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shall be appointed by the President, by and with the 
advice and consent of the Senate. 
(2) COMPENSATION; ETC.—The provisions of 
paragraphs (2), (5), and (7) of subsection (a) (relat-
ing to compensation, terms, general powers, rule-
making, and delegation) of section 702 of the Social 
Security Act (42 U.S.C. 902) shall apply to the 
Commissioner and the Administration in the same 
manner as such provisions apply to the Commis-
sioner of Social Security and the Social Security Ad-
ministration. 
(c) INSPECTOR
GENERAL.—For provision estab-
lishing an Office of the Inspector General for the Health 
Choices Administration, see section 1647. 
SEC. 242. DUTIES AND AUTHORITY OF COMMISSIONER. 
(a) DUTIES.—The Commissioner is responsible for 
carrying out the following functions under this division: 
(1) QUALIFIED PLAN STANDARDS.—The estab-
lishment of qualified health benefits plan standards 
under this title, including the enforcement of such 
standards in coordination with State insurance regu-
lators and the Secretaries of Labor and the Treas-
ury. 
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(2) HEALTH INSURANCE EXCHANGE.—The es-
tablishment and operation of a Health Insurance 
Exchange under subtitle A of title III. 
(3) INDIVIDUAL
AFFORDABILITY
CREDITS.— 
The administration of individual affordability credits 
under subtitle C of title III, including determination 
of eligibility for such credits. 
(4) ADDITIONAL FUNCTIONS.—Such additional 
functions as may be specified in this division. 
(b) PROMOTING ACCOUNTABILITY.— 
(1) IN GENERAL.—The Commissioner shall un-
dertake activities in accordance with this subtitle to 
promote accountability of QHBP offering entities in 
meeting Federal health insurance requirements, re-
gardless of whether such accountability is with re-
spect to qualified health benefits plans offered 
through the Health Insurance Exchange or outside 
of such Exchange. 
(2) COMPLIANCE EXAMINATION AND AUDITS.— 
(A) IN
GENERAL.—The Commissioner 
shall, in coordination with States, conduct au-
dits of qualified health benefits plan compliance 
with Federal requirements.
Such audits may 
include random compliance audits and targeted 
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audits in response to complaints or other sus-
pected noncompliance. 
(B) RECOUPMENT OF COSTS IN CONNEC-
TION
WITH
EXAMINATION
AND
AUDITS.—The 
Commissioner is authorized to recoup from 
qualified health benefits plans reimbursement 
for the costs of such examinations and audit of 
such QHBP offering entities. 
(c) DATA COLLECTION.—The Commissioner shall 
collect data for purposes of carrying out the Commis-
sioner’s duties, including for purposes of promoting qual-
ity and value, protecting consumers, and addressing dis-
parities in health and health care and may share such data 
with the Secretary of Health and Human Services. 
(d) SANCTIONS AUTHORITY.— 
(1) IN GENERAL.—In the case that the Com-
missioner determines that a QHBP offering entity 
violates a requirement of this title, the Commis-
sioner may, in coordination with State insurance 
regulators and the Secretary of Labor, provide, in 
addition to any other remedies authorized by law, 
for any of the remedies described in paragraph (2). 
(2) REMEDIES.—The remedies described in this 
paragraph, with respect to a qualified health benefits 
plan offered by a QHBP offering entity, are— 
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(A) civil money penalties of not more than 
the amount that would be applicable under 
similar circumstances for similar violations 
under section 1857(g) of the Social Security 
Act; 
(B) suspension of enrollment of individuals 
under such plan after the date the Commis-
sioner notifies the entity of a determination 
under paragraph (1) and until the Commis-
sioner is satisfied that the basis for such deter-
mination has been corrected and is not likely to 
recur; 
(C) in the case of an Exchange-partici-
pating health benefits plan, suspension of pay-
ment to the entity under the Health Insurance 
Exchange for individuals enrolled in such plan 
after the date the Commissioner notifies the en-
tity of a determination under paragraph (1) 
and until the Secretary is satisfied that the 
basis for such determination has been corrected 
and is not likely to recur; or 
(D) working with State insurance regu-
lators to terminate plans for repeated failure by 
the offering entity to meet the requirements of 
this title. 
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(e) STANDARD DEFINITIONS
OF INSURANCE
AND 
MEDICAL TERMS.—The Commissioner shall provide for 
the development of standards for the definitions of terms 
used in health insurance coverage, including insurance-re-
lated terms. 
(f) EFFICIENCY IN ADMINISTRATION.—The Commis-
sioner shall issue regulations for the effective and efficient 
administration of the Health Insurance Exchange and af-
fordability credits under subtitle C, including, with respect 
to the determination of eligibility for affordability credits, 
the use of personnel who are employed in accordance with 
the requirements of title 5, United States Code, to carry 
out the duties of the Commissioner or, in the case of sec-
tions 308 and 341(b)(2), the use of State personnel who 
are employed in accordance with standards prescribed by 
the Office of Personnel Management pursuant to section 
208 of the Intergovernmental Personnel Act of 1970 (42 
U.S.C. 4728). 
SEC. 243. CONSULTATION AND COORDINATION. 
(a) CONSULTATION.—In carrying out the Commis-
sioner’s duties under this division, the Commissioner, as 
appropriate, shall consult at least with the following: 
(1) State attorneys general and State insurance 
regulators, including concerning the standards for 
health insurance coverage that is a qualified health 
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benefits plan under this title and enforcement of 
such standards. 
(2) The National Association of Insurance 
Commissioners, including for purposes of using 
model guidelines established by such association for 
purposes of subtitles B and D. 
(3) Appropriate State agencies, specifically con-
cerning the administration of individual affordability 
credits under subtitle C of title III and the offering 
of Exchange-participating health benefits plans, to 
Medicaid eligible individuals under subtitle A of such 
title. 
(4) The Federal Trade Commission, specifically 
concerning the development and issuance of guid-
ance, rules, or standards regarding fair marketing 
practices under section 231 or otherwise, or any con-
sumer disclosure requirements under section 233 or 
otherwise. 
(5) Other appropriate Federal agencies. 
(6) Indian tribes and tribal organizations. 
(b) COORDINATION.— 
(1) IN GENERAL.—In carrying out the func-
tions of the Commissioner, including with respect to 
the enforcement of the provisions of this division, 
the Commissioner shall work in coordination with 
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existing Federal and State entities to the maximum 
extent feasible consistent with this division and in a 
manner that prevents conflicts of interest in duties 
and ensures effective enforcement. 
(2) UNIFORM STANDARDS.—The Commissioner, 
in coordination with such entities, shall seek to 
achieve uniform standards that adequately protect 
consumers in a manner that does not unreasonably 
affect employers and insurers. 
SEC. 244. HEALTH INSURANCE OMBUDSMAN. 
(a) IN GENERAL.—The Commissioner shall appoint 
within the Health Choices Administration a Qualified 
Health Benefits Plan Ombudsman who shall have exper-
tise and experience in the fields of health care and edu-
cation of (and assistance to) individuals. 
(b) DUTIES.—The Qualified Health Benefits Plan 
Ombudsman shall, in a linguistically appropriate man-
ner— 
(1) receive complaints, grievances, and requests 
for information submitted by individuals through 
means such as the mail, by telephone, electronically, 
and in person; 
(2) provide assistance with respect to com-
plaints, grievances, and requests referred to in para-
graph (1), including— 
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(A) helping individuals determine the rel-
evant information needed to seek an appeal of 
a decision or determination; 
(B) assistance to such individuals in choos-
ing a qualified health benefits plan in which to 
enroll; 
(C) assistance to such individuals with any 
problems arising from disenrollment from such 
a plan; and 
(D) assistance to such individuals in pre-
senting information under subtitle C (relating 
to affordability credits); and 
(3) submit annual reports to Congress and the 
Commissioner that describe the activities of the Om-
budsman and that include such recommendations for 
improvement in the administration of this division as 
the Ombudsman determines appropriate. The Om-
budsman shall not serve as an advocate for any in-
creases in payments or new coverage of services, but 
may identify issues and problems in payment or cov-
erage policies. 
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Subtitle F—Relation to Other 
Requirements; Miscellaneous 
SEC. 251. RELATION TO OTHER REQUIREMENTS. 
(a) COVERAGE
NOT
OFFERED
THROUGH
EX-
CHANGE.— 
(1) IN GENERAL.—In the case of health insur-
ance coverage not offered through the Health Insur-
ance Exchange (whether or not offered in connection 
with an employment-based health plan), and in the 
case of employment-based health plans, the require-
ments of this title do not supercede any require-
ments applicable under titles XXII and XXVII of 
the Public Health Service Act, parts 6 and 7 of sub-
title B of title I of the Employee Retirement Income 
Security Act of 1974, or State law, except insofar as 
such requirements prevent the application of a re-
quirement of this division, as determined by the 
Commissioner. 
(2) CONSTRUCTION.—Nothing in paragraphs 
(1) or (2) shall be construed as affecting the appli-
cation of section 514 of the Employee Retirement 
Income Security Act of 1974. 
(b) COVERAGE OFFERED THROUGH EXCHANGE.— 
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(1) IN GENERAL.—In the case of health insur-
ance coverage offered through the Health Insurance 
Exchange— 
(A) the requirements of this title do not 
supercede any requirements (including require-
ments relating to genetic information non-
discrimination and mental health parity) appli-
cable under title XXVII of the Public Health 
Service Act or under State law, except insofar 
as such requirements prevent the application of 
a requirement of this division, as determined by 
the Commissioner; and 
(B) individual rights and remedies under 
State laws shall apply. 
(2) CONSTRUCTION.—In the case of coverage 
described in paragraph (1), nothing in such para-
graph shall be construed as preventing the applica-
tion of rights and remedies under State laws to 
health insurance issuers generally with respect to 
any requirement referred to in paragraph (1)(A). 
The previous sentence shall not be construed as pro-
viding for the applicability of rights or remedies 
under State laws with respect to requirements appli-
cable to employers or other plan sponsors in connec-
tion with arrangements which are treated as group 
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health plans under section 802(a)(1) of the Em-
ployee Retirement Income Security Act of 1974. 
SEC. 252. PROHIBITING DISCRIMINATION IN HEALTH CARE. 
(a) IN GENERAL.—Except as otherwise explicitly per-
mitted by this Act and by subsequent regulations con-
sistent with this Act, all health care and related services 
(including insurance coverage and public health activities) 
covered by this Act shall be provided without regard to 
personal characteristics extraneous to the provision of 
high quality health care or related services. 
(b) IMPLEMENTATION.—To implement the require-
ment set forth in subsection (a), the Secretary of Health 
and Human Services shall, not later than 18 months after 
the date of the enactment of this Act, promulgate such 
regulations as are necessary or appropriate to insure that 
all health care and related services (including insurance 
coverage and public health activities) covered by this Act 
are provided (whether directly or through contractual, li-
censing, or other arrangements) without regard to per-
sonal characteristics extraneous to the provision of high 
quality health care or related services. 
SEC. 253. WHISTLEBLOWER PROTECTION. 
(a) RETALIATION PROHIBITED.—No employer may 
discharge any employee or otherwise discriminate against 
any employee with respect to his compensation, terms, 
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edies set forth in section 40(b) of the Consumer Product 
Safety Act (15 U.S.C. 2087(b)). 
(c) EMPLOYER DEFINED.—As used in this section, 
the term ‘‘employer’’ means any person (including one or 
more individuals, partnerships, associations, corporations, 
trusts, professional membership organization including a 
certification, disciplinary, or other professional body, unin-
corporated organizations, nongovernmental organizations, 
or trustees) engaged in profit or nonprofit business or in-
dustry whose activities are governed by this Act, and any 
agent, contractor, subcontractor, grantee, or consultant of 
such person. 
(d) RULE OF CONSTRUCTION.—The rule of construc-
tion set forth in section 20109(h) of title 49, United 
States Code, shall also apply to this section. 
SEC. 254. CONSTRUCTION REGARDING COLLECTIVE BAR-
GAINING. 
Nothing in this division shall be construed to alter 
or supersede any statutory or other obligation to engage 
in collective bargaining over the terms or conditions of em-
ployment related to health care. Any plan amendment 
made pursuant to a collective bargaining agreement relat-
ing to the plan which amends the plan solely to conform 
to any requirement added by this division shall not be 
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treated as a termination of such collective bargaining 
agreement. 
SEC. 255. SEVERABILITY. 
If any provision of this Act, or any application of such 
provision to any person or circumstance, is held to be un-
constitutional, the remainder of the provisions of this Act 
and the application of the provision to any other person 
or circumstance shall not be affected. 
SEC. 256. TREATMENT OF HAWAII PREPAID HEALTH CARE 
ACT. 
(a) IN GENERAL.—Subject to this section— 
(1) nothing in this division (or an amendment 
made by this division) shall be construed to modify 
or limit the application of the exemption for the Ha-
waii Prepaid Health Care Act (Haw. Rev. Stat. §§ 
393–1 et seq.) as provided for under section 
514(b)(5) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1144(b)(5)), and such 
exemption shall also apply with respect to the provi-
sions of this division; and 
(2) for purposes of this division (and the 
amendments made by this division), coverage pro-
vided pursuant to the Hawaii Prepaid Health Care 
Act shall be treated as a qualified health benefits 
plan providing acceptable coverage so long as the 
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Secretary of Labor determines that such coverage 
for employees (taking into account the benefits and 
the cost to employees for such benefits) is substan-
tially equivalent to or greater than the coverage pro-
vided for employees pursuant to the essential bene-
fits package. 
(b) COORDINATION WITH STATE LAW OF HAWAII.— 
The Commissioner shall, based on ongoing consultation 
with the appropriate officials of the State of Hawaii, make 
adjustments to rules and regulations of the Commissioner 
under this division as may be necessary, as determined 
by the Commissioner, to most effectively coordinate the 
provisions of this division with the provisions of the Ha-
waii Prepaid Health Care Act, taking into account any 
changes made from time to time to the Hawaii Prepaid 
Health Care Act and related laws of such State. 
SEC. 257. ACTIONS BY STATE ATTORNEYS GENERAL. 
Any State attorney general may bring a civil action 
in the name of such State as parens patriae on behalf of 
natural persons residing in such State, in any district 
court of the United States or State court having jurisdic-
tion of the defendant to secure monetary or equitable relief 
for violation of any provisions of this title or regulations 
issued thereunder. Nothing in this section shall be con-
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strued as affecting the application of section 514 of the 
Employee Retirement Income Security Act of 1974. 
SEC. 258. APPLICATION OF STATE AND FEDERAL LAWS RE-
GARDING ABORTION. 
(a) NO PREEMPTION OF STATE LAWS REGARDING 
ABORTION.—Nothing in this Act shall be construed to 
preempt or otherwise have any effect on State laws regard-
ing the prohibition of (or requirement of) coverage, fund-
ing, or procedural requirements on abortions, including 
parental notification or consent for the performance of an 
abortion on a minor. 
(b) NO EFFECT ON FEDERAL LAWS REGARDING 
ABORTION.— 
(1) IN GENERAL.—Nothing in this Act shall be 
construed to have any effect on Federal laws regard-
ing— 
(A) conscience protection; 
(B) willingness or refusal to provide abor-
tion; and 
(C) discrimination on the basis of the will-
ingness or refusal to provide, pay for, cover, or 
refer for abortion or to provide or participate in 
training to provide abortion. 
(c) NO EFFECT ON FEDERAL CIVIL RIGHTS LAW.— 
Nothing in this section shall alter the rights and obliga-
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tions of employees and employers under title VII of the 
Civil Rights Act of 1964. 
SEC. 259. NONDISCRIMINATION ON ABORTION AND RE-
SPECT FOR RIGHTS OF CONSCIENCE. 
(a) NONDISCRIMINATION.—A Federal agency or pro-
gram, and any State or local government that receives 
Federal financial assistance under this Act (or an amend-
ment made by this Act), may not— 
(1) subject any individual or institutional health 
care entity to discrimination; or 
(2) require any health plan created or regulated 
under this Act (or an amendment made by this Act) 
to subject any individual or institutional health care 
entity to discrimination, 
on the basis that the health care entity does not provide, 
pay for, provide coverage of, or refer for abortions. 
(b) DEFINITION.—In this section, the term ‘‘health 
care entity’’ includes an individual physician or other 
health care professional, a hospital, a provider-sponsored 
organization, a health maintenance organization, a health 
insurance plan, or any other kind of health care facility, 
organization, or plan. 
(c) ADMINISTRATION.—The Office for Civil Rights of 
the Department of Health and Human Services is des-
ignated to receive complaints of discrimination based on 
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this section, and coordinate the investigation of such com-
plaints. 
SEC. 260. AUTHORITY OF FEDERAL TRADE COMMISSION. 
Section 6 of the Federal Trade Commission Act (15 
U.S.C. 46) is amended by striking ‘‘and prepare reports’’ 
and all that follows and inserting the following: ‘‘and pre-
pare reports, and to share information under clauses (f) 
and (k), relating to insurance. Notwithstanding section 4, 
the Commission’s authority shall include the authority to 
conduct studies and prepare reports, and to share infor-
mation under clauses (f) and (k), relating to insurance, 
without regard to whether the subject of such studies, re-
ports, or information is for-profit or not-for-profit.’’. 
SEC. 261. CONSTRUCTION REGARDING STANDARD OF 
CARE. 
(a) IN GENERAL.—The development, recognition, or 
implementation of any guideline or other standard under 
a provision described in subsection (b) shall not be con-
strued to establish the standard of care or duty of care 
owed by health care providers to their patients in any med-
ical malpractice action or claim (as defined in section 
431(7) of the Health Care Quality Improvement Act of 
1986 (42 U.S.C. 11151(7)). 
(b) PROVISIONS DESCRIBED.—The provisions de-
scribed in this subsection are the following: 
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(1) Section 324 (relating to modernized pay-
ment initiatives and delivery system reform under 
the public health option). 
(2) The amendments made by section 1151 (re-
lating to reducing potentially preventable hospital re-
admissions). 
(3) The amendments made by section 1751 (re-
lating to health care acquired conditions). 
(4) Section 3131 of the Public Health Service 
Act (relating to the Task Force on Clinical Preven-
tive Services), added by section 2301. 
(5) Part D of title IX of the Public Health 
Service Act (relating to implementation of best prac-
tices in the delivery of health care), added by section 
2401. 
(c) SAVINGS CLAUSE FOR STATE MEDICAL MAL-
PRACTICE LAWS.—Nothing in this Act or the amendments 
made by this Act shall be construed to modify or impair 
State law governing legal standards or procedures used 
in medical malpractice cases, including the authority of 
a State to make or implement such law. 
SEC. 262. RESTORING APPLICATION OF ANTITRUST LAWS 
TO HEALTH SECTOR INSURERS. 
(a) AMENDMENT TO MCCARRAN-FERGUSON ACT.— 
Section 3 of the Act of March 9, 1945 (15 U.S.C. 1013), 
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commonly known as the McCarran-Ferguson Act, is 
amended by adding at the end the following: 
‘‘(c)(1) Except as provided in paragraph (2), nothing 
contained in this Act shall modify, impair, or supersede 
the operation of any of the antitrust laws with respect to 
the business of health insurance or the business of medical 
malpractice insurance. 
‘‘(2) Paragraph (1) shall not apply to— 
‘‘(A) collecting, compiling, classifying, or dis-
seminating historical loss data; 
‘‘(B) determining a loss development factor ap-
plicable to historical loss data; or 
‘‘(C) performing actuarial services if doing so 
does not involve a restraint of trade. 
‘‘(3) For purposes of this subsection— 
‘‘(A) the term ‘antitrust laws’ has the meaning 
given it in subsection (a) of the first section of the 
Clayton Act, except that such term includes section 
5 of the Federal Trade Commission Act to the ex-
tent that such section 5 applies to unfair methods of 
competition; 
‘‘(B) the term ‘historical loss data’ means infor-
mation respecting claims paid, or reserves held for 
claims reported, by any person engaged in the busi-
ness of insurance; and 
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‘‘(C) the term ‘loss development factor’ means 
an adjustment to be made to the aggregate of losses 
incurred during a prior period of time that have 
been paid, or for which claims have been received 
and reserves are being held, in order to estimate the 
aggregate of the losses incurred during such period 
that will ultimately be paid.’’. 
(b) RELATED PROVISION.—For purposes of section 
5 of the Federal Trade Commission Act (15 U.S.C. 45) 
to the extent such section applies to unfair methods of 
competition, section 3(c) of the McCarran-Ferguson Act 
shall apply with respect to the business of health insur-
ance, and with respect to the business of medical mal-
practice insurance, without regard to whether such busi-
ness is carried on for profit, notwithstanding the definition 
of ‘‘Corporation’’ contained in section 4 of the Federal 
Trade Commission Act. 
(c) 
RELATED
PRESERVATION
OF
ANTITRUST 
LAWS.—Except as provided in subsections (a) and (b), 
nothing in this Act, or in the amendments made by this 
Act, shall be construed to modify, impair, or supersede 
the operation of any of the antitrust laws. For purposes 
of the preceding sentence, the term ‘‘antitrust laws’’ has 
the meaning given it in subsection (a) of the first section 
of the Clayton Act, except that it includes section 5 of 
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the Federal Trade Commission Act to the extent that such 
section 5 applies to unfair methods of competition. 
SEC. 263. STUDY AND REPORT ON METHODS TO INCREASE 
EHR USE BY SMALL HEALTH CARE PRO-
VIDERS. 
(a) STUDY.—The Secretary of Health and Human 
Services shall conduct a study of potential methods to in-
crease the use of qualified electronic health records (as 
defined in section 3000(13) of the Public Health Service 
Act) by small health care providers. Such study shall con-
sider at least the following methods: 
(1) Providing for higher rates of reimbursement 
or other incentives for such health care providers to 
use electronic health records (taking into consider-
ation initiatives by private health insurance compa-
nies and incentives provided under Medicare under 
title XVIII of the Social Security Act, Medicaid 
under title XIX of such Act, and other programs). 
(2) Promoting low-cost electronic health record 
software packages that are available for use by such 
health care providers, including software packages 
that are available to health care providers through 
the Veterans Administration and other sources. 
(3) Training and education of such health care 
providers on the use of electronic health records. 
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(4) Providing assistance to such health care 
providers on the implementation of electronic health 
records. 
(b) REPORT.—Not later than December 31, 2013, 
the Secretary of Health and Human Services shall submit 
to Congress a report containing the results of the study 
conducted under subsection (a), including recommenda-
tions for legislation or administrative action to increase 
the use of electronic health records by small health care 
providers that include the use of both public and private 
funding sources. 
SEC. 264. PERFORMANCE ASSESSMENT AND ACCOUNT-
ABILITY: APPLICATION OF GPRA. 
(a) APPLICATION OF GPRA.—Section 306 of title 5, 
United States Code, and sections 1115, 1116, 1117, and 
9703 of title 31 of such Code (originally enacted by the 
Government Performance and Results Act of 1993, Public 
Law 103–62) apply to the executive agencies established 
by this Act, including the Health Choices Administration. 
Under such section 306, each such executive agency is re-
quired to provide for a strategic plan every 3 years. 
(b) IMPROVING CONSUMER SERVICE AND STREAM-
LINING PROCEDURES.—Every 3 years each such executive 
agency shall— 
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(1)(A) assess the quality of customer service 
provided, (B) develop a strategy for improving such 
service, and (C) establish standards for high-quality 
customer service; and 
(2)(A) identify redundant rules, regulations, 
and procedures, and (B) develop and implement a 
plan 
for 
eliminating 
or 
streamlining 
such 
redundancies. 
SEC. 265. LIMITATION ON ABORTION FUNDING. 
(a) IN GENERAL.—No funds authorized or appro-
priated by this Act (or an amendment made by this Act) 
may be used to pay for any abortion or to cover any part 
of the costs of any health plan that includes coverage of 
abortion, except in the case where a woman suffers from 
a physical disorder, physical injury, or physical illness that 
would, as certified by a physician, place the woman in dan-
ger of death unless an abortion is performed, including 
a life-endangering physical condition caused by or arising 
from the pregnancy itself, or unless the pregnancy is the 
result of an act of rape or incest. 
(b) OPTION
TO
PURCHASE
SEPARATE
SUPPLE-
MENTAL COVERAGE OR PLAN.—Nothing in this section 
shall be construed as prohibiting any nonfederal entity (in-
cluding an individual or a State or local government) from 
purchasing separate supplemental coverage for abortions 
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for which funding is prohibited under this section, or a 
plan that includes such abortions, so long as— 
(1) such coverage or plan is paid for entirely 
using only funds not authorized or appropriated by 
this Act; and 
(2) such coverage or plan is not purchased 
using— 
(A) individual premium payments required 
for a Exchange-participating health benefits 
plan towards which an affordability credit is ap-
plied; or 
(B) other nonfederal funds required to re-
ceive a federal payment, including a State’s or 
locality’s contribution of Medicaid matching 
funds. 
(c) OPTION TO OFFER SEPARATE SUPPLEMENTAL 
COVERAGE OR PLAN.—Notwithstanding section 303(b), 
nothing in this section shall restrict any nonfederal QHBP 
offering entity from offering separate supplemental cov-
erage for abortions for which funding is prohibited under 
this section, or a plan that includes such abortions, so long 
as— 
(1) premiums for such separate supplemental 
coverage or plan are paid for entirely with funds not 
authorized or appropriated by this Act; 
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(2) administrative costs and all services offered 
through such supplemental coverage or plan are paid 
for using only premiums collected for such coverage 
or plan; and 
(3) any nonfederal QHBP offering entity that 
offers an Exchange-participating health benefits 
plan that includes coverage for abortions for which 
funding is prohibited under this section also offers 
an Exchange-participating health benefits plan that 
is identical in every respect except that it does not 
cover abortions for which funding is prohibited 
under this section. 
TITLE III—HEALTH INSURANCE 
EXCHANGE 
AND 
RELATED 
PROVISIONS 
Subtitle A—Health Insurance 
Exchange 
SEC. 301. ESTABLISHMENT OF HEALTH INSURANCE EX-
CHANGE; OUTLINE OF DUTIES; DEFINITIONS. 
(a) ESTABLISHMENT.—There is established within 
the Health Choices Administration and under the direc-
tion of the Commissioner a Health Insurance Exchange 
in order to facilitate access of individuals and employers, 
through a transparent process, to a variety of choices of 
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affordable, quality health insurance coverage, including a 
public health insurance option. 
(b) OUTLINE OF DUTIES OF COMMISSIONER.—In ac-
cordance with this subtitle and in coordination with appro-
priate Federal and State officials as provided under sec-
tion 243(b), the Commissioner shall— 
(1) under section 304 establish standards for, 
accept bids from, and negotiate and enter into con-
tracts with, QHBP offering entities for the offering 
of health benefits plans through the Health Insur-
ance Exchange, with different levels of benefits re-
quired under section 303, and including with respect 
to oversight and enforcement; 
(2) under section 305 facilitate outreach and 
enrollment in such plans of Exchange-eligible indi-
viduals and employers described in section 302; and 
(3) conduct such activities related to the Health 
Insurance Exchange as required, including establish-
ment of a risk pooling mechanism under section 306 
and consumer protections under subtitle D of title 
II. 
SEC. 302. EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOY-
ERS. 
(a) ACCESS TO COVERAGE.—In accordance with this 
section, all individuals are eligible to obtain coverage 
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through enrollment in an Exchange-participating health 
benefits plan offered through the Health Insurance Ex-
change unless such individuals are enrolled in another 
qualified health benefits plan or certain other acceptable 
coverage. 
(b) DEFINITIONS.—In this division: 
(1) 
EXCHANGE-ELIGIBLE
INDIVIDUAL.—The 
term ‘‘Exchange-eligible individual’’ means an indi-
vidual who is eligible under this section to be en-
rolled through the Health Insurance Exchange in an 
Exchange-participating health benefits plan and, 
with respect to family coverage, includes dependents 
of such individual. 
(2) 
EXCHANGE-ELIGIBLE
EMPLOYER.—The 
term ‘‘Exchange-eligible employer’’ means an em-
ployer that is eligible under this section to enroll 
through the Health Insurance Exchange employees 
of the employer (and their dependents) in Exchange- 
eligible health benefits plans. 
(3) 
EMPLOYMENT-RELATED
DEFINITIONS.— 
The terms ‘‘employer’’, ‘‘employee’’, ‘‘full-time em-
ployee’’, and ‘‘part-time employee’’ have the mean-
ings given such terms by the Commissioner for pur-
poses of this division. 
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(1) INDIVIDUAL
DESCRIBED.—Subject to the 
succeeding provisions of this subsection, an indi-
vidual described in this paragraph is an individual 
who— 
(A) is not enrolled in coverage described in 
subparagraph (C) or (D) of paragraph (2); and 
(B) is not enrolled in coverage as a full- 
time employee (or as a dependent of such an 
employee) under a group health plan if the cov-
erage and an employer contribution under the 
plan meet the requirements of section 412. 
For purposes of subparagraph (B), in the case of an 
individual who is self-employed, who has at least 1 
employee, and who meets the requirements of section 
412, such individual shall be deemed a full-time em-
ployee described in such subparagraph. 
(2) ACCEPTABLE COVERAGE.—For purposes of 
this division, the term ‘‘acceptable coverage’’ means 
any of the following: 
(A) QUALIFIED HEALTH BENEFITS PLAN 
COVERAGE.—Coverage under a qualified health 
benefits plan. 
(B) GRANDFATHERED HEALTH INSURANCE 
COVERAGE; COVERAGE UNDER CURRENT GROUP 
HEALTH
PLAN.—Coverage under a grand-
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fathered health insurance coverage (as defined 
in subsection (a) of section 202) or under a 
current group health plan (described in sub-
section (b) of such section). 
(C) MEDICARE.—Coverage under part A of 
title XVIII of the Social Security Act. 
(D) MEDICAID.—Coverage for medical as-
sistance under title XIX of the Social Security 
Act, excluding such coverage that is only avail-
able because of the application of subsection 
(u), (z), (aa), or (hh) of section 1902 of such 
Act. 
(E) MEMBERS
OF
THE
ARMED
FORCES 
AND
DEPENDENTS
(INCLUDING
TRICARE).— 
Coverage under chapter 55 of title 10, United 
States Code, including similar coverage fur-
nished under section 1781 of title 38 of such 
Code. 
(F) VA.—Coverage under the veteran’s 
health care program under chapter 17 of title 
38, United States Code. 
(G) OTHER COVERAGE.—Such other health 
benefits coverage, such as a State health bene-
fits risk pool, as the Commissioner, in coordina-
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tion with the Secretary of the Treasury, recog-
nizes for purposes of this paragraph. 
The Commissioner shall make determinations under 
this paragraph in coordination with the Secretary of 
the Treasury. 
(3) CONTINUING ELIGIBILITY PERMITTED.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), once an individual qualifies 
as an Exchange-eligible individual under this 
subsection (including as an employee or depend-
ent of an employee of an Exchange-eligible em-
ployer) and enrolls under an Exchange-partici-
pating health benefits plan through the Health 
Insurance Exchange, the individual shall con-
tinue to be treated as an Exchange-eligible indi-
vidual until the individual is no longer enrolled 
with an Exchange-participating health benefits 
plan. 
(B) EXCEPTIONS.— 
(i) IN GENERAL.—Subparagraph (A) 
shall not apply to an individual once the 
individual becomes eligible for coverage— 
(I) under part A of the Medicare 
program; 
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(II) under the Medicaid program 
as a Medicaid-eligible individual, ex-
cept as permitted under clause (ii); or 
(III) in such other circumstances 
as the Commissioner may provide. 
(ii) TRANSITION PERIOD.—In the case 
described in clause (i)(II), the Commis-
sioner shall permit the individual to con-
tinue treatment under subparagraph (A) 
until such limited time as the Commis-
sioner determines it is administratively fea-
sible, consistent with minimizing disruption 
in the individual’s access to health care. 
(4) TRANSITION FOR CHIP ELIGIBLES.—An in-
dividual who is eligible for child health assistance 
under title XXI of the Social Security Act for a pe-
riod during Y1 shall not be an Exchange-eligible in-
dividual during such period. 
(e) EMPLOYERS.— 
(1) SMALLEST
EMPLOYER.—Subject to para-
graph (5), smallest employers described in this para-
graph are employers with 25 or fewer employees. 
(2) SMALLER
EMPLOYERS.—Subject to para-
graph (5), smaller employers described in this para-
graph are employers that are not smallest employers 
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described in paragraph (1) and have 50 or fewer em-
ployees. 
(3) SMALL EMPLOYERS.—Subject to paragraph 
(5), small employers described in this paragraph are 
employers that are not described in paragraph (1) or 
(2) and have 100 or fewer employees. 
(4) LARGER EMPLOYERS.— 
(A) IN GENERAL.—Beginning with Y3, the 
Commissioner may permit employers not de-
scribed in paragraph (1), (2), or (3) to be Ex-
change-eligible employers. 
(B) PHASE-IN.—In applying subparagraph 
(A), the Commissioner may phase-in the appli-
cation of such subparagraph based on the num-
ber of full-time employees of an employer and 
such other considerations as the Commissioner 
deems appropriate. 
(5) CONTINUING
ELIGIBILITY.—Once an em-
ployer is permitted to be an Exchange-eligible em-
ployer under this subsection and enrolls employees 
through the Health Insurance Exchange, the em-
ployer shall continue to be treated as an Exchange- 
eligible employer for each subsequent plan year re-
gardless of the number of employees involved unless 
and until the employer meets the requirement of sec-
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tion 411(a) through paragraph (1) of such section 
by offering a group health plan and not through of-
fering an Exchange-participating health benefits 
plan. 
(6) EMPLOYER PARTICIPATION AND CONTRIBU-
TIONS.— 
(A) SATISFACTION OF EMPLOYER RESPON-
SIBILITY.—For any year in which an employer 
is an Exchange-eligible employer, such employer 
may meet the requirements of section 412 with 
respect to employees of such employer by offer-
ing such employees the option of enrolling with 
Exchange-participating health benefits plans 
through the Health Insurance Exchange con-
sistent with the provisions of subtitle B of title 
IV. 
(B) EMPLOYEE
CHOICE.—Any employee 
offered Exchange-participating health benefits 
plans by the employer of such employee under 
subparagraph (A) may choose coverage under 
any such plan. That choice includes, with re-
spect to family coverage, coverage of the de-
pendents of such employee. 
(7) AFFILIATED GROUPS.—Any employer which 
is part of a group of employers who are treated as 
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a single employer under subsection (b), (c), (m), or 
(o) of section 414 of the Internal Revenue Code of 
1986 shall be treated, for purposes of this subtitle, 
as a single employer. 
(8) 
TREATMENT
OF
MULTI-EMPLOYER 
PLANS.—The plan sponsor of a group health plan 
(as defined in section 773(a) of the Employee Re-
tirement Income Security Act of 1974) that is a 
multi-employer plan (as defined in section 3(37) of 
such Act) may obtain health insurance coverage with 
respect to participants in the plan through the Ex-
change to the same extent that an employer not de-
scribed in paragraph (1) or (2) is permitted by the 
Commissioner to obtain health insurance coverage 
through the Exchange as an Exchange-eligible em-
ployer. 
(9) OTHER COUNTING RULES.—The Commis-
sioner shall establish rules relating to how employees 
are counted for purposes of carrying out this sub-
section. 
(f) SPECIAL SITUATION AUTHORITY.—The Commis-
sioner shall have the authority to establish such rules as 
may be necessary to deal with special situations with re-
gard to uninsured individuals and employers participating 
as Exchange-eligible individuals and employers, such as 
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transition periods for individuals and employers who gain, 
or lose, Exchange-eligible participation status, and to es-
tablish grace periods for premium payment. 
(g) SURVEYS OF INDIVIDUALS AND EMPLOYERS.— 
The Commissioner shall provide for periodic surveys of 
Exchange-eligible individuals and employers concerning 
satisfaction of such individuals and employers with the 
Health Insurance Exchange and Exchange-participating 
health benefits plans. 
(h) EXCHANGE ACCESS STUDY.— 
(1) IN GENERAL.—The Commissioner shall con-
duct a study of access to the Health Insurance Ex-
change for individuals and for employers, including 
individuals and employers who are not eligible and 
enrolled in Exchange-participating health benefits 
plans. The goal of the study is to determine if there 
are significant groups and types of individuals and 
employers who are not Exchange-eligible individuals 
or employers, but who would have improved benefits 
and affordability if made eligible for coverage in the 
Exchange. 
(2) ITEMS INCLUDED IN STUDY.—Such study 
also shall examine— 
(A) the terms, conditions, and affordability 
of group health coverage offered by employers 
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and QHBP offering entities outside of the Ex-
change compared to Exchange-participating 
health benefits plans; and 
(B) the affordability-test standard for ac-
cess of certain employed individuals to coverage 
in the Health Insurance Exchange. 
(3) REPORT.—Not later than January 1 of Y3, 
in Y6, and thereafter, the Commissioner shall sub-
mit to Congress a report on the study conducted 
under this subsection and shall include in such re-
port recommendations regarding changes in stand-
ards for Exchange eligibility for individuals and em-
ployers. 
SEC. 303. BENEFITS PACKAGE LEVELS. 
(a) IN GENERAL.—The Commissioner shall specify 
the benefits to be made available under Exchange-partici-
pating health benefits plans during each plan year, con-
sistent with subtitle C of title II and this section. 
(b) LIMITATION ON HEALTH BENEFITS PLANS OF-
FERED BY OFFERING ENTITIES.—The Commissioner may 
not enter into a contract with a QHBP offering entity 
under section 304(c) for the offering of an Exchange-par-
ticipating health benefits plan in a service area unless the 
following requirements are met: 
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(1) REQUIRED OFFERING OF BASIC PLAN.—The 
entity offers only one basic plan for such service 
area. 
(2) 
OPTIONAL
OFFERING
OF
ENHANCED 
PLAN.—If and only if the entity offers a basic plan 
for such service area, the entity may offer one en-
hanced plan for such area. 
(3) OPTIONAL OFFERING OF PREMIUM PLAN.— 
If and only if the entity offers an enhanced plan for 
such service area, the entity may offer one premium 
plan for such area. 
(4) OPTIONAL
OFFERING
OF
PREMIUM-PLUS 
PLANS.—If and only if the entity offers a premium 
plan for such service area, the entity may offer one 
or more premium-plus plans for such area. 
All such plans may be offered under a single contract with 
the Commissioner. 
(c) SPECIFICATION
OF
BENEFIT
LEVELS
FOR 
PLANS.— 
(1) IN GENERAL.—The Commissioner shall es-
tablish the following standards consistent with this 
subsection and title II: 
(A) BASIC, ENHANCED, AND
PREMIUM 
PLANS.—Standards for 3 levels of Exchange- 
participating health benefits plans: basic, en-
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hanced, and premium (in this division referred 
to as a ‘‘basic plan’’, ‘‘enhanced plan’’, and 
‘‘premium plan’’, respectively). 
(B) PREMIUM-PLUS
PLAN
BENEFITS.— 
Standards for additional benefits that may be 
offered, consistent with this subsection and sub-
title C of title II, under a premium plan (such 
a plan with additional benefits referred to in 
this division as a ‘‘premium-plus plan’’) . 
(2) BASIC PLAN.— 
(A) IN GENERAL.—A basic plan shall offer 
the essential benefits package required under 
title II for a qualified health benefits plan with 
an actuarial value of 70 percent of the full ac-
tuarial value of the benefits provided under the 
reference benefits package. 
(B) TIERED COST-SHARING FOR AFFORD-
ABLE CREDIT ELIGIBLE INDIVIDUALS.—In the 
case of an affordable credit eligible individual 
(as defined in section 342(a)(1)) enrolled in an 
Exchange-participating health benefits plan, the 
benefits under a basic plan are modified to pro-
vide for the reduced cost-sharing for the income 
tier applicable to the individual under section 
324(c). 
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(3) ENHANCED PLAN.—An enhanced plan shall 
offer, in addition to the level of benefits under the 
basic plan, a lower level of cost-sharing as provided 
under title II consistent with section 223(b)(5)(A). 
(4) PREMIUM
PLAN.—A premium plan shall 
offer, in addition to the level of benefits under the 
basic plan, a lower level of cost-sharing as provided 
under title II consistent with section 223(b)(5)(B). 
(5) PREMIUM-PLUS
PLAN.—A premium-plus 
plan is a premium plan that also provides additional 
benefits, such as adult oral health and vision care, 
approved by the Commissioner. The portion of the 
premium that is attributable to such additional ben-
efits shall be separately specified. 
(6) RANGE
OF
PERMISSIBLE
VARIATION
IN 
COST-SHARING.—The Commissioner shall establish a 
permissible range of variation of cost-sharing for 
each basic, enhanced, and premium plan, except with 
respect to any benefit for which there is no cost- 
sharing permitted under the essential benefits pack-
age. Such variation shall permit a variation of not 
more than plus (or minus) 10 percent in cost-shar-
ing with respect to each benefit category specified 
under section 222. Nothing in this subtitle shall be 
construed as prohibiting tiering in cost-sharing, in-
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cluding through preferred and participating pro-
viders and prescription drugs. In applying this para-
graph, a health benefits plan may increase the cost- 
sharing by 10 percent within each category or tier, 
as applicable, and may decrease or eliminate cost- 
sharing in any category or tier as compared to the 
essential benefits package. 
(d) TREATMENT OF STATE BENEFIT MANDATES.— 
Insofar as a State requires a health insurance issuer offer-
ing health insurance coverage to include benefits beyond 
the essential benefits package, such requirement shall con-
tinue to apply to an Exchange-participating health bene-
fits plan, if the State has entered into an arrangement 
satisfactory to the Commissioner to reimburse the Com-
missioner for the amount of any net increase in afford-
ability premium credits under subtitle C as a result of an 
increase in premium in basic plans as a result of applica-
tion of such requirement. 
SEC. 304. CONTRACTS FOR THE OFFERING OF EXCHANGE- 
PARTICIPATING HEALTH BENEFITS PLANS. 
(a) CONTRACTING DUTIES.—In carrying out section 
301(b)(1) and consistent with this subtitle: 
(1) OFFERING
ENTITY
AND
PLAN
STAND-
ARDS.—The Commissioner shall— 
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(A) establish standards necessary to imple-
ment the requirements of this title and title II 
for— 
(i) QHBP offering entities for the of-
fering of an Exchange-participating health 
benefits plan; and 
(ii) 
Exchange-participating 
health 
benefits plans; and 
(B) certify QHBP offering entities and 
qualified health benefits plans as meeting such 
standards and requirements of this title and 
title II for purposes of this subtitle. 
(2) SOLICITING AND NEGOTIATING BIDS; CON-
TRACTS.— 
(A) BID
SOLICITATION.—The Commis-
sioner shall solicit bids from QHBP offering en-
tities for the offering of Exchange-participating 
health benefits plans. Such bids shall include 
justification for proposed premiums. 
(B) BID REVIEW AND NEGOTIATION.—The 
Commissioner shall, based upon a review of 
such bids including the premiums and their af-
fordability, negotiate with such entities for the 
offering of such plans. 
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(C) DENIAL OF EXCESSIVE PREMIUMS.— 
The Commissioner shall deny excessive pre-
miums and premium increases. 
(D) CONTRACTS.—The Commissioner shall 
enter into contracts with such entities for the 
offering of such plans through the Health In-
surance Exchange under terms (consistent with 
this title) negotiated between the Commissioner 
and such entities. 
(3) FEDERAL
ACQUISITION
REGULATION.—In 
carrying out this subtitle, the Commissioner may 
waive such provisions of the Federal Acquisition 
Regulation that the Commissioner determines to be 
inconsistent with the furtherance of this subtitle, 
other than provisions relating to confidentiality of 
information. Competitive procedures shall be used in 
awarding contracts under this subtitle to the extent 
that such procedures are consistent with this sub-
title. 
(b) STANDARDS FOR QHBP OFFERING ENTITIES TO 
OFFER EXCHANGE-PARTICIPATING HEALTH BENEFITS 
PLANS.—The standards established under subsection 
(a)(1)(A) shall require that, in order for a QHBP offering 
entity to offer an Exchange-participating health benefits 
plan, the entity must meet the following requirements: 
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(1) LICENSED.—The entity shall be licensed to 
offer health insurance coverage under State law for 
each State in which it is offering such coverage. 
(2) DATA REPORTING.—The entity shall pro-
vide for the reporting of such information as the 
Commissioner may specify, including information 
necessary to administer the risk pooling mechanism 
described in section 306(b) and information to ad-
dress disparities in health and health care. 
(3) AFFORDABILITY.—The entity shall provide 
for affordable premiums. 
(4) 
IMPLEMENTING
AFFORDABILITY
CRED-
ITS.—The entity shall provide for implementation of 
the affordability credits provided for enrollees under 
subtitle C, including the reduction in cost-sharing 
under section 344(c). 
(5) ENROLLMENT.—The entity shall accept all 
enrollments under this subtitle, subject to such ex-
ceptions (such as capacity limitations) in accordance 
with the requirements under title II for a qualified 
health benefits plan. The entity shall notify the 
Commissioner if the entity projects or anticipates 
reaching such a capacity limitation that would result 
in a limitation in enrollment. 
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(6) RISK POOLING PARTICIPATION.—The entity 
shall participate in such risk pooling mechanism as 
the Commissioner establishes under section 306(b). 
(7) ESSENTIAL COMMUNITY PROVIDERS.—With 
respect to the basic plan offered by the entity, the 
entity shall include within the plan network those es-
sential community providers, where available, that 
serve predominantly low-income, medically-under-
served individuals, such as health care providers de-
fined in section 340B(a)(4) of the Public Health 
Service Act and providers described in section 
1927(c)(1)(D)(i)(IV) of the Social Security Act (as 
amended by section 221 of Public Law 111–8). The 
Commissioner shall specify the extent to which and 
manner in which the previous sentence shall apply in 
the case of a basic plan with respect to which the 
Commissioner determines provides substantially all 
benefits through a health maintenance organization, 
as defined in section 2791(b)(3) of the Public 
Health Service Act. This paragraph shall not be con-
strued to require a basic plan to contract with a pro-
vider if such provider refuses to accept the generally 
applicable payment rates of such plan. 
(8) CULTURALLY AND LINGUISTICALLY APPRO-
PRIATE SERVICES AND COMMUNICATIONS.—The en-
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ticipating provider which is not an Indian 
health care provider. 
(B) SPECIAL RULE RELATING TO INDIAN 
HEALTH CARE PROVIDERS.—Provision of serv-
ices by an Indian health care provider exclu-
sively to Indians and their dependents shall not 
constitute discrimination under this Act. 
(10) PROGRAM
INTEGRITY
STANDARDS.—The 
entity shall establish and operate a program to pro-
tect and promote the integrity of Exchange-partici-
pating health benefits plans it offers, in accordance 
with standards and functions established by the 
Commissioner. 
(11) ADDITIONAL REQUIREMENTS.—The entity 
shall comply with other applicable requirements of 
this title, as specified by the Commissioner, which 
shall include standards regarding billing and collec-
tion practices for premiums and related grace peri-
ods and which may include standards to ensure that 
the entity does not use coercive practices to force 
providers not to contract with other entities offering 
coverage through the Health Insurance Exchange. 
(c) CONTRACTS.— 
(1) BID APPLICATION.—To be eligible to enter 
into a contract under this section, a QHBP offering 
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entity shall submit to the Commissioner a bid at 
such time, in such manner, and containing such in-
formation as the Commissioner may require. 
(2) TERM.—Each contract with a QHBP offer-
ing entity under this section shall be for a term of 
not less than one year, but may be made automati-
cally renewable from term to term in the absence of 
notice of termination by either party. 
(3) ENFORCEMENT OF NETWORK ADEQUACY.— 
In the case of a health benefits plan of a QHBP of-
fering entity that uses a provider network, the con-
tract under this section with the entity shall provide 
that if— 
(A) the Commissioner determines that 
such provider network does not meet such 
standards as the Commissioner shall establish 
under section 215; and 
(B) an individual enrolled in such plan re-
ceives an item or service from a provider that 
is not within such network; 
then any cost-sharing for such item or service shall 
be equal to the amount of such cost-sharing that 
would be imposed if such item or service was fur-
nished by a provider within such network. 
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(4) OVERSIGHT AND ENFORCEMENT RESPON-
SIBILITIES.—The Commissioner shall establish proc-
esses, in coordination with State insurance regu-
lators, to oversee, monitor, and enforce applicable re-
quirements of this title with respect to QHBP offer-
ing entities offering Exchange-participating health 
benefits plans, including the marketing of such 
plans. Such processes shall include the following: 
(A) GRIEVANCE AND COMPLAINT MECHA-
NISMS.—The Commissioner shall establish, in 
coordination with State insurance regulators, a 
process under which Exchange-eligible individ-
uals and employers may file complaints con-
cerning violations of such standards. 
(B) ENFORCEMENT.—In carrying out au-
thorities under this division relating to the 
Health Insurance Exchange, the Commissioner 
may impose one or more of the intermediate 
sanctions described in section 242(d). 
(C) TERMINATION.— 
(i) IN GENERAL.—The Commissioner 
may terminate a contract with a QHBP of-
fering entity under this section for the of-
fering of an Exchange-participating health 
benefits plan if such entity fails to comply 
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with the applicable requirements of this 
title. Any determination by the Commis-
sioner to terminate a contract shall be 
made in accordance with formal investiga-
tion and compliance procedures established 
by the Commissioner under which— 
(I) the Commissioner provides 
the entity with the reasonable oppor-
tunity to develop and implement a 
corrective action plan to correct the 
deficiencies that were the basis of the 
Commissioner’s determination; and 
(II) the Commissioner provides 
the entity with reasonable notice and 
opportunity for hearing (including the 
right to appeal an initial decision) be-
fore terminating the contract. 
(ii) EXCEPTION FOR IMMINENT AND 
SERIOUS
RISK
TO
HEALTH.—Clause (i) 
shall not apply if the Commissioner deter-
mines that a delay in termination, result-
ing from compliance with the procedures 
specified in such clause prior to termi-
nation, would pose an imminent and seri-
ous risk to the health of individuals en-
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rolled under the qualified health benefits 
plan of the QHBP offering entity. 
(D) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the ap-
plication of other sanctions under subtitle E of 
title II with respect to an entity for a violation 
of such a requirement. 
(5) SPECIAL RULE RELATED TO COST-SHARING 
AND INDIAN HEALTH CARE PROVIDERS.—The con-
tract under this section with a QHBP offering entity 
for a health benefits plan shall provide that if an in-
dividual who is an Indian is enrolled in such a plan 
and such individual receives a covered item or serv-
ice from an Indian health care provider (regardless 
of whether such provider is in the plan’s provider 
network), the cost-sharing for such item or service 
shall be equal to the amount of cost-sharing that 
would be imposed if such item or service— 
(A) had been furnished by another pro-
vider in the plan’s provider network; or 
(B) in the case that the plan has no such 
network, was furnished by a non-Indian pro-
vider. 
(6) NATIONAL PLAN.—Nothing in this section 
shall be construed as preventing the Commissioner 
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from entering into a contract under this subsection 
with a QHBP offering entity for the offering of a 
health benefits plan with the same benefits in every 
State so long as such entity is licensed to offer such 
plan in each State and the benefits meet the applica-
ble requirements in each such State. 
(d) NO DISCRIMINATION ON THE BASIS OF PROVI-
SION OF ABORTION.—No Exchange participating health 
benefits plan may discriminate against any individual 
health care provider or health care facility because of its 
unwillingness to provide, pay for, provide coverage of, or 
refer for abortions. 
SEC. 305. OUTREACH AND ENROLLMENT OF EXCHANGE-EL-
IGIBLE INDIVIDUALS AND EMPLOYERS IN EX-
CHANGE-PARTICIPATING HEALTH BENEFITS 
PLAN. 
(a) IN GENERAL.— 
(1) OUTREACH.—The Commissioner shall con-
duct outreach activities consistent with subsection 
(c), including through use of appropriate entities as 
described in paragraph (3) of such subsection, to in-
form and educate individuals and employers about 
the Health Insurance Exchange and Exchange-par-
ticipating health benefits plan options. Such out-
reach shall include outreach specific to vulnerable 
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populations, such as children, individuals with dis-
abilities, individuals with mental illness, and individ-
uals with other cognitive impairments. 
(2) ELIGIBILITY.—The Commissioner shall 
make timely determinations of whether individuals 
and employers are Exchange-eligible individuals and 
employers (as defined in section 302). 
(3) ENROLLMENT.—The Commissioner shall es-
tablish and carry out an enrollment process for Ex-
change-eligible individuals and employers, including 
at community locations, in accordance with sub-
section (b). 
(b) ENROLLMENT PROCESS.— 
(1) IN GENERAL.—The Commissioner shall es-
tablish a process consistent with this title for enroll-
ments in Exchange-participating health benefits 
plans. Such process shall provide for enrollment 
through means such as the mail, by telephone, elec-
tronically, and in person. 
(2) ENROLLMENT PERIODS.— 
(A) OPEN
ENROLLMENT
PERIOD.—The 
Commissioner shall establish an annual open 
enrollment period during which an Exchange-el-
igible individual or employer may elect to enroll 
in an Exchange-participating health benefits 
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plan for the following plan year and an enroll-
ment period for affordability credits under sub-
title C. Such periods shall be during September 
through November of each year, or such other 
time that would maximize timeliness of income 
verification for purposes of such subtitle. The 
open enrollment period shall not be less than 30 
days. 
(B) SPECIAL
ENROLLMENT.—The Com-
missioner shall also provide for special enroll-
ment periods to take into account special cir-
cumstances of individuals and employers, such 
as an individual who— 
(i) loses acceptable coverage; 
(ii) experiences a change in marital or 
other dependent status; 
(iii) moves outside the service area of 
the Exchange-participating health benefits 
plan in which the individual is enrolled; or 
(iv) experiences a significant change 
in income. 
(C) 
ENROLLMENT
INFORMATION.—The 
Commissioner shall provide for the broad dis-
semination of information to prospective enroll-
ees on the enrollment process, including before 
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each open enrollment period. In carrying out 
the previous sentence, the Commissioner may 
work with other appropriate entities to facilitate 
such provision of information. 
(3) AUTOMATIC ENROLLMENT FOR NON-MED-
ICAID ELIGIBLE INDIVIDUALS.— 
(A) IN
GENERAL.—The Commissioner 
shall provide for a process under which individ-
uals who are Exchange-eligible individuals de-
scribed in subparagraph (B) are automatically 
enrolled under an appropriate Exchange-partici-
pating health benefits plan. Such process may 
involve a random assignment or some other 
form of assignment that takes into account the 
health care providers used by the individual in-
volved or such other relevant factors as the 
Commissioner may specify. 
(B) 
SUBSIDIZED
INDIVIDUALS
DE-
SCRIBED.—An individual described in this sub-
paragraph is an Exchange-eligible individual 
who is either of the following: 
(i) AFFORDABILITY CREDIT ELIGIBLE 
INDIVIDUALS.—The individual— 
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(I) has applied for, and been de-
termined eligible for, affordability 
credits under subtitle C; 
(II) has not opted out from re-
ceiving such affordability credit; and 
(III) does not otherwise enroll in 
another Exchange-participating health 
benefits plan. 
(ii) INDIVIDUALS
ENROLLED
IN
A 
TERMINATED
PLAN.—The individual who 
is enrolled in an Exchange-participating 
health benefits plan that is terminated 
(during or at the end of a plan year) and 
who does not otherwise enroll in another 
Exchange-participating 
health 
benefits 
plan. 
(4) DIRECT
PAYMENT
OF
PREMIUMS
TO 
PLANS.—Under the enrollment process, individuals 
enrolled in an Exchange-participating health benefits 
plan shall pay such plans directly, and not through 
the Commissioner or the Health Insurance Ex-
change. 
(c) COVERAGE INFORMATION AND ASSISTANCE.— 
(1) COVERAGE
INFORMATION.—The Commis-
sioner shall provide for the broad dissemination of 
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information on Exchange-participating health bene-
fits plans offered under this title. Such information 
shall be provided in a comparative manner, and shall 
include information on benefits, premiums, cost- 
sharing, quality, provider networks, and consumer 
satisfaction. 
(2) CONSUMER ASSISTANCE WITH CHOICE.—To 
provide assistance to Exchange-eligible individuals 
and employers, the Commissioner shall— 
(A) provide for the operation of a toll-free 
telephone hotline to respond to requests for as-
sistance and maintain an Internet Web site 
through which individuals may obtain informa-
tion on coverage under Exchange-participating 
health benefits plans and file complaints; 
(B) develop and disseminate information to 
Exchange-eligible enrollees on their rights and 
responsibilities; 
(C) assist Exchange-eligible individuals in 
selecting Exchange-participating health benefits 
plans and obtaining benefits through such 
plans; and 
(D) ensure that the Internet Web site de-
scribed in subparagraph (A) and the informa-
tion described in subparagraph (B) is developed 
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using plain language (as defined in section 
233(a)(2)). 
(3) USE OF OTHER ENTITIES.—In carrying out 
this subsection, the Commissioner may work with 
other appropriate entities to facilitate the dissemina-
tion of information under this subsection and to pro-
vide assistance as described in paragraph (2). 
(d) COVERAGE
FOR CERTAIN NEWBORNS UNDER 
MEDICAID.— 
(1) IN GENERAL.—In the case of a child born 
in the United States who at the time of birth is not 
otherwise covered under acceptable coverage, for the 
period of time beginning on the date of birth and 
ending on the date the child otherwise is covered 
under acceptable coverage (or, if earlier, the end of 
the month in which the 60-day period, beginning on 
the date of birth, ends), the child shall be deemed— 
(A) to be a Medicaid eligible individual for 
purposes of this division and Medicaid; and 
(B) to be automatically enrolled in Med-
icaid as a traditional Medicaid eligible indi-
vidual (as defined in section 1943(c) of the So-
cial Security Act). 
(2) EXTENDED TREATMENT AS MEDICAID ELI-
GIBLE INDIVIDUAL.—In the case of a child described 
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in paragraph (1) who at the end of the period re-
ferred to in such paragraph is not otherwise covered 
under acceptable coverage, the child shall be deemed 
(until such time as the child obtains such coverage 
or the State otherwise makes a determination of the 
child’s eligibility for medical assistance under its 
Medicaid plan pursuant to section 1943(b)(1) of the 
Social Security Act) to be a Medicaid eligible indi-
vidual described in section 1902(l)(1)(B) of such 
Act. 
(e) MEDICAID COVERAGE FOR MEDICAID ELIGIBLE 
INDIVIDUALS.— 
(1) MEDICAID ENROLLMENT OBLIGATION.—An 
individual may apply, in the manner described in 
section 341(b)(1), for a determination of whether 
the individual is a Medicaid-eligible individual. If the 
individual is determined to be so eligible, the Com-
missioner, through the Medicaid memorandum of 
understanding under paragraph (2), shall provide 
for the enrollment of the individual under the State 
Medicaid plan in accordance with such memorandum 
of understanding. In the case of such an enrollment, 
the State shall provide for the same periodic redeter-
mination of eligibility under Medicaid as would oth-
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erwise apply if the individual had directly applied for 
medical assistance to the State Medicaid agency. 
(2) COORDINATED ENROLLMENT WITH STATE 
THROUGH
MEMORANDUM
OF
UNDERSTANDING.— 
The Commissioner, in consultation with the Sec-
retary of Health and Human Services, shall enter 
into a memorandum of understanding with each 
State with respect to coordinating enrollment of in-
dividuals in Exchange-participating health benefits 
plans and under the State’s Medicaid program con-
sistent with this section and to otherwise coordinate 
the implementation of the provisions of this division 
with respect to the Medicaid program. Such memo-
randum shall permit the exchange of information 
consistent with the limitations described in section 
1902(a)(7) of the Social Security Act. Nothing in 
this section shall be construed as permitting such 
memorandum to modify or vitiate any requirement 
of a State Medicaid plan. 
(f) EFFECTIVE CULTURALLY AND LINGUISTICALLY 
APPROPRIATE COMMUNICATION.—In carrying out this 
section, the Commissioner shall establish effective methods 
for communicating in plain language and a culturally and 
linguistically appropriate manner. 
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(g) ROLE
FOR ENROLLMENT AGENTS
AND BRO-
KERS.—Nothing in this division shall be construed to af-
fect the role of enrollment agents and brokers under State 
law, including with regard to the enrollment of individuals 
and employers in qualified health benefits plans including 
the public health insurance option. 
(h) ASSISTANCE FOR SMALL EMPLOYERS.— 
(1) IN GENERAL.—The Commissioner, in con-
sultation with the Small Business Administration, 
shall establish and carry out a program to provide 
to small employers counseling and technical assist-
ance with respect to the provision of health insur-
ance to employees of such employers through the 
Health Insurance Exchange. 
(2) DUTIES.—The program established under 
paragraph (1) shall include the following services: 
(A) Educational activities to increase 
awareness of the Health Insurance Exchange 
and available small employer health plan op-
tions. 
(B) Distribution of information to small 
employers with respect to the enrollment and 
selection process for health plans available 
under the Health Insurance Exchange, includ-
ing standardized comparative information on 
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the health plans available under the Health In-
surance Exchange. 
(C) Distribution of information to small 
employers with respect to available affordability 
credits or other financial assistance. 
(D) Referrals to appropriate entities of 
complaints and questions relating to the Health 
Insurance Exchange. 
(E) Enrollment and plan selection assist-
ance for employers with respect to the Health 
Insurance Exchange. 
(F) Responses to questions relating to the 
Health Insurance Exchange and the program 
established under paragraph (1). 
(3) AUTHORITY
TO
PROVIDE
SERVICES
DI-
RECTLY OR BY CONTRACT.—The Commissioner may 
provide services under paragraph (2) directly or by 
contract with nonprofit entities that the Commis-
sioner determines capable of carrying out such serv-
ices. 
(4) SMALL EMPLOYER DEFINED.—In this sub-
section, the term ‘‘small employer’’ means an em-
ployer with less than 100 employees. 
(i) PARTICIPATION OF SMALL EMPLOYER BENEFIT 
ARRANGEMENTS.— 
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(1) IN
GENERAL.—The Commissioner may 
enter into contracts with small employer benefit ar-
rangements to provide consumer information, out-
reach, and assistance in the enrollment of small em-
ployers (and their employees) who are members of 
such an arrangement under Exchange participating 
health benefits plans. 
(2) SMALL EMPLOYER BENEFIT ARRANGEMENT 
DEFINED.—In this subsection, the term ‘‘small em-
ployer benefit arrangement’’ means a not-for-profit 
agricultural or other cooperative that— 
(A) consists solely of its members and is 
operated for the primary purpose of providing 
affordable employee benefits to its members; 
(B) only has as members small employers 
in the same industry or line of business; 
(C) has no member that has more than a 
5 percent voting interest in the cooperative; and 
(D) is governed by a board of directors 
elected by its members. 
SEC. 306. OTHER FUNCTIONS. 
(a) COORDINATION OF AFFORDABILITY CREDITS.— 
The Commissioner shall coordinate the distribution of af-
fordability premium and cost-sharing credits under sub-
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title C to QHBP offering entities offering Exchange-par-
ticipating health benefits plans. 
(b) COORDINATION OF RISK POOLING.—The Com-
missioner shall establish a mechanism whereby there is an 
adjustment made of the premium amounts payable among 
QHBP offering entities offering Exchange-participating 
health benefits plans of premiums collected for such plans 
that takes into account (in a manner specified by the Com-
missioner) the differences in the risk characteristics of in-
dividuals and employees enrolled under the different Ex-
change-participating health benefits plans offered by such 
entities so as to minimize the impact of adverse selection 
of enrollees among the plans offered by such entities. For 
purposes of the previous sentence, the Commissioner may 
utilize data regarding enrollee demographics, inpatient 
and outpatient diagnoses (in a similar manner as such 
data are used under parts C and D of title XVIII of the 
Social Security Act), and such other information as the 
Secretary determines may be necessary, such as the actual 
medical costs of enrollees during the previous year. 
SEC. 307. HEALTH INSURANCE EXCHANGE TRUST FUND. 
(a) ESTABLISHMENT OF HEALTH INSURANCE EX-
CHANGE TRUST FUND.—There is created within the 
Treasury of the United States a trust fund to be known 
as the ‘‘Health Insurance Exchange Trust Fund’’ (in this 
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section referred to as the ‘‘Trust Fund’’), consisting of 
such amounts as may be appropriated or credited to the 
Trust Fund under this section or any other provision of 
law. 
(b) PAYMENTS FROM TRUST FUND.—The Commis-
sioner shall pay from time to time from the Trust Fund 
such amounts as the Commissioner determines are nec-
essary to make payments to operate the Health Insurance 
Exchange, including payments under subtitle C (relating 
to affordability credits). 
(c) TRANSFERS TO TRUST FUND.— 
(1) DEDICATED PAYMENTS.—There are hereby 
appropriated to the Trust Fund amounts equivalent 
to the following: 
(A) TAXES ON INDIVIDUALS NOT OBTAIN-
ING ACCEPTABLE COVERAGE.—The amounts re-
ceived in the Treasury under section 59B of the 
Internal Revenue Code of 1986 (relating to re-
quirement of health insurance coverage for indi-
viduals). 
(B) EMPLOYMENT TAXES ON EMPLOYERS 
NOT PROVIDING ACCEPTABLE COVERAGE.—The 
amounts received in the Treasury under sec-
tions 3111(c) and 3221(c) of the Internal Rev-
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enue Code of 1986 (relating to employers elect-
ing to not provide health benefits). 
(C) EXCISE TAX ON FAILURES TO MEET 
CERTAIN
HEALTH
COVERAGE
REQUIRE-
MENTS.—The amounts received in the Treasury 
under section 4980H(b) (relating to excise tax 
with respect to failure to meet health coverage 
participation requirements). 
(2) APPROPRIATIONS TO COVER GOVERNMENT 
CONTRIBUTIONS.—There are hereby appropriated, 
out of any moneys in the Treasury not otherwise ap-
propriated, to the Trust Fund, an amount equivalent 
to the amount of payments made from the Trust 
Fund under subsection (b) plus such amounts as are 
necessary reduced by the amounts deposited under 
paragraph (1). 
(d) APPLICATION OF CERTAIN RULES.—Rules simi-
lar to the rules of subchapter B of chapter 98 of the Inter-
nal Revenue Code of 1986 shall apply with respect to the 
Trust Fund. 
SEC. 308. OPTIONAL OPERATION OF STATE-BASED HEALTH 
INSURANCE EXCHANGES. 
(a) IN GENERAL.—If— 
(1) a State (or group of States, subject to the 
approval of the Commissioner) applies to the Com-
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missioner for approval of a State-based Health In-
surance Exchange to operate in the State (or group 
of States); and 
(2) the Commissioner approves such State- 
based Health Insurance Exchange, 
then, subject to subsections (c) and (d), the State-based 
Health Insurance Exchange shall operate, instead of the 
Health Insurance Exchange, with respect to such State 
(or group of States). The Commissioner shall approve a 
State-based Health Insurance Exchange if it meets the re-
quirements for approval under subsection (b). 
(b) REQUIREMENTS FOR APPROVAL.— 
(1) IN GENERAL.—The Commissioner may not 
approve a State-based Health Insurance Exchange 
under this section unless the following requirements 
are met: 
(A) The State-based Health Insurance Ex-
change must demonstrate the capacity to and 
provide assurances satisfactory to the Commis-
sioner that the State-based Health Insurance 
Exchange will carry out the functions specified 
for the Health Insurance Exchange in the State 
(or States) involved, including— 
(i) negotiating and contracting with 
QHBP offering entities for the offering of 
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Exchange-participating 
health 
benefits 
plans, which satisfy the standards and re-
quirements of this title and title II; 
(ii) enrolling Exchange-eligible indi-
viduals and employers in such State in 
such plans; 
(iii) the establishment of sufficient 
local offices to meet the needs of Ex-
change-eligible individuals and employers; 
(iv) administering affordability credits 
under subtitle B using the same meth-
odologies (and at least the same income 
verification methods) as would otherwise 
apply under such subtitle and at a cost to 
the Federal Government which does exceed 
the cost to the Federal Government if this 
section did not apply; and 
(v) enforcement activities consistent 
with Federal requirements. 
(B) There is no more than one Health In-
surance Exchange operating with respect to any 
one State. 
(C) The State provides assurances satisfac-
tory to the Commissioner that approval of such 
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an Exchange will not result in any net increase 
in expenditures to the Federal Government. 
(D) The State provides for reporting of 
such information as the Commissioner deter-
mines and assurances satisfactory to the Com-
missioner that it will vigorously enforce viola-
tions of applicable requirements. 
(E) Such other requirements as the Com-
missioner may specify. 
(2) PRESUMPTION FOR CERTAIN STATE-OPER-
ATED EXCHANGES.— 
(A) IN GENERAL.—In the case of a State 
operating an Exchange prior to January 1, 
2010, that seeks to operate the State-based 
Health Insurance Exchange under this section, 
the Commissioner shall presume that such Ex-
change meets the standards under this section 
unless the Commissioner determines, after com-
pletion of the process established under sub-
paragraph (B), that the Exchange does not 
comply with such standards. 
(B) PROCESS.—The Commissioner shall 
establish a process to work with a State de-
scribed in subparagraph (A) to provide assist-
ance necessary to assure that the State’s Ex-
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change comes into compliance with the stand-
ards for approval under this section. 
(c) CEASING OPERATION.— 
(1) IN GENERAL.—A State-based Health Insur-
ance Exchange may, at the option of each State in-
volved, and only after providing timely and reason-
able notice to the Commissioner, cease operation as 
such an Exchange, in which case the Health Insur-
ance Exchange shall operate, instead of such State- 
based Health Insurance Exchange, with respect to 
such State (or States). 
(2) TERMINATION; HEALTH
INSURANCE
EX-
CHANGE RESUMPTION OF FUNCTIONS.—The Com-
missioner may terminate the approval (for some or 
all functions) of a State-based Health Insurance Ex-
change under this section if the Commissioner deter-
mines that such Exchange no longer meets the re-
quirements of subsection (b) or is no longer capable 
of carrying out such functions in accordance with 
the requirements of this subtitle. In lieu of termi-
nating such approval, the Commissioner may tempo-
rarily assume some or all functions of the State- 
based Health Insurance Exchange until such time as 
the 
Commissioner 
determines 
the 
State-based 
Health Insurance Exchange meets such require-
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ments of subsection (b) and is capable of carrying 
out such functions in accordance with the require-
ments of this subtitle. 
(3) EFFECTIVENESS.—The ceasing or termi-
nation of a State-based Health Insurance Exchange 
under this subsection shall be effective in such time 
and manner as the Commissioner shall specify. 
(d) RETENTION OF AUTHORITY.— 
(1) AUTHORITY RETAINED.—Enforcement au-
thorities of the Commissioner shall be retained by 
the Commissioner. 
(2) DISCRETION TO RETAIN ADDITIONAL AU-
THORITY.—The Commissioner may specify functions 
of the Health Insurance Exchange that— 
(A) may not be performed by a State- 
based Health Insurance Exchange under this 
section; or 
(B) may be performed by the Commis-
sioner and by such a State-based Health Insur-
ance Exchange. 
(e) REFERENCES.—In the case of a State-based 
Health Insurance Exchange, except as the Commissioner 
may otherwise specify under subsection (d), any references 
in this subtitle to the Health Insurance Exchange or to 
the Commissioner in the area in which the State-based 
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Health Insurance Exchange operates shall be deemed a 
reference to the State-based Health Insurance Exchange 
and the head of such Exchange, respectively. 
(f) FUNDING.—In the case of a State-based Health 
Insurance Exchange, there shall be assistance provided for 
the operation of such Exchange in the form of a matching 
grant with a State share of expenditures required. 
SEC. 309. INTERSTATE HEALTH INSURANCE COMPACTS. 
(a) IN GENERAL.—Effective January 1, 2015, 2 or 
more States may form Health Care Choice Compacts (in 
this section referred to as ‘‘compacts’’) to facilitate the 
purchase of individual health insurance coverage across 
State lines. 
(b) MODEL GUIDELINES.—The Secretary of Health 
and Human Services (in this section referred to as the 
‘‘Secretary’’) shall consult with the National Association 
of Insurance Commissioners (in this section referred to as 
‘‘NAIC’’) to develop not later than January 1, 2014, 
model guidelines for the creation of compacts. In devel-
oping such guidelines, the Secretary shall consult with 
consumers, health insurance issuers, and other interested 
parties. Such guidelines shall— 
(1) provide for the sale of health insurance cov-
erage to residents of all compacting States subject to 
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the laws and regulations of a primary State des-
ignated by the compacting States; 
(2) require health insurance issuers issuing 
health insurance coverage in secondary States to 
maintain licensure in every such State; 
(3) preserve the authority of the State of an in-
dividual’s residence to enforce law relating to— 
(A) market conduct; 
(B) unfair trade practices; 
(C) network adequacy; 
(D) consumer protection standards; 
(E) grievance and appeals; 
(F) fair claims payment requirements; 
(G) prompt payment of claims; 
(H) rate review; and 
(I) fraud. 
(4) permit State insurance commissioners and 
other State agencies in secondary States access to 
the records of a health insurance issuer to the same 
extent as if the policy were written in that State; 
and 
(5) provide for clear and conspicuous disclosure 
to consumers that the policy may not be subject to 
all the laws and regulations of the State in which 
the purchaser resides. 
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(c) NO REQUIREMENT TO COMPACT.—Nothing in 
this section shall be construed to require a State to join 
a compact. 
(d) STATE AUTHORITY.—A State may not enter into 
a compact under this subsection unless the State enacts 
a law after the date of enactment of this Act that specifi-
cally authorizes the State to enter into such compact. 
(e) CONSUMER PROTECTIONS.—If a State enters into 
a compact it must retain responsibility for the consumer 
protections of its residents and its residents retain the 
right to bring a claim in a State court in the State in 
which the resident resides. 
(f) ASSISTANCE TO COMPACTING STATES.— 
(1) IN GENERAL.—Beginning January 1, 2015, 
the Secretary shall make awards, from amounts ap-
propriated under paragraph (5), to States in the 
amount specified in paragraph (2) for the uses de-
scribed in paragraph (3). 
(2) AMOUNT SPECIFIED.— 
(A) IN GENERAL.—For each fiscal year, 
the Secretary shall determine the total amount 
that the Secretary will make available for 
grants under this subsection. 
(B) STATE AMOUNT.—For each State that 
is awarded a grant under paragraph (1), the 
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amount of such grants shall be based on a for-
mula established by the Secretary, not to exceed 
$1 million per State, under which States shall 
receive an award in the amount that is based 
on the following two components: 
(i) A minimum amount for each 
State. 
(ii) An additional amount based on 
population of the State. 
(3) USE
OF
FUNDS.—A State shall use 
amounts awarded under this subsection for activities 
(including planning activities) related regulating 
health insurance coverage sold in secondary States. 
(4) RENEWABILITY OF GRANT.—The Secretary 
may renew a grant award under paragraph (1) if the 
State receiving the grant continues to be a member 
of a compact. 
(5) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated such sums 
as may be necessary to carry out this subsection in 
each of fiscal years 2015 through 2020. 
SEC. 310. HEALTH INSURANCE COOPERATIVES. 
(a) ESTABLISHMENT.—Not later than 6 months after 
the date of the enactment of this Act, the Commissioner, 
in consultation with the Secretary of the Treasury, shall 
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establish a Consumer Operated and Oriented Plan pro-
gram (in this section referred to as the ‘‘CO–OP pro-
gram’’) under which the Commissioner may make grants 
and loans for the establishment and initial operation of 
not-for-profit, member–run health insurance cooperatives 
(in this section individually referred to as a ‘‘cooperative’’) 
that provide insurance through the Health Insurance Ex-
change or a State-based Health Insurance Exchange 
under section 308. Nothing in this section shall be con-
strued as requiring a State to establish such a cooperative. 
(b) 
START-UP
AND
SOLVENCY
GRANTS
AND 
LOANS.— 
(1) IN GENERAL.—Not later than 36 months 
after the date of the enactment of this Act, the 
Commissioner, acting through the CO–OP program, 
may make— 
(A) loans (of such period and with such 
terms as the Secretary may specify) to coopera-
tives to assist such cooperatives with start-up 
costs; and 
(B) grants to cooperatives to assist such 
cooperatives in meeting State solvency require-
ments in the States in which such cooperative 
offers or issues insurance coverage. 
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(2) CONDITIONS.—A grant or loan may not be 
awarded under this subsection with respect to a co-
operative unless the following conditions are met: 
(A) The cooperative is structured as a not- 
for-profit, member organization under the law 
of each State in which such cooperative offers, 
intends to offer, or issues insurance coverage, 
with the membership of the cooperative being 
made up entirely of beneficiaries of the insur-
ance coverage offered by such cooperative. 
(B) The cooperative did not offer insur-
ance on or before July 16, 2009, and the coop-
erative is not an affiliate or successor to an in-
surance company offering insurance on or be-
fore such date. 
(C) The governing documents of the coop-
erative incorporate ethical and conflict of inter-
est standards designed to protect against insur-
ance industry involvement and interference in 
the governance of the cooperative. 
(D) The cooperative is not sponsored by a 
State government. 
(E) Substantially all of the activities of the 
cooperative consist of the issuance of qualified 
health benefits plans through the Health Insur-
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ance Exchange or a State-based health insur-
ance exchange. 
(F) The cooperative is licensed to offer in-
surance in each State in which it offers insur-
ance. 
(G) The governance of the cooperative 
must be subject to a majority vote of its mem-
bers. 
(H) As provided in guidance issued by the 
Secretary of Health and Human Services, the 
cooperative operates with a strong consumer 
focus, including timeliness, responsiveness, and 
accountability to members. 
(I) Any profits made by the cooperative 
are used to lower premiums, improve benefits, 
or to otherwise improve the quality of health 
care delivered to members. 
(3) PRIORITY.—The Commissioner, in making 
grants and loans under this subsection, shall give 
priority to cooperatives that— 
(A) operate on a statewide basis; 
(B) use an integrated delivery system; or 
(C) have a significant level of financial 
support from nongovernmental sources. 
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(4) RULES
OF
CONSTRUCTION.—Nothing in 
this section shall be construed to prevent a coopera-
tive established in one State from integrating with a 
cooperative established in another State the adminis-
tration, issuance of coverage, or other activities re-
lated to acting as a QHBP offering entity. Nothing 
in this section shall be construed as preventing State 
governments from taking actions to permit such in-
tegration. 
(5) AMORTIZATION OF GRANTS AND LOANS.— 
The Secretary shall provide for the repayment of 
grants or loans provided under this subsection to the 
Treasury in an amortized manner over a 10-year pe-
riod. 
(6) REPAYMENT FOR VIOLATIONS OF TERMS OF 
PROGRAM.—If a cooperative violates the terms of the 
CO–OP program and fails to correct the violation 
within a reasonable period of time, as determined by 
the Commissioner, the cooperative shall repay the 
total amount of any loan or grant received by such 
cooperative under this section, plus interest (at a 
rate determined by the Secretary). 
(7) AUTHORIZATION
OF
APPROPRIATIONS.— 
There 
is 
authorized 
to 
be 
appropriated 
$5,000,000,000 for the period of fiscal years 2010 
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through 2014 to provide for grants and loans under 
this subsection. 
(c) DEFINITIONS.—For purposes of this section: 
(1) STATE.—The term ‘‘State’’ means each of 
the 50 States and the District of Columbia. 
(2) MEMBER.—The term ‘‘member’’, with re-
spect to a cooperative, means an individual who, 
after the cooperative offers health insurance cov-
erage, is enrolled in such coverage. 
SEC. 311. RETENTION OF DOD AND VA AUTHORITY. 
Nothing in this subtitle shall be construed as affect-
ing any authority under title 38, United States Code, or 
chapter 55 of title 10, United States Code. 
Subtitle B—Public Health 
Insurance Option 
SEC. 321. ESTABLISHMENT AND ADMINISTRATION OF A 
PUBLIC HEALTH INSURANCE OPTION AS AN 
EXCHANGE-QUALIFIED 
HEALTH 
BENEFITS 
PLAN. 
(a) ESTABLISHMENT.—For years beginning with Y1, 
the Secretary of Health and Human Services (in this sub-
title referred to as the ‘‘Secretary’’) shall provide for the 
offering of an Exchange-participating health benefits plan 
(in this division referred to as the ‘‘public health insurance 
option’’) that ensures choice, competition, and stability of 
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affordable, high quality coverage throughout the United 
States in accordance with this subtitle. In designing the 
option, the Secretary’s primary responsibility is to create 
a low-cost plan without compromising quality or access to 
care. 
(b) OFFERING
AS
AN EXCHANGE-PARTICIPATING 
HEALTH BENEFITS PLAN.— 
(1) EXCLUSIVE TO THE EXCHANGE.—The pub-
lic health insurance option shall only be made avail-
able through the Health Insurance Exchange. 
(2) ENSURING A LEVEL PLAYING FIELD.—Con-
sistent with this subtitle, the public health insurance 
option shall comply with requirements that are ap-
plicable under this title to an Exchange-participating 
health benefits plan, including requirements related 
to benefits, benefit levels, provider networks, notices, 
consumer protections, and cost-sharing. 
(3) PROVISION OF BENEFIT LEVELS.—The pub-
lic health insurance option— 
(A) shall offer basic, enhanced, and pre-
mium plans; and 
(B) may offer premium-plus plans. 
(c) ADMINISTRATIVE CONTRACTING.—The Secretary 
may enter into contracts for the purpose of performing 
administrative functions (including functions described in 
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subsection (a)(4) of section 1874A of the Social Security 
Act) with respect to the public health insurance option in 
the same manner as the Secretary may enter into con-
tracts under subsection (a)(1) of such section. The Sec-
retary has the same authority with respect to the public 
health insurance option as the Secretary has under sub-
sections (a)(1) and (b) of section 1874A of the Social Se-
curity Act with respect to title XVIII of such Act. Con-
tracts under this subsection shall not involve the transfer 
of insurance risk to such entity. 
(d) OMBUDSMAN.—The Secretary shall establish an 
office of the ombudsman for the public health insurance 
option which shall have duties with respect to the public 
health insurance option similar to the duties of the Medi-
care Beneficiary Ombudsman under section 1808(c)(2) of 
the Social Security Act. 
(e) DATA COLLECTION.—The Secretary shall collect 
such data as may be required to establish premiums and 
payment rates for the public health insurance option and 
for other purposes under this subtitle, including to im-
prove quality and to reduce racial, ethnic, and other dis-
parities in health and health care. Nothing in this subtitle 
may be construed as authorizing the Secretary (or any em-
ployee or contractor) to create or maintain lists of non- 
medical personal property. 
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(f) TREATMENT OF PUBLIC HEALTH INSURANCE OP-
TION.—With respect to the public health insurance option, 
the Secretary shall be treated as a QHBP offering entity 
offering an Exchange-participating health benefits plan. 
(g) ACCESS TO FEDERAL COURTS.—The provisions 
of Medicare (and related provisions of title II of the Social 
Security Act) relating to access of Medicare beneficiaries 
to Federal courts for the enforcement of rights under 
Medicare, including with respect to amounts in con-
troversy, shall apply to the public health insurance option 
and individuals enrolled under such option under this title 
in the same manner as such provisions apply to Medicare 
and Medicare beneficiaries. 
SEC. 322. PREMIUMS AND FINANCING. 
(a) ESTABLISHMENT OF PREMIUMS.— 
(1) IN GENERAL.—The Secretary shall establish 
geographically adjusted premium rates for the public 
health insurance option— 
(A) in a manner that complies with the 
premium rules established by the Commissioner 
under section 213 for Exchange-participating 
health benefits plans; and 
(B) at a level sufficient to fully finance the 
costs of— 
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(i) health benefits provided by the 
public health insurance option; and 
(ii) administrative costs related to op-
erating the public health insurance option. 
(2) CONTINGENCY
MARGIN.—In establishing 
premium rates under paragraph (1), the Secretary 
shall include an appropriate amount for a contin-
gency margin (which shall be not less than 90 days 
of estimated claims). Before setting such appropriate 
amount for years starting with Y3, the Secretary 
shall solicit a recommendation on such amount from 
the American Academy of Actuaries. 
(b) ACCOUNT.— 
(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States an Account for 
the receipts and disbursements attributable to the 
operation of the public health insurance option, in-
cluding the start-up funding under paragraph (2). 
Section 1854(g) of the Social Security Act shall 
apply to receipts described in the previous sentence 
in the same manner as such section applies to pay-
ments or premiums described in such section. 
(2) START-UP FUNDING.— 
(A) IN GENERAL.—In order to provide for 
the establishment of the public health insurance 
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option, there is hereby appropriated to the Sec-
retary, out of any funds in the Treasury not 
otherwise appropriated, $2,000,000,000. In 
order to provide for initial claims reserves be-
fore the collection of premiums, there are here-
by appropriated to the Secretary, out of any 
funds in the Treasury not otherwise appro-
priated, such sums as necessary to cover 90 
days worth of claims reserves based on pro-
jected enrollment. 
(B) AMORTIZATION
OF
START-UP
FUND-
ING.—The Secretary shall provide for the re-
payment of the startup funding provided under 
subparagraph (A) to the Treasury in an amor-
tized manner over the 10-year period beginning 
with Y1. 
(C) LIMITATION ON FUNDING.—Nothing in 
this section shall be construed as authorizing 
any additional appropriations to the Account, 
other than such amounts as are otherwise pro-
vided with respect to other Exchange-partici-
pating health benefits plans. 
(3) NO BAILOUTS.—In no case shall the public 
health insurance option receive any Federal funds 
for purposes of insolvency in any manner similar to 
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the manner in which entities receive Federal funding 
under the Troubled Assets Relief Program of the 
Secretary of the Treasury. 
SEC. 323. PAYMENT RATES FOR ITEMS AND SERVICES. 
(a) NEGOTIATION OF PAYMENT RATES.— 
(1) IN GENERAL.—The Secretary shall nego-
tiate payment for the public health insurance option 
for health care providers and items and services, in-
cluding prescription drugs, consistent with this sec-
tion and section 324. 
(2) MANNER OF NEGOTIATION.—The Secretary 
shall negotiate such rates in a manner that results 
in payment rates that are not lower, in the aggre-
gate, than rates under title XVIII of the Social Se-
curity Act, and not higher, in the aggregate, than 
the average rates paid by other QHBP offering enti-
ties for services and health care providers. 
(3) INNOVATIVE PAYMENT METHODS.—Nothing 
in this subsection shall be construed as preventing 
the use of innovative payment methods such as those 
described in section 324 in connection with the nego-
tiation of payment rates under this subsection. 
(4) TREATMENT
OF
CERTAIN
STATE
WAIV-
ERS.—In the case of any State operating a cost-con-
tainment waiver for health care providers in accord-
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ance with section 1814(b)(3) of the Social Security 
Act, the Secretary shall provide for payment to such 
providers under the public health insurance option 
consistent with the provisions and requirements of 
that waiver. 
(b) ESTABLISHMENT OF A PROVIDER NETWORK.— 
(1) IN GENERAL.—Health care providers (in-
cluding physicians and hospitals) participating in 
Medicare are participating providers in the public 
health insurance option unless they opt out in a 
process established by the Secretary consistent with 
this subsection. 
(2) REQUIREMENTS FOR OPT-OUT PROCESS.— 
Under the process established under paragraph 
(1)— 
(A) providers described in such paragraph 
shall be provided at least a 1-year period prior 
to the first day of Y1 to opt out of participating 
in the public health insurance option; 
(B) no provider shall be subject to a pen-
alty for not participating in the public health 
insurance option; 
(C) the Secretary shall include information 
on how providers participating in Medicare who 
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chose to opt out of participating in the public 
health insurance option may opt back in; and 
(D) there shall be an annual enrollment 
period in which providers may decide whether 
to participate in the public health insurance op-
tion. 
(3) RULEMAKING.—Not later than 18 months 
before the first day of Y1, the Secretary shall pro-
mulgate rules (pursuant to notice and comment) for 
the process described in paragraph (1). 
(c) LIMITATIONS ON REVIEW.—There shall be no ad-
ministrative or judicial review of a payment rate or meth-
odology established under this section or under section 
324. 
SEC. 324. MODERNIZED PAYMENT INITIATIVES AND DELIV-
ERY SYSTEM REFORM. 
(a) IN GENERAL.—For plan years beginning with Y1, 
the Secretary may utilize innovative payment mechanisms 
and policies to determine payments for items and services 
under the public health insurance option. The payment 
mechanisms and policies under this section may include 
patient-centered medical home and other care manage-
ment payments, accountable care organizations, value- 
based purchasing, bundling of services, differential pay-
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ment rates, performance or utilization based payments, 
partial capitation, and direct contracting with providers. 
(b) REQUIREMENTS FOR INNOVATIVE PAYMENTS.— 
The Secretary shall design and implement the payment 
mechanisms and policies under this section in a manner 
that— 
(1) seeks to— 
(A) improve health outcomes; 
(B) reduce health disparities (including ra-
cial, ethnic, and other disparities); 
(C) provide efficient and affordable care; 
(D) address geographic variation in the 
provision of health services; or 
(E) prevent or manage chronic illness; and 
(2) promotes care that is integrated, patient- 
centered, quality, and efficient. 
(c) ENCOURAGING THE USE OF HIGH VALUE SERV-
ICES.—To the extent allowed by the benefit standards ap-
plied to all Exchange-participating health benefits plans, 
the public health insurance option may modify cost-shar-
ing and payment rates to encourage the use of services 
that promote health and value. 
(d) PROMOTION OF DELIVERY SYSTEM REFORM.— 
The Secretary shall monitor and evaluate the progress of 
payment and delivery system reforms under this Act and 
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shall seek to implement such reforms subject to the fol-
lowing: 
(1) To the extent that the Secretary finds a 
payment and delivery system reform successful in 
improving quality and reducing costs, the Secretary 
shall implement such reform on as large a geo-
graphic scale as practical and economical. 
(2) The Secretary may delay the implementa-
tion of such a reform in geographic areas in which 
such implementation would place the public health 
insurance option at a competitive disadvantage. 
(3) The Secretary may prioritize implementa-
tion of such a reform in high cost geographic areas 
or otherwise in order to reduce total program costs 
or to promote high value care. 
(e) NON-UNIFORMITY PERMITTED.—Nothing in this 
subtitle shall prevent the Secretary from varying payments 
based on different payment structure models (such as ac-
countable care organizations and medical homes) under 
the public health insurance option for different geographic 
areas. 
SEC. 325. PROVIDER PARTICIPATION. 
(a) IN GENERAL.—The Secretary shall establish con-
ditions of participation for health care providers under the 
public health insurance option. 
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(b) LICENSURE OR CERTIFICATION.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall not allow a health 
care provider to participate in the public health in-
surance option unless such provider is appropriately 
licensed, certified, or otherwise permitted to practice 
under State law. 
(2) SPECIAL RULE FOR IHS FACILITIES AND 
PROVIDERS.—The requirements under paragraph (1) 
shall not apply to— 
(A) a facility that is operated by the In-
dian Health Service; 
(B) a facility operated by an Indian Tribe 
or tribal organization under the Indian Self-De-
termination Act (Public Law 93–638); 
(C) a health care professional employed by 
the Indian Health Service; or 
(D) a health care professional— 
(i) who is employed to provide health 
care services in a facility operated by an 
Indian Tribe or tribal organization under 
the Indian Self-Determination Act; and 
(ii) who is licensed or certified in any 
State. 
(c) PAYMENT TERMS FOR PROVIDERS.— 
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(1) PHYSICIANS.—The Secretary shall provide 
for the annual participation of physicians under the 
public health insurance option, for which payment 
may be made for services furnished during the year, 
in one of 2 classes: 
(A) PREFERRED PHYSICIANS.—Those phy-
sicians who agree to accept the payment under 
section 323 (without regard to cost-sharing) as 
the payment in full. 
(B) 
PARTICIPATING, 
NON-PREFERRED 
PHYSICIANS.—Those physicians who agree not 
to impose charges (in relation to the payment 
described in section 323 for such physicians) 
that exceed the sum of the in-network cost- 
sharing plus 15 percent of the total payment 
for each item and service. The Secretary shall 
reduce the payment described in section 323 for 
such physicians. 
(2) OTHER
PROVIDERS.—The Secretary shall 
provide for the participation (on an annual or other 
basis specified by the Secretary) of health care pro-
viders (other than physicians) under the public 
health insurance option under which payment shall 
only be available if the provider agrees to accept the 
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payment under section 323 (without regard to cost- 
sharing) as the payment in full. 
(d) EXCLUSION OF CERTAIN PROVIDERS.—The Sec-
retary shall exclude from participation under the public 
health insurance option a health care provider that is ex-
cluded from participation in a Federal health care pro-
gram (as defined in section 1128B(f) of the Social Secu-
rity Act). 
SEC. 326. APPLICATION OF FRAUD AND ABUSE PROVI-
SIONS. 
Provisions of civil law identified by the Secretary by 
regulation, in consultation with the Inspector General of 
the Department of Health and Human Services, that im-
pose sanctions with respect to waste, fraud, and abuse 
under Medicare, such as sections 3729 through 3733 of 
title 31, United States Code (commonly known as the 
False Claims Act), shall also apply to the public health 
insurance option. 
SEC. 327. APPLICATION OF HIPAA INSURANCE REQUIRE-
MENTS. 
The requirements of sections 2701 through 2792 of 
the Public Health Service Act shall apply to the public 
health insurance option in the same manner as they apply 
to health insurance coverage offered by a health insurance 
issuer in the individual market. 
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SEC. 328. APPLICATION OF HEALTH INFORMATION PRI-
VACY, SECURITY, AND ELECTRONIC TRANS-
ACTION REQUIREMENTS. 
Part C of title XI of the Social Security Act, relating 
to standards for protections against the wrongful disclo-
sure of individually identifiable health information, health 
information security, and the electronic exchange of health 
care information, shall apply to the public health insur-
ance option in the same manner as such part applies to 
other health plans (as defined in section 1171(5) of such 
Act). 
SEC. 329. ENROLLMENT IN PUBLIC HEALTH INSURANCE 
OPTION IS VOLUNTARY. 
Nothing in this division shall be construed as requir-
ing anyone to enroll in the public health insurance option. 
Enrollment in such option is voluntary. 
SEC. 330. ENROLLMENT IN PUBLIC HEALTH INSURANCE 
OPTION BY MEMBERS OF CONGRESS. 
Notwithstanding any other provision of this Act, 
Members of Congress may enroll in the public health in-
surance option. 
SEC. 331. REIMBURSEMENT OF SECRETARY OF VETERANS 
AFFAIRS. 
The Secretary of Health and Human Services shall 
seek to enter into a memorandum of understanding with 
the Secretary of Veterans Affairs regarding the recovery 
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of costs related to non-service-connected care or services 
provided by the Secretary of Veterans Affairs to an indi-
vidual covered under the public health insurance option 
in a manner consistent with recovery of costs related to 
non-service-connected care from private health insurance 
plans. 
Subtitle C—Individual 
Affordability Credits 
SEC. 341. AVAILABILITY THROUGH HEALTH INSURANCE EX-
CHANGE. 
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this subtitle, in the case of an affordable credit 
eligible individual enrolled in an Exchange-participating 
health benefits plan— 
(1) the individual shall be eligible for, in accord-
ance with this subtitle, affordability credits con-
sisting of— 
(A) an affordability premium credit under 
section 343 to be applied against the premium 
for the Exchange-participating health benefits 
plan in which the individual is enrolled; and 
(B) an affordability cost-sharing credit 
under section 344 to be applied as a reduction 
of the cost-sharing otherwise applicable to such 
plan; and 
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(2) the Commissioner shall pay the QHBP of-
fering entity that offers such plan from the Health 
Insurance Exchange Trust Fund the aggregate 
amount of affordability credits for all affordable 
credit eligible individuals enrolled in such plan. 
(b) APPLICATION.— 
(1) IN GENERAL.—An Exchange eligible indi-
vidual may apply to the Commissioner through the 
Health Insurance Exchange or through another enti-
ty under an arrangement made with the Commis-
sioner, in a form and manner specified by the Com-
missioner. The Commissioner through the Health 
Insurance Exchange or through another public enti-
ty under an arrangement made with the Commis-
sioner shall make a determination as to eligibility of 
an individual for affordability credits under this sub-
title. The Commissioner shall establish a process 
whereby, on the basis of information otherwise avail-
able, individuals may be deemed to be affordable 
credit eligible individuals. In carrying this subtitle, 
the Commissioner shall establish effective methods 
that ensure that individuals with limited English 
proficiency are able to apply for affordability credits. 
(2) USE
OF
STATE
MEDICAID
AGENCIES.—If 
the Commissioner determines that a State Medicaid 
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agency has the capacity to make a determination of 
eligibility for affordability credits under this subtitle 
and under the same standards as used by the Com-
missioner, under the Medicaid memorandum of un-
derstanding under section 305(e)(2)— 
(A) the State Medicaid agency is author-
ized to conduct such determinations for any Ex-
change-eligible individual who requests such a 
determination; and 
(B) the Commissioner shall reimburse the 
State Medicaid agency for the costs of con-
ducting such determinations. 
(3) MEDICAID SCREEN AND ENROLL OBLIGA-
TION.—In the case of an application made under 
paragraph (1), there shall be a determination of 
whether the individual is a Medicaid-eligible indi-
vidual. If the individual is determined to be so eligi-
ble, the Commissioner, through the Medicaid memo-
randum of understanding under section 305(e)(2), 
shall provide for the enrollment of the individual 
under the State Medicaid plan in accordance with 
such Medicaid memorandum of understanding. In 
the case of such an enrollment, the State shall pro-
vide for the same periodic redetermination of eligi-
bility under Medicaid as would otherwise apply if the 
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individual had directly applied for medical assistance 
to the State Medicaid agency. 
(4) APPLICATION
AND
VERIFICATION
OF
RE-
QUIREMENT OF CITIZENSHIP OR LAWFUL PRESENCE 
IN THE UNITED STATES.— 
(A) REQUIREMENT.—No individual shall 
be an affordable credit eligible individual (as 
defined in section 342(a)(1)) unless the indi-
vidual is a citizen or national of the United 
States or is lawfully present in a State in the 
United States (other than as a nonimmigrant 
described in a subparagraph (excluding sub-
paragraphs (K), (T), (U), and (V)) of section 
101(a)(15) of the Immigration and Nationality 
Act). 
(B) DECLARATION
OF
CITIZENSHIP
OR 
LAWFUL IMMIGRATION STATUS.—No individual 
shall be an affordable credit eligible individual 
unless there has been a declaration made, in a 
form and manner specified by the Health 
Choices Commissioner similar to the manner re-
quired under section 1137(d)(1) of the Social 
Security Act and under penalty of perjury, that 
the individual— 
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(i) is a citizen or national of the 
United States; or 
(ii) is not such a citizen or national 
but is lawfully present in a State in the 
United States (other than as a non-
immigrant described in a subparagraph 
(excluding subparagraphs (K), (T), (U), 
and (V)) of section 101(a)(15) of the Im-
migration and Nationality Act). 
Such declaration shall be verified in accordance 
with subparagraph (C) or (D), as the case may 
be. 
(C) VERIFICATION
PROCESS
FOR
CITI-
ZENS.— 
(i) IN GENERAL.—In the case of an 
individual making the declaration described 
in subparagraph (B)(i), subject to clause 
(ii), section 1902(ee) of the Social Security 
Act shall apply to such declaration in the 
same manner as such section applies to a 
declaration described in paragraph (1) of 
such section. 
(ii) SPECIAL RULES.—In applying sec-
tion 1902(ee) of such Act under clause 
(i)— 
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(I) any reference in such section 
to a State is deemed a reference to 
the Commissioner (or other public en-
tity making the eligibility determina-
tion); 
(II) any reference to medical as-
sistance or enrollment under a State 
plan is deemed a reference to provi-
sion of affordability credits under this 
subtitle; 
(III) a reference to a newly en-
rolled individual under paragraph 
(2)(A) of such section is deemed a ref-
erence to an individual newly in re-
ceipt of an affordability credit under 
this subtitle; 
(IV) approval by the Secretary 
shall not be required in applying para-
graph (2)(B)(ii) of such section; 
(V) paragraph (3) of such section 
shall not apply; and 
(VI) before the end of Y2, the 
Health Choices Commissioner, in con-
sultation with the Commissioner of 
Social Security, may extend the peri-
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ods specified in paragraph (1)(B)(ii) 
of such section. 
(D) VERIFICATION PROCESS FOR NONCITI-
ZENS.— 
(i) IN GENERAL.—In the case of an 
individual making the declaration described 
in subparagraph (B)(ii), subject to clause 
(ii), the verification procedures of para-
graphs (2) through (5) of section 1137(d) 
of the Social Security Act shall apply to 
such declaration in the same manner as 
such procedures apply to a declaration de-
scribed in paragraph (1) of such section. 
(ii) SPECIAL
RULES.—In applying 
such paragraphs of section 1137(d) of such 
Act under clause (i)— 
(I) any reference in such para-
graphs to a State is deemed a ref-
erence to the Health Choices Commis-
sioner; and 
(II) any reference to benefits 
under a program is deemed a ref-
erence to affordability credits under 
this subtitle. 
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(iii) APPLICATION
TO
STATE-BASED 
EXCHANGES.—In the case of the applica-
tion of the verification process under this 
subparagraph to a State-based Health In-
surance Exchange approved under section 
308, section 1137(e) of such Act shall 
apply to the Health Choices Commissioner 
in relation to the State. 
(E) 
ANNUAL
REPORTS.—The 
Health 
Choices Commissioner shall report to Congress 
annually on the number of applicants for af-
fordability credits under this subtitle, their citi-
zenship or immigration status, and the disposi-
tion of their applications. Such report shall be 
made publicly available and shall include infor-
mation on— 
(i) the number of applicants whose 
declaration of citizenship or immigration 
status, name, or social security account 
number was not consistent with records 
maintained by the Commissioner of Social 
Security or the Department of Homeland 
Security and, of such applicants, the num-
ber who contested the inconsistency and 
sought to document their citizenship or im-
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migration status, name, or social security 
account number or to correct the informa-
tion maintained in such records and, of 
those, the results of such contestations; 
and 
(ii) the administrative costs of con-
ducting the status verification under this 
paragraph. 
(F) GAO REPORT.—Not later than the end 
of Y2, the Comptroller General of the United 
States shall submit to the Committee on Ways 
and Means, the Committee on Energy and 
Commerce, the Committee on Education and 
Labor, and the Committee on the Judiciary of 
the House of Representatives and the Com-
mittee on Finance, the Committee on Health, 
Education, Labor, and Pensions, and the Com-
mittee on the Judiciary of the Senate a report 
examining the effectiveness of the citizenship 
and immigration verification systems applied 
under this paragraph. Such report shall include 
an analysis of the following: 
(i) The causes of erroneous deter-
minations under such systems. 
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able without fiscal year limit to carry out 
this paragraph and section 205(v) of the 
Social Security Act. 
(ii) FUNDING
LIMITATION.—In no 
case shall funds from the Social Security 
Administration’s Limitation on Adminis-
trative Expenses be used to carry out ac-
tivities related to this paragraph or section 
205(v) of the Social Security Act. 
(5) AGREEMENT WITH SOCIAL SECURITY COM-
MISSIONER.— 
(A) IN
GENERAL.—The Health Choices 
Commissioner shall enter into and maintain an 
agreement described in section 205(v)(2) of the 
Social Security Act with the Commissioner of 
Social Security. 
(B) FUNDING.—The agreement entered 
into under subparagraph (A) shall, for each fis-
cal year (beginning with fiscal year 2013)— 
(i) provide funds to the Commissioner 
of Social Security for the full costs of the 
responsibilities of the Commissioner of So-
cial Security under paragraph (4), includ-
ing— 
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(I) 
acquiring, 
installing, 
and 
maintaining technological equipment 
and systems necessary for the fulfill-
ment of the responsibilities of the 
Commissioner 
of 
Social 
Security 
under paragraph (4), but only that 
portion of such costs that are attrib-
utable to such responsibilities; and 
(II) responding to individuals 
who contest with the Commissioner of 
Social Security a reported inconsist-
ency with records maintained by the 
Commissioner of Social Security or 
the Department of Homeland Security 
relating to citizenship or immigration 
status, name, or social security ac-
count number under paragraph (4); 
(ii) based on an estimating method-
ology agreed to by the Commissioner of 
Social Security and the Health Choices 
Commissioner, provide such funds, within 
10 calendar days of the beginning of the 
fiscal year for the first quarter and in ad-
vance for all subsequent quarters in that 
fiscal year; and 
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(iii) provide for an annual accounting 
and reconciliation of the actual costs in-
curred and the funds provided under the 
agreement. 
(C) REVIEW
OF
ACCOUNTING.—The an-
nual accounting and reconciliation conducted 
pursuant to subparagraph (B)(iii) shall be re-
viewed by the Inspectors General of the Social 
Security Administration and the Health Choices 
Administration, including an analysis of consist-
ency with the requirements of paragraph (4). 
(D) CONTINGENCY.—In any case in which 
agreement with respect to the provisions re-
quired under subparagraph (B) for any fiscal 
year has not been reached as of the first day 
of such fiscal year, the latest agreement with 
respect to such provisions shall be deemed in ef-
fect on an interim basis for such fiscal year 
until such time as an agreement relating to 
such provisions is subsequently reached. In any 
case in which an interim agreement applies for 
any fiscal year under this subparagraph, the 
Commissioner of Social Security shall, not later 
than the first day of such fiscal year, notify the 
appropriate Committees of the Congress of the 
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failure to reach the agreement with respect to 
such provisions for such fiscal year. Until such 
time as the agreement with respect to such pro-
visions has been reached for such fiscal year, 
the Commissioner of Social Security shall, not 
later than the end of each 90-day period after 
October 1 of such fiscal year, notify such Com-
mittees of the status of negotiations between 
such Commissioner and the Health Choices 
Commissioner in order to reach such an agree-
ment. 
(E) APPLICATION
TO
PUBLIC
ENTITIES 
ADMINISTERING
AFFORDABILITY
CREDITS.—If 
the Health Choices Commissioner provides for 
the conduct of verifications under paragraph 
(4) through a public entity, the Health Choices 
Commissioner shall require the public entity to 
enter into an agreement with the Commissioner 
of Social Security which provides the same 
terms as the agreement described in this para-
graph (and section 205(v) of the Social Security 
Act) between the Health Choices Commissioner 
and the Commissioner of Social Security, except 
that the Health Choices Commissioner shall be 
responsible for providing funds for the Commis-
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sioner of Social Security in accordance with 
subparagraphs (B) through (D). 
(6) AMENDMENTS TO SOCIAL SECURITY ACT.— 
(A) COORDINATION OF INFORMATION BE-
TWEEN SOCIAL SECURITY ADMINISTRATION AND 
HEALTH CHOICES ADMINISTRATION.— 
(i) IN GENERAL.—Section 205 of the 
Social Security Act (42 U.S.C. 405) is 
amended by adding at the end the fol-
lowing new subsection: 
‘‘Coordination of Information With Health Choices 
Administration 
‘‘(v)(1) The Health Choices Commissioner may col-
lect and use the names and social security account num-
bers of individuals as required to provide for verification 
of citizenship under subsection (b)(4)(C) of section 341 
of the Affordable Health Care for America Act in connec-
tion with determinations of eligibility for affordability 
credits under such section. 
‘‘(2)(A) The Commissioner of Social Security shall 
enter into and maintain an agreement with the Health 
Choices Commissioner for the purpose of establishing, in 
compliance with the requirements of section 1902(ee) as 
applied pursuant to section 341(b)(4)(C) of the Affordable 
Health Care for America Act, a program for verifying in-
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formation required to be collected by the Health Choices 
Commissioner under such section 341(b)(4)(C). 
‘‘(B) The agreement entered into pursuant to sub-
paragraph (A) shall include such safeguards as are nec-
essary to ensure the maintenance of confidentiality of any 
information disclosed for purposes of verifying information 
described in subparagraph (A) and to provide procedures 
for permitting the Health Choices Commissioner to use 
the information for purposes of maintaining the records 
of the Health Choices Administration. 
‘‘(C) The agreement entered into pursuant to sub-
paragraph (A) shall provide that information provided by 
the Commissioner of Social Security to the Health Choices 
Commissioner pursuant to the agreement shall be provided 
at such time, at such place, and in such manner as the 
Commissioner of Social Security determines appropriate. 
‘‘(D) Information provided by the Commissioner of 
Social Security to the Health Choices Commissioner pur-
suant to an agreement entered into pursuant to subpara-
graph (A) shall be considered as strictly confidential and 
shall be used only for the purposes described in this para-
graph and for carrying out such agreement. Any officer 
or employee or former officer or employee of the Health 
Choices Commissioner, or any officer or employee or 
former officer or employee of a contractor of the Health 
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Choices Commissioner, who, without the written authority 
of the Commissioner of Social Security, publishes or com-
municates any information in such individual’s possession 
by reason of such employment or position as such an offi-
cer shall be guilty of a felony and, upon conviction thereof, 
shall be fined or imprisoned, or both, as described in sec-
tion 208. 
‘‘(3) The agreement entered into under paragraph (2) 
shall provide for funding to the Commissioner of Social 
Security consistent with section 341(b)(5) of Affordable 
Health Care for America Act. 
‘‘(4) This subsection shall apply in the case of a pub-
lic entity that conducts verifications under section 
341(b)(4) of the Affordable Health Care for America Act 
and the obligations of this subsection shall apply to such 
an entity in the same manner as such obligations apply 
to the Health Choices Commissioner when such Commis-
sioner is conducting such verifications.’’. 
(ii) CONFORMING AMENDMENT.—Sec-
tion 205(c)(2)(C) of such Act (42 U.S.C. 
405(c)(2)(C)) is amended by adding at the 
end the following new clause: 
‘‘(x) For purposes of the administration of the 
verification procedures described in section 341(b)(4) of 
the Affordable Health Care for America Act, the Health 
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Choices Commissioner may collect and use social security 
account numbers as provided for in section 205(v)(1).’’. 
(B) IMPROVING THE INTEGRITY OF DATA 
AND EFFECTIVENESS OF SAVE PROGRAM.—Sec-
tion 1137(d) of the Social Security Act (42 
U.S.C. 1320b–7(d)) is amended by adding at 
the end the following new paragraphs: 
‘‘(6)(A) With respect to the use by any agency of the 
system described in subsection (b) by programs specified 
in subsection (b) or any other use of such system, the 
United States Citizenship and Immigration Services and 
any other agency charged with the management of the sys-
tem shall establish appropriate safeguards necessary to 
protect and improve the integrity and accuracy of data 
relating to individuals by— 
‘‘(i) establishing a process through which such 
individuals are provided access to, and the ability to 
amend, correct, and update, their own personally 
identifiable information contained within the system; 
‘‘(ii) providing a written response, without 
undue delay, to any individual who has made such 
a request to amend, correct, or update such individ-
ual’s own personally identifiable information con-
tained within the system; and 
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‘‘(iii) developing a written notice for user agen-
cies to provide to individuals who are denied a ben-
efit due to a determination of ineligibility based on 
a final verification determination under the system. 
‘‘(B) The notice described in subparagraph (A)(ii) 
shall include— 
‘‘(i) information about the reason for such no-
tice; 
‘‘(ii) a description of the right of the recipient 
of the notice under subparagraph (A)(i) to contest 
such notice; 
‘‘(iii) a description of the right of the recipient 
under subparagraph (A)(i) to access and attempt to 
amend, correct, and update the recipient’s own per-
sonally identifiable information contained within 
records of the system described in paragraph (3); 
and 
‘‘(iv) instructions on how to contest such notice 
and attempt to correct records of such system relat-
ing to the recipient, including contact information 
for relevant agencies.’’. 
(C) STREAMLINING
ADMINISTRATION
OF 
VERIFICATION
PROCESS
FOR
UNITED
STATES 
CITIZENS.—Section 1902(ee)(2) of the Social 
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Security Act (42 U.S.C. 1396a(ee)(2)) is 
amended by adding at the end the following: 
‘‘(D) In carrying out the verification procedures 
under this subsection with respect to a State, if the Com-
missioner of Social Security determines that the records 
maintained by such Commissioner are not consistent with 
an individual’s allegation of United States citizenship, 
pursuant to procedures which shall be established by the 
State in coordination with the Commissioner of Social Se-
curity, the Secretary of Homeland Security, and the Sec-
retary of Health and Human Services— 
‘‘(i) the Commissioner of Social Security shall 
inform the State of the inconsistency; 
‘‘(ii) upon being so informed of the inconsist-
ency, the State shall submit the information on the 
individual to the Secretary of Homeland Security for 
a determination of whether the records of the De-
partment of Homeland Security indicate that the in-
dividual is a citizen; 
‘‘(iii) upon making such determination, the De-
partment of Homeland Security shall inform the 
State of such determination; and 
‘‘(iv) information provided by the Commissioner 
of Social Security shall be considered as strictly con-
fidential and shall only be used by the State and the 
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Secretary of Homeland Security for the purposes of 
such verification procedures. 
‘‘(E) Verification of status eligibility pursuant to the 
procedures established under this subsection shall be 
deemed a verification of status eligibility for purposes of 
this title, title XXI, and affordability credits under section 
341(b)(4) of the Affordable Health Care for America Act, 
regardless of the program in which the individual is apply-
ing for benefits.’’. 
(c) USE OF AFFORDABILITY CREDITS.— 
(1) IN GENERAL.—In Y1 and Y2 an affordable 
credit eligible individual may use an affordability 
credit only with respect to a basic plan. 
(2) FLEXIBILITY
IN
PLAN
ENROLLMENT
AU-
THORIZED.—Beginning with Y3, the Commissioner 
shall establish a process to allow an affordability 
premium credit under section 343, but not the af-
fordability cost-sharing credit under section 344, to 
be used for enrollees in enhanced or premium plans. 
In the case of an affordable credit eligible individual 
who enrolls in an enhanced or premium plan, the in-
dividual shall be responsible for any difference be-
tween the premium for such plan and the afford-
ability credit amount otherwise applicable if the indi-
vidual had enrolled in a basic plan. 
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(d) ACCESS TO DATA.—In carrying out this subtitle, 
the Commissioner shall request from the Secretary of the 
Treasury consistent with section 6103 of the Internal Rev-
enue Code of 1986 such information as may be required 
to carry out this subtitle. 
(e) NO CASH REBATES.—In no case shall an afford-
able credit eligible individual receive any cash payment as 
a result of the application of this subtitle. 
SEC. 342. AFFORDABLE CREDIT ELIGIBLE INDIVIDUAL. 
(a) DEFINITION.— 
(1) IN GENERAL.—For purposes of this divi-
sion, the term ‘‘affordable credit eligible individual’’ 
means, subject to subsection (b) and section 346, an 
individual who is lawfully present in a State in the 
United States (other than as a nonimmigrant de-
scribed in a subparagraph (excluding subparagraphs 
(K), (T), (U), and (V)) of section 101(a)(15) of the 
Immigration and Nationality Act)— 
(A) who is enrolled under an Exchange- 
participating health benefits plan and is not en-
rolled under such plan as an employee (or de-
pendent of an employee) through an employer 
qualified health benefits plan that meets the re-
quirements of section 412; 
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(B) with modified adjusted gross income 
below 400 percent of the Federal poverty level 
for a family of the size involved; 
(C) who is not a Medicaid eligible indi-
vidual, other than an individual during a transi-
tion period under section 302(d)(3)(B)(ii); and 
(D) subject to paragraph (3), who is not 
enrolled in acceptable coverage (other than an 
Exchange-participating health benefits plan). 
(2) TREATMENT
OF
FAMILY.—Except as the 
Commissioner may otherwise provide, members of 
the same family who are affordable credit eligible in-
dividuals shall be treated as a single affordable cred-
it individual eligible for the applicable credit for such 
a family under this subtitle. 
(3) SPECIAL
RULE
FOR
INDIANS.—Subpara-
graph (D) of paragraph (1) shall not apply to an in-
dividual who has coverage that is treated as accept-
able coverage for purposes of section 59B(d)(2) of 
the Internal Revenue Code of 1986 but is not treat-
ed as acceptable coverage for purposes of this divi-
sion. 
(b) LIMITATIONS ON EMPLOYEE AND DEPENDENT 
DISQUALIFICATION.— 
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(1) IN GENERAL.—Subject to paragraph (2), 
the term ‘‘affordable credit eligible individual’’ does 
not include a full-time employee of an employer if 
the employer offers the employee coverage (for the 
employee and dependents) as a full-time employee 
under a group health plan if the coverage and em-
ployer contribution under the plan meet the require-
ments of section 412. 
(2) EXCEPTIONS.— 
(A) 
FOR
CERTAIN
FAMILY
CIR-
CUMSTANCES.—The Commissioner shall estab-
lish such exceptions and special rules in the 
case described in paragraph (1) as may be ap-
propriate in the case of a divorced or separated 
individual or such a dependent of an employee 
who would otherwise be an affordable credit eli-
gible individual. 
(B) FOR UNAFFORDABLE EMPLOYER COV-
ERAGE.—Beginning in Y2, in the case of full- 
time employees for which the cost of the em-
ployee premium for coverage under a group 
health plan would exceed 12 percent of current 
modified adjusted gross income (determined by 
the Commissioner on the basis of verifiable doc-
umentation), paragraph (1) shall not apply. 
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(c) INCOME DEFINED.— 
(1) IN GENERAL.—In this title, the term ‘‘in-
come’’ means modified adjusted gross income (as de-
fined in section 59B of the Internal Revenue Code 
of 1986). 
(2) STUDY
OF
INCOME
DISREGARDS.—The 
Commissioner shall conduct a study that examines 
the application of income disregards for purposes of 
this subtitle. Not later than the first day of Y2, the 
Commissioner shall submit to Congress a report on 
such study and shall include such recommendations 
as the Commissioner determines appropriate. 
(d) CLARIFICATION
OF TREATMENT
OF AFFORD-
ABILITY CREDITS.—Affordability credits under this sub-
title shall not be treated, for purposes of title IV of the 
Personal Responsibility and Work Opportunity Reconcili-
ation Act of 1996, to be a benefit provided under section 
403 of such title. 
SEC. 343. AFFORDABILITY PREMIUM CREDIT. 
(a) IN GENERAL.—The affordability premium credit 
under this section for an affordable credit eligible indi-
vidual enrolled in an Exchange-participating health bene-
fits plan is in an amount equal to the amount (if any) 
by which the reference premium amount specified in sub-
section (c), exceeds the affordable premium amount speci-
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fied in subsection (b) for the individual, except that in no 
case shall the affordable premium credit exceed the pre-
mium for the plan. 
(b) AFFORDABLE PREMIUM AMOUNT.— 
(1) IN
GENERAL.—The affordable premium 
amount specified in this subsection for an individual 
for the annual premium in a plan year shall be equal 
to the product of— 
(A) the premium percentage limit specified 
in paragraph (2) for the individual based upon 
the individual’s modified adjusted gross income 
for the plan year; and 
(B) the individual’s modified adjusted 
gross income for such plan year. 
(2) PREMIUM PERCENTAGE LIMITS BASED ON 
TABLE.—The Commissioner shall establish premium 
percentage limits so that for individuals whose modi-
fied adjusted gross income is within an income tier 
specified in the table in subsection (d) such percent-
age limits shall increase, on a sliding scale in a lin-
ear manner, from the initial premium percentage to 
the final premium percentage specified in such table 
for such income tier. 
(c) REFERENCE PREMIUM AMOUNT.—The reference 
premium amount specified in this subsection for a plan 
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year for an individual in a premium rating area is equal 
to the average premium for the 3 basic plans in the area 
for the plan year with the lowest premium levels. In com-
puting such amount the Commissioner may exclude plans 
with extremely limited enrollments. 
(d) TABLE OF PREMIUM PERCENTAGE LIMITS, AC-
TUARIAL VALUE PERCENTAGES, AND OUT-OF-POCKET 
LIMITS FOR Y1 BASED ON INCOME TIER.— 
(1) IN GENERAL.—For purposes of this sub-
title, subject to paragraph (3) and section 346, the 
table specified in this subsection is as follows: 
In the case of 
modified adjusted 
gross income (ex-
pressed as a per-
cent of FPL) with-
in the following in-
come tier: 
The initial 
premium 
percentage 
is— 
The final 
premium 
percentage 
is— 
The actu-
arial value 
percentage 
is— 
The out-of- 
pocket limit 
for Y1 is— 
133% through 
150% 
1.5% 
3.0% 
97% 
$500 
150% through 
200% 
3.0% 
5.5% 
93% 
$1,000 
200% through 
250% 
5.5% 
8.0% 
85% 
$2,000 
250% through 
300% 
8.0% 
10.0% 
78% 
$4,000 
300% through 
350% 
10.0% 
11.0% 
72% 
$4,500 
350% through 
400% 
11.0% 
12.0% 
70% 
$5,000 
(2) SPECIAL RULES.—For purposes of applying 
the table under paragraph (1): 
(A) FOR LOWEST LEVEL OF INCOME.—In 
the case of an individual with income that does 
not exceed 133 percent of FPL, the individual 
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shall be considered to have income that is 133 
percent of FPL. 
(B) APPLICATION OF HIGHER ACTUARIAL 
VALUE
PERCENTAGE
AT
TIER
TRANSITION 
POINTS.—If two actuarial value percentages 
may be determined with respect to an indi-
vidual, the actuarial value percentage shall be 
the higher of such percentages. 
(3) INDEXING.—For years after Y1, the Com-
missioner shall adjust the initial and final premium 
percentages to maintain the ratio of governmental to 
enrollee shares of premiums over time, for each in-
come tier identified in the table in paragraph (1). 
SEC. 344. AFFORDABILITY COST-SHARING CREDIT. 
(a) IN GENERAL.—The affordability cost-sharing 
credit under this section for an affordable credit eligible 
individual enrolled in an Exchange-participating health 
benefits plan is in the form of the cost-sharing reduction 
described in subsection (b) provided under this section for 
the income tier in which the individual is classified based 
on the individual’s modified adjusted gross income. 
(b) COST-SHARING
REDUCTIONS.—The Commis-
sioner shall specify a reduction in cost-sharing amounts 
and the annual limitation on cost-sharing specified in sec-
tion 222(c)(2)(B) under a basic plan for each income tier 
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specified in the table under section 343(d), with respect 
to a year, in a manner so that, as estimated by the Com-
missioner— 
(1) the actuarial value of the coverage with 
such reduced cost-sharing amounts (and the reduced 
annual cost-sharing limit) is equal to the actuarial 
value percentage (specified in the table under section 
343(d) for the income tier involved) of the full actu-
arial value if there were no cost-sharing imposed 
under the plan; and 
(2) the annual limitation on cost-sharing speci-
fied in section 222(c)(2)(B) is reduced to a level 
that does not exceed the maximum out-of-pocket 
limit specified in subsection (c). 
(c) MAXIMUM OUT-OF-POCKET LIMIT.— 
(1) IN GENERAL.—Subject to paragraph (2), 
the maximum out-of-pocket limit specified in this 
subsection for an individual within an income tier— 
(A) for individual coverage— 
(i) for Y1 is the out-of-pocket limit 
for Y1 specified in subsection (c) in the 
table under section 343(d) for the income 
tier involved; or 
(ii) for a subsequent year is such out- 
of-pocket limit for the previous year under 
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this subparagraph increased (rounded to 
the nearest $10) for each subsequent year 
by the percentage increase in the enroll-
ment-weighted average of premium in-
creases for basic plans applicable to such 
year; or 
(B) for family coverage is twice the max-
imum out-of-pocket limit under subparagraph 
(A) for the year involved. 
(2) ADJUSTMENT.—The Commissioner shall ad-
just the maximum out-of-pocket limits under para-
graph (1) to ensure that such limits meet the actu-
arial value percentage specified in the table under 
section 343(d) for the income tier involved. 
(d) DETERMINATION AND PAYMENT OF COST-SHAR-
ING AFFORDABILITY CREDIT.—In the case of an afford-
able credit eligible individual in a tier enrolled in an Ex-
change-participating health benefits plan offered by a 
QHBP offering entity, the Commissioner shall provide for 
payment to the offering entity of an amount equivalent 
to the increased actuarial value of the benefits under the 
plan provided under section 303(c)(2)(B) resulting from 
the reduction in cost-sharing described in subsections (b) 
and (c). 
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SEC. 345. INCOME DETERMINATIONS. 
(a) IN GENERAL.—In applying this subtitle for an 
affordability credit for an individual for a plan year, the 
individual’s income shall be the income (as defined in sec-
tion 342(c)) for the individual for the most recent taxable 
year (as determined in accordance with rules of the Com-
missioner). The Federal poverty level applied shall be such 
level in effect as of the date of the application. 
(b) PROGRAM INTEGRITY; INCOME VERIFICATION 
PROCEDURES.— 
(1) PROGRAM INTEGRITY.—The Commissioner 
shall take such steps as may be appropriate to en-
sure the accuracy of determinations and redeter-
minations under this subtitle. 
(2) INCOME VERIFICATION.— 
(A) IN GENERAL.—Upon an initial applica-
tion of an individual for an affordability credit 
under this subtitle (or in applying section 
342(b)) or upon an application for a change in 
the affordability credit based upon a significant 
change in modified adjusted gross income de-
scribed in subsection (c)(1)— 
(i) the Commissioner shall request 
from the Secretary of the Treasury the dis-
closure to the Commissioner of such infor-
mation as may be permitted to verify the 
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information contained in such application; 
and 
(ii) the Commissioner shall use the in-
formation so disclosed to verify such infor-
mation. 
(B) 
ALTERNATIVE
PROCEDURES.—The 
Commissioner shall establish procedures for the 
verification of income for purposes of this sub-
title if no income tax return is available for the 
most recent completed tax year. 
(c) SPECIAL RULES.— 
(1) CHANGES IN INCOME AS A PERCENT OF 
FPL.—In the case that an individual’s income (ex-
pressed as a percentage of the Federal poverty level 
for a family of the size involved) for a plan year is 
expected (in a manner specified by the Commis-
sioner) to be significantly different from the income 
(as so expressed) used under subsection (a), the 
Commissioner shall establish rules requiring an indi-
vidual to report, consistent with the mechanism es-
tablished under paragraph (2), significant changes 
in such income (including a significant change in 
family composition) to the Commissioner and requir-
ing the substitution of such income for the income 
otherwise applicable. 
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(2) REPORTING OF SIGNIFICANT CHANGES IN 
INCOME.—The Commissioner shall establish rules 
under which an individual determined to be an af-
fordable credit eligible individual would be required 
to inform the Commissioner when there is a signifi-
cant change in the modified adjusted gross income 
of the individual (expressed as a percentage of the 
FPL for a family of the size involved) and of the in-
formation regarding such change. Such mechanism 
shall provide for guidelines that specify the cir-
cumstances that qualify as a significant change, the 
verifiable information required to document such a 
change, and the process for submission of such in-
formation. If the Commissioner receives new infor-
mation from an individual regarding the modified 
adjusted gross income of the individual, the Commis-
sioner shall provide for a redetermination of the in-
dividual’s eligibility to be an affordable credit eligible 
individual. 
(3) TRANSITION FOR CHIP.—In the case of a 
child described in section 302(d)(4), the Commis-
sioner shall establish rules under which the modified 
adjusted gross income of the child is deemed to be 
no greater than the family income of the child as 
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most recently determined before Y1 by the State 
under title XXI of the Social Security Act. 
(4) STUDY OF GEOGRAPHIC VARIATION IN AP-
PLICATION OF FPL.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall conduct a 
study to examine the feasibility and implication 
of adjusting the application of the Federal pov-
erty level under this subtitle for different geo-
graphic areas so as to reflect the variations in 
cost-of-living among different areas within the 
United States. If the Secretary determines that 
an adjustment is feasible, the study should in-
clude a methodology to make such an adjust-
ment. Not later than the first day of Y1, the 
Secretary shall submit to Congress a report on 
such study and shall include such recommenda-
tions as the Secretary determines appropriate. 
(B) INCLUSION OF TERRITORIES.— 
(i) IN GENERAL.—The Secretary shall 
ensure that the study under subparagraph 
(A) covers the territories of the United 
States and that special attention is paid to 
the disparity that exists among poverty lev-
els and the cost of living in such territories 
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and to the impact of such disparity on ef-
forts to expand health coverage and ensure 
health care. 
(ii) TERRITORIES DEFINED.—In this 
subparagraph, the term ‘‘territories of the 
United States’’ includes the Common-
wealth of Puerto Rico, the United States 
Virgin Islands, Guam, the Northern Mar-
iana Islands, and any other territory or 
possession of the United States. 
(d) PENALTIES FOR MISREPRESENTATION.—In the 
case of an individual who intentionally misrepresents 
modified adjusted gross income or the individual fails 
(without regard to intent) to disclose to the Commissioner 
a significant change in modified adjusted gross income 
under subsection (c) in a manner that results in the indi-
vidual becoming an affordable credit eligible individual 
when the individual is not or in the amount of the afford-
ability credit exceeding the correct amount— 
(1) the individual is liable for repayment of the 
amount of the improper affordability credit; and 
(2) in the case of such an intentional misrepre-
sentation or other egregious circumstances specified 
by the Commissioner, the Commissioner may impose 
an additional penalty. 
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SEC. 346. SPECIAL RULES FOR APPLICATION TO TERRI-
TORIES. 
(a) ONE-TIME ELECTION FOR TREATMENT AND AP-
PLICATION OF FUNDING.— 
(1) IN GENERAL.—A territory may elect, in a 
form and manner specified by the Commissioner in 
consultation with the Secretary of Health and 
Human Services and the Secretary of the Treasury 
and not later than October 1, 2012, either— 
(A) to be treated as a State for purposes 
of applying this title and title II; or 
(B) not to be so treated but instead, to 
have the dollar limitation otherwise applicable 
to the territory under subsections (f) and (g) of 
section 1108 of the Social Security Act (42 
U.S.C. 1308) for a fiscal year increased by a 
dollar amount equivalent to the cap amount de-
termined under subsection (c)(2) for the terri-
tory as applied by the Secretary for the fiscal 
year involved. 
(2) CONDITIONS FOR ACCEPTANCE.—The Com-
missioner has the nonreviewable authority to accept 
or reject an election described in paragraph (1)(A). 
Any such acceptance is— 
(A) contingent upon entering into an 
agreement described in subsection (b) between 
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the Commissioner and the territory and sub-
section (c); and 
(B) subject to the approval of the Sec-
retary of Health and Human Services and the 
Secretary of the Treasury and subject to such 
other terms and conditions as the Commis-
sioner, in consultation with such Secretaries, 
may specify. 
(3) DEFAULT
RULE.—A territory failing to 
make such an election (or having an election under 
paragraph (1)(A) not accepted under paragraph (2)) 
shall be treated as having made the election de-
scribed in paragraph (1)(B). 
(b) AGREEMENT FOR SUBSTITUTION OF PERCENT-
AGES FOR AFFORDABILITY CREDITS.— 
(1) NEGOTIATION.—In the case of a territory 
making an election under subsection (a)(1)(A) (in 
this section referred to as an ‘‘electing territory’’), 
the Commissioner, in consultation with the Secre-
taries of Health and Human Services and the Treas-
ury, shall enter into negotiations with the govern-
ment of such territory so that, before Y1, there is 
an agreement reached between the parties on the 
percentages that shall be applied under paragraph 
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(2) for that territory. The Commissioner shall not 
enter into such an agreement unless— 
(A) payments made under this subtitle 
with respect to residents of the territory are 
consistent with the cap established under sub-
section (c) for such territory and with sub-
section (d); and 
(B) the requirements of paragraphs (3) 
and (4) are met. 
(2) APPLICATION
OF
SUBSTITUTE
PERCENT-
AGES AND DOLLAR AMOUNTS.—In the case of an 
electing territory, there shall be substituted in sec-
tion 342(a)(1)(B) and in the table in section 
341(d)(1) for 400 percent, 133 percent, and other 
percentages and dollar amounts specified in such 
table, such respective percentages and dollar 
amounts as are established under the agreement 
under paragraph (1) consistent with the following: 
(A) NO INCOME GAP BETWEEN MEDICAID 
AND
AFFORDABILITY
CREDITS.—The 
sub-
stituted percentages shall be specified in a man-
ner so as to prevent any gap in coverage for in-
dividuals between income level at which medical 
assistance is available through Medicaid and 
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the income level at which affordability credits 
are available. 
(B) ADJUSTMENT
FOR
OUT-OF-POCKET 
RESPONSIBILITY
FOR
PREMIUMS
AND
COST- 
SHARING IN RELATION TO INCOME.—The sub-
stituted percentages of FPL for income tiers 
under such table shall be specified in a manner 
so that— 
(i) affordable credit eligible individ-
uals residing in the territory bear the same 
out-of-pocket responsibility for premiums 
and cost-sharing in relation to average in-
come for residents in that territory, as 
(ii) the out-of-pocket responsibility for 
premiums and cost-sharing for affordable 
credit eligible individuals residing in the 50 
States or the District of Columbia in rela-
tion to average income for such residents. 
(3) SPECIAL RULES WITH RESPECT TO APPLI-
CATION OF TAX AND PENALTY PROVISIONS.—The 
electing territory shall enact one or more laws under 
which provisions similar to the following provisions 
apply with respect to such territory: 
(A) Section 59B of the Internal Revenue 
Code of 1986, except that any resident of the 
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territory who is not an affordable credit eligible 
individual but who would be an affordable cred-
it eligible individual if such resident were a resi-
dent of one of the 50 States (and any quali-
fying child residing with such individual) may 
be treated as covered by acceptable coverage. 
(B) Section 4980H of the Internal Rev-
enue Code of 1986 and section 502(c)(11) of 
the Employee Retirement Income Security Act 
of 1974. 
(C) Section 3121(c) of the Internal Rev-
enue Code of 1986. 
(4) IMPLEMENTATION OF INSURANCE REFORM 
AND CONSUMER PROTECTION REQUIREMENTS.—The 
electing territory shall enact and implement such 
laws and regulations as may be required to apply the 
requirements of title II with respect to health insur-
ance coverage offered in the territory. 
(c) CAP ON ADDITIONAL EXPENDITURES.— 
(1) IN GENERAL.—In entering into an agree-
ment with an electing territory under subsection (b), 
the Commissioner shall ensure that the aggregate 
expenditures under this subtitle with respect to resi-
dents of such territory during the period beginning 
with Y1 and ending with 2019 will not exceed the 
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cap amount specified in paragraph (2) for such ter-
ritory. The Commissioner shall adjust from time to 
time the percentages applicable under such agree-
ment as needed in order to carry out the previous 
sentence. 
(2) CAP AMOUNT.— 
(A) IN GENERAL.—The cap amount speci-
fied in this paragraph— 
(i) for Puerto Rico is $3,700,000,000 
increased by the amount (if any) elected 
under subparagraph (C); or 
(ii) for another territory is the portion 
of $300,000,000 negotiated for such terri-
tory under subparagraph (B). 
(B) NEGOTIATION
FOR
CERTAIN
TERRI-
TORIES.—The Commissioner in consultation 
with the Secretary of Health and Human Serv-
ices shall negotiate with the governments of the 
territories (other than Puerto Rico) to allocate 
the amount specified in subparagraph (A)(ii) 
among such territories. 
(C) OPTIONAL
SUPPLEMENTATION
FOR 
PUERTO RICO.— 
(i) IN
GENERAL.—Puerto Rico may 
elect, in a form and manner specified by 
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the Secretary of Health and Human Serv-
ices in consultation with the Commissioner 
to increase the dollar amount specified in 
subparagraph 
(A)(i) 
by 
up 
to 
$1,000,000,000. 
(ii) OFFSET
IN
MEDICAID
CAP.—If 
Puerto Rico makes the election described 
in clause (i), the Secretary shall decrease 
the dollar limitation otherwise applicable to 
Puerto Rico under subsections (f) and (g) 
of section 1108 of the Social Security Act 
(42 U.S.C. 1308) for a fiscal year by the 
additional aggregate payments the Sec-
retary estimates will be payable under this 
section for the fiscal year because of such 
election. 
(d) LIMITATION ON FUNDING.—In no case shall this 
section (including the agreement under subsection (b)) 
permit— 
(1) the obligation of funds for expenditures 
under this subtitle for periods beginning on or after 
January 1, 2020; or 
(2) any increase in the dollar limitation de-
scribed in subsection (a)(1)(B) for any portion of 
any fiscal year occurring on or after such date. 
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SEC. 347. NO FEDERAL PAYMENT FOR UNDOCUMENTED 
ALIENS. 
Nothing in this subtitle shall allow Federal payments 
for affordability credits on behalf of individuals who are 
not lawfully present in the United States. 
TITLE IV—SHARED 
RESPONSIBILITY 
Subtitle A—Individual 
Responsibility 
SEC. 401. INDIVIDUAL RESPONSIBILITY. 
For an individual’s responsibility to obtain acceptable 
coverage, see section 59B of the Internal Revenue Code 
of 1986 (as added by section 501 of this Act). 
Subtitle B—Employer 
Responsibility 
PART 1—HEALTH COVERAGE PARTICIPATION 
REQUIREMENTS 
SEC. 411. HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS. 
An employer meets the requirements of this section 
if such employer does all of the following: 
(1) OFFER OF COVERAGE.—The employer of-
fers each employee individual and family coverage 
under a qualified health benefits plan (or under a 
current employment-based health plan (within the 
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meaning of section 202(b))) in accordance with sec-
tion 412. 
(2) CONTRIBUTION
TOWARDS
COVERAGE.—If 
an employee accepts such offer of coverage, the em-
ployer makes timely contributions towards such cov-
erage in accordance with section 412. 
(3) CONTRIBUTION IN LIEU OF COVERAGE.— 
Beginning with Y2, if an employee declines such 
offer but otherwise obtains coverage in an Exchange- 
participating health benefits plan (other than by rea-
son of being covered by family coverage as a spouse 
or dependent of the primary insured), the employer 
shall make a timely contribution to the Health In-
surance Exchange with respect to each such em-
ployee in accordance with section 413. 
SEC. 412. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TO-
WARD EMPLOYEE AND DEPENDENT COV-
ERAGE. 
(a) IN GENERAL.—An employer meets the require-
ments of this section with respect to an employee if the 
following requirements are met: 
(1) OFFERING OF COVERAGE.—The employer 
offers the coverage described in section 411(1). In 
the case of an Exchange-eligible employer, the em-
ployer may offer such coverage either through an 
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Exchange-participating health benefits plan or other 
than through such a plan. 
(2) EMPLOYER
REQUIRED
CONTRIBUTION.— 
The employer timely pays to the issuer of such cov-
erage an amount not less than the employer required 
contribution specified in subsection (b) for such cov-
erage. 
(3) PROVISION
OF
INFORMATION.—The em-
ployer provides the Health Choices Commissioner, 
the Secretary of Labor, the Secretary of Health and 
Human Services, and the Secretary of the Treasury, 
as applicable, with such information as the Commis-
sioner may require to ascertain compliance with the 
requirements of this section, including the following: 
(A) The name, date, and employer identi-
fication number of the employer. 
(B) A certification as to whether the em-
ployer offers to its full-time employees (and 
their dependents) the opportunity to enroll in a 
qualified health benefits plan or a current em-
ployment-based health plan (within the meaning 
of section 202(b)). 
(C) If the employer certifies that the em-
ployer did offer to its full-time employees (and 
their dependents) the opportunity to so enroll— 
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(i) the months during the calendar 
year for which such coverage was available; 
and 
(ii) the monthly premium for the low-
est cost option in each of the enrollment 
categories under each such plan offered to 
employees. 
(D) The name, address, and TIN of each 
full-time employee during the calendar year and 
the months (if any) during which such employee 
(and any dependents) were covered under any 
such plans. 
(4) AUTOENROLLMENT
OF
EMPLOYEES.—The 
employer provides for autoenrollment of the em-
ployee in accordance with subsection (c). 
This subsection shall supersede any law of a State which 
would prevent automatic payroll deduction of employee 
contributions to an employment-based health plan. 
(b) REDUCTION OF EMPLOYEE PREMIUMS THROUGH 
MINIMUM EMPLOYER CONTRIBUTION.— 
(1) FULL-TIME
EMPLOYEES.—The minimum 
employer contribution described in this subsection 
for coverage of a full-time employee (and, if any, the 
employee’s spouse and qualifying children (as de-
fined in section 152(c) of the Internal Revenue Code 
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of 1986)) under a qualified health benefits plan (or 
current employment-based health plan) is equal to— 
(A) in case of individual coverage, not less 
than 72.5 percent of the applicable premium 
(as defined in section 4980B(f)(4) of such 
Code, subject to paragraph (2)) of the lowest 
cost plan offered by the employer that is a 
qualified health benefits plan (or is such cur-
rent employment-based health plan); and 
(B) in the case of family coverage which 
includes coverage of such spouse and children, 
not less 65 percent of such applicable premium 
of such lowest cost plan. 
(2) APPLICABLE PREMIUM FOR EXCHANGE COV-
ERAGE.—In this subtitle, the amount of the applica-
ble premium of the lowest cost plan with respect to 
coverage of an employee under an Exchange-partici-
pating health benefits plan is the reference premium 
amount under section 343(c) for individual coverage 
(or, if elected, family coverage) for the premium rat-
ing area in which the individual or family resides. 
(3) MINIMUM
EMPLOYER
CONTRIBUTION
FOR 
EMPLOYEES
OTHER
THAN
FULL-TIME
EMPLOY-
EES.—In the case of coverage for an employee who 
is not a full-time employee, the amount of the min-
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imum employer contribution under this subsection 
shall be a proportion (as determined in accordance 
with rules of the Health Choices Commissioner, the 
Secretary of Labor, the Secretary of Health and 
Human Services, and the Secretary of the Treasury, 
as applicable) of the minimum employer contribution 
under this subsection with respect to a full-time em-
ployee that reflects the proportion of— 
(A) the average weekly hours of employ-
ment of the employee by the employer, to 
(B) the minimum weekly hours specified 
by the Commissioner for an employee to be a 
full-time employee. 
(4) SALARY REDUCTIONS NOT TREATED AS EM-
PLOYER CONTRIBUTIONS.—For purposes of this sec-
tion, any contribution on behalf of an employee with 
respect to which there is a corresponding reduction 
in the compensation of the employee shall not be 
treated as an amount paid by the employer. 
(c) AUTOMATIC ENROLLMENT FOR EMPLOYER SPON-
SORED HEALTH BENEFITS.— 
(1) IN GENERAL.—The requirement of this sub-
section with respect to an employer and an employee 
is that the employer automatically enroll such em-
ployee into the employment-based health benefits 
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plan for individual coverage under the plan option 
with the lowest applicable employee premium. 
(2) OPT-OUT.—In no case may an employer 
automatically enroll an employee in a plan under 
paragraph (1) if such employee makes an affirmative 
election to opt out of such plan or to elect coverage 
under an employment-based health benefits plan of-
fered by such employer. An employer shall provide 
an employee with a 30-day period to make such an 
affirmative election before the employer may auto-
matically enroll the employee in such a plan. 
(3) NOTICE REQUIREMENTS.— 
(A) IN
GENERAL.—Each employer de-
scribed in paragraph (1) who automatically en-
rolls an employee into a plan as described in 
such paragraph shall provide the employees, 
within a reasonable period before the beginning 
of each plan year (or, in the case of new em-
ployees, within a reasonable period before the 
end of the enrollment period for such a new em-
ployee), written notice of the employees’ rights 
and obligations relating to the automatic enroll-
ment requirement under such paragraph. Such 
notice must be comprehensive and understood 
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by the average employee to whom the automatic 
enrollment requirement applies. 
(B) INCLUSION
OF
SPECIFIC
INFORMA-
TION.—The written notice under subparagraph 
(A) must explain an employee’s right to opt out 
of being automatically enrolled in a plan and in 
the case that more than one level of benefits or 
employee premium level is offered by the em-
ployer involved, the notice must explain which 
level of benefits and employee premium level the 
employee will be automatically enrolled in the 
absence of an affirmative election by the em-
ployee. 
SEC. 413. EMPLOYER CONTRIBUTIONS IN LIEU OF COV-
ERAGE. 
(a) IN GENERAL.—A contribution is made in accord-
ance with this section with respect to an employee if such 
contribution is equal to an amount equal to 8 percent of 
the average wages paid by the employer during the period 
of enrollment (determined by taking into account all em-
ployees of the employer and in such manner as the Com-
missioner provides, including rules providing for the ap-
propriate aggregation of related employers) but not to ex-
ceed the minimum employer contribution described in sec-
tion 412(b)(1)(A). Any such contribution— 
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(1) shall be paid to the Health Choices Com-
missioner for deposit into the Health Insurance Ex-
change Trust Fund; and 
(2) shall not be applied against the premium of 
the employee under the Exchange-participating 
health benefits plan in which the employee is en-
rolled. 
(b) SPECIAL RULES FOR SMALL EMPLOYERS.— 
(1) IN GENERAL.—In the case of any employer 
who is a small employer for any calendar year, sub-
section (a) shall be applied by substituting the appli-
cable percentage determined in accordance with the 
following table for ‘‘8 percent’’: 
If the annual payroll of such employer for 
the preceding calendar year: 
The applicable 
percentage is: 
Does not exceed $500,000 .....................................
0 percent 
Exceeds $500,000, but does not exceed $585,000 
2 percent 
Exceeds $585,000, but does not exceed $670,000 
4 percent 
Exceeds $670,000, but does not exceed $750,000 
6 percent 
(2) SMALL EMPLOYER.—For purposes of this 
subsection, the term ‘‘small employer’’ means any 
employer for any calendar year if the annual payroll 
of such employer for the preceding calendar year 
does not exceed $750,000. 
(3) ANNUAL PAYROLL.—For purposes of this 
paragraph, the term ‘‘annual payroll’’ means, with 
respect to any employer for any calendar year, the 
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aggregate wages paid by the employer during such 
calendar year. 
(4) AGGREGATION RULES.—Related employers 
and predecessors shall be treated as a single em-
ployer for purposes of this subsection. 
SEC. 414. AUTHORITY RELATED TO IMPROPER STEERING. 
The Health Choices Commissioner (in coordination 
with the Secretary of Labor, the Secretary of Health and 
Human Services, and the Secretary of the Treasury) shall 
have authority to set standards for determining whether 
employers or insurers are undertaking any actions to af-
fect the risk pool within the Health Insurance Exchange 
by inducing individuals to decline coverage under a quali-
fied health benefits plan (or current employment-based 
health plan (within the meaning of section 202(b)) offered 
by the employer and instead to enroll in an Exchange-par-
ticipating health benefits plan. An employer violating such 
standards shall be treated as not meeting the require-
ments of this section. 
SEC. 415. IMPACT STUDY ON EMPLOYER RESPONSIBILITY 
REQUIREMENTS. 
(a) IN GENERAL.—The Secretary of Labor shall con-
duct a study to examine the effect of the exemptions under 
section 512(a) and coverage thresholds under this division 
(in this section referred to collectively as ‘‘employer re-
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sponsibility requirements’’) on employment-based health 
plan sponsorship, generally and within specific industries, 
and the effect of such requirements and thresholds on em-
ployers, employment-based health plans, and employees in 
each industry. 
(b) ANNUAL REPORT.—The Secretary of Labor an-
nually shall submit to Congress a report on findings on 
how employer responsibility requirements have impacted 
and are likely to impact employers, plans, and employees 
during the previous year and projected trends. 
(c) LEGISLATIVE
RECOMMENDATIONS.—No later 
than January 1, 2012, and on an annual basis thereafter, 
the Secretary of Labor shall submit legislative rec-
ommendations to Congress to modify the employer respon-
sibility requirements if the Secretary determines that the 
requirements are detrimentally affecting or will detrimen-
tally affect employer plan sponsorship or otherwise cre-
ating inequities among employers, health plans, and em-
ployees. The Secretary may also submit such recommenda-
tions as the Secretary determines necessary to improve 
and strengthen employment-based health plan sponsor-
ship, employer responsibility, and related proposals that 
would enhance the delivery of health care benefits between 
employers and employees. 
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SEC. 416. STUDY ON EMPLOYER HARDSHIP EXEMPTION. 
(a) IN GENERAL.—The Secretary of Labor together 
with the Secretary of Treasury, the Secretary of Health 
and Human Services, and the Commissioner, shall conduct 
a study to examine the impact of the employer responsi-
bility requirements described in section 415(a) and make 
a recommendation to Congress about whether an employer 
hardship exemption would be appropriate. 
(b) ITEMS INCLUDED IN STUDY.—Within such study 
the Secretaries and Commissioner shall examine cases 
where such employer responsibility requirements may pose 
a particular hardship, and specifically look at employers 
by industry, profit margin, length of time in business, and 
size. In this examination, the economic conditions shall be 
considered, including the rate of increase in business costs, 
the availability of short-term credit lines, and abilities to 
restructure debt. In addition, the study shall examine the 
impact an employer hardship waiver could have on employ-
ees. 
(c) REPORT.—Not later than January 1, 2012, the 
Secretaries and Commissioner shall report to Congress on 
their findings and make a recommendation regarding the 
need or lack of need for a partial or complete employer 
hardship waiver. The Secretaries and Commissioner may 
also submit recommendations about the criteria Congress 
should include when developing eligibility requirements for 
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the employer hardship waiver and what safeguards are 
necessary to protect the employees of that employer. 
PART 2—SATISFACTION OF HEALTH COVERAGE 
PARTICIPATION REQUIREMENTS 
SEC. 421. SATISFACTION OF HEALTH COVERAGE PARTICI-
PATION REQUIREMENTS UNDER THE EM-
PLOYEE 
RETIREMENT 
INCOME 
SECURITY 
ACT OF 1974. 
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding at the end the following new part: 
‘‘PART 8—NATIONAL HEALTH COVERAGE 
PARTICIPATION REQUIREMENTS 
‘‘SEC. 801. ELECTION OF EMPLOYER TO BE SUBJECT TO NA-
TIONAL HEALTH COVERAGE PARTICIPATION 
REQUIREMENTS. 
‘‘(a) IN GENERAL.—An employer may make an elec-
tion with the Secretary to be subject to the health coverage 
participation requirements. 
‘‘(b) TIME AND MANNER.—An election under sub-
section (a) may be made at such time and in such form 
and manner as the Secretary may prescribe. 
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‘‘SEC. 802. TREATMENT OF COVERAGE RESULTING FROM 
ELECTION. 
‘‘(a) IN GENERAL.—If an employer makes an election 
to the Secretary under section 801— 
‘‘(1) such election shall be treated as the estab-
lishment and maintenance of a group health plan (as 
defined in section 733(a)) for purposes of this title, 
subject to section 251 of the Affordable Health Care 
for America Act; and 
‘‘(2) the health coverage participation require-
ments shall be deemed to be included as terms and 
conditions of such plan. 
‘‘(b) PERIODIC INVESTIGATIONS TO DISCOVER NON-
COMPLIANCE.—The Secretary shall regularly audit a rep-
resentative sampling of employers and group health plans 
and conduct investigations and other activities under sec-
tion 504 with respect to such sampling of plans so as to 
discover noncompliance with the health coverage participa-
tion requirements in connection with such plans. The Sec-
retary shall communicate findings of noncompliance made 
by the Secretary under this subsection to the Secretary 
of the Treasury and the Health Choices Commissioner. 
The Secretary shall take such timely enforcement action 
as appropriate to achieve compliance. 
‘‘(c) RECORDKEEPING.—To facilitate the audits de-
scribed in subsection (b), the Secretary shall promulgate 
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recordkeeping requirements for employers to account for 
both employees of the employer and individuals whom the 
employer has not treated as employees of the employer but 
with whom the employer, in the course of its trade or busi-
ness, has engaged for the performance of labor or services. 
The scope and content of such recordkeeping requirements 
shall be determined by the Secretary and shall be designed 
to ensure that employees who are not properly treated as 
such may be identified and properly treated. 
‘‘SEC. 803. HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS. 
‘‘For purposes of this part, the term ‘health coverage 
participation requirements’ means the requirements of 
part 1 of subtitle B of title IV of division A of (as in effect 
on the date of the enactment of such Act). 
‘‘SEC. 804. RULES FOR APPLYING REQUIREMENTS. 
‘‘(a) AFFILIATED GROUPS.—In the case of any em-
ployer which is part of a group of employers who are treat-
ed as a single employer under subsection (b), (c), (m), or 
(o) of section 414 of the Internal Revenue Code of 1986, 
the election under section 801 shall be made by such em-
ployer as the Secretary may provide. Any such election, 
once made, shall apply to all members of such group. 
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‘‘(b) SEPARATE ELECTIONS.—Under regulations pre-
scribed by the Secretary, separate elections may be made 
under section 801 with respect to— 
‘‘(1) separate lines of business, and 
‘‘(2) full-time employees and employees who are 
not full-time employees. 
‘‘SEC. 805. TERMINATION OF ELECTION IN CASES OF SUB-
STANTIAL NONCOMPLIANCE. 
‘‘The Secretary may terminate the election of any em-
ployer under section 801 if the Secretary (in coordination 
with the Health Choices Commissioner) determines that 
such employer is in substantial noncompliance with the 
health coverage participation requirements and shall refer 
any such determination to the Secretary of the Treasury 
as appropriate. 
‘‘SEC. 806. REGULATIONS. 
‘‘The Secretary may promulgate such regulations as 
may be necessary or appropriate to carry out the provi-
sions of this part, in accordance with section 424(a) of 
the Affordable Health Care for America Act. The Sec-
retary may promulgate any interim final rules as the Sec-
retary determines are appropriate to carry out this part.’’. 
(b) ENFORCEMENT OF HEALTH COVERAGE PARTICI-
PATION REQUIREMENTS.—Section 502 of such Act (29 
U.S.C. 1132) is amended— 
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(1) in subsection (a)(6), by striking ‘‘para-
graph’’ and all that follows through ‘‘subsection (c)’’ 
and inserting ‘‘paragraph (2), (4), (5), (6), (7), (8), 
(9), (10), or (11) of subsection (c)’’; and 
(2) in subsection (c), by redesignating the sec-
ond paragraph (10) as paragraph (12) and by in-
serting after the first paragraph (10) the following 
new paragraph: 
‘‘(11) HEALTH COVERAGE PARTICIPATION RE-
QUIREMENTS.— 
‘‘(A) CIVIL
PENALTIES.—In the case of 
any employer who fails (during any period with 
respect to which an election under section 
801(a) is in effect) to satisfy the health cov-
erage participation requirements with respect to 
any employee, the Secretary may assess a civil 
penalty against the employer of $100 for each 
day in the period beginning on the date such 
failure first occurs and ending on the date such 
failure is corrected. 
‘‘(B) HEALTH
COVERAGE
PARTICIPATION 
REQUIREMENTS.—For purposes of this para-
graph, the term ‘health coverage participation 
requirements’ has the meaning provided in sec-
tion 803. 
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‘‘(C) LIMITATIONS ON AMOUNT OF PEN-
ALTY.— 
‘‘(i) PENALTY NOT TO APPLY WHERE 
FAILURE
NOT
DISCOVERED
EXERCISING 
REASONABLE
DILIGENCE.—No 
penalty 
shall be assessed under subparagraph (A) 
with respect to any failure during any pe-
riod for which it is established to the satis-
faction of the Secretary that the employer 
did not know, or exercising reasonable dili-
gence would not have known, that such 
failure existed. 
‘‘(ii) PENALTY
NOT
TO
APPLY
TO 
FAILURES CORRECTED WITHIN 30 DAYS.— 
No penalty shall be assessed under sub-
paragraph (A) with respect to any failure 
if— 
‘‘(I) such failure was due to rea-
sonable cause and not to willful ne-
glect, and 
‘‘(II) such failure is corrected 
during the 30-day period beginning on 
the 1st date that the employer knew, 
or 
exercising 
reasonable 
diligence 
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would have known, that such failure 
existed. 
‘‘(iii) OVERALL LIMITATION FOR UN-
INTENTIONAL FAILURES.—In the case of 
failures which are due to reasonable cause 
and not to willful neglect, the penalty as-
sessed under subparagraph (A) for failures 
during any 1-year period shall not exceed 
the amount equal to the lesser of— 
‘‘(I) 10 percent of the aggregate 
amount paid or incurred by the em-
ployer (or predecessor employer) dur-
ing the preceding 1-year period for 
group health plans, or 
‘‘(II) $500,000. 
‘‘(D) ADVANCE NOTIFICATION OF FAILURE 
PRIOR TO ASSESSMENT.—Before a reasonable 
time prior to the assessment of any penalty 
under this paragraph with respect to any failure 
by an employer, the Secretary shall inform the 
employer in writing of such failure and shall 
provide the employer information regarding ef-
forts and procedures which may be undertaken 
by the employer to correct such failure. 
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‘‘(E) COORDINATION WITH EXCISE TAX.— 
Under regulations prescribed in accordance 
with section 424 of the Affordable Health Care 
for America Act, the Secretary and the Sec-
retary of the Treasury shall coordinate the as-
sessment of penalties under this section in con-
nection with failures to satisfy health coverage 
participation requirements with the imposition 
of excise taxes on such failures under section 
4980H(b) of the Internal Revenue Code of 
1986 so as to avoid duplication of penalties 
with respect to such failures. 
‘‘(F) DEPOSIT OF PENALTY COLLECTED.— 
Any amount of penalty collected under this 
paragraph shall be deposited as miscellaneous 
receipts in the Treasury of the United States.’’. 
(c) CLERICAL AMENDMENTS.—The table of contents 
in section 1 of such Act is amended by inserting after the 
item relating to section 734 the following new items: 
‘‘PART 8—NATIONAL HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
‘‘Sec. 801. Election of employer to be subject to national health coverage par-
ticipation requirements. 
‘‘Sec. 802. Treatment of coverage resulting from election. 
‘‘Sec. 803. Health coverage participation requirements. 
‘‘Sec. 804. Rules for applying requirements. 
‘‘Sec. 805. Termination of election in cases of substantial noncompliance. 
‘‘Sec. 806. Regulations.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods beginning after Decem-
ber 31, 2012. 
SEC. 422. SATISFACTION OF HEALTH COVERAGE PARTICI-
PATION REQUIREMENTS UNDER THE INTER-
NAL REVENUE CODE OF 1986. 
(a) FAILURE TO ELECT, OR SUBSTANTIALLY COM-
PLY WITH, HEALTH COVERAGE PARTICIPATION RE-
QUIREMENTS.—For employment tax on employers who fail 
to elect, or substantially comply with, the health coverage 
participation requirements described in part 1, see section 
3111(c) of the Internal Revenue Code of 1986 (as added 
by section 512 of this Act). 
(b) OTHER FAILURES.—For excise tax on other fail-
ures of electing employers to comply with such require-
ments, see section 4980H of the Internal Revenue Code 
of 1986 (as added by section 511 of this Act). 
SEC. 423. SATISFACTION OF HEALTH COVERAGE PARTICI-
PATION REQUIREMENTS UNDER THE PUBLIC 
HEALTH SERVICE ACT. 
(a) IN GENERAL.—Part C of title XXVII of the Pub-
lic Health Service Act is amended by adding at the end 
the following new section: 
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‘‘SEC. 2793. NATIONAL HEALTH COVERAGE PARTICIPATION 
REQUIREMENTS. 
‘‘(a) ELECTION OF EMPLOYER TO BE SUBJECT TO 
NATIONAL HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS.— 
‘‘(1) IN GENERAL.—An employer may make an 
election with the Secretary to be subject to the 
health coverage participation requirements. 
‘‘(2) TIME AND MANNER.—An election under 
paragraph (1) may be made at such time and in 
such form and manner as the Secretary may pre-
scribe. 
‘‘(b) TREATMENT OF COVERAGE RESULTING FROM 
ELECTION.— 
‘‘(1) IN GENERAL.—If an employer makes an 
election to the Secretary under subsection (a)— 
‘‘(A) such election shall be treated as the 
establishment and maintenance of a group 
health plan for purposes of this title, subject to 
section 251 of the Affordable Health Care for 
America Act; and 
‘‘(B) the health coverage participation re-
quirements shall be deemed to be included as 
terms and conditions of such plan. 
‘‘(2) PERIODIC INVESTIGATIONS TO DETERMINE 
COMPLIANCE WITH HEALTH COVERAGE PARTICIPA-
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TION
REQUIREMENTS.—The Secretary shall regu-
larly audit a representative sampling of employers 
and conduct investigations and other activities with 
respect to such sampling of employers so as to dis-
cover noncompliance with the health coverage par-
ticipation requirements in connection with such em-
ployers (during any period with respect to which an 
election under subsection (a) is in effect). The Sec-
retary shall communicate findings of noncompliance 
made by the Secretary under this subsection to the 
Secretary of the Treasury and the Health Choices 
Commissioner. The Secretary shall take such timely 
enforcement action as appropriate to achieve compli-
ance. 
‘‘(3) RECORDKEEPING.—To facilitate the audits 
described in subsection (b), the Secretary shall pro-
mulgate recordkeeping requirements for employers 
to account for both employees of the employer and 
individuals whom the employer has not treated as 
employees of the employer but with whom the em-
ployer, in the course of its trade or business, has en-
gaged for the performance of labor or services. The 
scope and content of such recordkeeping require-
ments shall be determined by the Secretary and 
shall be designed to ensure that employees who are 
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