‘‘(2) that costs of marketing are reasonable and 
do not exceed a percentage of total costs that is 
specified by the Commissioner and that takes into 
account costs of market entry for new qualified 
health plans. 
‘‘SEC. 
2204. 
GOVERNMENT 
CONTRIBUTION; 
AMERICAN 
HEALTH BENEFITS PROGRAM TRUST FUND. 
‘‘(a) GOVERNMENT CONTRIBUTION.— 
‘‘(1) IN
GENERAL.—The Commissioner shall 
provide each year for a contribution under this sub-
section towards the coverage provided under this 
title for those AHBP-eligible individuals who are re-
quired to be enrolled in a qualified health plan under 
section 2202(b). Except as provided in this sub-
section, the amount of such contribution shall be de-
termined using the same methodology that is applied 
for purposes of determining the Government con-
tribution under section 8906 of title 5, United 
States Code and shall not exceed 75 percent of the 
premium for the plan selected. 
‘‘(2) USE OF REGIONAL WEIGHTED AVERAGE.— 
Instead of computing the Government contribution 
using methodology under section 8906(b)(1) of title 
5, United States Code, based on 72 percent of the 
weighted average premium for qualified health plans
nationally, the Commissioner shall compute such 
contribution based on 72 percent of the weighted av-
erage premium for qualified health plans in each re-
gion involved (as identified by the Commissioner). 
‘‘(b) PLAN PAYMENT.— 
‘‘(1) IN
GENERAL.—The Commissioner shall 
provide for payment of qualified health plans of the 
premiums for such plans, as adjusted under this 
subsection. 
‘‘(2) RISK ADJUSTED PAYMENT.—The payment 
to a qualified health plan under this subsection shall 
be adjusted in a budget-neutral manner specified by 
the Commissioner to reflect the actuarial risk of the 
enrollees in the plan compared to an average actu-
arial risk. 
‘‘(3) REDUCTION
FOR
ADMINISTRATIVE
EX-
PENSES AND CONTINGENCY RESERVE.—The Com-
missioner shall provide for a uniform percentage re-
duction in payment otherwise made to a qualified 
health plan under this subsection. Such percentage 
shall consist of the following: 
‘‘(A) CONTINGENCY RESERVE.—A percent-
age (not to exceed 3 percent) to provide for a 
contingency 
reserve 
described 
in 
section 
2206(h)(1).
‘‘(B) FEDERAL ADMINISTRATIVE COSTS.— 
A percentage (not to exceed 5 percent) to cover 
Federal administrative costs in implementing 
this title. 
‘‘(c) TRUST FUND.— 
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished a trust fund, to be known as the ‘American 
Health Benefits Program Trust Fund’ (in this sub-
section referred to as the ‘Trust Fund’) . 
‘‘(2) DEPOSITS.—The Trust Fund shall consist 
of such gifts and bequests as may be provided in 
section 201(i)(1) and such amounts as may be de-
posited in, or appropriated to, such fund as provided 
in this title. There are hereby appropriated to the 
Trust Fund, out of any moneys in the Treasury not 
otherwise appropriated, amounts equivalent to 100 
percent of— 
‘‘(A) the taxes imposed by section 3451 of 
the Internal Revenue Code of 1986 with respect 
to wages reported to the Secretary of the 
Treasury or the Secretary ’s delegate pursuant 
to subtitle F of such Code, as determined by 
the Secretary of the Treasury by applying the 
applicable rates of tax under such section to 
such wages, which wages shall be certified by
the Commissioner of Social Security on the 
basis of records of wages established and main-
tained by such Commissioner in accordance 
with such reports; 
‘‘(B) the taxes imposed by section 1401(c) 
of the Internal Revenue Code of 1986 with re-
spect to self-employment income reported to the 
Secretary of the Treasury or the Secretary’s 
delegate pursuant to subtitle F of such Code, as 
determined by the Secretary of the Treasury by 
applying the applicable rates of tax under such 
section to such self-employment income, which 
self-employment income shall be certified by the 
Commissioner of Social Security on the basis of 
records of self-employment established and 
maintained by such Commissioner in accord-
ance with such returns; and 
‘‘(C) the excess of the amounts imposed 
under section 59B of the Internal Revenue 
Code of 1986 over the amounts of credits al-
lowed under section 36. 
The amounts appropriated by the preceding sentence 
shall be transferred from time to time from the gen-
eral fund in the Treasury to the Trust Fund, such 
amounts to be determined on the basis of estimates
by the Secretary of the Treasury of the taxes, speci-
fied in the preceding sentence, paid to or deposited 
into the Treasury; and proper adjustments shall be 
made in amounts subsequently transferred to the ex-
tent prior estimates were in excess of or were less 
than the taxes specified in such sentence. 
‘‘(3) APPLICATION
OF
TRUST
FUND
PROVI-
SIONS.—The provisions of subsections (b) through 
(f) of section 1817 shall apply to the Trust Fund in 
the same manner as they apply to the Federal Hos-
pital Insurance Trust Fund, except that, for pur-
poses of this paragraph, any reference in such sub-
sections to a provision of the Internal Revenue Code 
of 1986 is deemed a reference to the corresponding 
provision of such Code referred to in paragraph (2) 
of this subsection. 
‘‘SEC. 2205. PREMIUM AND COST-SHARING SUBSIDIES FOR 
LOWER INCOME INDIVIDUALS. 
‘‘(a) PREMIUM SUBSIDIES.—The Commissioner, in 
consultation with the Secretary of the Treasury, shall as-
sist individuals in estimating the amount of the premium 
subsidy which will be allowed to such individuals under 
section 36 of the Internal Revenue Code of 1986 with re-
spect to any month, and shall take the estimated amount
of such premium subsidy into account for purposes of col-
lecting any premium under section 2203(c)(2). 
‘‘(b) COST-SHARING SUBSIDIES.— 
‘‘(1) NO COST-SHARING FOR INDIVIDUALS WITH 
FAMILY INCOME BELOW LOWEST INCOME THRESH-
OLD.—In the case of a cost-sharing subsidy-eligible 
individual whose family income is less than the low-
est income threshold, there shall be a cost-sharing 
subsidy so the cost-sharing is reduced to zero. 
‘‘(2) NO COST-SHARING FOR PREGNANT WOMEN 
AND CHILDREN.—In the case of a cost-sharing sub-
sidy-eligible individual who is under 18 years of age 
or who is a pregnant woman, there shall be a cost- 
sharing subsidy so the cost-sharing is reduced to 
zero. 
‘‘(3) SLIDING
SCALE
FOR
OTHER
INDIVID-
UALS.—In the case of cost-sharing subsidy-eligible 
individuals not described in paragraph (1) or (2), 
the Commissioner, in consultation with the Secretary 
of the Treasury, shall establish a schedule of cost- 
sharing subsidies consistent with this paragraph. 
Under such schedule the amount of a cost-sharing 
subsidy for such individuals shall be such that— 
‘‘(A) the cost-sharing is nominal (as de-
fined for purposes of section 1916(a)(3)) for in-
dividuals whose family income is at the lowest 
income threshold; and 
‘‘(B) as the family income increases from 
such lowest income threshold to twice such 
threshold, the cost-sharing subsidy is reduced in 
a ratable matter to zero. 
‘‘(4) APPLICATION OF A PREVIOUS YEAR’S FAM-
ILY INCOME.—In applying this subsection for cost- 
sharing subsidies for expenses incurred for services 
furnished in a year, family income shall be deter-
mined based on the modified AGI, as defined in 
paragraph (7)(D), for taxable years ending in or 
with the previous year (or, if information on such 
modified AGI for such taxable years is not available 
on a timely basis, for the most recent taxable years 
for which such information is so available). 
‘‘(5) APPLICATION
FOR
SUBSIDIES.—A cost- 
sharing subsidy shall not be available to a cost-shar-
ing subsidy-eligible individual under this subsection 
unless an application, in a form and manner and 
containing such information and in such frequency 
as the Commissioner shall specify, has been made 
for such subsidy. 
‘‘(6) PAYMENT OF SUBSIDIES TO PLANS.—The 
Commissioner shall establish the form of additional
payments to qualified health plans to compensate 
such plans for cost-sharing subsidies provided to en-
rollees under this subsection. Such payments may be 
in such form as the Commissioner specifies and may 
include— 
‘‘(A) a capitation payment, in an amount 
that reflects the per capita actuarial value of 
such subsidies; 
‘‘(B) reimbursement for the reductions in 
cost-sharing made to carry out this subsection; 
or 
‘‘(C) a combination of the methodologies 
under subparagraphs (A) and (B). 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) COST-SHARING SUBSIDY-ELIGIBLE IN-
DIVIDUAL
DEFINED.—The term ‘cost-sharing 
subsidy-eligible individual’ means an AHBP-eli-
gible individual— 
‘‘(i) who is enrolled, and required 
under section 2202(b) to be enrolled, in a 
qualified health plan under this title; 
‘‘(ii) whose family income does not ex-
ceed twice the lowest income threshold (as 
defined in subparagraph (B)); and
‘‘(iii) who does not have in effect (and 
any of whose family members does not 
have in effect), in a form and manner 
specified by the Commissioner, in consulta-
tion with the Secretary of the Treasury, 
for any portion of the year involved an ob-
jection to the release of information under 
section 6103(l)(21) of the Internal Rev-
enue Code of 1986. 
‘‘(B) LOWEST INCOME THRESHOLD.—The 
term ‘lowest income threshold’ means— 
‘‘(i) in the case of coverage consisting 
of only an individual, 125 percent of the 
poverty line (as defined in section 673(2) 
of the Community Services Block Grant 
Act (42 U.S.C. 9902(2)), including any re-
vision required by such section) for a sin-
gle individual; or 
‘‘(ii) in the case of coverage consisting 
of a family of two or more individuals, 150 
percent of the poverty line (as so defined) 
for a family of the size involved. 
‘‘(C) FAMILY INCOME.—The term ‘family 
income’ means, with respect to an AHBP-eligi-
ble individual who is enrolled in a qualified 
health plan— 
‘‘(i) for individual-only coverage, the 
modified AGI of the individual; or 
‘‘(ii) for coverage that includes other 
family members, the sum of the modified 
AGI of the individual and of each other in-
dividual covered under the plan as a family 
member of the individual. 
The Commissioner, in consultation with the 
Secretary of the Treasury, may provide for ex-
clusion from family income under subparagraph 
(B) of family members (such as children) who 
have de minimis income (as specified by the 
Commissioner). 
‘‘(D) MODIFIED AGI DEFINED.—The term 
‘modified AGI’ means adjusted gross income 
(as defined in section 62 of the Internal Rev-
enue Code of 1986)— 
‘‘(i) determined without regard to sec-
tions 135, 911, 931, and 933 of such 
Code; and 
‘‘(ii) increased by the amount of inter-
est received or accrued during the taxable
year which is exempt from tax under such 
Code. 
In the case of an individual filing a joint return, 
any reference in this subsection to the modified 
adjusted gross income of such individual shall 
be 1⁄2 such return’s modified adjusted gross in-
come. 
‘‘SEC. 2206. ADMINISTRATION. 
‘‘(a) APPLICATION OF FEHBP RULES.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this title, the program under this title shall 
be administered in the same manner as FEHBP. 
‘‘(2) SPECIFIC
PROVISIONS.—In carrying out 
this title, the Commissioner pursuant to paragraph 
(1) shall provide for the following: 
‘‘(A) Approval and disapproval of plans as 
qualified health plans. 
‘‘(B) Negotiation of plan benefits (includ-
ing cost-sharing) and plan premiums. 
‘‘(b) ESTABLISHMENT OF HEALTH BENEFITS AD-
MINISTRATION.—There is hereby established, as an inde-
pendent agency in the executive branch of Government, 
a Health Benefits Administration (in this title referred to 
as the ‘Administration’). 
‘‘(c) DUTIES.—
‘‘(1) IN GENERAL.—The Administration shall 
administer the program under this title and, with re-
spect to application of any provision of FEHBP 
under this title, any reference in FEHBP to the Di-
rector of the Office of Management and Budget is 
deemed a reference to the Commissioner of Health 
Benefits. 
‘‘(2) ESTABLISHMENT OF AHBP REGIONS.—For 
purposes of carrying out this title, the Commissioner 
shall divide the United States into, and establish, 
AHBP regions. 
‘‘(d) OFFICERS.— 
‘‘(1) COMMISSIONER OF HEALTH BENEFITS.— 
‘‘(A) IN GENERAL.—There shall be in the 
Administration a Commissioner of Health Ben-
efits who shall be appointed by the President, 
by and with the advice and consent of the Sen-
ate. 
‘‘(B) COMPENSATION.—The Commissioner 
shall be compensated at the rate provided for 
level I of the Executive Schedule. 
‘‘(C) TERM.—The provisions of section 
702(a)(3) shall apply to the Commissioner of 
Health Benefits in the same manner as they 
apply to the Commissioner of Social Security,