1200 
ployer makes timely contributions towards such cov-
erage in accordance with section 312. 
(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 313. 
(b) HARDSHIP EXEMPTION.—Notwithstanding any 
other provision of this part, an employer may, in a form 
and manner which shall be prescribed by the Secretary, 
apply to the Secretary for a waiver from the health cov-
erage participation requirements of this part for any 2- 
year period. The Secretary shall grant the waiver within 
30 days after submission of the application if the applica-
tion reasonably demonstrates to the Secretary that meet-
ing the requirements of this part would result in job losses 
that would negatively impact the employer or the commu-
nity in which the employer is located. 
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SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TO-
WARDS 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 311(1) either 
through an 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. 
(4) AUTOENROLLMENT
OF
EMPLOYEES.—The 
employer provides for autoenrollment of the em-
ployee in accordance with subsection (c). 
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(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 
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 
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amount under section 243(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-
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 
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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 enrolls such em-
ployee into the employment-based health benefits 
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 
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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 
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. 313. 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 
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of such employer for the preceding calendar year 
does not exceed $400,000. 
(3) ANNUAL PAYROLL.—For purposes of this 
paragraph, the term ‘‘annual payroll’’ means, with 
respect to any employer for any calendar year, the 
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. 314. 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 102(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. 
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PART 2—SATISFACTION OF HEALTH COVERAGE 
PARTICIPATION REQUIREMENTS 
SEC. 321. 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. 
‘‘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 
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defined in section 733(a)) for purposes of this title, 
subject to section 151 of the America’s Affordable 
Health Choices Act of 2009, 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 
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 the trade or 
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business in which the employer is engaged, has engaged 
for the performance of labor or services. 
‘‘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 III of subdivision A of Amer-
ica’s Affordable Health Choices Act of 2009 (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. 
‘‘(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. 
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‘‘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 324(a) of 
the America’s Affordable Health Choices Act of 2009. The 
Secretary may promulgate any interim final rules as the 
Secretary 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— 
(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-
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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. 
‘‘(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) 
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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 
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 
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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. 
‘‘(E) COORDINATION WITH EXCISE TAX.— 
Under regulations prescribed in accordance 
with section 324 of the America’s Affordable 
Health Choices Act of 2009, the Secretary and 
the Secretary of the Treasury shall coordinate 
the assessment of penalties under this section 
in connection with failures to satisfy health cov-
erage participation requirements with the impo-
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sition of excise taxes on such failures under sec-
tion 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. ’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods beginning after Decem-
ber 31, 2012. 
SEC. 322. 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 
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participation requirements described in part 1, see section 
3111(c) of the Internal Revenue Code of 1986 (as added 
by section 412 of this division). 
(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 411 of this division). 
SEC. 323. 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: 
‘‘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. 
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‘‘(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 151 of the America’s Affordable Health 
Choices Act of 2009, 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-
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 
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Commissioner. The Secretary shall take such timely 
enforcement action as appropriate to achieve compli-
ance. 
‘‘(c) HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS.—For purposes of this section, the term ‘health 
coverage participation requirements’ means the require-
ments of part 1 of subtitle B of title III of subdivision 
A of the America’s Affordable Health Choices Act of 2009 
(as in effect on the date of the enactment of this section). 
‘‘(d) SEPARATE ELECTIONS.—Under regulations pre-
scribed by the Secretary, separate elections may be made 
under subsection (a) with respect to full-time employees 
and employees who are not full-time employees. 
‘‘(e) TERMINATION OF ELECTION IN CASES OF SUB-
STANTIAL NONCOMPLIANCE.—The Secretary may termi-
nate the election of any employer under subsection (a) if 
the Secretary (in coordination with the Health Choices 
Commissioner) determines that such employer is in sub-
stantial noncompliance with the health coverage participa-
tion requirements and shall refer any such determination 
to the Secretary of the Treasury as appropriate. 
‘‘(f) ENFORCEMENT OF HEALTH COVERAGE PAR-
TICIPATION REQUIREMENTS.— 
‘‘(1) CIVIL PENALTIES.—In the case of any em-
ployer who fails (during any period with respect to 
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which the election under subsection (a) is in effect) 
to satisfy the health coverage participation require-
ments 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. 
‘‘(2) LIMITATIONS ON AMOUNT OF PENALTY.— 
‘‘(A) PENALTY
NOT
TO
APPLY
WHERE 
FAILURE
NOT
DISCOVERED
EXERCISING
REA-
SONABLE DILIGENCE.—No penalty shall be as-
sessed under paragraph (1) with respect to any 
failure during any period for which it is estab-
lished to the satisfaction of the Secretary that 
the employer did not know, or exercising rea-
sonable diligence would not have known, that 
such failure existed. 
‘‘(B) PENALTY NOT TO APPLY TO FAIL-
URES CORRECTED WITHIN 30 DAYS.—No pen-
alty shall be assessed under paragraph (1) with 
respect to any failure if— 
‘‘(i) such failure was due to reason-
able cause and not to willful neglect, and 
‘‘(ii) such failure is corrected during 
the 30-day period beginning on the 1st 
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date that the employer knew, or exercising 
reasonable diligence would have known, 
that such failure existed. 
‘‘(C) OVERALL LIMITATION FOR UNINTEN-
TIONAL
FAILURES.—In the case of failures 
which are due to reasonable cause and not to 
willful neglect, the penalty assessed under para-
graph (1) 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 employer 
(or predecessor employer) during the pre-
ceding taxable year for group health plans, 
or 
‘‘(ii) $500,000. 
‘‘(3) ADVANCE
NOTIFICATION
OF
FAILURE 
PRIOR TO ASSESSMENT.—Before a reasonable time 
prior to the assessment of any penalty under para-
graph (1) with respect to any failure by an em-
ployer, the Secretary shall inform the employer in 
writing of such failure and shall provide the em-
ployer information regarding efforts and procedures 
which may be undertaken by the employer to correct 
such failure. 
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‘‘(4) ACTIONS
TO
ENFORCE
ASSESSMENTS.— 
The Secretary may bring a civil action in any Dis-
trict Court of the United States to collect any civil 
penalty under this subsection. 
‘‘(5) COORDINATION
WITH
EXCISE
TAX.— 
Under regulations prescribed in accordance with sec-
tion 324 of the America’s Affordable Health Choices 
Act of 2009, the Secretary and the Secretary of the 
Treasury shall coordinate the assessment of pen-
alties under paragraph (1) in connection with fail-
ures to satisfy health coverage participation require-
ments with the imposition of excise taxes on such 
failures under section 4980H(b) of the Internal Rev-
enue Code of 1986 so as to avoid duplication of pen-
alties with respect to such failures. 
‘‘(6) DEPOSIT OF PENALTY COLLECTED.—Any 
amount of penalty collected under this subsection 
shall be deposited as miscellaneous receipts in the 
Treasury of the United States. 
‘‘(g) REGULATIONS.—The Secretary may promulgate 
such regulations as may be necessary or appropriate to 
carry out the provisions of this section, in accordance with 
section 324(a) of the America’s Affordable Health Choices 
Act of 2009. The Secretary may promulgate any interim 
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final rules as the Secretary determines are appropriate to 
carry out this section.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to periods beginning after De-
cember 31, 2012. 
SEC. 324. ADDITIONAL RULES RELATING TO HEALTH COV-
ERAGE PARTICIPATION REQUIREMENTS. 
(a) ASSURING COORDINATION.—The officers con-
sisting of the Secretary of Labor, the Secretary of the 
Treasury, the Secretary of Health and Human Services, 
and the Health Choices Commissioner shall ensure, 
through the execution of an interagency memorandum of 
understanding among such officers, that— 
(1) regulations, rulings, and interpretations 
issued by such officers relating to the same matter 
over which two or more of such officers have respon-
sibility under subpart B of part 6 of subtitle B of 
title I of the Employee Retirement Income Security 
Act of 1974, section 4980H of the Internal Revenue 
Code of 1986, and section 2793 of the Public Health 
Service Act are administered so as to have the same 
effect at all times; and 
(2) coordination of policies relating to enforcing 
the same requirements through such officers in 
order to have a coordinated enforcement strategy 
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that avoids duplication of enforcement efforts and 
assigns priorities in enforcement. 
(b) MULTIEMPLOYER PLANS.—In the case of a group 
health plan that is a multiemployer plan (as defined in 
section 3(37) of the Employee Retirement Income Secu-
rity Act of 1974), the regulations prescribed in accordance 
with subsection (a) by the officers referred to in subsection 
(a) shall provide for the application of the health coverage 
participation requirements to the plan sponsor and con-
tributing sponsors of such plan. 
TITLE IV—AMENDMENTS TO IN-
TERNAL REVENUE CODE OF 
1986 
Subtitle A—Shared Responsibility 
PART 1—INDIVIDUAL RESPONSIBILITY 
SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE 
HEALTH CARE COVERAGE. 
(a) IN GENERAL.—Subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new part: 
‘‘PART VIII—HEALTH CARE RELATED TAXES 
‘‘SUBPART A. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE 
COVERAGE. 
‘‘Subpart A—Tax on Individuals Without Acceptable 
Health Care Coverage 
‘‘Sec. ?59B.?Tax on individuals without acceptable health care coverage. 
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‘‘SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE 
HEALTH CARE COVERAGE. 
‘‘(a) TAX IMPOSED.—In the case of any individual 
who does not meet the requirements of subsection (d) at 
any time during the taxable year, there is hereby imposed 
a tax equal to 2.5 percent of the excess of— 
‘‘(1) the taxpayer’s modified adjusted gross in-
come for the taxable year, over 
‘‘(2) the amount of gross income specified in 
section 6012(a)(1) with respect to the taxpayer. 
‘‘(b) LIMITATIONS.— 
‘‘(1) TAX LIMITED TO AVERAGE PREMIUM.— 
‘‘(A) IN
GENERAL.—The tax imposed 
under subsection (a) with respect to any tax-
payer for any taxable year shall not exceed the 
applicable national average premium for such 
taxable year. 
‘‘(B) APPLICABLE
NATIONAL
AVERAGE 
PREMIUM.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), the ‘applicable national 
average premium’ means, with respect to 
any taxable year, the average premium (as 
determined by the Secretary, in coordina-
tion with the Health Choices Commis-
sioner) for self-only coverage under a basic 
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plan which is offered in a Health Insur-
ance Exchange for the calendar year in 
which such taxable year begins. 
‘‘(ii) FAILURE TO PROVIDE COVERAGE 
FOR MORE THAN ONE INDIVIDUAL.—In the 
case of any taxpayer who fails to meet the 
requirements of subsection (e) with respect 
to more than one individual during the tax-
able year, clause (i) shall be applied by 
substituting ‘family coverage’ for ‘self-only 
coverage’. 
‘‘(2) PRORATION FOR PART YEAR FAILURES.— 
The tax imposed under subsection (a) with respect 
to any taxpayer for any taxable year shall not exceed 
the amount which bears the same ratio to the 
amount of tax so imposed (determined without re-
gard to this paragraph and after application of para-
graph (1)) as— 
‘‘(A) the aggregate periods during such 
taxable year for which such individual failed to 
meet the requirements of subsection (d), bears 
to 
‘‘(B) the entire taxable year. 
‘‘(c) EXCEPTIONS.— 
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‘‘(1) DEPENDENTS.—Subsection (a) shall not 
apply to any individual for any taxable year if a de-
duction is allowable under section 151 with respect 
to such individual to another taxpayer for any tax-
able year beginning in the same calendar year as 
such taxable year. 
‘‘(2) NONRESIDENT
ALIENS.—Subsection (a) 
shall not apply to any individual who is a non-
resident alien. 
‘‘(3) INDIVIDUALS RESIDING OUTSIDE UNITED 
STATES.—Any qualified individual (as defined in 
section 911(d)) (and any qualifying child residing 
with such individual) shall be treated for purposes of 
this section as covered by acceptable coverage during 
the period described in subparagraph (A) or (B) of 
section 911(d)(1), whichever is applicable. 
‘‘(4) INDIVIDUALS
RESIDING
IN
POSSESSIONS 
OF THE UNITED STATES.—Any individual who is a 
bona fide resident of any possession of the United 
States (as determined under section 937(a)) for any 
taxable year (and any qualifying child residing with 
such individual) shall be treated for purposes of this 
section as covered by acceptable coverage during 
such taxable year. 
‘‘(5) RELIGIOUS CONSCIENCE EXEMPTION.— 
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‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to any individual (and any qualifying 
child residing with such individual) for any pe-
riod if such individual has in effect an exemp-
tion which certifies that such individual is a 
member of a recognized religious sect or divi-
sion thereof described in section 1402(g)(1) and 
an adherent of established tenets or teachings 
of such sect or division as described in such sec-
tion. 
‘‘(B) EXEMPTION.—An application for the 
exemption described in subparagraph (A) shall 
be filed with the Secretary at such time and in 
such form and manner as the Secretary may 
prescribe. Any such exemption granted by the 
Secretary shall be effective for such period as 
the Secretary determines appropriate. 
‘‘(d) ACCEPTABLE COVERAGE REQUIREMENT.— 
‘‘(1) IN GENERAL.—The requirements of this 
subsection are met with respect to any individual for 
any period if such individual (and each qualifying 
child of such individual) is covered by acceptable 
coverage at all times during such period. 
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‘‘(2) ACCEPTABLE
COVERAGE.—For purposes 
of this section, the term ‘acceptable coverage’ means 
any of the following: 
‘‘(A) QUALIFIED HEALTH BENEFITS PLAN 
COVERAGE.—Coverage under a qualified health 
benefits plan (as defined in section 100(c) of 
the America’s Affordable Health Choices Act of 
2009). 
‘‘(B) GRANDFATHERED
HEALTH
INSUR-
ANCE
COVERAGE; COVERAGE
UNDER
GRAND-
FATHERED
EMPLOYMENT-BASED
HEALTH 
PLAN.—Coverage under a grandfathered health 
insurance coverage (as defined in subsection (a) 
of section 102 of the America’s Affordable 
Health Choices Act of 2009) or under a current 
employment-based health plan (within the 
meaning of subsection (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. 
‘‘(E) MEMBERS OF THE ARMED FORCES 
AND
DEPENDENTS
(INCLUDING
TRICARE).— 
Coverage under chapter 55 of title 10, United 
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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, but only if the cov-
erage for the individual involved is determined 
by the Secretary in coordination with the 
Health Choices Commissioner to be not less 
than the level specified by the Secretary of the 
Treasury, in coordination with the Secretary of 
Veteran’s Affairs and the Health Choices Com-
missioner, based on the individual’s priority for 
services as provided under section 1705(a) of 
such title. 
‘‘(G) 
OTHER
COVERAGE.—Such 
other 
health benefits coverage as the Secretary, in co-
ordination with the Health Choices Commis-
sioner, recognizes for purposes of this sub-
section. 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) QUALIFYING CHILD.—For purposes of this 
section, the term ‘qualifying child’ has the meaning 
given such term by section 152(c). 
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‘‘(2) BASIC PLAN.—For purposes of this sec-
tion, the term ‘basic plan’ has the meaning given 
such term under section 100(c) of the America’s Af-
fordable Health Choices Act of 2009. 
‘‘(3) HEALTH
INSURANCE
EXCHANGE.—For 
purposes of this section, the term ‘Health Insurance 
Exchange’ has the meaning given such term under 
section 100(c) of the America’s Affordable Health 
Choices Act of 2009, including any State-based 
health insurance exchange approved for operation 
under section 208 of such Act. 
‘‘(4) FAMILY COVERAGE.—For purposes of this 
section, the term ‘family coverage’ means any cov-
erage other than self-only coverage. 
‘‘(5) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of this section, the term ‘modified ad-
justed gross income’ means adjusted gross income— 
‘‘(A) determined without regard to section 
911, and 
‘‘(B) increased by the amount of interest 
received or accrued by the taxpayer during the 
taxable year which is exempt from tax. 
‘‘(6) NOT TREATED AS TAX IMPOSED BY THIS 
CHAPTER
FOR
CERTAIN
PURPOSES.—The tax im-
posed under this section shall not be treated as tax 
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imposed by this chapter for purposes of determining 
the amount of any credit under this chapter or for 
purposes of section 55. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this section, 
including regulations or other guidance (developed in co-
ordination with the Health Choices Commissioner) which 
provide— 
‘‘(1) exemption from the tax imposed under 
subsection (a) in cases of de minimis lapses of ac-
ceptable coverage, and 
‘‘(2) a process for applying for a waiver of the 
application of subsection (a) in cases of hardship.’’. 
(b) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of such Code is amended 
by inserting after section 6050W the following new 
section: 
‘‘SEC. 6050X. RETURNS RELATING TO HEALTH INSURANCE 
COVERAGE. 
‘‘(a) REQUIREMENT OF REPORTING.—Every person 
who provides acceptable coverage (as defined in section 
59B(d)) to any individual during any calendar year shall, 
at such time as the Secretary may prescribe, make the 
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return described in subsection (b) with respect to such in-
dividual. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
‘‘(A) the name, address, and TIN of the 
primary insured and the name of each other in-
dividual obtaining coverage under the policy, 
‘‘(B) the period for which each such indi-
vidual was provided with the coverage referred 
to in subsection (a), and 
‘‘(C) such other information as the Sec-
retary may require. 
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each primary insured whose 
name is required to be set forth in such return a written 
statement showing— 
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, and 
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‘‘(2) the information required to be shown on 
the return with respect to such individual. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) is required to be made. 
‘‘(d) COVERAGE
PROVIDED
BY
GOVERNMENTAL 
UNITS.—In the case of coverage provided by any govern-
mental unit or any agency or instrumentality thereof, the 
officer or employee who enters into the agreement to pro-
vide such coverage (or the person appropriately designated 
for purposes of this section) shall make the returns and 
statements required by this section.’’. 
(2) PENALTY FOR FAILURE TO FILE.— 
(A) RETURN.—Subparagraph (B) of sec-
tion 6724(d)(1) of such Code is amended by 
striking ‘‘or’’ at the end of clause (xxii), by 
striking ‘‘and’’ at the end of clause (xxiii) and 
inserting ‘‘or’’, and by adding at the end the 
following new clause: 
‘‘(xxiv) section 6050X (relating to re-
turns relating to health insurance cov-
erage), and’’. 
(B) STATEMENT.—Paragraph (2) of sec-
tion 6724(d) of such Code is amended by strik-
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ing ‘‘or’’ at the end of subparagraph (EE), by 
striking the period at the end of subparagraph 
(FF) and inserting ‘‘, or’’, and by inserting 
after subparagraph (FF) the following new sub-
paragraph: 
‘‘(GG) section 6050X (relating to returns 
relating to health insurance coverage).’’. 
(c) RETURN REQUIREMENT.—Subsection (a) of sec-
tion 6012 of such Code is amended by inserting after 
paragraph (9) the following new paragraph: 
‘‘(10) Every individual to whom section 59B(a) 
applies and who fails to meet the requirements of 
section 59B(d) with respect to such individual or 
any qualifying child (as defined in section 152(c)) of 
such individual.’’. 
(d) CLERICAL AMENDMENTS.— 
(1) The table of parts for subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new 
item: 
‘‘PART VIII. HEALTH CARE RELATED TAXES.’’. 
(2) The table of sections for subpart B of part 
III of subchapter A of chapter 61 is amended by 
adding at the end the following new item: 
‘‘Sec. ?6050X.?Returns relating to health insurance coverage.’’. 
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(e) SECTION 15 NOT TO APPLY.—The amendment 
made by subsection (a) shall not be treated as a change 
in a rate of tax for purposes of section 15 of the Internal 
Revenue Code of 1986. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2012. 
(2) RETURNS.—The amendments made by sub-
section (b) shall apply to calendar years beginning 
after December 31, 2012. 
PART 2—EMPLOYER RESPONSIBILITY 
SEC. 411. ELECTION TO SATISFY HEALTH COVERAGE PAR-
TICIPATION REQUIREMENTS. 
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new section: 
‘‘SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COV-
ERAGE PARTICIPATION REQUIREMENTS. 
‘‘(a) ELECTION OF EMPLOYER RESPONSIBILITY TO 
PROVIDE HEALTH COVERAGE.— 
‘‘(1) IN GENERAL.—Subsection (b) shall apply 
to any employer with respect to whom an election 
under paragraph (2) is in effect. 
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‘‘(2) TIME AND MANNER.—An employer may 
make an election under this paragraph at such time 
and in such form and manner as the Secretary may 
prescribe. 
‘‘(3) AFFILIATED GROUPS.—In the case of any 
employer which is part of a group of employers who 
are treated as a single employer under subsection 
(b), (c), (m), or (o) of section 414, the election 
under paragraph (2) shall be made by such person 
as the Secretary may provide. Any such election, 
once made, shall apply to all members of such 
group. 
‘‘(4) SEPARATE
ELECTIONS.—Under regula-
tions prescribed by the Secretary, separate elections 
may be made under paragraph (2) with respect to— 
‘‘(A) separate lines of business, and 
‘‘(B) full-time employees and employees 
who are not full-time employees. 
‘‘(5) TERMINATION OF ELECTION IN CASES OF 
SUBSTANTIAL
NONCOMPLIANCE.—The 
Secretary 
may terminate the election of any employer under 
paragraph (2) if the Secretary (in coordination with 
the Health Choices Commissioner) determines that 
such employer is in substantial noncompliance with 
the health coverage participation requirements. 
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‘‘(b) EXCISE TAX WITH RESPECT TO FAILURE TO 
MEET HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS.— 
‘‘(1) IN GENERAL.—In the case of any employer 
who fails (during any period with respect to which 
the election under subsection (a) is in effect) to sat-
isfy the health coverage participation requirements 
with respect to any employee to whom such election 
applies, there is hereby imposed on each such failure 
with respect to each such employee a tax of $100 for 
each day in the period beginning on the date such 
failure first occurs and ending on the date such fail-
ure is corrected. 
‘‘(2) LIMITATIONS ON AMOUNT OF TAX.— 
‘‘(A) TAX NOT TO APPLY WHERE FAILURE 
NOT
DISCOVERED
EXERCISING
REASONABLE 
DILIGENCE.—No tax shall be imposed by para-
graph (1) on any failure during any period for 
which it is established to the satisfaction of the 
Secretary that the employer neither knew, nor 
exercising reasonable diligence would have 
known, that such failure existed. 
‘‘(B) TAX
NOT
TO
APPLY
TO
FAILURES 
CORRECTED WITHIN 30 DAYS.—No tax shall be 
imposed by paragraph (1) on any failure if— 
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‘‘(i) such failure was due to reason-
able cause and not to willful neglect, and 
‘‘(ii) such failure is corrected during 
the 30-day period beginning on the 1st 
date that the employer knew, or exercising 
reasonable diligence would have known, 
that such failure existed. 
‘‘(C) OVERALL LIMITATION FOR UNINTEN-
TIONAL
FAILURES.—In the case of failures 
which are due to reasonable cause and not to 
willful neglect, the tax imposed by subsection 
(a) for failures during the taxable year of the 
employer shall not exceed the amount equal to 
the lesser of— 
‘‘(i) 10 percent of the aggregate 
amount paid or incurred by the employer 
(or predecessor employer) during the pre-
ceding taxable year for employment-based 
health plans, or 
‘‘(ii) $500,000. 
‘‘(D) COORDINATION
WITH
OTHER
EN-
FORCEMENT
PROVISIONS.—The tax imposed 
under paragraph (1) with respect to any failure 
shall be reduced (but not below zero) by the 
amount of any civil penalty collected under sec-
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tion 502(c)(11) of the Employee Retirement In-
come Security Act of 1974 or section 2793(g) 
of the Public Health Service Act with respect to 
such failure. 
‘‘(c) HEALTH COVERAGE PARTICIPATION REQUIRE-
MENTS.—For purposes of this section, the term ‘health 
coverage participation requirements’ means the require-
ments of part I of subtitle B of title III of the America’s 
Affordable Health Choices Act of 2009 (as in effect on 
the date of the enactment of this section).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 43 of such Code is amended by adding at the 
end the following new item: 
‘‘Sec. ?4980H.?Election to satisfy health coverage participation requirements.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods beginning after Decem-
ber 31, 2012. 
SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOY-
ERS. 
(a) IN GENERAL.—Section 3111 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(c) as subsection (d) and by inserting after subsection (b) 
the following new subsection: 
‘‘(c) EMPLOYERS
ELECTING
TO
NOT
PROVIDE 
HEALTH BENEFITS.— 
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‘‘(1) IN GENERAL.—In addition to other taxes, 
there is hereby imposed on every nonelecting em-
ployer an excise tax, with respect to having individ-
uals in his employ, equal to 8 percent of the wages 
(as defined in section 3121(a)) paid by him with re-
spect to employment (as defined in section 3121(b)). 
‘‘(2) SPECIAL
RULES
FOR
SMALL
EMPLOY-
ERS.— 
‘‘(A) IN GENERAL.—In the case of any em-
ployer who is small employer for any calendar 
year, paragraph (1) shall be applied by sub-
stituting the applicable 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 $250,000 .....................................
0 percent 
Exceeds $250,000, but does not exceed $300,000 
2 percent 
Exceeds $300,000, but does not exceed $350,000 
4 percent 
Exceeds $350,000, but does not exceed $400,000 
6 percent 
‘‘(B) SMALL EMPLOYER.—For purposes of 
this paragraph, the term ‘small employer’ 
means any employer for any calendar year if 
the annual payroll of such employer for the pre-
ceding calendar year does not exceed $400,000. 
‘‘(C) ANNUAL PAYROLL.—For purposes of 
this paragraph, the term ‘annual payroll’ 
means, with respect to any employer for any 
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calendar year, the aggregate wages (as defined 
in section 3121(a)) paid by him with respect to 
employment (as defined in section 3121(b)) 
during such calendar year. 
‘‘(3) NONELECTING EMPLOYER.—For purposes 
of paragraph (1), the term ‘nonelecting employer’ 
means any employer for any period with respect to 
which such employer does not have an election under 
section 4980H(a) in effect. 
‘‘(4) SPECIAL
RULE
FOR
SEPARATE
ELEC-
TIONS.—In the case of an employer who makes a 
separate election described in section 4980H(a)(4) 
for any period, paragraph (1) shall be applied for 
such period by taking into account only the wages 
paid to employees who are not subject to such elec-
tion. 
‘‘(5) AGGREGATION; PREDECESSORS.—For pur-
poses of this subsection— 
‘‘(A) all persons treated as a single em-
ployer under subsection (b), (c), (m), or (o) of 
section 414 shall be treated as 1 employer, and 
‘‘(B) any reference to any person shall be 
treated as including a reference to any prede-
cessor of such person.’’. 
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(b) DEFINITIONS.—Section 3121 of such Code is 
amended by adding at the end the following new sub-
section: 
‘‘(aa) SPECIAL RULES
FOR TAX
ON EMPLOYERS 
ELECTING NOT TO PROVIDE HEALTH BENEFITS.—For 
purposes of section 3111(c)— 
‘‘(1) Paragraphs (1), (5), and (19) of sub-
section (b) shall not apply. 
‘‘(2) Paragraph (7) of subsection (b) shall apply 
by treating all services as not covered by the retire-
ment systems referred to in subparagraphs (C) and 
(F) thereof. 
‘‘(3) Subsection (e) shall not apply and the 
term ‘State’ shall include the District of Columbia.’’. 
(c) CONFORMING AMENDMENT.—Subsection (d) of 
section 3111 of such Code, as redesignated by this section, 
is amended by striking ‘‘this section’’ and inserting ‘‘sub-
sections (a) and (b)’’. 
(d) APPLICATION TO RAILROADS.— 
(1) IN GENERAL.—Section 3221 of such Code 
is amended by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the 
following new subsection: 
‘‘(c) EMPLOYERS
ELECTING
TO
NOT
PROVIDE 
HEALTH BENEFITS.— 
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‘‘(1) IN GENERAL.—In addition to other taxes, 
there is hereby imposed on every nonelecting em-
ployer an excise tax, with respect to having individ-
uals in his employ, equal to 8 percent of the com-
pensation paid during any calendar year by such em-
ployer for services rendered to such employer. 
‘‘(2) EXCEPTION
FOR
SMALL
EMPLOYERS.— 
Rules similar to the rules of section 3111(c)(2) shall 
apply for purposes of this subsection. 
‘‘(3) NONELECTING EMPLOYER.—For purposes 
of paragraph (1), the term ‘nonelecting employer’ 
means any employer for any period with respect to 
which such employer does not have an election under 
section 4980H(a) in effect. 
‘‘(4) SPECIAL
RULE
FOR
SEPARATE
ELEC-
TIONS.—In the case of an employer who makes a 
separate election described in section 4980H(a)(4) 
for any period, subsection (a) shall be applied for 
such period by taking into account only the wages 
paid to employees who are not subject to such elec-
tion.’’. 
(2) DEFINITIONS.—Subsection (e) of section 
3231 of such Code is amended by adding at the end 
the following new paragraph: 
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‘‘(13) SPECIAL RULES FOR TAX ON EMPLOYERS 
ELECTING NOT TO PROVIDE HEALTH BENEFITS.— 
For purposes of section 3221(c)— 
‘‘(A) Paragraph (1) shall be applied with-
out regard to the third sentence thereof. 
‘‘(B) Paragraph (2) shall not apply.’’. 
(3) CONFORMING AMENDMENT.—Subsection (d) 
of section 3221 of such Code, as redesignated by 
this section, is amended by striking ‘‘subsections (a) 
and (b), see section 3231(e)(2)’’ and inserting ‘‘this 
section, see paragraphs (2) and (13)(B) of section 
3231(e)’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods beginning after Decem-
ber 31, 2012. 
Subtitle B—Credit for Small Busi-
ness Employee Health Coverage 
Expenses 
SEC. 
421. 
CREDIT 
FOR 
SMALL 
BUSINESS 
EMPLOYEE 
HEALTH COVERAGE EXPENSES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business-related credits) is amended by 
adding at the end the following new section: 
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‘‘SEC. 45R. SMALL BUSINESS EMPLOYEE HEALTH COV-
ERAGE CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of a qualified small employer, the small business 
employee health coverage credit determined under this sec-
tion for the taxable year is an amount equal to the applica-
ble percentage of the qualified employee health coverage 
expenses of such employer for such taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the applicable percentage is 50 percent. 
‘‘(2) PHASEOUT
BASED
ON
AVERAGE
COM-
PENSATION OF EMPLOYEES.—In the case of an em-
ployer whose average annual employee compensation 
for the taxable year exceeds $20,000, the percentage 
specified in paragraph (1) shall be reduced by a 
number of percentage points which bears the same 
ratio to 50 as such excess bears to $20,000. 
‘‘(c) LIMITATIONS.— 
‘‘(1) PHASEOUT BASED ON EMPLOYER SIZE.— 
In the case of an employer who employs more than 
10 qualified employees during the taxable year, the 
credit determined under subsection (a) shall be re-
duced by an amount which bears the same ratio to 
the amount of such credit (determined without re-
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gard to this paragraph and after the application of 
the other provisions of this section) as— 
‘‘(A) the excess of— 
‘‘(i) the number of qualified employees 
employed by the employer during the tax-
able year, over 
‘‘(ii) 10, bears to 
‘‘(B) 15. 
‘‘(2) CREDIT NOT ALLOWED WITH RESPECT TO 
CERTAIN HIGHLY COMPENSATED EMPLOYEES.—No 
credit shall be allowed under subsection (a) with re-
spect to qualified employee health coverage expenses 
paid or incurred with respect to any employee for 
any taxable year if the aggregate compensation paid 
by the employer to such employee during such tax-
able year exceeds $80,000. 
‘‘(d) QUALIFIED EMPLOYEE HEALTH COVERAGE EX-
PENSES.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified em-
ployee health coverage expenses’ means, with respect 
to any employer for any taxable year, the aggregate 
amount paid or incurred by such employer during 
such taxable year for coverage of any qualified em-
ployee of the employer (including any family cov-
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erage which covers such employee) under qualified 
health coverage. 
‘‘(2) QUALIFIED
HEALTH
COVERAGE.—The 
term ‘qualified health coverage’ means acceptable 
coverage (as defined in section 59B(d)) which— 
‘‘(A) is provided pursuant to an election 
under section 4980H(a), and 
‘‘(B) satisfies the requirements referred to 
in section 4980H(c). 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) QUALIFIED SMALL EMPLOYER.—For pur-
poses of this section, the term ‘qualified small em-
ployer’ means any employer for any taxable year 
if— 
‘‘(A) the number of qualified employees 
employed by such employer during the taxable 
year does not exceed 25, and 
‘‘(B) the average annual employee com-
pensation of such employer for such taxable 
year does not exceed the sum of the dollar 
amounts in effect under subsection (b)(2). 
‘‘(2) QUALIFIED EMPLOYEE.—The term ‘quali-
fied employee’ means any employee of an employer 
for any taxable year of the employer if such em-
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‘‘(2) AGGREGATION RULE.—All persons treated 
as a single employer under subsection (b), (c), (m), 
or (o) of section 414 shall be treated as 1 employer. 
‘‘(3) DENIAL OF DOUBLE BENEFIT.—Any de-
duction otherwise allowable with respect to amounts 
paid or incurred for health insurance coverage to 
which subsection (a) applies shall be reduced by the 
amount of the credit determined under this section. 
‘‘(4) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after 2013, each of the 
dollar amounts in subsections (b)(2), (c)(2), and 
(e)(2) shall be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost of living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins deter-
mined by substituting ‘calendar year 2012’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any increase determined under this paragraph is 
not a multiple of $50, such increase shall be rounded 
to the next lowest multiple of $50.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to general business credit) is amended by striking 
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‘‘plus’’ at the end of paragraph (34), by striking the period 
at the end of paragraph (35) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(36) in the case of a qualified small employer 
(as defined in section 45R(e)), the small business 
employee health coverage credit determined under 
section 45R(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 45Q the following new item: 
‘‘Sec. ?45R.?Small business employee health coverage credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2012. 
Subtitle C—Disclosures To Carry 
Out Health Insurance Exchange 
Subsidies 
SEC. 431. DISCLOSURES TO CARRY OUT HEALTH INSUR-
ANCE EXCHANGE SUBSIDIES. 
(a) IN GENERAL.—Subsection (l) of section 6103 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
‘‘(21) DISCLOSURE OF RETURN INFORMATION 
TO CARRY OUT HEALTH INSURANCE EXCHANGE SUB-
SIDIES.— 
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‘‘(A) IN GENERAL.—The Secretary, upon 
written request from the Health Choices Com-
missioner or the head of a State-based health 
insurance exchange approved for operation 
under section 208 of the America’s Affordable 
Health Choices Act of 2009, shall disclose to of-
ficers and employees of the Health Choices Ad-
ministration or such State-based health insur-
ance exchange, as the case may be, return in-
formation of any taxpayer whose income is rel-
evant in determining any affordability credit de-
scribed in subtitle C of title II of the America’s 
Affordable Health Choices Act of 2009. Such 
return information shall be limited to— 
‘‘(i) taxpayer identity information 
with respect to such taxpayer, 
‘‘(ii) the filing status of such tax-
payer, 
‘‘(iii) the modified adjusted gross in-
come of such taxpayer (as defined in sec-
tion 59B(e)(5)), 
‘‘(iv) the number of dependents of the 
taxpayer, 
‘‘(v) such other information as is pre-
scribed by the Secretary by regulation as 
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might indicate whether the taxpayer is eli-
gible for such affordability credits (and the 
amount thereof), and 
‘‘(vi) the taxable year with respect to 
which the preceding information relates or, 
if applicable, the fact that such informa-
tion is not available. 
‘‘(B) RESTRICTION ON USE OF DISCLOSED 
INFORMATION.—Return information disclosed 
under subparagraph (A) may be used by offi-
cers and employees of the Health Choices Ad-
ministration or such State-based health insur-
ance exchange, as the case may be, only for the 
purposes of, and to the extent necessary in, es-
tablishing and verifying the appropriate amount 
of any affordability credit described in subtitle 
C of title II of the America’s Affordable Health 
Choices Act of 2009 and providing for the re-
payment of any such credit which was in excess 
of such appropriate amount.’’. 
(b) PROCEDURES AND RECORDKEEPING RELATED 
TO DISCLOSURES.—Paragraph (4) of section 6103(p) of 
such Code is amended— 
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(1) by inserting ‘‘, or any entity described in 
subsection (l)(21),’’ after ‘‘or (20)’’ in the matter 
preceding subparagraph (A), 
(2) by inserting ‘‘or any entity described in sub-
section (l)(21),’’ after ‘‘or (o)(1)(A)’’ in subpara-
graph (F)(ii), and 
(3) by inserting ‘‘or any entity described in sub-
section (l)(21),’’ after ‘‘or (20)’’ both places it ap-
pears in the matter after subparagraph (F). 
(c) UNAUTHORIZED DISCLOSURE OR INSPECTION.— 
Paragraph (2) of section 7213(a) of such Code is amended 
by striking ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’. 
Subtitle D—Other Revenue 
Provisions 
PART 1—GENERAL PROVISIONS 
SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS. 
(a) IN GENERAL.—Part VIII of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986, as added 
by this title, is amended by adding at the end the following 
new subpart: 
‘‘Subpart B—Surcharge on High Income Individuals 
‘‘Sec. ?59C.?Surcharge on high income individuals. 
‘‘SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS. 
‘‘(a) GENERAL RULE.—In the case of a taxpayer 
other than a corporation, there is hereby imposed (in addi-
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1254 
tion to any other tax imposed by this subtitle) a tax equal 
to— 
‘‘(1) 1 percent of so much of the modified ad-
justed gross income of the taxpayer as exceeds 
$350,000 but does not exceed $500,000, 
‘‘(2) 1.5 percent of so much of the modified ad-
justed gross income of the taxpayer as exceeds 
$500,000 but does not exceed $1,000,000, and 
‘‘(3) 5.4 percent of so much of the modified ad-
justed gross income of the taxpayer as exceeds 
$1,000,000. 
‘‘(b) TAXPAYERS NOT MAKING A JOINT RETURN.— 
In the case of any taxpayer other than a taxpayer making 
a joint return under section 6013 or a surviving spouse 
(as defined in section 2(a)), subsection (a) shall be applied 
by substituting for each of the dollar amounts therein 
(after any increase determined under subsection (e)) a dol-
lar amount equal to— 
‘‘(1) 50 percent of the dollar amount so in ef-
fect in the case of a married individual filing a sepa-
rate return, and 
‘‘(2) 80 percent of the dollar amount so in ef-
fect in any other case. 
‘‘(c) ADJUSTMENTS BASED ON FEDERAL HEALTH 
REFORM SAVINGS.— 
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term ‘excess Federal health reform savings’ 
means the excess of— 
‘‘(i) the Federal health reform sav-
ings, over 
‘‘(ii) $525,000,000,000. 
‘‘(D) FEDERAL
HEALTH
REFORM
SAV-
INGS.—The term ‘Federal health reform sav-
ings’ means the sum of the amounts described 
in subparagraphs (A) and (B) of paragraph (3). 
‘‘(3) DETERMINATION
OF
FEDERAL
HEALTH 
REFORM
SAVINGS.—Not later than December 1, 
2012, the Director of the Office of Management and 
Budget shall— 
‘‘(A) determine, on the basis of the study 
conducted under paragraph (4), the aggregate 
reductions in Federal expenditures which have 
been achieved as a result of the provisions of, 
and amendments made by, subdivision B of the 
America’s Affordable Health Choices Act of 
2009 during the period beginning on October 1, 
2009, and ending with the latest date with re-
spect to which the Director has sufficient data 
to make such determination, and 
‘‘(B) estimate, on the basis of such study 
and the determination under subparagraph (A), 
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1257 
the aggregate reductions in Federal expendi-
tures which will be achieved as a result of such 
provisions and amendments during so much of 
the period beginning with fiscal year 2010 and 
ending with fiscal year 2019 as is not taken 
into account under subparagraph (A). 
‘‘(4) STUDY
OF
FEDERAL
HEALTH
REFORM 
SAVINGS.—The Director of the Office of Manage-
ment and Budget shall conduct a study of the reduc-
tions in Federal expenditures during fiscal years 
2010 through 2019 which are attributable to the 
provisions of, and amendments made by, subdivision 
B of the America’s Affordable Health Choices Act of 
2009. The Director shall complete such study not 
later than December 1, 2012. 
‘‘(5) REDUCTIONS IN FEDERAL EXPENDITURES 
DETERMINED WITHOUT REGARD TO PROGRAM IN-
VESTMENTS.—For purposes of paragraphs (3) and 
(4), reductions in Federal expenditures shall be de-
termined without regard to section 1121 of the 
America’s Affordable Health Choices Act of 2009 
and other program investments under subdivision B 
thereof. 
‘‘(d) MODIFIED ADJUSTED GROSS INCOME.—For 
purposes of this section, the term ‘modified adjusted gross 
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income’ means adjusted gross income reduced by any de-
duction allowed for investment interest (as defined in sec-
tion 163(d)). In the case of an estate or trust, adjusted 
gross income shall be determined as provided in section 
67(e). 
‘‘(e) INFLATION ADJUSTMENTS.— 
‘‘(1) IN GENERAL.—In the case of taxable years 
beginning after 2011, the dollar amounts in sub-
section (a) shall be increased by an amount equal 
to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, by sub-
stituting ‘calendar year 2010’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
‘‘(2) ROUNDING.—If any amount as adjusted 
under paragraph (1) is not a multiple of $5,000, 
such amount shall be rounded to the next lowest 
multiple of $5,000. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) NONRESIDENT ALIEN.—In the case of a 
nonresident alien individual, only amounts taken 
into account in connection with the tax imposed 
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under section 871(b) shall be taken into account 
under this section. 
‘‘(2) 
CITIZENS
AND
RESIDENTS
LIVING 
ABROAD.—The dollar amounts in effect under sub-
section (a) (after the application of subsections (b) 
and (e)) shall be decreased by the excess of— 
‘‘(A) the amounts excluded from the tax-
payer’s gross income under section 911, over 
‘‘(B) the amounts of any deductions or ex-
clusions disallowed under section 911(d)(6) 
with respect to the amounts described in sub-
paragraph (A). 
‘‘(3) CHARITABLE
TRUSTS.—Subsection (a) 
shall not apply to a trust all the unexpired interests 
in which are devoted to one or more of the purposes 
described in section 170(c)(2)(B). 
‘‘(4) NOT TREATED AS TAX IMPOSED BY THIS 
CHAPTER
FOR
CERTAIN
PURPOSES.—The tax im-
posed under this section shall not be treated as tax 
imposed by this chapter for purposes of determining 
the amount of any credit under this chapter or for 
purposes of section 55.’’. 
(b) CLERICAL AMENDMENT.—The table of subparts 
for part VIII of subchapter A of chapter 1 of such Code, 
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as added by this title, is amended by inserting after the 
item relating to subpart A the following new item: 
‘‘SUBPART B. SURCHARGE ON HIGH INCOME INDIVIDUALS.’’. 
(c) SECTION 15 NOT TO APPLY.—The amendment 
made by subsection (a) shall not be treated as a change 
in a rate of tax for purposes of section 15 of the Internal 
Revenue Code of 1986. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
SEC. 442. DELAY IN APPLICATION OF WORLDWIDE ALLOCA-
TION OF INTEREST. 
(a) IN GENERAL.—Paragraphs (5)(D) and (6) of sec-
tion 864(f) of the Internal Revenue Code of 1986 are each 
amended by striking ‘‘December 31, 2010’’ and inserting 
‘‘December 31, 2019’’. 
(b) TRANSITION.—Subsection (f) of section 864 of 
such Code is amended by striking paragraph (7). 
PART 2—PREVENTION OF TAX AVOIDANCE 
SEC. 451. LIMITATION ON TREATY BENEFITS FOR CERTAIN 
DEDUCTIBLE PAYMENTS. 
(a) IN GENERAL.—Section 894 of the Internal Rev-
enue Code of 1986 (relating to income affected by treaty) 
is amended by adding at the end the following new sub-
section: 
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