I 
111TH CONGRESS 
1ST SESSION H. R. 2520 
To provide comprehensive solutions for the health care system of the United 
States, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 20, 2009 
Mr. RYAN of Wisconsin (for himself and Mr. NUNES) introduced the following 
bill; which was referred to the Committee on Energy and Commerce, and 
in addition to the Committee on Ways and Means, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To provide comprehensive solutions for the health care 
system of the United States, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Patients’ Choice Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—INVESTING IN PREVENTION 
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Sec. 101. Strategic approach to outcome-based prevention. 
Sec. 102. State grants for outcome-based prevention effort. 
Sec. 103. Focusing the food stamp program on nutrition. 
Sec. 104. Immunizations. 
TITLE II—STATE-BASED HEALTH CARE EXCHANGES 
Sec. 201. State-based health care exchanges. 
Sec. 202. Requirements. 
Sec. 203. State Exchange incentives. 
TITLE III—FAIR TAX TREATMENT FOR ALL AMERICANS TO 
AFFORD HEALTH CARE 
Sec. 300. Reference. 
Subtitle A—Refundable and Advanceable Credit for Certain Health Insurance 
Coverage 
Sec. 301. Refundable and advanceable credit for certain health insurance cov-
erage. 
Sec. 302. Requiring employer transparency about employee benefits. 
Sec. 303. Changes to existing tax preferences for medical coverage, etc., for in-
dividuals eligible for qualified health insurance credit. 
Subtitle B—Health Savings Accounts 
Sec. 311. Improvements to health savings accounts. 
Sec. 312. Exception to requirement for employers to make comparable health 
savings account contributions. 
TITLE IV—FAIRNESS FOR EVERY AMERICAN PATIENT 
Subtitle A—Medicaid Modernization 
Sec. 401. Medicaid modernization. 
Sec. 402. Outreach. 
Sec. 403. Transition rules; miscellaneous provisions. 
Subtitle B—Supplemental Health Care Assistance for Low-Income Families 
Sec. 411. Supplemental Health Care Assistance for Low-Income Families. 
TITLE V—FIXING MEDICARE FOR AMERICAN SENIORS 
Subtitle A—Increasing Programmatic Efficiency, Economy, and Accountability 
Sec. 501. Eliminating inefficiencies and increasing choice in Medicare Advan-
tage. 
Sec. 502. Medicare Accountable Care Organization demonstration program. 
Sec. 503. Reducing government handouts to wealthier seniors. 
Sec. 504. Rewarding prevention. 
Sec. 505. Promoting healthcare provider transparency. 
Sec. 506. Availability of Medicare and Medicaid claims and patient encounter 
data. 
Subtitle B—Reducing Fraud and Abuse 
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Sec. 511. Requiring the Secretary of Health and Human Services to change the 
Medicare beneficiary identifier used to identify Medicare bene-
ficiaries under the Medicare program. 
Sec. 512. Use of technology for real-time data review. 
Sec. 513. Detection of medicare fraud and abuse. 
Sec. 514. Edits on 855S Medicare enrollment application and exemption of 
pharmacists from surety bond requirement. 
Sec. 515. GAO study and report on effectiveness of surety bond requirements 
for suppliers of durable medical equipment in combating fraud. 
TITLE VI—ENDING LAWSUIT ABUSE 
Sec. 601. State grants to create health court solutions. 
TITLE VII—PROMOTING HEALTH INFORMATION TECHNOLOGY 
Subtitle A—Assisting the Development of Health Information Technology 
Sec. 701. Purpose. 
Sec. 702. Health record banking. 
Sec. 703. Application of Federal and State security and confidentiality stand-
ards. 
Subtitle B—Removing Barriers to the Use of Health Information Technology 
to Better Coordinate Health Care 
Sec. 711. Safe harbors to antikickback civil penalties and criminal penalties for 
provision of health information technology and training serv-
ices. 
Sec. 712. Exception to limitation on certain physician referrals (under Stark) 
for provision of health information technology and training 
services to health care professionals. 
Sec. 713. Rules of construction regarding use of consortia. 
TITLE VIII—HEALTH CARE SERVICES COMMISSION 
Subtitle A—Establishment and General Duties 
Sec. 801. Establishment. 
Sec. 802. General authorities and duties. 
Sec. 803. Dissemination. 
Subtitle B—Forum for Quality and Effectiveness in Health Care 
Sec. 811. Establishment of office. 
Sec. 812. Membership. 
Sec. 813. Duties. 
Sec. 814. Adoption and enforcement of guidelines and standards. 
Sec. 815. Additional requirements. 
Subtitle C—General Provisions 
Sec. 821. Certain administrative authorities. 
Sec. 822. Funding. 
Sec. 823. Definitions. 
Subtitle D—Terminations and Transition 
Sec. 831. Termination of Agency for Healthcare Research and Quality. 
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Sec. 832. Transition. 
Subtitle E—Independent Health Record Trust 
Sec. 841. Short title. 
Sec. 842. Purpose. 
Sec. 843. Definitions. 
Sec. 844. Establishment, certification, and membership of Independent Health 
Record Trusts. 
Sec. 845. Duties of IHRT to IHRT participants. 
Sec. 846. Availability and use of information from records in IHRT consistent 
with privacy protections and agreements. 
Sec. 847. Voluntary nature of trust participation and information sharing. 
Sec. 848. Financing of activities. 
Sec. 849. Regulatory oversight. 
TITLE IX—MISCELLANEOUS 
Sec. 901. Health care choice for veterans. 
Sec. 902. Health care choice for Indians. 
Sec. 903. Termination of Federal Coordinating Council for Comparative Effec-
tiveness Research. 
Sec. 904. HHS and GAO joint study and report on costs of the 5 medical con-
ditions that have the greatest impact. 
TITLE I—INVESTING IN 
PREVENTION 
SEC. 101. STRATEGIC APPROACH TO OUTCOME-BASED PRE-
VENTION. 
(a) INTERAGENCY COORDINATING COMMITTEE.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (referred to in this title as the 
‘‘Secretary’’) shall convene an interagency coordi-
nating committee to develop a national strategic 
plan for prevention. The Secretary shall serve as the 
chairperson of the committee. 
(2) COMPOSITION.—In carrying out paragraph 
(1), the Secretary shall include the participation 
of— 
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(A) the Director of the National Institutes 
of Health; 
(B) the Director of the Centers for Disease 
Control and Prevention; 
(C) the Administrator of the Agency for 
Healthcare Research and Quality; 
(D) the Administrator of the Substance 
Abuse and Mental Health Services Administra-
tion; 
(E) the Administrator of the Health Re-
sources and Services Administration; 
(F) the Secretary of Agriculture; 
(G) the Director of the Centers for Medi-
care & Medicaid Services; 
(H) the Administrator of the Environ-
mental Protection Agency; 
(I) the Director of the Indian Health Serv-
ice; 
(J) the Administrator of the Administra-
tion on Aging; 
(K) the Secretary of Veterans Affairs; 
(L) the Secretary of Defense; 
(M) the Secretary of Education; and 
(N) the Secretary of Labor. 
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(3) REPORT AND PLAN.—Not later than 1 year 
after the date of enactment of this Act, the Sec-
retary, acting through the coordinating committee 
convened under paragraph (1), shall submit to Con-
gress a report concerning the recommendation of the 
committee for health promotion and disease preven-
tion activities. Such report shall include a specific 
strategic plan that shall include— 
(A) a list of national priorities on health 
promotion and disease prevention to address 
lifestyle behavior modification (smoking ces-
sation, proper nutrition, and appropriate exer-
cise) and the prevention measures for the 5 
leading disease killers in the United States; 
(B) specific science-based initiatives to 
achieve the measurable goals of Healthy People 
2010 regarding nutrition, exercise, and smoking 
cessation, and targeting the 5 leading disease 
killers in the United States; 
(C) specific plans for consolidating Federal 
health programs and Centers that exist to pro-
mote healthy behavior and reduce disease risk 
(including eliminating programs and offices de-
termined to be ineffective in meeting the pri-
ority goals of Healthy People 2010), that in-
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clude transferring the nutrition guideline devel-
opment responsibility from the Secretary of Ag-
riculture to the Director of the Centers for Dis-
ease Control and Prevention; 
(D) specific plans to ensure that all Fed-
eral health care programs are fully coordinated 
with science-based prevention recommendations 
promulgated by the Director of the Centers for 
Disease Control and Prevention; 
(E) specific plans to ensure that all non- 
Department of Health and Human Services 
prevention programs are based on the science- 
based guidelines developed by the Centers for 
Disease Control and Prevention under subpara-
graph (D); and 
(F) a list of new non-Federal and non-gov-
ernment partners identified by the committee to 
build Federal capacity in health promotion and 
disease prevention efforts. 
(4) ANNUAL REQUEST TO GIVE TESTIMONY.— 
The Secretary shall annually request an opportunity 
to testify before Congress concerning the progress 
made by the United States in meeting the outcome- 
based standards of Healthy People 2010 with re-
spect to disease prevention and measurable outcomes 
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and effectiveness of Federal programs related to this 
goal. 
(5) PERIODIC REVIEWS.—The Secretary shall 
conduct periodic reviews, not less than every 5 years, 
and grading of every Federal disease prevention and 
health promotion initiatives, programs, and agencies. 
Such reviews shall be evaluated based on effective-
ness in meeting metrics-based goals with an analysis 
posted on such agencies’ public Internet websites. 
(b) FEDERAL MESSAGING ON HEALTH PROMOTION 
AND DISEASE PREVENTION.— 
(1) MEDIA CAMPAIGNS.— 
(A) IN GENERAL.—Not later than 1 year 
after the date of enactment of this Act, the Sec-
retary, acting through the Director of the Cen-
ters for Disease Control and Prevention, shall 
establish and implement a national science- 
based media campaign on health promotion and 
disease prevention. 
(B) REQUIREMENTS OF CAMPAIGN.—The 
campaign implemented under subparagraph 
(A)— 
(i) shall be designed to address proper 
nutrition, regular exercise, smoking ces-
sation, obesity reduction, the 5 leading dis-
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ease killers in the United States, and sec-
ondary prevention through disease screen-
ing promotion; 
(ii) shall be carried out through com-
petitively bid contracts awarded to entities 
providing for the professional production 
and design of such campaign; 
(iii) may include the use of television, 
radio, Internet, and other commercial mar-
keting venues and may be targeted to spe-
cific age groups based on peer-reviewed so-
cial research; 
(iv) shall not be duplicative of any 
other Federal efforts relating to health 
promotion and disease prevention; and 
(v) may include the use of humor and 
nationally recognized positive role models. 
(C) EVALUATION.—The Secretary shall en-
sure that the campaign implemented under sub-
paragraph (A) is subject to an independent 
evaluation every 2 years and shall report every 
2 years to Congress on the effectiveness of such 
campaigns 
towards 
meeting 
science-based 
metrics. 
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(2) WEBSITE.—The Secretary, in consultation 
with private-sector experts, shall maintain or enter 
into a contract to maintain an Internet website to 
provide science-based information on guidelines for 
nutrition, regular exercise, obesity reduction, smok-
ing cessation, and specific chronic disease preven-
tion. Such website shall be designed to provide infor-
mation to health care providers and consumers. 
(3) 
DISSEMINATION
OF
INFORMATION 
THROUGH
PROVIDERS.—The 
Secretary, 
acting 
through the Centers for Disease Control and Preven-
tion, shall develop and implement a plan for the dis-
semination of health promotion and disease preven-
tion information consistent with national priorities 
described in the strategic and implementing plan 
under subsection (a)(3)(A), to health care providers 
who participate in Federal programs, including pro-
grams administered by the Indian Health Service, 
the Department of Veterans Affairs, the Department 
of Defense, and the Health Resources and Services 
Administration, and the Medicare and Medicaid Pro-
grams. 
(4) PERSONALIZED PREVENTION PLANS.— 
(A) CONTRACT.—The Secretary, acting 
through the Director of the Centers for Disease 
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Control and Prevention, shall enter into a con-
tract with a qualified entity for the development 
and operation of a Federal Internet website 
personalized prevention plan tool. 
(B) USE.—The website developed under 
subparagraph (A) shall be designed to be used 
as a source of the most up-to-date scientific evi-
dence relating to disease prevention for use by 
individuals. Such website shall contain a compo-
nent that enables an individual to determine 
their disease risk (based on personal health and 
family history, BMI, and other relevant infor-
mation) relating to the 5 leading diseases in the 
United States, and obtain personalized sugges-
tions for preventing such diseases. 
(5) INTERNET
PORTAL.—The Secretary shall 
establish an Internet portal for accessing risk-assess-
ment tools developed and maintained by private and 
academic entities. 
(6) PRIORITY FUNDING.—Funding for the ac-
tivities authorized under this section shall take pri-
ority over funding from the Centers for Disease Con-
trol and Prevention provided for grants to States 
and other entities for similar purposes and goals as 
provided for in this section. Not to exceed 
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$500,000,000 shall be expended on the campaigns 
and activities required under this Act. 
SEC. 102. STATE GRANTS FOR OUTCOME-BASED PREVEN-
TION EFFORT. 
(a) IN GENERAL.—If the Secretary determines that 
it is essential to meeting the national priorities described 
in the plan required under section 101(a)(3)(A), the Sec-
retary may award grants to States for the conduct of spe-
cific health promotion and disease prevention activities. 
(b) ELIGIBILITY.—To be eligible to receive a grant 
under subsection (a), a State shall submit to the Secretary 
an application at such time, in such manner, and con-
taining such information as the Secretary may require, in-
cluding a strategic plan that shall— 
(1) describe the specific health promotion and 
disease prevention activities to be carried out under 
this grant; 
(2) include a list of the barriers that exist with-
in the State to meeting specific goals of Healthy 
People 2010; 
(3) include targeted demographic indicators and 
measurable objectives with respect to health pro-
motion and disease prevention; 
(4) contain a set of process outcomes and mile-
stones, based on the process outcomes and mile-
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stones developed by the Secretary, for measuring the 
effectiveness of activities carried out under the grant 
in the State; and 
(5) outline the manner in which interventions to 
be carried out under this grant will reduce morbidity 
and mortality within the State over a 5-year period 
(or over a 10-year period, if the Secretary deter-
mines such period appropriate for adequately meas-
uring progress). 
(c) PROCESS OUTCOMES AND MILESTONES.— 
(1) IN GENERAL.—The Secretary shall develop 
process outcomes and milestones to be used to meas-
ure the effectiveness of activities carried out under 
a grant under this section by a State. 
(2) DETERMINATIONS.—If, beginning 2 years 
after the date on which a grant is awarded to a 
State under this section, the Secretary determines 
that the State is failing to make adequate progress 
in meeting the outcomes and milestones contained in 
the State plan under subsection (b)(4), the Secretary 
shall provide the State with technical assistance on 
how to make such progress. Such technical assist-
ance shall continue for a period of 2 years. 
(3) CONTINUED
FAILURE
TO
MEET
OBJEC-
TIVES.—If after the expiration of the 2-year period 
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described in paragraph (2), the Secretary determines 
that the State is failing to make adequate progress 
in meeting the outcomes and milestones contained in 
the State plan under subsection (b)(4) over a 5-year 
period, the Secretary shall terminate all funding to 
the State under a grant under this section. 
(d) REGIONAL ACTIVITIES.—A State may use an 
amount, not to exceed 15 percent of the total grant 
amount to such State, to carry out regional activities in 
conjunction with other States. 
(e) TARGETED ACTIVITIES.—A State may use grant 
funds to target specific populations within the State to 
achieve specific outcomes described in Healthy People 
2010. 
(f) INNOVATIVE INCENTIVE STRUCTURES.—The Sec-
retary may award grants to States for the purposes of de-
veloping innovative incentive structures to encourage indi-
viduals to adopt specific prevention behaviors such as re-
ducing their body mass index or for smoking cessation. 
(g) WELLNESS BONUSES.— 
(1) IN GENERAL.—The Secretary shall award 
wellness bonus payments to at least 5, but not more 
than 10, States that demonstrate the greatest 
progress in reducing disease rates and risk factors 
and increasing heathy behaviors. 
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(2) REQUIREMENT.—To be eligible to receive a 
bonus payment under paragraph (1), a State shall 
demonstrate— 
(A) the progress described in paragraph 
(1); and 
(B) that the State has met a specific floor 
for progress outlined in the science-based 
metrics of Healthy People 2010. 
(3) USE
OF
PAYMENTS.—Bonus payments 
under this subsection may only be used by a State 
for the purposes of health promotion and disease 
prevention. 
(4) FUNDING.—Out of funds appropriated to 
the Director of the Centers for Disease Control and 
Prevention for each fiscal year beginning with fiscal 
year 2010, the Director shall give priority to using 
$50,000,000 of such funds to make bonus payments 
under this subsection. 
(h) ADMINISTRATIVE EXPENSES.—A State may use 
not more than 5 percent of the amount of a grant under 
this section to carry out administrative activities. 
(i) STATE.—In this section, the term ‘‘State’’ means 
the 50 States, the District of Columbia, the Common-
wealth of Puerto Rico, Guam, Samoa, the United States 
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Virgin Islands, and the Commonwealth of the Northern 
Mariana Islands. 
(j) AUTHORIZATION OF APPROPRIATIONS.—Funding 
for the activities authorized under this section shall take 
priority over funding from the Centers for Disease Control 
and Prevention provided for grants to States and other 
entities for similar purposes and goals as provided for in 
this section, not to exceed $300,000,000 for each fiscal 
year. 
SEC. 103. FOCUSING THE FOOD STAMP PROGRAM ON NU-
TRITION. 
(a) COUNSELING BROCHURE.—The Director of the 
Centers for Disease Control and Prevention shall develop, 
and the Secretary of Agriculture shall distribute to each 
individual and family enrolled in the Food Stamp Program 
under the Food Stamp Act of 1977 (7 U.S.C. 2011 et 
seq.), a science-based nutrition counseling brochure. 
(b) LIMITATIONS ON FOOD STAMP PURCHASES.— 
(1) IN
GENERAL.—Not later than 6 months 
after the date of enactment of this Act, the Sec-
retary of Agriculture shall, based on scientific, peer- 
reviewed recommendations provided by a Commis-
sion that includes public health, medical, and nutri-
tion experts and the Director of the Centers for Dis-
ease Control and Prevention, develop lists of foods 
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that do not meet science-based standards for proper 
nutrition and that may not be purchased under the 
food stamp program. Such list shall be updated on 
an annual basis to ensure the most current science- 
based recommendations are applied to the food 
stamp program. 
(2) AUTOMATED
ENFORCEMENT.—The Sec-
retary of Agriculture shall, through regulations, en-
sure that the limitations on food purchases under 
paragraph (1) is enforced through the food stamp 
program’s automated system. 
(3) IMPLEMENTATION.—The Secretary of Agri-
culture shall promulgate the regulations described in 
paragraph (2) by the date that is not later than 1 
year after the date of enactment of this section. 
SEC. 104. IMMUNIZATIONS. 
(a) PURCHASE OF VACCINES.—Notwithstanding any 
other provision of law, a State may use amounts provided 
under section 317 of the Public Health Service Act (42 
U.S.C. 247b) for immunization programs to purchase vac-
cines for use in health care provider offices and schools. 
(b) TECHNICAL ASSISTANCE
AND REDUCTION
IN 
FUNDING.—If a State does not achieve a benchmark of 
80 percent coverage within the State for Centers for Dis-
ease Control and Prevention-recommended vaccines, the 
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Director of the Centers shall provide technical assistance 
to the State for a period of 2 years. If after the expiration 
of such 2-year period the State continues to fail to achieve 
such benchmark, the Secretary shall reduce funding pro-
vided under section 317 of the Public Health Service Act 
to such State by 5 percent. 
(c) BONUS GRANT.—A State achieving a benchmark 
of 90 percent or greater coverage within the State for Cen-
ters for Disease Control and Prevention-recommended 
vaccines shall be eligible for a bonus grant from amounts 
appropriated under subsection (d). 
(d) AUTHORIZATION OF APPROPRIATIONS.—Out of 
funds appropriated to the Director of the Centers for Dis-
ease Control and Prevention for each fiscal year beginning 
with fiscal year 2010, there shall be made available to 
carry out this section, $50,000,000 for each fiscal year. 
(e) FUNDING FOR SECTION 317.—Section 317(j)(1) 
of the Public Health Service Act (42 U.S.C. 247b(j)(1)) 
is amended by striking ‘‘2005’’ and inserting ‘‘2012’’. 
TITLE II—STATE-BASED HEALTH 
CARE EXCHANGES 
SEC. 201. STATE-BASED HEALTH CARE EXCHANGES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (referred to in this title as the ‘‘Sec-
retary’’) shall establish a process for the review of applica-
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tions submitted by States for the establishment and imple-
mentation of State-based health care Exchanges (referred 
to in this title as a ‘‘State Exchange’’) and for the certifi-
cation of such Exchanges. The Secretary shall certify a 
State Exchange if the Secretary determines that such Ex-
change meets the requirements of this title. 
(b) CONTINUED CERTIFICATION.—The certification 
of a State Exchange under subsection (a) shall remain in 
effect until the Secretary determines that the Exchange 
has failed to meet any of the requirements under this title. 
SEC. 202. REQUIREMENTS. 
(a) 
GENERAL
REQUIREMENTS
FOR
CERTIFI-
CATION.—An application for certification under section 
201(a) shall demonstrate compliance with the following: 
(1) PURPOSE.—The primary purpose of a State 
Exchange shall be the facilitation of the individual 
purchase of innovative private health insurance and 
the creation of a market where private health plans 
compete for enrollees based on price and quality. 
(2) ADMINISTRATION.—A State shall ensure 
the operation of the State Exchange through direct 
contracts with the health insurance plans that are 
participating in the State Exchange or through a 
contract with a third party administrator for the op-
eration of the Exchange. 
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(3) PLAN PARTICIPATION.—A State shall not 
restrict or otherwise limit the ability of a health in-
surance plan to participate in, and offer health in-
surance coverage through, the State Exchange, so 
long as the health insurance issuers involved are 
duly licensed under State insurance laws applicable 
to all health insurance issuers in the State and oth-
erwise comply with the requirements of this title. 
(4) PREMIUMS.— 
(A) AMOUNT.—A State shall not determine 
premium or cost sharing amounts for health in-
surance coverage offered through the State Ex-
change. 
(B) COLLECTION METHOD.—A State shall 
ensure the existence of an effective and efficient 
method for the collection of premiums for 
health insurance coverage offered through the 
State Exchange. 
(b) BENEFIT PARITY WITH MEMBERS
OF CON-
GRESS.—With respect to health insurance issuers offering 
health insurance coverage through the State Exchange, 
the State shall not impose any requirement that such 
issuers provide coverage that includes benefits different 
than requirements on plans offered to Members of Con-
gress under chapter 89 of title 5, United States Code. 
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(c) FACILITATING
UNIVERSAL
COVERAGE
FOR 
AMERICANS.— 
(1) AUTOMATIC ENROLLMENT.—The State Ex-
change shall ensure that health insurance coverage 
offered through the Exchange provides for the appli-
cation of uniform mechanisms that are designed to 
encourage and facilitate the enrollment of all eligible 
individuals in Exchange-based health insurance cov-
erage. Such mechanisms shall include automatic en-
rollment through various venues, which may include 
emergency rooms, the submission of State tax forms, 
places of employment in the State, and State depart-
ments of motor vehicles. 
(2) OTHER ENROLLMENT OPPORTUNITIES.— 
(A) IN
GENERAL.—The State Exchange 
shall ensure that health insurance coverage of-
fered through the Exchange permits enrollment, 
and changes in enrollment, of individuals at the 
time such individuals become eligible individuals 
in the State. 
(B) ANNUAL
OPEN
ENROLLMENT
PERI-
ODS.—The State Exchange shall ensure that 
health insurance coverage offered through the 
Exchange permits eligible individuals to annu-
ally change enrollment among the coverage of-
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fered through the Exchange, subject to sub-
paragraph (A). 
(C) INCENTIVES
FOR
CONTINUOUS
AN-
NUAL
COVERAGE.—The State Exchange shall 
include an incentive for eligible individuals to 
remain insured from plan year to plan year, 
and may include incentives such as State tax 
incentives or premium-based incentives. 
(3) GUARANTEED ACCESS FOR INDIVIDUALS.— 
The State Exchange shall ensure that, with respect 
to health insurance coverage offered through the Ex-
change, all eligible individuals are able to enroll in 
the coverage of their choice provided that such indi-
viduals agree to make applicable premium and cost 
sharing payments. 
(4) LIMITATION ON PRE-EXISTING CONDITION 
EXCLUSIONS.—The State Exchange shall ensure 
that health insurance coverage offered through the 
Exchange meets the requirements of section 9801 of 
the Internal Revenue Code of 1986 in the same 
manner as if such coverage was a group health plan. 
(5) OPT-OUT.—Nothing in this title shall be 
construed to require that an individual be enrolled in 
health insurance coverage. 
(d) LIMITATION ON EXORBITANT PREMIUMS.— 
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(1) ESTABLISHMENT
OF
MECHANISM.—With 
respect to health insurance coverage offered through 
the State Exchange, the Exchange shall establish a 
mechanisms to protect enrollees from the imposition 
of excessive premiums, to reduce adverse selection, 
and to share risk. 
(2) MECHANISM
OPTIONS.—The mechanisms 
referred to in paragraph (1) may include the fol-
lowing: 
(A) INDEPENDENT RISK ADJUSTMENT.— 
The implementation of risk-adjustment among 
health insurance coverage offered through the 
State Exchange through a contract entered into 
with a private, independent board. Such board 
shall include representation of health insurance 
issuers and State officials but shall be inde-
pendently controlled. The State Exchange shall 
ensure that risk-adjustment implemented under 
this subparagraph shall be based on a blend of 
patient diagnoses and estimated costs. 
(B) HEALTH SECURITY POOLS.—The es-
tablishment (or continued operation under sec-
tion 2745 of the Public Health Service Act) of 
a health security pool to guarantee high-risk in-
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dividuals access to affordable, quality health 
care. 
(C) REINSURANCE.—The implementation 
of a successful reinsurance mechanisms to guar-
antee high-risk individuals access to affordable, 
quality health care. 
(e) MEDICAID
AND SCHIP BENEFICIARIES.—The 
State Exchange shall include procedures to permit eligible 
individuals who are receiving (or who are eligible to re-
ceive) health care under title XIX or XXI of the Social 
Security Act to enroll in health insurance coverage offered 
through the Exchange. 
(f) DISSEMINATION OF COVERAGE INFORMATION.— 
The State Exchange shall ensure that each health insur-
ance issuer that provides health insurance coverage 
through the Exchange disseminate to eligible individuals 
and employers within the State information concerning 
health insurance coverage options, including the plans of-
fered and premiums and benefits for such plans. 
(g) REGIONAL OPTIONS.— 
(1) INTERSTATE
COMPACTS.—Two or more 
States that establish a State Exchange may enter 
into interstate compacts providing for the regula-
tions of health insurance coverage offered within 
such States. 
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(2) MODEL
LEGISLATION.—States adopting 
model legislation as developed by the National Asso-
ciation of Insurance Commissioners shall be eligible 
to enter into an interstate compact as provided for 
in this section. 
(3) MULTI-STATE POOLING ARRANGEMENTS.— 
State Exchanges may implement a multi-state health 
care coverage pooling arrangement under this title. 
(h) ELIGIBLE INDIVIDUAL.—In this title, the term 
‘‘eligible individual’’ means an individual who is— 
(1) a citizen or national of the United States or 
an alien lawfully admitted to the United States for 
permanent residence or otherwise residing in the 
United States under color of law; 
(2) a resident of the State involved; 
(3) not incarcerated; and 
(4) not eligible for coverage under parts A and 
B (or C) of the Medicare program under title XVIII 
of the Social Security Act. 
SEC. 203. STATE EXCHANGE INCENTIVES. 
(a) GRANTS.—The Secretary may award grants, pur-
suant to subsection (b), to States for the development, im-
plementation, and evaluation of certified State Exchanges 
and to provide more options and choice for individuals 
purchasing health insurance coverage. 
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(b) ONE-TIME INCREASE IN MEDICAID PAYMENT.— 
In the case of a State awarded a grant to carry out this 
section, the total amount of the Federal payment deter-
mined for the State under section 1913 of the Social Secu-
rity Act (as amended by section 401) for fiscal year 2011 
shall be increased by an amount equal to 1 percent of the 
total amount of payments made to the State for fiscal year 
2010 under section 1903(a) of the Social Security Act (42 
U.S.C. 1396b(a)) for purposes of carrying out a grant 
awarded under this section. Amounts paid to a State pur-
suant to this subsection shall remain available until ex-
pended. 
TITLE 
III—FAIR 
TAX 
TREAT-
MENT FOR ALL AMERICANS 
TO AFFORD HEALTH CARE 
SEC. 300. REFERENCE. 
Except as otherwise expressly provided, whenever in 
this title an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
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Subtitle 
A—Refundable 
and 
Advanceable Credit for Certain 
Health Insurance Coverage 
SEC. 301. REFUNDABLE AND ADVANCEABLE CREDIT FOR 
CERTAIN HEALTH INSURANCE COVERAGE. 
(a) ADVANCEABLE CREDIT.—Subpart A of part IV 
of subchapter A of chapter 1 (relating to nonrefundable 
personal credits) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 25E. QUALIFIED HEALTH INSURANCE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year the sum of 
the monthly limitations determined under subsection (b) 
for the taxpayer and the taxpayer’s spouse and depend-
ents. 
‘‘(b) MONTHLY LIMITATION.— 
‘‘(1) IN GENERAL.—The monthly limitation for 
each month during the taxable year for an eligible 
individual is 1⁄12th of— 
‘‘(A) the applicable adult amount, in the 
case that the eligible individual is the taxpayer 
or the taxpayer’s spouse, 
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‘‘(B) the applicable adult amount, in the 
case that the eligible individual is an adult de-
pendent, and 
‘‘(C) the applicable child amount, in the 
case that the eligible individual is a child de-
pendent. 
‘‘(2) LIMITATION ON AGGREGATE AMOUNT.— 
Notwithstanding paragraph (1), the aggregate 
monthly limitations for the taxpayer and the tax-
payer’s spouse and dependents for any month shall 
not exceed 1⁄12th of the applicable aggregate amount. 
‘‘(3) NO CREDIT FOR INELIGIBLE MONTHS.— 
With respect to any individual, the monthly limita-
tion shall be zero for any month for which such indi-
vidual is not an eligible individual. 
‘‘(4) APPLICABLE AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of this 
section— 
‘‘(i) APPLICABLE ADULT AMOUNT.— 
The applicable adult amount is $2,290. 
‘‘(ii) APPLICABLE CHILD AMOUNT.— 
The applicable child amount is $1,710. 
‘‘(iii) 
APPLICABLE
AGGREGATE 
AMOUNT.—The 
applicable 
aggregate 
amount is $5,710. 
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‘‘(B) COST-OF-LIVING ADJUSTMENTS.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning in a calendar year 
after 2011, each dollar amount contained 
in subparagraph (A) shall be increased by 
an amount equal to such dollar amount 
multiplied by the blended cost-of-living ad-
justment. 
‘‘(ii) BLENDED
COST-OF-LIVING
AD-
JUSTMENT.—For purposes of clause (i), 
the 
blended 
cost-of-living 
adjustment 
means one-half of the sum of— 
‘‘(I) the cost-of-living adjustment 
determined under section 1(f)(3) for 
the calendar year in which the taxable 
year begins by substituting ‘calendar 
year 2010’ for ‘calendar year 1992’ in 
subparagraph (B) thereof, plus 
‘‘(II) the cost-of-living adjust-
ment 
determined 
under 
section 
213(d)(10)(B)(ii) for the calendar 
year in which the taxable year begins 
by substituting ‘2010’ for ‘1996’ in 
subclause (II) thereof. 
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‘‘(iii) ROUNDING.—Any increase de-
termined under clause (i) shall be rounded 
to the nearest multiple of $10. 
‘‘(C) 
REVENUE
NEUTRALITY
ADJUST-
MENTS.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning in a calendar year 
after 2011, each dollar amount contained 
in subparagraph (A), as adjusted under 
subparagraph (B), shall be further ad-
justed (if necessary) such that the aggre-
gate of such dollar amounts allowed as 
credits under this section for such taxable 
year equals but does not exceed the total 
increase in revenues in the Treasury re-
sulting from the amendments made by sec-
tions 303 and 401 of the Patients’ Choice 
Act for such taxable year as estimated by 
the Secretary. 
‘‘(ii) DATE
OF
ADJUSTMENT.—The 
Secretary shall announce the adjustments 
for any taxable year under this subpara-
graph not later than the preceding October 
1. 
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‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—In 
the case of a taxable year to which section 26(a)(2) does 
not apply, the credit allowed under subsection (a) for the 
taxable year shall not exceed the excess of— 
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under this 
subpart (other than this section) and section 27 for 
the taxable year. 
‘‘(d) EXCESS CREDIT REFUNDABLE
TO CERTAIN 
TAX-FAVORED ACCOUNTS.—If— 
‘‘(1) the credit which would be allowable under 
subsection (a) if only qualified refund eligible health 
insurance were taken into account under this sec-
tion, exceeds 
‘‘(2) the limitation imposed by section 26 or 
subsection (c) for the taxable year, 
such excess shall be paid by the Secretary into the des-
ignated account of the taxpayer. 
‘‘(e) ELIGIBLE INDIVIDUAL.—For purposes of this 
section— 
‘‘(1) IN
GENERAL.—The term ‘eligible indi-
vidual’ means, with respect to any month, an indi-
vidual who— 
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‘‘(A) is the taxpayer, the taxpayer’s 
spouse, or the taxpayer’s dependent, and 
‘‘(B) is covered under qualified health in-
surance as of the 1st day of such month. 
‘‘(2) MEDICARE
COVERAGE, MEDICAID
DIS-
ABILITY
COVERAGE, AND
MILITARY
COVERAGE.— 
The term ‘eligible individual’ shall not include any 
individual who for any month is— 
‘‘(A) entitled to benefits under part A of 
title XVIII of the Social Security Act or en-
rolled under part B of such title, and the indi-
vidual is not a participant or beneficiary in a 
group health plan or large group health plan 
that is a primary plan (as defined in section 
1862(b)(2)(A) of such Act), 
‘‘(B) enrolled by reason of disability in the 
program under title XIX of such Act, or 
‘‘(C) entitled to benefits under chapter 55 
of title 10, United States Code, including under 
the TRICARE program (as defined in section 
1072(7) of such title). 
‘‘(3) IDENTIFICATION
REQUIREMENTS.—The 
term ‘eligible individual’ shall not include any indi-
vidual for any month unless the policy number asso-
ciated with the qualified health insurance and the 
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TIN of each eligible individual covered under such 
health insurance for such month are included on the 
return of tax for the taxable year in which such 
month occurs. 
‘‘(4) PRISONERS.—The term ‘eligible individual’ 
shall not include any individual for a month if, as 
of the first day of such month, such individual is im-
prisoned under Federal, State, or local authority. 
‘‘(5) ALIENS.—The term ‘eligible individual’ 
shall not include any alien individual who is not a 
lawful permanent resident of the United States. 
‘‘(f) HEALTH INSURANCE.—For purposes of this sec-
tion— 
‘‘(1) QUALIFIED
HEALTH
INSURANCE.—The 
term ‘qualified health insurance’ means any insur-
ance constituting medical care which (as determined 
under regulations prescribed by the Secretary)— 
‘‘(A) has a reasonable annual and lifetime 
benefit maximum, and 
‘‘(B) provides coverage for inpatient and 
outpatient care, emergency benefits, and physi-
cian care. 
Such term does not include any insurance substan-
tially all of the coverage of which is coverage de-
scribed in section 223(c)(1)(B). 
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‘‘(2) QUALIFIED
REFUND
ELIGIBLE
HEALTH 
INSURANCE.—The term ‘qualified refund eligible 
health insurance’ means any qualified health insur-
ance which is coverage under a group health plan 
(as defined in section 5000(b)(1)). 
‘‘(g) DESIGNATED ACCOUNTS.— 
‘‘(1) DESIGNATED ACCOUNT.—For purposes of 
this section, the term ‘designated account’ means 
any specified account established and maintained by 
the provider of the taxpayer’s qualified refund eligi-
ble health insurance— 
‘‘(A) which is designated by the taxpayer 
(in such form and manner as the Secretary may 
provide) on the return of tax for the taxable 
year, 
‘‘(B) which, under the terms of the ac-
count, accepts the payment described in sub-
section (d) on behalf of the taxpayer, and 
‘‘(C) which, under such terms, provides for 
the payment of expenses by the taxpayer or on 
behalf of such taxpayer by the trustee or custo-
dian of such account, including payment to 
such provider. 
‘‘(2) SPECIFIED
ACCOUNT.—For purposes of 
this paragraph, the term ‘specified account’ means— 
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‘‘(A) any health savings account under sec-
tion 223 or Archer MSA under section 220, or 
‘‘(B) any health insurance reserve account. 
‘‘(3) 
HEALTH
INSURANCE
RESERVE
AC-
COUNT.—For purposes of this subsection, the term 
‘health insurance reserve account’ means a trust cre-
ated or organized in the United States as a health 
insurance reserve account exclusively for the purpose 
of paying the qualified medical expenses (within the 
meaning of section 223(d)(2)) of the account bene-
ficiary (as defined in section 223(d)(3)), but only if 
the written governing instrument creating the trust 
meets the requirements described in subparagraphs 
(B), (C), (D), and (E) of section 223(d)(1). Rules 
similar to the rules under subsections (g) and (h) of 
section 408 shall apply for purposes of this subpara-
graph. 
‘‘(4) TREATMENT OF PAYMENT.—Any payment 
under subsection (d) to a designated account shall 
not be taken into account with respect to any dollar 
limitation which applies with respect to contributions 
to such account (or to tax benefits with respect to 
such contributions). 
‘‘(h) OTHER DEFINITIONS.—For purposes of this 
section— 
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‘‘(1) DEPENDENT.—The term ‘dependent’ has 
the meaning given such term by section 152 (deter-
mined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof). An individual who is a child 
to whom section 152(e) applies shall be treated as 
a dependent of the custodial parent for a coverage 
month unless the custodial and noncustodial parent 
provide otherwise. 
‘‘(2) ADULT.—The term ‘adult’ means an indi-
vidual who is not a child. 
‘‘(3) CHILD.—The term ‘child’ means a quali-
fying child (as defined in section 152(c)). 
‘‘(i) SPECIAL RULES.— 
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION.—Any amount paid by a taxpayer for insur-
ance which is taken into account for purposes of de-
termining the credit allowable to the taxpayer under 
subsection (a) shall not be taken into account in 
computing the amount allowable to the taxpayer as 
a deduction under section 213(a) or 162(l). 
‘‘(2) COORDINATION WITH HEALTH CARE TAX 
CREDIT.—No credit shall be allowed under sub-
section (a) for any taxable year to any taxpayer and 
qualifying family members with respect to whom a 
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credit under section 35 is allowed for such taxable 
year. 
‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
able year beginning in the calendar year in which 
such individual’s taxable year begins. 
‘‘(4) MARRIED COUPLES MUST FILE JOINT RE-
TURN.— 
‘‘(A) IN
GENERAL.—If the taxpayer is 
married at the close of the taxable year, the 
credit shall be allowed under subsection (a) only 
if the taxpayer and his spouse file a joint return 
for the taxable year. 
‘‘(B) MARITAL STATUS; CERTAIN MARRIED 
INDIVIDUALS LIVING APART.—Rules similar to 
the rules of paragraphs (3) and (4) of section 
21(e) shall apply for purposes of this para-
graph. 
‘‘(5) VERIFICATION
OF
COVERAGE, ETC.—No 
credit shall be allowed under this section with re-
spect to any individual unless such individual’s cov-
erage (and such related information as the Secretary 
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may require) is verified in such manner as the Sec-
retary may prescribe. 
‘‘(6) INSURANCE WHICH COVERS OTHER INDI-
VIDUALS; TREATMENT OF PAYMENTS.—Rules similar 
to the rules of paragraphs (7) and (8) of section 
35(g) shall apply for purposes of this section. 
‘‘(j) COORDINATION WITH ADVANCE PAYMENTS.— 
‘‘(1) REDUCTION IN CREDIT FOR ADVANCE PAY-
MENTS.—With respect to any taxable year, the 
amount which would (but for this subsection) be al-
lowed as a credit to the taxpayer under subsection 
(a) shall be reduced (but not below zero) by the ag-
gregate amount paid on behalf of such taxpayer 
under section 7527A for months beginning in such 
taxable year. 
‘‘(2) RECAPTURE
OF
EXCESS
ADVANCE
PAY-
MENTS.—If the aggregate amount paid on behalf of 
the taxpayer under section 7527A for months begin-
ning in the taxable year exceeds the sum of the 
monthly limitations determined under subsection (b) 
for the taxpayer and the taxpayer’s spouse and de-
pendents for such months, then the tax imposed by 
this chapter for such taxable year shall be increased 
by the sum of— 
‘‘(A) such excess, plus 
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‘‘(B) interest on such excess determined at 
the underpayment rate established under sec-
tion 6621 for the period from the date of the 
payment under section 7527A to the date such 
excess is paid. 
For purposes of subparagraph (B), an equal part of 
the aggregate amount of the excess shall be deemed 
to be attributable to payments made under section 
7527A on the first day of each month beginning in 
such taxable year, unless the taxpayer establishes 
the date on which each such payment giving rise to 
such excess occurred, in which case subparagraph 
(B) shall be applied with respect to each date so es-
tablished. The Secretary may rescind or waive all or 
any portion of any amount imposed by reason of 
subparagraph (B) if such excess was not the result 
of the actions of the taxpayer.’’. 
(b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 
(relating to miscellaneous provisions) is amended by in-
serting after section 7527 the following new section: 
‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR QUALI-
FIED 
REFUND 
ELIGIBLE 
HEALTH 
INSUR-
ANCE. 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
program for making payments on behalf of individuals to 
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providers of qualified refund eligible health insurance (as 
defined in section 25E(f)(2)) for such individuals. 
‘‘(b) LIMITATION.—The Secretary may make pay-
ments under subsection (a) only to the extent that the Sec-
retary determines that the amount of such payments made 
on behalf of any taxpayer for any month does not exceed 
the sum of the monthly limitations determined under sec-
tion 25E(b) for the taxpayer and taxpayer’s spouse and 
dependents for such month.’’. 
(c) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 (relating to information 
concerning transactions with other persons) is 
amended by inserting after section 6050W the fol-
lowing new section: 
‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR QUALI-
FIED 
REFUND 
ELIGIBLE 
HEALTH 
INSUR-
ANCE. 
‘‘(a) REQUIREMENT OF REPORTING.—Every person 
who is entitled to receive payments for any month of any 
calendar year under section 7527A (relating to advance 
payment of credit for qualified refund eligible health insur-
ance) with respect to any individual shall, at such time 
as the Secretary may prescribe, make the return described 
in subsection (b) with respect to each such individual. 
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‘‘(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, with respect to each individual 
referred to in subsection (a)— 
‘‘(A) the name, address, and TIN of each 
such individual, 
‘‘(B) the months for which amounts pay-
ments under section 7527A were received, 
‘‘(C) the amount of each such payment, 
‘‘(D) the type of insurance coverage pro-
vided by such person with respect to such indi-
vidual and the policy number associated with 
such coverage, 
‘‘(E) the name, address, and TIN of the 
spouse and each dependent covered under such 
coverage, and 
‘‘(F) such other information as the Sec-
retary may prescribe. 
‘‘(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 individual whose name 
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is required to be set forth in such return a written state-
ment showing— 
‘‘(1) the contact information of the person re-
quired to make such return, and 
‘‘(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) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of any amount received by any person on behalf of 
another person, only the person first receiving such 
amount shall be required to make the return under sub-
section (a).’’. 
(2) ASSESSABLE PENALTIES.— 
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) (relating to definitions) 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 inserting after clause 
(xxiii) the following new clause: 
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‘‘(xxiv) section 6050X (relating to re-
turns relating to credit for qualified refund 
eligible health insurance), and’’. 
(B) Paragraph (2) of section 6724(d) is 
amended by striking ‘‘or’’ at the end of sub-
paragraph (EE), by striking the period at the 
end of subparagraph (FF) and inserting ‘‘, or’’ 
and by inserting after subparagraph (FF) the 
following new subparagraph: 
‘‘(GG) section 6050X (relating to returns 
relating to credit for qualified refund eligible 
health insurance).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting 
‘‘25E,’’ before ‘‘35,’’. 
(2)(A) Section 24(b)(3)(B) is amended by in-
serting ‘‘, 25E,’’ after ‘‘25D’’. 
(B) Section 25(e)(1)(C)(ii) is amended by in-
serting ‘‘25E,’’ after ‘‘25D,’’. 
(C) Section 25B(g)(2) is amended by inserting 
‘‘25E,’’ after ‘‘25D,’’. 
(D) Section 26(a)(1) is amended by inserting 
‘‘25E,’’ after ‘‘25D,’’. 
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(E) Section 30(c)(2)(B)(ii) is amended by in-
serting ‘‘25E,’’ after ‘‘25D,’’. 
(F) Section 30D(c)(2)(B)(ii) is amended by 
striking ‘‘and 25D’’ and inserting ‘‘, 25D, and 
25E’’. 
(G) Section 904(i) is amended by inserting 
‘‘25E,’’ after ‘‘25B,’’. 
(H) Section 1400C(d)(2) is amended by insert-
ing ‘‘25E,’’ after ‘‘25D,’’. 
(3) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 25D the 
following new item: 
‘‘Sec. 25E. Qualified health insurance credit.’’. 
(4) The table of sections for chapter 77 is 
amended by inserting after the item relating to sec-
tion 7527 the following new item: 
‘‘Sec. 7527A. Advance payment of credit for qualified refund eligible health in-
surance.’’. 
(5) 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 credit for qualified refund eligible health in-
surance.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
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SEC. 302. REQUIRING EMPLOYER TRANSPARENCY ABOUT 
EMPLOYEE BENEFITS. 
(a) IN GENERAL.—Section 6051(a) (relating to W– 
2 requirement) is amended by striking ‘‘and’’ at the end 
of paragraph (12), by striking the period at the end of 
paragraph (13) and inserting ‘‘, and’’ and by inserting 
after paragraph (13) the following new paragraph: 
‘‘(14) the aggregate cost (within the meaning of 
section 4980B(f)(4)) for coverage of the employee 
under an accident or health plan which is excludable 
from the gross income of the employee under section 
106(a) (other than coverage under a health flexible 
spending arrangement).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to statements for calendar years 
beginning after 2009. 
SEC. 303. CHANGES TO EXISTING TAX PREFERENCES FOR 
MEDICAL COVERAGE, ETC., FOR INDIVIDUALS 
ELIGIBLE FOR QUALIFIED HEALTH INSUR-
ANCE CREDIT. 
(a) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER 
TO ACCIDENT AND HEALTH PLANS.— 
(1) IN GENERAL.—Section 106 (relating to con-
tributions by employer to accident and health plans) 
is amended by adding at the end the following new 
subsection: 
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‘‘(f) NO EXCLUSION
FOR INDIVIDUALS ELIGIBLE 
FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub-
section (a) shall not apply with respect to any employer- 
provided coverage under an accident or health plan for any 
individual for any month unless such individual is de-
scribed in paragraph (2) or (5) of section 25E(e) for such 
month. The amount includible in gross income by reason 
of this subsection shall be determined under rules similar 
to the rules of section 4980B(f)(4).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 106(b)(1) is amended— 
(i) by inserting ‘‘gross income does 
not include’’ before ‘‘amounts contrib-
uted’’, and 
(ii) by striking ‘‘shall be treated as 
employer-provided coverage for medical ex-
penses under an accident or health plan’’. 
(B) Section 106(d)(1) is amended— 
(i) by inserting ‘‘gross income does 
not include’’ before ‘‘amounts contrib-
uted’’, and 
(ii) by striking ‘‘shall be treated as 
employer-provided coverage for medical ex-
penses under an accident or health plan’’. 
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(b) AMOUNTS RECEIVED UNDER ACCIDENT
AND 
HEALTH PLANS.—Section 105 (relating to amounts re-
ceived under accident and health plans) is amended by 
adding at the end the following new subsection: 
‘‘(f) NO EXCLUSION
FOR INDIVIDUALS ELIGIBLE 
FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub-
section (b) shall not apply with respect to any employer- 
provided coverage under an accident or health plan for any 
individual for any month unless such individual is de-
scribed in paragraph (2) or (5) of section 25E(e) for such 
month.’’. 
(c) SPECIAL RULES FOR HEALTH INSURANCE COSTS 
OF SELF-EMPLOYED INDIVIDUALS.—Subsection (l) of 
section 162 (relating to special rules for health insurance 
costs of self-employed individuals) is amended by adding 
at the end the following new paragraph: 
‘‘(6) NO DEDUCTION TO INDIVIDUALS ELIGIBLE 
FOR
QUALIFIED
HEALTH
INSURANCE.—Paragraph 
(1) shall not apply for any individual for any month 
unless such individual is described in paragraph (2) 
or (5) of section 25E(e) for such month.’’. 
(d) EARNED INCOME CREDIT UNAFFECTED BY RE-
PEALED
EXCLUSIONS.—Subparagraph (B) of section 
32(c)(2) is amended by redesignating clauses (v) and (vi) 
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as clauses (vi) and (vii), respectively, and by inserting 
after clause (iv) the following new clause: 
‘‘(v) the earned income of an indi-
vidual shall be computed without regard to 
sections 105(f) and 106(f),’’. 
(e) MODIFICATION OF DEDUCTION FOR MEDICAL 
EXPENSES.—Subsection (d) of section 213 is amended by 
adding at the end the following new paragraph: 
‘‘(12) PREMIUMS FOR QUALIFIED HEALTH IN-
SURANCE.—The term ‘medical care’ does not include 
any amount paid as a premium for coverage of an 
eligible individual (as defined in section 25E(e)) 
under qualified health insurance (as defined in sec-
tion 25E(f)) for any month.’’. 
(f) REPORTING REQUIREMENT.—Subsection (a) of 
section 6051 is amended by striking ‘‘and’’ at the end of 
paragraph (12), by striking the period at the end of para-
graph (13) and inserting ‘‘and’’, and by inserting after 
paragraph (13) the following new paragraph: 
‘‘(14) the total amount of employer-provided 
coverage under an accident or health plan which is 
includible in gross income by reason of sections 
105(f) and 106(f).’’. 
(g) RETIRED PUBLIC SAFETY OFFICERS.—Section 
402(l)(4)(D) is amended by adding at the end the fol-
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lowing: ‘‘Such term shall not include any premium for cov-
erage by an accident or health insurance plan for any 
month unless such individual is described in paragraph (2) 
or (5) of section 25E(e) for such month.’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
(i) NO INTENT TO ENCOURAGE STATE TAXATION OF 
HEALTH BENEFITS.—No intent to encourage any State 
to treat health benefits as taxable income for the purpose 
of increasing State income taxes may be inferred from the 
provisions of, and amendments made by, this section. 
Subtitle B—Health Savings 
Accounts 
SEC. 311. IMPROVEMENTS TO HEALTH SAVINGS ACCOUNTS. 
(a) INCREASE IN MONTHLY CONTRIBUTION LIMIT.— 
(1) IN
GENERAL.—Paragraph (2) of section 
223(b) (relating to limitations) is amended to read 
as follows: 
‘‘(2) MONTHLY LIMITATION.— 
‘‘(A) IN GENERAL.—In the case of an eligi-
ble individual who has coverage under a high 
deductible health plan, the monthly limitation 
for any month of such coverage is 1⁄12 of the 
sum of— 
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‘‘(i) the greater of— 
‘‘(I) the sum of the annual de-
ductible and the other annual out-of- 
pocket expenses (other than for pre-
miums) required to be paid under the 
plan by the eligible individual for cov-
ered benefits, or 
‘‘(II) in the case of an eligible in-
dividual who has— 
‘‘(aa) 
self-only 
coverage 
under a high deductible health 
plan as of the first day of such 
month, $3,000, or 
‘‘(bb) family coverage under 
a high deductible health plan as 
of the first day of such month, 
$5,950, and 
‘‘(ii) in the case of an eligible indi-
vidual who has coverage under a qualified 
long-term care insurance contract (as de-
fined in section 7702B(b)), the lesser of— 
‘‘(I) the annual premium for 
such coverage, or 
‘‘(II) $1,000. 
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‘‘(B) SPECIAL RULES RELATING TO OUT- 
OF-POCKET EXPENSES.— 
‘‘(i) 
REDUCTION
FOR
SEPARATE 
PLAN.—The annual out-of-pocket expenses 
taken into account under subparagraph 
(A)(i)(I) with respect to any eligible indi-
vidual shall be reduced by any out-of-pock-
et expense payable under a separate plan 
covering the individual. 
‘‘(ii) SECRETARIAL AUTHORITY.—The 
Secretary may by regulations provide that 
annual out-of-pocket expenses will not be 
taken into account under subparagraph 
(A)(i)(I) to the extent that there is only a 
remote likelihood that such amounts will 
be required to be paid.’’. 
(2) APPLICATION OF SPECIAL RULES FOR MAR-
RIED
INDIVIDUALS.—Paragraph (5) of section 
223(b) (relating to limitations) is amended to read 
as follows: 
‘‘(5) SPECIAL RULES FOR MARRIED INDIVID-
UALS.— 
‘‘(A) IN GENERAL.—In the case of individ-
uals who are married to each other and who are 
both eligible individuals, the limitation under 
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paragraph (1) for each spouse shall be equal to 
the spouse’s applicable share of the combined 
marital limit. 
‘‘(B) COMBINED
MARITAL
LIMIT.—For 
purposes of subparagraph (A), the combined 
marital limit is the excess (if any) of— 
‘‘(i) the lesser of— 
‘‘(I) subject to subparagraph (C), 
the sum of the limitations computed 
separately under paragraph (1) for 
each spouse (including any additional 
contribution amount under paragraph 
(3)), or 
‘‘(II) the dollar amount in effect 
under 
subsection 
(c)(2)(A)(ii)(II), 
over 
‘‘(ii) the aggregate amount paid to 
Archer MSAs of such spouses for the tax-
able year. 
‘‘(C) 
SPECIAL
RULE
WHERE
BOTH 
SPOUSES HAVE FAMILY COVERAGE.—For pur-
poses of subparagraph (B)(i)(I), if either spouse 
has family coverage which covers both spouses, 
both spouses shall be treated as having only 
such coverage (and if both spouses each have 
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such coverage under different plans, shall be 
treated as having only family coverage with the 
plan with respect to which the lowest amount is 
determined under paragraph (2)(A)(i)(I)). 
‘‘(D) APPLICABLE SHARE.—For purposes 
of subparagraph (A), a spouse’s applicable 
share is 1⁄2 of the combined marital limit unless 
both spouses agree on a different division. 
‘‘(E) COUPLES
NOT
MARRIED
ENTIRE 
YEAR.—The Secretary shall prescribe rules for 
the application of this paragraph in the case of 
any taxable year for which the individuals were 
not married to each other during all months in-
cluded in the taxable year, including rules 
which allow individuals in appropriate cases to 
take into account coverage prior to marriage in 
computing the combined marital limit for pur-
poses of this paragraph.’’. 
(3) SELF-ONLY COVERAGE.—Paragraph (4) of 
section 223(c) (relating to definitions and special 
rules) is amended to read as follows: 
‘‘(4) COVERAGE.— 
‘‘(A) FAMILY COVERAGE.—The term ‘fam-
ily coverage’ means any coverage other than 
self-only coverage. 
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‘‘(B) SELF-ONLY
COVERAGE.—If more 
than 1 individual is covered by a high deduct-
ible health plan but only 1 of the individuals is 
an eligible individual, the coverage shall be 
treated as self-only coverage.’’. 
(4) CONFORMING AMENDMENTS.— 
(A) Section 223(b)(3)(A) is amended by 
striking ‘‘subparagraphs (A) and (B) of’’. 
(B) Section 223(c)(2)(A) is amended— 
(i) by striking ‘‘$1,000’’ in clause 
(i)(I) and inserting ‘‘$1,150’’, and 
(ii) by striking ‘‘$5,000’’ in clause 
(ii)(I) and inserting ‘‘$5,800’’. 
(C) Section 223(d)(1)(A)(ii)(I) is amended 
by striking ‘‘subsection (b)(2)(B)(ii)’’ and in-
serting ‘‘subsection (c)(2)(A)(ii)(II)’’. 
(D) Clause (ii) of section 223(c)(2)(D) is 
amended to read as follows: 
‘‘(ii) CERTAIN
ITEMS
DISREGARDED 
IN
COMPUTING
MONTHLY
LIMITATION.— 
Such plan’s annual deductible, and such 
plan’s annual out-of-pocket limitation, for 
services provided outside of such network 
shall not be taken into account for pur-
poses of subsection (b)(2).’’ 
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(E) Subsection (g) of section 223 is 
amended to read as follows: 
‘‘(g) COST-OF-LIVING ADJUSTMENTS.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2009, each 
dollar amount contained in subsections (b)(2)(A) 
and (c)(2)(A) shall be increased by an amount equal 
to such dollar amount multiplied by the blended 
cost-of-living adjustment. 
‘‘(2) 
BLENDED
COST-OF-LIVING
ADJUST-
MENT.—For purposes of paragraph (1), the blended 
cost-of-living adjustment means one-half of the sum 
of— 
‘‘(A) 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 2008’ for ‘calendar year 
1992’ in subparagraph (B) thereof, plus 
‘‘(B) the cost-of-living adjustment deter-
mined under section 213(d)(10)(B)(ii) for the 
calendar year in which the taxable year begins 
by substituting ‘2008’ for ‘1996’ in subclause 
(II) thereof. 
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‘‘(G) Old section 1905(l)(1) (relating to 
rural health clinic services). 
‘‘(H) Old section 1905(o) (relating to hos-
pice care). 
‘‘(I) Old section 1905(q) (relating to the 
definition of a qualified severely impaired indi-
vidual). 
‘‘(J) Old section 1905(r) (relating to the 
definition of early and periodic screening, diag-
nostic, and treatment services). 
‘‘(K) Old section 1905(s) (relating to the 
definition of a qualified disabled and working 
individual). 
‘‘(L) Old section 1905(t) (relating to the 
definition of primary care case management 
services). 
‘‘(M) Old section 1905(v) (relating to the 
definition of an employed individual with a 
medically improved disability). 
‘‘(N) Paragraphs (1) and (3) of old section 
1905(w) (relating to the definition of an inde-
pendent foster care adolescent). 
‘‘(O) Old section 1905(x) (relating to 
strategies, treatment, and services for individ-
uals with Sickle Cell Disease). 
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105 
‘‘SEC. 1932. APPLICATION OF CERTAIN REQUIREMENTS 
UNDER PRE-MODERNIZED MEDICAID. 
‘‘The following old provisions shall apply under this 
part: 
‘‘(1) Old section 1902(a)(9) (relating to health 
standards and applicable requirements for laboratory 
services). 
‘‘(2) Old section 1902(a)(28) (relating to nurs-
ing facilities and nursing facility services). 
‘‘(3) Old sections 1902(a)(29) and 1908 (relat-
ing to a State program for the licensing of adminis-
trators of nursing homes). 
‘‘(4) Old section 1902(a)(33)(B) (relating to li-
censing health institutions). 
‘‘(5) Old section 1902(d) (relating to medical or 
utilization review functions). 
‘‘(6) Old section 1902(i) (relating to inter-
mediate care facilities for the mentally retarded). 
‘‘(7) Old section 1902(y) (relating to psy-
chiatric hospitals). 
‘‘(8) Paragraphs (2) and (6) of old section 
1903(g) (relating to the Secretarial requirement to 
conduct sample onsite surveys of private and public 
institutions and recertifications for the need for cer-
tain services). 
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187 
ferred to an administrative health care tri-
bunal (in accordance with subparagraph 
(D). 
‘‘(C) EXPERT REVIEW PANEL.— 
‘‘(i) IN GENERAL.—The provisions of 
paragraph (2) shall apply with respect to 
the establishment and operation of an ex-
pert review panel under this subparagraph, 
except that the subparagraphs (F) and (G) 
of such paragraph shall not apply. 
‘‘(ii) FAILURE
TO
ACCEPT
DETER-
MINATION OF PANEL.—If any party to a 
dispute before an expert panel under this 
subparagraph refuses to accept the panel’s 
determination, the dispute shall be referred 
to an administrative health care tribunal 
under subparagraph (D). 
‘‘(D) ADMINISTRATIVE HEALTH CARE TRI-
BUNALS.— 
‘‘(i) IN GENERAL.—Upon the failure 
of any party to accept the determination of 
an expert panel under subparagraph (C), 
the parties shall request a hearing con-
cerning the liability or compensation in-
volved by an administrative health care tri-
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