122
Title I, Subtitle E
(1) AVAILABILITY.—The requirements of sec-
tion 1111(c) (relating to availability of qualified
health plans).
(2) MSA BOUNDARIES.—Subject to subsection
(c)(1), the requirements of paragraphs (1) and (3)
of section 1403(b) (relating to the treatment of met-
ropolitan statistical areas in drawing the boundaries
of HCCAs).
(3) CORPORATE
STRUCTURE
OF
PURCHASING
GROUPS.—The requirement of section 1141(a) (re-
lating to corporate structure of a purchasing group),
insofar as it prevents the establishment of a public
(or quasi-public) entity as a purchasing group.
(4) COVERED ITEMS AND SERVICES.—Subject
to subsection (c)(2), the items and services included
as covered items and services under the standard
and catastrophic packages under section 1301(b).
(c) LIMITATIONS ON WAIVERS.—
(1) ANTI-REDLINING.—In establishing bound-
aries for HCCAs, a State may not discriminate on
the basis of or otherwise take into account race, reli-
gion, national origin, socio-economic status, disabil-
ity, or perceived health status.
(2) SUBSTITUTION
OF
ACTUARIALLY
EQUIVA-
LENT BENEFITS.—A State may not waive the re-
123
Title I, Subtitle E
quirement described in subsection (b)(4) unless the
State provides for the inclusion of benefits that are
actuarially equivalent to the benefits not included.
(c) CONSTRUCTION.—Nothing in this section shall be
construed as allowing a State to waive all the requirements
of subtitle B in order to establish a single-payer system.
SEC. 1422. STATE OPT-OUT.
Any State that applies to the Secretary and dem-
onstrates to the satisfaction of the Secretary that, because
of unique geographic and related features that inhibit a
competitive market, no more than two qualified general
access plans are made available in the State, the Secretary
may waive such requirements of this title as may be nec-
essary to assure the provision of covered items and serv-
ices to all eligible employees and eligible individuals.
SEC. 1423. WAIVER OF CERTAIN MEDICAID REQUIREMENTS.
For provisions authorizing States to waive certain
medicaid requirements, in order to permit managed care,
etc., see section 6001.
Subpart C—Preemption of Certain State Laws
SEC. 1431. PREEMPTION FROM STATE BENEFIT MANDATES.
Effective as of January 1, 1995, no State shall estab-
lish or enforce any law or regulation that—
(1) requires the offering, as part of a qualified
health plan, of any services, category of care, or
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Title I, Subtitle E
services of any class or type of provider that is dif-
ferent from the covered items and services specified
under subtitle C;
(2) specifies the individuals to be covered under
such a plan or the duration of such coverage; or
(3) requires a right of conversion from a group
health plan that is a qualified health plan to an indi-
vidual health plan.
SEC. 1432. PREEMPTION OF STATE LAW RESTRICTIONS ON
NETWORK PLANS.
(a) LIMITATION
ON RESTRICTIONS
ON NETWORK
PLANS.—Effective as of January 1, 1995—
(1) a State may not prohibit or limit a network
plan from including incentives for enrollees to use
the services of participating providers;
(2) a State may not prohibit or limit a network
plan from limiting coverage of services to those pro-
vided by a participating provider;
(3) a State may not prohibit or limit the nego-
tiation of rates and forms of payments for providers
under a network plan;
(4) a State may not prohibit or limit a network
plan from limiting the number of participating pro-
viders;
125
Title I, Subtitle E
(5) a State may not prohibit or limit a network
plan from requiring that services be provided (or au-
thorized) by a practitioner selected by the enrollee
from a list of available participating providers; and
(6) a State may not prohibit or limit the cor-
porate practice of medicine.
(b) DEFINITIONS.—In this section:
(1) NETWORK
PLAN.—The term ‘‘network
plan’’ means a qualified health plan—
(A) which—
(i) limits coverage of covered items
and services to those provided by partici-
pating providers, or
(ii) provides, with respect to such
services provided by persons who are not
participating providers, for cost-sharing
which are in excess of those permitted
under the standard or catastrophic pack-
age for participating providers;
(B) which has a sufficient number and dis-
tribution of participating providers to assure
that the uniform set of effective benefits (i) is
available and accessible to each enrollee, within
the area served by the plan, with reasonable
promptness and in a manner which assures con-
126
Title I, Subtitle E
tinuity, and (ii) when medically necessary, is
available and accessible twenty-four hours a day
and seven days a week; and
(C) which provides benefits for covered
items and services not furnished by participat-
ing providers if the services are medically nec-
essary and immediately required because of an
unforeseen illness, injury, or condition.
(2) 
PARTICIPATING
PROVIDER.—The 
term
‘‘participating provider’’ means an entity or individ-
ual which provides, sells, or leases health care serv-
ices under a contract with a network plan, which
contract does not permit—
(A) cost sharing in excess of the cost-shar-
ing permitted under a standard or catastrophic
package, and
(B) any enrollee charges (for covered items
or services) in excess of such cost sharing.
PART II—FEDERAL RESPONSIBILITIES
SEC. 1441. FEDERAL ROLE WITH RESPECT TO MULTI-STATE
EMPLOYER PLANS.
In the case of an insured health plan offered by an
employer which has employees who are employed in 2 or
more States, the Secretary shall carry out activities under
this section in the same manner as a State program would
127
Title I, Subtitle E
carry out activities under part I with respect to a health
plan subject to such part.
SEC. 1442. FEDERAL ROLE IN THE CASE OF A DEFAULT BY
A STATE.
(a) FAILURE TO ESTABLISH STATE PROGRAM.—If a
State fails to establish a State program under part I or,
having established such a program, the program fails to
continue to meet the requirements of such part, the Sec-
retary shall, after notice and opportunity for correction,
terminate such program and shall carry out activities
under part I in the same manner as a State program
would carry out activities under such part.
(b) FAILURE OF STATE TO DESIGNATE HCCAS.—
If a State fails to designate 1 or more HCCAs under sec-
tion 1403(a) by the deadline specified in section
1401(c)(2), the Secretary shall make such designation.
SEC. 1443. ESTABLISHMENT OF RESIDENCY RULES.
The Secretary shall establish rules relating to identi-
fying the State (and HCCA) in which individuals reside.
Such rules shall be based on the principal residence of
such an individual.
SEC. 1444. RULES DETERMINING SEPARATE EMPLOYER
STATUS.
Under rules of the Secretary, employers that are re-
lated (as defined under such rules) shall be treated under
128
Title I, Subtitle G
this title as a single employer if a reason for their separa-
tion relates to the health risk characteristics of eligible em-
ployees of such employers.
Subtitle F—Universal Coverage
SEC. 1501. REQUIREMENT OF COVERAGE.
(a) IN GENERAL.—Effective January 1, 2005, each
individual who is a citizen or lawful permanent resident
of the United States shall be covered under—
(1) a qualified health plan, or
(2) an equivalent health care program (as de-
fined in section 1601(7)).
(b) EXCEPTION.—Subsection (a) shall not apply in
the case of an individual who is opposed for religious rea-
sons to health plan coverage, including an individual who
declines health plan coverage due to a reliance on healing
using spiritual means through prayer alone.
Subtitle G—Definitions
SEC. 1601. DEFINITIONS.
Unless specifically provided otherwise, as used in this
Act:
(1) APPROPRIATE
CERTIFYING
AUTHORITY.—
The 
term 
‘‘appropriate 
certifying 
authority’’
means—
(A) in the case of a health plan offered in
a State with a qualified health plan certification
129
Title I, Subtitle G
program meeting the requirements of this Act,
the State commissioner or superintendent of in-
surance or other State authority responsible for
regulation of health insurance; or
(B) in all other cases, the Secretary.
(2) COVERED ITEMS AND SERVICES.—The term
‘‘covered items and services’’ means items and serv-
ices described in section 1301(b).
(3) DELIVERY SYSTEM.—Each of the following
is considered to be a distinct ‘‘delivery system’’ with
respect to a health plan:
(A) Fee-for-service.
(B) Use of preferred providers.
(C) Staff or group model health mainte-
nance organizations.
(D) Such other systems as the Secretary
may recognize.
(4) 
DEPENDENT.—The 
term 
‘‘dependent’’
means, with respect to any individual, any person
who is—
(A) the spouse of such individual, or
(B) under regulations of the Secretary, a
child (including an adopted child) of such indi-
vidual and who—
(i) is under 19 years of age,
130
Title I, Subtitle G
(ii) is under 25 years of age and a
full-time student, or
(iii) regardless of age is incapable of
self-support because of mental or physical
disability.
(5) ELIGIBLE EMPLOYEE.—The term ‘‘eligible
employee’’ means, with respect to an employer, in
any month after the month which includes the hiring
date, an employee who normally performs at least 30
hours of service per week for that employer, and in-
cludes any dependent of such employee.
(6) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible
individual’’ means an individual who—
(A) is otherwise not eligible for coverage
under an employer-based qualified health plan
or 1 of the equivalent health care programs (as
defined in paragraph (7)), or
(B) in the case of eligible employee of a
small employer, has elected not to enroll in a
qualified health plan offered by such employer.
(7) EQUIVALENT
HEALTH
CARE
PROGRAM.—
The term ‘‘equivalent health care program’’ means—
(A) part A or part B of the medicare pro-
gram under title XVIII of the Social Security
Act,
131
Title I, Subtitle G
(B) the medicaid program under title XIX
of the Social Security Act,
(C) the health care program for active
military personnel under title 10, United States
Code,
(D) the veterans health care program
under chapter 17 of title 38, United States
Code,
(E) the Civilian Health and Medical Pro-
gram of the Uniformed Services (CHAMPUS),
as defined in section 1073(4) of title 10, United
States Code,
(F) the Indian health service program
under the Indian Health Care Improvement Act
(25 U.S.C. 1601 et seq.), and
(G) any other plan recognized by the Sec-
retary the purpose of which is to provide retiree
health benefits.
(8) FAMILY.—The term ‘‘family’’ means an in-
dividual and includes the individual’s dependents (if
any), as defined in paragraph (4), but only if such
an individual or dependent is a citizen or lawful per-
manent resident of the United States.
(9) FIRST
CERTIFICATION
YEAR.—The term
‘‘first certification year’’ means, with respect to a
132
Title I, Subtitle G
qualified health plan in a State, the first year in
which the State has in effect a State program under
part I of subtitle E as of January 1 of such year,
but not later than the first January 1 following the
deadline specified in section 1401(c)(2).
(10) GENERAL ACCESS PLAN.—The term ‘‘gen-
eral access plan’’ means an insured health plan of-
fered with respect to eligible employees of small em-
ployers and eligible individuals under subtitle B.
(11) HCCA.—The term ‘‘HCCA’’ means a
health care coverage area established under section
1403.
(12) HEALTH PLAN.—The term ‘‘health plan’’
means an insured health plan and a self-insured
health plan.
(13) HEALTH
PLAN
SPONSOR.—The term
‘‘health plan sponsor’’ means, with respect to an in-
sured health plan or self-insured health plan, the in-
surer offering the plan or the self-insured sponsor
for the plan, respectively.
(14) INSURED HEALTH PLAN.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘insured health
plan’’ means any hospital or medical service
policy or certificate, hospital or medical service
133
Title I, Subtitle G
plan contract, or health maintenance organiza-
tion group contract offered by an insurer.
(B) EXCEPTION.—Such term does not in-
clude any of the following—
(i) coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof,
(ii) medicare supplemental health in-
surance,
(iii) coverage issued as a supplement
to liability insurance,
(iv) worker’s compensation or similar
insurance,
(v) automobile medical-payment insur-
ance,
(vi) coverage for a specified disease or
illness, or
(vii) a hospital or fixed indemnity pol-
icy (unless the Secretary determines that
such a policy provides sufficiently com-
prehensive coverage of a benefit so that it
should be treated as an insured health
plan),
or any combination thereof.
(15) INSURER.—The term ‘‘insurer’’ means—
134
Title I, Subtitle G
(A) a licensed insurance company,
(B) a prepaid hospital or medical service
plan,
(C) a health maintenance organization, or
(D) other entity providing a plan of health
insurance or health benefits,
with respect to which State regulation is not pre-
empted by reason of section 514(b)(2) of the Em-
ployee Retirement Income Security Act of 1974.
(16) LARGE EMPLOYER.—The term ‘‘large em-
ployer’’ means an employer that is not a small em-
ployer.
(17) LARGE
EMPLOYER
PLAN.—The term
‘‘large employer plan’’ means a qualified health plan
which is made available by a large employer, wheth-
er the plan is insured or self-insured.
(18) MULTIPLE
EMPLOYER
WELFARE
AR-
RANGEMENT.—The term ‘‘multiple employer welfare
arrangement’’ has the meaning given such term in
section 3(40) of the Employee Retirement Income
Security Act of 1974.
(19) PURCHASING
GROUP.—The term ‘‘pur-
chasing group’’ means an individual and small em-
ployer purchasing group established under section
1141.
135
Title I, Subtitle G
(20) QUALIFIED
HEALTH
PLAN.—The term
‘‘qualified’’ means—
(A) with respect to a insured health plan,
a health plan that is certified as qualified under
section 1402, or
(B) with respect to a self-insured health
plan, a health plan that meets the requirements
of a large employer plan under section 1201.
(21) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(22) SELF-INSURED HEALTH PLAN.—The term
‘‘self-insured health plan’’—
(A) means an employee welfare benefit
plan or other arrangement insofar as the plan
or arrangement provides health benefits and
that is funded in a manner other than through
the purchase of one or more insured health
plans, but
(B) does not include any coverage or insur-
ance described in paragraph (14)(B).
(23) SELF-INSURED SPONSOR.—The term ‘‘self-
insured sponsor’’ includes, with respect to a self-in-
sured plan, any entity which establishes or main-
tains the plan.
(24) SMALL EMPLOYER.—
136
Title II
(A) IN GENERAL.—The term ‘‘small em-
ployer’’ means, with respect to a calendar year,
an employer that normally employs 1 or more
but less than 101 eligible employees on a typi-
cal business day.
(B) TREATMENT
OF
SELF-EMPLOYED.—
For the purposes of subparagraph (A), the term
‘‘employee’’ includes a self-employed individual.
(C) TREATMENT OF LINES OF BUSINESS,
ETC.—For purposes of making a determination
under subparagraph (A), an employer may treat
each line of business or each geographic loca-
tion as a separate employer.
(25) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States
Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
TITLE II—TAX AND
ENFORCEMENT PROVISIONS
SEC. 2000. AMENDMENT OF 1986 CODE.
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
137
Title II, Subtitle A
section or other provision of the Internal Revenue Code
of 1986.
Subtitle A—General Tax Provisions
SEC. 2001. CERTAIN EMPLOYER HEALTH PLAN CONTRIBU-
TIONS INCLUDED IN INCOME.
(a) EXCLUSION FOR EMPLOYER HEALTH PLAN CON-
TRIBUTIONS LIMITED TO CONTRIBUTIONS TO QUALIFIED
HEALTH PLANS.—
(1) IN GENERAL.—Section 106 (relating to con-
tributions by employer to accident and health plans)
is amended to read as follows:
‘‘SEC. 106. CONTRIBUTIONS BY EMPLOYER TO QUALIFIED
HEALTH PLANS.
‘‘Except as provided in section 91, gross income of
an employee does not include employer-provided coverage
under a qualified health plan (as defined in section
1601(20) of the Health Equity and Access Reform Today
Act of 1993) or employer-provided contributions to such
employee’s medical savings account’’.
(b) CLERICAL AMENDMENT.—The table of sections
of part III of subchapter B of chapter 1 is amended by
striking the item relating to section 106 and inserting the
following new item:
‘‘Sec. 106. Contributions by employer to qualified health plans.’’
(b) INCLUSION IN INCOME.—
138
Title II, Subtitle A
(1) IN GENERAL.—Part II of subchapter B of
chapter 1 (relating to items specifically included in
gross income) is amended by adding at the end the
following new section:
‘‘SEC. 91. EXCESS EMPLOYER CONTRIBUTIONS TO QUALI-
FIED HEALTH PLANS.
‘‘(a) GENERAL RULE.—Notwithstanding section 106,
if—
‘‘(1) an employee is covered by a qualified
health plan at any time during any month, and
‘‘(2) there is an excess employer contribution
with respect to the employee to such plan for such
month,
the gross income of such employee for the taxable year
which includes such month shall include an amount equal
to such excess employer contribution for such month.
‘‘(b) 
EXCESS
EMPLOYER
CONTRIBUTION
DE-
FINED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘excess employer contribution’ means,
with respect to an employee enrolled in a qualified
health plan for any month, the excess of—
‘‘(A) the employer contribution to such
plan for such month, over
139
Title II, Subtitle A
‘‘(B) the applicable dollar limit for such
employee for such month.
‘‘(2) APPLICABLE
DOLLAR
LIMIT.—For pur-
poses of paragraph (1)—
‘‘(A) IN GENERAL.—The applicable dollar
limit for an employee for any month is equal to
1⁄12 of the average premium cost for the cal-
endar year of the lowest priced 1⁄2 of standard
packages (within the meaning of section
1301(a)(1) of the Health Equity and Access
Reform Today Act of 1993) of qualified health
plans offered in such year in the HCCA (as de-
fined in section 1601(11) of such Act) within
which is offered the qualified health plan in
which the employee is enrolled.
‘‘(B) DETERMINATION OF LIMIT.—
‘‘(i) ANNUAL
DETERMINATION.—The
applicable dollar limit shall be determined
annually by the Secretary, in consultation
with the Secretary of Health and Human
Services, from information submitted by
each State with respect to each HCCA.
‘‘(ii) DETERMINATION BASED ON EN-
ROLLMENT AND AGE STATUS.—
140
Title II, Subtitle A
‘‘(I) IN GENERAL.—The applica-
ble dollar limit shall be determined
with respect to individual and family
enrollments, and within each such en-
rollment status, determined with re-
spect to the age of the principal en-
rollee.
‘‘(II) 
AGE
BANDS
ESTAB-
LISHED.—In carrying out subclause
(I), the Secretary shall establish rea-
sonable age bands (consistent with
such bands established under section
1116 of the Health Equity and Access
Reform Today Act of 1993) within
which premium amounts will not vary
for a type of enrollment.
‘‘(c) SPECIAL RULE FOR MULTIEMPLOYER HEALTH
PLANS.—In the case of employer contributions with re-
spect to any employee made to a multiemployer health
plan on a basis other than per employee per month, the
Secretary may by regulations prescribe the method of de-
termining that portion of such contributions that is not
included in gross income of the employee.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
141
Title II, Subtitle A
‘‘(1) QUALIFIED
HEALTH
PLAN.—The term
‘qualified health plan’ shall have the meaning given
to such term by section 1601(20) of the Health Eq-
uity and Access Reform Today Act of 1993.
‘‘(2) 
EMPLOYEE
INCLUDES
FORMER
EM-
PLOYEE.—The term ‘employee’ includes a former
employee.
‘‘(3) DETERMINATION
OF
EMPLOYER
CON-
TRIBUTION.—
‘‘(A) IN
GENERAL.—The employer con-
tribution to any qualified health plan for any
month shall be that portion of the cost of such
plan for such month which is incurred by the
employer.
‘‘(B) SELF-INSURED PLAN MAY USE AN-
NUAL ESTIMATES.—An employer who maintains
a self-insured health plan may elect (in such
manner and at such time as may be provided
in regulations) to determine the actual employer
contribution under subsection (b)(1)(A) for any
period of not more than 12 months on the basis
of a reasonable estimate of the cost of providing
coverage for such month. To the extent prac-
ticable, such estimate shall be made on an actu-
arial basis, and in the making of any such esti-
142
Title II, Subtitle A
mate, there shall be taken into account such
factors as may be required under regulations.
‘‘(C) EMPLOYEES ONLY TAKEN INTO AC-
COUNT FOR PERIODS COVERED.—For purposes
of determining the employer contribution,
amounts shall be taken into account with re-
spect to an employee only for periods during
which such employee is covered by the plan.
‘‘(4) COVERAGE FOR ONLY PART OF MONTH.—
If an employee is covered under a qualified health
plan for only a portion of a month, the amount re-
quired to be included under subsection (a) in the
gross income of such employee with respect to such
month shall be an amount which bears the same
ratio to the excess employer contribution for such
month as such portion bears to the entire month.
‘‘(5) CERTAIN RELATED EMPLOYERS TREATED
AS 1 EMPLOYER.—Rules similar to the rules pro-
vided by subsections (b) and (c) of section 414 shall
apply.
‘‘(6) MONTH.—The term ‘month’ means a cal-
endar month.
‘‘(7) MULTIEMPLOYER
HEALTH
PLAN.—The
term ‘multiemployer health plan’ means a qualified
health plan which is part of an employee welfare
143
Title II, Subtitle A
benefit plan (within the meaning of section 3(1) of
the Employee Retirement Income Security Act of
1974)—
‘‘(A) to which more than 1 employer is re-
quired to contribute, and
‘‘(B) which is maintained pursuant to 1 or
more collective bargaining agreements between
1 or more employee organizations and more
than 1 employer.’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter B of chapter 1 is
amended by adding at the end the following:
‘‘Sec. 91. Excess employer contributions to qualified health plans.’’
(c) EMPLOYMENT TAX AMENDMENTS.—
(1) GENERAL RULE.—Chapter 25 (relating to
general provisions relating to employment taxes) is
amended by adding at the end the following new sec-
tion:
‘‘SEC. 3510. TREATMENT OF EXCESS EMPLOYER CONTRIBU-
TIONS.
‘‘(a) IN GENERAL.—For purposes of this subtitle and
section 209 of the Social Security Act, any amount re-
quired to be included in the gross income of an employee
under section 91(a) with respect to any month—
‘‘(1) shall be treated as paid in cash to such
employee at the close of such month, and
144
Title II, Subtitle A
‘‘(2) shall not be treated as paid under a health
or similar plan of the employer.
For purposes of paragraph (1), an employer may elect to
prorate any such amount to any payroll period (or portion
thereof) covering such month rather than treat it as being
paid at the close of such month.
‘‘(b) SPECIAL RULES IN THE CASE OF SELF-IN-
SURED PLANS.—
‘‘(1) SAFE
HARBOR
FOR
EMPLOYEES
WHOSE
ESTIMATES ARE AT LEAST 95 PERCENT OF ACTUAL
EMPLOYER CONTRIBUTIONS.—In the case of an em-
ployer who maintains a self-insured qualified health
plan, if for any calendar year the excess of—
‘‘(A) the actual employer contributions de-
termined under section 91 with respect to all
employees for such year, over
‘‘(B) the amount estimated by the em-
ployer under section 91(d)(3)(B) as the em-
ployer contributions with respect to all employ-
ees for such year,
is not greater than 5 percent of the amount deter-
mined under subparagraph (A) then, except as pro-
vided in paragraph (2), no penalty shall be imposed
under section 6672 on the employer for failure to
145
Title II, Subtitle A
pay, or to deduct and withhold, any tax imposed by
this subtitle on such excess.
‘‘(2) EMPLOYER MUST PAY CERTAIN TAXES ON
EXCESS.—Paragraph (1) shall not apply to any tax
imposed, or required to be deducted and withheld,
under sections 3111, 3221, 3301, and 3402 on the
excess described in paragraph (1) unless the em-
ployer pays any such tax within the time prescribed
by the Secretary under regulations.
‘‘(3) SPECIAL RULES FOR EMPLOYEE’S SOCIAL
SECURITY TAX AND CREDIT.—In the case of the ex-
cess described in paragraph (1)—
‘‘(A) no tax shall be imposed by section
3101, and
‘‘(B) the amount of such excess shall not
be taken into account for purposes of section
209 of the Social Security Act.
‘‘(c) LIABILITY FOR WITHHOLDING AND PAYMENT
OF TAX.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the applicable payor shall withhold, and
be liable for, payment of any tax required to be
withheld or paid under this subtitle on any amount
described in subsection (a).
146
Title II, Subtitle A
‘‘(2) SPECIAL
RULES
FOR
MULTIEMPLOYER
HEALTH PLANS.—In the case of any multiemployer
health plan, the plan administrator shall comply
with such rules with respect to the withholding of,
and liability for, any tax required to be withheld or
paid under this subtitle as the Secretary may require
by regulations.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) APPLICABLE PAYOR.—The term ‘applica-
ble payor’ means the payor of remuneration for serv-
ices which qualifies the employee for coverage under
a multiemployer health plan.
‘‘(2) EMPLOYEE.—The term ‘employee’ does
not include a former employee.
‘‘(3) MULTIEMPLOYER
HEALTH
PLAN.—The
term ‘multiemployer health plan’ has the meaning
given such term by section 91(d)(7).’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 25 is amended by adding at the
end the following new item:
‘‘Sec. 3510. Treatment of excess employer contributions.’’
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
subsections (a) and (b) shall apply to taxable years
beginning after the first December 31 following the
deadline specified in section 1401(c)(2) of this Act.
147
Title II, Subtitle A
(2) 
EMPLOYMENT
TAX.—The 
amendments
made by subsection (c) shall take effect on and after
the first January 1 following the deadline specified
in such section 1401(c)(2).
SEC. 2002. DEDUCTIONS FOR COSTS OF QUALIFIED HEALTH
PLANS.
(a) BUSINESS EXPENSE DEDUCTION FOR HEALTH
INSURANCE.—Section 162 (relating to trade or business
expenses) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the fol-
lowing new subsection:
‘‘(m) GROUP HEALTH PLANS.—The amount of ex-
penses paid or incurred by an employer for a group health
plan or as contributions to an employee’s medical savings
account shall not be allowed as a deduction under this sec-
tion—
‘‘(1) unless the plan is a qualified health plan
(as defined in section 1601(20) of the Health Equity
and Access Reform Today Act of 1993), and
‘‘(2) with respect to each employee, to the ex-
tent such amount exceeds the applicable dollar limit
for such employee (within the meaning of section
91(b)(2) and determined on an annual basis).’’
148
Title II, Subtitle A
(b) PERMANENT EXTENSION
AND INCREASE
IN
HEALTH INSURANCE TAX DEDUCTION FOR SELF-EM-
PLOYED INDIVIDUALS.—
(1) PERMANENT EXTENSION OF DEDUCTION.—
(A) IN GENERAL.—Subsection (l) of sec-
tion 162 (relating to special rules for health in-
surance costs of self-employed individuals) is
amended by striking paragraph (6).
(B) EFFECTIVE
DATE.—The amendment
made by this paragraph shall apply to taxable
years beginning after December 31, 1993.
(2) INCREASE IN AMOUNT OF DEDUCTION; IN-
SURANCE PURCHASED MUST MEET CERTAIN STAND-
ARDS.—
(A) INCREASE
IN
AMOUNT
OF
DEDUC-
TION.—Paragraph (1) of section 162(l) is
amended—
(i) by striking ‘‘25 percent of’’ and in-
serting ‘‘100 percent of’’, and
(ii) by striking ‘‘dependents.’’ and in-
serting ‘‘dependents, and only to the extent
such amount does not exceed the applica-
ble dollar limit for such taxpayer (within
the meaning of section 91(b)(2) and deter-
mined on an annual basis).’’