129
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of 
$10.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting be-
fore the period ‘‘or 36’’ after ‘‘section 35’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 35 the following new item:
‘‘Sec. 36. Health insurance costs.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 502. EXCLUSION FOR EMPLOYER PAYMENTS MADE TO 
COMPENSATE EMPLOYEES WHO ELECT NOT 
TO PARTICIPATE IN EMPLOYER-SUBSIDIZED 
HEALTH PLANS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
items specifically excluded from gross income) is amended 
by inserting after section 139 the following new section:
130
‘‘SEC. 139A. TREATMENT OF COMPENSATING PAYMENTS 
MADE FOR EMPLOYEES WHO ELECT NOT TO 
PARTICIPATE 
IN 
EMPLOYER-SUBSIDIZED 
HEALTH PLANS. 
‘‘(a) IN GENERAL.—Gross income of an eligible em-
ployee shall not include the amount of any compensating 
coverage payment made by an employer of such employee 
for such employee’s benefit. 
‘‘(b) ELIGIBLE EMPLOYEE.—For purposes of this 
section, the term ‘eligible employee’ means any employee 
who is eligible to participate in any subsidized health plan 
of an employer for any period and who elects not to par-
ticipate in any subsidized health plan of such employer 
for such period. 
‘‘(c) COMPENSATING
COVERAGE
PAYMENT.—For 
purposes of this section, the term ‘compensating coverage 
payment’ means—
‘‘(1) any payment made by the employer for 
qualified health insurance specified by the employee 
(for any period for which the employee is described 
in subsection (b)) which covers all of the individuals 
who, but for the election referred to in subsection 
(b), would be covered under the subsidized health 
plan of the employer, and 
‘‘(2) any payment made by the employer to any 
medical savings account of such employee or spouse
131
for a period for which the employee is covered by 
qualified health insurance. 
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section, the term ‘qualified health insurance’ 
has the meaning given such term in section 36(c). 
‘‘(e) EMPLOYER PARTICIPATION.—
‘‘(1) IN GENERAL.—This section shall apply to 
a compensating coverage payment made by an em-
ployer for an employee’s benefit only if—
‘‘(A) the employer, and all other employers 
which are members of any controlled group 
which includes such employer, agree to make 
such payments to all their eligible employees, 
‘‘(B) the amount of such payment is not 
less than the employer health plan contribution 
for such period with respect to the employee, 
and 
‘‘(C) the employer permits the election re-
ferred to in subsection (b) to be made by em-
ployees—
‘‘(i) at the commencement of employ-
ment with the employer, and 
‘‘(ii) during open enrollment periods 
(not less frequently than annually) of at 
least 30 days.
132
‘‘(2) EXCEPTION FOR CERTAIN EMPLOYEES.—
Paragraph (1) shall not apply to—
‘‘(A) any employee who is covered under a 
subsidized health plan of another employer of 
such employee or of an employer of such em-
ployee’s spouse, 
‘‘(B) any employee who normally works 
less than 25 hours per week, 
‘‘(C) any employee who normally works 
during not more than 6 months during any 
year, 
‘‘(D) any employee who has not attained 
age 21, and 
‘‘(E) except to the extent provided in regu-
lations, any employee who is included in a unit 
of employees covered by an agreement which 
the Secretary of Labor finds to be a collective 
bargaining agreement between employee rep-
resentatives and the employer. 
‘‘(3) CONTROLLED GROUPS.—Rules similar to 
the rules of subclauses (II) and (III) of paragraph 
(4)(D)(iii) shall apply for purposes of paragraph 
(1)(A). 
‘‘(4) EMPLOYER
HEALTH
PLAN
CONTRIBU-
TION.—For purposes of this section—
133
‘‘(A) IN
GENERAL.—The term ‘employer 
health plan contribution’ means the applicable 
premium for the employee reduced by the em-
ployee’s share of such premium. 
‘‘(B) APPLICABLE
PREMIUM.—Except as 
provided in subparagraph (D), the term ‘appli-
cable premium’ means an amount which is not 
less than 98 percent of—
‘‘(i) the applicable premium (as de-
fined in section 4980B(f)(4)) for the em-
ployee, or 
‘‘(ii) if an election under subpara-
graph (D) is in effect with respect to an 
employee, the applicable premium deter-
mined under subparagraph (D). 
‘‘(C) EMPLOYEE’S SHARE.—The term ‘em-
ployee’s share’ means, with respect to the appli-
cable premium for any employee, the amount of 
the cost to the plan which is paid by the simi-
larly situated beneficiaries who are taken into 
account in determining such premium for such 
employee. 
‘‘(D) AUTHORITY TO USE AGE, SEX, AND 
GEOGRAPHY
IN
DETERMINING
CONTRIBU-
TION.—
134
‘‘(i) IN GENERAL.—An employer may 
elect to determine the applicable premium 
for an employee on an actuarial basis tak-
ing into account age, sex, and geography of 
the employee and similarly situated bene-
ficiaries. 
‘‘(ii) DETERMINATION
OF
EMPLOY-
EE’S SHARE.—In the case of an employer 
who determines the applicable premium 
under clause (i), the employee’s share of 
such premium shall be the same percent-
age of such premium as the employee’s 
share of the applicable premium deter-
mined without regard to clause (i). 
‘‘(iii) CONSISTENCY REQUIRED.—
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (III), an em-
ployer may determine the applicable 
premium under this subparagraph for 
any employee only if such employer, 
and all other employers which are 
members of any controlled group 
which includes such employer, elect to 
determine the applicable premium
135
under this subparagraph for all their 
employees. 
‘‘(II) CONTROLLED GROUP.—All 
persons treated as a single employer 
under subsection (a) or (b) of section 
52 or subsection (m) or (o) of section 
414 shall be treated as members of a 
controlled group for purposes of sub-
clause (I). 
‘‘(III) TREATMENT OF SEPARATE 
LINES OF BUSINESS.—If an employer 
is treated under section 414(r) as op-
erating separate lines of business dur-
ing any taxable year, subclause (I) 
shall not apply to employees employed 
in such separate lines of business. 
‘‘(f) SPECIAL RULE
FOR MEDICAL SAVINGS AC-
COUNT CONTRIBUTIONS.—Section 220(b)(5) shall not 
apply to an employer contribution which is excludable 
from gross income under subsection (a). 
‘‘(g) EXCLUSION APPLICABLE IN DETERMINING EM-
PLOYMENT TAX LIABILITY.—The exclusion under this 
section shall be treated for purposes of subtitle C in the 
same manner as the exclusion under section 106.’’
136
(b) EMPLOYER HEALTH PLAN CONTRIBUTION TO 
BE REPORTED ON W–2.—Subsection (a) of section 6051 
of such Code (relating to receipts to employees) is amend-
ed by striking ‘‘and’’ at the end of paragraph (10), by 
striking the period at the end of paragraph (11) and in-
serting a comma, and by inserting after paragraph (11) 
the following new paragraphs: 
‘‘(12) the amount of the employer health plan 
contribution (as defined in section 139(c)(3)), and 
‘‘(13) the amount of compensating coverage 
payment (as defined in section 139(c)(1)).’’ 
(c) CLERICAL AMENDMENT.—The table of sections 
for such part III is amended by inserting after the item 
relating to section 139 the following new item:
‘‘Sec. 139A. Treatment of compensating payments made for em-
ployees who elect not to participate in employer-
subsidized health plans.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
SEC. 503. EXPANDED AVAILABILITY OF MEDICAL SAVINGS 
ACCOUNTS. 
(a) REPEAL OF LIMITATIONS ON NUMBER OF MED-
ICAL SAVINGS ACCOUNTS.—
(1) IN GENERAL.—Subsections (i) and (j) of 
section 220 of the Internal Revenue Code of 1986 
are hereby repealed.
137
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of 
such Code is amended by striking subparagraph 
(D). 
(B) Section 138 of such Code is amended 
by striking subsection (f). 
(b) ALL EMPLOYERS MAY OFFER MEDICAL SAVINGS 
ACCOUNTS.—
(1) IN
GENERAL.—Subclause (I) of section 
220(c)(1)(A)(iii) of such Code (defining eligible indi-
vidual) is amended by striking ‘‘and such employer 
is a small employer’’. 
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of 
such Code is amended by striking subparagraph 
(C). 
(B) Subsection (c) of section 220 of such 
Code is amended by striking paragraph (4) and 
by redesignating paragraph (5) as paragraph 
(4). 
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED 
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section 
220(b) of such Code is amended to read as follows:
138
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of 
the annual deductible (as of the first day of such 
month) of the individual’s coverage under the high 
deductible health plan.’’. 
(2) CONFORMING AMENDMENT.—Clause (ii) of 
section 220(d)(1)(A) of such Code is amended by 
striking ‘‘75 percent of’’. 
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph 
(5) of section 220(b) of such Code is amended to read 
as follows: 
‘‘(5) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which 
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be 
reduced (but not below zero) by the amount which 
would (but for section 106(b)) be includible in the 
taxpayer’s gross income for such taxable year.’’. 
(e) EXPANSION OF PERMITTED DEDUCTIBLES.—
(1) IN GENERAL.—Subparagraph (A) of section 
220(c)(2) of such Code (defining high deductible 
health plan) is amended—
(A) in clause (i), by striking ‘‘not less than 
$1,500 and not more than $2,250’’ and insert-
139
ing ‘‘not less than $1,000 and not more than 
$5,000’’, and 
(B) in clause (ii), by striking ‘‘not less 
than $3,000 and not more than $4,500’’ and 
inserting ‘‘not less than $2,000 and not more 
than $10,000’’. 
(2) CONFORMING AMENDMENT.—Subsection (g) 
of section 220 of such Code is amended—
(A) by striking ‘‘1998’’ and inserting 
‘‘2003’’; and 
(B) by striking ‘‘1997’’ and inserting 
‘‘2002’’. 
(f) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED 
UNDER CAFETERIA PLANS.—Subsection (f) of section 
125 of such Code is amended by striking ‘‘106(b),’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
140
TITLE VI—PATIENT ACCESS TO 
INFORMATION
SEC. 601. PATIENT ACCESS TO INFORMATION REGARDING 
PLAN COVERAGE, MANAGED CARE PROCE-
DURES, 
HEALTH 
CARE 
PROVIDERS, 
AND 
QUALITY OF MEDICAL CARE. 
(a) IN GENERAL.—Subpart 2 of part A of title 
XXVII of the Public Health Service Act is amended by 
adding at the end the following new section:
‘‘SEC. 2707. PATIENT ACCESS TO INFORMATION REGARD-
ING PLAN COVERAGE, MANAGED CARE PRO-
CEDURES, HEALTH CARE PROVIDERS, AND 
QUALITY OF MEDICAL CARE. 
‘‘(a) DISCLOSURE REQUIREMENT.—Each health in-
surance issuer offering health insurance coverage in con-
nection with a group health plan shall provide the adminis-
trator of such plan on a timely basis with the information 
necessary to enable the administrator to include in the 
summary plan description of the plan required under sec-
tion 102 of the Employee Retirement Income Security Act 
of 1974 (or each summary plan description in any case 
in which different summary plan descriptions are appro-
priate under part 1 of subtitle B of title I of such Act 
for different options of coverage) the information required 
under subsections (b), (c), (d), and (e)(2)(A). To the ex-
141
tent that any such issuer provides such information on a 
timely basis to plan participants and beneficiaries, the re-
quirements of this subsection shall be deemed satisfied in 
the case of such plan with respect to such information. 
‘‘(b) PLAN BENEFITS.—The information required 
under subsection (a) includes the following: 
‘‘(1) COVERED ITEMS AND SERVICES.—
‘‘(A) CATEGORIZATION OF INCLUDED BEN-
EFITS.—A description of covered benefits, cat-
egorized by—
‘‘(i) types of items and services (in-
cluding any special disease management 
program); and 
‘‘(ii) types of health care professionals 
providing such items and services. 
‘‘(B) EMERGENCY MEDICAL CARE.—A de-
scription of the extent to which the coverage in-
cludes emergency medical care (including the 
extent to which the coverage provides for access 
to urgent care centers), and any definitions pro-
vided under in connection with such coverage 
for the relevant coverage terminology referring 
to such care.
142
‘‘(C) PREVENTATIVE
SERVICES.—A de-
scription of the extent to which the coverage in-
cludes benefits for preventative services. 
‘‘(D) DRUG FORMULARIES.—A description 
of the extent to which covered benefits are de-
termined by the use or application of a drug 
formulary and a summary of the process for de-
termining what is included in such formulary. 
‘‘(E) 
COBRA 
CONTINUATION
COV-
ERAGE.—A description of the benefits available 
under the coverage provided pursuant to part 6 
of subtitle B of title I of the Employee Retire-
ment Income Security Act of 1974. 
‘‘(2) LIMITATIONS, EXCLUSIONS, AND RESTRIC-
TIONS ON COVERED BENEFITS.—
‘‘(A) 
CATEGORIZATION
OF
EXCLUDED 
BENEFITS.—A description of benefits specifi-
cally excluded from coverage, categorized by 
types of items and services. 
‘‘(B) 
UTILIZATION
REVIEW
AND 
PREAUTHORIZATION REQUIREMENTS.—Whether 
coverage for medical care is limited or excluded 
on 
the 
basis 
of 
utilization 
review 
or 
preauthorization requirements.
143
‘‘(C) LIFETIME, ANNUAL, OR OTHER PE-
RIOD LIMITATIONS.—A description of the cir-
cumstances under which, and the extent to 
which, coverage is subject to lifetime, annual, or 
other period limitations, categorized by types of 
benefits. 
‘‘(D) CUSTODIAL CARE.—A description of 
the circumstances under which, and the extent 
to which, the coverage of benefits for custodial 
care is limited or excluded, and a statement of 
the definition used in connection with such cov-
erage for custodial care. 
‘‘(E) 
EXPERIMENTAL
TREATMENTS.—
Whether coverage for any medical care is lim-
ited or excluded because it constitutes experi-
mental treatment or technology, and any defini-
tions provided in connection with such coverage 
for the relevant plan terminology referring to 
such limited or excluded care. 
‘‘(F) MEDICAL APPROPRIATENESS OR NE-
CESSITY.—Whether coverage for medical care 
may be limited or excluded by reason of a fail-
ure to meet the plan’s requirements for medical 
appropriateness or necessity, and any defini-
tions provided in connection with such coverage
144
for the relevant coverage terminology referring 
to such limited or excluded care. 
‘‘(G) SECOND
OR
SUBSEQUENT
OPIN-
IONS.—A description of the circumstances 
under which, and the extent to which, coverage 
for second or subsequent opinions is limited or 
excluded. 
‘‘(H) SPECIALTY CARE.—A description of 
the circumstances under which, and the extent 
to which, coverage of benefits for specialty care 
is conditioned on referral from a primary care 
provider.
‘‘(I) CONTINUITY OF CARE.—A description 
of the circumstances under which, and the ex-
tent to which, coverage of items and services 
provided by any health care professional is lim-
ited or excluded by reason of the departure by 
the professional from any defined set of pro-
viders. 
‘‘(J) RESTRICTIONS
ON
COVERAGE
OF 
EMERGENCY
SERVICES.—A description of the 
circumstances under which, and the extent to 
which, the coverage, in including emergency 
medical care furnished to a participant or bene-
ficiary of the plan imposes any financial respon-
145
sibility described in subsection (c) on partici-
pants or beneficiaries or limits or conditions 
benefits for such care subject to any other term 
or condition of such coverage. 
‘‘(c) 
PARTICIPANT’S
FINANCIAL
RESPONSIBIL-
ITIES.—The information required under subsection (a) in-
cludes an explanation of—
‘‘(1) a participant’s financial responsibility for 
payment of premiums, coinsurance, copayments, 
deductibles, and any other charges; and 
‘‘(2) the circumstances under which, and the 
extent to which, the participant’s financial responsi-
bility described in paragraph (1) may vary, including 
any distinctions based on whether a health care pro-
vider from whom covered benefits are obtained is in-
cluded in a defined set of providers. 
‘‘(d) ACCOUNTABILITY.—The information required 
under subsection (a) includes a description of the legal re-
course options available for participants and beneficiaries 
under the plan including—
‘‘(1) the preemption that applies under section 
514 of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1144) to certain actions 
arising out of the provision of health benefits;
146
‘‘(2) the ability of a participant or beneficiary 
(or the estate of the participant or beneficiary) 
under State law to recover damages resulting from 
personal injury or for wrongful death against any 
person in connection with the provision of insurance, 
administrative services, or medical services by such 
person to or for a group health plan; and 
‘‘(3) the extent to which coverage decisions 
made by the plan are subject to internal review or 
any external review and the proper time frames 
under which such reviews may be requested and con-
ducted. 
‘‘(e) INFORMATION AVAILABLE ON REQUEST.—
‘‘(1) ACCESS TO PLAN BENEFIT INFORMATION 
IN ELECTRONIC FORM.—
‘‘(A) IN GENERAL.—A group health plan 
(and a health insurance issuer offering health 
insurance coverage in connection with a group 
health plan) shall, upon written request (made 
not more frequently than annually), make avail-
able to participants and beneficiaries, in a gen-
erally recognized electronic format, the fol-
lowing information: