vidual under creditable health insurance, shall make the 
return described in subsection (b) (at such time as the 
Secretary may by regulations prescribe) with respect to 
each individual from whom such payments were received. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
‘‘(A) the name, address, and TIN of the 
individual from whom payments described in 
subsection (a) were received, 
‘‘(B) the name, address, and TIN of each 
individual who was provided by such person 
with coverage under creditable health insurance 
by reason of such payments and the period of 
such coverage, and 
‘‘(C) such other information as the Sec-
retary may reasonably prescribe. 
‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’ 
means qualified health insurance (as defined in section 
36(c)) other than— 
‘‘(1) insurance under a subsidized group health 
plan maintained by an employer, or
‘‘(2) to the extent provided in regulations pre-
scribed by the Secretary, any other insurance cov-
ering an individual if no credit is allowable under 
section 36 with respect to such coverage. 
‘‘(d) 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 
is required under subsection (b)(2)(A) to be set forth in 
such return a written statement showing— 
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, 
‘‘(2) the aggregate amount of payments de-
scribed in subsection (a) received by the person re-
quired to make such return from the individual to 
whom the statement is required to be furnished, and 
‘‘(3) the information required under subsection 
(b)(2)(B) with respect to such payments. 
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. 
‘‘(e) 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) of such Code (relating to defini-
tions) is amended by redesignating clauses (xiii) 
through (xviii) as clauses (xiv) through (xix), 
respectively, and by inserting after clause (xii) 
the following new clause: 
‘‘(xiiii) section 6050U (relating to re-
turns relating to payments for qualified 
health insurance),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of the next to last subparagraph, by strik-
ing the period at the end of the last subpara-
graph and inserting ‘‘, or’’, and by adding at 
the end the following new subparagraph: 
‘‘(CC) section 6050U(d) (relating to re-
turns relating to payments for qualified health 
insurance).’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by inserting 
after the item relating to section 6050T the fol-
lowing new item: 
‘‘Sec. 6050U. Returns relating to payments for qualified health insurance.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘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 striking the last item and inserting the 
following new items: 
‘‘Sec. 36. Health insurance costs. 
‘‘Sec. 37. Overpayments of tax.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PUR-
CHASERS OF QUALIFIED HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 (relating to miscellaneous provisions) 
is amended by inserting after section 7527 the following 
new section:
‘‘SEC. 7527A. ADVANCE PAYMENT OF HEALTH INSURANCE 
CREDIT FOR PURCHASERS OF QUALIFIED 
HEALTH INSURANCE. 
‘‘(a) GENERAL RULE.—In the case of an eligible indi-
vidual, the Secretary shall make payments to the provider 
of such individual’s qualified health insurance equal to 
such individual’s qualified health insurance credit advance 
amount with respect to such provider. 
‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 
section, the term ‘eligible individual’ means any indi-
vidual— 
‘‘(1) who purchases qualified health insurance 
(as defined in section 36(c)), and 
‘‘(2) for whom a qualified health insurance 
credit eligibility certificate is in effect. 
‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI-
BILITY CERTIFICATE.—For purposes of this section, a 
qualified health insurance credit eligibility certificate is a 
statement furnished by an individual to the Secretary 
which— 
‘‘(1) certifies that the individual will be eligible 
to receive the credit provided by section 36 for the 
taxable year, 
‘‘(2) estimates the amount of such credit for 
such taxable year, and
‘‘(3) provides such other information as the 
Secretary may require for purposes of this section. 
‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD-
VANCE AMOUNT.—For purposes of this section, the term 
‘qualified health insurance credit advance amount’ means, 
with respect to any provider of qualified health insurance, 
the Secretary’s estimate of the amount of credit allowable 
under section 36 to the individual for the taxable year 
which is attributable to the insurance provided to the indi-
vidual by such provider. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to carry out the pur-
poses of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 of such Code is amended by inserting after 
the item relating to section 7527 the following new item: 
‘‘Sec. 7527A. Advance payment of health insurance credit for purchasers of 
qualified health insurance.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2006. 
TITLE II—ASSURING HEALTH IN-
SURANCE COVERAGE FOR UN-
INSURABLE INDIVIDUALS 
SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY 
NETS. 
(a) IN GENERAL.—
(1) REQUIREMENT.—For years beginning with 
2006, each health insurer, health maintenance orga-
nization, and health service organization shall be a 
participant in a health insurance safety net (in this 
title referred to as a ‘‘safety net’’) established by the 
State in which it operates. 
(2) FUNCTIONS.—Any safety net shall assure, 
in accordance with this title, the availability of quali-
fied health insurance coverage to uninsurable indi-
viduals. 
(3) FUNDING.—Any safety net shall be funded 
by an assessment against health insurers, health 
service organizations, and health maintenance orga-
nizations on a pro rata basis of premiums collected 
in the State in which the safety net operates. The 
costs of the assessment may be added by a health 
insurer, health service organization, or health main-
tenance organization to the costs of its health insur-
ance or health coverage provided in the State. 
(4) 
GUARANTEED
RENEWABLE.—Coverage 
under a safety net shall be guaranteed renewable ex-
cept for nonpayment of premiums, material mis-
representation, fraud, medicare eligibility under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.), loss of dependent status, or eligibility for other 
health insurance coverage. 
(5) COMPLIANCE WITH NAIC MODEL ACT.—In 
the case of a State that has not established, as of 
the date of the enactment of this Act, a high risk 
pool or other comprehensive health insurance pro-
gram that assures the availability of qualified health 
insurance coverage to all eligible individuals residing 
in the State, a safety net shall be established in ac-
cordance with the requirements of the ‘‘Model 
Health Plan For Uninsurable Individuals Act’’ (or 
the successor model Act), as adopted by the Na-
tional Association of Insurance Commissioners and 
as in effect on the date of the safety net’s establish-
ment. 
(b) DEADLINE.—Safety nets required under sub-
section (a) shall be established not later than January 1, 
2006. 
(c) WAIVER.—This title shall not apply in the case 
of insurers and organizations operating in a State if the 
State has established a similar comprehensive health in-
surance program that assures the availability of qualified 
health insurance coverage to all eligible individuals resid-
ing in the State.
(d) RECOMMENDATION FOR COMPLIANCE REQUIRE-
MENT.—Not later than January 1, 2007, the Secretary 
of Health and Human Services shall submit to Congress 
a recommendation on appropriate sanctions for States 
that fail to meet the requirement of subsection (a). 
SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COV-
ERAGE. 
(a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DE-
FINED.—In this title: 
(1) UNINSURABLE
INDIVIDUAL.—The term 
‘‘uninsurable individual’’ means, with respect to a 
State, an eligible individual who presents proof of 
uninsurability by a private insurer in accordance 
with subsection (b) or proof of a condition previously 
recognized as uninsurable by the State. 
(2) ELIGIBLE INDIVIDUAL.— 
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means, with respect to a State, a citizen 
or national of the United States (or an alien 
lawfully admitted for permanent residence) who 
is a resident of the State for at least 90 days 
and includes any dependent (as defined for pur-
poses of the Internal Revenue Code of 1986) of 
such a citizen, national, or alien who also is 
such a resident.
(B) EXCEPTION.—An individual is not an 
‘‘eligible individual’’ if the individual— 
(i) is covered by or eligible for benefits 
under a State medicaid plan approved 
under title XIX of the Social Security Act 
(42 U.S.C. 1396 et seq.), 
(ii) has voluntarily terminated safety 
net coverage within the past 6 months, 
(iii) has received the maximum benefit 
payable under the safety net, 
(iv) is an inmate in a public institu-
tion, or 
(v) is eligible for other public or pri-
vate health care programs (including pro-
grams that pay for directly, or reimburse, 
otherwise eligible individuals with pre-
miums charged for safety net coverage). 
(b) PROOF OF UNINSURABILITY.— 
(1) IN GENERAL.—The proof of uninsurability 
for an individual shall be in the form of— 
(A) a notice of rejection or refusal to issue 
substantially similar health insurance for health 
reasons by one insurer; or 
(B) a notice of refusal by an insurer to 
issue substantially similar health insurance ex-
cept at a rate in excess of the rate applicable 
to the individual under the safety net plan. 
For purposes of this paragraph, the term ‘‘health in-
surance’’ does not include insurance consisting only 
of stoploss, excess of loss, or reinsurance coverage. 
(2) EXCEPTION FOR INDIVIDUALS WITH UNIN-
SURABLE CONDITIONS.—The State shall promulgate 
a list of medical or health conditions for which an 
individual shall be eligible for safety net plan cov-
erage without applying for health insurance or estab-
lishing proof of uninsurability under paragraph (1). 
Individuals who can demonstrate the existence or 
history of any medical or health conditions on such 
list shall not be required to provide the proof de-
scribed in paragraph (1). The list shall be effective 
on the first day of the operation of the safety net 
plan and may be amended from time to time as may 
be appropriate. 
SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE 
UNDER SAFETY NET. 
In this title, the term ‘‘qualified health insurance cov-
erage’’ means, with respect to a State, health insurance 
coverage that provides benefits typical of major medical 
insurance available in the individual health insurance mar-
ket in such State.