1465 
(2) RETURNS.—The amendments made 
by subsection (b) shall apply to calendar 
years beginning after December 31, 2012. 
PART 2—EMPLOYER RESPONSIBILITY 
SEC. 411. ELECTION TO SATISFY HEALTH COVERAGE PAR-
TICIPATION REQUIREMENTS. 
(a) IN GENERAL.—Chapter 43 of the Inter-
nal Revenue Code of 1986 is amended by add-
ing at the end the following new section: 
‘‘SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COV-
ERAGE PARTICIPATION REQUIREMENTS. 
‘‘(a) ELECTION
OF
EMPLOYER
RESPONSI-
BILITY TO PROVIDE HEALTH COVERAGE.— 
‘‘(1) IN GENERAL.—Subsection (b) shall 
apply to any employer with respect to 
whom an election under paragraph (2) is 
in effect. 
‘‘(2) TIME AND MANNER.—An employer 
may make an election under this para-
graph at such time and in such form and 
manner as the Secretary may prescribe. 
‘‘(3) AFFILIATED GROUPS.—In the case 
of any employer which is part of a group 
of employers who are treated as a single 
employer under subsection (b), (c), (m), or 
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(o) of section 414, the election under 
paragraph (2) shall be made by such per-
son as the Secretary may provide. Any 
such election, once made, shall apply to 
all members of such group. 
‘‘(4) SEPARATE ELECTIONS.—Under reg-
ulations prescribed by the Secretary, sep-
arate elections may be made under para-
graph (2) with respect to— 
‘‘(A) separate lines of business, 
and 
‘‘(B) full-time employees and em-
ployees who are not full-time employ-
ees. 
‘‘(5) TERMINATION OF ELECTION IN CASES 
OF
SUBSTANTIAL
NONCOMPLIANCE.—The 
Secretary may terminate the election of 
any employer under paragraph (2) if the 
Secretary 
(in 
coordination 
with 
the 
Health 
Choices 
Commissioner) 
deter-
mines that such employer is in substan-
tial noncompliance with the health cov-
erage participation requirements. 
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‘‘(b) EXCISE TAX WITH RESPECT TO FAILURE 
TO MEET HEALTH COVERAGE PARTICIPATION RE-
QUIREMENTS.— 
‘‘(1) IN GENERAL.—In the case of any 
employer who fails (during any period 
with respect to which the election under 
subsection (a) is in effect) to satisfy the 
health coverage participation require-
ments with respect to any employee to 
whom such election applies, there is 
hereby imposed on each such failure with 
respect to each such employee a tax of 
$100 for each day in the period beginning 
on the date such failure first occurs and 
ending on the date such failure is cor-
rected. 
‘‘(2) LIMITATIONS ON AMOUNT OF TAX.— 
‘‘(A) TAX NOT TO APPLY WHERE FAIL-
URE NOT DISCOVERED EXERCISING REA-
SONABLE DILIGENCE.—No tax shall be 
imposed by paragraph (1) on any fail-
ure during any period for which it is 
established to the satisfaction of the 
Secretary that the employer neither 
knew, nor exercising reasonable dili-
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gence would have known, that such 
failure existed. 
‘‘(B) TAX NOT TO APPLY TO FAILURES 
CORRECTED
WITHIN
DAYS.—No tax 
shall be imposed by paragraph (1) on 
any failure if— 
‘‘(i) such failure was due to 
reasonable cause and not to will-
ful neglect, and 
‘‘(ii) such failure is corrected 
during the 30-day period begin-
ning on the 1st date that the em-
ployer knew, or exercising rea-
sonable 
diligence 
would 
have 
known, that such failure existed. 
‘‘(C) OVERALL LIMITATION FOR UNIN-
TENTIONAL
FAILURES.—In the case of 
failures which are due to reasonable 
cause and not to willful neglect, the 
tax imposed by subsection (a) for fail-
ures during the taxable year of the 
employer shall not exceed the amount 
equal to the lesser of— 
‘‘(i) 10 percent of the aggre-
gate amount paid or incurred by 
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the employer (or predecessor em-
ployer) during the preceding tax-
able year for employment-based 
health plans, or 
‘‘(ii) $500,000. 
‘‘(D) COORDINATION WITH OTHER EN-
FORCEMENT
PROVISIONS.—The tax im-
posed under paragraph (1) with re-
spect to any failure shall be reduced 
(but not below zero) by the amount of 
any civil penalty collected under sec-
tion 502(c)(11) of the Employee Re-
tirement Income Security Act of 1974 
or section 2793(g) of the Public 
Health Service Act with respect to 
such failure. 
‘‘(c) HEALTH COVERAGE PARTICIPATION RE-
QUIREMENTS.—For purposes of this section, 
the term ‘health coverage participation re-
quirements’ means the requirements of part I 
of subtitle B of title III of the America’s Af-
fordable Health Choices Act of 2009 (as in ef-
fect on the date of the enactment of this sec-
tion).’’. 
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(b) CLERICAL AMENDMENT.—The table of 
sections for chapter 43 of such Code is amend-
ed by adding at the end the following new 
item: 
‘‘Sec. 4980H. Election with respect to health coverage partici-
pation requirements.’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to periods be-
ginning after December 31, 2012. 
SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOY-
ERS. 
(a) IN GENERAL.—Section 3111 of the Inter-
nal Revenue Code of 1986 is amended by re-
designating subsection (c) as subsection (d) 
and by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) EMPLOYERS ELECTING TO NOT PROVIDE 
HEALTH BENEFITS.— 
‘‘(1) IN GENERAL.—In addition to other 
taxes, there is hereby imposed on every 
nonelecting employer an excise tax, with 
respect to having individuals in his em-
ploy, equal to 8 percent of the wages (as 
defined in section 3121(a)) paid by him 
with respect to employment (as defined 
in section 3121(b)). 
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section 3121(a)) paid by him with re-
spect to employment (as defined in 
section 3121(b)) during such calendar 
year. 
‘‘(3) 
NONELECTING
EMPLOYER.—For 
purposes of paragraph (1), the term ‘non-
electing employer’ means any employer 
for any period with respect to which such 
employer does not have an election under 
section 4980H(a) in effect. 
‘‘(4) SPECIAL RULE FOR SEPARATE ELEC-
TIONS.—In the case of an employer who 
makes a separate election described in 
section 4980H(a)(4) for any period, para-
graph (1) shall be applied for such period 
by taking into account only the wages 
paid to employees who are not subject to 
such election. 
‘‘(5) 
AGGREGATION; 
PREDECESSORS.— 
For purposes of this subsection— 
‘‘(A) all persons treated as a single 
employer under subsection (b), (c), 
(m), or (o) of section 414 shall be 
treated as 1 employer, and 
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‘‘(B) any reference to any person 
shall be treated as including a ref-
erence to any predecessor of such 
person.’’. 
(b) DEFINITIONS.—Section 3121 of such 
Code is amended by adding at the end the fol-
lowing new subsection: 
‘‘(aa) SPECIAL RULES FOR TAX ON EMPLOY-
ERS ELECTING NOT TO PROVIDE HEALTH BENE-
FITS.—For purposes of section 3111(c)— 
‘‘(1) Paragraphs (1), (5), and (19) of 
subsection (b) shall not apply. 
‘‘(2) Paragraph (7) of subsection (b) 
shall apply by treating all services as not 
covered by the retirement systems re-
ferred to in subparagraphs (C) and (F) 
thereof. 
‘‘(3) Subsection (e) shall not apply and 
the term ‘State’ shall include the District 
of Columbia.’’. 
(c) CONFORMING AMENDMENT.—Subsection 
(d) of section 3111 of such Code, as redesig-
nated by this section, is amended by striking 
‘‘this section’’ and inserting ‘‘subsections (a) 
and (b)’’. 
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1474 
(d) APPLICATION TO RAILROADS.— 
(1) IN GENERAL.—Section 3221 of such 
Code is amended by redesignating sub-
section (c) as subsection (d) and by in-
serting after subsection (b) the following 
new subsection: 
‘‘(c) EMPLOYERS ELECTING TO NOT PROVIDE 
HEALTH BENEFITS.— 
‘‘(1) IN GENERAL.—In addition to other 
taxes, there is hereby imposed on every 
nonelecting employer an excise tax, with 
respect to having individuals in his em-
ploy, equal to 8 percent of the compensa-
tion paid during any calendar year by 
such employer for services rendered to 
such employer. 
‘‘(2) EXCEPTION
FOR
SMALL
EMPLOY-
ERS.—Rules similar to the rules of section 
3111(c)(2) shall apply for purposes of this 
subsection. 
‘‘(3) 
NONELECTING
EMPLOYER.—For 
purposes of paragraph (1), the term ‘non-
electing employer’ means any employer 
for any period with respect to which such 
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employer does not have an election under 
section 4980H(a) in effect. 
‘‘(4) SPECIAL RULE FOR SEPARATE ELEC-
TIONS.—In the case of an employer who 
makes a separate election described in 
section 4980H(a)(4) for any period, sub-
section (a) shall be applied for such pe-
riod by taking into account only the 
wages paid to employees who are not 
subject to such election.’’. 
(2) DEFINITIONS.—Subsection (e) of 
section 3231 of such Code is amended by 
adding at the end the following new 
paragraph: 
‘‘(13) SPECIAL
RULES
FOR
TAX
ON
EM-
PLOYERS ELECTING NOT TO PROVIDE HEALTH 
BENEFITS.—For 
purposes 
of 
section 
3221(c)— 
‘‘(A) Paragraph (1) shall be ap-
plied without regard to the third sen-
tence thereof. 
‘‘(B) 
Paragraph 
(2) 
shall 
not 
apply.’’. 
(3) 
CONFORMING
AMENDMENT.—Sub-
section (d) of section 3221 of such Code, 
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1476 
as redesignated by this section, is amend-
ed by striking ‘‘subsections (a) and (b), 
see section 3231(e)(2)’’ and inserting ‘‘this 
section, see paragraphs (2) and (13)(B) of 
section 3231(e)’’. 
(e) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to periods be-
ginning after December 31, 2012. 
Subtitle B—Credit for Small Busi-
ness Employee Health Coverage 
Expenses 
SEC. 
421. 
CREDIT 
FOR 
SMALL 
BUSINESS 
EMPLOYEE 
HEALTH COVERAGE EXPENSES. 
(a) IN GENERAL.—Subpart D of part IV of 
subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 (relating to business-re-
lated credits) is amended by adding at the end 
the following new section: 
‘‘SEC. 45R. SMALL BUSINESS EMPLOYEE HEALTH COV-
ERAGE CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 
38, in the case of a qualified small employer, 
the small business employee health coverage 
credit determined under this section for the 
taxable year is an amount equal to the appli-
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cable percentage of the qualified employee 
health coverage expenses of such employer 
for such taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.— 
‘‘(1) IN GENERAL.—For purposes of this 
section, the applicable percentage is 50 
percent. 
‘‘(2) PHASEOUT BASED ON AVERAGE COM-
PENSATION OF EMPLOYEES.—In the case of 
an employer whose average annual em-
ployee compensation for the taxable year 
exceeds $20,000, the percentage specified 
in paragraph (1) shall be reduced by a 
number of percentage points which bears 
the same ratio to 50 as such excess bears 
to $20,000. 
‘‘(c) LIMITATIONS.— 
‘‘(1) PHASEOUT
BASED
ON
EMPLOYER 
SIZE.—In the case of an employer who em-
ploys more than 10 qualified employees 
during the taxable year, the credit deter-
mined under subsection (a) shall be re-
duced by an amount which bears the 
same ratio to the amount of such credit 
(determined without regard to this para-
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graph and after the application of the 
other provisions of this section) as— 
‘‘(A) the excess of— 
‘‘(i) the number of qualified 
employees employed by the em-
ployer during the taxable year, 
over 
‘‘(ii) 10, bears to 
‘‘(B) 15. 
‘‘(2) CREDIT
NOT
ALLOWED
WITH
RE-
SPECT
TO
CERTAIN
HIGHLY
COMPENSATED 
EMPLOYEES.—No credit shall be allowed 
under subsection (a) with respect to 
qualified employee health coverage ex-
penses paid or incurred with respect to 
any employee for any taxable year if the 
aggregate compensation paid by the em-
ployer to such employee during such tax-
able year exceeds $80,000. 
‘‘(d) QUALIFIED
EMPLOYEE
HEALTH
COV-
ERAGE EXPENSES.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified 
employee 
health 
coverage 
expenses’ 
means, with respect to any employer for 
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any taxable year, the aggregate amount 
paid or incurred by such employer dur-
ing such taxable year for coverage of any 
qualified employee of the employer (in-
cluding any family coverage which covers 
such employee) under qualified health 
coverage. 
‘‘(2) QUALIFIED
HEALTH
COVERAGE.— 
The 
term 
‘qualified 
health 
coverage’ 
means acceptable coverage (as defined in 
section 59B(d)) which— 
‘‘(A) is provided pursuant to an 
election under section 4980H(a), and 
‘‘(B) satisfies the requirements re-
ferred to in section 4980H(c). 
‘‘(e) OTHER DEFINITIONS.—For purposes of 
this section— 
‘‘(1) QUALIFIED SMALL EMPLOYER.—For 
purposes of this section, the term ‘quali-
fied small employer’ means any employer 
for any taxable year if— 
‘‘(A) the number of qualified em-
ployees employed by such employer 
during the taxable year does not ex-
ceed 25, and 
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‘‘(B) the average annual employee 
compensation of such employer for 
such taxable year does not exceed the 
sum of the dollar amounts in effect 
under subsection (b)(2). 
‘‘(2) QUALIFIED
EMPLOYEE.—The term 
‘qualified employee’ means any employee 
of an employer for any taxable year of 
the employer if such employee received 
at least $5,000 of compensation from such 
employer for services performed in the 
trade or business of such employer dur-
ing such taxable year. 
‘‘(3) AVERAGE ANNUAL EMPLOYEE COM-
PENSATION.—The term ‘average annual 
employee compensation’ means, with re-
spect to any employer for any taxable 
year, the average amount of compensa-
tion paid by such employer to qualified 
employees of such employer during such 
taxable year. 
‘‘(4) COMPENSATION.—The term ‘com-
pensation’ has the meaning given such 
term in section 408(p)(6)(A). 
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‘‘(5) 
FAMILY
COVERAGE.—The 
term 
‘family coverage’ means any coverage 
other than self-only coverage. 
‘‘(f) SPECIAL RULES.—For purposes of this 
section— 
‘‘(1) SPECIAL
RULE
FOR
PARTNERSHIPS 
AND
SELF-EMPLOYED.—In the case of a 
partnership (or a trade or business car-
ried on by an individual) which has one 
or more qualified employees (determined 
without regard to this paragraph) with 
respect to whom the election under 
4980H(a) applies, each partner (or, in the 
case of a trade or business carried on by 
an individual, such individual) shall be 
treated as an employee. 
‘‘(2) AGGREGATION
RULE.—All persons 
treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 
shall be treated as 1 employer. 
‘‘(3) DENIAL OF DOUBLE BENEFIT.—Any 
deduction otherwise allowable with re-
spect to amounts paid or incurred for 
health insurance coverage to which sub-
section (a) applies shall be reduced by 
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the amount of the credit determined 
under this section. 
‘‘(4) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning after 
2013, each of the dollar amounts in sub-
sections (b)(2), (c)(2), and (e)(2) shall be 
increased by an amount equal to— 
‘‘(A) such dollar amount, multi-
plied by 
‘‘(B) the cost of living adjustment 
determined under section 1(f)(3) for 
the calendar year in which the tax-
able year begins determined by sub-
stituting ‘calendar year 2012’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
If any increase determined under this 
paragraph is not a multiple of $50, such 
increase shall be rounded to the next 
lowest multiple of $50.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSI-
NESS CREDIT.—Subsection (b) of section 38 of 
such Code (relating to general business cred-
it) is amended by striking ‘‘plus’’ at the end of 
paragraph (34), by striking the period at the 
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end of paragraph (35) and inserting ‘‘, plus’’ , 
and by adding at the end the following new 
paragraph: 
‘‘(36) in the case of a qualified small 
employer (as defined in section 45R(e)), 
the small business employee health cov-
erage credit determined under section 
45R(a).’’. 
(c) CLERICAL AMENDMENT.—The table of 
sections for subpart D of part IV of sub-
chapter A of chapter 1 of such Code is amend-
ed by inserting after the item relating to sec-
tion 45Q the following new item: 
‘‘Sec. 45R. Small business employee health coverage credit.’’. 
(d) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to taxable 
years beginning after December 31, 2012. 
Subtitle C—Disclosures to Carry 
Out Health Insurance Exchange 
Subsidies 
SEC. 431. DISCLOSURES TO CARRY OUT HEALTH INSUR-
ANCE EXCHANGE SUBSIDIES. 
(a) IN GENERAL.—Subsection (l) of section 
6103 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following 
new paragraph: 
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