met, the Comptroller General shall include in the report 
an analysis of the reasons for such noncompliance. 
SEC. 18. REGULATIONS. 
The Secretary of the Treasury, the Secretaries of Ag-
riculture and Labor, and the International Trade Commis-
sion may promulgate such regulations as may be necessary 
to carry out the amendments made by sections 3 through 
16. 
SEC. 19. MODIFICATIONS RELATING TO CREDIT FOR 
HEALTH INSURANCE COSTS OF CERTAIN TAA 
AND PBGC PENSION RECIPIENTS. 
(a) INCREASE IN CREDIT PERCENTAGE AMOUNT.— 
(1) IN GENERAL.—Subsection (a) of section 35 
of the Internal Revenue Code of 1986 is amended by 
striking ‘‘65 percent’’ and inserting ‘‘80 percent 
(100 percent in the case of the taxpayer’s first eligi-
ble coverage month)’’. 
(2) CONFORMING AMENDMENT.—Subsection (b) 
of section 7527 of such Code is amended by striking 
‘‘65 percent’’ and inserting ‘‘80 percent (100 per-
cent in the case of the taxpayer’s first eligible cov-
erage month)’’. 
(b) PRESUMPTIVE STATUS AS A TAA RECIPIENT.—
(1) IN GENERAL.—Subsection (c) of section 35 
of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(5) PRESUMPTIVE STATUS AS A TAA RECIPI-
ENT.— 
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ shall include any individual who is cov-
ered by a petition filed with the Secretary of 
Labor under section 221 of the Trade Act of 
1974. This paragraph shall apply to any indi-
vidual only with respect to months which— 
‘‘(i) end after the date that such peti-
tion is so filed, and 
‘‘(ii) begin before the earlier of— 
‘‘(I) the end of the 90-day period 
beginning on the date that such peti-
tion is so filed, 
‘‘(II) the date that the Secretary 
of Labor makes a final determination 
not to issue a certification with re-
spect to such petition, or 
‘‘(III) the beginning of the first 
month that such individual is an eligi-
ble individual without regard to this 
paragraph.
‘‘(B) EXCEPTION.—If the Secretary, after 
consultation with the Secretary of Labor, deter-
mines that, at the time of the filing of such pe-
tition, there was not reasonable cause to believe 
that the petition would result in a certification 
by the Secretary of Labor, with respect to indi-
viduals covered by such petition— 
‘‘(i) subparagraph (A) shall not apply 
to such individuals, and 
‘‘(ii) in the case of any such individual 
on whose behalf a payment is made under 
section 7527 with respect to a month de-
scribed in paragraph (1), the tax imposed 
under this subtitle for the taxable year of 
such individual which includes the date of 
such determination shall be increased by 
the amount of such payments.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 7527(d) of 
such Code is amended by striking ‘‘or an eligi-
ble alternative TAA recipient (as defined in sec-
tion 35(c)(3))’’ and inserting ‘‘, an eligible al-
ternative TAA recipient (as defined in section 
35(c)(3)), or an individual who is an eligible in-
dividual by reason of section 35(c)(5)’’.
(B) Section 173(f)(4) of the Workforce In-
vestment Act of 1998 (29 U.S.C. 2918(f)(4)) is 
amended by striking ‘‘and’’ at the end of sub-
paragraph (B), by striking the period at the 
end of subparagraph (C) and inserting ‘‘, and’’, 
and by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) an individual who is an eligible indi-
vidual by reason of section 35(c)(5) of the In-
ternal Revenue Code of 1986.’’. 
(c) RESTRICTIONS ON INDIVIDUAL MARKET COV-
ERAGE.— 
(1) INDIVIDUAL COVERAGE NOT TREATED AS 
QUALIFIED HEALTH INSURANCE.— 
(A) IN GENERAL.—Paragraph (1) of sec-
tion 35(e) of such Code is amended by striking 
subparagraph (J). 
(B) CONFORMING AMENDMENT.—Subpara-
graph (A) of section 173(f)(2) of the Workforce 
Investment Act of 1998 (29 U.S.C. 2918(f)(2)) 
is amended by striking clause (x). 
(2) RATING SYSTEM REQUIREMENT FOR CER-
TAIN STATE-BASED COVERAGE.—
(A) IN
GENERAL.—Subparagraph (A) of 
section 35(e)(2) of such Code is amended by 
adding at the end the following new clause: 
‘‘(v) 
RATING
SYSTEM
REQUIRE-
MENT.—In the case of coverage described 
in paragraph (1)(F)(ii), the premiums for 
such coverage are restricted based on a 
community rating system or based on a 
rate-band system under which the max-
imum rate which may be charged does not 
exceed 150 percent of the standard rate.’’. 
(B) CONFORMING
AMENDMENT.—Clause 
(i) of section 173(f)(2)(B) of the Workforce In-
vestment 
Act 
of 
1998 
(29 
U.S.C. 
2918(f)(2)(B)) is amended by adding at the 
end the following new subclause: 
‘‘(V) RATING SYSTEM REQUIRE-
MENT.—In the case of coverage de-
scribed in subparagraph (A)(vi)(II), 
the premiums for such coverage are 
restricted based on a community rat-
ing system or based on a rate-band 
system under which the maximum 
rate which may be charged does not
exceed 150 percent of the standard 
rate.’’. 
(d) MODIFICATION OF CREDITABLE COVERAGE RE-
QUIREMENT.— 
(1) IN GENERAL.—Subparagraph (B) of section 
35(e)(2) of such Code is amended to read as follows: 
‘‘(B) QUALIFYING INDIVIDUAL.—For pur-
poses of this paragraph, the term ‘qualifying in-
dividual’ means an eligible individual and the 
qualifying family members of such individual if 
such individual meets the requirements of 
clauses (iii) and (iv) of subsection (b)(1)(A) 
and— 
‘‘(i) in the case of an eligible TAA re-
cipient, an eligible alternative TAA recipi-
ent, or an individual who is an eligible in-
dividual by reason of subsection (c)(5), has 
(as of the date on which the individual 
seeks to enroll in the coverage described in 
subparagraphs (B) through (H) of para-
graph (1)) a period of creditable coverage 
(as defined in section 9801(c)), or 
‘‘(ii) in the case of an eligible PBGC 
pension recipient, enrolls in such coverage
during the 90-day period beginning on the 
later of— 
‘‘(I) the last day of the first 
month with respect to which such re-
cipient becomes an eligible PBGC 
pension recipient, or 
‘‘(II) the date of the enactment 
of the Trade Adjustment Assistance 
Improvement Act.’’. 
(2) CONFORMING AMENDMENT.—Clause (ii) of 
section 172(f)(2)(B) of the Workforce Investment 
Act of 1998 (29 U.S.C. 2918(f)(2)(B)) is amended 
to read as follows: 
‘‘(ii) QUALIFYING
INDIVIDUAL.—For 
purposes of this subparagraph, the term 
‘qualifying individual’ means an eligible in-
dividual and the qualifying family members 
of such individual if such individual meets 
the requirements of clauses (iii) and (iv) of 
section 35(b)(1)(A) of the Internal Rev-
enue Code of 1986 and— 
‘‘(I) in the case of an eligible 
TAA recipient, an eligible alternative 
TAA recipient, or an individual who is 
an eligible individual by reason of sec-
tion 35(c)(5) of such Code, has (as of 
the date on which the individual seeks 
to enroll in the coverage described in 
clauses (ii) through (viii) of subpara-
graph (A)) a period of creditable cov-
erage (as defined in section 9801(c) of 
such Code), or 
‘‘(II) in the case of an eligible 
PBGC pension recipient, enrolls in 
such coverage during the 90-day pe-
riod beginning on the later of— 
‘‘(aa) the last day of the 
first month with respect to which 
such recipient becomes an eligible 
PBGC pension recipient, or 
‘‘(bb) the date of the enact-
ment of the Trade Adjustment 
Assistance Improvement Act.’’. 
(3) OUTREACH.—The Secretary of the Treas-
ury shall carry out a program to notify individuals 
prior to their becoming eligible PBGC pension re-
cipients (as defined in section 35 of the Internal 
Revenue Code of 1986) of the requirement of sub-
section (e)(2)(B)(ii) of such section.
(e) CONTINUED QUALIFICATION OF FAMILY MEM-
BERS AFTER CERTAIN EVENTS.— 
(1) IN GENERAL.—Subsection (g) of section 35 
of such Code is amended by redesignating paragraph 
(9) as paragraph (10) and inserting after paragraph 
(8) the following new paragraph: 
‘‘(9) CONTINUED
QUALIFICATION
OF
FAMILY 
MEMBERS AFTER CERTAIN EVENTS.—In the case of 
a month which would be an eligible coverage month 
with respect to an eligible individual but for a quali-
fying event with respect to such individual (within 
the meaning of section 4980B(f)(3)), such month 
shall be treated as an eligible coverage month with 
respect to any qualifying family member of such eli-
gible individual for a period of months not to exceed 
the 
period 
of 
months 
described 
in 
section 
4980B(f)(2)(B) with respect to such qualifying 
event.’’. 
(2) CONFORMING AMENDMENT.—Section 173(f) 
of the Workforce Investment Act of 1998 (29 U.S.C. 
2918(f)) is amended by adding at the end the fol-
lowing: 
‘‘(8) CONTINUED
QUALIFICATION
OF
FAMILY 
MEMBERS AFTER CERTAIN EVENTS.—In the case of 
a month which would be an eligible coverage month
with respect to an eligible individual but for a quali-
fying event with respect to such individual (within 
the meaning of section 4980B(f)(3) of the Internal 
Revenue Code of 1986), such month shall be treated 
as an eligible coverage month with respect to any 
qualifying family member of such eligible individual 
for a period of months not to exceed the period of 
months described in section 4980B(f)(2)(B) of such 
Code with respect to such qualifying event.’’. 
(f) TAA PRE-CERTIFICATION PERIOD RULE
FOR 
PURPOSES OF DETERMINING WHETHER THERE IS A 63- 
DAY LAPSE IN CREDITABLE COVERAGE.— 
(1) IRC AMENDMENT.—Section 9801(c)(2) of 
the Internal Revenue Code of 1986 (relating to not 
counting periods before significant breaks in cred-
itable coverage) is amended by adding at the end the 
following new subparagraph: 
‘‘(D) TAA-ELIGIBLE INDIVIDUALS.— 
‘‘(i) TAA PRE-CERTIFICATION PERIOD 
RULE.—In the case of a TAA-eligible indi-
vidual, the period beginning on the date 
the individual has a TAA-related loss of 
coverage and ending on the date which is 
5 days after the postmark date of the no-
tice by the Secretary (or by any person or
entity designated by the Secretary) that 
the individual is eligible for a qualified 
health insurance costs credit eligibility cer-
tificate for purposes of section 7527 shall 
not be taken into account in determining 
the continuous period under subparagraph 
(A). 
‘‘(ii) DEFINITIONS.—The terms ‘TAA- 
eligible individual’, and ‘TAA-related loss 
of coverage’ have the meanings given such 
terms in section 4980B(f)(5)(C)(iv).’’. 
(2) ERISA AMENDMENT.—Section 701(c)(2) of 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1181(c)(2)) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) TAA-ELIGIBLE INDIVIDUALS.— 
‘‘(i) TAA PRE-CERTIFICATION PERIOD 
RULE.—In the case of a TAA-eligible indi-
vidual, the period beginning on the date 
the individual has a TAA-related loss of 
coverage and ending on the date that is 5 
days after the postmark date of the notice 
by the Secretary (or by any person or enti-
ty designated by the Secretary) that the 
individual is eligible for a qualified health
insurance costs credit eligibility certificate 
for purposes of section 7527 of the Inter-
nal Revenue Code of 1986 shall not be 
taken into account in determining the con-
tinuous period under subparagraph (A). 
‘‘(ii) DEFINITIONS.—The terms ‘TAA- 
eligible individual’, and ‘TAA-related loss 
of coverage’ have the meanings given such 
terms in section 605(b)(4)(c).’’. 
(3) PHSA AMENDMENT.—Section 2701(c)(2) 
of the Public Health Service Act (42 U.S.C. 
300gg(c)(2)) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) TAA-ELIGIBLE INDIVIDUALS.— 
‘‘(i) TAA PRE-CERTIFICATION PERIOD 
RULE.—In the case of a TAA-eligible indi-
vidual, the period beginning on the date 
the individual has a TAA-related loss of 
coverage and ending on the date that is 5 
days after the postmark date of the notice 
by the Secretary (or by any person or enti-
ty designated by the Secretary) that the 
individual is eligible for a qualified health 
insurance costs credit eligibility certificate 
for purposes of section 7527 of the Inter-
nal Revenue Code of 1986 shall not be 
taken into account in determining the con-
tinuous period under subparagraph (A). 
‘‘(ii) DEFINITIONS.—The terms ‘TAA- 
eligible individual’, and ‘TAA-related loss 
of coverage’ have the meanings given such 
terms in section 2205(b)(4)(c).’’. 
(g) OFFERING
OF
NATIONAL
FALLBACK
COV-
ERAGE.— 
(1) PROVISION OF FALLBACK COVERAGE.—The 
Director of the Office of Personnel Management 
jointly with the Secretary of the Treasury shall es-
tablish a program under which eligible individuals 
(as defined in section 35(c) of the Internal Revenue 
Code of 1986) are offered enrollment under health 
benefit plans that are made available under 
FEHBP. 
(2) TERMS AND CONDITIONS.—The terms and 
conditions of health benefits plans under paragraph 
(1) shall be the same as the terms and coverage of-
fered under FEHBP, except that the premium 
charged for such health benefit plans offered under 
such paragraph— 
(A) shall be equal to the full premium (in-
cluding both employer and beneficiary share)
charged for such coverage determined in the 
same manner, subject to subparagraph (B), it 
is determined for full-time employees; and 
(B) shall be determined for the pool of in-
dividuals covered under this subsection, sepa-
rately from the pool of individuals otherwise 
covered under FEHBP. 
(3) STUDY.—The Director of the Office of Per-
sonnel Management jointly with the Secretary of the 
Treasury shall conduct a study of the impact of the 
offering of health benefit plans under this subsection 
on the terms and conditions, including premiums, 
for health benefit plans offered under FEHBP and 
shall submit to Congress, not later than 2 years 
after the date of the enactment of this Act, a report 
on such study. Such report may contain such rec-
ommendations regarding the establishment of sepa-
rate risk pools for individuals covered under 
FEHBP and eligible individuals covered this sub-
section as may be appropriate to protect the inter-
ests of individuals covered under FEHBP. 
(4) FEHBP DEFINED.—For purposes of this 
subsection, the term ‘‘FEHBP’’ means the Federal 
Employees Health Benefits Program offered under 
chapter 89 of title 5, United States Code.
(5) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 35(e) of the 
Internal Revenue Code of 1986 is amended by 
adding at the end the following: 
‘‘(K) Coverage under a health benefits plan 
offered under section 17(g) of the Trade Ad-
justment Assistance Improvement Act.’’. 
(B) Section 173(f)(2)(A) of the Workforce 
Investment 
Act 
of 
1998 
(29 
U.S.C. 
2918(f)(2)(A)) is amended by adding at the end 
the following new clause: 
‘‘(xi) Coverage under a health benefits 
plan offered under section 17(g) of the 
Trade Adjustment Assistance Improvement 
Act.’’. 
(h) REPORT
TO CONGRESS.—Not later than 18 
months after the date of the enactment of this Act, the 
Secretary of the Treasury shall transmit to the Congress 
a report which includes the recommendations of the Sec-
retary regarding increasing the number eligible individuals 
who are covered by qualified health insurance, including 
increasing such number by increasing the credit subsidy 
under section 35 of the Internal Revenue Code of 1986 
to make the premiums for such insurance more affordable. 
Terms used in this subsection which are defined in such
section shall have the meaning given such terms by such 
section. 
(i) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to months beginning after the date of the 
enactment of this Act in taxable years ending after 
such date. 
(2) GRANDFATHERING
OF
INDIVIDUAL
COV-
ERAGE
RULES
FOR
CURRENT
RECIPIENTS.—The 
amendments made by subsection (c) shall not apply 
with respect to any eligible individual (or qualifying 
family members with respect to such individual) for 
any month if such individual was an eligible indi-
vidual for all previous months which began after the 
date of the enactment of this Act and was enrolled 
in coverage described in section 35(e)(1)(J) of such 
Code (as in effect immediately before the date of the 
enactment of this Act) for all such previous months. 
Æ