H. R. 3590—69 
(2) ENFORCEMENT AUTHORITY.—The provisions of section 
2736(b) of the Public Health Services Act shall apply to the 
enforcement under paragraph (1) of requirements of subsection 
(a)(1) (without regard to any limitation on the application of 
those provisions to group health plans). 
(d) NO INTERFERENCE WITH STATE REGULATORY AUTHORITY.— 
Nothing in this title shall be construed to preempt any State law 
that does not prevent the application of the provisions of this 
title. 
(e) PRESUMPTION FOR CERTAIN STATE-OPERATED EXCHANGES.— 
(1) IN
GENERAL.—In the case of a State operating an 
Exchange before January 1, 2010, and which has insured a 
percentage of its population not less than the percentage of 
the population projected to be covered nationally after the 
implementation of this Act, that seeks to operate an Exchange 
under this section, the Secretary shall presume that such 
Exchange meets the standards under this section unless the 
Secretary determines, after completion of the process estab-
lished under paragraph (2), that the Exchange does not comply 
with such standards. 
(2) PROCESS.—The Secretary shall establish a process to 
work with a State described in paragraph (1) to provide assist-
ance necessary to assist the State’s Exchange in coming into 
compliance with the standards for approval under this section. 
SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPER-
ATION OF NONPROFIT, MEMBER-RUN HEALTH INSUR-
ANCE ISSUERS. 
(a) ESTABLISHMENT OF PROGRAM.— 
(1) IN GENERAL.—The Secretary shall establish a program 
to carry out the purposes of this section to be known as the 
Consumer Operated and Oriented Plan (CO–OP) program. 
(2) PURPOSE.—It is the purpose of the CO–OP program 
to foster the creation of qualified nonprofit health insurance 
issuers to offer qualified health plans in the individual and 
small group markets in the States in which the issuers are 
licensed to offer such plans. 
(b) LOANS AND GRANTS UNDER THE CO–OP PROGRAM.— 
(1) IN GENERAL.—The Secretary shall provide through the 
CO–OP program for the awarding to persons applying to become 
qualified nonprofit health insurance issuers of— 
(A) loans to provide assistance to such person in 
meeting its start-up costs; and 
(B) grants to provide assistance to such person in 
meeting any solvency requirements of States in which the 
person seeks to be licensed to issue qualified health plans. 
(2) REQUIREMENTS FOR AWARDING LOANS AND GRANTS.— 
(A) IN GENERAL.—In awarding loans and grants under 
the CO–OP program, the Secretary shall— 
(i) take into account the recommendations of the 
advisory board established under paragraph (3); 
(ii) give priority to applicants that will offer quali-
fied health plans on a Statewide basis, will utilize 
integrated care models, and have significant private 
support; and 
(iii) ensure that there is sufficient funding to estab-
lish at least 1 qualified nonprofit health insurance
H. R. 3590—70 
issuer in each State, except that nothing in this clause 
shall prohibit the Secretary from funding the establish-
ment of multiple qualified nonprofit health insurance 
issuers in any State if the funding is sufficient to 
do so. 
(B) STATES WITHOUT ISSUERS IN PROGRAM.—If no health 
insurance issuer applies to be a qualified nonprofit health 
insurance issuer within a State, the Secretary may use 
amounts appropriated under this section for the awarding 
of grants to encourage the establishment of a qualified 
nonprofit health insurance issuer within the State or the 
expansion of a qualified nonprofit health insurance issuer 
from another State to the State. 
(C) AGREEMENT.— 
(i) IN GENERAL.—The Secretary shall require any 
person receiving a loan or grant under the CO–OP 
program to enter into an agreement with the Secretary 
which requires such person to meet (and to continue 
to meet)— 
(I) any requirement under this section for such 
person to be treated as a qualified nonprofit health 
insurance issuer; and 
(II) any requirements contained in the agree-
ment for such person to receive such loan or grant. 
(ii) RESTRICTIONS ON USE OF FEDERAL FUNDS.— 
The agreement shall include a requirement that no 
portion of the funds made available by any loan or 
grant under this section may be used— 
(I) for carrying on propaganda, or otherwise 
attempting, to influence legislation; or 
(II) for marketing. 
Nothing in this clause shall be construed to allow 
a person to take any action prohibited by section 
501(c)(29) of the Internal Revenue Code of 1986. 
(iii) FAILURE TO MEET REQUIREMENTS.—If the Sec-
retary determines that a person has failed to meet 
any requirement described in clause (i) or (ii) and 
has failed to correct such failure within a reasonable 
period of time of when the person first knows (or 
reasonably should have known) of such failure, such 
person shall repay to the Secretary an amount equal 
to the sum of— 
(I) 110 percent of the aggregate amount of 
loans and grants received under this section; plus 
(II) interest on the aggregate amount of loans 
and grants received under this section for the 
period the loans or grants were outstanding. 
The Secretary shall notify the Secretary of the 
Treasury of any determination under this section of 
a failure that results in the termination of an issuer’s 
tax-exempt status under section 501(c)(29) of such 
Code. 
(D) TIME FOR AWARDING LOANS AND GRANTS.—The Sec-
retary shall not later than July 1, 2013, award the loans 
and grants under the CO–OP program and begin the dis-
tribution of amounts awarded under such loans and grants. 
(3) ADVISORY BOARD.—
H. R. 3590—71 
(A) IN GENERAL.—The advisory board under this para-
graph shall consist of 15 members appointed by the Comp-
troller General of the United States from among individuals 
with qualifications described in section 1805(c)(2) of the 
Social Security Act. 
(B) RULES RELATING TO APPOINTMENTS.— 
(i) STANDARDS.—Any individual appointed under 
subparagraph (A) shall meet ethics and conflict of 
interest 
standards 
protecting 
against 
insurance 
industry involvement and interference. 
(ii) 
ORIGINAL
APPOINTMENTS.—The 
original 
appointment of board members under subparagraph 
(A)(ii) shall be made no later than 3 months after 
the date of enactment of this Act. 
(C) VACANCY.—Any vacancy on the advisory board 
shall be filled in the same manner as the original appoint-
ment. 
(D) PAY AND REIMBURSEMENT.— 
(i) NO COMPENSATION FOR MEMBERS OF ADVISORY 
BOARD.—Except as provided in clause (ii), a member 
of the advisory board may not receive pay, allowances, 
or benefits by reason of their service on the board. 
(ii) TRAVEL EXPENSES.—Each member shall receive 
travel expenses, including per diem in lieu of subsist-
ence under subchapter I of chapter 57 of title 5, United 
States Code. 
(E) APPLICATION OF FACA.—The Federal Advisory Com-
mittee Act (5 U.S.C. App.) shall apply to the advisory 
board, except that section 14 of such Act shall not apply. 
(F) TERMINATION.—The advisory board shall terminate 
on the earlier of the date that it completes its duties 
under this section or December 31, 2015. 
(c) QUALIFIED NONPROFIT HEALTH INSURANCE ISSUER.—For 
purposes of this section— 
(1) IN
GENERAL.—The term ‘‘qualified nonprofit health 
insurance issuer’’ means a health insurance issuer that is an 
organization— 
(A) that is organized under State law as a nonprofit, 
member corporation; 
(B) substantially all of the activities of which consist 
of the issuance of qualified health plans in the individual 
and small group markets in each State in which it is 
licensed to issue such plans; and 
(C) that meets the other requirements of this sub-
section. 
(2) CERTAIN ORGANIZATIONS PROHIBITED.—An organization 
shall not be treated as a qualified nonprofit health insurance 
issuer if— 
(A) the organization or a related entity (or any prede-
cessor of either) was a health insurance issuer on July 
16, 2009; or 
(B) the organization is sponsored by a State or local 
government, any political subdivision thereof, or any 
instrumentality of such government or political subdivision. 
(3) GOVERNANCE
REQUIREMENTS.—An organization shall 
not be treated as a qualified nonprofit health insurance issuer 
unless—
H. R. 3590—72 
(A) the governance of the organization is subject to 
a majority vote of its members; 
(B) its governing documents incorporate ethics and 
conflict of interest standards protecting against insurance 
industry involvement and interference; and 
(C) as provided in regulations promulgated by the Sec-
retary, the organization is required to operate with a strong 
consumer focus, including timeliness, responsiveness, and 
accountability to members. 
(4) PROFITS INURE TO BENEFIT OF MEMBERS.—An organiza-
tion shall not be treated as a qualified nonprofit health insur-
ance issuer unless any profits made by the organization are 
required to be used to lower premiums, to improve benefits, 
or for other programs intended to improve the quality of health 
care delivered to its members. 
(5) 
COMPLIANCE
WITH
STATE
INSURANCE
LAWS.—An 
organization shall not be treated as a qualified nonprofit health 
insurance issuer unless the organization meets all the require-
ments that other issuers of qualified health plans are required 
to meet in any State where the issuer offers a qualified health 
plan, including solvency and licensure requirements, rules on 
payments to providers, and compliance with network adequacy 
rules, rate and form filing rules, any applicable State premium 
assessments and any other State law described in section 
1324(b). 
(6) COORDINATION WITH STATE INSURANCE REFORMS.—An 
organization shall not be treated as a qualified nonprofit health 
insurance issuer unless the organization does not offer a health 
plan in a State until that State has in effect (or the Secretary 
has implemented for the State) the market reforms required 
by part A of title XXVII of the Public Health Service Act 
(as amended by subtitles A and C of this Act). 
(d) ESTABLISHMENT OF PRIVATE PURCHASING COUNCIL.— 
(1) IN
GENERAL.—Qualified nonprofit health insurance 
issuers participating in the CO–OP program under this section 
may establish a private purchasing council to enter into collec-
tive purchasing arrangements for items and services that 
increase administrative and other cost efficiencies, including 
claims administration, administrative services, health informa-
tion technology, and actuarial services. 
(2) COUNCIL MAY NOT SET PAYMENT RATES.—The private 
purchasing council established under paragraph (1) shall not 
set payment rates for health care facilities or providers partici-
pating in health insurance coverage provided by qualified non-
profit health insurance issuers. 
(3) CONTINUED APPLICATION OF ANTITRUST LAWS.— 
(A) IN GENERAL.—Nothing in this section shall be con-
strued to limit the application of the antitrust laws to 
any private purchasing council (whether or not established 
under this subsection) or to any qualified nonprofit health 
insurance issuer participating in such a council. 
(B) ANTITRUST LAWS.—For purposes of this subpara-
graph, the term ‘‘antitrust laws’’ has the meaning given 
the term in subsection (a) of the first section of the Clayton 
Act (15 U.S.C. 12(a)). Such term also includes section 5 
of the Federal Trade Commission Act (15 U.S.C. 45) to
H. R. 3590—73 
the extent that such section 5 applies to unfair methods 
of competition. 
(e) LIMITATION ON PARTICIPATION.—No representative of any 
Federal, State, or local government (or of any political subdivision 
or instrumentality thereof), and no representative of a person 
described in subsection (c)(2)(A), may serve on the board of directors 
of a qualified nonprofit health insurance issuer or with a private 
purchasing council established under subsection (d). 
(f) LIMITATIONS ON SECRETARY.— 
(1) IN GENERAL.—The Secretary shall not— 
(A) participate in any negotiations between 1 or more 
qualified nonprofit health insurance issuers (or a private 
purchasing council established under subsection (d)) and 
any health care facilities or providers, including any drug 
manufacturer, pharmacy, or hospital; and 
(B) establish or maintain a price structure for 
reimbursement of any health benefits covered by such 
issuers. 
(2) COMPETITION.—Nothing in this section shall be con-
strued as authorizing the Secretary to interfere with the 
competitive nature of providing health benefits through quali-
fied nonprofit health insurance issuers. 
(g) APPROPRIATIONS.—There are hereby appropriated, out of 
any 
funds 
in 
the 
Treasury 
not 
otherwise 
appropriated, 
$6,000,000,000 to carry out this section. 
(h) TAX EXEMPTION FOR QUALIFIED NONPROFIT HEALTH INSUR-
ANCE ISSUER.— 
(1) IN GENERAL.—Section 501(c) of the Internal Revenue 
Code of 1986 (relating to list of exempt organizations) is 
amended by adding at the end the following: 
‘‘(29) CO–OP HEALTH INSURANCE ISSUERS.— 
‘‘(A) IN GENERAL.—A qualified nonprofit health insur-
ance issuer (within the meaning of section 1322 of the 
Patient Protection and Affordable Care Act) which has 
received a loan or grant under the CO–OP program under 
such section, but only with respect to periods for which 
the issuer is in compliance with the requirements of such 
section and any agreement with respect to the loan or 
grant. 
‘‘(B) CONDITIONS FOR EXEMPTION.—Subparagraph (A) 
shall apply to an organization only if— 
‘‘(i) the organization has given notice to the Sec-
retary, in such manner as the Secretary may by regula-
tions prescribe, that it is applying for recognition of 
its status under this paragraph, 
‘‘(ii) except as provided in section 1322(c)(4) of 
the Patient Protection and Affordable Care Act, no 
part of the net earnings of which inures to the benefit 
of any private shareholder or individual, 
‘‘(iii) no substantial part of the activities of which 
is carrying on propaganda, or otherwise attempting, 
to influence legislation, and 
‘‘(iv) the organization does not participate in, or 
intervene in (including the publishing or distributing 
of statements), any political campaign on behalf of 
(or in opposition to) any candidate for public office.’’.
H. R. 3590—74 
(2) ADDITIONAL REPORTING REQUIREMENT.—Section 6033 of 
such Code (relating to returns by exempt organizations) is 
amended by redesignating subsection (m) as subsection (n) 
and by inserting after subsection (l) the following: 
‘‘(m) ADDITIONAL
INFORMATION
REQUIRED
FROM
CO–OP 
INSURERS.—An organization described in section 501(c)(29) shall 
include on the return required under subsection (a) the following 
information: 
‘‘(1) The amount of the reserves required by each State 
in which the organization is licensed to issue qualified health 
plans. 
‘‘(2) The amount of reserves on hand.’’. 
(3) APPLICATION
OF
TAX
ON
EXCESS
BENEFIT
TRANS-
ACTIONS.—Section 4958(e)(1) of such Code (defining applicable 
tax-exempt organization) is amended by striking ‘‘paragraph 
(3) or (4)’’ and inserting ‘‘paragraph (3), (4), or (29)’’. 
(i) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the General 
Accountability Office shall conduct an ongoing study on com-
petition and market concentration in the health insurance 
market in the United States after the implementation of the 
reforms in such market under the provisions of, and the amend-
ments made by, this Act. Such study shall include an analysis 
of new issuers of health insurance in such market. 
(2) REPORT.—The Comptroller General shall, not later than 
December 31 of each even-numbered year (beginning with 
2014), report to the appropriate committees of the Congress 
the results of the study conducted under paragraph (1), 
including any recommendations for administrative or legislative 
changes the Comptroller General determines necessary or 
appropriate to increase competition in the health insurance 
market. 
SEC. 1323. COMMUNITY HEALTH INSURANCE OPTION. 
(a) VOLUNTARY NATURE.— 
(1) NO
REQUIREMENT
FOR
HEALTH
CARE
PROVIDERS
TO 
PARTICIPATE.—Nothing in this section shall be construed to 
require a health care provider to participate in a community 
health insurance option, or to impose any penalty for non- 
participation. 
(2) NO REQUIREMENT FOR INDIVIDUALS TO JOIN.—Nothing 
in this section shall be construed to require an individual 
to participate in a community health insurance option, or to 
impose any penalty for non-participation. 
(3) STATE OPT OUT.— 
(A) IN
GENERAL.—A State may elect to prohibit 
Exchanges in such State from offering a community health 
insurance option if such State enacts a law to provide 
for such prohibition. 
(B) TERMINATION OF OPT OUT.—A State may repeal 
a law described in subparagraph (A) and provide for the 
offering of such an option through the Exchange. 
(b) 
ESTABLISHMENT
OF
COMMUNITY
HEALTH
INSURANCE 
OPTION.— 
(1) ESTABLISHMENT.—The Secretary shall establish a 
community health insurance option to offer, through the 
Exchanges established under this title (other than Exchanges
H. R. 3590—75 
in States that elect to opt out as provided for in subsection 
(a)(3)), health care coverage that provides value, choice, com-
petition, and stability of affordable, high quality coverage 
throughout the United States. 
(2) COMMUNITY HEALTH INSURANCE OPTION.—In this sec-
tion, the term ‘‘community health insurance option’’ means 
health insurance coverage that— 
(A) except as specifically provided for in this section, 
complies with the requirements for being a qualified health 
plan; 
(B) provides high value for the premium charged; 
(C) reduces administrative costs and promotes adminis-
trative simplification for beneficiaries; 
(D) promotes high quality clinical care; 
(E) provides high quality customer service to bene-
ficiaries; 
(F) offers a sufficient choice of providers; and 
(G) complies with State laws (if any), except as other-
wise provided for in this title, relating to the laws described 
in section 1324(b). 
(3) ESSENTIAL HEALTH BENEFITS.— 
(A) GENERAL RULE.—Except as provided in subpara-
graph (B), a community health insurance option offered 
under this section shall provide coverage only for the essen-
tial health benefits described in section 1302(b). 
(B) STATES MAY OFFER ADDITIONAL BENEFITS.—Nothing 
in this section shall preclude a State from requiring that 
benefits in addition to the essential health benefits required 
under subparagraph (A) be provided to enrollees of a 
community health insurance option offered in such State. 
(C) CREDITS.— 
(i) IN
GENERAL.—An individual enrolled in a 
community health insurance option under this section 
shall be eligible for credits under section 36B of the 
Internal Revenue Code of 1986 in the same manner 
as an individual who is enrolled in a qualified health 
plan. 
(ii) NO ADDITIONAL FEDERAL COST.—A requirement 
by a State under subparagraph (B) that benefits in 
addition to the essential health benefits required under 
subparagraph (A) be provided to enrollees of a commu-
nity health insurance option shall not affect the 
amount of a premium tax credit provided under section 
36B of the Internal Revenue Code of 1986 with respect 
to such plan. 
(D) STATE MUST ASSUME COST.—A State shall make 
payments to or on behalf of an eligible individual to defray 
the cost of any additional benefits described in subpara-
graph (B). 
(E) ENSURING ACCESS TO ALL SERVICES.—Nothing in 
this Act shall prohibit an individual enrolled in a commu-
nity health insurance option from paying out-of-pocket the 
full cost of any item or service not included as an essential 
health benefit or otherwise covered as a benefit by a health 
plan. Nothing in subparagraph (B) shall prohibit any type 
of medical provider from accepting an out-of-pocket pay-
ment from an individual enrolled in a community health
H. R. 3590—76 
insurance option for a service otherwise not included as 
an essential health benefit. 
(F) PROTECTING
ACCESS
TO
END
OF
LIFE
CARE.—A 
community health insurance option offered under this sec-
tion shall be prohibited from limiting access to end of 
life care. 
(4) COST SHARING.—A community health insurance option 
shall offer coverage at each of the levels of coverage described 
in section 1302(d). 
(5) PREMIUMS.— 
(A) PREMIUMS SUFFICIENT TO COVER COSTS.—The Sec-
retary shall establish geographically adjusted premium 
rates in an amount sufficient to cover expected costs 
(including claims and administrative costs) using methods 
in general use by qualified health plans. 
(B) APPLICABLE RULES.—The provisions of title XXVII 
of the Public Health Service Act relating to premiums 
shall apply to community health insurance options under 
this section, including modified community rating provi-
sions under section 2701 of such Act. 
(C) COLLECTION OF DATA.—The Secretary shall collect 
data as necessary to set premium rates under subpara-
graph (A). 
(D) NATIONAL
POOLING.—Notwithstanding any other 
provision of law, the Secretary may treat all enrollees 
in community health insurance options as members of a 
single pool. 
(E) CONTINGENCY MARGIN.—In establishing premium 
rates under subparagraph (A), the Secretary shall include 
an appropriate amount for a contingency margin. 
(6) REIMBURSEMENT RATES.— 
(A) NEGOTIATED RATES.—The Secretary shall negotiate 
rates for the reimbursement of health care providers for 
benefits covered under a community health insurance 
option. 
(B) LIMITATION.—The rates described in subparagraph 
(A) shall not be higher, in aggregate, than the average 
reimbursement rates paid by health insurance issuers 
offering qualified health plans through the Exchange. 
(C) INNOVATION.—Subject to the limits contained in 
subparagraph (A), a State Advisory Council established 
or designated under subsection (d) may develop or encour-
age the use of innovative payment policies that promote 
quality, efficiency and savings to consumers. 
(7) SOLVENCY AND CONSUMER PROTECTION.— 
(A) SOLVENCY.—The Secretary shall establish a Fed-
eral solvency standard to be applied with respect to a 
community health insurance option. A community health 
insurance option shall also be subject to the solvency 
standard of each State in which such community health 
insurance option is offered. 
(B) MINIMUM REQUIRED.—In establishing the standard 
described under subparagraph (A), the Secretary shall 
require a reserve fund that shall be equal to at least 
the dollar value of the incurred but not reported claims 
of a community health insurance option.
H. R. 3590—77 
(C) CONSUMER PROTECTIONS.—The consumer protection 
laws of a State shall apply to a community health insurance 
option. 
(8) REQUIREMENTS
ESTABLISHED
IN
PARTNERSHIP
WITH 
INSURANCE COMMISSIONERS.— 
(A) IN GENERAL.—The Secretary, in collaboration with 
the National Association of Insurance Commissioners (in 
this paragraph referred to as the ‘‘NAIC’’), may promulgate 
regulations to establish additional requirements for a 
community health insurance option. 
(B) APPLICABILITY.—Any requirement promulgated 
under subparagraph (A) shall be applicable to such option 
beginning 90 days after the date on which the regulation 
involved becomes final. 
(c) START-UP FUND.— 
(1) ESTABLISHMENT OF FUND.— 
(A) IN GENERAL.—There is established in the Treasury 
of the United States a trust fund to be known as the 
‘‘Health Benefit Plan Start-Up Fund’’ (referred to in this 
section as the ‘‘Start-Up Fund’’), that shall consist of such 
amounts as may be appropriated or credited to the Start- 
Up Fund as provided for in this subsection to provide 
loans for the initial operations of a community health insur-
ance option. Such amounts shall remain available until 
expended. 
(B) FUNDING.—There is hereby appropriated to the 
Start-Up Fund, out of any moneys in the Treasury not 
otherwise appropriated an amount requested by the Sec-
retary of Health and Human Services as necessary to— 
(i) pay the start-up costs associated with the initial 
operations of a community health insurance option; 
and 
(ii) pay the costs of making payments on claims 
submitted during the period that is not more than 
90 days from the date on which such option is offered. 
(2) USE
OF
START-UP
FUND.—The Secretary shall use 
amounts contained in the Start-Up Fund to make payments 
(subject to the repayment requirements in paragraph (4)) for 
the purposes described in paragraph (1)(B). 
(3) PASS THROUGH OF REBATES.—The Secretary may estab-
lish procedures for reducing the amount of payments to a 
contracting administrator to take into account any rebates or 
price concessions. 
(4) REPAYMENT.— 
(A) IN
GENERAL.—A community health insurance 
option shall be required to repay the Secretary of the 
Treasury (on such terms as the Secretary may require) 
for any payments made under paragraph (1)(B) by the 
date that is not later than 9 years after the date on which 
the payment is made. The Secretary may require the pay-
ment of interest with respect to such repayments at rates 
that do not exceed the market interest rate (as determined 
by the Secretary). 
(B) SANCTIONS IN CASE OF FOR-PROFIT CONVERSION.— 
In any case in which the Secretary enters into a contract 
with a qualified entity for the offering of a community 
health insurance option and such entity is determined to
H. R. 3590—78 
be a for-profit entity by the Secretary, such entity shall 
be— 
(i) immediately liable to the Secretary for any pay-
ments received by such entity from the Start-Up Fund; 
and 
(ii) permanently ineligible to offer a qualified 
health plan. 
(d) STATE ADVISORY COUNCIL.— 
(1) ESTABLISHMENT.—A State (other than a State that 
elects to opt out as provided for in subsection (a)(3)) shall 
establish or designate a public or non-profit private entity 
to serve as the State Advisory Council to provide recommenda-
tions to the Secretary on the operations and policies of a 
community health insurance option in the State. Such Council 
shall provide recommendations on at least the following: 
(A) policies and procedures to integrate quality 
improvement and cost containment mechanisms into the 
health care delivery system; 
(B) mechanisms to facilitate public awareness of the 
availability of a community health insurance option; and 
(C) alternative payment structures under a community 
health insurance option for health care providers that 
encourage quality improvement and cost control. 
(2) MEMBERS.—The members of the State Advisory Council 
shall be representatives of the public and shall include health 
care consumers and providers. 
(3) APPLICABILITY OF RECOMMENDATIONS.—The Secretary 
may apply the recommendations of a State Advisory Council 
to a community health insurance option in that State, in any 
other State, or in all States. 
(e) AUTHORITY TO CONTRACT; TERMS OF CONTRACT.— 
(1) AUTHORITY.— 
(A) IN GENERAL.—The Secretary may enter into a con-
tract or contracts with one or more qualified entities for 
the 
purpose 
of 
performing 
administrative 
functions 
(including functions described in subsection (a)(4) of section 
1874A of the Social Security Act) with respect to a commu-
nity health insurance option in the same manner as the 
Secretary may enter into contracts under subsection (a)(1) 
of such section. The Secretary shall have the same 
authority with respect to a community health insurance 
option under this section as the Secretary has under sub-
sections (a)(1) and (b) of section 1874A of the Social Security 
Act with respect to title XVIII of such Act. 
(B) REQUIREMENTS APPLY.—If the Secretary enters into 
a contract with a qualified entity to offer a community 
health insurance option, under such contract such entity— 
(i) shall meet the criteria established under para-
graph (2); and 
(ii) shall receive an administrative fee under para-
graph (7). 
(C) LIMITATION.—Contracts under this subsection shall 
not involve the transfer of insurance risk to the contracting 
administrator. 
(D) REFERENCE.—An entity with which the Secretary 
has entered into a contract under this paragraph shall 
be referred to as a ‘‘contracting administrator’’.
H. R. 3590—79 
(2) QUALIFIED ENTITY.—To be qualified to be selected by 
the Secretary to offer a community health insurance option, 
an entity shall— 
(A) meet the criteria established under section 
1874A(a)(2) of the Social Security Act; 
(B) be a nonprofit entity for purposes of offering such 
option; 
(C) meet the solvency standards applicable under sub-
section (b)(7); 
(D) be eligible to offer health insurance or health bene-
fits coverage; 
(E) meet quality standards specified by the Secretary; 
(F) have in place effective procedures to control fraud, 
abuse, and waste; and 
(G) meet such other requirements as the Secretary 
may impose. 
Procedures described under subparagraph (F) shall include the 
implementation of procedures to use beneficiary identifiers to 
identify individuals entitled to benefits so that such an individ-
ual’s social security account number is not used, and shall 
also include procedures for the use of technology (including 
front-end, prepayment intelligent data-matching technology 
similar to that used by hedge funds, investment funds, and 
banks) to provide real-time data analysis of claims for payment 
under this title to identify and investigate unusual billing or 
order practices under this title that could indicate fraud or 
abuse. 
(3) TERM.—A contract provided for under paragraph (1) 
shall be for a term of at least 5 years but not more than 
10 years, as determined by the Secretary. At the end of each 
such term, the Secretary shall conduct a competitive bidding 
process for the purposes of renewing existing contracts or 
selecting new qualified entities with which to enter into con-
tracts under such paragraph. 
(4) LIMITATION.—A contract may not be renewed under 
this subsection unless the Secretary determines that the con-
tracting administrator has met performance requirements 
established by the Secretary in the areas described in para-
graph (7)(B). 
(5) AUDITS.—The Inspector General shall conduct periodic 
audits with respect to contracting administrators under this 
subsection to ensure that the administrator involved is in 
compliance with this section. 
(6) REVOCATION.—A contract awarded under this subsection 
shall be revoked by the Secretary, upon the recommendation 
of the Inspector General, only after notice to the contracting 
administrator involved and an opportunity for a hearing. The 
Secretary may revoke such contract if the Secretary determines 
that such administrator has engaged in fraud, deception, waste, 
abuse of power, negligence, mismanagement of taxpayer dollars, 
or gross mismanagement. An entity that has had a contract 
revoked under this paragraph shall not be qualified to enter 
into a subsequent contract under this subsection. 
(7) FEE FOR ADMINISTRATION.— 
(A) IN
GENERAL.—The Secretary shall pay the con-
tracting administrator a fee for the management, adminis-
tration, and delivery of the benefits under this section.
H. R. 3590—80 
(B) REQUIREMENT
FOR
HIGH
QUALITY
ADMINISTRA-
TION.—The Secretary may increase the fee described in 
subparagraph (A) by not more than 10 percent, or reduce 
the fee described in subparagraph (A) by not more than 
50 percent, based on the extent to which the contracting 
administrator, in the determination of the Secretary, meets 
performance requirements established by the Secretary, 
in at least the following areas: 
(i) Maintaining low premium costs and low cost 
sharing requirements, provided that such requirements 
are consistent with section 1302. 
(ii) Reducing administrative costs and promoting 
administrative simplification for beneficiaries. 
(iii) Promoting high quality clinical care. 
(iv) Providing high quality customer service to 
beneficiaries. 
(C) NON-RENEWAL.—The Secretary may not renew a 
contract to offer a community health insurance option 
under this section with any contracting entity that has 
been assessed more than one reduction under subparagraph 
(B) during the contract period. 
(8) LIMITATION.—Notwithstanding the terms of a contract 
under this subsection, the Secretary shall negotiate the 
reimbursement rates for purposes of subsection (b)(6). 
(f) REPORT BY HHS AND INSOLVENCY WARNINGS.— 
(1) IN GENERAL.—On an annual basis, the Secretary shall 
conduct a study on the solvency of a community health insur-
ance option and submit to Congress a report describing the 
results of such study. 
(2) RESULT.—If, in any year, the result of the study under 
paragraph (1) is that a community health insurance option 
is insolvent, such result shall be treated as a community health 
insurance option solvency warning. 
(3) SUBMISSION OF PLAN AND PROCEDURE.— 
(A) IN GENERAL.—If there is a community health insur-
ance option solvency warning under paragraph (2) made 
in a year, the President shall submit to Congress, within 
the 15-day period beginning on the date of the budget 
submission to Congress under section 1105(a) of title 31, 
United States Code, for the succeeding year, proposed legis-
lation to respond to such warning. 
(B) PROCEDURE.—In the case of a legislative proposal 
submitted by the President pursuant to subparagraph (A), 
such proposal shall be considered by Congress using the 
same procedures described under sections 803 and 804 
of the Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 that shall be used for a medicare 
funding warning. 
(g) MARKETING PARITY.—In a facility controlled by the Federal 
Government, or by a State, where marketing or promotional mate-
rials related to a community health insurance option are made 
available to the public, making available marketing or promotional 
materials relating to private health insurance plans shall not be 
prohibited. Such materials include informational pamphlets, guide-
books, enrollment forms, or other materials determined reasonable 
for display.
H. R. 3590—81 
(h) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 
to be appropriated such sums as may be necessary to carry out 
this section. 
SEC. 1324. LEVEL PLAYING FIELD. 
(a) IN GENERAL.—Notwithstanding any other provision of law, 
any health insurance coverage offered by a private health insurance 
issuer shall not be subject to any Federal or State law described 
in subsection (b) if a qualified health plan offered under the Con-
sumer Operated and Oriented Plan program under section 1322, 
a community health insurance option under section 1323, or a 
nationwide qualified health plan under section 1333(b), is not sub-
ject to such law. 
(b) LAWS DESCRIBED.—The Federal and State laws described 
in this subsection are those Federal and State laws relating to— 
(1) guaranteed renewal; 
(2) rating; 
(3) preexisting conditions; 
(4) non-discrimination; 
(5) quality improvement and reporting; 
(6) fraud and abuse; 
(7) solvency and financial requirements; 
(8) market conduct; 
(9) prompt payment; 
(10) appeals and grievances; 
(11) privacy and confidentiality; 
(12) licensure; and 
(13) benefit plan material or information. 
PART IV—STATE FLEXIBILITY TO ESTABLISH 
ALTERNATIVE PROGRAMS 
SEC. 1331. STATE FLEXIBILITY TO ESTABLISH BASIC HEALTH PRO-
GRAMS FOR LOW-INCOME INDIVIDUALS NOT ELIGIBLE 
FOR MEDICAID. 
(a) ESTABLISHMENT OF PROGRAM.— 
(1) IN
GENERAL.—The Secretary shall establish a basic 
health program meeting the requirements of this section under 
which a State may enter into contracts to offer 1 or more 
standard health plans providing at least the essential health 
benefits described in section 1302(b) to eligible individuals in 
lieu of offering such individuals coverage through an Exchange. 
(2) CERTIFICATIONS AS TO BENEFIT COVERAGE AND COSTS.— 
Such program shall provide that a State may not establish 
a basic health program under this section unless the State 
establishes to the satisfaction of the Secretary, and the Sec-
retary certifies, that— 
(A) in the case of an eligible individual enrolled in 
a standard health plan offered through the program, the 
State provides— 
(i) that the amount of the monthly premium an 
eligible individual is required to pay for coverage under 
the standard health plan for the individual and the 
individual’s dependents does not exceed the amount 
of the monthly premium that the eligible individual 
would have been required to pay (in the rating area 
in which the individual resides) if the individual had
H. R. 3590—82 
enrolled in the applicable second lowest cost silver 
plan (as defined in section 36B(b)(3)(B) of the Internal 
Revenue Code of 1986) offered to the individual 
through an Exchange; and 
(ii) that the cost-sharing an eligible individual is 
required to pay under the standard health plan does 
not exceed— 
(I) the cost-sharing required under a platinum 
plan in the case of an eligible individual with 
household income not in excess of 150 percent 
of the poverty line for the size of the family 
involved; and 
(II) the cost-sharing required under a gold plan 
in the case of an eligible individual not described 
in subclause (I); and 
(B) the benefits provided under the standard health 
plans offered through the program cover at least the essen-
tial health benefits described in section 1302(b). 
For purposes of subparagraph (A)(i), the amount of the monthly 
premium an individual is required to pay under either the 
standard health plan or the applicable second lowest cost silver 
plan shall be determined after reduction for any premium tax 
credits and cost-sharing reductions allowable with respect to 
either plan. 
(b) STANDARD
HEALTH
PLAN.—In this section, the term 
‘‘standard heath plan’’ means a health benefits plan that the State 
contracts with under this section— 
(1) under which the only individuals eligible to enroll are 
eligible individuals; 
(2) that provides at least the essential health benefits 
described in section 1302(b); and 
(3) in the case of a plan that provides health insurance 
coverage offered by a health insurance issuer, that has a med-
ical loss ratio of at least 85 percent. 
(c) CONTRACTING PROCESS.— 
(1) IN GENERAL.—A State basic health program shall estab-
lish a competitive process for entering into contracts with 
standard health plans under subsection (a), including negotia-
tion of premiums and cost-sharing and negotiation of benefits 
in addition to the essential health benefits described in section 
1302(b). 
(2) SPECIFIC ITEMS TO BE CONSIDERED.—A State shall, as 
part of its competitive process under paragraph (1), include 
at least the following: 
(A) INNOVATION.—Negotiation with offerors of a 
standard health plan for the inclusion of innovative fea-
tures in the plan, including— 
(i) care coordination and care management for 
enrollees, especially for those with chronic health 
conditions; 
(ii) incentives for use of preventive services; and 
(iii) the establishment of relationships between 
providers and patients that maximize patient involve-
ment in health care decision-making, including pro-
viding incentives for appropriate utilization under the 
plan.
H. R. 3590—83 
(B) HEALTH AND RESOURCE DIFFERENCES.—Consider-
ation of, and the making of suitable allowances for, dif-
ferences in health care needs of enrollees and differences 
in local availability of, and access to, health care providers. 
Nothing in this subparagraph shall be construed as 
allowing discrimination on the basis of pre-existing condi-
tions or other health status-related factors. 
(C) MANAGED CARE.—Contracting with managed care 
systems, or with systems that offer as many of the 
attributes of managed care as are feasible in the local 
health care market. 
(D) PERFORMANCE
MEASURES.—Establishing specific 
performance measures and standards for issuers of 
standard health plans that focus on quality of care and 
improved health outcomes, requiring such plans to report 
to the State with respect to the measures and standards, 
and making the performance and quality information avail-
able to enrollees in a useful form. 
(3) ENHANCED AVAILABILITY.— 
(A) MULTIPLE PLANS.—A State shall, to the maximum 
extent feasible, seek to make multiple standard health 
plans available to eligible individuals within a State to 
ensure individuals have a choice of such plans. 
(B) REGIONAL
COMPACTS.—A State may negotiate a 
regional compact with other States to include coverage 
of eligible individuals in all such States in agreements 
with issuers of standard health plans. 
(4) COORDINATION WITH OTHER STATE PROGRAMS.—A State 
shall seek to coordinate the administration of, and provision 
of benefits under, its program under this section with the 
State medicaid program under title XIX of the Social Security 
Act, the State child health plan under title XXI of such Act, 
and other State-administered health programs to maximize 
the efficiency of such programs and to improve the continuity 
of care. 
(d) TRANSFER OF FUNDS TO STATES.— 
(1) IN GENERAL.—If the Secretary determines that a State 
electing the application of this section meets the requirements 
of the program established under subsection (a), the Secretary 
shall transfer to the State for each fiscal year for which 1 
or more standard health plans are operating within the State 
the amount determined under paragraph (3). 
(2) USE OF FUNDS.—A State shall establish a trust for 
the deposit of the amounts received under paragraph (1) and 
amounts in the trust fund shall only be used to reduce the 
premiums and cost-sharing of, or to provide additional benefits 
for, eligible individuals enrolled in standard health plans within 
the State. Amounts in the trust fund, and expenditures of 
such amounts, shall not be included in determining the amount 
of any non-Federal funds for purposes of meeting any matching 
or expenditure requirement of any federally-funded program. 
(3) AMOUNT OF PAYMENT.— 
(A) SECRETARIAL DETERMINATION.— 
(i) IN GENERAL.—The amount determined under 
this paragraph for any fiscal year is the amount the 
Secretary determines is equal to 85 percent of the 
premium tax credits under section 36B of the Internal
H. R. 3590—84 
Revenue Code of 1986, and the cost-sharing reductions 
under section 1402, that would have been provided 
for the fiscal year to eligible individuals enrolled in 
standard health plans in the State if such eligible 
individuals were allowed to enroll in qualified health 
plans through an Exchange established under this sub-
title. 
(ii) SPECIFIC REQUIREMENTS.—The Secretary shall 
make the determination under clause (i) on a per 
enrollee basis and shall take into account all relevant 
factors necessary to determine the value of the pre-
mium tax credits and cost-sharing reductions that 
would have been provided to eligible individuals 
described in clause (i), including the age and income 
of the enrollee, whether the enrollment is for self- 
only or family coverage, geographic differences in aver-
age spending for health care across rating areas, the 
health status of the enrollee for purposes of deter-
mining risk adjustment payments and reinsurance pay-
ments that would have been made if the enrollee had 
enrolled in a qualified health plan through an 
Exchange, and whether any reconciliation of the credit 
or cost-sharing reductions would have occurred if the 
enrollee had been so enrolled. This determination shall 
take into consideration the experience of other States 
with respect to participation in an Exchange and such 
credits and reductions provided to residents of the 
other States, with a special focus on enrollees with 
income below 200 percent of poverty. 
(iii) CERTIFICATION.—The Chief Actuary of the 
Centers for Medicare & Medicaid Services, in consulta-
tion with the Office of Tax Analysis of the Department 
of the Treasury, shall certify whether the methodology 
used to make determinations under this subparagraph, 
and such determinations, meet the requirements of 
clause (ii). Such certifications shall be based on suffi-
cient data from the State and from comparable States 
about their experience with programs created by this 
Act. 
(B) CORRECTIONS.—The Secretary shall adjust the pay-
ment for any fiscal year to reflect any error in the deter-
minations under subparagraph (A) for any preceding fiscal 
year. 
(4) APPLICATION OF SPECIAL RULES.—The provisions of sec-
tion 1303 shall apply to a State basic health program, and 
to standard health plans offered through such program, in 
the same manner as such rules apply to qualified health plans. 
(e) ELIGIBLE INDIVIDUAL.— 
(1) IN GENERAL.—In this section, the term ‘‘eligible indi-
vidual’’ means, with respect to any State, an individual— 
(A) who a resident of the State who is not eligible 
to enroll in the State’s medicaid program under title XIX 
of the Social Security Act for benefits that at a minimum 
consist of the essential health benefits described in section 
1302(b);
H. R. 3590—85 
(B) whose household income exceeds 133 percent but 
does not exceed 200 percent of the poverty line for the 
size of the family involved; 
(C) who is not eligible for minimum essential coverage 
(as defined in section 5000A(f) of the Internal Revenue 
Code of 1986) or is eligible for an employer-sponsored plan 
that is not affordable coverage (as determined under section 
5000A(e)(2) of such Code); and 
(D) who has not attained age 65 as of the beginning 
of the plan year. 
Such term shall not include any individual who is not a quali-
fied individual under section 1312 who is eligible to be covered 
by a qualified health plan offered through an Exchange. 
(2) ELIGIBLE
INDIVIDUALS
MAY
NOT
USE
EXCHANGE.—An 
eligible individual shall not be treated as a qualified individual 
under section 1312 eligible for enrollment in a qualified health 
plan offered through an Exchange established under section 
1311. 
(f) SECRETARIAL OVERSIGHT.—The Secretary shall each year 
conduct a review of each State program to ensure compliance with 
the requirements of this section, including ensuring that the State 
program meets— 
(1) eligibility verification requirements for participation in 
the program; 
(2) the requirements for use of Federal funds received 
by the program; and 
(3) the quality and performance standards under this sec-
tion. 
(g) STANDARD HEALTH PLAN OFFERORS.—A State may provide 
that persons eligible to offer standard health plans under a basic 
health program established under this section may include a 
licensed health maintenance organization, a licensed health insur-
ance insurer, or a network of health care providers established 
to offer services under the program. 
(h) DEFINITIONS.—Any term used in this section which is also 
used in section 36B of the Internal Revenue Code of 1986 shall 
have the meaning given such term by such section. 
SEC. 1332. WAIVER FOR STATE INNOVATION. 
(a) APPLICATION.— 
(1) IN GENERAL.—A State may apply to the Secretary for 
the waiver of all or any requirements described in paragraph 
(2) with respect to health insurance coverage within that State 
for plan years beginning on or after January 1, 2017. Such 
application shall— 
(A) be filed at such time and in such manner as the 
Secretary may require; 
(B) contain such information as the Secretary may 
require, including— 
(i) a comprehensive description of the State legisla-
tion and program to implement a plan meeting the 
requirements for a waiver under this section; and 
(ii) a 10-year budget plan for such plan that is 
budget neutral for the Federal Government; and 
(C) provide an assurance that the State has enacted 
the law described in subsection (b)(2).
H. R. 3590—86 
(2) REQUIREMENTS.—The requirements described in this 
paragraph with respect to health insurance coverage within 
the State for plan years beginning on or after January 1, 
2014, are as follows: 
(A) Part I of subtitle D. 
(B) Part II of subtitle D. 
(C) Section 1402. 
(D) Sections 36B, 4980H, and 5000A of the Internal 
Revenue Code of 1986. 
(3) PASS THROUGH OF FUNDING.—With respect to a State 
waiver under paragraph (1), under which, due to the structure 
of the State plan, individuals and small employers in the State 
would not qualify for the premium tax credits, cost-sharing 
reductions, or small business credits under sections 36B of 
the Internal Revenue Code of 1986 or under part I of subtitle 
E for which they would otherwise be eligible, the Secretary 
shall provide for an alternative means by which the aggregate 
amount of such credits or reductions that would have been 
paid on behalf of participants in the Exchanges established 
under this title had the State not received such waiver, shall 
be paid to the State for purposes of implementing the State 
plan under the waiver. Such amount shall be determined 
annually by the Secretary, taking into consideration the experi-
ence of other States with respect to participation in an 
Exchange and credits and reductions provided under such provi-
sions to residents of the other States. 
(4) WAIVER CONSIDERATION AND TRANSPARENCY.— 
(A) IN GENERAL.—An application for a waiver under 
this section shall be considered by the Secretary in accord-
ance with the regulations described in subparagraph (B). 
(B) REGULATIONS.—Not later than 180 days after the 
date of enactment of this Act, the Secretary shall promul-
gate regulations relating to waivers under this section that 
provide— 
(i) a process for public notice and comment at 
the State level, including public hearings, sufficient 
to ensure a meaningful level of public input; 
(ii) a process for the submission of an application 
that ensures the disclosure of— 
(I) the provisions of law that the State involved 
seeks to waive; and 
(II) the specific plans of the State to ensure 
that the waiver will be in compliance with sub-
section (b); 
(iii) a process for providing public notice and com-
ment after the application is received by the Secretary, 
that is sufficient to ensure a meaningful level of public 
input and that does not impose requirements that are 
in addition to, or duplicative of, requirements imposed 
under the Administrative Procedures Act, or require-
ments that are unreasonable or unnecessarily burden-
some with respect to State compliance; 
(iv) a process for the submission to the Secretary 
of periodic reports by the State concerning the 
implementation of the program under the waiver; and 
(v) a process for the periodic evaluation by the 
Secretary of the program under the waiver.
H. R. 3590—87 
(C) REPORT.—The Secretary shall annually report to 
Congress concerning actions taken by the Secretary with 
respect to applications for waivers under this section. 
(5) COORDINATED WAIVER PROCESS.—The Secretary shall 
develop a process for coordinating and consolidating the State 
waiver processes applicable under the provisions of this section, 
and the existing waiver processes applicable under titles XVIII, 
XIX, and XXI of the Social Security Act, and any other Federal 
law relating to the provision of health care items or services. 
Such process shall permit a State to submit a single application 
for a waiver under any or all of such provisions. 
(6) DEFINITION.—In this section, the term ‘‘Secretary’’ 
means— 
(A) the Secretary of Health and Human Services with 
respect to waivers relating to the provisions described in 
subparagraph (A) through (C) of paragraph (2); and 
(B) the Secretary of the Treasury with respect to 
waivers relating to the provisions described in paragraph 
(2)(D). 
(b) GRANTING OF WAIVERS.— 
(1) IN GENERAL.—The Secretary may grant a request for 
a waiver under subsection (a)(1) only if the Secretary deter-
mines that the State plan— 
(A) will provide coverage that is at least as comprehen-
sive as the coverage defined in section 1302(b) and offered 
through Exchanges established under this title as certified 
by Office of the Actuary of the Centers for Medicare & 
Medicaid Services based on sufficient data from the State 
and from comparable States about their experience with 
programs created by this Act and the provisions of this 
Act that would be waived; 
(B) will provide coverage and cost sharing protections 
against excessive out-of-pocket spending that are at least 
as affordable as the provisions of this title would provide; 
(C) will provide coverage to at least a comparable 
number of its residents as the provisions of this title would 
provide; and 
(D) will not increase the Federal deficit. 
(2) REQUIREMENT TO ENACT A LAW.— 
(A) IN GENERAL.—A law described in this paragraph 
is a State law that provides for State actions under a 
waiver under this section, including the implementation 
of the State plan under subsection (a)(1)(B). 
(B) TERMINATION OF OPT OUT.—A State may repeal 
a law described in subparagraph (A) and terminate the 
authority provided under the waiver with respect to the 
State. 
(c) SCOPE OF WAIVER.— 
(1) IN GENERAL.—The Secretary shall determine the scope 
of a waiver of a requirement described in subsection (a)(2) 
granted to a State under subsection (a)(1). 
(2) LIMITATION.—The Secretary may not waive under this 
section any Federal law or requirement that is not within 
the authority of the Secretary. 
(d) DETERMINATIONS BY SECRETARY.— 
(1) TIME FOR DETERMINATION.—The Secretary shall make 
a determination under subsection (a)(1) not later than 180
H. R. 3590—88 
days after the receipt of an application from a State under 
such subsection. 
(2) EFFECT OF DETERMINATION.— 
(A) GRANTING
OF
WAIVERS.—If the Secretary deter-
mines to grant a waiver under subsection (a)(1), the Sec-
retary shall notify the State involved of such determination 
and the terms and effectiveness of such waiver. 
(B) DENIAL OF WAIVER.—If the Secretary determines 
a waiver should not be granted under subsection (a)(1), 
the Secretary shall notify the State involved, and the appro-
priate committees of Congress of such determination and 
the reasons therefore. 
(e) TERM OF WAIVER.—No waiver under this section may extend 
over a period of longer than 5 years unless the State requests 
continuation of such waiver, and such request shall be deemed 
granted unless the Secretary, within 90 days after the date of 
its submission to the Secretary, either denies such request in 
writing or informs the State in writing with respect to any addi-
tional information which is needed in order to make a final deter-
mination with respect to the request. 
SEC. 1333. PROVISIONS RELATING TO OFFERING OF PLANS IN MORE 
THAN ONE STATE. 
(a) HEALTH CARE CHOICE COMPACTS.— 
(1) IN GENERAL.—Not later than July 1, 2013, the Secretary 
shall, in consultation with the National Association of Insurance 
Commissioners, issue regulations for the creation of health 
care choice compacts under which 2 or more States may enter 
into an agreement under which— 
(A) 1 or more qualified health plans could be offered 
in the individual markets in all such States but, except 
as provided in subparagraph (B), only be subject to the 
laws and regulations of the State in which the plan was 
written or issued; 
(B) the issuer of any qualified health plan to which 
the compact applies— 
(i) would continue to be subject to market conduct, 
unfair trade practices, network adequacy, and con-
sumer protection standards (including standards 
relating to rating), including addressing disputes as 
to the performance of the contract, of the State in 
which the purchaser resides; 
(ii) would be required to be licensed in each State 
in which it offers the plan under the compact or to 
submit to the jurisdiction of each such State with 
regard to the standards described in clause (i) 
(including allowing access to records as if the insurer 
were licensed in the State); and 
(iii) must clearly notify consumers that the policy 
may not be subject to all the laws and regulations 
of the State in which the purchaser resides. 
(2) STATE
AUTHORITY.—A State may not enter into an 
agreement under this subsection unless the State enacts a 
law after the date of the enactment of this title that specifically 
authorizes the State to enter into such agreements. 
(3) APPROVAL OF COMPACTS.—The Secretary may approve 
interstate health care choice compacts under paragraph (1)
H. R. 3590—89 
only if the Secretary determines that such health care choice 
compact— 
(A) will provide coverage that is at least as comprehen-
sive as the coverage defined in section 1302(b) and offered 
through Exchanges established under this title; 
(B) will provide coverage and cost sharing protections 
against excessive out-of-pocket spending that are at least 
as affordable as the provisions of this title would provide; 
(C) will provide coverage to at least a comparable 
number of its residents as the provisions of this title would 
provide; 
(D) will not increase the Federal deficit; and 
(E) will not weaken enforcement of laws and regula-
tions described in paragraph (1)(B)(i) in any State that 
is included in such compact. 
(4) EFFECTIVE
DATE.—A health care choice compact 
described in paragraph (1) shall not take effect before January 
1, 2016. 
(b) AUTHORITY FOR NATIONWIDE PLANS.— 
(1) IN GENERAL.—Except as provided in paragraph (2), if 
an issuer (including a group of health insurance issuers affili-
ated either by common ownership and control or by the common 
use of a nationally licensed service mark) of a qualified health 
plan in the individual or small group market meets the require-
ments of this subsection (in this subsection a ‘‘nationwide quali-
fied health plan’’)— 
(A) the issuer of the plan may offer the nationwide 
qualified health plan in the individual or small group 
market in more than 1 State; and 
(B) with respect to State laws mandating benefit cov-
erage by a health plan, only the State laws of the State 
in which such plan is written or issued shall apply to 
the nationwide qualified health plan. 
(2) STATE
OPT-OUT.—A State may, by specific reference 
in a law enacted after the date of enactment of this title, 
provide that this subsection shall not apply to that State. 
Such opt-out shall be effective until such time as the State 
by law revokes it. 
(3) PLAN
REQUIREMENTS.—An issuer meets the require-
ments of this subsection with respect to a nationwide qualified 
health plan if, in the determination of the Secretary— 
(A) the plan offers a benefits package that is uniform 
in each State in which the plan is offered and meets the 
requirements set forth in paragraphs (4) through (6); 
(B) the issuer is licensed in each State in which it 
offers the plan and is subject to all requirements of State 
law not inconsistent with this section, including but not 
limited to, the standards and requirements that a State 
imposes that do not prevent the application of a require-
ment of part A of title XXVII of the Public Health Service 
Act or a requirement of this title; 
(C) the issuer meets all requirements of this title with 
respect to a qualified health plan, including the require-
ment to offer the silver and gold levels of the plan in 
each Exchange in the State for the market in which the 
plan is offered;
H. R. 3590—90 
(D) the issuer determines the premiums for the plan 
in any State on the basis of the rating rules in effect 
in that State for the rating areas in which it is offered; 
(E) the issuer offers the nationwide qualified health 
plan in at least 60 percent of the participating States 
in the first year in which the plan is offered, 65 percent 
of such States in the second year, 70 percent of such 
States in the third year, 75 percent of such States in 
the fourth year, and 80 percent of such States in the 
fifth and subsequent years; 
(F) the issuer shall offer the plan in participating 
States across the country, in all geographic regions, and 
in all States that have adopted adjusted community rating 
before the date of enactment of this Act; and 
(G) the issuer clearly notifies consumers that the policy 
may not contain some benefits otherwise mandated for 
plans in the State in which the purchaser resides and 
provides a detailed statement of the benefits offered and 
the benefit differences in that State, in accordance with 
rules promulgated by the Secretary. 
(4) FORM
REVIEW
FOR
NATIONWIDE
PLANS.—Notwith-
standing any contrary provision of State law, at least 3 months 
before any nationwide qualified health plan is offered, the 
issuer shall file all nationwide qualified health plan forms 
with the regulator in each participating State in which the 
plan will be offered. An issuer may appeal the disapproval 
of a nationwide qualified health plan form to the Secretary. 
(5) APPLICABLE RULES.—The Secretary shall, in consulta-
tion with the National Association of Insurance Commissioners, 
issue rules for the offering of nationwide qualified health plans 
under this subsection. Nationwide qualified health plans may 
be offered only after such rules have taken effect. 
(6) COVERAGE.—The Secretary shall provide that the health 
benefits coverage provided to an individual through a nation-
wide qualified health plan under this subsection shall include 
at least the essential benefits package described in section 
1302. 
(7) STATE LAW MANDATING BENEFIT COVERAGE BY A HEALTH 
BENEFITS PLAN.—For the purposes of this subsection, a State 
law mandating benefit coverage by a health plan is a law 
that mandates health insurance coverage or the offer of health 
insurance coverage for specific health services or specific dis-
eases. A law that mandates health insurance coverage or 
reimbursement for services provided by certain classes of pro-
viders of health care services, or a law that mandates that 
certain classes of individuals must be covered as a group or 
as dependents, is not a State law mandating benefit coverage 
by a health benefits plan. 
PART V—REINSURANCE AND RISK 
ADJUSTMENT 
SEC. 1341. TRANSITIONAL REINSURANCE PROGRAM FOR INDIVIDUAL 
AND SMALL GROUP MARKETS IN EACH STATE. 
(a) IN GENERAL.—Each State shall, not later than January 
1, 2014—
H. R. 3590—91 
(1) include in the Federal standards or State law or regula-
tion the State adopts and has in effect under section 1321(b) 
the provisions described in subsection (b); and 
(2) establish (or enter into a contract with) 1 or more 
applicable reinsurance entities to carry out the reinsurance 
program under this section. 
(b) MODEL REGULATION.— 
(1) IN
GENERAL.—In establishing the Federal standards 
under section 1321(a), the Secretary, in consultation with the 
National Association of Insurance Commissioners (the ‘‘NAIC’’), 
shall include provisions that enable States to establish and 
maintain a program under which— 
(A) health insurance issuers, and third party adminis-
trators on behalf of group health plans, are required to 
make payments to an applicable reinsurance entity for 
any plan year beginning in the 3-year period beginning 
January 1, 2014 (as specified in paragraph (3); and 
(B) the applicable reinsurance entity collects payments 
under subparagraph (A) and uses amounts so collected 
to make reinsurance payments to health insurance issuers 
described in subparagraph (A) that cover high risk individ-
uals in the individual market (excluding grandfathered 
health plans) for any plan year beginning in such 3-year 
period. 
(2) HIGH-RISK INDIVIDUAL; PAYMENT AMOUNTS.—The Sec-
retary shall include the following in the provisions under para-
graph (1): 
(A) DETERMINATION OF HIGH-RISK INDIVIDUALS.—The 
method by which individuals will be identified as high 
risk individuals for purposes of the reinsurance program 
established under this section. Such method shall provide 
for identification of individuals as high-risk individuals 
on the basis of— 
(i) a list of at least 50 but not more than 100 
medical conditions that are identified as high-risk 
conditions and that may be based on the identification 
of diagnostic and procedure codes that are indicative 
of individuals with pre-existing, high-risk conditions; 
or 
(ii) any other comparable objective method of 
identification recommended by the American Academy 
of Actuaries. 
(B) PAYMENT AMOUNT.—The formula for determining 
the amount of payments that will be paid to health insur-
ance issuers described in paragraph (1)(A) that insure high- 
risk individuals. Such formula shall provide for the equi-
table allocation of available funds through reconciliation 
and may be designed— 
(i) to provide a schedule of payments that specifies 
the amount that will be paid for each of the conditions 
identified under subparagraph (A); or 
(ii) to use any other comparable method for deter-
mining payment amounts that is recommended by the 
American Academy of Actuaries and that encourages 
the use of care coordination and care management 
programs for high risk conditions. 
(3) DETERMINATION OF REQUIRED CONTRIBUTIONS.—
H. R. 3590—92 
(A) IN GENERAL.—The Secretary shall include in the 
provisions under paragraph (1) the method for determining 
the amount each health insurance issuer and group health 
plan described in paragraph (1)(A) contributing to the 
reinsurance program under this section is required to con-
tribute under such paragraph for each plan year beginning 
in the 36-month period beginning January 1, 2014. The 
contribution amount for any plan year may be based on 
the percentage of revenue of each issuer and the total 
costs of providing benefits to enrollees in self-insured plans 
or on a specified amount per enrollee and may be required 
to be paid in advance or periodically throughout the plan 
year. 
(B) SPECIFIC REQUIREMENTS.—The method under this 
paragraph shall be designed so that— 
(i) the contribution amount for each issuer propor-
tionally reflects each issuer’s fully insured commercial 
book of business for all major medical products and 
the total value of all fees charged by the issuer and 
the costs of coverage administered by the issuer as 
a third party administrator; 
(ii) the contribution amount can include an addi-
tional amount to fund the administrative expenses of 
the applicable reinsurance entity; 
(iii) the aggregate contribution amounts for all 
States shall, based on the best estimates of the NAIC 
and without regard to amounts described in clause 
(ii), equal $10,000,000,000 for plan years beginning 
in 2014, $6,000,000,000 for plan years beginning 2015, 
and $4,000,000,000 for plan years beginning in 2016; 
and 
(iv) in addition to the aggregate contribution 
amounts under clause (iii), each issuer’s contribution 
amount for any calendar year under clause (iii) reflects 
its proportionate share of an additional $2,000,000,000 
for 2014, an additional $2,000,000,000 for 2015, and 
an additional $1,000,000,000 for 2016. 
Nothing in this subparagraph shall be construed to pre-
clude a State from collecting additional amounts from 
issuers on a voluntary basis. 
(4) EXPENDITURE OF FUNDS.—The provisions under para-
graph (1) shall provide that— 
(A) the contribution amounts collected for any calendar 
year may be allocated and used in any of the three calendar 
years for which amounts are collected based on the reinsur-
ance needs of a particular period or to reflect experience 
in a prior period; and 
(B) amounts remaining unexpended as of December, 
2016, may be used to make payments under any reinsur-
ance program of a State in the individual market in effect 
in the 2-year period beginning on January 1, 2017. 
Notwithstanding the preceding sentence, any contribution 
amounts described in paragraph (3)(B)(iv) shall be deposited 
into the general fund of the Treasury of the United States 
and may not be used for the program established under this 
section.
H. R. 3590—93 
(c) APPLICABLE REINSURANCE ENTITY.—For purposes of this 
section— 
(1) IN GENERAL.—The term ‘‘applicable reinsurance entity’’ 
means a not-for-profit organization— 
(A) the purpose of which is to help stabilize premiums 
for coverage in the individual and small group markets 
in a State during the first 3 years of operation of an 
Exchange for such markets within the State when the 
risk of adverse selection related to new rating rules and 
market changes is greatest; and 
(B) the duties of which shall be to carry out the reinsur-
ance program under this section by coordinating the 
funding and operation of the risk-spreading mechanisms 
designed to implement the reinsurance program. 
(2) STATE DISCRETION.—A State may have more than 1 
applicable reinsurance entity to carry out the reinsurance pro-
gram under this section within the State and 2 or more States 
may enter into agreements to provide for an applicable reinsur-
ance entity to carry out such program in all such States. 
(3) ENTITIES ARE TAX-EXEMPT.—An applicable reinsurance 
entity established under this section shall be exempt from 
taxation under chapter 1 of the Internal Revenue Code of 
1986. The preceding sentence shall not apply to the tax imposed 
by section 511 such Code (relating to tax on unrelated business 
taxable income of an exempt organization). 
(d) COORDINATION WITH STATE HIGH-RISK POOLS.—The State 
shall eliminate or modify any State high-risk pool to the extent 
necessary to carry out the reinsurance program established under 
this section. The State may coordinate the State high-risk pool 
with such program to the extent not inconsistent with the provisions 
of this section. 
SEC. 1342. ESTABLISHMENT OF RISK CORRIDORS FOR PLANS IN INDI-
VIDUAL AND SMALL GROUP MARKETS. 
(a) IN GENERAL.—The Secretary shall establish and administer 
a program of risk corridors for calendar years 2014, 2015, and 
2016 under which a qualified health plan offered in the individual 
or small group market shall participate in a payment adjustment 
system based on the ratio of the allowable costs of the plan to 
the plan’s aggregate premiums. Such program shall be based on 
the program for regional participating provider organizations under 
part D of title XVIII of the Social Security Act. 
(b) PAYMENT METHODOLOGY.— 
(1) PAYMENTS OUT.—The Secretary shall provide under the 
program established under subsection (a) that if— 
(A) a participating plan’s allowable costs for any plan 
year are more than 103 percent but not more than 108 
percent of the target amount, the Secretary shall pay to 
the plan an amount equal to 50 percent of the target 
amount in excess of 103 percent of the target amount; 
and 
(B) a participating plan’s allowable costs for any plan 
year are more than 108 percent of the target amount, 
the Secretary shall pay to the plan an amount equal to 
the sum of 2.5 percent of the target amount plus 80 percent 
of allowable costs in excess of 108 percent of the target 
amount.
H. R. 3590—94 
(2) PAYMENTS IN.—The Secretary shall provide under the 
program established under subsection (a) that if— 
(A) a participating plan’s allowable costs for any plan 
year are less than 97 percent but not less than 92 percent 
of the target amount, the plan shall pay to the Secretary 
an amount equal to 50 percent of the excess of 97 percent 
of the target amount over the allowable costs; and 
(B) a participating plan’s allowable costs for any plan 
year are less than 92 percent of the target amount, the 
plan shall pay to the Secretary an amount equal to the 
sum of 2.5 percent of the target amount plus 80 percent 
of the excess of 92 percent of the target amount over 
the allowable costs. 
(c) DEFINITIONS.—In this section: 
(1) ALLOWABLE COSTS.— 
(A) IN GENERAL.—The amount of allowable costs of 
a plan for any year is an amount equal to the total costs 
(other than administrative costs) of the plan in providing 
benefits covered by the plan. 
(B) REDUCTION FOR RISK ADJUSTMENT AND REINSUR-
ANCE
PAYMENTS.—Allowable costs shall reduced by any 
risk adjustment and reinsurance payments received under 
section 1341 and 1343. 
(2) TARGET
AMOUNT.—The target amount of a plan for 
any year is an amount equal to the total premiums (including 
any premium subsidies under any governmental program), 
reduced by the administrative costs of the plan. 
SEC. 1343. RISK ADJUSTMENT. 
(a) IN GENERAL.— 
(1) LOW ACTUARIAL RISK PLANS.—Using the criteria and 
methods developed under subsection (b), each State shall assess 
a charge on health plans and health insurance issuers (with 
respect to health insurance coverage) described in subsection 
(c) if the actuarial risk of the enrollees of such plans or coverage 
for a year is less than the average actuarial risk of all enrollees 
in all plans or coverage in such State for such year that are 
not self-insured group health plans (which are subject to the 
provisions of the Employee Retirement Income Security Act 
of 1974). 
(2) HIGH ACTUARIAL RISK PLANS.—Using the criteria and 
methods developed under subsection (b), each State shall pro-
vide a payment to health plans and health insurance issuers 
(with respect to health insurance coverage) described in sub-
section (c) if the actuarial risk of the enrollees of such plans 
or coverage for a year is greater than the average actuarial 
risk of all enrollees in all plans and coverage in such State 
for such year that are not self-insured group health plans 
(which are subject to the provisions of the Employee Retirement 
Income Security Act of 1974). 
(b) CRITERIA AND METHODS.—The Secretary, in consultation 
with States, shall establish criteria and methods to be used in 
carrying out the risk adjustment activities under this section. The 
Secretary may utilize criteria and methods similar to the criteria 
and methods utilized under part C or D of title XVIII of the 
Social Security Act. Such criteria and methods shall be included
H. R. 3590—95 
in the standards and requirements the Secretary prescribes under 
section 1321. 
(c) SCOPE.—A health plan or a health insurance issuer is 
described in this subsection if such health plan or health insurance 
issuer provides coverage in the individual or small group market 
within the State. This subsection shall not apply to a grandfathered 
health plan or the issuer of a grandfathered health plan with 
respect to that plan. 
Subtitle E—Affordable Coverage Choices 
for All Americans 
PART I—PREMIUM TAX CREDITS AND COST- 
SHARING REDUCTIONS 
Subpart A—Premium Tax Credits and Cost- 
sharing Reductions 
SEC. 1401. REFUNDABLE TAX CREDIT PROVIDING PREMIUM ASSIST-
ANCE FOR COVERAGE UNDER A QUALIFIED HEALTH 
PLAN. 
(a) IN GENERAL.—Subpart C of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (relating to refund-
able credits) is amended by inserting after section 36A the following 
new section: 
‘‘SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED 
HEALTH PLAN. 
‘‘(a) IN GENERAL.—In the case of an applicable taxpayer, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for any taxable year an amount equal to the premium assistance 
credit amount of the taxpayer for the taxable year. 
‘‘(b) PREMIUM ASSISTANCE CREDIT AMOUNT.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘premium assistance credit 
amount’ means, with respect to any taxable year, the sum 
of the premium assistance amounts determined under para-
graph (2) with respect to all coverage months of the taxpayer 
occurring during the taxable year. 
‘‘(2) PREMIUM ASSISTANCE AMOUNT.—The premium assist-
ance amount determined under this subsection with respect 
to any coverage month is the amount equal to the lesser of— 
‘‘(A) the monthly premiums for such month for 1 or 
more qualified health plans offered in the individual market 
within a State which cover the taxpayer, the taxpayer’s 
spouse, or any dependent (as defined in section 152) of 
the taxpayer and which were enrolled in through an 
Exchange established by the State under 1311 of the 
Patient Protection and Affordable Care Act, or 
‘‘(B) the excess (if any) of— 
‘‘(i) the adjusted monthly premium for such month 
for the applicable second lowest cost silver plan with 
respect to the taxpayer, over
H. R. 3590—96 
‘‘(ii) an amount equal to 1/12 of the product of 
the applicable percentage and the taxpayer’s household 
income for the taxable year. 
‘‘(3) OTHER TERMS AND RULES RELATING TO PREMIUM ASSIST-
ANCE AMOUNTS.—For purposes of paragraph (2)— 
‘‘(A) APPLICABLE PERCENTAGE.— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), the applicable percentage with respect to any tax-
payer for any taxable year is equal to 2.8 percent, 
increased by the number of percentage points (not 
greater than 7) which bears the same ratio to 7 percent-
age points as— 
‘‘(I) the taxpayer’s household income for the 
taxable year in excess of 100 percent of the poverty 
line for a family of the size involved, bears to 
‘‘(II) an amount equal to 200 percent of the 
poverty line for a family of the size involved. 
‘‘(ii) SPECIAL RULE FOR TAXPAYERS UNDER 133 PER-
CENT
OF
POVERTY
LINE.—If a taxpayer’s household 
income for the taxable year is in excess of 100 percent, 
but not more than 133 percent, of the poverty line 
for a family of the size involved, the taxpayer’s 
applicable percentage shall be 2 percent. 
‘‘(iii) INDEXING.—In the case of taxable years begin-
ning in any calendar year after 2014, the Secretary 
shall adjust the initial and final applicable percentages 
under clause (i), and the 2 percent under clause (ii), 
for the calendar year to reflect the excess of the rate 
of premium growth between the preceding calendar 
year and 2013 over the rate of income growth for 
such period. 
‘‘(B) APPLICABLE SECOND LOWEST COST SILVER PLAN.— 
The applicable second lowest cost silver plan with respect 
to any applicable taxpayer is the second lowest cost silver 
plan of the individual market in the rating area in which 
the taxpayer resides which— 
‘‘(i) is offered through the same Exchange through 
which the qualified health plans taken into account 
under paragraph (2)(A) were offered, and 
‘‘(ii) provides— 
‘‘(I) self-only coverage in the case of an 
applicable taxpayer— 
‘‘(aa) whose tax for the taxable year is 
determined under section 1(c) (relating to 
unmarried individuals other than surviving 
spouses and heads of households) and who 
is not allowed a deduction under section 151 
for the taxable year with respect to a 
dependent, or 
‘‘(bb) who is not described in item (aa) 
but who purchases only self-only coverage, and 
‘‘(II) family coverage in the case of any other 
applicable taxpayer. 
If a taxpayer files a joint return and no credit is allowed 
under this section with respect to 1 of the spouses by 
reason of subsection (e), the taxpayer shall be treated as 
described in clause (ii)(I) unless a deduction is allowed
H. R. 3590—97 
under section 151 for the taxable year with respect to 
a dependent other than either spouse and subsection (e) 
does not apply to the dependent. 
‘‘(C) ADJUSTED
MONTHLY
PREMIUM.—The adjusted 
monthly premium for an applicable second lowest cost 
silver plan is the monthly premium which would have 
been charged (for the rating area with respect to which 
the premiums under paragraph (2)(A) were determined) 
for the plan if each individual covered under a qualified 
health plan taken into account under paragraph (2)(A) 
were covered by such silver plan and the premium was 
adjusted only for the age of each such individual in the 
manner allowed under section 2701 of the Public Health 
Service Act. In the case of a State participating in the 
wellness discount demonstration project under section 
2705(d) of the Public Health Service Act, the adjusted 
monthly premium shall be determined without regard to 
any premium discount or rebate under such project. 
‘‘(D) ADDITIONAL BENEFITS.—If— 
‘‘(i) a qualified health plan under section 1302(b)(5) 
of the Patient Protection and Affordable Care Act offers 
benefits in addition to the essential health benefits 
required to be provided by the plan, or 
‘‘(ii) a State requires a qualified health plan under 
section 1311(d)(3)(B) of such Act to cover benefits in 
addition to the essential health benefits required to 
be provided by the plan, 
the portion of the premium for the plan properly allocable 
(under rules prescribed by the Secretary of Health and 
Human Services) to such additional benefits shall not be 
taken into account in determining either the monthly pre-
mium or the adjusted monthly premium under paragraph 
(2). 
‘‘(E) SPECIAL RULE FOR PEDIATRIC DENTAL COVERAGE.— 
For purposes of determining the amount of any monthly 
premium, if an individual enrolls in both a qualified health 
plan and a plan described in section 1311(d)(2)(B)(ii)(I) 
of the Patient Protection and Affordable Care Act for any 
plan year, the portion of the premium for the plan described 
in such section that (under regulations prescribed by the 
Secretary) is properly allocable to pediatric dental benefits 
which are included in the essential health benefits required 
to be provided by a qualified health plan under section 
1302(b)(1)(J) of such Act shall be treated as a premium 
payable for a qualified health plan. 
‘‘(c) DEFINITION
AND RULES RELATING
TO APPLICABLE TAX-
PAYERS, COVERAGE MONTHS, AND QUALIFIED HEALTH PLAN.—For 
purposes of this section— 
‘‘(1) APPLICABLE TAXPAYER.— 
‘‘(A) IN
GENERAL.—The term ‘applicable taxpayer’ 
means, with respect to any taxable year, a taxpayer whose 
household income for the taxable year exceeds 100 percent 
but does not exceed 400 percent of an amount equal to 
the poverty line for a family of the size involved. 
‘‘(B) SPECIAL RULE FOR CERTAIN INDIVIDUALS LAWFULLY 
PRESENT IN THE UNITED STATES.—If—
H. R. 3590—98 
‘‘(i) a taxpayer has a household income which is 
not greater than 100 percent of an amount equal to 
the poverty line for a family of the size involved, and 
‘‘(ii) the taxpayer is an alien lawfully present in 
the United States, but is not eligible for the medicaid 
program under title XIX of the Social Security Act 
by reason of such alien status, 
the taxpayer shall, for purposes of the credit under this 
section, be treated as an applicable taxpayer with a house-
hold income which is equal to 100 percent of the poverty 
line for a family of the size involved. 
‘‘(C) MARRIED
COUPLES
MUST
FILE
JOINT
RETURN.— 
If the taxpayer is married (within the meaning of section 
7703) at the close of the taxable year, the taxpayer shall 
be treated as an applicable taxpayer only if the taxpayer 
and the taxpayer’s spouse file a joint return for the taxable 
year. 
‘‘(D) DENIAL
OF
CREDIT
TO
DEPENDENTS.—No credit 
shall be allowed under this section to any individual with 
respect to whom a deduction under section 151 is allowable 
to another taxpayer for a taxable year beginning in the 
calendar year in which such individual’s taxable year 
begins. 
‘‘(2) COVERAGE MONTH.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘coverage month’ means, 
with respect to an applicable taxpayer, any month if— 
‘‘(i) as of the first day of such month the taxpayer, 
the taxpayer’s spouse, or any dependent of the taxpayer 
is covered by a qualified health plan described in sub-
section (b)(2)(A) that was enrolled in through an 
Exchange established by the State under section 1311 
of the Patient Protection and Affordable Care Act, and 
‘‘(ii) the premium for coverage under such plan 
for such month is paid by the taxpayer (or through 
advance payment of the credit under subsection (a) 
under section 1412 of the Patient Protection and 
Affordable Care Act). 
‘‘(B) EXCEPTION FOR MINIMUM ESSENTIAL COVERAGE.— 
‘‘(i) IN GENERAL.—The term ‘coverage month’ shall 
not include any month with respect to an individual 
if for such month the individual is eligible for minimum 
essential coverage other than eligibility for coverage 
described in section 5000A(f)(1)(C) (relating to coverage 
in the individual market). 
‘‘(ii) MINIMUM
ESSENTIAL
COVERAGE.—The term 
‘minimum essential coverage’ has the meaning given 
such term by section 5000A(f). 
‘‘(C) SPECIAL RULE FOR EMPLOYER-SPONSORED MINIMUM 
ESSENTIAL COVERAGE.—For purposes of subparagraph (B)— 
‘‘(i) COVERAGE MUST BE AFFORDABLE.—Except as 
provided in clause (iii), an employee shall not be 
treated as eligible for minimum essential coverage if 
such coverage— 
‘‘(I) consists of an eligible employer-sponsored 
plan (as defined in section 5000A(f)(2)), and 
‘‘(II) the employee’s required contribution 
(within the meaning of section 5000A(e)(1)(B)) with
H. R. 3590—99 
respect to the plan exceeds 9.8 percent of the 
applicable taxpayer’s household income. 
This clause shall also apply to an individual who is 
eligible to enroll in the plan by reason of a relationship 
the individual bears to the employee. 
‘‘(ii) COVERAGE MUST PROVIDE MINIMUM VALUE.— 
Except as provided in clause (iii), an employee shall 
not be treated as eligible for minimum essential cov-
erage if such coverage consists of an eligible employer- 
sponsored plan (as defined in section 5000A(f)(2)) and 
the plan’s share of the total allowed costs of benefits 
provided under the plan is less than 60 percent of 
such costs. 
‘‘(iii) EMPLOYEE OR FAMILY MUST NOT BE COVERED 
UNDER EMPLOYER PLAN.—Clauses (i) and (ii) shall not 
apply if the employee (or any individual described in 
the last sentence of clause (i)) is covered under the 
eligible employer-sponsored plan or the grandfathered 
health plan. 
‘‘(iv) INDEXING.—In the case of plan years begin-
ning in any calendar year after 2014, the Secretary 
shall adjust the 9.8 percent under clause (i)(II) in the 
same manner as the percentages are adjusted under 
subsection (b)(3)(A)(ii). 
‘‘(3) DEFINITIONS AND OTHER RULES.— 
‘‘(A) QUALIFIED
HEALTH
PLAN.—The term ‘qualified 
health plan’ has the meaning given such term by section 
1301(a) of the Patient Protection and Affordable Care Act, 
except that such term shall not include a qualified health 
plan which is a catastrophic plan described in section 
1302(e) of such Act. 
‘‘(B) GRANDFATHERED HEALTH PLAN.—The term ‘grand-
fathered health plan’ has the meaning given such term 
by section 1251 of the Patient Protection and Affordable 
Care Act. 
‘‘(d) TERMS RELATING TO INCOME AND FAMILIES.—For purposes 
of this section— 
‘‘(1) FAMILY SIZE.—The family size involved with respect 
to any taxpayer shall be equal to the number of individuals 
for whom the taxpayer is allowed a deduction under section 
151 (relating to allowance of deduction for personal exemptions) 
for the taxable year. 
‘‘(2) HOUSEHOLD INCOME.— 
‘‘(A) 
HOUSEHOLD
INCOME.—The 
term 
‘household 
income’ means, with respect to any taxpayer, an amount 
equal to the sum of— 
‘‘(i) the modified gross income of the taxpayer, 
plus 
‘‘(ii) the aggregate modified gross incomes of all 
other individuals who— 
‘‘(I) were taken into account in determining 
the taxpayer’s family size under paragraph (1), 
and 
‘‘(II) were required to file a return of tax 
imposed by section 1 for the taxable year. 
‘‘(B) MODIFIED
GROSS
INCOME.—The term ‘modified 
gross income’ means gross income—
H. R. 3590—100 
‘‘(i) decreased by the amount of any deduction 
allowable under paragraph (1), (3), (4), or (10) of section 
62(a), 
‘‘(ii) increased by the amount of interest received 
or accrued during the taxable year which is exempt 
from tax imposed by this chapter, and 
‘‘(iii) determined without regard to sections 911, 
931, and 933. 
‘‘(3) POVERTY LINE.— 
‘‘(A) IN
GENERAL.—The term ‘poverty line’ has the 
meaning given that term in section 2110(c)(5) of the Social 
Security Act (42 U.S.C. 1397jj(c)(5)). 
‘‘(B) POVERTY LINE USED.—In the case of any qualified 
health plan offered through an Exchange for coverage 
during a taxable year beginning in a calendar year, the 
poverty line used shall be the most recently published 
poverty line as of the 1st day of the regular enrollment 
period for coverage during such calendar year. 
‘‘(e) RULES FOR INDIVIDUALS NOT LAWFULLY PRESENT.— 
‘‘(1) IN GENERAL.—If 1 or more individuals for whom a 
taxpayer is allowed a deduction under section 151 (relating 
to allowance of deduction for personal exemptions) for the tax-
able year (including the taxpayer or his spouse) are individuals 
who are not lawfully present— 
‘‘(A) the aggregate amount of premiums otherwise 
taken into account under clauses (i) and (ii) of subsection 
(b)(2)(A) shall be reduced by the portion (if any) of such 
premiums which is attributable to such individuals, and 
‘‘(B) for purposes of applying this section, the deter-
mination as to what percentage a taxpayer’s household 
income bears to the poverty level for a family of the size 
involved shall be made under one of the following methods: 
‘‘(i) A method under which— 
‘‘(I) the taxpayer’s family size is determined 
by not taking such individuals into account, and 
‘‘(II) the taxpayer’s household income is equal 
to the product of the taxpayer’s household income 
(determined without regard to this subsection) and 
a fraction— 
‘‘(aa) the numerator of which is the pov-
erty line for the taxpayer’s family size deter-
mined after application of subclause (I), and 
‘‘(bb) the denominator of which is the pov-
erty line for the taxpayer’s family size deter-
mined without regard to subclause (I). 
‘‘(ii) A comparable method reaching the same result 
as the method under clause (i). 
‘‘(2) LAWFULLY PRESENT.—For purposes of this section, an 
individual shall be treated as lawfully present only if the indi-
vidual is, and is reasonably expected to be for the entire period 
of enrollment for which the credit under this section is being 
claimed, a citizen or national of the United States or an alien 
lawfully present in the United States. 
‘‘(3) SECRETARIAL AUTHORITY.—The Secretary of Health and 
Human Services, in consultation with the Secretary, shall pre-
scribe rules setting forth the methods by which calculations 
of family size and household income are made for purposes
H. R. 3590—101 
of this subsection. Such rules shall be designed to ensure that 
the least burden is placed on individuals enrolling in qualified 
health plans through an Exchange and taxpayers eligible for 
the credit allowable under this section. 
‘‘(f) RECONCILIATION OF CREDIT AND ADVANCE CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit allowed under 
this section for any taxable year shall be reduced (but not 
below zero) by the amount of any advance payment of such 
credit under section 1412 of the Patient Protection and Afford-
able Care Act. 
‘‘(2) EXCESS ADVANCE PAYMENTS.— 
‘‘(A) IN GENERAL.—If the advance payments to a tax-
payer under section 1412 of the Patient Protection and 
Affordable Care Act for a taxable year exceed the credit 
allowed by this section (determined without regard to para-
graph (1)), the tax imposed by this chapter for the taxable 
year shall be increased by the amount of such excess. 
‘‘(B) LIMITATION
ON
INCREASE
WHERE
INCOME
LESS 
THAN 400 PERCENT OF POVERTY LINE.— 
‘‘(i) IN GENERAL.—In the case of an applicable tax-
payer whose household income is less than 400 percent 
of the poverty line for the size of the family involved 
for the taxable year, the amount of the increase under 
subparagraph (A) shall in no event exceed $400 ($250 
in the case of a taxpayer whose tax is determined 
under section 1(c) for the taxable year). 
‘‘(ii) INDEXING
OF
AMOUNT.—In the case of any 
calendar year beginning after 2014, each of the dollar 
amounts under clause (i) shall be increased by an 
amount equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year, deter-
mined by substituting ‘calendar year 2013’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof. 
If the amount of any increase under clause (i) is not 
a multiple of $50, such increase shall be rounded to 
the next lowest multiple of $50. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary to carry out the provisions of this section, 
including regulations which provide for— 
‘‘(1) the coordination of the credit allowed under this section 
with the program for advance payment of the credit under 
section 1412 of the Patient Protection and Affordable Care 
Act, and 
‘‘(2) the application of subsection (f) where the filing status 
of the taxpayer for a taxable year is different from such status 
used for determining the advance payment of the credit.’’. 
(b) DISALLOWANCE
OF
DEDUCTION.—Section 280C of the 
Internal Revenue Code of 1986 is amended by adding at the end 
the following new subsection: 
‘‘(g) CREDIT FOR HEALTH INSURANCE PREMIUMS.—No deduction 
shall be allowed for the portion of the premiums paid by the 
taxpayer for coverage of 1 or more individuals under a qualified 
health plan which is equal to the amount of the credit determined 
for the taxable year under section 36B(a) with respect to such 
premiums.’’.
H. R. 3590—102 
(c) STUDY ON AFFORDABLE COVERAGE.— 
(1) STUDY AND REPORT.— 
(A) IN
GENERAL.—Not later than 5 years after the 
date of the enactment of this Act, the Comptroller General 
shall conduct a study on the affordability of health insur-
ance coverage, including— 
(i) the impact of the tax credit for qualified health 
insurance coverage of individuals under section 36B 
of the Internal Revenue Code of 1986 and the tax 
credit for employee health insurance expenses of small 
employers under section 45R of such Code on 
maintaining and expanding the health insurance cov-
erage of individuals; 
(ii) the availability of affordable health benefits 
plans, including a study of whether the percentage 
of household income used for purposes of section 
36B(c)(2)(C) of the Internal Revenue Code of 1986 (as 
added by this section) is the appropriate level for deter-
mining whether employer-provided coverage is afford-
able for an employee and whether such level may 
be lowered without significantly increasing the costs 
to the Federal Government and reducing employer- 
provided coverage; and 
(iii) the ability of individuals to maintain essential 
health benefits coverage (as defined in section 5000A(f) 
of the Internal Revenue Code of 1986). 
(B) REPORT.—The Comptroller General shall submit 
to the appropriate committees of Congress a report on 
the study conducted under subparagraph (A), together with 
legislative recommendations relating to the matters studied 
under such subparagraph. 
(2) APPROPRIATE COMMITTEES OF CONGRESS.—In this sub-
section, the term ‘‘appropriate committees of Congress’’ means 
the Committee on Ways and Means, the Committee on Edu-
cation and Labor, and the Committee on Energy and Commerce 
of the House of Representatives and the Committee on Finance 
and the Committee on Health, Education, Labor and Pensions 
of the Senate. 
(d) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 31, United 
States Code, is amended by inserting ‘‘36B,’’ after ‘‘36A,’’. 
(2) The table of sections for subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 1986 
is amended by inserting after the item relating to section 36A 
the following new item: 
‘‘Sec. 36B. Refundable credit for coverage under a qualified health plan.’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years ending after December 31, 2013. 
SEC. 1402. REDUCED COST-SHARING FOR INDIVIDUALS ENROLLING 
IN QUALIFIED HEALTH PLANS. 
(a) IN GENERAL.—In the case of an eligible insured enrolled 
in a qualified health plan— 
(1) the Secretary shall notify the issuer of the plan of 
such eligibility; and 
(2) the issuer shall reduce the cost-sharing under the plan 
at the level and in the manner specified in subsection (c).
H. R. 3590—103 
(b) ELIGIBLE INSURED.—In this section, the term ‘‘eligible 
insured’’ means an individual— 
(1) who enrolls in a qualified health plan in the silver 
level of coverage in the individual market offered through an 
Exchange; and 
(2) whose household income exceeds 100 percent but does 
not exceed 400 percent of the poverty line for a family of 
the size involved. 
In the case of an individual described in section 36B(c)(1)(B) of 
the Internal Revenue Code of 1986, the individual shall be treated 
as having household income equal to 100 percent for purposes 
of applying this section. 
(c) DETERMINATION OF REDUCTION IN COST-SHARING.— 
(1) REDUCTION IN OUT-OF-POCKET LIMIT.— 
(A) IN GENERAL.—The reduction in cost-sharing under 
this subsection shall first be achieved by reducing the 
applicable out-of pocket limit under section 1302(c)(1) in 
the case of— 
(i) an eligible insured whose household income is 
more than 100 percent but not more than 200 percent 
of the poverty line for a family of the size involved, 
by two-thirds; 
(ii) an eligible insured whose household income 
is more than 200 percent but not more than 300 per-
cent of the poverty line for a family of the size involved, 
by one-half; and 
(iii) an eligible insured whose household income 
is more than 300 percent but not more than 400 per-
cent of the poverty line for a family of the size involved, 
by one-third. 
(B) COORDINATION
WITH
ACTUARIAL
VALUE
LIMITS.— 
(i) IN GENERAL.—The Secretary shall ensure the 
reduction under this paragraph shall not result in an 
increase in the plan’s share of the total allowed costs 
of benefits provided under the plan above— 
(I) 90 percent in the case of an eligible insured 
described in paragraph (2)(A); 
(II) 80 percent in the case of an eligible insured 
described in paragraph (2)(B); and 
(III) 70 percent in the case of an eligible 
insured described in clause (ii) or (iii) of subpara-
graph (A). 
(ii) ADJUSTMENT.—The Secretary shall adjust the 
out-of pocket limits under paragraph (1) if necessary 
to ensure that such limits do not cause the respective 
actuarial values to exceed the levels specified in clause 
(i). 
(2) ADDITIONAL REDUCTION FOR LOWER INCOME INSUREDS.— 
The Secretary shall establish procedures under which the issuer 
of a qualified health plan to which this section applies shall 
further reduce cost-sharing under the plan in a manner suffi-
cient to— 
(A) in the case of an eligible insured whose household 
income is not less than 100 percent but not more than 
150 percent of the poverty line for a family of the size 
involved, increase the plan’s share of the total allowed
H. R. 3590—104 
costs of benefits provided under the plan to 90 percent 
of such costs; and 
(B) in the case of an eligible insured whose household 
income is more than 150 percent but not more than 200 
percent of the poverty line for a family of the size involved, 
increase the plan’s share of the total allowed costs of bene-
fits provided under the plan to 80 percent of such costs. 
(3) METHODS FOR REDUCING COST-SHARING.— 
(A) IN GENERAL.—An issuer of a qualified health plan 
making reductions under this subsection shall notify the 
Secretary of such reductions and the Secretary shall make 
periodic and timely payments to the issuer equal to the 
value of the reductions. 
(B) CAPITATED PAYMENTS.—The Secretary may estab-
lish a capitated payment system to carry out the payment 
of cost-sharing reductions under this section. Any such 
system shall take into account the value of the reductions 
and make appropriate risk adjustments to such payments. 
(4) ADDITIONAL BENEFITS.—If a qualified health plan under 
section 1302(b)(5) offers benefits in addition to the essential 
health benefits required to be provided by the plan, or a State 
requires a qualified health plan under section 1311(d)(3)(B) 
to cover benefits in addition to the essential health benefits 
required to be provided by the plan, the reductions in cost- 
sharing under this section shall not apply to such additional 
benefits. 
(5) SPECIAL
RULE
FOR
PEDIATRIC
DENTAL
PLANS.—If an 
individual enrolls in both a qualified health plan and a plan 
described in section 1311(d)(2)(B)(ii)(I) for any plan year, sub-
section (a) shall not apply to that portion of any reduction 
in cost-sharing under subsection (c) that (under regulations 
prescribed by the Secretary) is properly allocable to pediatric 
dental benefits which are included in the essential health bene-
fits required to be provided by a qualified health plan under 
section 1302(b)(1)(J). 
(d) SPECIAL RULES FOR INDIANS.— 
(1) INDIANS UNDER 300 PERCENT OF POVERTY.—If an indi-
vidual enrolled in any qualified health plan in the individual 
market through an Exchange is an Indian (as defined in section 
4(d) of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b(d))) whose household income is not more 
than 300 percent of the poverty line for a family of the size 
involved, then, for purposes of this section— 
(A) such individual shall be treated as an eligible 
insured; and 
(B) the issuer of the plan shall eliminate any cost- 
sharing under the plan. 
(2) ITEMS OR SERVICES FURNISHED THROUGH INDIAN HEALTH 
PROVIDERS.—If an Indian (as so defined) enrolled in a qualified 
health plan is furnished an item or service directly by the 
Indian Health Service, an Indian Tribe, Tribal Organization, 
or Urban Indian Organization or through referral under con-
tract health services— 
(A) no cost-sharing under the plan shall be imposed 
under the plan for such item or service; and 
(B) the issuer of the plan shall not reduce the payment 
to any such entity for such item or service by the amount
H. R. 3590—105 
of any cost-sharing that would be due from the Indian 
but for subparagraph (A). 
(3) PAYMENT.—The Secretary shall pay to the issuer of 
a qualified health plan the amount necessary to reflect the 
increase in actuarial value of the plan required by reason 
of this subsection. 
(e) RULES FOR INDIVIDUALS NOT LAWFULLY PRESENT.— 
(1) IN GENERAL.—If an individual who is an eligible insured 
is not lawfully present— 
(A) no cost-sharing reduction under this section shall 
apply with respect to the individual; and 
(B) for purposes of applying this section, the determina-
tion as to what percentage a taxpayer’s household income 
bears to the poverty level for a family of the size involved 
shall be made under one of the following methods: 
(i) A method under which— 
(I) the taxpayer’s family size is determined 
by not taking such individuals into account, and 
(II) the taxpayer’s household income is equal 
to the product of the taxpayer’s household income 
(determined without regard to this subsection) and 
a fraction— 
(aa) the numerator of which is the poverty 
line for the taxpayer’s family size determined 
after application of subclause (I), and 
(bb) the denominator of which is the pov-
erty line for the taxpayer’s family size deter-
mined without regard to subclause (I). 
(ii) A comparable method reaching the same result 
as the method under clause (i). 
(2) LAWFULLY PRESENT.—For purposes of this section, an 
individual shall be treated as lawfully present only if the indi-
vidual is, and is reasonably expected to be for the entire period 
of enrollment for which the cost-sharing reduction under this 
section is being claimed, a citizen or national of the United 
States or an alien lawfully present in the United States. 
(3) SECRETARIAL AUTHORITY.—The Secretary, in consulta-
tion with the Secretary of the Treasury, shall prescribe rules 
setting forth the methods by which calculations of family size 
and household income are made for purposes of this subsection. 
Such rules shall be designed to ensure that the least burden 
is placed on individuals enrolling in qualified health plans 
through an Exchange and taxpayers eligible for the credit allow-
able under this section. 
(f) DEFINITIONS AND SPECIAL RULES.—In this section: 
(1) IN
GENERAL.—Any term used in this section which 
is also used in section 36B of the Internal Revenue Code of 
1986 shall have the meaning given such term by such section. 
(2) LIMITATIONS ON REDUCTION.—No cost-sharing reduction 
shall be allowed under this section with respect to coverage 
for any month unless the month is a coverage month with 
respect to which a credit is allowed to the insured (or an 
applicable taxpayer on behalf of the insured) under section 
36B of such Code. 
(3) DATA USED FOR ELIGIBILITY.—Any determination under 
this section shall be made on the basis of the taxable year 
for which the advance determination is made under section
H. R. 3590—106 
1412 and not the taxable year for which the credit under 
section 36B of such Code is allowed. 
Subpart B—Eligibility Determinations 
SEC. 
1411. 
PROCEDURES 
FOR 
DETERMINING 
ELIGIBILITY 
FOR 
EXCHANGE PARTICIPATION, PREMIUM TAX CREDITS AND 
REDUCED COST-SHARING, AND INDIVIDUAL RESPONSI-
BILITY EXEMPTIONS. 
(a) ESTABLISHMENT OF PROGRAM.—The Secretary shall estab-
lish a program meeting the requirements of this section for deter-
mining— 
(1) whether an individual who is to be covered in the 
individual market by a qualified health plan offered through 
an Exchange, or who is claiming a premium tax credit or 
reduced cost-sharing, meets the requirements of sections 
1312(f)(3), 1402(e), and 1412(d) of this title and section 36B(e) 
of the Internal Revenue Code of 1986 that the individual be 
a citizen or national of the United States or an alien lawfully 
present in the United States; 
(2) in the case of an individual claiming a premium tax 
credit or reduced cost-sharing under section 36B of such Code 
or section 1402— 
(A) whether the individual meets the income and cov-
erage requirements of such sections; and 
(B) the amount of the tax credit or reduced cost- 
sharing; 
(3) whether an individual’s coverage under an employer- 
sponsored health benefits plan is treated as unaffordable under 
sections 36B(c)(2)(C) and 5000A(e)(2); and 
(4) whether to grant a certification under section 
1311(d)(4)(H) attesting that, for purposes of the individual 
responsibility requirement under section 5000A of the Internal 
Revenue Code of 1986, an individual is entitled to an exemption 
from either the individual responsibility requirement or the 
penalty imposed by such section. 
(b) INFORMATION REQUIRED TO BE PROVIDED BY APPLICANTS.— 
(1) IN GENERAL.—An applicant for enrollment in a qualified 
health plan offered through an Exchange in the individual 
market shall provide— 
(A) the name, address, and date of birth of each indi-
vidual who is to be covered by the plan (in this subsection 
referred to as an ‘‘enrollee’’); and 
(B) the information required by any of the following 
paragraphs that is applicable to an enrollee. 
(2) CITIZENSHIP OR IMMIGRATION STATUS.—The following 
information shall be provided with respect to every enrollee: 
(A) In the case of an enrollee whose eligibility is based 
on an attestation of citizenship of the enrollee, the enrollee’s 
social security number. 
(B) In the case of an individual whose eligibility is 
based on an attestation of the enrollee’s immigration status, 
the enrollee’s social security number (if applicable) and 
such identifying information with respect to the enrollee’s 
immigration status as the Secretary, after consultation 
with the Secretary of Homeland Security, determines 
appropriate.
H. R. 3590—107 
(3) ELIGIBILITY AND AMOUNT OF TAX CREDIT OR REDUCED 
COST-SHARING.—In the case of an enrollee with respect to whom 
a premium tax credit or reduced cost-sharing under section 
36B of such Code or section 1402 is being claimed, the following 
information: 
(A) INFORMATION
REGARDING
INCOME
AND
FAMILY 
SIZE.—The information described in section 6103(l)(21) for 
the taxable year ending with or within the second calendar 
year preceding the calendar year in which the plan year 
begins. 
(B) CHANGES
IN
CIRCUMSTANCES.—The information 
described in section 1412(b)(2), including information with 
respect to individuals who were not required to file an 
income tax return for the taxable year described in 
subparagraph (A) or individuals who experienced changes 
in marital status or family size or significant reductions 
in income. 
(4) EMPLOYER-SPONSORED COVERAGE.—In the case of an 
enrollee with respect to whom eligibility for a premium tax 
credit under section 36B of such Code or cost-sharing reduction 
under section 1402 is being established on the basis that the 
enrollee’s (or related individual’s) employer is not treated under 
section 36B(c)(2)(C) of such Code as providing minimum essen-
tial coverage or affordable minimum essential coverage, the 
following information: 
(A) The name, address, and employer identification 
number (if available) of the employer. 
(B) Whether the enrollee or individual is a full-time 
employee and whether the employer provides such min-
imum essential coverage. 
(C) If the employer provides such minimum essential 
coverage, the lowest cost option for the enrollee’s or individ-
ual’s enrollment status and the enrollee’s or individual’s 
required contribution (within the meaning of section 
5000A(e)(1)(B) of such Code) under the employer-sponsored 
plan. 
(D) If an enrollee claims an employer’s minimum essen-
tial coverage is unaffordable, the information described 
in paragraph (3). 
If an enrollee changes employment or obtains additional 
employment while enrolled in a qualified health plan for which 
such credit or reduction is allowed, the enrollee shall notify 
the Exchange of such change or additional employment and 
provide the information described in this paragraph with 
respect to the new employer. 
(5) EXEMPTIONS FROM INDIVIDUAL RESPONSIBILITY REQUIRE-
MENTS.—In the case of an individual who is seeking an exemp-
tion certificate under section 1311(d)(4)(H) from any require-
ment or penalty imposed by section 5000A, the following 
information: 
(A) In the case of an individual seeking exemption 
based on the individual’s status as a member of an exempt 
religious sect or division, as a member of a health care 
sharing ministry, as an Indian, or as an individual eligible 
for a hardship exemption, such information as the Sec-
retary shall prescribe.
H. R. 3590—108 
(B) In the case of an individual seeking exemption 
based on the lack of affordable coverage or the individual’s 
status as a taxpayer with household income less than 100 
percent of the poverty line, the information described in 
paragraphs (3) and (4), as applicable. 
(c) VERIFICATION OF INFORMATION CONTAINED IN RECORDS OF 
SPECIFIC FEDERAL OFFICIALS.— 
(1) 
INFORMATION
TRANSFERRED
TO
SECRETARY.—An 
Exchange shall submit the information provided by an applicant 
under subsection (b) to the Secretary for verification in accord-
ance with the requirements of this subsection and subsection 
(d). 
(2) CITIZENSHIP OR IMMIGRATION STATUS.— 
(A) COMMISSIONER
OF
SOCIAL
SECURITY.—The Sec-
retary shall submit to the Commissioner of Social Security 
the following information for a determination as to whether 
the information provided is consistent with the information 
in the records of the Commissioner: 
(i) The name, date of birth, and social security 
number of each individual for whom such information 
was provided under subsection (b)(2). 
(ii) The attestation of an individual that the indi-
vidual is a citizen. 
(B) SECRETARY OF HOMELAND SECURITY.— 
(i) IN GENERAL.—In the case of an individual— 
(I) who attests that the individual is an alien 
lawfully present in the United States; or 
(II) who attests that the individual is a citizen 
but with respect to whom the Commissioner of 
Social Security has notified the Secretary under 
subsection (e)(3) that the attestation is inconsistent 
with information in the records maintained by the 
Commissioner; 
the Secretary shall submit to the Secretary of Home-
land Security the information described in clause (ii) 
for a determination as to whether the information pro-
vided is consistent with the information in the records 
of the Secretary of Homeland Security. 
(ii) INFORMATION.—The information described in 
clause (ii) is the following: 
(I) The name, date of birth, and any identifying 
information with respect to the individual’s 
immigration status provided under subsection 
(b)(2). 
(II) The attestation that the individual is an 
alien lawfully present in the United States or in 
the case of an individual described in clause (i)(II), 
the attestation that the individual is a citizen. 
(3) ELIGIBILITY FOR TAX CREDIT AND COST-SHARING REDUC-
TION.—The Secretary shall submit the information described 
in subsection (b)(3)(A) provided under paragraph (3), (4), or 
(5) of subsection (b) to the Secretary of the Treasury for 
verification of household income and family size for purposes 
of eligibility. 
(4) METHODS.— 
(A) IN GENERAL.—The Secretary, in consultation with 
the Secretary of the Treasury, the Secretary of Homeland
H. R. 3590—109 
Security, and the Commissioner of Social Security, shall 
provide that verifications and determinations under this 
subsection shall be done— 
(i) through use of an on-line system or otherwise 
for the electronic submission of, and response to, the 
information submitted under this subsection with 
respect to an applicant; or 
(ii) by determining the consistency of the informa-
tion submitted with the information maintained in the 
records of the Secretary of the Treasury, the Secretary 
of Homeland Security, or the Commissioner of Social 
Security through such other method as is approved 
by the Secretary. 
(B) FLEXIBILITY.—The Secretary may modify the 
methods used under the program established by this section 
for the Exchange and verification of information if the 
Secretary determines such modifications would reduce the 
administrative costs and burdens on the applicant, 
including allowing an applicant to request the Secretary 
of the Treasury to provide the information described in 
paragraph (3) directly to the Exchange or to the Secretary. 
The Secretary shall not make any such modification unless 
the Secretary determines that any applicable requirements 
under this section and section 6103 of the Internal Revenue 
Code of 1986 with respect to the confidentiality, disclosure, 
maintenance, or use of information will be met. 
(d) VERIFICATION BY SECRETARY.—In the case of information 
provided under subsection (b) that is not required under subsection 
(c) to be submitted to another person for verification, the Secretary 
shall verify the accuracy of such information in such manner as 
the Secretary determines appropriate, including delegating respon-
sibility for verification to the Exchange. 
(e) ACTIONS RELATING TO VERIFICATION.— 
(1) IN GENERAL.—Each person to whom the Secretary pro-
vided information under subsection (c) shall report to the Sec-
retary under the method established under subsection (c)(4) 
the results of its verification and the Secretary shall notify 
the Exchange of such results. Each person to whom the Sec-
retary provided information under subsection (d) shall report 
to the Secretary in such manner as the Secretary determines 
appropriate. 
(2) VERIFICATION.— 
(A) ELIGIBILITY FOR ENROLLMENT AND PREMIUM TAX 
CREDITS
AND
COST-SHARING
REDUCTIONS.—If information 
provided by an applicant under paragraphs (1), (2), (3), 
and (4) of subsection (b) is verified under subsections (c) 
and (d)— 
(i) the individual’s eligibility to enroll through the 
Exchange and to apply for premium tax credits and 
cost-sharing reductions shall be satisfied; and 
(ii) the Secretary shall, if applicable, notify the 
Secretary of the Treasury under section 1412(c) of the 
amount of any advance payment to be made. 
(B) EXEMPTION FROM INDIVIDUAL RESPONSIBILITY.—If 
information provided by an applicant under subsection 
(b)(5) is verified under subsections (c) and (d), the Secretary
H. R. 3590—110 
shall issue the certification of exemption described in sec-
tion 1311(d)(4)(H). 
(3) INCONSISTENCIES INVOLVING ATTESTATION OF CITIZEN-
SHIP OR LAWFUL PRESENCE.—If the information provided by 
any applicant under subsection (b)(2) is inconsistent with 
information in the records maintained by the Commissioner 
of Social Security or Secretary of Homeland Security, whichever 
is applicable, the applicant’s eligibility will be determined in 
the same manner as an individual’s eligibility under the med-
icaid program is determined under section 1902(ee) of the Social 
Security Act (as in effect on January 1, 2010). 
(4) INCONSISTENCIES INVOLVING OTHER INFORMATION.— 
(A) IN GENERAL.—If the information provided by an 
applicant under subsection (b) (other than subsection (b)(2)) 
is inconsistent with information in the records maintained 
by persons under subsection (c) or is not verified under 
subsection (d), the Secretary shall notify the Exchange 
and the Exchange shall take the following actions: 
(i) REASONABLE
EFFORT.—The Exchange shall 
make a reasonable effort to identify and address the 
causes of such inconsistency, including through typo-
graphical or other clerical errors, by contacting the 
applicant to confirm the accuracy of the information, 
and by taking such additional actions as the Secretary, 
through regulation or other guidance, may identify. 
(ii) NOTICE AND OPPORTUNITY TO CORRECT.—In the 
case the inconsistency or inability to verify is not 
resolved under subparagraph (A), the Exchange shall— 
(I) notify the applicant of such fact; 
(II) provide the applicant an opportunity to 
either present satisfactory documentary evidence 
or resolve the inconsistency with the person 
verifying the information under subsection (c) or 
(d) during the 90-day period beginning the date 
on which the notice required under subclause (I) 
is sent to the applicant. 
The Secretary may extend the 90-day period under 
subclause (II) for enrollments occurring during 2014. 
(B) SPECIFIC ACTIONS NOT INVOLVING CITIZENSHIP OR 
LAWFUL PRESENCE.— 
(i) IN GENERAL.—Except as provided in paragraph 
(3), the Exchange shall, during any period before the 
close of the period under subparagraph (A)(ii)(II), make 
any determination under paragraphs (2), (3), and (4) 
of subsection (a) on the basis of the information con-
tained on the application. 
(ii) ELIGIBILITY OR AMOUNT OF CREDIT OR REDUC-
TION.—If an inconsistency involving the eligibility for, 
or amount of, any premium tax credit or cost-sharing 
reduction is unresolved under this subsection as of 
the close of the period under subparagraph (A)(ii)(II), 
the Exchange shall notify the applicant of the amount 
(if any) of the credit or reduction that is determined 
on the basis of the records maintained by persons 
under subsection (c). 
(iii) EMPLOYER AFFORDABILITY.—If the Secretary 
notifies an Exchange that an enrollee is eligible for
H. R. 3590—111 
a premium tax credit under section 36B of such Code 
or cost-sharing reduction under section 1402 because 
the enrollee’s (or related individual’s) employer does 
not provide minimum essential coverage through an 
employer-sponsored plan or that the employer does 
provide that coverage but it is not affordable coverage, 
the Exchange shall notify the employer of such fact 
and that the employer may be liable for the payment 
assessed under section 4980H of such Code. 
(iv) EXEMPTION.—In any case where the inconsist-
ency involving, or inability to verify, information pro-
vided under subsection (b)(5) is not resolved as of the 
close of the period under subparagraph (A)(ii)(II), the 
Exchange shall notify an applicant that no certification 
of exemption from any requirement or payment under 
section 5000A of such Code will be issued. 
(C) APPEALS PROCESS.—The Exchange shall also notify 
each person receiving notice under this paragraph of the 
appeals processes established under subsection (f). 
(f) APPEALS AND REDETERMINATIONS.— 
(1) IN GENERAL.—The Secretary, in consultation with the 
Secretary of the Treasury, the Secretary of Homeland Security, 
and the Commissioner of Social Security, shall establish proce-
dures by which the Secretary or one of such other Federal 
officers— 
(A) hears and makes decisions with respect to appeals 
of any determination under subsection (e); and 
(B) redetermines eligibility on a periodic basis in appro-
priate circumstances. 
(2) EMPLOYER LIABILITY.— 
(A) IN GENERAL.—The Secretary shall establish a sepa-
rate appeals process for employers who are notified under 
subsection (e)(4)(C) that the employer may be liable for 
a tax imposed by section 4980H of the Internal Revenue 
Code of 1986 with respect to an employee because of a 
determination that the employer does not provide minimum 
essential coverage through an employer-sponsored plan or 
that the employer does provide that coverage but it is 
not affordable coverage with respect to an employee. Such 
process shall provide an employer the opportunity to— 
(i) present information to the Exchange for review 
of the determination either by the Exchange or the 
person making the determination, including evidence 
of the employer-sponsored plan and employer contribu-
tions to the plan; and 
(ii) have access to the data used to make the 
determination to the extent allowable by law. 
Such process shall be in addition to any rights of appeal 
the employer may have under subtitle F of such Code. 
(B) CONFIDENTIALITY.—Notwithstanding any provision 
of this title (or the amendments made by this title) or 
section 6103 of the Internal Revenue Code of 1986, an 
employer shall not be entitled to any taxpayer return 
information with respect to an employee for purposes of 
determining whether the employer is subject to the penalty 
under section 4980H of such Code with respect to the 
employee, except that—
H. R. 3590—112 
(i) the employer may be notified as to the name 
of an employee and whether or not the employee’s 
income is above or below the threshold by which the 
affordability of an employer’s health insurance cov-
erage is measured; and 
(ii) this subparagraph shall not apply to an 
employee who provides a waiver (at such time and 
in such manner as the Secretary may prescribe) 
authorizing an employer to have access to the 
employee’s taxpayer return information. 
(g) CONFIDENTIALITY OF APPLICANT INFORMATION.— 
(1) IN GENERAL.—An applicant for insurance coverage or 
for a premium tax credit or cost-sharing reduction shall be 
required to provide only the information strictly necessary to 
authenticate identity, determine eligibility, and determine the 
amount of the credit or reduction. 
(2) RECEIPT OF INFORMATION.—Any person who receives 
information provided by an applicant under subsection (b) 
(whether directly or by another person at the request of the 
applicant), or receives information from a Federal agency under 
subsection (c), (d), or (e), shall— 
(A) use the information only for the purposes of, and 
to the extent necessary in, ensuring the efficient operation 
of the Exchange, including verifying the eligibility of an 
individual to enroll through an Exchange or to claim a 
premium tax credit or cost-sharing reduction or the amount 
of the credit or reduction; and 
(B) not disclose the information to any other person 
except as provided in this section. 
(h) PENALTIES.— 
(1) FALSE OR FRAUDULENT INFORMATION.— 
(A) CIVIL PENALTY.— 
(i) IN GENERAL.—If— 
(I) any person fails to provides correct informa-
tion under subsection (b); and 
(II) such failure is attributable to negligence 
or disregard of any rules or regulations of the 
Secretary, 
such person shall be subject, in addition to any other 
penalties that may be prescribed by law, to a civil 
penalty of not more than $25,000 with respect to any 
failures involving an application for a plan year. For 
purposes of this subparagraph, the terms ‘‘negligence’’ 
and ‘‘disregard’’ shall have the same meanings as when 
used in section 6662 of the Internal Revenue Code 
of 1986. 
(ii) REASONABLE
CAUSE
EXCEPTION.—No penalty 
shall be imposed under clause (i) if the Secretary deter-
mines that there was a reasonable cause for the failure 
and that the person acted in good faith. 
(B) KNOWING AND WILLFUL VIOLATIONS.—Any person 
who knowingly and willfully provides false or fraudulent 
information under subsection (b) shall be subject, in addi-
tion to any other penalties that may be prescribed by 
law, to a civil penalty of not more than $250,000.
H. R. 3590—113 
(2) IMPROPER USE OR DISCLOSURE OF INFORMATION.—Any 
person who knowingly and willfully uses or discloses informa-
tion in violation of subsection (g) shall be subject, in addition 
to any other penalties that may be prescribed by law, to a 
civil penalty of not more than $25,000. 
(3) LIMITATIONS ON LIENS AND LEVIES.—The Secretary (or, 
if applicable, the Attorney General of the United States) shall 
not— 
(A) file notice of lien with respect to any property 
of a person by reason of any failure to pay the penalty 
imposed by this subsection; or 
(B) levy on any such property with respect to such 
failure. 
(i) STUDY OF ADMINISTRATION OF EMPLOYER RESPONSIBILITY.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services shall, in consultation with the Secretary of the 
Treasury, conduct a study of the procedures that are necessary 
to ensure that in the administration of this title and section 
4980H of the Internal Revenue Code of 1986 (as added by 
section 1513) that the following rights are protected: 
(A) The rights of employees to preserve their right 
to confidentiality of their taxpayer return information and 
their right to enroll in a qualified health plan through 
an Exchange if an employer does not provide affordable 
coverage. 
(B) The rights of employers to adequate due process 
and access to information necessary to accurately deter-
mine any payment assessed on employers. 
(2) REPORT.—Not later than January 1, 2013, the Secretary 
of Health and Human Services shall report the results of the 
study conducted under paragraph (1), including any rec-
ommendations for legislative changes, to the Committees on 
Finance and Health, Education, Labor and Pensions of the 
Senate and the Committees of Education and Labor and Ways 
and Means of the House of Representatives. 
SEC. 1412. ADVANCE DETERMINATION AND PAYMENT OF PREMIUM 
TAX CREDITS AND COST-SHARING REDUCTIONS. 
(a) IN GENERAL.—The Secretary, in consultation with the Sec-
retary of the Treasury, shall establish a program under which— 
(1) upon request of an Exchange, advance determinations 
are made under section 1411 with respect to the income eligi-
bility of individuals enrolling in a qualified health plan in 
the individual market through the Exchange for the premium 
tax credit allowable under section 36B of the Internal Revenue 
Code of 1986 and the cost-sharing reductions under section 
1402; 
(2) the Secretary notifies— 
(A) the Exchange and the Secretary of the Treasury 
of the advance determinations; and 
(B) the Secretary of the Treasury of the name and 
employer identification number of each employer with 
respect to whom 1 or more employee of the employer were 
determined to be eligible for the premium tax credit under 
section 36B of the Internal Revenue Code of 1986 and 
the cost-sharing reductions under section 1402 because—
H. R. 3590—114 
(i) the employer did not provide minimum essential 
coverage; or 
(ii) the employer provided such minimum essential 
coverage 
but 
it 
was 
determined 
under 
section 
36B(c)(2)(C) of such Code to either be unaffordable 
to the employee or not provide the required minimum 
actuarial value; and 
(3) the Secretary of the Treasury makes advance payments 
of such credit or reductions to the issuers of the qualified 
health plans in order to reduce the premiums payable by 
individuals eligible for such credit. 
(b) ADVANCE DETERMINATIONS.— 
(1) IN GENERAL.—The Secretary shall provide under the 
program established under subsection (a) that advance deter-
mination of eligibility with respect to any individual shall be 
made— 
(A) during the annual open enrollment period 
applicable to the individual (or such other enrollment 
period as may be specified by the Secretary); and 
(B) on the basis of the individual’s household income 
for the most recent taxable year for which the Secretary, 
after consultation with the Secretary of the Treasury, deter-
mines information is available. 
(2) CHANGES IN CIRCUMSTANCES.—The Secretary shall pro-
vide procedures for making advance determinations on the 
basis of information other than that described in paragraph 
(1)(B) in cases where information included with an application 
form demonstrates substantial changes in income, changes in 
family size or other household circumstances, change in filing 
status, the filing of an application for unemployment benefits, 
or other significant changes affecting eligibility, including— 
(A) allowing an individual claiming a decrease of 20 
percent or more in income, or filing an application for 
unemployment benefits, to have eligibility for the credit 
determined on the basis of household income for a later 
period or on the basis of the individual’s estimate of such 
income for the taxable year; and 
(B) the determination of household income in cases 
where the taxpayer was not required to file a return of 
tax imposed by this chapter for the second preceding tax-
able year. 
(c) PAYMENT
OF PREMIUM TAX CREDITS
AND COST-SHARING 
REDUCTIONS.— 
(1) IN GENERAL.—The Secretary shall notify the Secretary 
of the Treasury and the Exchange through which the individual 
is enrolling of the advance determination under section 1411. 
(2) PREMIUM TAX CREDIT.— 
(A) IN GENERAL.—The Secretary of the Treasury shall 
make the advance payment under this section of any pre-
mium tax credit allowed under section 36B of the Internal 
Revenue Code of 1986 to the issuer of a qualified health 
plan on a monthly basis (or such other periodic basis as 
the Secretary may provide). 
(B) ISSUER RESPONSIBILITIES.—An issuer of a qualified 
health plan receiving an advance payment with respect 
to an individual enrolled in the plan shall—
H. R. 3590—115 
(i) reduce the premium charged the insured for 
any period by the amount of the advance payment 
for the period; 
(ii) notify the Exchange and the Secretary of such 
reduction; 
(iii) include with each billing statement the 
amount by which the premium for the plan has been 
reduced by reason of the advance payment; and 
(iv) in the case of any nonpayment of premiums 
by the insured— 
(I) notify the Secretary of such nonpayment; 
and 
(II) allow a 3-month grace period for non-
payment of premiums before discontinuing cov-
erage. 
(3) COST-SHARING REDUCTIONS.—The Secretary shall also 
notify the Secretary of the Treasury and the Exchange under 
paragraph (1) if an advance payment of the cost-sharing reduc-
tions under section 1402 is to be made to the issuer of any 
qualified health plan with respect to any individual enrolled 
in the plan. The Secretary of the Treasury shall make such 
advance payment at such time and in such amount as the 
Secretary specifies in the notice. 
(d) NO FEDERAL PAYMENTS FOR INDIVIDUALS NOT LAWFULLY 
PRESENT.—Nothing in this subtitle or the amendments made by 
this subtitle allows Federal payments, credits, or cost-sharing reduc-
tions for individuals who are not lawfully present in the United 
States. 
(e) STATE FLEXIBILITY.—Nothing in this subtitle or the amend-
ments made by this subtitle shall be construed to prohibit a State 
from making payments to or on behalf of an individual for coverage 
under a qualified health plan offered through an Exchange that 
are in addition to any credits or cost-sharing reductions allowable 
to the individual under this subtitle and such amendments. 
SEC. 1413. STREAMLINING OF PROCEDURES FOR ENROLLMENT 
THROUGH AN EXCHANGE AND STATE MEDICAID, CHIP, 
AND HEALTH SUBSIDY PROGRAMS. 
(a) IN GENERAL.—The Secretary shall establish a system 
meeting the requirements of this section under which residents 
of each State may apply for enrollment in, receive a determination 
of eligibility for participation in, and continue participation in, 
applicable State health subsidy programs. Such system shall ensure 
that if an individual applying to an Exchange is found through 
screening to be eligible for medical assistance under the State 
medicaid plan under title XIX, or eligible for enrollment under 
a State children’s health insurance program (CHIP) under title 
XXI of such Act, the individual is enrolled for assistance under 
such plan or program. 
(b) REQUIREMENTS RELATING TO FORMS AND NOTICE.— 
(1) REQUIREMENTS RELATING TO FORMS.— 
(A) IN GENERAL.—The Secretary shall develop and pro-
vide to each State a single, streamlined form that— 
(i) may be used to apply for all applicable State 
health subsidy programs within the State; 
(ii) may be filed online, in person, by mail, or 
by telephone;
H. R. 3590—116 
(iii) may be filed with an Exchange or with State 
officials operating one of the other applicable State 
health subsidy programs; and 
(iv) is structured to maximize an applicant’s ability 
to complete the form satisfactorily, taking into account 
the characteristics of individuals who qualify for 
applicable State health subsidy programs. 
(B) STATE AUTHORITY TO ESTABLISH FORM.—A State 
may develop and use its own single, streamlined form 
as an alternative to the form developed under subpara-
graph (A) if the alternative form is consistent with stand-
ards promulgated by the Secretary under this section. 
(C) SUPPLEMENTAL ELIGIBILITY FORMS.—The Secretary 
may allow a State to use a supplemental or alternative 
form in the case of individuals who apply for eligibility 
that is not determined on the basis of the household income 
(as defined in section 36B of the Internal Revenue Code 
of 1986). 
(2) NOTICE.—The Secretary shall provide that an applicant 
filing a form under paragraph (1) shall receive notice of eligi-
bility for an applicable State health subsidy program without 
any need to provide additional information or paperwork unless 
such information or paperwork is specifically required by law 
when information provided on the form is inconsistent with 
data used for the electronic verification under paragraph (3) 
or is otherwise insufficient to determine eligibility. 
(c) REQUIREMENTS RELATING TO ELIGIBILITY BASED ON DATA 
EXCHANGES.— 
(1) DEVELOPMENT
OF
SECURE
INTERFACES.—Each State 
shall develop for all applicable State health subsidy programs 
a secure, electronic interface allowing an exchange of data 
(including information contained in the application forms 
described in subsection (b)) that allows a determination of 
eligibility for all such programs based on a single application. 
Such interface shall be compatible with the method established 
for data verification under section 1411(c)(4). 
(2) DATA
MATCHING
PROGRAM.—Each applicable State 
health subsidy program shall participate in a data matching 
arrangement for determining eligibility for participation in the 
program under paragraph (3) that— 
(A) provides access to data described in paragraph 
(3); 
(B) applies only to individuals who— 
(i) receive assistance from an applicable State 
health subsidy program; or 
(ii) apply for such assistance— 
(I) by filing a form described in subsection 
(b); or 
(II) by requesting a determination of eligibility 
and authorizing disclosure of the information 
described in paragraph (3) to applicable State 
health coverage subsidy programs for purposes of 
determining and establishing eligibility; and 
(C) consistent with standards promulgated by the Sec-
retary, including the privacy and data security safeguards 
described in section 1942 of the Social Security Act or 
that are otherwise applicable to such programs.
H. R. 3590—117 
(3) DETERMINATION OF ELIGIBILITY.— 
(A) IN GENERAL.—Each applicable State health subsidy 
program shall, to the maximum extent practicable— 
(i) establish, verify, and update eligibility for 
participation in the program using the data matching 
arrangement under paragraph (2); and 
(ii) determine such eligibility on the basis of reli-
able, third party data, including information described 
in sections 1137, 453(i), and 1942(a) of the Social Secu-
rity Act, obtained through such arrangement. 
(B) EXCEPTION.—This paragraph shall not apply in 
circumstances with respect to which the Secretary deter-
mines that the administrative and other costs of use of 
the data matching arrangement under paragraph (2) out-
weigh its expected gains in accuracy, efficiency, and pro-
gram participation. 
(4) SECRETARIAL STANDARDS.—The Secretary shall, after 
consultation with persons in possession of the data to be 
matched and representatives of applicable State health subsidy 
programs, promulgate standards governing the timing, con-
tents, and procedures for data matching described in this sub-
section. Such standards shall take into account administrative 
and other costs and the value of data matching to the establish-
ment, verification, and updating of eligibility for applicable 
State health subsidy programs. 
(d) ADMINISTRATIVE AUTHORITY.— 
(1) AGREEMENTS.—Subject to section 1411 and section 
6103(l)(21) of the Internal Revenue Code of 1986 and any 
other requirement providing safeguards of privacy and data 
integrity, the Secretary may establish model agreements, and 
enter into agreements, for the sharing of data under this sec-
tion. 
(2) AUTHORITY OF EXCHANGE TO CONTRACT OUT.—Nothing 
in this section shall be construed to— 
(A) prohibit contractual arrangements through which 
a State medicaid agency determines eligibility for all 
applicable State health subsidy programs, but only if such 
agency 
complies 
with 
the 
Secretary’s 
requirements 
ensuring reduced administrative costs, eligibility errors, 
and disruptions in coverage; or 
(B) change any requirement under title XIX that eligi-
bility for participation in a State’s medicaid program must 
be determined by a public agency. 
(e) APPLICABLE STATE HEALTH SUBSIDY PROGRAM.—In this sec-
tion, the term ‘‘applicable State health subsidy program’’ means— 
(1) the program under this title for the enrollment in 
qualified health plans offered through an Exchange, including 
the premium tax credits under section 36B of the Internal 
Revenue Code of 1986 and cost-sharing reductions under section 
1402; 
(2) a State medicaid program under title XIX of the Social 
Security Act; 
(3) a State children’s health insurance program (CHIP) 
under title XXI of such Act; and 
(4) a State program under section 1331 establishing quali-
fied basic health plans.
H. R. 3590—118 
SEC. 1414. DISCLOSURES TO CARRY OUT ELIGIBILITY REQUIREMENTS 
FOR CERTAIN PROGRAMS. 
(a) DISCLOSURE OF TAXPAYER RETURN INFORMATION AND SOCIAL 
SECURITY NUMBERS.— 
(1) TAXPAYER RETURN INFORMATION.—Subsection (l) of sec-
tion 6103 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new paragraph: 
‘‘(21) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT 
ELIGIBILITY REQUIREMENTS FOR CERTAIN PROGRAMS.— 
‘‘(A) IN GENERAL.—The Secretary, upon written request 
from the Secretary of Health and Human Services, shall 
disclose to officers, employees, and contractors of the 
Department of Health and Human Services return informa-
tion of any taxpayer whose income is relevant in deter-
mining any premium tax credit under section 36B or any 
cost-sharing reduction under section 1402 of the Patient 
Protection and Affordable Care Act or eligibility for partici-
pation in a State medicaid program under title XIX of 
the Social Security Act, a State’s children’s health insur-
ance program under title XXI of the Social Security Act, 
or a basic health program under section 1331 of Patient 
Protection and Affordable Care Act. Such return informa-
tion shall be limited to— 
‘‘(i) taxpayer identity information with respect to 
such taxpayer, 
‘‘(ii) the filing status of such taxpayer, 
‘‘(iii) the number of individuals for whom a deduc-
tion is allowed under section 151 with respect to the 
taxpayer (including the taxpayer and the taxpayer’s 
spouse), 
‘‘(iv) the modified gross income (as defined in sec-
tion 36B) of such taxpayer and each of the other 
individuals included under clause (iii) who are required 
to file a return of tax imposed by chapter 1 for the 
taxable year, 
‘‘(v) such other information as is prescribed by 
the Secretary by regulation as might indicate whether 
the taxpayer is eligible for such credit or reduction 
(and the amount thereof), and 
‘‘(vi) the taxable year with respect to which the 
preceding information relates or, if applicable, the fact 
that such information is not available. 
‘‘(B) INFORMATION
TO
EXCHANGE
AND
STATE
AGEN-
CIES.—The Secretary of Health and Human Services may 
disclose to an Exchange established under the Patient 
Protection and Affordable Care Act or its contractors, or 
to a State agency administering a State program described 
in subparagraph (A) or its contractors, any inconsistency 
between the information provided by the Exchange or State 
agency to the Secretary and the information provided to 
the Secretary under subparagraph (A). 
‘‘(C) RESTRICTION
ON
USE
OF
DISCLOSED
INFORMA-
TION.—Return information disclosed under subparagraph 
(A) or (B) may be used by officers, employees, and contrac-
tors of the Department of Health and Human Services, 
an Exchange, or a State agency only for the purposes 
of, and to the extent necessary in—
H. R. 3590—119 
‘‘(i) establishing eligibility for participation in the 
Exchange, and verifying the appropriate amount of, 
any credit or reduction described in subparagraph (A), 
‘‘(ii) determining eligibility for participation in the 
State programs described in subparagraph (A).’’. 
(2) SOCIAL SECURITY NUMBERS.—Section 205(c)(2)(C) of the 
Social Security Act is amended by adding at the end the fol-
lowing new clause: 
‘‘(x) The Secretary of Health and Human Services, 
and the Exchanges established under section 1311 of 
the Patient Protection and Affordable Care Act, are 
authorized to collect and use the names and social 
security account numbers of individuals as required 
to administer the provisions of, and the amendments 
made by, the such Act.’’. 
(b) CONFIDENTIALITY AND DISCLOSURE.—Paragraph (3) of sec-
tion 6103(a) of such Code is amended by striking ‘‘or (20)’’ and 
inserting ‘‘(20), or (21)’’. 
(c) PROCEDURES
AND RECORDKEEPING RELATED
TO DISCLO-
SURES.—Paragraph (4) of section 6103(p) of such Code is amended— 
(1) by inserting ‘‘, or any entity described in subsection 
(l)(21),’’ after ‘‘or (20)’’ in the matter preceding subparagraph 
(A), 
(2) by inserting ‘‘or any entity described in subsection 
(l)(21),’’ after ‘‘or (o)(1)(A)’’ in subparagraph (F)(ii), and 
(3) by inserting ‘‘or any entity described in subsection 
(l)(21),’’ after ‘‘or (20)’’ both places it appears in the matter 
after subparagraph (F). 
(d) UNAUTHORIZED DISCLOSURE OR INSPECTION.—Paragraph (2) 
of section 7213(a) of such Code is amended by striking ‘‘or (20)’’ 
and inserting ‘‘(20), or (21)’’. 
SEC. 1415. PREMIUM TAX CREDIT AND COST-SHARING REDUCTION 
PAYMENTS DISREGARDED FOR FEDERAL AND FEDER-
ALLY-ASSISTED PROGRAMS. 
For purposes of determining the eligibility of any individual 
for benefits or assistance, or the amount or extent of benefits 
or assistance, under any Federal program or under any State or 
local program financed in whole or in part with Federal funds— 
(1) any credit or refund allowed or made to any individual 
by reason of section 36B of the Internal Revenue Code of 
1986 (as added by section 1401) shall not be taken into account 
as income and shall not be taken into account as resources 
for the month of receipt and the following 2 months; and 
(2) any cost-sharing reduction payment or advance payment 
of the credit allowed under such section 36B that is made 
under section 1402 or 1412 shall be treated as made to the 
qualified health plan in which an individual is enrolled and 
not to that individual. 
PART II—SMALL BUSINESS TAX CREDIT 
SEC. 1421. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES 
OF SMALL BUSINESSES. 
(a) IN GENERAL.—Subpart D of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (relating to business-
H. R. 3590—120 
related credits) is amended by inserting after section 45Q the fol-
lowing: 
‘‘SEC. 45R. EMPLOYEE HEALTH INSURANCE EXPENSES OF SMALL 
EMPLOYERS. 
‘‘(a) GENERAL RULE.—For purposes of section 38, in the case 
of an eligible small employer, the small employer health insurance 
credit determined under this section for any taxable year in the 
credit period is the amount determined under subsection (b). 
‘‘(b) HEALTH INSURANCE CREDIT AMOUNT.—Subject to sub-
section (c), the amount determined under this subsection with 
respect to any eligible small employer is equal to 50 percent (35 
percent in the case of a tax-exempt eligible small employer) of 
the lesser of— 
‘‘(1) the aggregate amount of nonelective contributions the 
employer made on behalf of its employees during the taxable 
year under the arrangement described in subsection (d)(4) for 
premiums for qualified health plans offered by the employer 
to its employees through an Exchange, or 
‘‘(2) the aggregate amount of nonelective contributions 
which the employer would have made during the taxable year 
under the arrangement if each employee taken into account 
under paragraph (1) had enrolled in a qualified health plan 
which had a premium equal to the average premium (as deter-
mined by the Secretary of Health and Human Services) for 
the small group market in the rating area in which the 
employee enrolls for coverage. 
‘‘(c) PHASEOUT
OF CREDIT AMOUNT BASED
ON NUMBER
OF 
EMPLOYEES AND AVERAGE WAGES.—The amount of the credit deter-
mined under subsection (b) without regard to this subsection shall 
be reduced (but not below zero) by the sum of the following amounts: 
‘‘(1) Such amount multiplied by a fraction the numerator 
of which is the total number of full-time equivalent employees 
of the employer in excess of 10 and the denominator of which 
is 15. 
‘‘(2) Such amount multiplied by a fraction the numerator 
of which is the average annual wages of the employer in excess 
of the dollar amount in effect under subsection (d)(3)(B) and 
the denominator of which is such dollar amount. 
‘‘(d) ELIGIBLE SMALL EMPLOYER.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘eligible small employer’ 
means, with respect to any taxable year, an employer— 
‘‘(A) which has no more than 25 full-time equivalent 
employees for the taxable year, 
‘‘(B) the average annual wages of which do not exceed 
an amount equal to twice the dollar amount in effect under 
paragraph (3)(B) for the taxable year, and 
‘‘(C) which has in effect an arrangement described 
in paragraph (4). 
‘‘(2) FULL-TIME EQUIVALENT EMPLOYEES.— 
‘‘(A) IN
GENERAL.—The term ‘full-time equivalent 
employees’ means a number of employees equal to the 
number determined by dividing— 
‘‘(i) the total number of hours of service for which 
wages were paid by the employer to employees during 
the taxable year, by 
‘‘(ii) 2,080.
H. R. 3590—121 
Such number shall be rounded to the next lowest whole 
number if not otherwise a whole number. 
‘‘(B) EXCESS
HOURS
NOT
COUNTED.—If an employee 
works in excess of 2,080 hours of service during any taxable 
year, such excess shall not be taken into account under 
subparagraph (A). 
‘‘(C) HOURS OF SERVICE.—The Secretary, in consulta-
tion with the Secretary of Labor, shall prescribe such regu-
lations, rules, and guidance as may be necessary to deter-
mine the hours of service of an employee, including rules 
for the application of this paragraph to employees who 
are not compensated on an hourly basis. 
‘‘(3) AVERAGE ANNUAL WAGES.— 
‘‘(A) IN GENERAL.—The average annual wages of an 
eligible small employer for any taxable year is the amount 
determined by dividing— 
‘‘(i) the aggregate amount of wages which were 
paid by the employer to employees during the taxable 
year, by 
‘‘(ii) the number of full-time equivalent employees 
of the employee determined under paragraph (2) for 
the taxable year. 
Such amount shall be rounded to the next lowest multiple 
of $1,000 if not otherwise such a multiple. 
‘‘(B) DOLLAR
AMOUNT.—For purposes of paragraph 
(1)(B)— 
‘‘(i) 2011, 2012, AND 2013.—The dollar amount in 
effect under this paragraph for taxable years beginning 
in 2011, 2012, or 2013 is $20,000. 
‘‘(ii) SUBSEQUENT YEARS.—In the case of a taxable 
year beginning in a calendar year after 2013, the dollar 
amount in effect under this paragraph shall be equal 
to $20,000, multiplied by the cost-of-living adjustment 
determined under section 1(f)(3) for the calendar year, 
determined by substituting ‘calendar year 2012’ for 
‘calendar year 1992’ in subparagraph (B) thereof. 
‘‘(4) CONTRIBUTION
ARRANGEMENT.—An arrangement is 
described in this paragraph if it requires an eligible small 
employer to make a nonelective contribution on behalf of each 
employee who enrolls in a qualified health plan offered to 
employees by the employer through an exchange in an amount 
equal to a uniform percentage (not less than 50 percent) of 
the premium cost of the qualified health plan. 
‘‘(5) SEASONAL WORKER HOURS AND WAGES NOT COUNTED.— 
For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The number of hours of service 
worked by, and wages paid to, a seasonal worker of an 
employer shall not be taken into account in determining 
the full-time equivalent employees and average annual 
wages of the employer unless the worker works for the 
employer on more than 120 days during the taxable year. 
‘‘(B) DEFINITION OF SEASONAL WORKER.—The term ‘sea-
sonal worker’ means a worker who performs labor or serv-
ices on a seasonal basis as defined by the Secretary of 
Labor, including workers covered by section 500.20(s)(1) 
of title 29, Code of Federal Regulations and retail workers 
employed exclusively during holiday seasons.
H. R. 3590—122 
‘‘(e) OTHER RULES AND DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) EMPLOYEE.— 
‘‘(A) 
CERTAIN
EMPLOYEES
EXCLUDED.—The 
term 
‘employee’ shall not include— 
‘‘(i) an employee within the meaning of section 
401(c)(1), 
‘‘(ii) any 2-percent shareholder (as defined in sec-
tion 1372(b)) of an eligible small business which is 
an S corporation, 
‘‘(iii) any 5-percent owner (as defined in section 
416(i)(1)(B)(i)) of an eligible small business, or 
‘‘(iv) any individual who bears any of the relation-
ships described in subparagraphs (A) through (G) of 
section 152(d)(2) to, or is a dependent described in 
section 152(d)(2)(H) of, an individual described in 
clause (i), (ii), or (iii). 
‘‘(B) LEASED EMPLOYEES.—The term ‘employee’ shall 
include a leased employee within the meaning of section 
414(n). 
‘‘(2) CREDIT PERIOD.—The term ‘credit period’ means, with 
respect to any eligible small employer, the 2-consecutive-taxable 
year period beginning with the 1st taxable year in which the 
employer (or any predecessor) offers 1 or more qualified health 
plans to its employees through an Exchange. 
‘‘(3) NONELECTIVE CONTRIBUTION.—The term ‘nonelective 
contribution’ means an employer contribution other than an 
employer contribution pursuant to a salary reduction arrange-
ment. 
‘‘(4) WAGES.—The term ‘wages’ has the meaning given such 
term by section 3121(a) (determined without regard to any 
dollar limitation contained in such section). 
‘‘(5) AGGREGATION AND OTHER RULES MADE APPLICABLE.— 
‘‘(A) AGGREGATION RULES.—All employers treated as 
a single employer under subsection (b), (c), (m), or (o) 
of section 414 shall be treated as a single employer for 
purposes of this section. 
‘‘(B) OTHER RULES.—Rules similar to the rules of sub-
sections (c), (d), and (e) of section 52 shall apply. 
‘‘(f) CREDIT MADE AVAILABLE TO TAX-EXEMPT ELIGIBLE SMALL 
EMPLOYERS.— 
‘‘(1) IN GENERAL.—In the case of a tax-exempt eligible small 
employer, there shall be treated as a credit allowable under 
subpart C (and not allowable under this subpart) the lesser 
of— 
‘‘(A) the amount of the credit determined under this 
section with respect to such employer, or 
‘‘(B) the amount of the payroll taxes of the employer 
during the calendar year in which the taxable year begins. 
‘‘(2) TAX-EXEMPT ELIGIBLE SMALL EMPLOYER.—For purposes 
of this section, the term ‘tax-exempt eligible small employer’ 
means an eligible small employer which is any organization 
described in section 501(c) which is exempt from taxation under 
section 501(a). 
‘‘(3) PAYROLL
TAXES.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘payroll taxes’ means—
H. R. 3590—123 
‘‘(i) amounts required to be withheld from the 
employees of the tax-exempt eligible small employer 
under section 3401(a), 
‘‘(ii) amounts required to be withheld from such 
employees under section 3101(b), and 
‘‘(iii) amounts of the taxes imposed on the tax- 
exempt eligible small employer under section 3111(b). 
‘‘(B) SPECIAL RULE.—A rule similar to the rule of sec-
tion 24(d)(2)(C) shall apply for purposes of subparagraph 
(A). 
‘‘(g) APPLICATION OF SECTION FOR CALENDAR YEARS 2011, 2012, 
AND 2013.—In the case of any taxable year beginning in 2011, 
2012, or 2013, the following modifications to this section shall 
apply in determining the amount of the credit under subsection 
(a): 
‘‘(1) NO
CREDIT
PERIOD
REQUIRED.—The credit shall be 
determined without regard to whether the taxable year is in 
a credit period and for purposes of applying this section to 
taxable years beginning after 2013, no credit period shall be 
treated as beginning with a taxable year beginning before 2014. 
‘‘(2) AMOUNT OF CREDIT.—The amount of the credit deter-
mined under subsection (b) shall be determined— 
‘‘(A) by substituting ‘35 percent (25 percent in the 
case of a tax-exempt eligible small employer)’ for ‘50 percent 
(35 percent in the case of a tax-exempt eligible small 
employer)’, 
‘‘(B) by reference to an eligible small employer’s non-
elective contributions for premiums paid for health insur-
ance coverage (within the meaning of section 9832(b)(1)) 
of an employee, and 
‘‘(C) by substituting for the average premium deter-
mined under subsection (b)(2) the amount the Secretary 
of Health and Human Services determines is the average 
premium for the small group market in the State in which 
the employer is offering health insurance coverage (or for 
such area within the State as is specified by the Secretary). 
‘‘(3) CONTRIBUTION ARRANGEMENT.—An arrangement shall 
not fail to meet the requirements of subsection (d)(4) solely 
because it provides for the offering of insurance outside of 
an Exchange. 
‘‘(h) INSURANCE DEFINITIONS.—Any term used in this section 
which is also used in the Public Health Service Act or subtitle 
A of title I of the Patient Protection and Affordable Care Act 
shall have the meaning given such term by such Act or subtitle. 
‘‘(i) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary to carry out the provisions of this section, 
including regulations to prevent the avoidance of the 2-year limit 
on the credit period through the use of successor entities and 
the avoidance of the limitations under subsection (c) through the 
use of multiple entities.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.—Section 
38(b) of the Internal Revenue Code of 1986 (relating to current 
year business credit) is amended by striking ‘‘plus’’ at the end 
of paragraph (34), by striking the period at the end of paragraph 
(35) and inserting ‘‘, plus’’, and by inserting after paragraph (35) 
the following:
H. R. 3590—124 
‘‘(36) the small employer health insurance credit deter-
mined under section 45R.’’. 
(c) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.— 
Section 38(c)(4)(B) of the Internal Revenue Code of 1986 (defining 
specified credits) is amended by redesignating clauses (vi), (vii), 
and (viii) as clauses (vii), (viii), and (ix), respectively, and by 
inserting after clause (v) the following new clause: 
‘‘(vi) the credit determined under section 45R,’’. 
(d) DISALLOWANCE OF DEDUCTION FOR CERTAIN EXPENSES FOR 
WHICH CREDIT ALLOWED.— 
(1) IN GENERAL.—Section 280C of the Internal Revenue 
Code of 1986 (relating to disallowance of deduction for certain 
expenses for which credit allowed), as amended by section 
1401(b), is amended by adding at the end the following new 
subsection: 
‘‘(h) CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES OF 
SMALL EMPLOYERS.—No deduction shall be allowed for that portion 
of the premiums for qualified health plans (as defined in section 
1301(a) of the Patient Protection and Affordable Care Act), or 
for health insurance coverage in the case of taxable years beginning 
in 2011, 2012, or 2013, paid by an employer which is equal to 
the amount of the credit determined under section 45R(a) with 
respect to the premiums.’’. 
(2) DEDUCTION FOR EXPIRING CREDITS.—Section 196(c) of 
such Code is amended by striking ‘‘and’’ at the end of paragraph 
(12), by striking the period at the end of paragraph (13) and 
inserting ‘‘, and’’, and by adding at the end the following new 
paragraph: 
‘‘(14) the small employer health insurance credit deter-
mined under section 45R(a).’’. 
(e) CLERICAL AMENDMENT.—The table of sections for subpart 
D of part IV of subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following: 
‘‘Sec. 45R. Employee health insurance expenses of small employers.’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by this section 
shall apply to amounts paid or incurred in taxable years begin-
ning after December 31, 2010. 
(2) MINIMUM TAX.—The amendments made by subsection 
(c) shall apply to credits determined under section 45R of 
the Internal Revenue Code of 1986 in taxable years beginning 
after December 31, 2010, and to carrybacks of such credits. 
Subtitle F—Shared Responsibility for 
Health Care 
PART I—INDIVIDUAL RESPONSIBILITY 
SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COV-
ERAGE. 
(a) FINDINGS.—Congress makes the following findings: 
(1) IN GENERAL.—The individual responsibility requirement 
provided for in this section (in this subsection referred to as 
the ‘‘requirement’’) is commercial and economic in nature, and 
substantially affects interstate commerce, as a result of the 
effects described in paragraph (2).
H. R. 3590—125 
(2) EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE 
COMMERCE.—The effects described in this paragraph are the 
following: 
(A) The requirement regulates activity that is commer-
cial and economic in nature: economic and financial 
decisions about how and when health care is paid for, 
and when health insurance is purchased. 
(B) Health insurance and health care services are a 
significant part of the national economy. National health 
spending is projected to increase from $2,500,000,000,000, 
or 
17.6 
percent 
of 
the 
economy, 
in 
2009 
to 
$4,700,000,000,000 in 2019. Private health insurance 
spending is projected to be $854,000,000,000 in 2009, and 
pays for medical supplies, drugs, and equipment that are 
shipped in interstate commerce. Since most health insur-
ance is sold by national or regional health insurance compa-
nies, health insurance is sold in interstate commerce and 
claims payments flow through interstate commerce. 
(C) The requirement, together with the other provisions 
of this Act, will add millions of new consumers to the 
health insurance market, increasing the supply of, and 
demand for, health care services. According to the Congres-
sional Budget Office, the requirement will increase the 
number and share of Americans who are insured. 
(D) The requirement achieves near-universal coverage 
by building upon and strengthening the private employer- 
based health insurance system, which covers 176,000,000 
Americans nationwide. In Massachusetts, a similar require-
ment has strengthened private employer-based coverage: 
despite the economic downturn, the number of workers 
offered employer-based coverage has actually increased. 
(E) Half of all personal bankruptcies are caused in 
part by medical expenses. By significantly increasing health 
insurance coverage, the requirement, together with the 
other provisions of this Act, will improve financial security 
for families. 
(F) Under the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health 
Service Act (42 U.S.C. 201 et seq.), and this Act, the Federal 
Government has a significant role in regulating health 
insurance which is in interstate commerce. 
(G) Under sections 2704 and 2705 of the Public Health 
Service Act (as added by section 1201 of this Act), if there 
were no requirement, many individuals would wait to pur-
chase health insurance until they needed care. By signifi-
cantly increasing health insurance coverage, the require-
ment, together with the other provisions of this Act, will 
minimize this adverse selection and broaden the health 
insurance risk pool to include healthy individuals, which 
will lower health insurance premiums. The requirement 
is essential to creating effective health insurance markets 
in which improved health insurance products that are 
guaranteed issue and do not exclude coverage of pre- 
existing conditions can be sold. 
(H) Administrative costs for private health insurance, 
which were $90,000,000,000 in 2006, are 26 to 30 percent 
of premiums in the current individual and small group
H. R. 3590—126 
markets. By significantly increasing health insurance cov-
erage and the size of purchasing pools, which will increase 
economies of scale, the requirement, together with the other 
provisions of this Act, will significantly reduce administra-
tive costs and lower health insurance premiums. The 
requirement is essential to creating effective health insur-
ance markets that do not require underwriting and elimi-
nate its associated administrative costs. 
(3) SUPREME COURT RULING.—In United States v. South- 
Eastern Underwriters Association (322 U.S. 533 (1944)), the 
Supreme Court of the United States ruled that insurance is 
interstate commerce subject to Federal regulation. 
(b) IN GENERAL.—Subtitle D of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new chapter: 
‘‘CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL 
COVERAGE 
‘‘Sec. 5000A. Requirement to maintain minimum essential coverage. 
‘‘SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COV-
ERAGE. 
‘‘(a) REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COV-
ERAGE.—An applicable individual shall for each month beginning 
after 2013 ensure that the individual, and any dependent of the 
individual who is an applicable individual, is covered under min-
imum essential coverage for such month. 
‘‘(b) SHARED RESPONSIBILITY PAYMENT.— 
‘‘(1) IN GENERAL.—If an applicable individual fails to meet 
the requirement of subsection (a) for 1 or more months during 
any calendar year beginning after 2013, then, except as pro-
vided in subsection (d), there is hereby imposed a penalty 
with respect to the individual in the amount determined under 
subsection (c). 
‘‘(2) INCLUSION
WITH
RETURN.—Any penalty imposed by 
this section with respect to any month shall be included with 
a taxpayer’s return under chapter 1 for the taxable year which 
includes such month. 
‘‘(3) PAYMENT OF PENALTY.—If an individual with respect 
to whom a penalty is imposed by this section for any month— 
‘‘(A) is a dependent (as defined in section 152) of 
another taxpayer for the other taxpayer’s taxable year 
including such month, such other taxpayer shall be liable 
for such penalty, or 
‘‘(B) files a joint return for the taxable year including 
such month, such individual and the spouse of such indi-
vidual shall be jointly liable for such penalty. 
‘‘(c) AMOUNT OF PENALTY.— 
‘‘(1) IN GENERAL.—The penalty determined under this sub-
section for any month with respect to any individual is an 
amount equal to 1⁄12 of the applicable dollar amount for the 
calendar year. 
‘‘(2) DOLLAR
LIMITATION.—The amount of the penalty 
imposed by this section on any taxpayer for any taxable year 
with respect to all individuals for whom the taxpayer is liable 
under subsection (b)(3) shall not exceed an amount equal to 
300 percent the applicable dollar amount (determined without
H. R. 3590—127 
regard to paragraph (3)(C)) for the calendar year with or within 
which the taxable year ends. 
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For purposes of para-
graph (1)— 
‘‘(A) IN
GENERAL.—Except as provided in subpara-
graphs (B) and (C), the applicable dollar amount is $750. 
‘‘(B) PHASE IN.—The applicable dollar amount is $95 
for 2014 and $350 for 2015. 
‘‘(C) SPECIAL RULE FOR INDIVIDUALS UNDER AGE 18.— 
If an applicable individual has not attained the age of 
18 as of the beginning of a month, the applicable dollar 
amount with respect to such individual for the month shall 
be equal to one-half of the applicable dollar amount for 
the calendar year in which the month occurs. 
‘‘(D) INDEXING OF AMOUNT.—In the case of any calendar 
year beginning after 2016, the applicable dollar amount 
shall be equal to $750, increased by an amount equal 
to— 
‘‘(i) $750, multiplied by 
‘‘(ii) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year, determined 
by substituting ‘calendar year 2015’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
If the amount of any increase under clause (i) is not a 
multiple of $50, such increase shall be rounded to the 
next lowest multiple of $50. 
‘‘(4) TERMS RELATING TO INCOME AND FAMILIES.—For pur-
poses of this section— 
‘‘(A) FAMILY
SIZE.—The family size involved with 
respect to any taxpayer shall be equal to the number of 
individuals for whom the taxpayer is allowed a deduction 
under section 151 (relating to allowance of deduction for 
personal exemptions) for the taxable year. 
‘‘(B) 
HOUSEHOLD
INCOME.—The 
term 
‘household 
income’ means, with respect to any taxpayer for any taxable 
year, an amount equal to the sum of— 
‘‘(i) the modified gross income of the taxpayer, 
plus 
‘‘(ii) the aggregate modified gross incomes of all 
other individuals who— 
‘‘(I) were taken into account in determining 
the taxpayer’s family size under paragraph (1), 
and 
‘‘(II) were required to file a return of tax 
imposed by section 1 for the taxable year. 
‘‘(C) MODIFIED
GROSS
INCOME.—The term ‘modified 
gross income’ means gross income— 
‘‘(i) decreased by the amount of any deduction 
allowable under paragraph (1), (3), (4), or (10) of section 
62(a), 
‘‘(ii) increased by the amount of interest received 
or accrued during the taxable year which is exempt 
from tax imposed by this chapter, and 
‘‘(iii) determined without regard to sections 911, 
931, and 933. 
‘‘(D) POVERTY LINE.—
H. R. 3590—128 
‘‘(i) IN GENERAL.—The term ‘poverty line’ has the 
meaning given that term in section 2110(c)(5) of the 
Social Security Act (42 U.S.C. 1397jj(c)(5)). 
‘‘(ii) POVERTY LINE USED.—In the case of any tax-
able year ending with or within a calendar year, the 
poverty line used shall be the most recently published 
poverty line as of the 1st day of such calendar year. 
‘‘(d) APPLICABLE INDIVIDUAL.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘applicable individual’ means, 
with respect to any month, an individual other than an indi-
vidual described in paragraph (2), (3), or (4). 
‘‘(2) RELIGIOUS EXEMPTIONS.— 
‘‘(A) RELIGIOUS
CONSCIENCE
EXEMPTION.—Such term 
shall not include any individual for any month if such 
individual has in effect an exemption under section 
1311(d)(4)(H) of the Patient Protection and Affordable Care 
Act which certifies that such individual is a member of 
a recognized religious sect or division thereof described 
in section 1402(g)(1) and an adherent of established tenets 
or teachings of such sect or division as described in such 
section. 
‘‘(B) HEALTH CARE SHARING MINISTRY.— 
‘‘(i) IN GENERAL.—Such term shall not include any 
individual for any month if such individual is a member 
of a health care sharing ministry for the month. 
‘‘(ii) HEALTH CARE SHARING MINISTRY.—The term 
‘health care sharing ministry’ means an organization— 
‘‘(I) which is described in section 501(c)(3) and 
is exempt from taxation under section 501(a), 
‘‘(II) members of which share a common set 
of ethical or religious beliefs and share medical 
expenses among members in accordance with those 
beliefs and without regard to the State in which 
a member resides or is employed, 
‘‘(III) members of which retain membership 
even after they develop a medical condition, 
‘‘(IV) which (or a predecessor of which) has 
been in existence at all times since December 31, 
1999, and medical expenses of its members have 
been shared continuously and without interruption 
since at least December 31, 1999, and 
‘‘(V) which conducts an annual audit which 
is performed by an independent certified public 
accounting firm in accordance with generally 
accepted accounting principles and which is made 
available to the public upon request. 
‘‘(3) INDIVIDUALS NOT LAWFULLY PRESENT.—Such term shall 
not include an individual for any month if for the month the 
individual is not a citizen or national of the United States 
or an alien lawfully present in the United States. 
‘‘(4) INCARCERATED
INDIVIDUALS.—Such term shall not 
include an individual for any month if for the month the indi-
vidual is incarcerated, other than incarceration pending the 
disposition of charges. 
‘‘(e) EXEMPTIONS.—No penalty shall be imposed under sub-
section (a) with respect to— 
‘‘(1) INDIVIDUALS WHO CANNOT AFFORD COVERAGE.—
H. R. 3590—129 
‘‘(A) IN GENERAL.—Any applicable individual for any 
month if the applicable individual’s required contribution 
(determined on an annual basis) for coverage for the month 
exceeds 8 percent of such individual’s household income 
for the taxable year described in section 1412(b)(1)(B) of 
the Patient Protection and Affordable Care Act. For pur-
poses of applying this subparagraph, the taxpayer’s house-
hold income shall be increased by any exclusion from gross 
income for any portion of the required contribution made 
through a salary reduction arrangement. 
‘‘(B) REQUIRED CONTRIBUTION.—For purposes of this 
paragraph, the term ‘required contribution’ means— 
‘‘(i) in the case of an individual eligible to purchase 
minimum essential coverage consisting of coverage 
through an eligible-employer-sponsored plan, the por-
tion of the annual premium which would be paid by 
the individual (without regard to whether paid through 
salary reduction or otherwise) for self-only coverage, 
or 
‘‘(ii) in the case of an individual eligible only to 
purchase minimum essential coverage described in sub-
section (f)(1)(C), the annual premium for the lowest 
cost bronze plan available in the individual market 
through the Exchange in the State in the rating area 
in which the individual resides (without regard to 
whether the individual purchased a qualified health 
plan through the Exchange), reduced by the amount 
of the credit allowable under section 36B for the tax-
able year (determined as if the individual was covered 
by a qualified health plan offered through the 
Exchange for the entire taxable year). 
‘‘(C) SPECIAL
RULES
FOR
INDIVIDUALS
RELATED
TO 
EMPLOYEES.—For purposes of subparagraph (B)(i), if an 
applicable individual is eligible for minimum essential cov-
erage through an employer by reason of a relationship 
to an employee, the determination shall be made by ref-
erence to the affordability of the coverage to the employee. 
‘‘(D) INDEXING.—In the case of plan years beginning 
in any calendar year after 2014, subparagraph (A) shall 
be applied by substituting for ‘8 percent’ the percentage 
the Secretary of Health and Human Services determines 
reflects the excess of the rate of premium growth between 
the preceding calendar year and 2013 over the rate of 
income growth for such period. 
‘‘(2) TAXPAYERS WITH INCOME UNDER 100 PERCENT OF POV-
ERTY LINE.—Any applicable individual for any month during 
a calendar year if the individual’s household income for the 
taxable year described in section 1412(b)(1)(B) of the Patient 
Protection and Affordable Care Act is less than 100 percent 
of the poverty line for the size of the family involved (deter-
mined in the same manner as under subsection (b)(4)). 
‘‘(3) MEMBERS OF INDIAN TRIBES.—Any applicable individual 
for any month during which the individual is a member of 
an Indian tribe (as defined in section 45A(c)(6)). 
‘‘(4) MONTHS DURING SHORT COVERAGE GAPS.— 
‘‘(A) IN GENERAL.—Any month the last day of which 
occurred during a period in which the applicable individual
H. R. 3590—130 
was not covered by minimum essential coverage for a 
continuous period of less than 3 months. 
‘‘(B) SPECIAL
RULES.—For purposes of applying this 
paragraph— 
‘‘(i) the length of a continuous period shall be deter-
mined without regard to the calendar years in which 
months in such period occur, 
‘‘(ii) if a continuous period is greater than the 
period allowed under subparagraph (A), no exception 
shall be provided under this paragraph for any month 
in the period, and 
‘‘(iii) if there is more than 1 continuous period 
described in subparagraph (A) covering months in a 
calendar year, the exception provided by this para-
graph shall only apply to months in the first of such 
periods. 
The Secretary shall prescribe rules for the collection of 
the penalty imposed by this section in cases where contin-
uous periods include months in more than 1 taxable year. 
‘‘(5) HARDSHIPS.—Any applicable individual who for any 
month is determined by the Secretary of Health and Human 
Services under section 1311(d)(4)(H) to have suffered a hardship 
with respect to the capability to obtain coverage under a quali-
fied health plan. 
‘‘(f) MINIMUM ESSENTIAL COVERAGE.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘minimum essential coverage’ 
means any of the following: 
‘‘(A) GOVERNMENT
SPONSORED
PROGRAMS.—Coverage 
under— 
‘‘(i) the Medicare program under part A of title 
XVIII of the Social Security Act, 
‘‘(ii) the Medicaid program under title XIX of the 
Social Security Act, 
‘‘(iii) the CHIP program under title XXI of the 
Social Security Act, 
‘‘(iv) the TRICARE for Life program, 
‘‘(v) the veteran’s health care program under 
chapter 17 of title 38, United States Code, or 
‘‘(vi) a health plan under section 2504(e) of title 
22, United States Code (relating to Peace Corps volun-
teers). 
‘‘(B) EMPLOYER-SPONSORED PLAN.—Coverage under an 
eligible employer-sponsored plan. 
‘‘(C) PLANS
IN
THE
INDIVIDUAL
MARKET.—Coverage 
under a health plan offered in the individual market within 
a State. 
‘‘(D) GRANDFATHERED HEALTH PLAN.—Coverage under 
a grandfathered health plan. 
‘‘(E) OTHER COVERAGE.—Such other health benefits cov-
erage, such as a State health benefits risk pool, as the 
Secretary of Health and Human Services, in coordination 
with the Secretary, recognizes for purposes of this sub-
section. 
‘‘(2) ELIGIBLE
EMPLOYER-SPONSORED
PLAN.—The term 
‘eligible employer-sponsored plan’ means, with respect to any
H. R. 3590—131 
employee, a group health plan or group health insurance cov-
erage offered by an employer to the employee which is— 
‘‘(A) a governmental plan (within the meaning of sec-
tion 2791(d)(8) of the Public Health Service Act), or 
‘‘(B) any other plan or coverage offered in the small 
or large group market within a State. 
Such term shall include a grandfathered health plan described 
in paragraph (1)(D) offered in a group market. 
‘‘(3) EXCEPTED BENEFITS NOT TREATED AS MINIMUM ESSEN-
TIAL COVERAGE.—The term ‘minimum essential coverage’ shall 
not include health insurance coverage which consists of cov-
erage of excepted benefits— 
‘‘(A) described in paragraph (1) of subsection (c) of 
section 2791 of the Public Health Service Act; or 
‘‘(B) described in paragraph (2), (3), or (4) of such 
subsection if the benefits are provided under a separate 
policy, certificate, or contract of insurance. 
‘‘(4) INDIVIDUALS RESIDING OUTSIDE UNITED STATES OR RESI-
DENTS
OF
TERRITORIES.—Any applicable individual shall be 
treated as having minimum essential coverage for any month— 
‘‘(A) if such month occurs during any period described 
in subparagraph (A) or (B) of section 911(d)(1) which is 
applicable to the individual, or 
‘‘(B) if such individual is a bona fide resident of any 
possession of the United States (as determined under sec-
tion 937(a)) for such month. 
‘‘(5) INSURANCE-RELATED TERMS.—Any term used in this 
section which is also used in title I of the Patient Protection 
and Affordable Care Act shall have the same meaning as when 
used in such title. 
‘‘(g) ADMINISTRATION AND PROCEDURE.— 
‘‘(1) IN GENERAL.—The penalty provided by this section 
shall be paid upon notice and demand by the Secretary, and 
except as provided in paragraph (2), shall be assessed and 
collected in the same manner as an assessable penalty under 
subchapter B of chapter 68. 
‘‘(2) SPECIAL RULES.—Notwithstanding any other provision 
of law— 
‘‘(A) WAIVER OF CRIMINAL PENALTIES.—In the case of 
any failure by a taxpayer to timely pay any penalty imposed 
by this section, such taxpayer shall not be subject to any 
criminal prosecution or penalty with respect to such failure. 
‘‘(B) LIMITATIONS ON LIENS AND LEVIES.—The Secretary 
shall not— 
‘‘(i) file notice of lien with respect to any property 
of a taxpayer by reason of any failure to pay the 
penalty imposed by this section, or 
‘‘(ii) levy on any such property with respect to 
such failure.’’. 
(c) CLERICAL AMENDMENT.—The table of chapters for subtitle 
D of the Internal Revenue Code of 1986 is amended by inserting 
after the item relating to chapter 47 the following new item: 
‘‘CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years ending after December 31, 2013.
H. R. 3590—132 
SEC. 1502. REPORTING OF HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Part III of subchapter A of chapter 61 of 
the Internal Revenue Code of 1986 is amended by inserting after 
subpart C the following new subpart: 
‘‘Subpart D—Information Regarding Health 
Insurance Coverage 
‘‘Sec. 6055. Reporting of health insurance coverage. 
‘‘SEC. 6055. REPORTING OF HEALTH INSURANCE COVERAGE. 
‘‘(a) IN GENERAL.—Every person who provides minimum essen-
tial coverage to an individual during a calendar year shall, at 
such time as the Secretary may prescribe, make a return described 
in subsection (b). 
‘‘(b) FORM AND MANNER OF RETURN.— 
‘‘(1) IN GENERAL.—A return is described in this subsection 
if such return— 
‘‘(A) is in such form as the Secretary may prescribe, 
and 
‘‘(B) contains— 
‘‘(i) the name, address and TIN of the primary 
insured and the name and TIN of each other individual 
obtaining coverage under the policy, 
‘‘(ii) the dates during which such individual was 
covered under minimum essential coverage during the 
calendar year, 
‘‘(iii) in the case of minimum essential coverage 
which consists of health insurance coverage, informa-
tion concerning— 
‘‘(I) whether or not the coverage is a qualified 
health plan offered through an Exchange estab-
lished under section 1311 of the Patient Protection 
and Affordable Care Act, and 
‘‘(II) in the case of a qualified health plan, 
the amount (if any) of any advance payment under 
section 1412 of the Patient Protection and Afford-
able Care Act of any cost-sharing reduction under 
section 1402 of such Act or of any premium tax 
credit under section 36B with respect to such cov-
erage, and 
‘‘(iv) such other information as the Secretary may 
require. 
‘‘(2) INFORMATION RELATING TO EMPLOYER-PROVIDED COV-
ERAGE.—If minimum essential coverage provided to an indi-
vidual under subsection (a) consists of health insurance cov-
erage of a health insurance issuer provided through a group 
health plan of an employer, a return described in this subsection 
shall include— 
‘‘(A) the name, address, and employer identification 
number of the employer maintaining the plan, 
‘‘(B) the portion of the premium (if any) required to 
be paid by the employer, and 
‘‘(C) if the health insurance coverage is a qualified 
health plan in the small group market offered through 
an Exchange, such other information as the Secretary may 
require for administration of the credit under section 45R
H. R. 3590—133 
(relating to credit for employee health insurance expenses 
of small employers). 
‘‘(c) STATEMENTS TO BE FURNISHED
TO INDIVIDUALS WITH 
RESPECT TO WHOM INFORMATION IS REPORTED.— 
‘‘(1) IN GENERAL.—Every person required to make a return 
under subsection (a) shall furnish to each individual whose 
name is required to be set forth in such return a written 
statement showing— 
‘‘(A) the name and address of the person required 
to make such return and the phone number of the informa-
tion contact for such person, and 
‘‘(B) the information required to be shown on the return 
with respect to such individual. 
‘‘(2) TIME FOR FURNISHING STATEMENTS.—The written state-
ment required under paragraph (1) shall be furnished on or 
before January 31 of the year following the calendar year 
for which the return under subsection (a) was required to 
be made. 
‘‘(d) COVERAGE PROVIDED BY GOVERNMENTAL UNITS.—In the 
case of coverage provided by any governmental unit or any agency 
or instrumentality thereof, the officer or employee who enters into 
the agreement to provide such coverage (or the person appropriately 
designated for purposes of this section) shall make the returns 
and statements required by this section. 
‘‘(e) MINIMUM ESSENTIAL COVERAGE.—For purposes of this sec-
tion, the term ‘minimum essential coverage’ has the meaning given 
such term by section 5000A(f).’’. 
(b) ASSESSABLE PENALTIES.— 
(1) Subparagraph (B) of section 6724(d)(1) of the Internal 
Revenue Code of 1986 (relating to definitions) is amended by 
striking ‘‘or’’ at the end of clause (xxii), by striking ‘‘and’’ 
at the end of clause (xxiii) and inserting ‘‘or’’, and by inserting 
after clause (xxiii) the following new clause: 
‘‘(xxiv) section 6055 (relating to returns relating 
to information regarding health insurance coverage), 
and’’. 
(2) Paragraph (2) of section 6724(d) of such Code is 
amended by striking ‘‘or’’ at the end of subparagraph (EE), 
by striking the period at the end of subparagraph (FF) and 
inserting ‘‘, or’’ and by inserting after subparagraph (FF) the 
following new subparagraph: 
‘‘(GG) section 6055(c) (relating to statements relating 
to information regarding health insurance coverage).’’. 
(c) NOTIFICATION OF NONENROLLMENT.—Not later than June 
30 of each year, the Secretary of the Treasury, acting through 
the Internal Revenue Service and in consultation with the Secretary 
of Health and Human Services, shall send a notification to each 
individual who files an individual income tax return and who is 
not enrolled in minimum essential coverage (as defined in section 
5000A of the Internal Revenue Code of 1986). Such notification 
shall contain information on the services available through the 
Exchange operating in the State in which such individual resides. 
(d) CONFORMING AMENDMENT.—The table of subparts for part 
III of subchapter A of chapter 61 of such Code is amended by 
inserting after the item relating to subpart C the following new 
item:
H. R. 3590—134 
‘‘SUBPART D—INFORMATION REGARDING HEALTH INSURANCE COVERAGE’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to calendar years beginning after 2013. 
PART II—EMPLOYER RESPONSIBILITIES 
SEC. 1511. AUTOMATIC ENROLLMENT FOR EMPLOYEES OF LARGE 
EMPLOYERS. 
The Fair Labor Standards Act of 1938 is amended by inserting 
after section 18 (29 U.S.C. 218) the following: 
‘‘SEC. 18A. AUTOMATIC ENROLLMENT FOR EMPLOYEES OF LARGE 
EMPLOYERS. 
‘‘In accordance with regulations promulgated by the Secretary, 
an employer to which this Act applies that has more than 200 
full-time employees and that offers employees enrollment in 1 or 
more health benefits plans shall automatically enroll new full- 
time employees in one of the plans offered (subject to any waiting 
period authorized by law) and to continue the enrollment of current 
employees in a health benefits plan offered through the employer. 
Any automatic enrollment program shall include adequate notice 
and the opportunity for an employee to opt out of any coverage 
the individual or employee were automatically enrolled in. Nothing 
in this section shall be construed to supersede any State law which 
establishes, implements, or continues in effect any standard or 
requirement relating to employers in connection with payroll except 
to the extent that such standard or requirement prevents an 
employer from instituting the automatic enrollment program under 
this section.’’. 
SEC. 1512. EMPLOYER REQUIREMENT TO INFORM EMPLOYEES OF COV-
ERAGE OPTIONS. 
The Fair Labor Standards Act of 1938 is amended by inserting 
after section 18A (as added by section 1513) the following: 
‘‘SEC. 18B. NOTICE TO EMPLOYEES. 
‘‘(a) IN GENERAL.—In accordance with regulations promulgated 
by the Secretary, an employer to which this Act applies, shall 
provide to each employee at the time of hiring (or with respect 
to current employees, not later than March 1, 2013), written 
notice— 
‘‘(1) informing the employee of the existence of an 
Exchange, including a description of the services provided by 
such Exchange, and the manner in which the employee may 
contact the Exchange to request assistance; 
‘‘(2) if the employer plan’s share of the total allowed costs 
of benefits provided under the plan is less than 60 percent 
of such costs, that the employee may be eligible for a premium 
tax credit under section 36B of the Internal Revenue Code 
of 1986 and a cost sharing reduction under section 1402 of 
the Patient Protection and Affordable Care Act if the employee 
purchases a qualified health plan through the Exchange; and 
‘‘(3) if the employee purchases a qualified health plan 
through the Exchange, the employee will lose the employer 
contribution (if any) to any health benefits plan offered by 
the employer and that all or a portion of such contribution 
may be excludable from income for Federal income tax pur-
poses.
H. R. 3590—135 
‘‘(b) EFFECTIVE DATE.—Subsection (a) shall take effect with 
respect to employers in a State beginning on March 1, 2013.’’. 
SEC. 1513. SHARED RESPONSIBILITY FOR EMPLOYERS. 
(a) IN GENERAL.—Chapter 43 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following: 
‘‘SEC. 4980H. SHARED RESPONSIBILITY FOR EMPLOYERS REGARDING 
HEALTH COVERAGE. 
‘‘(a) LARGE EMPLOYERS NOT OFFERING HEALTH COVERAGE.— 
If— 
‘‘(1) any applicable large employer fails to offer to its full- 
time employees (and their dependents) the opportunity to enroll 
in minimum essential coverage under an eligible employer- 
sponsored plan (as defined in section 5000A(f)(2)) for any 
month, and 
‘‘(2) at least one full-time employee of the applicable large 
employer has been certified to the employer under section 1411 
of the Patient Protection and Affordable Care Act as having 
enrolled for such month in a qualified health plan with respect 
to which an applicable premium tax credit or cost-sharing 
reduction is allowed or paid with respect to the employee, 
then there is hereby imposed on the employer an assessable pay-
ment equal to the product of the applicable payment amount and 
the number of individuals employed by the employer as full-time 
employees during such month. 
‘‘(b) LARGE EMPLOYERS WITH WAITING PERIODS EXCEEDING 30 
DAYS.— 
‘‘(1) IN
GENERAL.—In the case of any applicable large 
employer which requires an extended waiting period to enroll 
in any minimum essential coverage under an employer-spon-
sored plan (as defined in section 5000A(f)(2)), there is hereby 
imposed on the employer an assessable payment, in the amount 
specified in paragraph (2), for each full-time employee of the 
employer to whom the extended waiting period applies. 
‘‘(2) AMOUNT.—For purposes of paragraph (1), the amount 
specified in this paragraph for a full-time employee is— 
‘‘(A) in the case of an extended waiting period which 
exceeds 30 days but does not exceed 60 days, $400, and 
‘‘(B) in the case of an extended waiting period which 
exceeds 60 days, $600. 
‘‘(3) EXTENDED
WAITING
PERIOD.—The term ‘extended 
waiting period’ means any waiting period (as defined in section 
2701(b)(4) of the Public Health Service Act) which exceeds 
30 days. 
‘‘(c) LARGE EMPLOYERS OFFERING COVERAGE WITH EMPLOYEES 
WHO QUALIFY FOR PREMIUM TAX CREDITS OR COST-SHARING REDUC-
TIONS.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an applicable large employer offers to its full- 
time employees (and their dependents) the opportunity to 
enroll in minimum essential coverage under an eligible 
employer-sponsored plan (as defined in section 5000A(f)(2)) 
for any month, and 
‘‘(B) 1 or more full-time employees of the applicable 
large employer has been certified to the employer under 
section 1411 of the Patient Protection and Affordable Care 
Act as having enrolled for such month in a qualified health
H. R. 3590—136 
plan with respect to which an applicable premium tax 
credit or cost-sharing reduction is allowed or paid with 
respect to the employee, 
then there is hereby imposed on the employer an assessable 
payment equal to the product of the number of full-time 
employees of the applicable large employer described in 
subparagraph (B) for such month and 400 percent of the 
applicable payment amount. 
‘‘(2) OVERALL LIMITATION.—The aggregate amount of tax 
determined under paragraph (1) with respect to all employees 
of an applicable large employer for any month shall not exceed 
the product of the applicable payment amount and the number 
of individuals employed by the employer as full-time employees 
during such month. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this 
section— 
‘‘(1) APPLICABLE PAYMENT AMOUNT.—The term ‘applicable 
payment amount’ means, with respect to any month, 1⁄12 of 
$750. 
‘‘(2) APPLICABLE LARGE EMPLOYER.— 
‘‘(A) IN GENERAL.—The term ‘applicable large employer’ 
means, with respect to a calendar year, an employer who 
employed an average of at least 50 full-time employees 
on business days during the preceding calendar year. 
‘‘(B) EXEMPTION FOR CERTAIN EMPLOYERS.— 
‘‘(i) IN GENERAL.—An employer shall not be consid-
ered to employ more than 50 full-time employees if— 
‘‘(I) the employer’s workforce exceeds 50 full- 
time employees for 120 days or fewer during the 
calendar year, and 
‘‘(II) the employees in excess of 50 employed 
during such 120-day period were seasonal workers. 
‘‘(ii) DEFINITION OF SEASONAL WORKERS.—The term 
‘seasonal worker’ means a worker who performs labor 
or services on a seasonal basis as defined by the Sec-
retary of Labor, including workers covered by section 
500.20(s)(1) of title 29, Code of Federal Regulations 
and retail workers employed exclusively during holiday 
seasons. 
‘‘(C) RULES
FOR
DETERMINING
EMPLOYER
SIZE.—For 
purposes of this paragraph— 
‘‘(i) APPLICATION
OF
AGGREGATION
RULE
FOR 
EMPLOYERS.—All persons treated as a single employer 
under subsection (b), (c), (m), or (o) of section 414 
of the Internal Revenue Code of 1986 shall be treated 
as 1 employer. 
‘‘(ii) EMPLOYERS NOT IN EXISTENCE IN PRECEDING 
YEAR.—In the case of an employer which was not in 
existence throughout the preceding calendar year, the 
determination of whether such employer is an 
applicable large employer shall be based on the average 
number of employees that it is reasonably expected 
such employer will employ on business days in the 
current calendar year. 
‘‘(iii) PREDECESSORS.—Any reference in this sub-
section to an employer shall include a reference to 
any predecessor of such employer.
H. R. 3590—137 
‘‘(3) APPLICABLE PREMIUM TAX CREDIT AND COST-SHARING 
REDUCTION.—The term ‘applicable premium tax credit and cost- 
sharing reduction’ means— 
‘‘(A) any premium tax credit allowed under section 
36B, 
‘‘(B) any cost-sharing reduction under section 1402 of 
the Patient Protection and Affordable Care Act, and 
‘‘(C) any advance payment of such credit or reduction 
under section 1412 of such Act. 
‘‘(4) FULL-TIME EMPLOYEE.— 
‘‘(A) IN GENERAL.—The term ‘full-time employee’ means 
an employee who is employed on average at least 30 hours 
of service per week. 
‘‘(B) HOURS OF SERVICE.—The Secretary, in consulta-
tion with the Secretary of Labor, shall prescribe such regu-
lations, rules, and guidance as may be necessary to deter-
mine the hours of service of an employee, including rules 
for the application of this paragraph to employees who 
are not compensated on an hourly basis. 
‘‘(5) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of any calendar year 
after 2014, each of the dollar amounts in subsection (b)(2) 
and (d)(1) shall be increased by an amount equal to the 
product of— 
‘‘(i) such dollar amount, and 
‘‘(ii) the premium adjustment percentage (as 
defined in section 1302(c)(4) of the Patient Protection 
and Affordable Care Act) for the calendar year. 
‘‘(B) ROUNDING.—If the amount of any increase under 
subparagraph (A) is not a multiple of $10, such increase 
shall be rounded to the next lowest multiple of $10. 
‘‘(6) OTHER DEFINITIONS.—Any term used in this section 
which is also used in the Patient Protection and Affordable 
Care Act shall have the same meaning as when used in such 
Act. 
‘‘(7) TAX NONDEDUCTIBLE.—For denial of deduction for the 
tax imposed by this section, see section 275(a)(6). 
‘‘(e) ADMINISTRATION AND PROCEDURE.— 
‘‘(1) IN
GENERAL.—Any assessable payment provided by 
this section shall be paid upon notice and demand by the 
Secretary, and shall be assessed and collected in the same 
manner as an assessable penalty under subchapter B of chapter 
68. 
‘‘(2) TIME FOR PAYMENT.—The Secretary may provide for 
the payment of any assessable payment provided by this section 
on an annual, monthly, or other periodic basis as the Secretary 
may prescribe. 
‘‘(3) COORDINATION
WITH
CREDITS, ETC..—The Secretary 
shall prescribe rules, regulations, or guidance for the repayment 
of any assessable payment (including interest) if such payment 
is based on the allowance or payment of an applicable premium 
tax credit or cost-sharing reduction with respect to an employee, 
such allowance or payment is subsequently disallowed, and 
the assessable payment would not have been required to be 
made but for such allowance or payment.’’.
H. R. 3590—138 
(b) CLERICAL AMENDMENT.—The table of sections for chapter 
43 of such Code is amended by adding at the end the following 
new item: 
‘‘Sec. 4980H. Shared responsibility for employers regarding health coverage.’’. 
(c) STUDY
AND REPORT
OF EFFECT
OF TAX
ON WORKERS’ 
WAGES.— 
(1) IN
GENERAL.—The Secretary of Labor shall conduct 
a study to determine whether employees’ wages are reduced 
by reason of the application of the assessable payments under 
section 4980H of the Internal Revenue Code of 1986 (as added 
by the amendments made by this section). The Secretary shall 
make such determination on the basis of the National Com-
pensation Survey published by the Bureau of Labor Statistics. 
(2) REPORT.—The Secretary shall report the results of the 
study under paragraph (1) to the Committee on Ways and 
Means of the House of Representatives and to the Committee 
on Finance of the Senate. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to months beginning after December 31, 2013. 
SEC. 1514. REPORTING OF EMPLOYER HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Subpart D of part III of subchapter A of 
chapter 61 of the Internal Revenue Code of 1986, as added by 
section 1502, is amended by inserting after section 6055 the fol-
lowing new section: 
‘‘SEC. 6056. LARGE EMPLOYERS REQUIRED TO REPORT ON HEALTH 
INSURANCE COVERAGE. 
‘‘(a) IN GENERAL.—Every applicable large employer required 
to meet the requirements of section 4980H with respect to its 
full-time employees during a calendar year shall, at such time 
as the Secretary may prescribe, make a return described in sub-
section (b). 
‘‘(b) FORM AND MANNER OF RETURN.—A return is described 
in this subsection if such return— 
‘‘(1) is in such form as the Secretary may prescribe, and 
‘‘(2) contains— 
‘‘(A) the name, date, and employer identification 
number of the employer, 
‘‘(B) a certification as to whether the employer offers 
to its full-time employees (and their dependents) the oppor-
tunity to enroll in minimum essential coverage under an 
eligible employer-sponsored plan (as defined in section 
5000A(f)(2)), 
‘‘(C) if the employer certifies that the employer did 
offer to its full-time employees (and their dependents) the 
opportunity to so enroll— 
‘‘(i) the length of any waiting period (as defined 
in section 2701(b)(4) of the Public Health Service Act) 
with respect to such coverage, 
‘‘(ii) the months during the calendar year for which 
coverage under the plan was available, 
‘‘(iii) the monthly premium for the lowest cost 
option in each of the enrollment categories under the 
plan, and 
‘‘(iv) the applicable large employer’s share of the 
total allowed costs of benefits provided under the plan,