provided under this subsection. Such outreach shall 
target employers, group health plan administrators, 
public assistance programs, States, insurers, and 
other entities as determined appropriate by such 
Secretaries. Such outreach shall include an initial 
focus on those individuals electing continuation cov-
erage who are referred to in paragraph (7)(C). In-
formation on such premium reduction, including en-
rollment, shall also be made available on websites of 
the Departments of Labor, Treasury, and Health 
and Human Services. 
(12) DEFINITIONS.—For purposes of this sec-
tion: 
(A) ADMINISTRATOR.—The term ‘‘admin-
istrator’’ has the meaning given such term in 
section 3(16)(A) of the Employee Retirement 
Income Security Act of 1974. 
(B) COBRA CONTINUATION COVERAGE.— 
The term ‘‘COBRA continuation coverage’’ 
means continuation coverage provided pursuant 
to part 6 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 
(other than under section 609), title XXII of 
the Public Health Service Act, section 4980B of 
the Internal Revenue Code of 1986 (other than 
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subsection (f)(1) of such section insofar as it 
relates to pediatric vaccines), or section 8905a 
of title 5, United States Code, or under a State 
program that provides comparable continuation 
coverage. Such term does not include coverage 
under a health flexible spending arrangement 
under a cafeteria plan within the meaning of 
section 125 of the Internal Revenue Code of 
1986. 
(C) COBRA CONTINUATION PROVISION.— 
The term ‘‘COBRA continuation provision’’ 
means the provisions of law described in sub-
paragraph (B). 
(D) 
COVERED
EMPLOYEE.—The 
term 
‘‘covered employee’’ has the meaning given such 
term in section 607(2) of the Employee Retire-
ment Income Security Act of 1974. 
(E) QUALIFIED BENEFICIARY.—The term 
‘‘qualified beneficiary’’ has the meaning given 
such term in section 607(3) of the Employee 
Retirement Income Security Act of 1974. 
(F) GROUP
HEALTH
PLAN.—The term 
‘‘group health plan’’ has the meaning given 
such term in section 607(1) of the Employee 
Retirement Income Security Act of 1974. 
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(G) STATE.—The term ‘‘State’’ includes 
the District of Columbia, the Commonwealth of 
Puerto Rico, the Virgin Islands, Guam, Amer-
ican Samoa, and the Commonwealth of the 
Northern Mariana Islands. 
(H) PERIOD
OF
COVERAGE.—Any ref-
erence in this subsection to a period of coverage 
shall be treated as a reference to a monthly or 
shorter period of coverage with respect to which 
premiums are charged with respect to such cov-
erage. 
(I) PLAN
SPONSOR.—The term ‘‘plan 
sponsor’’ has the meaning given such term in 
section 3(16)(B) of the Employee Retirement 
Income Security Act of 1974. 
(J) FURLOUGH.—The term ‘‘furlough’’ 
means, with respect to an individual, a reduc-
tion of the number of paid hours by at least 20 
percent during any 30-day period as compared 
to the number of paid hours during the prior 
30-day period due to a lack of work, funds, or 
other nondisciplinary reason and the continued 
eligibility for coverage of the individual under 
the group health plan of the employer involved. 
(13) REPORTS.— 
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(A) INTERIM REPORT.—The Secretary of 
the Treasury and the Secretary of Labor shall 
jointly submit an interim report to the Com-
mittee on Education and Labor, the Committee 
on Ways and Means, and the Committee on En-
ergy and Commerce of the House of Represent-
atives and the Committee on Health, Edu-
cation, Labor, and Pensions and the Committee 
on Finance of the Senate regarding the pre-
mium reduction provided under this subsection 
that includes— 
(i) the number of individuals provided 
such assistance as of the date of the re-
port; and 
(ii) the total amount of expenditures 
incurred (with administrative expenditures 
noted separately) in connection with such 
assistance as of the date of the report. 
(B) FINAL
REPORT.—As soon as prac-
ticable after the last period of COBRA continu-
ation coverage for which premium reduction is 
provided under this section, the Secretary of the 
Treasury and the Secretary of Labor shall 
jointly submit a final report to each Committee 
referred to in subparagraph (A) that includes— 
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(i) the number of individuals provided 
premium reduction under this section; 
(ii) 
the 
average 
dollar 
amount 
(monthly and annually) of premium reduc-
tions provided to such individuals; and 
(iii) the total amount of expenditures 
incurred (with administrative expenditures 
noted separately) in connection with pre-
mium reduction under this section. 
(14) COBRA PREMIUM ASSISTANCE.— 
(A) IN GENERAL.—Subchapter B of chap-
ter 65 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following 
new section: 
‘‘SEC. 6432. CONTINUATION COVERAGE PREMIUM ASSIST-
ANCE. 
‘‘(a) IN GENERAL.—The person to whom premiums 
are payable for continuation coverage under section 
2(a)(1) of the Worker Health Coverage Protection Act 
shall be reimbursed as provided in subsection (c) for the 
amount of premiums not paid by assistance eligible indi-
viduals by reason of such section. 
‘‘(b) PERSON ENTITLED TO REIMBURSEMENT.—For 
purposes of subsection (a), except as otherwise provided 
by the Secretary, the person to whom premiums are pay-
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able under such continuation coverage shall be treated as 
being— 
‘‘(1) in the case of any group health plan which 
is a multiemployer plan (as defined in section 3(37) 
of the Employee Retirement Income Security Act of 
1974), the plan, 
‘‘(2) in the case of any group health plan not 
described in paragraph (1)— 
‘‘(A) which is furlough continuation cov-
erage described in section 2(a)(1)(A)(ii) of the 
Worker Health Coverage Protection Act or sub-
ject to the COBRA continuation provisions con-
tained in— 
‘‘(i) this title, 
‘‘(ii) the Employee Retirement Income 
Security Act of 1974, 
‘‘(iii) the Public Health Service Act, 
or 
‘‘(iv) title 5, United States Code, or 
‘‘(B) under which some or all of the cov-
erage is not provided by insurance, 
the employer maintaining the plan, and 
‘‘(3) in the case of any group health plan not 
described in paragraph (1) or (2), the insurer pro-
viding the coverage under the group health plan. 
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‘‘(c) LIMITATION
ON REIMBURSEMENT
FOR FUR-
LOUGHED EMPLOYEES.—The amount of the premiums 
treated as not paid by an assistance eligible individual de-
scribed in section 2(a)(3)(B) of the Worker Health Cov-
erage Protection Act shall not exceed the portion of the 
annual premium which would have been paid by the em-
ployee (without regard to whether paid through salary re-
duction or otherwise) for periods of coverage under the 
plan before the date of the enactment of this section. 
‘‘(d) METHOD OF REIMBURSEMENT.—Except as oth-
erwise provided by the Secretary— 
‘‘(1) TREATMENT
AS
PAYMENT
OF
PAYROLL 
TAXES.—Each person entitled to reimbursement 
under subsection (a) (and filing a claim for such re-
imbursement at such time and in such manner as 
the Secretary may require) shall be treated for pur-
poses of this title and section 1324(b)(2) of title 31, 
United States Code, as having paid to the Secretary, 
on the date that the assistance eligible individual’s 
premium payment would otherwise be due, payroll 
taxes in an amount equal to the portion of such re-
imbursement which relates to such premium. To the 
extent that the amount treated as paid under the 
preceding sentence exceeds the amount of such per-
son’s liability for such taxes, the Secretary shall 
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credit or refund such excess in the same manner as 
if it were an overpayment of such taxes. 
‘‘(2) OVERSTATEMENTS.—Any overstatement of 
the reimbursement to which a person is entitled 
under this section (and any amount paid by the Sec-
retary as a result of such overstatement) shall be 
treated as an underpayment of payroll taxes by such 
person and may be assessed and collected by the 
Secretary in the same manner as payroll taxes. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) PAYROLL
TAXES.—The term ‘payroll 
taxes’ means— 
‘‘(A) amounts required to be deducted and 
withheld for the payroll period under section 
3402 (relating to wage withholding), 
‘‘(B) amounts required to be deducted for 
the payroll period under section 3102 (relating 
to FICA employee taxes), and 
‘‘(C) amounts of the taxes imposed for the 
payroll period under section 3111 (relating to 
FICA employer taxes). 
‘‘(2) PERSON.—The term ‘person’ includes any 
governmental entity. 
‘‘(f) REPORTING.—Each person entitled to reim-
bursement under subsection (a) for any period shall sub-
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mit such reports (at such time and in such manner) as 
the Secretary may require, including— 
‘‘(1) an attestation of involuntary termination 
of employment, reduction of hours, or furloughing, 
for each assistance eligible individual on the basis of 
whose termination, reduction of hours, or fur-
loughing entitlement to reimbursement is claimed 
under subsection (a), 
‘‘(2) a report of the amount of payroll taxes off-
set under subsection (a) for the reporting period and 
the estimated offsets of such taxes for the subse-
quent reporting period in connection with reimburse-
ments under subsection (a), and 
‘‘(3) a report containing the TINs of all covered 
employees, the amount of subsidy reimbursed with 
respect to each covered employee and qualified bene-
ficiaries, and a designation with respect to each cov-
ered employee as to whether the subsidy reimburse-
ment is for coverage of 1 individual or 2 or more in-
dividuals. 
‘‘(g) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out this section, including— 
‘‘(1) the requirement to report information or 
the establishment of other methods for verifying the 
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correct amounts of reimbursements under this sec-
tion, and 
‘‘(2) the application of this section to group 
health plans that are multiemployer plans (as de-
fined in section 3(37) of the Employee Retirement 
Income Security Act of 1974).’’. 
(B) SOCIAL SECURITY TRUST FUNDS HELD 
HARMLESS.—In determining any amount trans-
ferred or appropriated to any fund under the 
Social Security Act, section 6432 of the Inter-
nal Revenue Code of 1986 shall not be taken 
into account. 
(C) CLERICAL AMENDMENT.—The table of 
sections for subchapter B of chapter 65 of the 
Internal Revenue Code of 1986 is amended by 
adding at the end the following new item: 
‘‘Sec. 6432. Continuation coverage premium assistance.’’. 
(D) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to pre-
miums to which subsection (a)(1)(A) applies. 
(E) SPECIAL RULE.— 
(i) IN GENERAL.—In the case of an 
assistance eligible individual who pays, 
with respect to the first period of continu-
ation 
coverage 
to 
which 
subsection 
(a)(1)(A) applies or the immediately subse-
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quent period, the full premium amount for 
such coverage, the person to whom such 
payment is payable shall— 
(I) make a reimbursement pay-
ment to such individual for the 
amount of such premium paid in ex-
cess of the amount required to be paid 
under subsection (a)(1)(A); or 
(II) provide credit to the indi-
vidual for such amount in a manner 
that reduces one or more subsequent 
premium payments that the individual 
is required to pay under such sub-
section for the coverage involved. 
(ii) 
REIMBURSING
EMPLOYER.—A 
person to which clause (i) applies shall be 
reimbursed as provided for in section 6432 
of the Internal Revenue Code of 1986 for 
any payment made, or credit provided, to 
the employee under such clause. 
(iii) PAYMENT OF CREDITS.—Unless 
it is reasonable to believe that the credit 
for the excess payment in clause (i)(II) will 
be used by the assistance eligible individual 
within 180 days of the date on which the 
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person receives from the individual the 
payment of the full premium amount, a 
person to which clause (i) applies shall 
make the payment required under such 
clause to the individual within 60 days of 
such payment of the full premium amount. 
If, as of any day within the 180-day pe-
riod, it is no longer reasonable to believe 
that the credit will be used during that pe-
riod, payment equal to the remainder of 
the credit outstanding shall be made to the 
individual within 60 days of such day. 
(15) PENALTY
FOR
FAILURE
TO
NOTIFY 
HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR 
PREMIUM ASSISTANCE.— 
(A) IN GENERAL.—Part I of subchapter B 
of chapter 68 of the Internal Revenue Code of 
1986 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 
PLAN OF CESSATION OF ELIGIBILITY FOR 
CONTINUATION COVERAGE PREMIUM ASSIST-
ANCE. 
‘‘(a) IN GENERAL.—Any person required to notify a 
group health plan under section 2(a)(2)(B) of the Worker 
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Health Coverage Protection Act who fails to make such 
a notification at such time and in such manner as the Sec-
retary of Labor may require shall pay a penalty of $250. 
‘‘(b) INTENTIONAL FAILURE.—In the case of any 
such failure that is fraudulent, such person shall pay a 
penalty of 110 percent of the premium reduction provided 
under such section after termination of eligibility under 
such subsection. 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any 
failure if it is shown that such failure is due to reasonable 
cause and not to willful neglect.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections of part I of subchapter B of chapter 68 
of such Code is amended by adding at the end 
the following new item: 
‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility 
for continuation coverage premium assistance.’’. 
(16) COORDINATION WITH HCTC.— 
(A) IN GENERAL.—Section 35(g)(9) of the 
Internal Revenue Code of 1986 is amended to 
read as follows: 
‘‘(9) CONTINUATION COVERAGE PREMIUM AS-
SISTANCE.—In the case of an assistance eligible in-
dividual who receives premium reduction for continu-
ation coverage under section 2(a)(1) of the Worker 
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Health Coverage Protection Act for any month dur-
ing the taxable year, such individual shall not be 
treated as an eligible individual, a certified indi-
vidual, or a qualifying family member for purposes 
of this section or section 7527 with respect to such 
month.’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to tax-
able years ending after the date of the enact-
ment of this Act. 
(17) EXCLUSION OF CONTINUATION COVERAGE 
PREMIUM ASSISTANCE FROM GROSS INCOME.— 
(A) IN GENERAL.—Part III of subchapter 
B of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 
139H the following new section: 
‘‘SEC. 139I. CONTINUATION COVERAGE PREMIUM ASSIST-
ANCE. 
‘‘In the case of an assistance eligible individual (as 
defined in subsection (a)(3) of section 2 of the Worker 
Health Coverage Protection Act), gross income does not 
include any premium reduction provided under subsection 
(a)(1) of such section.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections for part III of subchapter B of chapter 
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1 of such Code is amended by inserting after 
the item relating to section 139H the following 
new item: 
‘‘Sec. 139I. Continuation coverage premium assistance.’’. 
(C) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to taxable 
years ending after the date of the enactment of 
this Act. 
(b) ELIMINATION OF PREMIUM SUBSIDY FOR HIGH- 
INCOME INDIVIDUALS.— 
(1) RECAPTURE OF SUBSIDY FOR HIGH-INCOME 
INDIVIDUALS.—If— 
(A) premium assistance is provided under 
this section with respect to any continuation 
coverage which covers the taxpayer, the tax-
payer’s spouse, or any dependent (within the 
meaning of section 152 of the Internal Revenue 
Code of 1986, determined without regard to 
subsections (b)(1), (b)(2), and (d)(1)(B) there-
of) of the taxpayer during any portion of the 
taxable year, and 
(B) the taxpayer’s modified adjusted gross 
income for such taxable year exceeds $125,000 
($250,000 in the case of a joint return), 
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then the tax imposed by chapter 1 of such Code with 
respect to the taxpayer for such taxable year shall 
be increased by the amount of such assistance. 
(2) PHASE-IN OF RECAPTURE.— 
(A) IN GENERAL.—In the case of a tax-
payer whose modified adjusted gross income for 
the taxable year does not exceed $145,000 
($290,000 in the case of a joint return), the in-
crease in the tax imposed under paragraph (1) 
shall not exceed the phase-in percentage of such 
increase (determined without regard to this 
paragraph). 
(B) PHASE-IN
PERCENTAGE.—For pur-
poses of this subsection, the term ‘‘phase-in 
percentage’’ means the ratio (expressed as a 
percentage) obtained by dividing— 
(i) the excess of described in subpara-
graph (B) of paragraph (1), by 
(ii) $20,000 ($40,000 in the case of a 
joint return). 
(3) OPTION FOR HIGH-INCOME INDIVIDUALS TO 
WAIVE ASSISTANCE AND AVOID RECAPTURE.—Not-
withstanding subsection (a)(3), an individual shall 
not be treated as an assistance eligible individual for 
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purposes of this section and section 6432 of the In-
ternal Revenue Code of 1986 if such individual— 
(A) makes a permanent election (at such 
time and in such form and manner as the Sec-
retary of the Treasury may prescribe) to waive 
the right to the premium assistance provided 
under this section, and 
(B) notifies the entity to whom premiums 
are reimbursed under section 6432(a) of such 
Code of such election. 
(4) MODIFIED ADJUSTED GROSS INCOME.—For 
purposes of this subsection, the term ‘‘modified 
gross income’’ means the adjusted gross income (as 
defined in section 62 of the Internal Revenue Code 
of 1986) of the taxpayer for the taxable year in-
creased by any amount excluded from gross income 
under section 911, 931, or 933 of such Code. 
(5) CREDITS
NOT
ALLOWED
AGAINST
TAX, 
ETC.—For purposes determining regular tax liability 
under section 26(b) of such Code, the increase in tax 
under this subsection shall not be treated as a tax 
imposed under chapter 1 of such Code. 
(6) REGULATIONS.—The Secretary of the 
Treasury shall issue such regulations or other guid-
ance as are necessary or appropriate to carry out 
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this subsection, including requirements that the enti-
ty to whom premiums are reimbursed under section 
6432(a) of the Internal Revenue Code of 1986 re-
port to the Secretary, and to each assistance eligible 
individual, the amount of premium assistance pro-
vided under subsection (a) with respect to each such 
individual. 
(7) EFFECTIVE DATE.—The provisions of this 
subsection shall apply to taxable years ending after 
the date of the enactment of this Act. 
(c) RULE OF CONSTRUCTION.—In all matters of in-
terpretation, rules, and operational procedures, the lan-
guage of this section shall be interpreted broadly for the 
benefit of workers and their families. 
Æ 
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