SEC. 2. INCREASING STATE FLEXIBILITY THROUGH PROVI-
SION OF HEALTH-FLEX AND EXCHANGE WAIV-
ERS. 
(a) STATE OPTIONS.— 
(1) IN GENERAL.—The Patient Protection and 
Affordable Care Act is amended by inserting after 
section 1332 (42 U.S.C. 18052) the following: 
‘‘SEC. 1332A. OPTIONS FOR STATE FLEXIBILITY. 
‘‘(a) STATE OPTIONS.— 
‘‘(1) IN GENERAL.—If a State provides to the 
Secretary a notice (in this section referred to as a 
‘waiver notice’) of intent to implement a health-flex 
waiver (described in subsection (b)(1)), an exchange 
waiver (described in subsection (b)(2)), or both, and 
such notice complies with paragraph (2), the waiver 
shall be deemed to be approved and effective, except 
as provided in paragraphs (5) and (6). 
‘‘(2) CONTENTS
OF
A
WAIVER
NOTICE.—A 
waiver notice with respect to a State shall include 
the following: 
‘‘(A) The years for which the waiver shall 
be effective (which may be indefinite). 
‘‘(B) An assurance that the State will com-
ply with annual reporting requirements estab-
lished by the Secretary relating to the activities 
of the State under the waiver, which reporting 
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
requirements shall include information on af-
fordability, access, and transparency. 
‘‘(C) In the case of a health-flex waiver— 
‘‘(i) the requirements to be waived; 
‘‘(ii) an assurance that there will be 
available throughout the State one or more 
health plans that provide the catastrophic 
level of coverage described in subsection 
(c)(1)(B)(i) for which an enrollee’s re-
quired contribution (as defined in section 
5000A(e)(1)(B) of the Internal Revenue 
Code of 1986, determined on an annual 
basis) does not exceed 6.5 percent of the 
median household income (as defined in 
section 36B(d)(2)(A) of such Code) of resi-
dents of the State for the most recent tax-
able year for which information on such 
median household income is available to 
the Secretary; and 
‘‘(iii) an assurance that the certifying 
entity (as defined in subsection (c)(2)) has 
a process to certify health plans as permis-
sible health plans consistent with sub-
section (c). 
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(D) In the case of an exchange waiver, 
assurances that the State— 
‘‘(i) will be responsible for functions 
that are necessary to carry out the waiver 
that would otherwise be performed by an 
Exchange; 
‘‘(ii) will comply with subsection (d); 
‘‘(iii) has the capability to receive 
from the Secretary subsidy eligibility infor-
mation; and 
‘‘(iv) has and is applying standards 
for privacy, security, and data encryption 
for subsidy eligibility information that are 
determined to be satisfactory by the Sec-
retary. 
‘‘(3) EFFECTIVENESS.—A waiver under this 
section shall be effective for the years described in 
the waiver notice under paragraph (2)(A), except 
that no waiver under this section shall be effective 
for a year unless the waiver notice for such waiver 
was submitted before November 1 of the previous 
year. 
‘‘(4) 
MODIFICATION
OR
TERMINATION.—A 
State may modify or terminate a waiver for the 
State under this section by submitting to the Sec-
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
retary a subsequent waiver notice with respect to 
such waiver. 
‘‘(5) DISAPPROVAL
AUTHORITY.—If the Sec-
retary determines that a waiver notice fails to com-
ply with paragraph (2) and notifies the State of the 
reason for such determination not later than 30 days 
after the date on which the State submits the waiver 
notice, such waiver notice shall not be effective. 
‘‘(6) REVOCATION.—If the Secretary deter-
mines that a State is in violation of an assurance 
submitted under paragraph (2) and notifies the 
State of the reason for such determination, the Sec-
retary may revoke the waiver. Such revocation shall 
be effective on the first day of the first year that be-
gins after the 60-day period that begins on the date 
on which notification of the revocation occurs. 
‘‘(7) CONSTRUCTION.—Nothing in this section 
shall be construed as requiring a State to enact a 
law in order to carry out the provisions of this sec-
tion. 
‘‘(b) WAIVERS.— 
‘‘(1) HEALTH-FLEX WAIVER.—A waiver under 
this paragraph (in this section referred to as a 
‘health-flex waiver’), with respect to a State, is a 
VerDate Sep 11 2014 
22:31 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
waiver of any of the requirements in sections 1301 
through 1303. 
‘‘(2) EXCHANGE WAIVER.—A waiver under this 
paragraph (in this section referred to as an ‘ex-
change waiver’) permits a State to elect to be re-
sponsible for certain Exchange functions, including 
serving as the certifying entity for the purposes of 
subsection (c). 
‘‘(3) NO WAIVER OF ADULT CHILD COVERAGE 
AND
PREEXISTING
CONDITIONS.—Nothing in this 
subsection may be construed to permit a State to 
waive the following: 
‘‘(A) PROHIBITION OF PREEXISTING CON-
DITION EXCLUSION.—Section 2704 of the Pub-
lic Health Service Act (42 U.S.C. 300gg–3). 
‘‘(B) EXTENSION
OF
COVERAGE
FOR 
ADULT CHILDREN.—Section 2714 of the Public 
Health Service Act (42 U.S.C. 300gg–14). 
‘‘(c) CERTIFYING PERMISSIBLE HEALTH PLANS.— 
‘‘(1) PERMISSIBLE HEALTH PLAN DEFINED.— 
For the purposes of this section, the term ‘permis-
sible health plan’ means, with respect to a State, a 
health plan that is offered for sale in the individual 
or small group market in the State and that is cer-
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
tified by a certifying entity to meet the following re-
quirements: 
‘‘(A) BENEFITS.—The plan provides bene-
fits for items and services within each of the 
following categories: 
‘‘(i) Ambulatory patient services. 
‘‘(ii) Emergency services. 
‘‘(iii) Hospitalization. 
‘‘(iv) Physician services. 
‘‘(B) LEVELS
OF
COVERAGE.—The plan 
provides a level of coverage that complies with 
one of the following levels of coverage (as estab-
lished by the State): 
‘‘(i) Catastrophic. 
‘‘(ii) Standard. 
‘‘(iii) High. 
‘‘(C) TRANSPARENCY
JUSTIFYING
PRE-
MIUMS.—The issuer of the plan makes available 
to the public information about the demo-
graphics of the population enrolled under the 
plan, the utilization of health care items and 
services by such population under the plan, and 
other factors that serve as a justification for 
the premium levels (including any premium in-
creases) under the plan. 
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(D) INFORMATION
REQUIREMENT.—The 
issuer of the plan submits information as re-
quired under section 36B(g)(3)(C) of the Inter-
nal Revenue Code of 1986. 
‘‘(2) CERTIFYING
ENTITY
DEFINED.—In this 
section, the term ‘certifying entity’ means— 
‘‘(A) in the case of a health plan that is 
offered through an Exchange established by a 
State, such Exchange; and 
‘‘(B) in the case of a health plan that is 
not so offered, the State in which such plan is 
offered. 
‘‘(3) EFFECT
OF
CERTIFYING
PERMISSIBLE 
HEALTH PLANS.—With respect to eligibility for pre-
mium assistance tax credits and reduced cost-shar-
ing for individuals enrolled in permissible health 
plans, see section 36B(g) of the Internal Revenue 
Code of 1986 and section 1402(f)(4) of the Patient 
Protection and Affordable Care Act (42 U.S.C. 
18071), respectively. 
‘‘(d) DETERMINING SUBSIDY ELIGIBILITY.— 
‘‘(1) IN GENERAL.—In the case of a State that 
has in effect an exchange waiver, the State shall de-
termine the eligibility of individuals residing in the 
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
State for the assistance described in subparagraphs 
(A) and (B) of paragraph (3). 
‘‘(2) DISCLOSURE
OF
FEDERAL
INFORMA-
TION.—In the case of a State that has in effect an 
exchange waiver, the Secretary or the Secretary of 
the Treasury, as appropriate, shall make subsidy eli-
gibility information available to the State, but only 
the minimum amount of information necessary to 
enable the State to determine the amount of the as-
sistance described in subparagraphs (A) and (B) of 
paragraph (3) for which the individual enrolled in a 
permissible health plan is eligible. 
‘‘(3) SUBSIDY ELIGIBILITY INFORMATION DE-
FINED.—In this subsection, the term ‘subsidy eligi-
bility information’ means information concerning the 
eligibility of an enrollee or a prospective enrollee in 
a health plan for— 
‘‘(A) a premium assistance credit under 
section 36B(a) of the Internal Revenue Code of 
1986; and 
‘‘(B) reduced cost-sharing under section 
1402.’’. 
(2) REPORTING
REQUIREMENTS.—The Sec-
retary shall establish annual reporting requirements 
under 1332A(a)(2)(B) of the Patient Protection and 
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
Affordable Care Act that include information on af-
fordability, access, and transparency. 
(3) CONFORMING AMENDMENT.—The table of 
contents of the Patient Protection and Affordable 
Care Act is amended by inserting after the item re-
lating to section 1332 the following: 
‘‘Sec. 1332A. Options for State flexibility.’’. 
(b) SUBSIDIES FOR INDIVIDUALS ENROLLED IN PER-
MISSIBLE HEALTH PLANS.— 
(1) PREMIUM ASSISTANCE TAX CREDITS.—Sec-
tion 36B of the Internal Revenue Code of 1986 is 
amended— 
(A) by redesignating subsection (g) as sub-
section (h); and 
(B) by inserting after subsection (f) the 
following: 
‘‘(g) SPECIAL RULES IN CASE OF WAIVERS UNDER 
SECTION 1332A OF PPACA.— 
‘‘(1) LIMITING
ELIGIBILITY
TO
TAXPAYERS 
WITH
INCOME
AT
OR
BELOW
300
PERCENT
OF 
FPL.—In the case of a section 1332A State, sub-
section (c)(1)(A) shall be applied by substituting 
‘300 percent’ for ‘400 percent’ for a taxpayer who 
obtains coverage through a plan issued under the 
law of such State for a year. 
VerDate Sep 11 2014 
22:31 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(2) PERMISSIBLE
HEALTH
PLANS.—In the 
case of a taxpayer who obtains coverage with respect 
to a section 1332A State, for a coverage month, a 
permissible health plan, as defined in section 
1332A(c)(1) of the Patient Protection and Afford-
able Care Act, shall be treated as a qualified health 
plan with respect to such taxpayer. 
‘‘(3) ADJUSTED MONTHLY PREMIUM.—In the 
case of a State that has in effect a health-flex waiver 
described in section 1332A(b)(1) of such Act, sub-
section (b)(3)(C) shall be applied as if the adjusted 
monthly premium calculated under such subsection 
were multiplied by the ratio of the full actuarial 
value of the benefits provided under the plan being 
offered to the full actuarial value of essential health 
benefits. 
‘‘(4) ELIMINATING CERTAIN REQUIREMENTS IN 
THE CASE OF AN EXCHANGE WAIVER.—In the case 
of a State that has in effect an exchange waiver de-
scribed in section 1332A(b)(2) of such Act for a cov-
erage month, the following shall apply: 
‘‘(A) 
ELIMINATING
EXCHANGE
REF-
ERENCES.—Subsections (b)(2)(A), (c)(2)(A)(i), 
(d)(3)(B), and (e)(3) shall be applied by treat-
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS
ing the permissible health plan as if it were of-
fered through an Exchange. 
‘‘(B) APPLICABLE SECOND LOWEST COST 
SILVER
PLAN.—Subsection (b)(3)(B) shall be 
applied by substituting— 
‘‘(i) ‘qualified health plan for which, if 
the adjusted monthly premium, taking into 
account subsection (g)(3), were multiplied 
by the ratio of 70 percent to the level of 
coverage expressed as a percent of the full 
actuarial value of the benefits provided 
under the plan, the product of such mul-
tiplication would be the second lowest such 
product for any plan offered in’ for ‘second 
lowest cost silver plan of’, and 
‘‘(ii) ‘is offered in such rating area’ 
for ‘is offered through the same Exchange 
through which the qualified health plans 
taken into account under paragraph (2)(A) 
were offered’. 
‘‘(C) 
INFORMATION
REQUIREMENT.—In 
the case of a permissible health plan which is 
not offered through an Exchange, such plan 
shall provide to the Secretary and to the indi-
vidual enrolled in the plan the information de-
VerDate Sep 11 2014 
06:26 Aug 05, 2015
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3352.IH
H3352
SSpencer on DSK4SPTVN1PROD with BILLS