SECTION 1. SHORT TITLE; TABLE OF DIVISIONS, TITLES, 
AND SUBTITLES. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Affordable Health Care for America Act’’. 
(b) TABLE
OF
DIVISIONS, TITLES, AND
SUB-
TITLES.—This Act is divided into divisions, titles, and 
subtitles as follows: 
DIVISION A—AFFORDABLE HEALTH CARE CHOICES 
TITLE I—IMMEDIATE REFORMS 
TITLE 
II—PROTECTIONS 
AND 
STANDARDS 
FOR 
QUALIFIED 
HEALTH BENEFITS PLANS 
Subtitle A—General Standards 
Subtitle B—Standards Guaranteeing Access to Affordable Coverage 
Subtitle C—Standards Guaranteeing Access to Essential Benefits 
Subtitle D—Additional Consumer Protections 
Subtitle E—Governance 
Subtitle F—Relation to Other Requirements; Miscellaneous 
TITLE III—HEALTH INSURANCE EXCHANGE AND RELATED PROVI-
SIONS 
Subtitle A—Health Insurance Exchange 
Subtitle B—Public Health Insurance Option 
Subtitle C—Individual Affordability Credits 
TITLE IV—SHARED RESPONSIBILITY 
Subtitle A—Individual Responsibility 
Subtitle B—Employer Responsibility 
TITLE V—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 
Subtitle A—Shared Responsibility 
Subtitle B—Credit for Small Business Employee Health Coverage Expenses 
Subtitle C—Disclosures To Carry Out Health Insurance Exchange Subsidies 
Subtitle D—Other Revenue Provisions 
DIVISION B—MEDICARE AND MEDICAID IMPROVEMENTS 
TITLE I—IMPROVING HEALTH CARE VALUE 
Subtitle A—Provisions related to Medicare part A 
Subtitle B—Provisions Related to Part B 
Subtitle C—Provisions Related to Medicare Parts A and B 
Subtitle D—Medicare Advantage Reforms 
Subtitle E—Improvements to Medicare Part D 
Subtitle F—Medicare Rural Access Protections 
TITLE II—MEDICARE BENEFICIARY IMPROVEMENTS 
Subtitle A—Improving and Simplifying Financial Assistance for Low Income 
Medicare Beneficiaries 
Subtitle B—Reducing Health Disparities 
Subtitle C—Miscellaneous Improvements 
TITLE III—PROMOTING PRIMARY CARE, MENTAL HEALTH SERV-
ICES, AND COORDINATED CARE
TITLE IV—QUALITY 
Subtitle A—Comparative Effectiveness Research 
Subtitle B—Nursing Home Transparency 
Subtitle C—Quality Measurements 
Subtitle D—Physician Payments Sunshine Provision 
Subtitle E—Public Reporting on Health Care-Associated Infections 
TITLE V—MEDICARE GRADUATE MEDICAL EDUCATION 
TITLE VI—PROGRAM INTEGRITY 
Subtitle A—Increased funding to fight waste, fraud, and abuse 
Subtitle B—Enhanced penalties for fraud and abuse 
Subtitle C—Enhanced Program and Provider Protections 
Subtitle D—Access to Information Needed to Prevent Fraud, Waste, and Abuse 
TITLE VII—MEDICAID AND CHIP 
Subtitle A—Medicaid and Health Reform 
Subtitle B—Prevention 
Subtitle C—Access 
Subtitle D—Coverage 
Subtitle E—Financing 
Subtitle F—Waste, Fraud, and Abuse 
Subtitle G—Puerto Rico and the Territories 
Subtitle H—Miscellaneous 
TITLE VIII—REVENUE-RELATED PROVISIONS 
TITLE IX—MISCELLANEOUS PROVISIONS 
DIVISION C—PUBLIC HEALTH AND WORKFORCE DEVELOPMENT 
TITLE I—COMMUNITY HEALTH CENTERS 
TITLE II—WORKFORCE 
Subtitle A—Primary Care Workforce 
Subtitle B—Nursing Workforce 
Subtitle C—Public Health Workforce 
Subtitle D—Adapting Workforce to Evolving Health System Needs 
TITLE III—PREVENTION AND WELLNESS 
TITLE IV—QUALITY AND SURVEILLANCE 
TITLE V—OTHER PROVISIONS 
Subtitle A—Drug Discount for Rural and Other Hospitals; 340B Program In-
tegrity 
Subtitle B—Programs 
Subtitle C—Food and Drug Administration 
Subtitle D—Community Living Assistance Services and Supports 
Subtitle E—Miscellaneous 
DIVISION D—INDIAN HEALTH CARE IMPROVEMENT 
TITLE I—AMENDMENTS TO INDIAN LAWS 
TITLE II—IMPROVEMENT OF INDIAN HEALTH CARE PROVIDED 
UNDER THE SOCIAL SECURITY ACT
DIVISION A—AFFORDABLE 
HEALTH CARE CHOICES 
SEC. 100. PURPOSE; TABLE OF CONTENTS OF DIVISION; 
GENERAL DEFINITIONS. 
(a) PURPOSE.— 
(1) IN GENERAL.—The purpose of this division 
is to provide affordable, quality health care for all 
Americans and reduce the growth in health care 
spending. 
(2) BUILDING ON CURRENT SYSTEM.—This di-
vision achieves this purpose by building on what 
works in today’s health care system, while repairing 
the aspects that are broken. 
(3) INSURANCE REFORMS.—This division— 
(A) enacts strong insurance market re-
forms; 
(B) creates a new Health Insurance Ex-
change, with a public health insurance option 
alongside private plans; 
(C) includes sliding scale affordability 
credits; and 
(D) initiates shared responsibility among 
workers, employers, and the Government; 
so that all Americans have coverage of essential 
health benefits.
(4) HEALTH DELIVERY REFORM.—This division 
institutes health delivery system reforms both to in-
crease quality and to reduce growth in health spend-
ing so that health care becomes more affordable for 
businesses, families, and Government. 
(b) TABLE OF CONTENTS OF DIVISION.—The table 
of contents of this division is as follows: 
Sec. 100. Purpose; table of contents of division; general definitions. 
TITLE I—IMMEDIATE REFORMS 
Sec. 101. National high-risk pool program. 
Sec. 102. Ensuring value and lower premiums. 
Sec. 103. Ending health insurance rescission abuse. 
Sec. 104. Sunshine on price gouging by health insurance issuers. 
Sec. 105. Requiring the option of extension of dependent coverage for unin-
sured young adults. 
Sec. 106. Limitations on preexisting condition exclusions in group health plans 
in advance of applicability of new prohibition of preexisting 
condition exclusions. 
Sec. 107. Prohibiting acts of domestic violence from being treated as pre-
existing conditions. 
Sec. 108. Ending health insurance denials and delays of necessary treatment 
for children with deformities. 
Sec. 109. Elimination of lifetime limits. 
Sec. 110. Prohibition against postretirement reductions of retiree health bene-
fits by group health plans. 
Sec. 111. Reinsurance program for retirees. 
Sec. 112. Wellness program grants. 
Sec. 113. Extension of COBRA continuation coverage. 
Sec. 114. State Health Access Program grants. 
Sec. 115. Administrative simplification. 
TITLE II—PROTECTIONS AND STANDARDS FOR QUALIFIED 
HEALTH BENEFITS PLANS 
Subtitle A—General Standards 
Sec. 201. Requirements reforming health insurance marketplace. 
Sec. 202. Protecting the choice to keep current coverage. 
Subtitle B—Standards Guaranteeing Access to Affordable Coverage 
Sec. 211. Prohibiting preexisting condition exclusions. 
Sec. 212. Guaranteed issue and renewal for insured plans and prohibiting re-
scissions. 
Sec. 213. Insurance rating rules.
Sec. 214. Nondiscrimination in benefits; parity in mental health and substance 
abuse disorder benefits. 
Sec. 215. Ensuring adequacy of provider networks. 
Sec. 216. Requiring the option of extension of dependent coverage for unin-
sured young adults. 
Sec. 217. Consistency of costs and coverage under qualified health benefits 
plans during plan year. 
Subtitle C—Standards Guaranteeing Access to Essential Benefits 
Sec. 221. Coverage of essential benefits package. 
Sec. 222. Essential benefits package defined. 
Sec. 223. Health Benefits Advisory Committee. 
Sec. 224. Process for adoption of recommendations; adoption of benefit stand-
ards. 
Subtitle D—Additional Consumer Protections 
Sec. 231. Requiring fair marketing practices by health insurers. 
Sec. 232. Requiring fair grievance and appeals mechanisms. 
Sec. 233. Requiring information transparency and plan disclosure. 
Sec. 234. Application to qualified health benefits plans not offered through the 
Health Insurance Exchange. 
Sec. 235. Timely payment of claims. 
Sec. 236. Standardized rules for coordination and subrogation of benefits. 
Sec. 237. Application of administrative simplification. 
Sec. 238. State prohibitions on discrimination against health care providers. 
Sec. 239. Protection of physician prescriber information. 
Sec. 240. Dissemination of advance care planning information. 
Subtitle E—Governance 
Sec. 241. Health Choices Administration; Health Choices Commissioner. 
Sec. 242. Duties and authority of Commissioner. 
Sec. 243. Consultation and coordination. 
Sec. 244. Health Insurance Ombudsman. 
Subtitle F—Relation to Other Requirements; Miscellaneous 
Sec. 251. Relation to other requirements. 
Sec. 252. Prohibiting discrimination in health care. 
Sec. 253. Whistleblower protection. 
Sec. 254. Construction regarding collective bargaining. 
Sec. 255. Severability. 
Sec. 256. Treatment of Hawaii Prepaid Health Care Act. 
Sec. 257. Actions by State attorneys general. 
Sec. 258. Application of State and Federal laws regarding abortion. 
Sec. 259. Nondiscrimination on abortion and respect for rights of conscience. 
Sec. 260. Authority of Federal Trade Commission. 
Sec. 261. Construction regarding standard of care. 
Sec. 262. Restoring application of antitrust laws to health sector insurers. 
Sec. 263. Study and report on methods to increase EHR use by small health 
care providers. 
Sec. 264. Performance assessment and accountability: application of GPRA. 
Sec. 265. Limitation on abortion funding.
TITLE III—HEALTH INSURANCE EXCHANGE AND RELATED 
PROVISIONS 
Subtitle A—Health Insurance Exchange 
Sec. 301. Establishment of Health Insurance Exchange; outline of duties; defi-
nitions. 
Sec. 302. Exchange-eligible individuals and employers. 
Sec. 303. Benefits package levels. 
Sec. 304. Contracts for the offering of Exchange-participating health benefits 
plans. 
Sec. 305. Outreach and enrollment of Exchange-eligible individuals and employ-
ers in Exchange-participating health benefits plan. 
Sec. 306. Other functions. 
Sec. 307. Health Insurance Exchange Trust Fund. 
Sec. 308. Optional operation of State-based health insurance exchanges. 
Sec. 309. Interstate health insurance compacts. 
Sec. 310. Health insurance cooperatives. 
Sec. 311. Retention of DOD and VA authority. 
Subtitle B—Public Health Insurance Option 
Sec. 321. Establishment and administration of a public health insurance option 
as an Exchange-qualified health benefits plan. 
Sec. 322. Premiums and financing. 
Sec. 323. Payment rates for items and services. 
Sec. 324. Modernized payment initiatives and delivery system reform. 
Sec. 325. Provider participation. 
Sec. 326. Application of fraud and abuse provisions. 
Sec. 327. Application of HIPAA insurance requirements. 
Sec. 328. Application of health information privacy, security, and electronic 
transaction requirements. 
Sec. 329. Enrollment in public health insurance option is voluntary. 
Sec. 330. Enrollment in public health insurance option by Members of Con-
gress. 
Sec. 331. Reimbursement of Secretary of Veterans Affairs. 
Subtitle C—Individual Affordability Credits 
Sec. 341. Availability through Health Insurance Exchange. 
Sec. 342. Affordable credit eligible individual. 
Sec. 343. Affordability premium credit. 
Sec. 344. Affordability cost-sharing credit. 
Sec. 345. Income determinations. 
Sec. 346. Special rules for application to territories. 
Sec. 347. No Federal payment for undocumented aliens. 
TITLE IV—SHARED RESPONSIBILITY 
Subtitle A—Individual Responsibility 
Sec. 401. Individual responsibility. 
Subtitle B—Employer Responsibility 
PART 1—HEALTH COVERAGE PARTICIPATION REQUIREMENTS 
Sec. 411. Health coverage participation requirements.
Sec. 412. Employer responsibility to contribute toward employee and dependent 
coverage. 
Sec. 413. Employer contributions in lieu of coverage. 
Sec. 414. Authority related to improper steering. 
Sec. 415. Impact study on employer responsibility requirements. 
Sec. 416. Study on employer hardship exemption. 
PART 2—SATISFACTION OF HEALTH COVERAGE PARTICIPATION 
REQUIREMENTS 
Sec. 421. Satisfaction of health coverage participation requirements under the 
Employee Retirement Income Security Act of 1974. 
Sec. 422. Satisfaction of health coverage participation requirements under the 
Internal Revenue Code of 1986. 
Sec. 423. Satisfaction of health coverage participation requirements under the 
Public Health Service Act. 
Sec. 424. Additional rules relating to health coverage participation require-
ments. 
TITLE V—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 
Subtitle A—Provisions Relating to Health Care Reform 
PART 1—SHARED RESPONSIBILITY 
SUBPART A—INDIVIDUAL RESPONSIBILITY 
Sec. 501. Tax on individuals without acceptable health care coverage. 
SUBPART B—EMPLOYER RESPONSIBILITY 
Sec. 511. Election to satisfy health coverage participation requirements. 
Sec. 512. Health care contributions of nonelecting employers. 
PART 2—CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE 
EXPENSES 
Sec. 521. Credit for small business employee health coverage expenses. 
PART 3—LIMITATIONS ON HEALTH CARE RELATED EXPENDITURES 
Sec. 531. Distributions for medicine qualified only if for prescribed drug or in-
sulin. 
Sec. 532. Limitation on health flexible spending arrangements under cafeteria 
plans. 
Sec. 533. Increase in penalty for nonqualified distributions from health savings 
accounts. 
Sec. 534. Denial of deduction for federal subsidies for prescription drug plans 
which have been excluded from gross income. 
PART 4—OTHER PROVISIONS TO CARRY OUT HEALTH INSURANCE REFORM 
Sec. 541. Disclosures to carry out health insurance exchange subsidies. 
Sec. 542. Offering of exchange-participating health benefits plans through cafe-
teria plans. 
Sec. 543. Exclusion from gross income of payments made under reinsurance 
program for retirees.
Sec. 544. CLASS program treated in same manner as long-term care insur-
ance. 
Sec. 545. Exclusion from gross income for medical care provided for Indians. 
Subtitle B—Other Revenue Provisions 
PART 1—GENERAL PROVISIONS 
Sec. 551. Surcharge on high income individuals. 
Sec. 552. Excise tax on medical devices. 
Sec. 553. Expansion of information reporting requirements. 
Sec. 554. Repeal of worldwide allocation of interest. 
Sec. 555. Exclusion of unprocessed fuels from the cellulosic biofuel producer 
credit. 
PART 2—PREVENTION OF TAX AVOIDANCE 
Sec. 561. Limitation on treaty benefits for certain deductible payments. 
Sec. 562. Codification of economic substance doctrine; penalties. 
Sec. 563. Certain large or publicly traded persons made subject to a more likely 
than not standard for avoiding penalties on underpayments. 
PART 3—PARITY IN HEALTH BENEFITS 
Sec. 571. Certain health related benefits applicable to spouses and dependents 
extended to eligible beneficiaries. 
(c) GENERAL DEFINITIONS.—Except as otherwise 
provided, in this division: 
(1) ACCEPTABLE COVERAGE.—The term ‘‘ac-
ceptable coverage’’ has the meaning given such term 
in section 302(d)(2). 
(2) BASIC PLAN.—The term ‘‘basic plan’’ has 
the meaning given such term in section 303(c). 
(3) 
COMMISSIONER.—The 
term 
‘‘Commis-
sioner’’ means the Health Choices Commissioner es-
tablished under section 241. 
(4) COST-SHARING.—The term ‘‘cost-sharing’’ 
includes deductibles, coinsurance, copayments, and 
similar charges, but does not include premiums, bal-
ance billing amounts for non-network providers, or 
spending for non-covered services. 
(5) DEPENDENT.—The term ‘‘dependent’’ has 
the meaning given such term by the Commissioner 
and includes a spouse. 
(6) EMPLOYMENT-BASED HEALTH PLAN.—The 
term ‘‘employment-based health plan’’— 
(A) means a group health plan (as defined 
in section 733(a)(1) of the Employee Retire-
ment Income Security Act of 1974); 
(B) includes such a plan that is the fol-
lowing: 
(i) FEDERAL, STATE, AND
TRIBAL 
GOVERNMENTAL PLANS.—A governmental 
plan (as defined in section 3(32) of the 
Employee Retirement Income Security Act 
of 1974), including a health benefits plan 
offered under chapter 89 of title 5, United 
States Code. 
(ii) CHURCH PLANS.—A church plan 
(as defined in section 3(33) of the Em-
ployee Retirement Income Security Act of 
1974); and 
(C) excludes coverage described in section 
302(d)(2)(E) (relating to TRICARE).
(7) ENHANCED
PLAN.—The term ‘‘enhanced 
plan’’ has the meaning given such term in section 
303(c). 
(8) ESSENTIAL BENEFITS PACKAGE.—The term 
‘‘essential benefits package’’ is defined in section 
222(a). 
(9) EXCHANGE-PARTICIPATING HEALTH BENE-
FITS
PLAN.—The term ‘‘Exchange-participating 
health benefits plan’’ means a qualified health bene-
fits plan that is offered through the Health Insur-
ance Exchange and may be purchased directly from 
the entity offering the plan or through enrollment 
agents and brokers. 
(10) FAMILY.—The term ‘‘family’’ means an 
individual and includes the individual’s dependents. 
(11) FEDERAL
POVERTY
LEVEL; FPL.—The 
terms ‘‘Federal poverty level’’ and ‘‘FPL’’ have the 
meaning given the term ‘‘poverty line’’ in section 
673(2) of the Community Services Block Grant Act 
(42 U.S.C. 9902(2)), including any revision required 
by such section. 
(12) HEALTH
BENEFITS
PLAN.—The term 
‘‘health benefits plan’’ means health insurance cov-
erage and an employment-based health plan and in-
cludes the public health insurance option.
(13) HEALTH
INSURANCE
COVERAGE.—The 
term ‘‘health insurance coverage’’ has the meaning 
given such term in section 2791 of the Public 
Health Service Act, but does not include coverage in 
relation to its provision of excepted benefits— 
(A) described in paragraph (1) of sub-
section (c) of such section; 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. 
(14) HEALTH INSURANCE ISSUER.—The term 
‘‘health insurance issuer’’ has the meaning given 
such term in section 2791(b)(2) of the Public Health 
Service Act. 
(15) HEALTH
INSURANCE
EXCHANGE.—The 
term ‘‘Health Insurance Exchange’’ means the 
Health Insurance Exchange established under sec-
tion 301. 
(16) INDIAN.—The term ‘‘Indian’’ has the 
meaning given such term in section 4 of the Indian 
Health Care Improvement Act (24 U.S.C. 1603). 
(17) INDIAN
HEALTH
CARE
PROVIDER.—The 
term ‘‘Indian health care provider’’ means a health 
care program operated by the Indian Health Service,
an Indian tribe, tribal organization, or urban Indian 
organization as such terms are defined in section 4 
of the Indian Health Care Improvement Act (25 
U.S.C. 1603). 
(18) MEDICAID.—The term ‘‘Medicaid’’ means 
a State plan under title XIX of the Social Security 
Act (whether or not the plan is operating under a 
waiver under section 1115 of such Act). 
(19) MEDICAID
ELIGIBLE
INDIVIDUAL.—The 
term ‘‘Medicaid eligible individual’’ means an indi-
vidual who is eligible for medical assistance under 
Medicaid. 
(20) MEDICARE.—The term ‘‘Medicare’’ means 
the health insurance programs under title XVIII of 
the Social Security Act. 
(21) PLAN SPONSOR.—The term ‘‘plan spon-
sor’’ has the meaning given such term in section 
3(16)(B) of the Employee Retirement Income Secu-
rity Act of 1974. 
(22) PLAN
YEAR.—The term ‘‘plan year’’ 
means— 
(A) with respect to an employment-based 
health plan, a plan year as specified under such 
plan; or
(B) with respect to a health benefits plan 
other than an employment-based health plan, a 
12-month period as specified by the Commis-
sioner. 
(23) PREMIUM PLAN; PREMIUM-PLUS PLAN.— 
The terms ‘‘premium plan’’ and ‘‘premium-plus 
plan’’ have the meanings given such terms in section 
303(c). 
(24) QHBP OFFERING
ENTITY.—The terms 
‘‘QHBP offering entity’’ means, with respect to a 
health benefits plan that is— 
(A) a group health plan (as defined, sub-
ject to subsection (d), in section 733(a)(1) of 
the Employee Retirement Income Security Act 
of 1974), the plan sponsor in relation to such 
group health plan, except that, in the case of a 
plan maintained jointly by 1 or more employers 
and 1 or more employee organizations and with 
respect to which an employer is the primary 
source of financing, such term means such em-
ployer; 
(B) health insurance coverage, the health 
insurance issuer offering the coverage; 
(C) the public health insurance option, the 
Secretary of Health and Human Services;
(D) a non-Federal governmental plan (as 
defined in section 2791(d) of the Public Health 
Service Act), the State or political subdivision 
of a State (or agency or instrumentality of such 
State or subdivision) which establishes or main-
tains such plan; or 
(E) a Federal governmental plan (as de-
fined in section 2791(d) of the Public Health 
Service Act), the appropriate Federal official. 
(25) QUALIFIED
HEALTH
BENEFITS
PLAN.— 
The term ‘‘qualified health benefits plan’’ means a 
health benefits plan that— 
(A) meets the requirements for such a plan 
under title II and includes the public health in-
surance option; and 
(B) is offered by a QHBP offering entity 
that meets the applicable requirements of such 
title with respect to such plan. 
(26) PUBLIC
HEALTH
INSURANCE
OPTION.— 
The term ‘‘public health insurance option’’ means 
the public health insurance option as provided under 
subtitle B of title III. 
(27) SERVICE AREA; PREMIUM RATING AREA.— 
The terms ‘‘service area’’ and ‘‘premium rating
area’’ mean with respect to health insurance cov-
erage— 
(A) offered other than through the Health 
Insurance Exchange, such an area as estab-
lished by the QHBP offering entity of such cov-
erage in accordance with applicable State law; 
and 
(B) offered through the Health Insurance 
Exchange, such an area as established by such 
entity in accordance with applicable State law 
and applicable rules of the Commissioner for 
Exchange-participating health benefits plans. 
(28) STATE.—The term ‘‘State’’ means the 50 
States and the District of Columbia and includes— 
(A) for purposes of title I, Puerto Rico, the 
Virgin Islands, Guam, American Samoa, and 
the Northern Mariana Islands; and 
(B) for purposes of titles II and III, as 
elected under and subject to section 346, Puer-
to Rico, the Virgin Islands, Guam, American 
Samoa, and the Northern Mariana Islands. 
(29) STATE
MEDICAID
AGENCY.—The term 
‘‘State Medicaid agency’’ means, with respect to a 
Medicaid plan, the single State agency responsible
for administering such plan under title XIX of the 
Social Security Act. 
(30) Y1, Y2, ETC.—The terms ‘‘Y1’’, ‘‘Y2’’, 
‘‘Y3’’, ‘‘Y4’’, ‘‘Y5’’, and similar subsequently num-
bered terms, mean 2013 and subsequent years, re-
spectively. 
TITLE I—IMMEDIATE REFORMS 
SEC. 101. NATIONAL HIGH-RISK POOL PROGRAM. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a temporary national high-risk 
pool program (in this section referred to as the ‘‘pro-
gram’’) to provide health benefits to eligible individuals 
during the period beginning on January 1, 2010, and, sub-
ject to subsection (h)(3)(B), ending on the date on which 
the Health Insurance Exchange is established. 
(b) ADMINISTRATION.—The Secretary may carry out 
this section directly or, pursuant to agreements, grants, 
or contracts with States, through State high-risk pool pro-
grams provided that the requirements of this section are 
met. For a State without a high-risk pool program, the 
Secretary may work with the State to coordinate with 
other forms of coverage expansions, such as State public- 
private partnerships.
(c) ELIGIBILITY.—For purposes of this section, the 
term ‘‘eligible individual’’ means an individual who meets 
the requirements of subsection (i)(1)— 
(1) who— 
(A) is not eligible for— 
(i) benefits under title XVIII, XIX, or 
XXI of the Social Security Act; or 
(ii) coverage under an employment- 
based health plan (not including coverage 
under a COBRA continuation provision, as 
defined in section 107(d)(1)); and 
(B) who— 
(i) is an eligible individual under sec-
tion 2741(b) of the Public Health Service 
Act; or 
(ii) is medically eligible for the pro-
gram by virtue of being an individual de-
scribed in subsection (d) at any time dur-
ing the 6-month period ending on the date 
the individual applies for high-risk pool 
coverage under this section; 
(2) who is the spouse or dependent of an indi-
vidual who is described in paragraph (1); 
(3) who has not had health insurance coverage 
or coverage under an employment-based health plan
for at least the 6-month period immediately pre-
ceding the date of the individual’s application for 
high-risk pool coverage under this section; or 
(4) who on or after October 29, 2009, had em-
ployment-based retiree health coverage (as defined in 
subsection (i)) and the annual increase in premiums 
for such individual under such coverage (for any cov-
erage period beginning on or after such date) ex-
ceeds such excessive percentage as the Secretary 
shall specify. 
For purposes of paragraph (1)(A)(ii), a person who is in 
a waiting period as defined in section 2701(b)(4) of the 
Public Health Service Act shall not be considered to be 
eligible for coverage under an employment-based health 
plan. 
(d) MEDICALLY
ELIGIBLE
REQUIREMENTS.—For 
purposes of subsection (c)(1)(B)(ii), an individual de-
scribed in this subsection is an individual— 
(1) who, during the 6-month period ending on 
the date the individual applies for high-risk pool cov-
erage under this section applied for individual health 
insurance coverage and— 
(A) was denied such coverage because of a 
preexisting condition or health status; or 
(B) was offered such coverage—
(i) under terms that limit the cov-
erage for such a preexisting condition; or 
(ii) at a premium rate that is above 
the premium rate for high risk pool cov-
erage under this section; or 
(2) who has an eligible medical condition as de-
fined by the Secretary. 
In making a determination under paragraph (1) of wheth-
er an individual was offered individual coverage at a pre-
mium rate above the premium rate for high risk pool cov-
erage, the Secretary shall make adjustments to offset dif-
ferences in premium rating that are attributable solely to 
differences in age rating. 
(e) ENROLLMENT.—To enroll in coverage in the pro-
gram, an individual shall— 
(1) submit to the Secretary an application for 
participation in the program, at such time, in such 
manner, and containing such information as the Sec-
retary shall require; 
(2) attest, consistent with subsection (i)(2), 
that the individual is an eligible individual and is a 
resident of one of the 50 States or the District of 
Columbia; and 
(3) if the individual had other prior health in-
surance coverage or coverage under an employment-
based health plan during the previous 6 months, 
provide information as to the nature and source of 
such coverage and reasons for its discontinuance. 
(f) PROTECTION AGAINST DUMPING RISKS BY IN-
SURERS.— 
(1) IN GENERAL.—The Secretary shall establish 
criteria for determining whether health insurance 
issuers and employment-based health plans have dis-
couraged an individual from remaining enrolled in 
prior coverage based on that individual’s health sta-
tus. 
(2) SANCTIONS.—An issuer or employment- 
based health plan shall be responsible for reimburs-
ing the program for the medical expenses incurred 
by the program for an individual who, based on cri-
teria established by the Secretary, the Secretary 
finds was encouraged by the issuer to disenroll from 
health benefits coverage prior to enrolling in the pro-
gram. The criteria shall include at least the fol-
lowing circumstances: 
(A) In the case of prior coverage obtained 
through an employer, the provision by the em-
ployer, group health plan, or the issuer of 
money or other financial consideration for 
disenrolling from the coverage.
(B) In the case of prior coverage obtained 
directly from an issuer or under an employ-
ment-based health plan— 
(i) the provision by the issuer or plan 
of money or other financial consideration 
for disenrolling from the coverage; or 
(ii) in the case of an individual whose 
premium for the prior coverage exceeded 
the premium required by the program (ad-
justed based on the age factors applied to 
the prior coverage)— 
(I) the prior coverage is a policy 
that is no longer being actively mar-
keted (as defined by the Secretary) by 
the issuer; or 
(II) the prior coverage is a policy 
for which duration of coverage form 
issue or health status are factors that 
can be considered in determining pre-
miums at renewal. 
(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as constituting exclusive 
remedies for violations of criteria established under 
paragraph (1) or as preventing States from applying
or enforcing such paragraph or other provisions 
under law with respect to health insurance issuers. 
(g) COVERED BENEFITS, COST-SHARING, PREMIUMS, 
AND CONSUMER PROTECTIONS.— 
(1) PREMIUM.—The monthly premium charged 
to eligible individuals for coverage under the pro-
gram— 
(A) may vary by age so long as the ratio 
of the highest such premium to the lowest such 
premium does not exceed the ratio of 2 to 1; 
(B) shall be set at a level that does not ex-
ceed 125 percent of the prevailing standard rate 
for comparable coverage in the individual mar-
ket; and 
(C) shall be adjusted for geographic vari-
ation in costs. 
Health insurance issuers shall provide such informa-
tion as the Secretary may require to determine pre-
vailing standard rates under this paragraph. The 
Secretary shall establish standard rates in consulta-
tion with the National Association of Insurance 
Commissioners. 
(2) COVERED
BENEFITS.—Covered benefits 
under the program shall be determined by the Sec-
retary and shall be consistent with the basic cat-
egories in the essential benefits package described in 
section 222. Under such benefits package— 
(A) the annual deductible for such benefits 
may not be higher than $1,500 for an indi-
vidual or such higher amount for a family as 
determined by the Secretary; 
(B) there may not be annual or lifetime 
limits; and 
(C) the maximum cost-sharing with respect 
to an individual (or family) for a year shall not 
exceed $5,000 for an individual (or $10,000 for 
a family). 
(3) NO
PREEXISTING
CONDITION
EXCLUSION 
PERIODS.—No preexisting condition exclusion period 
shall be imposed on coverage under the program. 
(4) APPEALS.—The Secretary shall establish an 
appeals process for individuals to appeal a deter-
mination of the Secretary— 
(A) with respect to claims submitted under 
this section; and 
(B) with respect to eligibility determina-
tions made by the Secretary under this section. 
(5) STATE
CONTRIBUTION, MAINTENANCE
OF 
EFFORT.—As a condition of providing health bene-
fits under this section to eligible individual residing 
in a State— 
(A) in the case of a State in which a quali-
fied high-risk pool (as defined under section 
2744(c)(2) of the Public Health Service Act) 
was in effect as of July 1, 2009, the Secretary 
shall require the State make a maintenance of 
effort payment each year that the high-risk pool 
is in effect equal to an amount not less than the 
amount of all sources of funding for high-risk 
pool coverage made by that State in the year 
ending July 1, 2009; and 
(B) in the case of a State which required 
health insurance issuers to contribute to a State 
high-risk pool or similar arrangement for the 
assessment against such issuers for pool losses, 
the State shall maintain such a contribution ar-
rangement among such issuers. 
(6) LIMITING PROGRAM EXPENDITURES.—The 
Secretary shall, with respect to the program— 
(A) establish procedures to protect against 
fraud, waste, and abuse under the program; 
and 
(B) provide for other program integrity 
methods.
(7) TREATMENT AS CREDITABLE COVERAGE.— 
Coverage under the program shall be treated, for 
purposes of applying the definition of ‘‘creditable 
coverage’’ under the provisions of title XXVII of the 
Public Health Service Act, part 6 of subtitle B of 
title I of Employee Retirement Income Security Act 
of 1974, and chapter 100 of the Internal Revenue 
Code of 1986 (and any other provision of law that 
references such provisions) in the same manner as 
if it were coverage under a State health benefits risk 
pool described in section 2701(c)(1)(G) of the Public 
Health Service Act. 
(h) FUNDING; TERMINATION OF AUTHORITY.— 
(1) IN GENERAL.—There is appropriated to the 
Secretary, out of any moneys in the Treasury not 
otherwise appropriated, $5,000,000,000 to pay 
claims against (and administrative costs of) the 
high-risk pool under this section in excess of the pre-
miums collected with respect to eligible individuals 
enrolled in the high-risk pool. Such funds shall be 
available without fiscal year limitation. 
(2) INSUFFICIENT FUNDS.—If the Secretary es-
timates for any fiscal year that the aggregate 
amounts available for payment of expenses of the 
high-risk pool will be less than the amount of the ex-
penses, the Secretary shall make such adjustments 
as are necessary to eliminate such deficit, including 
reducing benefits, increasing premiums, or estab-
lishing waiting lists. 
(3) TERMINATION OF AUTHORITY.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), coverage of eligible individ-
uals under a high-risk pool shall terminate as 
of the date on which the Health Insurance Ex-
change is established. 
(B) TRANSITION
TO
EXCHANGE.—The 
Secretary shall develop procedures to provide 
for the transition of eligible individuals who are 
enrolled in health insurance coverage offered 
through a high-risk pool established under this 
section to be enrolled in acceptable coverage. 
Such procedures shall ensure that there is no 
lapse in coverage with respect to the individual 
and may extend coverage offered through such 
a high-risk pool beyond 2012 if the Secretary 
determines necessary to avoid such a lapse. 
(i) APPLICATION AND VERIFICATION OF REQUIRE-
MENT OF CITIZENSHIP OR LAWFUL PRESENCE IN THE 
UNITED STATES.—
(1) REQUIREMENT.—No individual shall be an 
eligible individual under this section unless the indi-
vidual is a citizen or national of the United States 
or is lawfully present in a State in the United States 
(other than as a nonimmigrant described in a sub-
paragraph (excluding subparagraphs (K), (T), (U), 
and (V)) of section 101(a)(15) of the Immigration 
and Nationality Act). 
(2) APPLICATION
OF
VERIFICATION
PROCESS 
FOR
AFFORDABILITY
CREDITS.—The provisions of 
paragraphs (4) (other than subparagraphs (F) and 
(H)(i)) and (5)(A) of section 341(b), and of sub-
sections (v) (other than paragraph (3)) and (x) of 
section 205 of the Social Security Act, shall apply to 
the verification of eligibility of an eligible individual 
by the Secretary (or by a State agency approved by 
the Secretary) for benefits under this section in the 
same manner as such provisions apply to the 
verification of eligibility of an affordable credit eligi-
ble individual for affordability credits by the Com-
missioner under section 341(b). The agreement re-
ferred to in section 205(v)(2)(A) of the Social Secu-
rity Act (as applied under this paragraph) shall also 
provide for funding, to be payable from the amount 
made available under subsection (h)(1), to the Com-
missioner of Social Security in such amount as is 
agreed to by such Commissioner and the Secretary. 
(j) EMPLOYMENT-BASED RETIREE HEALTH COV-
ERAGE.—In this section, the term ‘‘employment-based re-
tiree health coverage’’ means health insurance or other 
coverage of health care costs (whether provided by vol-
untary insurance coverage or pursuant to statutory or con-
tractual obligation) for individuals (or for such individuals 
and their spouses and dependents) under a group health 
plan based on their status as retired participants in such 
plan. 
SEC. 102. ENSURING VALUE AND LOWER PREMIUMS. 
(a) GROUP HEALTH INSURANCE COVERAGE.—Title 
XXVII of the Public Health Service Act is amended by 
inserting after section 2713 the following new section: 
‘‘SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS. 
‘‘(a) IN GENERAL.—Each health insurance issuer 
that offers health insurance coverage in the small or large 
group market shall provide that for any plan year in which 
the coverage has a medical loss ratio below a level specified 
by the Secretary (but not less than 85 percent), the issuer 
shall provide in a manner specified by the Secretary for 
rebates to enrollees of the amount by which the issuer’s 
medical loss ratio is less than the level so specified.
‘‘(b) IMPLEMENTATION.—The Secretary shall estab-
lish a uniform definition of medical loss ratio and method-
ology for determining how to calculate it based on the av-
erage medical loss ratio in a health insurance issuer’s book 
of business for the small and large group market. Such 
methodology shall be designed to take into account the 
special circumstances of smaller plans, different types of 
plans, and newer plans. In determining the medical loss 
ratio, the Secretary shall exclude State taxes and licensing 
or regulatory fees. Such methodology shall be designed 
and exceptions shall be established to ensure adequate 
participation by health insurance issuers, competition in 
the health insurance market, and value for consumers so 
that their premiums are used for services. 
‘‘(c) SUNSET.—Subsections (a) and (b) shall not 
apply to health insurance coverage on and after the first 
date that health insurance coverage is offered through the 
Health Insurance Exchange.’’. 
(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.— 
Such title is further amended by inserting after section 
2753 the following new section: 
‘‘SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS. 
‘‘The provisions of section 2714 shall apply to health 
insurance coverage offered in the individual market in the 
same manner as such provisions apply to health insurance
coverage offered in the small or large group market except 
to the extent the Secretary determines that the application 
of such section may destabilize the existing individual 
market.’’. 
(c) IMMEDIATE
IMPLEMENTATION.—The amend-
ments made by this section shall apply in the group and 
individual market for plan years beginning on or after 
January 1, 2010, or as soon as practicable after such date. 
SEC. 103. ENDING HEALTH INSURANCE RESCISSION ABUSE. 
(a) CLARIFICATION REGARDING APPLICATION
OF 
GUARANTEED
RENEWABILITY
OF
INDIVIDUAL
AND 
GROUP HEALTH INSURANCE COVERAGE.—Sections 2712 
and 2742 of the Public Health Service Act (42 U.S.C. 
300gg–12, 300gg–42) are each amended— 
(1) in its heading, by inserting ‘‘AND CON-
TINUATION
IN
FORCE, INCLUDING
PROHIBI-
TION OF RESCISSION,’’ after ‘‘GUARANTEED RE-
NEWABILITY’’; and 
(2) in subsection (a), by inserting ‘‘, including 
without rescission,’’ after ‘‘continue in force’’. 
(b) SECRETARIAL GUIDANCE REGARDING RESCIS-
SIONS.— 
(1) GROUP HEALTH INSURANCE MARKET.—Sec-
tion 2712 of such Act (42 U.S.C. 300gg–12) is 
amended by adding at the end the following:
‘‘(f) RESCISSION.—A health insurance issuer may re-
scind group health insurance coverage only upon clear and 
convincing evidence of fraud described in subsection 
(b)(2), under procedures that provide for independent, ex-
ternal third-party review.’’. 
(2) INDIVIDUAL
HEALTH
MARKET.—Section 
2742 of such Act (42 U.S.C. 300gg–42) is amended 
by adding at the end the following: 
‘‘(f) RESCISSION.—A health insurance issuer may re-
scind individual health insurance coverage only upon clear 
and convincing evidence of fraud described in subsection 
(b)(2), under procedures that provide for independent, ex-
ternal third-party review.’’. 
(3) GUIDANCE.—The Secretary of Health and 
Human Services, no later than 90 days after the 
date of the enactment of this Act, shall issue guid-
ance implementing the amendments made by para-
graphs (1) and (2), including procedures for inde-
pendent, external third-party review. 
(c) OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD-PARTY REVIEW IN CERTAIN CASES.— 
(1) INDIVIDUAL MARKET.—Subpart 1 of part B 
of title XXVII of such Act (42 U.S.C. 300gg–41 et 
seq.) is amended by adding at the end the following:
‘‘SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD-PARTY REVIEW IN CASES OF RESCIS-
SION. 
‘‘(a) NOTICE AND REVIEW RIGHT.—If a health in-
surance issuer determines to rescind health insurance cov-
erage for an individual in the individual market, before 
such rescission may take effect the issuer shall provide the 
individual with notice of such proposed rescission and an 
opportunity for a review of such determination by an inde-
pendent, external third-party under procedures specified 
by the Secretary under section 2742(f). 
‘‘(b) INDEPENDENT DETERMINATION.—If the indi-
vidual requests such review by an independent, external 
third-party of a rescission of health insurance coverage, 
the coverage shall remain in effect until such third party 
determines that the coverage may be rescinded under the 
guidance issued by the Secretary under section 2742(f).’’. 
(2) APPLICATION
TO
GROUP
HEALTH
INSUR-
ANCE.—Such title is further amended by adding 
after section 2702 the following new section: 
‘‘SEC. 2703. OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD-PARTY REVIEW IN CASES OF RESCIS-
SION. 
‘‘The provisions of section 2746 shall apply to group 
health insurance coverage in the same manner as such 
provisions apply to individual health insurance coverage,
except that any reference to section 2742(f) is deemed a 
reference to section 2712(f).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act and shall apply to rescissions occurring on and 
after July 1, 2010, with respect to health insurance cov-
erage issued before, on, or after such date. 
SEC. 104. SUNSHINE ON PRICE GOUGING BY HEALTH IN-
SURANCE ISSUERS. 
(a) INITIAL PREMIUM REVIEW PROCESS.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services, in conjunction with States, shall 
establish a process for the annual review, beginning 
with 2010 and subject to subsection (c)(3)(A), of in-
creases in premiums for health insurance coverage. 
(2) JUSTIFICATION AND DISCLOSURE.— Such 
process shall require health insurance issuers to sub-
mit a justification for any premium increase prior to 
implementation of the increase. Such issuers shall 
prominently post such information on their websites. 
The Secretary shall ensure the public disclosure of 
information on such increases and justifications for 
all health insurance issuers. 
(b) CONTINUING PREMIUM REVIEW PROCESS.—
(1) INFORMING
COMMISSIONER
OF
PREMIUM 
INCREASE PATTERNS.—As a condition of receiving a 
grant under subsection (c)(1), a State, through its 
Commissioner of Insurance, shall— 
(A) provide the Health Choices Commis-
sioner with information about trends in pre-
mium increases in health insurance coverage in 
premium rating areas in the State; and 
(B) make recommendations, as appro-
priate, to such Commissioner about whether 
particular health insurance issuers should be 
excluded from participation in the Health In-
surance Exchange based on a pattern of exces-
sive or unjustified premium increases. 
(2) COMMISSIONER AUTHORITY REGARDING EX-
CHANGE PARTICIPATION.—In making determinations 
concerning entering into contracts with QHBP offer-
ing entities for the offering of Exchange-partici-
pating health plans under section 304, the Commis-
sioner shall take into account the information and 
recommendations provided under paragraph (1). 
(3) MONITORING BY COMMISSIONER OF PRE-
MIUM INCREASES.— 
(A) IN GENERAL.—Beginning in 2014, the 
Commissioner, in conjunction with the States
and in place of the monitoring by the Secretary 
under subsection (a)(1) and consistent with the 
provisions of subsection (a)(2), shall monitor 
premium increases of health insurance coverage 
offered inside the Health Insurance Exchange 
under section 304 and outside of the Exchange. 
(B) CONSIDERATION
IN
OPENING
EX-
CHANGE.—In 
determining 
under 
section 
302(e)(4) whether to make additional larger 
employers eligible to participate in the Health 
Insurance Exchange, the Commissioner shall 
take into account any excess of premium 
growth outside the Exchange as compared to 
the rate of such growth inside the Exchange, 
including information reported by the States. 
(c) GRANTS IN SUPPORT OF PROCESS.— 
(1) PREMIUM
REVIEW
GRANTS
DURING
2010 
THROUGH 2014.—The Secretary shall carry out a 
program of grants to States during the 5-year period 
beginning with 2010 to assist them in carrying out 
subsection (a), including— 
(A) in reviewing and, if appropriate under 
State law, approving premium increases for 
health insurance coverage; and
(B) in providing information and rec-
ommendations to the Commissioner under sub-
section (b)(1). 
(2) FUNDING.— 
(A) IN GENERAL.—Out of any funds in the 
Treasury not otherwise appropriated, there are 
appropriated to the Secretary $1,000,000,000, 
to be available for expenditure for grants under 
paragraph (1) and subparagraph (B). 
(B) FURTHER AVAILABILITY FOR INSUR-
ANCE
REFORM
AND
CONSUMER
PROTECTION 
GRANTS.—If the amounts appropriated under 
subparagraph (A) are not fully obligated under 
grants under paragraph (1) by the end of 2014, 
any remaining funds shall remain available to 
the Secretary for grants to States for planning 
and implementing the insurance reforms and 
consumer protections under title II. 
(C) ALLOCATION.—The Secretary shall es-
tablish a formula for determining the amount of 
any grant to a State under this subsection. 
Under such formula— 
(i) the Secretary shall consider the 
number of plans of health insurance cov-
erage offered in each State and the popu-
lation of the State; and 
(ii) no State qualifying for a grant 
under paragraph (1) shall receive less than 
$1,000,000, or more than $5,000,000 for a 
grant year. 
SEC. 105. REQUIRING THE OPTION OF EXTENSION OF DE-
PENDENT 
COVERAGE 
FOR 
UNINSURED 
YOUNG ADULTS. 
(a) UNDER GROUP HEALTH PLANS.— 
(1) PHSA.—Title XXVII of the Public Health 
Service Act is amended by inserting after section 
2702 the following new section: 
‘‘SEC. 2703. REQUIRING THE OPTION OF EXTENSION OF DE-
PENDENT 
COVERAGE 
FOR 
UNINSURED 
YOUNG ADULTS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering health insurance coverage in con-
nection with a group health plan that provides coverage 
for dependent children shall make available such coverage, 
at the option of the participant involved, for one or more 
qualified children (as defined in subsection (b)) of the par-
ticipant. 
‘‘(b) QUALIFIED CHILD DEFINED.—In this section, 
the term ‘qualified child’ means, with respect to a partici-
pant in a group health plan or group health insurance cov-
erage, an individual who (but for age) would be treated 
as a dependent child of the participant under such plan 
or coverage and who— 
‘‘(1) is under 27 years of age; and 
‘‘(2) is not enrolled as a participant, bene-
ficiary, or enrollee (other than under this section, 
section 2746, or section 704 of the Employee Retire-
ment Income Security Act of 1974) under any 
health insurance coverage or group health plan. 
‘‘(c) PREMIUMS.—Nothing in this section shall be 
construed as preventing a group health plan or health in-
surance issuer with respect to group health insurance cov-
erage from increasing the premiums otherwise required for 
coverage provided under this section consistent with 
standards established by the Secretary based upon family 
size.’’. 
(2) EMPLOYEE RETIREMENT INCOME SECURITY 
ACT OF 1974.— 
(A) IN GENERAL.—Part 7 of subtitle B of 
title I of the Employee Retirement Income Se-
curity Act of 1974 is amended by inserting 
after section 703 the following new section:
‘‘SEC. 704. REQUIRING THE OPTION OF EXTENSION OF DE-
PENDENT 
COVERAGE 
FOR 
UNINSURED 
YOUNG ADULTS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering health insurance coverage in con-
nection with a group health plan that provides coverage 
for dependent children shall make available such coverage, 
at the option of the participant involved, for one or more 
qualified children (as defined in subsection (b)) of the par-
ticipant. 
‘‘(b) QUALIFIED CHILD DEFINED.—In this section, 
the term ‘qualified child’ means, with respect to a partici-
pant in a group health plan or group health insurance cov-
erage, an individual who (but for age) would be treated 
as a dependent child of the participant under such plan 
or coverage and who— 
‘‘(1) is under 27 years of age; and 
‘‘(2) is not enrolled as a participant, bene-
ficiary, or enrollee (other than under this section) 
under any health insurance coverage or group health 
plan. 
‘‘(c) PREMIUMS.—Nothing in this section shall be 
construed as preventing a group health plan or health in-
surance issuer with respect to group health insurance cov-
erage from increasing the premiums otherwise required for 
coverage provided under this section consistent with
standards established by the Secretary based upon family 
size.’’. 
(B) CLERICAL AMENDMENT.—The table of 
contents of such Act is amended by inserting 
after the item relating to section 703 the fol-
lowing new item: 
‘‘Sec. 704. Requiring the option of extension of dependent coverage for unin-
sured young adults.’’. 
(3) IRC.— 
(A) IN GENERAL.—Subchapter A of chap-
ter 100 of the Internal Revenue Code of 1986 
is amended by adding at the end the following 
new section: 
‘‘SEC. 9804. REQUIRING THE OPTION OF EXTENSION OF DE-
PENDENT 
COVERAGE 
FOR 
UNINSURED 
YOUNG ADULTS. 
‘‘(a) IN GENERAL.—A group health plan that pro-
vides coverage for dependent children shall make available 
such coverage, at the option of the participant involved, 
for one or more qualified children (as defined in subsection 
(b)) of the participant. 
‘‘(b) QUALIFIED CHILD DEFINED.—In this section, 
the term ‘qualified child’ means, with respect to a partici-
pant in a group health plan, an individual who (but for 
age) would be treated as a dependent child of the partici-
pant under such plan and who—
terms of the plan if such reduction of benefits occurs after 
the date the participant retired for purposes of the plan 
and reduces benefits that were provided to the participant, 
or the participant’s beneficiary, as of the date the partici-
pant retired unless such reduction is also made with re-
spect to active participants. 
‘‘(c) REDUCTION DESCRIBED.— For purposes of this 
section, a reduction in benefits— 
‘‘(1) with respect to premiums occurs under a 
group health plan when a participant’s (or bene-
ficiary’s) share of the total premium (or, in the case 
of a self-insured plan, the costs of coverage) of the 
plan substantially increases; or 
‘‘(2) with respect to other cost-sharing and ben-
efits under a group health plan occurs when there is 
a substantial decrease in the actuarial value of the 
benefit package under the plan. 
For purposes of this section, the term ‘substantial’ means 
an increase in the total premium share or a decrease in 
the actuarial value of the benefit package that is greater 
than 5 percent.’’ 
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act, as amended by sections 
108 and 109, is amended by inserting after the item relat-
ing to section 716 the following new item:
211 
(c) NO REQUIREMENT TO COMPACT.—Nothing in 
this section shall be construed to require a State to join 
a compact. 
(d) STATE AUTHORITY.—A State may not enter into 
a compact under this subsection unless the State enacts 
a law after the date of enactment of this Act that specifi-
cally authorizes the State to enter into such compact. 
(e) CONSUMER PROTECTIONS.—If a State enters into 
a compact it must retain responsibility for the consumer 
protections of its residents and its residents retain the 
right to bring a claim in a State court in the State in 
which the resident resides. 
(f) ASSISTANCE TO COMPACTING STATES.— 
(1) IN GENERAL.—Beginning January 1, 2015, 
the Secretary shall make awards, from amounts ap-
propriated under paragraph (5), to States in the 
amount specified in paragraph (2) for the uses de-
scribed in paragraph (3). 
(2) AMOUNT SPECIFIED.— 
(A) IN GENERAL.—For each fiscal year, 
the Secretary shall determine the total amount 
that the Secretary will make available for 
grants under this subsection. 
(B) STATE AMOUNT.—For each State that 
is awarded a grant under paragraph (1), the
315 
(2) The table of sections for subpart B of part 
III of subchapter A of chapter 61 is amended by 
adding at the end the following new item: 
‘‘Sec. 6050X. Returns relating to health insurance coverage.’’. 
(e) SECTION 15 NOT TO APPLY.—The amendment 
made by subsection (a) shall not be treated as a change 
in a rate of tax for purposes of section 15 of the Internal 
Revenue Code of 1986. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2012. 
(2) RETURNS.—The amendments made by sub-
section (b) shall apply to calendar years beginning 
after December 31, 2012. 
Subpart B—Employer Responsibility 
SEC. 511. ELECTION TO SATISFY HEALTH COVERAGE PAR-
TICIPATION REQUIREMENTS. 
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new section: 
‘‘SEC. 4980H. ELECTION WITH RESPECT TO HEALTH COV-
ERAGE PARTICIPATION REQUIREMENTS. 
‘‘(a) ELECTION OF EMPLOYER RESPONSIBILITY TO 
PROVIDE HEALTH COVERAGE.—