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114th Congress  }                                           {  Rept.114-634 
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                           {  Part 1

======================================================================



 
             SMALL BUSINESS HEALTH CARE RELIEF ACT OF 2016

                                _______
                                

 June 21, 2016.--Committed to the Committee of the Whole House of the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Brady of Texas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5447]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 5447) to provide an exception from certain group 
health plan requirements for qualified small employer health 
reimbursement arrangements, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................5
 II. EXPLANATION OF THE BILL..........................................7
          A. Exception From Group Health Plan Requirements for 
              Qualified Small Employer Health Reimbursement 
              Arrangements (sec. 2 of the bill and secs. 36B, 
              106, 4980I, 6051 and 9831 of the Code).............     7
III. VOTES OF THE COMMITTEE..........................................11
 IV. BUDGET EFFECTS OF THE BILL......................................12
          A. Committee Estimate of Budgetary Effects.............    12
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    14
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    14
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......17
          A. Committee Oversight Findings and Recommendations....    17
          B. Statement of General Performance Goals and 
              Objectives.........................................    17
          C. Information Relating to Unfunded Mandates...........    17
          D. Applicability of House Rule XXI 5(b)................    17
          E. Tax Complexity Analysis.............................    17
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    18
          G. Duplication of Federal Programs.....................    18
          H. Disclosure of Directed Rule Makings.................    18
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........18
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................    18
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................    18
VII. EXCHANGE OF LETTERS WITH ADDITIONAL COMMITTEES OF REFERRAL.....120
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Small Business Health Care Relief Act 
of 2016''.

SEC. 2. EXCEPTION FROM GROUP HEALTH PLAN REQUIREMENTS FOR QUALIFIED 
                    SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.

  (a) Amendments to the Internal Revenue Code of 1986 and the Patient 
Protection and Affordable Care Act.--
          (1) In general.--Section 9831 of the Internal Revenue Code of 
        1986 is amended by adding at the end the following new 
        subsection:
  ``(d) Exception for Qualified Small Employer Health Reimbursement 
Arrangements.--
          ``(1) In general.--For purposes of this title (except as 
        provided in section 4980I(f)(4) and notwithstanding any other 
        provision of this title), the term `group health plan' shall 
        not include any qualified small employer health reimbursement 
        arrangement.
          ``(2) Qualified small employer health reimbursement 
        arrangement.--For purposes of this subsection--
                  ``(A) In general.--The term `qualified small employer 
                health reimbursement arrangement' means an arrangement 
                which--
                          ``(i) is described in subparagraph (B), and
                          ``(ii) is provided on the same terms to all 
                        eligible employees of the eligible employer.
                  ``(B) Arrangement described.--An arrangement is 
                described in this subparagraph if--
                          ``(i) such arrangement is funded solely by an 
                        eligible employer and no salary reduction 
                        contributions may be made under such 
                        arrangement,
                          ``(ii) such arrangement provides, after the 
                        employee provides proof of coverage, for the 
                        payment of, or reimbursement of, an eligible 
                        employee for expenses for medical care (as 
                        defined in section 213(d)) incurred by the 
                        eligible employee or the eligible employee's 
                        family members (as determined under the terms 
                        of the arrangement), and
                          ``(iii) the amount of payments and 
                        reimbursements described in clause (ii) for any 
                        year do not exceed $5,130 ($10,260 in the case 
                        of an arrangement that also provides for 
                        payments or reimbursements for family members 
                        of the employee).
                  ``(C) Certain variation permitted.--For purposes of 
                subparagraph (A)(ii), an arrangement shall not fail to 
                be treated as provided on the same terms to each 
                eligible employee merely because the employee's 
                permitted benefits under such arrangement vary in 
                accordance with the variation in the price of an 
                insurance policy in the relevant individual health 
                insurance market based on--
                          ``(i) the age of the eligible employee (and, 
                        in the case of an arrangement which covers 
                        medical expenses of the eligible employee's 
                        family members, the age of such family 
                        members), or
                          ``(ii) the number of family members of the 
                        eligible employee the medical expenses of which 
                        are covered under such arrangement.
                The variation permitted under the preceding sentence 
                shall be determined by reference to the same insurance 
                policy with respect to all eligible employees.
                  ``(D) Rules relating to maximum dollar limitation.--
                          ``(i) Amount prorated in certain cases.--In 
                        the case of an individual who is not covered by 
                        an arrangement for the entire year, the 
                        limitation under subparagraph (A)(iii) for such 
                        year shall be an amount which bears the same 
                        ratio to the amount which would (but for this 
                        clause) be in effect for such individual for 
                        such year under subparagraph (A)(iii) as the 
                        number of months for which such individual is 
                        covered by the arrangement for such year bears 
                        to 12.
                          ``(ii) Inflation adjustment.--In the case of 
                        any year beginning after 2016, each of the 
                        dollar amounts in subparagraph (A)(iii) 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 in which the taxable 
                                year begins, determined by substituting 
                                `calendar year 2015' for `calendar year 
                                1992' in subparagraph (B) thereof.
                        If any dollar amount increased under the 
                        preceding sentence is not a multiple of $100, 
                        such dollar amount shall be rounded to the next 
                        lowest multiple of $100.
          ``(3) Other definitions.--For purposes of this subsection--
                  ``(A) Eligible employee.--The term `eligible 
                employee' means any employee of an eligible employer, 
                except that the terms of the arrangement may exclude 
                from consideration employees described in any clause of 
                section 105(h)(3)(B) (applied by substituting `90 days' 
                for `3 years' in clause (i) thereof).
                  ``(B) Eligible employer.--The term `eligible 
                employer' means an employer that--
                          ``(i) is not an applicable large employer as 
                        defined in section 4980H(c)(2), and
                          ``(ii) does not offer a group health plan to 
                        any of its employees.
                  ``(C) Permitted benefit.--The term `permitted 
                benefit' means, with respect to any eligible employee, 
                the maximum dollar amount of payments and 
                reimbursements which may be made under the terms of the 
                qualified small employer health reimbursement 
                arrangement for the year with respect to such employee.
          ``(4) Notice.--
                  ``(A) In general.--An employer funding a qualified 
                small employer health reimbursement arrangement for any 
                year shall, not later than 90 days before the beginning 
                of such year (or, in the case of an employee who is not 
                eligible to participate in the arrangement as of the 
                beginning of such year, the date on which such employee 
                is first so eligible), provide a written notice to each 
                eligible employee which includes the information 
                described in subparagraph (B).
                  ``(B) Contents of notice.--The notice required under 
                subparagraph (A) shall include each of the following:
                          ``(i) A statement of the amount which would 
                        be such eligible employee's permitted benefits 
                        under the arrangement for the year.
                          ``(ii) A statement that the eligible employee 
                        should provide the information described in 
                        clause (i) to any health insurance exchange to 
                        which the employee applies for advance payment 
                        of the premium assistance tax credit.
                          ``(iii) A statement that if the employee is 
                        not covered under minimum essential coverage 
                        for any month the employee may be subject to 
                        tax under section 5000A for such month and 
                        reimbursements under the arrangement may be 
                        includible in gross income.''.
          (2) Limitation on exclusion from gross income.--Section 106 
        of such Code is amended by adding at the end the following:
  ``(g) Qualified Small Employer Health Reimbursement Arrangement.--For 
purposes of this section and section 105, payments or reimbursements 
from a qualified small employer health reimbursement arrangement (as 
defined in section 9831(d)) of an individual for medical care (as 
defined in section 213(d)) shall not be treated as paid or reimbursed 
under employer-provided coverage for medical expenses under an accident 
or health plan if for the month in which such medical care is provided 
the individual does not have minimum essential coverage (within the 
meaning of section 5000A(f)).''.
          (3) Coordination with health insurance premium credit.--
        Section 36B(c) of such Code is amended by adding at the end the 
        following new paragraph:
          ``(4) Special rules for qualified small employer health 
        reimbursement arrangements.--
                  ``(A) In general.--The term `coverage month' shall 
                not include any month with respect to an employee (or 
                any spouse or dependent of such employee) if for such 
                month the employee is provided a qualified small 
                employer health reimbursement arrangement which 
                constitutes affordable coverage.
                  ``(B) Denial of double benefit.--In the case of any 
                employee who is provided a qualified small employer 
                health reimbursement arrangement for any coverage month 
                (determined without regard to subparagraph (A)), the 
                credit otherwise allowable under subsection (a) to the 
                taxpayer for such month shall be reduced (but not below 
                zero) by the amount described in subparagraph 
                (C)(i)(II) for such month.
                  ``(C) Affordable coverage.--For purposes of 
                subparagraph (A), a qualified small employer health 
                reimbursement arrangement shall be treated as 
                constituting affordable coverage for a month if--
                          ``(i) the excess of--
                                  ``(I) the amount that would be paid 
                                by the employee as the premium for such 
                                month for self-only coverage under the 
                                second lowest cost silver plan offered 
                                in the relevant individual health 
                                insurance market, over
                                  ``(II) \1/12\ of the employee's 
                                permitted benefit (as defined in 
                                section 9831(d)(3)(C)) under such 
                                arrangement, does not exceed--
                          ``(ii) \1/12\ of 9.5 percent of the 
                        employee's household income.
                  ``(D) Qualified small employer health reimbursement 
                arrangement.--For purposes of this paragraph, the term 
                `qualified small employer health reimbursement 
                arrangement' has the meaning given such term by section 
                9831(d)(2).
                  ``(E) Coverage for less than entire year.--In the 
                case of an employee who is provided a qualified small 
                employer health reimbursement arrangement for less than 
                an entire year, subparagraph (C)(i)(II) shall be 
                applied by substituting `the number of months during 
                the year for which such arrangement was provided' for 
                `12'.
                  ``(F) Indexing.--In the case of plan years beginning 
                in any calendar year after 2014, the Secretary shall 
                adjust the 9.5 percent amount under subparagraph 
                (C)(ii) in the same manner as the percentages are 
                adjusted under subsection (b)(3)(A)(ii).''.
          (4) Application of excise tax on high cost employer-sponsored 
        health coverage.--
                  (A) In general.--Section 4980I(f)(4) of such Code is 
                amended by adding at the end the following: ``Section 
                9831(d)(1) shall not apply for purposes of this 
                section.''.
                  (B) Determination of cost of coverage.--Section 
                4980I(d)(2) of such Code is amended by redesignating 
                subparagraph (D) as subparagraph (E) and by inserting 
                after subparagraph (C) the following new subparagraph:
                  ``(D) Qualified small employer health reimbursement 
                arrangements.--In the case of applicable employer-
                sponsored coverage consisting of coverage under any 
                qualified small employer health reimbursement 
                arrangement (as defined in section 9831(d)(2)), the 
                cost of coverage shall be equal to the amount described 
                in section 6051(a)(15).''.
          (5) Enforcement of notice requirement.--Section 6652 of such 
        Code is amended by adding at the end the following new 
        subsection:
  ``(o) Failure To Provide Notices With Respect To Qualified Small 
Employer Health Reimbursement Arrangements.--In the case of each 
failure to provide a written notice as required by section 9831(d)(4), 
unless it is shown that such failure is due to reasonable cause and not 
willful neglect, there shall be paid, on notice and demand of the 
Secretary and in the same manner as tax, by the person failing to 
provide such written notice, an amount equal to $50 per employee per 
incident of failure to provide such notice, but the total amount 
imposed on such person for all such failures during any calendar year 
shall not exceed $2,500.''.
          (6) Reporting.--
                  (A) W-2 reporting.--Section 6051(a) of such Code is 
                amended by striking ``and'' at the end of paragraph 
                (13), by striking the period at the end of paragraph 
                (14) and inserting ``, and'', and by inserting after 
                paragraph (14) the following new paragraph:
          ``(15) the total amount of permitted benefit (as defined in 
        section 9831(d)(3)(C)) for the year under a qualified small 
        employer health reimbursement arrangement (as defined in 
        section 9831(d)(2)) with respect to the employee.''.
                  (B) Information required to be provided by exchange 
                subsidy applicants.--Section 1411(b)(3) of the Patient 
                Protection and Affordable Care Act is amended by 
                redesignating subparagraph (B) as subparagraph (C) and 
                by inserting after subparagraph (A) the following new 
                subparagraph:
                  ``(B) Certain individual health insurance policies 
                obtained through small employers.--The amount of the 
                enrollee's permitted benefit (as defined in section 
                9831(d)(3)(C) of the Internal Revenue Code of 1986) 
                under a qualified small employer health reimbursement 
                arrangement (as defined in section 9831(d)(2) of such 
                Code).''.
          (7) Effective dates.--
                  (A) In general.--Except as otherwise provided in this 
                paragraph, the amendments made by this subsection shall 
                apply to years beginning after the earlier of--
                          (i) the date that is 90 days after the date 
                        of the enactment of this Act, or
                          (ii) December 31, 2016.
                  (B) Transition relief.--The relief under Treasury 
                Notice 2015-17 shall be treated as applying to any plan 
                year beginning on or before the date described in 
                subparagraph (A).
                  (C) Coordination with health insurance premium 
                credit.--The amendments made by paragraph (3) shall 
                apply to taxable years beginning after the date 
                described in subparagraph (A).
                  (D) Employee notice.--The amendments made by 
                paragraph (5) shall apply to notices with respect to 
                years beginning after the date described in 
                subparagraph (A).
                  (E) W-2 reporting.--The amendments made by paragraph 
                (6)(A) shall apply to calendar years beginning after 
                December 31, 2016.
                  (F) Information provided by exchange subsidy 
                applicants.--
                          (i) In general.--The amendments made by 
                        paragraph (6)(B) shall apply to applications 
                        for enrollment made after the date described in 
                        subparagraph (A).
                          (ii) Verification.--Verification under 
                        section 1411 of the Patient Protection and 
                        Affordable Care Act of information provided 
                        under section 1411(b)(3)(B) of such Act shall 
                        apply with respect to months beginning after 
                        October 2016.
          (8) Substantiation requirements.--The Secretary of the 
        Treasury (or his designee) may issue substantiation 
        requirements as necessary to carry out this subsection.
  (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
          (1) In general.--Section 733(a)(1) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1191b(a)(1)) is amended 
        by adding at the end the following: ``Such term shall not 
        include any qualified small employer health reimbursement 
        arrangement (as defined in section 9831(d)(2) of the Internal 
        Revenue Code of 1986).''.
          (2) Exception from continuation coverage requirements, etc.--
        Section 607(1) of such Act (29 U.S.C. 1167(1)) is amended by 
        adding at the end the following: ``Such term shall not include 
        any qualified small employer health reimbursement arrangement 
        (as defined in section 9831(d)(2) of the Internal Revenue Code 
        of 1986).''.
          (3) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date described in 
        subsection (a)(7)(A).
  (c) Amendments to the Public Health Service Act.--
          (1) In general.--Section 2791(a)(1) of the Public Health 
        Service Act (42 U.S.C. 300gg-91(a)(1)) is amended by adding at 
        the end the following: ``Except for purposes of part C of title 
        XI of the Social Security Act (42 U.S.C. 1320d et seq.), such 
        term shall not include any qualified small employer health 
        reimbursement arrangement (as defined in section 9831(d)(2) of 
        the Internal Revenue Code of 1986).''.
          (2) Exception from continuation coverage requirements.--
        Section 2208(1) of the Public Health Service Act (42 U.S.C. 
        300bb-8(1)) is amended by adding at the end the following: 
        ``Such term shall not include any qualified small employer 
        health reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).''.
          (3) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning after the date described in 
        subsection (a)(7)(A).

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 5447, as reported by the Committee on Ways 
and Means, establishes new rules for Qualified Small Employer 
Health Reimbursement Arrangements (QSHERAs) that allow eligible 
employers to provide tax-preferred reimbursements to such 
arrangements and exempt those arrangements from current law 
group health plan associated penalties.

                 B. Background and Need for Legislation

    The Committee believes that exempting QSHERAs from current 
law group health plan rules and associated penalties will 
relieve an unfair tax burden on small employers and their 
employees who use these arrangements.
    The penalty currently facing those small businesses that 
are engaged in employer payment arrangements are different from 
the penalty that large employers are subject to through the 
employer mandate. Those large employers could face $3,240 per 
year per employee penalties. In contrast, a small business that 
is not subject to the employer mandate that wishes to provide a 
small amount of money to help an employee purchase a plan in 
the individual market could face $36,500 per year per employee 
penalties.
    Many small businesses are not aware of this penalty and 
could face significant financial hardship absent legislative 
relief. Direct contributions to health care through health 
reimbursement arrangements should be encouraged as it increases 
coverage and leads to portability of health care benefits for 
American workers and their families. While these arrangements 
are not considered group health plans for purposes of the 
employer penalty, H.R. 5447 is not intended to change the 
extent to which these plans are employee welfare benefit plans 
under ERISA.

                         C. Legislative History


Background

    H.R. 5447 was introduced on June 10, 2016, and was referred 
to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 5447, the 
Small Business Health Care Relief Act of 2016, on June 15, 
2016, and ordered the bill, as amended, favorably reported 
(with a quorum being present).

Committee hearings

    The policy issues associated with Health Reimbursement 
Arrangements (HRAs) and need for legislative response were 
discussed at three Ways and Means hearings during the 114th 
Congress:
           Ways and Means Committee Hearing on the Tax 
        Treatment of Health Care (April 14, 2016);
           Subcommittee on Tax Policy Member Day 
        Hearing on Tax Legislation (May 12, 2016); and
           Subcommittee on Health Member Day Hearing on 
        Tax-Related Proposals to Improve Health Care (May 17, 
        2016).

                      II. EXPLANATION OF THE BILL


 A. Exception From Group Health Plan Requirements for Qualified Small 
  Employer Health Reimbursement Arrangements (sec. 2 of the bill and 
           secs. 36B, 106, 4980I, 6051 and 9831 of the Code)


                              PRESENT LAW

Exclusion for employer-provided health benefits

    An employee may exclude from gross income amounts provided 
through an arrangement under which (1) an employer pays or 
reimburses premiums for health insurance for the employee and 
family members purchased in the individual insurance market 
(referred to as an employer payment plan) or (2) an employer 
reimburses the employee for medical expenses generally of the 
employee and family members (referred to as a health 
reimbursement arrangement or HRA).\1\ In order for employer 
payments or reimbursements under these arrangements to be 
excluded from gross income, premiums and other expenses must be 
substantiated and an employee must be entitled to receive 
payments from the employer only if he or she incurs qualifying 
expenses.\2\
---------------------------------------------------------------------------
    \1\Secs. 105(b) and 106; Rev. Rul. 61-146, 1961-2 C.B. 25; Notice 
2002-45, 2002-2 C.B. 93, and Rev. Rul. 2002-41, 2002-2 C.B. 75. Under 
section 105(h), a self-insured medical reimbursement plan must meet 
certain nondiscrimination requirements in order for the benefits 
provided to a highly compensated individual to be excluded from income. 
For this purpose, the following groups of employees may be excluded: 
employees who have not completed three years of service with the 
employer, employees under age 25, part-time or seasonal employees, 
employees covered by a collective bargaining agreement if health 
benefits was the subject of good faith bargaining, and nonresident 
aliens with no earned income from sources within the United States. 
Employer payments and reimbursements for health insurance and medical 
expenses are also excluded from wages for employment tax purposes. 
Secs. 3121(a)(2), 3231(e)(1), 3306(b)(2), 3401(a)(20), Rev. Rul. 56-
632, 1956-2 C.B. 101.
    \2\Treas. Reg. sec. 1.105-2.
---------------------------------------------------------------------------
    The exclusion applies also to amounts paid or reimbursed 
from funds withheld from an employee's salary under a cafeteria 
plan (salary reduction amounts).\3\
---------------------------------------------------------------------------
    \3\Sec. 125. An HRA cannot include salary reduction amounts.
---------------------------------------------------------------------------
    The value of employer-provided health benefits for a year 
is generally required to be reported by the employer on an 
employee's Form W-2, Wage and Tax Statement, for the year.\4\
---------------------------------------------------------------------------
    \4\Sec. 6051(a)(14).
---------------------------------------------------------------------------

Group health plan requirements

    The Code, the Employee Retirement Income Security Act of 
1974 (ERISA), and the Public Health Service Act (PHSA) impose 
various requirements with respect to employer-sponsored health 
plans, referred to for this purpose as group health plans.\5\ 
Under the Code, an employer is generally subject to an excise 
tax of $100 a day per employee if it sponsors a group health 
plan that fails to meet any of these requirements.\6\ In some 
cases, the excise tax does not apply if the failure is due to 
reasonable cause and not to willful neglect and the failure is 
corrected within a certain period. In addition, in some cases 
in which failure is due to reasonable cause and not to willful 
neglect, some or all of the excise tax may be waived to the 
extent payment of the tax would be excessive relative to the 
failure involved.
---------------------------------------------------------------------------
    \5\Secs. 4980B (relating to continuation coverage or ``COBRA'' 
requirements) and 5000 (relating to Medicare secondary payor 
requirements) and Chapter 100 (secs. 9801-9834, relating to various 
additional requirements, such as prohibitions on preexisting condition 
exclusions and discrimination based on health status); Title I, Parts 6 
and 7, of ERISA; Title XVII of PHSA.
    \6\Secs. 4980B(a) and (b), 4980D(a) and (b), 5000(a). Sec. 
4980B(d)(1) provides an exception for plans of employers with fewer 
than 20 employees. Sec. 4980D(d)(1) provides an exception for a plan of 
an employer with no more than 50 employees if coverage is provided 
solely through insurance.
---------------------------------------------------------------------------
    IRS guidance holds that employer payment plans generally 
fail to meet certain group health plan requirements.\7\ In 
addition, an HRA fails to meet those requirements unless the 
HRA is provided in conjunction with (or ``integrated'' with) 
employer-sponsored coverage that meets the requirements. An HRA 
that is integrated with such employer-sponsored coverage is 
often referred to as an ``integrated'' HRA, and an HRA that is 
not integrated with such employer-sponsored coverage is often 
referred to as a ``stand-alone'' HRA. Thus, an employer may be 
subject to an excise tax if it provides an employer payment 
plan or a stand-alone HRA.
---------------------------------------------------------------------------
    \7\Notice 2015-17, 2015-14 I.R.B. 845, and Notice 2013-54, 2013-2 
C.B. 287. Notice 2015-17 provides relief from the excise tax under 
section 4980D for periods before July 1, 2015, for certain small 
employers.
---------------------------------------------------------------------------

Other health rules under the Code

    Individuals are generally required to have health coverage, 
referred to as minimum essential coverage.\8\ Unless an 
exception applies, an individual who fails to have minimum 
essential coverage may be subject to a tax penalty. Minimum 
essential coverage includes employer-sponsored coverage under a 
group health plan, other than certain types of limited 
coverage, such as coverage only for vision or dental medical 
services. Minimum essential coverage also includes coverage 
purchased in the individual insurance market, other than 
certain types of limited coverage, such as coverage only for 
vision or dental medical services.
---------------------------------------------------------------------------
    \8\Sec. 5000A.
---------------------------------------------------------------------------
    An advanceable, refundable income tax credit (premium 
assistance credit) is available to certain individuals who 
purchase health insurance coverage in the individual market 
though an American Health Benefit Exchange (Exchange 
coverage).\9\ However, an individual is generally not eligible 
for the credit if his or her employer offers affordable minimum 
essential coverage under a group health plan.\10\ For this 
purpose, coverage is affordable if the employee's share of the 
premium for self-only coverage under the group health plan is 
not more than 9.5 percent\11\ of the employee's household 
income. An individual who applies for advance premium 
assistance with respect to Exchange coverage for a year must 
provide the Exchange with certain information, including 
information relating to employer-provided minimum essential 
coverage.\12\
---------------------------------------------------------------------------
    \9\Sec. 36B.
    \10\The coverage offered under the group health plan must also 
cover at least 60 percent of the total costs of benefits covered under 
the plan, referred to as ``minimum value.''
    \11\For years after 2014, this percentage is increased as needed to 
reflect cost-of-living increases. The percentage for 2016 is 9.66.
    \12\Sec. 1411(b) of the Patient Protection and Affordable Care Act 
(``PPACA''), Pub. L. No. 110-148. This information is subject to 
verification during the Exchange process under section 1411(c) and (d) 
of PPACA.
---------------------------------------------------------------------------
    If an applicable large employer fails to offer employees 
minimum essential coverage, or offers minimum essential 
coverage that is not affordable (under the standard described 
above), and any employee receives a premium assistance credit, 
the employer may be subject to a tax penalty.\13\ For this 
purpose, applicable large employer generally 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.\14\
---------------------------------------------------------------------------
    \13\Sec. 4980H.
    \14\In determining whether an employer is an applicable large 
employer (that is, whether the employer has at least 50 full-time 
employees), besides the number of full-time employees, the employer 
must include the number of its full time equivalent employees for a 
month, determined by dividing the aggregate number of hours of service 
of employees who are not full-time employees for the month by 120. In 
addition, in determining applicable large employer status, members of 
the same controlled group, group under common control, and affiliated 
service group under section 414(b), (c), (m) and (o) are treated as a 
single employer.
---------------------------------------------------------------------------
    Effective 2020, an excise tax (the high-cost coverage 
excise tax, commonly also referred to as the ``Cadillac'' tax) 
applies if the aggregate cost of employer-provided coverage 
provided to an employee under an employer's group health plans 
exceeds a specified amount.\15\ The aggregate cost of coverage 
for this purpose generally includes the cost of all types of 
coverage provided by the employer's group health plans, other 
than certain types of limited coverage, such as coverage only 
for vision or dental medical services.
---------------------------------------------------------------------------
    \15\Sec. 4980I.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    Small employers are not required to provide health 
insurance coverage to their employees and, for some small 
employers, doing so may not be feasible. Nonetheless, many 
small employers wish to provide pretax funds that employees may 
use to purchase their own health insurance or pay for expenses 
not covered by their insurance. However, under present law, 
providing such funds may expose a small employer to a 
substantial excise tax. The Committee wishes to enable small 
employers to provide such funds without incurring an excise 
tax.

                        EXPLANATION OF PROVISION

Qualified small employer health reimbursement arrangement

    Under the provision, a ``qualified small employer health 
reimbursement arrangement'' (referred to herein as a QSEHRA) is 
generally not a group health plan under the Code, ERISA or PHSA 
and thus is not subject to the group health plan 
requirements.\16\ A QSEHRA is defined as an arrangement that 
(1) is provided on the same terms to all eligible employees of 
an eligible employer; (2) is funded solely by the eligible 
employer and no salary reduction contributions may be made 
under the arrangement; (3) provides, after an employee provides 
proof of minimum essential coverage, for the payment or 
reimbursement of medical expenses of the employee and family 
members;\17\ and (4) the amount of payments and reimbursements 
under the arrangement for a year cannot exceed specified dollar 
limits.\18\ In the case of an individual not covered by the 
arrangement for all 12 months of a year, the dollar amounts are 
prorated to reflect the number of months of coverage.
---------------------------------------------------------------------------
    \16\A QSEHRA continues to be treated as a group health plan as 
defined under PHSA, for purposes of applying that definition to the 
privacy requirements applicable to medical information under the Health 
Insurance Portability and Accountability Act of 1996 (referred to as 
HIPAA), Part C of Title XI of the Social Security Act.
    \17\The provision specifies that the Secretary of the Treasury or 
his designee may issue substantiation requirements as necessary to 
carry out the provision.
    \18\For 2016, the dollar limits are $5,130 ($10,260 in the case of 
expenses of an employee and family members). For years after 2016, the 
dollar limits are increased as needed to reflect cost-of-living 
increases.
---------------------------------------------------------------------------
    The maximum dollar amount of payments or reimbursements 
that may be made under a QSEHRA with respect to an eligible 
employee for a year is the employee's ``permitted benefit.'' An 
arrangement does not fail to be provided on the same terms to 
all eligible employees merely because employees' permitted 
benefits vary with the price of a health insurance policy in 
the individual insurance market based on the ages of the 
employee and family members or the number of family members 
covered by the arrangement, provided that the variation is 
determined by reference to the same insurance policy for all 
eligible employees.
    Under the provision, ``eligible employee'' means any 
employee of an eligible employer, except that the terms of the 
QSEHRA may exclude employees who have not completed 90 days of 
service with the employer, employees under age 25, part-time or 
seasonal employees, employees covered by a collective 
bargaining agreement if health benefits were the subject of 
good faith bargaining, and nonresident aliens with no earned 
income from sources within the United States.\19\ ``Eligible 
employer'' means an employer that (1) is not an applicable 
large employer as defined for purposes of the requirement that 
an applicable large employer offer its employees minimum 
essential coverage (that is, generally, an employer with fewer 
than 50 full-time employees during the preceding year), and (2) 
does not offer a group health plan to any of its employees.
---------------------------------------------------------------------------
    \19\These groups are based on the groups that can be excluded in 
applying the nondiscrimination requirements under section 105(h) to a 
self-insured plan with 90 days of service substituted for three years 
of service.
---------------------------------------------------------------------------

Income tax treatment of QSEHRA benefits

    Coverage and payments or reimbursements under a QSHERA are 
generally excluded from gross income.
    Because a QSEHRA is not a group health plan, coverage under 
a QSEHRA is not minimum essential coverage and does not satisfy 
the requirement that an individual have minimum essential 
coverage. Under the provision, if an employee's medical care 
expenses are paid or reimbursed under a QSEHRA and the employee 
does not have minimum essential coverage for the month in which 
the medical care was provided, the amount of the payment or 
reimbursement for those expenses is includible in the 
employee's income.\20\ The provision is not intended to change 
the extent to which these plans are employee welfare benefit 
plans under ERISA.
---------------------------------------------------------------------------
    \20\The provision does not change the treatment of such payments or 
reimbursements for employment tax purposes. Thus, they continue to be 
excluded from wages for employment tax purposes.
---------------------------------------------------------------------------

Coordination with other Code rules

    Under the provision, an eligible employee under a QSEHRA is 
not eligible for the premium assistance credit for a month if 
the QSEHRA constitutes affordable coverage for the month. For 
this purpose, a QSEHRA constitutes affordable coverage for a 
month if the excess of (1) the employee's premium for self-only 
coverage under the second lowest cost silver plan offered in 
the Exchange, over (2) \1/12\ of the employee's permitted 
benefit under the QSEHRA, does not exceed \1/12\ of 9.5 
percent\21\ of the employee's household income for the year. In 
the case of an eligible employee under a QSEHRA who is eligible 
for a premium assistance credit for a year (that is, the QSEHRA 
does not constitute affordable coverage), the credit amount is 
reduced (but not below zero) by the employee's permitted 
benefit.
---------------------------------------------------------------------------
    \21\For years after 2014, this percentage is increased as needed to 
reflect cost-of-living increases. The percentage for 2016 is 9.66.
---------------------------------------------------------------------------
    Under the provision, a QSEHRA continues to be treated as a 
group health plan for purposes of the excise tax on high-cost 
coverage. For that purpose, an employee's permitted benefit is 
treated as the cost of coverage under the QSEHRA.

Notice and reporting requirements

    The provision includes several requirements relating to 
notices and reporting.
    Not later than 90 days before the beginning of a year in 
which an employer will fund a QSEHRA (or, if later, the date on 
which an employee becomes eligible for the QSEHRA), the 
employer must provide eligible employees with a written notice 
containing the amount of the employee's permitted benefit and 
certain other information. An employer that fails to provide 
the notice may be subject to a tax penalty of $50 per employee, 
subject to a maximum of $2,500 for the year.
    In addition, the employer must report an employee's 
permitted benefit for a year on the employee's Form W-2 for the 
year. An eligible employee who applies for advance premium 
assistance with respect to Exchange coverage for a year must 
provide the Exchange with the amount of his or her permitted 
benefit for the year.

                             EFFECTIVE DATE

    The provision generally applies to years beginning after 
the earlier of (1) the date that is 90 days after the date of 
enactment of the provision, or (2) December 31, 2016 (plan 
years beginning after the earlier of those two dates in the 
case of the ERISA and PHSA changes).\22\ The aspects of the 
provision relating to the premium assistance credit apply to 
taxable years beginning after the earlier of those two dates. 
The requirement that an employer report an employee's permitted 
benefit on the employee's Form W-2 applies to calendar years 
beginning after December 31, 2016. The requirement that an 
eligible employee applying for advance premium assistance 
provide the Exchange with the amount of his or her permitted 
benefit applies to applications for enrollment made after the 
earlier of the two dates described above.\23\
---------------------------------------------------------------------------
    \22\The provision extends the excise tax relief under Notice 2015-
17 to plan years beginning on or before the earlier of the two dates.
    \23\Verification of this information in the Exchange process 
applies with respect to months beginning after October 2016.
---------------------------------------------------------------------------

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 5447, the ``Small Business Health Care 
Relief Act of 2016,'' on June 15, 2016.
    The bill, H.R. 5447, as amended, was ordered favorably 
reported to the House of Representatives by a voice vote (with 
a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 5447, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal fiscal year budget receipts for the period 
2016-2026\1\\2\.

                                                                                          FISCAL YEARS
                                                                                      [Millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
     2016           2017           2018           2019           2020           2021           2022           2023           2024           2025           2026         2016-21        2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
         -20           -225           -120           -127            -24              6             25             49            100            136            199           -510   ............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.
\1\Estimate includes the following outlay effects:


 
     2016           2017           2018           2019           2020           2021           2022           2023           2024           2025           2026         2016-21        2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
          --             27             30             32             34             36             38             40             40             42             44            159          363
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\2\Estimate includes the following off-budget effects:


 
     2016           2017           2018           2019           2020           2021           2022           2023           2024           2025           2026         2016-21        2016-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
         -12            -47            -27            -29              6             16             24             32             49             61             83            -92           157
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: The gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves increased budget authority with respect to 
outlays for refundable credits. The Committee further states 
that the revenue-reducing provisions of the bill involve 
increased tax expenditures. See amounts shown in the table in 
Part IV.A above.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 21, 2016.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5447, the Small 
Business Health Care Relief Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Nathaniel 
Frentz.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5447--Small Business Health Care Relief Act of 2016

    H.R. 5447 would amend the Internal Revenue Code to define a 
qualified small employer health reimbursement arrangement 
(QSEHRA) as an arrangement where an employer pays directly for 
or reimburses medical expenses of an employee and his or her 
dependents. In order to be eligible for this arrangement, an 
employer must generally have had fewer than 50 full-time 
employees during the prior year. An employee must provide proof 
of having minimum essential health insurance coverage, as 
defined for purposes of the individual mandate. The payments 
from an employer provided through a QSEHRA would not be counted 
in the employees' gross income and would therefore be exempt 
from income taxes. An employer that offered a QSEHRA would not 
be subject to penalties under the Internal Revenue Code, the 
Employee Retirement Income Security Act of 1974, or the Public 
Health Service Act that typically apply to group health plans 
that fail to meet certain requirements.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 5447 would raise both revenues and 
outlays by $363 million over the 2016-2026 period. JCT 
therefore estimates that enacting the bill would have no effect 
on federal budget deficits over the 2016-2026 period. The 
change in revenues includes an increase of $157 million in off-
budget revenues (from Social Security payroll taxes). As a 
result, on-budget deficits are expected to increase by $157 
million over the 2016-2026 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
revenues or direct spending. The net changes in revenues and 
direct spending that are subject to those pay-as-you-go 
procedures are shown in the following table. Only on-budget 
changes to revenues and direct spending are subject to pay-as-
you-go procedures.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5447, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 15, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2016     2017     2018     2019     2020     2021     2022     2023     2024     2025     2026    2016-2021  2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
 
Statutory Pay-As-You-Go               9      178       93       98       30       11       -2      -17      -51      -74      -116       418        157
 Effects......................
Memorandum:a
    Change in Outlays.........        0       27       30       32       34       36       38       40       40       42        44       159        363
    Change in On-Budget              -9     -151      -63      -66        4       25       39       57       91      116       160      -259        206
     Revenues.................
    Change in Off-Budget            -13      -46      -27      -29        6       16       24       32       49       61        83       -92       157
     Revenues.................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
a. A positive sign for outlays indicates an increase in outlays. A positive sign for revenues indicates an increase in revenues.
Note: Components may not sum to total because of rounding.

    CBO and JCT estimate that enacting the bill would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in any of the four 10-year periods beginning in 
2027.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Nathaniel 
Frentz. The estimate was approved by David Weiner, Assistant 
Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 5447 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code of 1986 and has widespread applicability 
to individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Internal Revenue 
Code of 1986 and that have ``widespread applicability'' to 
individuals or small businesses, within the meaning of the 
rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

             VI. CHANGES IN EXISTING LAW MADE BY THE BILL,


                              AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *


PART IV--CREDITS AGAINST TAX

           *       *       *       *       *       *       *



Subpart C--Refundable Credits

           *       *       *       *       *       *       *



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 
        paragraph (2) with respect to all coverage months of 
        the taxpayer occurring during the taxable year.
          (2) Premium assistance amount.--The premium 
        assistance 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
                          (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 
        assistance amounts.--For purposes of paragraph (2)--
                  (A) Applicable percentage.--
                          (i) In general.--Except as provided 
                        in clause (ii), the applicable 
                        percentage for any taxable year shall 
                        be the percentage such that the 
                        applicable percentage for any taxpayer 
                        whose household income is within an 
                        income tier specified in the following 
                        table shall increase, on a sliding 
                        scale in a linear manner, from the 
                        initial premium percentage to the final 
                        premium percentage specified in such 
                        table for such income tier:


 
------------------------------------------------------------------------
     In the case of
    household income
(expressed as a percent    The initial premium       The final premium
of poverty line) within      percentage is--          percentage is--
  the following income
         tier:
------------------------------------------------------------------------
Up to 133%               2.0%                     2.0%
133% up to 150%          3.0%                     4.0%
150% up to 200%          4.0%                     6.3%
200% up to 250%          6.3%                     8.05%
250% up to 300%          8.05%                    9.5%
300% up to 400%          9.5%                     9.5%
------------------------------------------------------------------------

                          (ii) Indexing.--
                                  (I) In general.--Subject to 
                                subclause (II), in the case of 
                                taxable years beginning in any 
                                calendar year after 2014, the 
                                initial and final applicable 
                                percentages under clause (i) 
                                (as in effect for the preceding 
                                calendar year after application 
                                of this clause) shall be 
                                adjusted to reflect the excess 
                                of the rate of premium growth 
                                for the preceding calendar year 
                                over the rate of income growth 
                                for the preceding calendar 
                                year.
                                  (II) Additional adjustment.--
                                Except as provided in subclause 
                                (III), in the case of any 
                                calendar year after 2018, the 
                                percentages described in 
                                subclause (I) shall, in 
                                addition to the adjustment 
                                under subclause (I), be 
                                adjusted to reflect the excess 
                                (if any) of the rate of premium 
                                growth estimated under 
                                subclause (I) for the preceding 
                                calendar year over the rate of 
                                growth in the consumer price 
                                index for the preceding 
                                calendar year.
                                  (III) Failsafe.--Subclause 
                                (II) shall apply for any 
                                calendar year only if the 
                                aggregate amount of premium tax 
                                credits under this section and 
                                cost-sharing reductions under 
                                section 1402 of the Patient 
                                Protection and Affordable Care 
                                Act for the preceding calendar 
                                year exceeds an amount equal to 
                                0.504 percent of the gross 
                                domestic product for the 
                                preceding calendar year.
                  (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 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 
                premium 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 Taxpayers, 
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 equals or 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--
                          (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 household 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 subsection (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 respect to 
                                the plan exceeds 9.5 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 
                        coverage 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 beginning in any calendar year 
                        after 2014, the Secretary shall adjust 
                        the 9.5 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 
                ``grandfathered 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 adjusted gross 
                        income of the taxpayer, plus
                          (ii) the aggregate modified adjusted 
                        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 adjusted gross income.--The term 
                ``modified adjusted gross income'' means 
                adjusted gross income increased by--
                          (i) any amount excluded from gross 
                        income under section 911,
                          (ii) any amount of interest received 
                        or accrued by the taxpayer during the 
                        taxable year which is exempt from tax, 
                        and
                          (iii) an amount equal to the portion 
                        of the taxpayer's social security 
                        benefits (as defined in section 86(d)) 
                        which is not included in gross income 
                        under section 86 for the taxable year.
          (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 taxable 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 determination 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 poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        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 individual 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 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 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 Affordable Care Act.
          (2) Excess advance payments.--
                  (A) In general.--If the advance payments to a 
                taxpayer 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 paragraph 
                (1)), the tax imposed by this chapter for the 
                taxable year shall be increased by the amount 
                of such excess.
                  (B) Limitation on increase.--
                          (i) In general.--In the case of a 
                        taxpayer 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 the applicable 
                        dollar amount determined in accordance 
                        with the following table (one-half of 
                        such amount in the case of a taxpayer 
                        whose tax is determined under section 
                        1(c) for the taxable year):


 
------------------------------------------------------------------------
 If the household income (expressed
 as a percent of poverty line) is:     The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200%                       $600
At least 200% but less than 300%     $1,500
At least 300% but less than 400%     $2,500
------------------------------------------------------------------------

                          (ii) Indexing of amount.--In the case 
                        of any calendar year beginning after 
                        2014, each of the dollar amounts in the 
                        table contained 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, determined by 
                                substituting ``calendar year 
                                2013'' 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.
          (3) Information requirement.--Each Exchange (or any 
        person carrying out 1 or more responsibilities of an 
        Exchange under section 1311(f)(3) or 1321(c) of the 
        Patient Protection and Affordable Care Act) shall 
        provide the following information to the Secretary and 
        to the taxpayer with respect to any health plan 
        provided through the Exchange:
                  (A) The level of coverage described in 
                section 1302(d) of the Patient Protection and 
                Affordable Care Act and the period such 
                coverage was in effect.
                  (B) The total premium for the coverage 
                without regard to the credit under this section 
                or cost-sharing reductions under section 1402 
                of such Act.
                  (C) The aggregate amount of any advance 
                payment of such credit or reductions under 
                section 1412 of such Act.
                  (D) The name, address, and TIN of the primary 
                insured and the name and TIN of each other 
                individual obtaining coverage under the policy.
                  (E) Any information provided to the Exchange, 
                including any change of circumstances, 
                necessary to determine eligibility for, and the 
                amount of, such credit.
                  (F) Information necessary to determine 
                whether a taxpayer has received excess advance 
                payments.
  (g) Regulations.--The Secretary shall prescribe such 
regulations 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.

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME

           *       *       *       *       *       *       *



SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.

  (a) General Rule.--Except as otherwise provided in this 
section, gross income of an employee does not include employer-
provided coverage under an accident or health plan.
  (b) Contributions to Archer Msas.--
          (1) In general.--In the case of an employee who is an 
        eligible individual, amounts contributed by such 
        employee's employer to any Archer MSA of such employee 
        shall be treated as employer-provided coverage for 
        medical expenses under an accident or health plan to 
        the extent such amounts do not exceed the limitation 
        under section 220(b)(1) (determined without regard to 
        this subsection) which is applicable to such employee 
        for such taxable year.
          (2) No constructive receipt.--No amount shall be 
        included in the gross income of any employee solely 
        because the employee may choose between the 
        contributions referred to in paragraph (1) and employer 
        contributions to another health plan of the employer.
          (3) Special rule for deduction of employer 
        contributions.--Any employer contribution to an Archer 
        MSA, if otherwise allowable as a deduction under this 
        chapter, shall be allowed only for the taxable year in 
        which paid.
          (4) Employer MSA contributions required to be shown 
        on return.--Every individual required to file a return 
        under section 6012 for the taxable year shall include 
        on such return the aggregate amount contributed by 
        employers to the Archer MSAs of such individual or such 
        individual's spouse for such taxable year.
          (5) MSA contributions not part of COBRA coverage.--
        Paragraph (1) shall not apply for purposes of section 
        4980B.
          (6) Definitions.--For purposes of this subsection, 
        the terms ``eligible individual'' and ``Archer MSA'' 
        have the respective meanings given to such terms by 
        section 220.
          (7) Cross reference.--For penalty on failure by 
        employer to make comparable contributions to the Archer 
        MSAs of comparable employees, see section 4980E.
  (c) Inclusion of Long-Term Care Benefits Provided Through 
Flexible Spending Arrangements.--
          (1) In general.--Gross income of an employee shall 
        include employer-provided coverage for qualified long-
        term care services (as defined in section 7702B(c)) to 
        the extent that such coverage is provided through a 
        flexible spending or similar arrangement.
          (2) Flexible spending arrangement.--For purposes of 
        this subsection, a flexible spending arrangement is a 
        benefit program which provides employees with coverage 
        under which--
                  (A) specified incurred expenses may be 
                reimbursed (subject to reimbursement maximums 
                and other reasonable conditions), and
                  (B) the maximum amount of reimbursement which 
                is reasonably available to a participant for 
                such coverage is less than 500 percent of the 
                value of such coverage.
        In the case of an insured plan, the maximum amount 
        reasonably available shall be determined on the basis 
        of the underlying coverage.
  (d) Contributions to Health Savings Accounts.--
          (1) In general.--In the case of an employee who is an 
        eligible individual (as defined in section 223(c)(1)), 
        amounts contributed by such employee's employer to any 
        health savings account (as defined in section 223(d)) 
        of such employee shall be treated as employer-provided 
        coverage for medical expenses under an accident or 
        health plan to the extent such amounts do not exceed 
        the limitation under section 223(b) (determined without 
        regard to this subsection) which is applicable to such 
        employee for such taxable year.
          (2) Special rules.--Rules similar to the rules of 
        paragraphs (2), (3), (4), and (5) of subsection (b) 
        shall apply for purposes of this subsection.
          (3) Cross reference.--For penalty on failure by 
        employer to make comparable contributions to the health 
        savings accounts of comparable employees, see section 
        4980G.
  (e) Fsa and Hra Terminations to Fund Hsas.--
          (1) In general.--A plan shall not fail to be treated 
        as a health flexible spending arrangement or health 
        reimbursement arrangement under this section or section 
        105 merely because such plan provides for a qualified 
        HSA distribution.
          (2) Qualified HSA distribution.--The term ``qualified 
        HSA distribution'' means a distribution from a health 
        flexible spending arrangement or health reimbursement 
        arrangement to the extent that such distribution--
                  (A) does not exceed the lesser of the balance 
                in such arrangement on September 21, 2006, or 
                as of the date of such distribution, and
                  (B) is contributed by the employer directly 
                to the health savings account of the employee 
                before January 1, 2012.
        Such term shall not include more than 1 distribution 
        with respect to any arrangement.
          (3) Additional tax for failure to maintain high 
        deductible health plan coverage.--
                  (A) In general.--If, at any time during the 
                testing period, the employee is not an eligible 
                individual, then the amount of the qualified 
                HSA distribution--
                          (i) shall be includible in the gross 
                        income of the employee for the taxable 
                        year in which occurs the first month in 
                        the testing period for which such 
                        employee is not an eligible individual, 
                        and
                          (ii) the tax imposed by this chapter 
                        for such taxable year on the employee 
                        shall be increased by 10 percent of the 
                        amount which is so includible.
                  (B) Exception for disability or death.--
                Clauses (i) and (ii) of subparagraph (A) shall 
                not apply if the employee ceases to be an 
                eligible individual by reason of the death of 
                the employee or the employee becoming disabled 
                (within the meaning of section 72(m)(7)).
          (4) Definitions and special rules.--For purposes of 
        this subsection--
                  (A) Testing period.--The term ``testing 
                period'' means the period beginning with the 
                month in which the qualified HSA distribution 
                is contributed to the health savings account 
                and ending on the last day of the 12th month 
                following such month.
                  (B) Eligible individual.--The term ``eligible 
                individual'' has the meaning given such term by 
                section 223(c)(1).
                  (C) Treatment as rollover contribution.--A 
                qualified HSA distribution shall be treated as 
                a rollover contribution described in section 
                223(f)(5).
          (5) Tax treatment relating to distributions.--For 
        purposes of this title--
                  (A) In general.--A qualified HSA distribution 
                shall be treated as a payment described in 
                subsection (d).
                  (B) Comparability excise tax.--
                          (i) In general.--Except as provided 
                        in clause (ii), section 4980G shall not 
                        apply to qualified HSA distributions.
                          (ii) Failure to offer to all 
                        employees.--In the case of a qualified 
                        HSA distribution to any employee, the 
                        failure to offer such distribution to 
                        any eligible individual covered under a 
                        high deductible health plan of the 
                        employer shall (notwithstanding section 
                        4980G(d)) be treated for purposes of 
                        section 4980G as a failure to meet the 
                        requirements of section 4980G(b).
  (f) Reimbursements for Medicine Restricted to Prescribed 
Drugs and Insulin.--For purposes of this section and section 
105, reimbursement for expenses incurred for a medicine or a 
drug shall be treated as a reimbursement for medical expenses 
only if such medicine or drug is a prescribed drug (determined 
without regard to whether such drug is available without a 
prescription) or is insulin.

           *       *       *       *       *       *       *


Subtitle D--Miscellaneous Excise Taxes

           *       *       *       *       *       *       *


CHAPTER 43--QUALIFIED PENSION, ETC., PLANS

           *       *       *       *       *       *       *


SEC. 4980I. EXCISE TAX ON HIGH COST EMPLOYER-SPONSORED HEALTH COVERAGE.

  (a) Imposition of Tax.--If--
          (1) an employee is covered under any applicable 
        employer-sponsored coverage of an employer at any time 
        during a taxable period, and
          (2) there is any excess benefit with respect to the 
        coverage, there is hereby imposed a tax equal to 40 
        percent of the excess benefit.
  (b) Excess Benefit.--For purposes of this section--
          (1) In general.--The term ``excess benefit'' means, 
        with respect to any applicable employer-sponsored 
        coverage made available by an employer to an employee 
        during any taxable period, the sum of the excess 
        amounts determined under paragraph (2) for months 
        during the taxable period.
          (2) Monthly excess amount.--The excess amount 
        determined under this paragraph for any month is the 
        excess (if any) of--
                  (A) the aggregate cost of the applicable 
                employer- sponsored coverage of the employee 
                for the month, over
                  (B) an amount equal to \1/12\ of the annual 
                limitation under paragraph (3) for the calendar 
                year in which the month occurs.
          (3) Annual limitation.--For purposes of this 
        subsection--
                  (A) In general.--The annual limitation under 
                this paragraph for any calendar year is the 
                dollar limit determined under subparagraph (C) 
                for the calendar year.
                  (B) Applicable annual limitation.--
                          (i) In general.--Except as provided 
                        in clause (ii), the annual limitation 
                        which applies for any month shall be 
                        determined on the basis of the type of 
                        coverage (as determined under 
                        subsection (f)(1)) provided to the 
                        employee by the employer as of the 
                        beginning of the month.
                          (ii) Multiemployer plan coverage.--
                        Any coverage provided under a 
                        multiemployer plan (as defined in 
                        section 414(f)) shall be treated as 
                        coverage other than self-only coverage.
                  (C) Applicable dollar limit.--
                          (i) 2018.--In the case of 2018, the 
                        dollar limit under this subparagraph 
                        is--
                                  (I) in the case of an 
                                employee with self-only 
                                coverage, $10,200 multiplied by 
                                the health cost adjustment 
                                percentage (determined by only 
                                taking into account self-only 
                                coverage), and
                                  (II) in the case of an 
                                employee with coverage other 
                                than self-only coverage, 
                                $27,500 multiplied by the 
                                health cost adjustment 
                                percentage (determined by only 
                                taking into account coverage 
                                other than self-only coverage).
                          (ii) Health cost adjustment 
                        percentage.--For purposes of clause 
                        (i), the health cost adjustment 
                        percentage is equal to 100 percent plus 
                        the excess (if any) of--
                                  (I) the percentage by which 
                                the per employee cost for 
                                providing coverage under the 
                                Blue Cross/Blue Shield standard 
                                benefit option under the 
                                Federal Employees Health 
                                Benefits Plan for plan year 
                                2018 (determined by using the 
                                benefit package for such 
                                coverage in 2010) exceeds such 
                                cost for plan year 2010, over
                                  (II) 55 percent.
                          (iii) Age and gender adjustment.--
                                  (I) In general.--The amount 
                                determined under subclause (I) 
                                or (II) of clause (i), 
                                whichever is applicable, for 
                                any taxable period shall be 
                                increased by the amount 
                                determined under subclause 
                                (II).
                                  (II) Amount determined.--The 
                                amount determined under this 
                                subclause is an amount equal to 
                                the excess (if any) of--
                                          (aa) the premium cost 
                                        of the Blue Cross/Blue 
                                        Shield standard benefit 
                                        option under the 
                                        Federal Employees 
                                        Health Benefits Plan 
                                        for the type of 
                                        coverage provided such 
                                        individual in such 
                                        taxable period if 
                                        priced for the age and 
                                        gender characteristics 
                                        of all employees of the 
                                        individual's employer, 
                                        over
                                          (bb) that premium 
                                        cost for the provision 
                                        of such coverage under 
                                        such option in such 
                                        taxable period if 
                                        priced for the age and 
                                        gender characteristics 
                                        of the national 
                                        workforce.
                          (iv) Exception for certain 
                        individuals.--In the case of an 
                        individual who is a qualified retiree 
                        or who participates in a plan sponsored 
                        by an employer the majority of whose 
                        employees covered by the plan are 
                        engaged in a high-risk profession or 
                        employed to repair or install 
                        electrical or telecommunications 
                        lines--
                                  (I) the dollar amount in 
                                clause (i)(I) shall be 
                                increased by $1,650, and
                                  (II) the dollar amount in 
                                clause (i)(II) shall be 
                                increased by $3,450,
                          (v) Subsequent years.--In the case of 
                        any calendar year after 2018, each of 
                        the dollar amounts under clauses (i) 
                        (after the application of clause (ii)) 
                        and (iv) shall be increased to the 
                        amount equal to such amount as 
                        determined for for the calendar year 
                        preceding such year, increased by an 
                        amount equal to the product of--
                                  (I) such amount as so 
                                determined, multiplied by
                                  (II) the cost-of-living 
                                adjustment determined under 
                                section 1(f)(3) for such year 
                                (determined by substituting the 
                                calendar year that is 2 years 
                                before such year for ``1992'' 
                                in subparagraph (B) thereof), 
                                increased by 1 percentage point 
                                in the case of determinations 
                                for calendar years beginning 
                                before 2020.
                        If any amount determined under this 
                        clause is not a multiple of $50, such 
                        amount shall be rounded to the nearest 
                        multiple of $50.
  (c) Liability to Pay Tax.--
          (1) In general.--Each coverage provider shall pay the 
        tax imposed by subsection (a) on its applicable share 
        of the excess benefit with respect to an employee for 
        any taxable period.
          (2) Coverage provider.--For purposes of this 
        subsection, the term ``coverage provider'' means each 
        of the following:
                  (A) Health insurance coverage.--If the 
                applicable employer-sponsored coverage consists 
                of coverage under a group health plan which 
                provides health insurance coverage, the health 
                insurance issuer.
                  (B) HSA and MSA contributions.--If the 
                applicable employer-sponsored coverage consists 
                of coverage under an arrangement under which 
                the employer makes contributions described in 
                subsection (b) or (d) of section 106, the 
                employer.
                  (C) Other coverage.--In the case of any other 
                applicable employer-sponsored coverage, the 
                person that administers the plan benefits.
          (3) Applicable share.--For purposes of this 
        subsection, a coverage provider's applicable share of 
        an excess benefit for any taxable period is the amount 
        which bears the same ratio to the amount of such excess 
        benefit as--
                  (A) the cost of the applicable employer-
                sponsored coverage provided by the provider to 
                the employee during such period, bears to
                  (B) the aggregate cost of all applicable 
                employer-sponsored coverage provided to the 
                employee by all coverage providers during such 
                period.
          (4) Responsibility to calculate tax and applicable 
        shares.--
                  (A) In general.--Each employer shall--
                          (i) calculate for each taxable period 
                        the amount of the excess benefit 
                        subject to the tax imposed by 
                        subsection (a) and the applicable share 
                        of such excess benefit for each 
                        coverage provider, and
                          (ii) notify, at such time and in such 
                        manner as the Secretary may prescribe, 
                        the Secretary and each coverage 
                        provider of the amount so determined 
                        for the provider.
                  (B) Special rule for multiemployer plans.--In 
                the case of applicable employer-sponsored 
                coverage made available to employees through a 
                multiemployer plan (as defined in section 
                414(f)), the plan sponsor shall make the 
                calculations, and provide the notice, required 
                under subparagraph (A).
  (d) Applicable Employer-Sponsored Coverage; Cost.--For 
purposes of this section--
          (1) Applicable employer-sponsored coverage.--
                  (A) In general.--The term ``applicable 
                employer-sponsored coverage'' means, with 
                respect to any employee, coverage under any 
                group health plan made available to the 
                employee by an employer which is excludable 
                from the employee's gross income under section 
                106, or would be so excludable if it were 
                employer-provided coverage (within the meaning 
                of such section 106).
                  (B) Exceptions.--The term ``applicable 
                employer-sponsored coverage'' shall not 
                include--
                          (i) any coverage (whether through 
                        insurance or otherwise) described in 
                        section 9832(c)(1) (other than 
                        subparagraph (G) thereof) or for long-
                        term care, or
                          (ii) any coverage under a separate 
                        policy, certificate, or contract of 
                        insurance which provides benefits 
                        substantially all of which are for 
                        treatment of the mouth (including any 
                        organ or structure within the mouth) or 
                        for treatment of the eye, or
                          (iii) any coverage described in 
                        section 9832(c)(3) the payment for 
                        which is not excludable from gross 
                        income and for which a deduction under 
                        section 162(l) is not allowable.
                  (C) Coverage includes employee paid 
                portion.--Coverage shall be treated as 
                applicable employer-sponsored coverage without 
                regard to whether the employer or employee pays 
                for the coverage.
                  (D) Self-employed individual.--In the case of 
                an individual who is an employee within the 
                meaning of section 401(c)(1), coverage under 
                any group health plan providing health 
                insurance coverage shall be treated as 
                applicable employer-sponsored coverage if a 
                deduction is allowable under section 162(l) 
                with respect to all or any portion of the cost 
                of the coverage.
                  (E) Governmental plans included.--Applicable 
                employer-sponsored coverage shall include 
                coverage under any group health plan 
                established and maintained primarily for its 
                civilian employees by the Government of the 
                United States, by the government of any State 
                or political subdivision thereof, or by any 
                agency or instrumentality of any such 
                government.
          (2) Determination of cost.--
                  (A) In general.--The cost of applicable 
                employer- sponsored coverage shall be 
                determined under rules similar to the rules of 
                section 4980B(f)(4), except that in determining 
                such cost, any portion of the cost of such 
                coverage which is attributable to the tax 
                imposed under this section shall not be taken 
                into account and the amount of such cost shall 
                be calculated separately for self-only coverage 
                and other coverage. In the case of applicable 
                employer-sponsored coverage which provides 
                coverage to retired employees, the plan may 
                elect to treat a retired employee who has not 
                attained the age of 65 and a retired employee 
                who has attained the age of 65 as similarly 
                situated beneficiaries.
                  (B) Health FSAS.--In the case of applicable 
                employer- sponsored coverage consisting of 
                coverage under a flexible spending arrangement 
                (as defined in section 106(c)(2)), the cost of 
                the coverage shall be equal to the sum of--
                          (i) the amount of employer 
                        contributions under any salary 
                        reduction election under the 
                        arrangement, plus
                          (ii) the amount determined under 
                        subparagraph (A) with respect to any 
                        reimbursement under the arrangement in 
                        excess of the contributions described 
                        in clause (i).
                  (C) Archer MSAS and HSAS.--In the case of 
                applicable employer-sponsored coverage 
                consisting of coverage under an arrangement 
                under which the employer makes contributions 
                described in subsection (b) or (d) of section 
                106, the cost of the coverage shall be equal to 
                the amount of employer contributions under the 
                arrangement.
                  (D) Allocation on a monthly basis.--If cost 
                is determined on other than a monthly basis, 
                the cost shall be allocated to months in a 
                taxable period on such basis as the Secretary 
                may prescribe.
          (3) Employee.--The term ``employee'' includes any 
        former employee, surviving spouse, or other primary 
        insured individual.
  (e) Penalty for Failure to Properly Calculate Excess 
Benefit.--
          (1) In general.--If, for any taxable period, the tax 
        imposed by subsection (a) exceeds the tax determined 
        under such subsection with respect to the total excess 
        benefit calculated by the employer or plan sponsor 
        under subsection (c)(4)--
                  (A) each coverage provider shall pay the tax 
                on its applicable share (determined in the same 
                manner as under subsection (c)(4)) of the 
                excess, but no penalty shall be imposed on the 
                provider with respect to such amount, and
                  (B) the employer or plan sponsor shall, in 
                addition to any tax imposed by subsection (a), 
                pay a penalty in an amount equal to such 
                excess, plus interest at the underpayment rate 
                determined under section 6621 for the period 
                beginning on the due date for the payment of 
                tax imposed by subsection (a) to which the 
                excess relates and ending on the date of 
                payment of the penalty.
          (2) Limitations on penalty.--
                  (A) Penalty not to apply where failure not 
                discovered exercising reasonable diligence.--No 
                penalty shall be imposed by paragraph (1)(B) on 
                any failure to properly calculate the excess 
                benefit during any period for which it is 
                established to the satisfaction of the 
                Secretary that the employer or plan sponsor 
                neither knew, nor exercising reasonable 
                diligence would have known, that such failure 
                existed.
                  (B) Penalty not to apply to failures 
                corrected within 30 days.--No penalty shall be 
                imposed by paragraph (1)(B) on any such failure 
                if--
                          (i) such failure was due to 
                        reasonable cause and not to willful 
                        neglect, and
                          (ii) such failure is corrected during 
                        the 30-day period beginning on the 1st 
                        date that the employer knew, or 
                        exercising reasonable diligence would 
                        have known, that such failure existed.
                  (C) Waiver by Secretary.--In the case of any 
                such failure which is due to reasonable cause 
                and not to willful neglect, the Secretary may 
                waive part or all of the penalty imposed by 
                paragraph (1), to the extent that the payment 
                of such penalty would be excessive or otherwise 
                inequitable relative to the failure involved.
  (f) Other Definitions and Special Rules.--For purposes of 
this section--
          (1) Coverage determinations.--
                  (A) In general.--Except as provided in 
                subparagraph (B), an employee shall be treated 
                as having self-only coverage with respect to 
                any applicable employer-sponsored coverage of 
                an employer.
                  (B) Minimum essential coverage.--An employee 
                shall be treated as having coverage other than 
                self-only coverage only if the employee is 
                enrolled in coverage other than self-only 
                coverage in a group health plan which provides 
                minimum essential coverage (as defined in 
                section 5000A(f)) to the employee and at least 
                one other beneficiary, and the benefits 
                provided under such minimum essential coverage 
                do not vary based on whether any individual 
                covered under such coverage is the employee or 
                another beneficiary.
          (2) Qualified retiree.--The term ``qualified 
        retiree'' means any individual who--
                  (A) is receiving coverage by reason of being 
                a retiree,
                  (B) has attained age 55, and
                  (C) is not entitled to benefits or eligible 
                for enrollment under the Medicare program under 
                title XVIII of the Social Security Act.
          (3) Employees engaged in high-risk profession.--The 
        term ``employees engaged in a high-risk profession'' 
        means law enforcement officers (as such term is defined 
        in section 1204 of the Omnibus Crime Control and Safe 
        Streets Act of 1968), employees in fire protection 
        activities (as such term is defined in section 3(y) of 
        the Fair Labor Standards Act of 1938), individuals who 
        provide out- of-hospital emergency medical care 
        (including emergency medical technicians, paramedics, 
        and first-responders), individuals whose primary work 
        is longshore work (as defined in section 258(b) of the 
        Immigration and Nationality Act (8 U.S.C. 1288(b)), 
        determined without regard to paragraph (2) thereof), 
        and individuals engaged in the construction, mining, 
        agriculture (not including food processing), forestry, 
        and fishing industries. Such term includes an employee 
        who is retired from a high-risk profession described in 
        the preceding sentence, if such employee satisfied the 
        requirements of such sentence for a period of not less 
        than 20 years during the employee's employment.
          (4) Group health plan.--The term ``group health 
        plan'' has the meaning given such term by section 
        5000(b)(1).
          (5) Health insurance coverage; health insurance 
        issuer.--
                  (A) Health insurance coverage.--The term 
                ``health insurance coverage'' has the meaning 
                given such term by section 9832(b)(1) (applied 
                without regard to subparagraph (B) thereof, 
                except as provided by the Secretary in 
                regulations).
                  (B) Health insurance issuer.--The term 
                ``health insurance issuer'' has the meaning 
                given such term by section 9832(b)(2).
          (6) Person that administers the plan benefits.--The 
        term ``person that administers the plan benefits'' 
        shall include the plan sponsor if the plan sponsor 
        administers benefits under the plan.
          (7) 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.
          (8) Taxable period.--The term ``taxable period'' 
        means the calendar year or such shorter period as the 
        Secretary may prescribe. The Secretary may have 
        different taxable periods for employers of varying 
        sizes.
          (9) 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.
          (10) Deductibility of tax.--Section 275(a)(6) shall 
        not apply to the tax imposed by subsection (a).
  (g) Regulations.--The Secretary shall prescribe such 
regulations as may be necessary to carry out this section.

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Subtitle F--Procedure and Administration

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CHAPTER 61--INFORMATION AND RETURNS

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Subchapter A--Returns and Records

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PART III--INFORMATION RETURNS

           *       *       *       *       *       *       *



         Subpart C--Information Regarding Wages Paid Employees


SEC. 6051. RECEIPTS FOR EMPLOYEES.

  (a) Requirement.--Every person required to deduct and 
withhold from an employee a tax under section 3101 or 3402, or 
who would have been required to deduct and withhold a tax under 
section 3402 (determined without regard to subsection (n)) if 
the employee had claimed no more than one withholding 
exemption, or every employer engaged in a trade or business who 
pays remuneration for services performed by an employee, 
including the cash value of such remuneration paid in any 
medium other than cash, shall furnish to each such employee in 
respect of the remuneration paid by such person to such 
employee during the calendar year, on or before January 31 of 
the succeeding year, or, if his employment is terminated before 
the close of such calendar year, within 30 days after the date 
of receipt of a written request from the employee if such 30-
day period ends before January 31, a written statement showing 
the following:
          (1) the name of such person,
          (2) the name of the employee (and an identifying 
        number for the employee if wages as defined in section 
        3121(a) have been paid),
          (3) the total amount of wages as defined in section 
        3401(a),
          (4) the total amount deducted and withheld as tax 
        under section 3402,
          (5) the total amount of wages as defined in section 
        3121(a),
          (6) the total amount deducted and withheld as tax 
        under section 3101,
          (8) the total amount of elective deferrals (within 
        the meaning of section 402(g)(3)) and compensation 
        deferred under section 457, including the amount of 
        designated Roth contributions (as defined in section 
        402A),
          (9) the total amount incurred for dependent care 
        assistance with respect to such employee under a 
        dependent care assistance program described in section 
        129(d),
          (10) in the case of an employee who is a member of 
        the Armed Forces of the United States, such employee's 
        earned income as determined for purposes of section 32 
        (relating to earned income credit),
          (11) the amount contributed to any Archer MSA (as 
        defined in section 220(d)) of such employee or such 
        employee's spouse,
          (12) the amount contributed to any health savings 
        account (as defined in section 223(d)) of such employee 
        or such employee's spouse,
          (13) the total amount of deferrals for the year under 
        a nonqualified deferred compensation plan (within the 
        meaning of section 409A(d)),
          (14) the aggregate cost (determined under rules 
        similar to the rules of section 4980B(f)(4)) of 
        applicable employer-sponsored coverage (as defined in 
        section 4980I(d)(1)), except that this paragraph shall 
        not apply to--
                  (A) coverage to which paragraphs (11) and 
                (12) apply, or
                  (B) the amount of any salary reduction 
                contributions to a flexible spending 
                arrangement (within the meaning of section 
                125).
In the case of compensation paid for service as a member of a 
uniformed service, the statement shall show, in lieu of the 
amount required to be shown by paragraph (5), the total amount 
of wages as defined in section 3121(a), computed in accordance 
with such section and section 3121(i)(2). In the case of 
compensation paid for service as a volunteer or volunteer 
leader within the meaning of the Peace Corps Act, the statement 
shall show, in lieu of the amount required to be shown by 
paragraph (5), the total amount of wages as defined in section 
3121(a), computed in accordance with such section and section 
3121(i)(3). In the case of tips received by an employee in the 
course of his employment, the amounts required to be shown by 
paragraphs (3) and (5) shall include only such tips as are 
included in statements furnished to the employer pursuant to 
section 6053(a). The amounts required to be shown by paragraph 
(5) shall not include wages which are exempted pursuant to 
sections 3101(c) and 3111(c) from the taxes imposed by sections 
3101 and 3111. In the case of the amounts required to be shown 
by paragraph (13), the Secretary may (by regulation) establish 
a minimum amount of deferrals below which paragraph (13) does 
not apply.
  (b) Special Rule as to Compensation of Members of Armed 
Forces.--In the case of compensation paid for service as a 
member of the Armed Forces, the statement required by 
subsection (a) shall be furnished if any tax was withheld 
during the calendar year under section 3402, or if any of the 
compensation paid during such year is includible in gross 
income under chapter 1, or if during the calendar year any 
amount was required to be withheld as tax under section 3101. 
In lieu of the amount required to be shown by paragraph (3) of 
subsection (a), such statement shall show as wages paid during 
the calendar year the amount of such compensation paid during 
the calendar year which is not excluded from gross income under 
chapter 1 (whether or not such compensation constituted wages 
as defined in section 3401(a)).
  (c) Additional Requirements.--The statements required to be 
furnished pursuant to this section in respect of any 
remuneration shall be furnished at such other times, shall 
contain such other information, and shall be in such form as 
the Secretary may by regulations prescribe. The statements 
required under this section shall also show the proportion of 
the total amount withheld as tax under section 3101 which is 
for financing the cost of hospital insurance benefits under 
part A of title XVIII of the Social Security Act.
  (d) Statements to Constitute Information Returns.--A 
duplicate of any statement made pursuant to this section and in 
accordance with regulations prescribed by the Secretary shall, 
when required by such regulations, be filed with the Secretary.
  (e) Railroad Employees.--
          (1) Additional requirement.--Every person required to 
        deduct and withhold tax under section 3201 from an 
        employee shall include on or with the statement 
        required to be furnished such employee under subsection 
        (a) a notice concerning the provisions of this title 
        with respect to the allowance of a credit or refund of 
        the tax on wages imposed by section 3101(b) and the tax 
        on compensation imposed by section 3201 or 3211 which 
        is treated as a tax on wages imposed by section 
        3101(b).
          (2) Information to be supplied to employees.--Each 
        person required to deduct and withhold tax under 
        section 3201 during any year from an employee who has 
        also received wages during such year subject to the tax 
        imposed by section 3101(b) shall, upon request of such 
        employee, furnish to him a written statement showing--
                  (A) the total amount of compensation with 
                respect to which the tax imposed by section 
                3201 was deducted,
                  (B) the total amount deducted as tax under 
                section 3201, and
                  (C) the portion of the total amount deducted 
                as tax under section 3201 which is for 
                financing the cost of hospital insurance under 
                part A of title XVIII of the Social Security 
                Act.
  (f) Statements Required in Case of Sick Pay Paid by Third 
Parties.--
          (1) Statements required from payor.--
                  (A) In general.--If, during any calendar 
                year, any person makes a payment of third-party 
                sick pay to an employee, such person shall, on 
                or before January 15 of the succeeding year, 
                furnish a written statement to the employer in 
                respect of whom such payment was made showing--
                          (i) the name and, if there is 
                        withholding under section 3402(o), the 
                        social security number of such 
                        employee,
                          (ii) the total amount of the third-
                        party sick pay paid to such employee 
                        during the calendar year, and
                          (iii) the total amount (if any) 
                        deducted and withheld from such sick 
                        pay under section 3402.
                For purposes of the preceding sentence, the 
                term ``third-party sick pay'' means any sick 
                pay (as defined in section 3402(o)(2)(C)) which 
                does not constitute wages for purposes of 
                chapter 24 (determined without regard to 
                section 3402(o)(1)).
                  (B) Special rules.--
                          (i) Statements are in lieu of other 
                        reporting requirements.--The reporting 
                        requirements of subparagraph (A) with 
                        respect to any payments shall, with 
                        respect to such payments, be in lieu of 
                        the requirements of subsection (a) and 
                        of section 6041.
                          (ii) Penalties made applicable.--For 
                        purposes of sections 6674 and 7204, the 
                        statements required to be furnished by 
                        subparagraph (A) shall be treated as 
                        statements required under this section 
                        to be furnished to employees.
          (2) Information required to be furnished by 
        employer.--Every employer who receives a statement 
        under paragraph (1)(A) with respect to sick pay paid to 
        any employee during any calendar year shall, on or 
        before January 31 of the succeeding year, furnish a 
        written statement to such employee showing--
                  (A) the information shown on the statement 
                furnished under paragraph (1)(A), and
                  (B) if any portion of the sick pay is 
                excludable from gross income under section 
                104(a)(3), the portion which is not so 
                excludable and the portion which is so 
                excludable.
        To the extent practicable, the information required 
        under the preceding sentence shall be furnished on or 
        with the statement (if any) required under subsection 
        (a).

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 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *


Subchapter A--Additions to the Tax and Additional Amounts

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *



SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION 
                    STATEMENTS, ETC.

  (a) Returns With Respect to Certain Payments Aggregating Less 
Than $10.--In the case of each failure to file a statement of a 
payment to another person required under the authority of--
          (1) section 6042(a)(2) (relating to payments of 
        dividends aggregating less than $10), or
          (2) section 6044(a)(2) (relating to payments of 
        patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any 
extension of time for filing), unless it is shown that such 
failure is due to reasonable cause and not to willful neglect, 
there shall be paid (upon notice and demand by the Secretary 
and in the same manner as tax) by the person failing to so file 
the statement, $1 for each such statement not so filed, but the 
total amount imposed on the delinquent person for all such 
failures during the calendar year shall not exceed $1,000.
  (b) Failure to Report Tips.--In the case of failure by an 
employee to report to his employer on the date and in the 
manner prescribed therefor any amount of tips required to be so 
reported by section 6053(a) which are wages (as defined in 
section 3121(a)) or which are compensation (as defined in 
section 3231(e)), unless it is shown that such failure is due 
to reasonable cause and not due to willful neglect, there shall 
be paid by the employee, in addition to the tax imposed by 
section 3101 or section 3201 (as the case may be) with respect 
to the amount of tips which he so failed to report, an amount 
equal to 50 percent of such tax.
  (c) Returns by Exempt Organizations and by Certain Trusts.--
          (1) Annual returns under section 6033(a)(1) or 
        6012(a)(6).--
                  (A) Penalty on organization.--In the case 
                of--
                          (i) a failure to file a return 
                        required under section 6033(a)(1) 
                        (relating to returns by exempt 
                        organizations) or section 6012(a)(6) 
                        (relating to returns by political 
                        organizations) on the date and in the 
                        manner prescribed therefor (determined 
                        with regard to any extension of time 
                        for filing), or
                          (ii) a failure to include any of the 
                        information required to be shown on a 
                        return filed under section 6033(a)(1) 
                        or section 6012(a)(6) or to show the 
                        correct information,
                there shall be paid by the exempt organization 
                $20 for each day during which such failure 
                continues. The maximum penalty under this 
                subparagraph on failures with respect to any 1 
                return shall not exceed the lesser of $10,000 
                or 5 percent of the gross receipts of the 
                organization for the year. In the case of an 
                organization having gross receipts exceeding 
                $1,000,000 for any year, with respect to the 
                return required under section 6033(a)(1) or 
                section 6012(a)(6) for such year, in applying 
                the first sentence of this subparagraph, the 
                amount of the penalty for each day during which 
                a failure continues shall be $100 in lieu of 
                the amount otherwise specified, and, in lieu of 
                applying the second sentence of this 
                subparagraph, the maximum penalty under this 
                subparagraph shall not exceed $50,000.
                  (B) Managers.--
                          (i) In general.--The Secretary may 
                        make a written demand on any 
                        organization subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        return shall be filed (or the 
                        information furnished) for purposes of 
                        this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any person fails to comply with any 
                        demand under clause (i) on or before 
                        the date specified in such demand, 
                        there shall be paid by the person 
                        failing to so comply $10 for each day 
                        after the expiration of the time 
                        specified in such demand during which 
                        such failure continues. The maximum 
                        penalty imposed under this subparagraph 
                        on all persons for failures with 
                        respect to any 1 return shall not 
                        exceed $5,000.
                  (C) Public inspection of annual returns and 
                reports.--In the case of a failure to comply 
                with the requirements of section 6104(d) with 
                respect to any annual return on the date and in 
                the manner prescribed therefor (determined with 
                regard to any extension of time for filing) or 
                report required under section 527(j), there 
                shall be paid by the person failing to meet 
                such requirements $20 for each day during which 
                such failure continues. The maximum penalty 
                imposed under this subparagraph on all persons 
                for failures with respect to any 1 return or 
                report shall not exceed $10,000.
                  (D) Public inspection of applications for 
                exemption and notice of status.--In the case of 
                a failure to comply with the requirements of 
                section 6104(d) with respect to any exempt 
                status application materials (as defined in 
                such section) or notice materials (as defined 
                in such section) on the date and in the manner 
                prescribed therefor, there shall be paid by the 
                person failing to meet such requirements $20 
                for each day during which such failure 
                continues.
                  (E) No penalty for certain annual notices.--
                This paragraph shall not apply with respect to 
                any notice required under section 6033(i).
          (2) Returns under section 6034 or 6043(b).--
                  (A) Penalty on organization or trust.--In the 
                case of a failure to file a return required 
                under section 6034 (relating to returns by 
                certain trusts) or section 6043(b) (relating to 
                terminations, etc., of exempt organizations), 
                on the date and in the manner prescribed 
                therefor (determined with regard to any 
                extension of time for filing), there shall be 
                paid by the exempt organization or trust 
                failing so to file $10 for each day during 
                which such failure continues, but the total 
                amount imposed under this subparagraph on any 
                organization or trust for failure to file any 1 
                return shall not exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization or trust failing to 
                file under subparagraph (A) specifying therein 
                a reasonable future date by which such filing 
                shall be made for purposes of this 
                subparagraph. If such filing is not made on or 
                before such date, there shall be paid by the 
                person failing so to file $10 for each day 
                after the expiration of the time specified in 
                the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                file any 1 return shall not exceed $5,000.
                  (C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under 
                section 6034(a), subparagraphs (A) and (B) of 
                this paragraph shall not apply and paragraph 
                (1) shall apply in the same manner as if such 
                return were required under section 6033, except 
                that--
                          (i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) 
                        shall not apply,
                          (ii) in the case of any trust with 
                        gross income in excess of $250,000, in 
                        applying the first sentence of 
                        paragraph (1)(A), the amount of the 
                        penalty for each day during which a 
                        failure continues shall be $100 in lieu 
                        of the amount otherwise specified, and 
                        in lieu of applying the second sentence 
                        of paragraph (1)(A), the maximum 
                        penalty under paragraph (1)(A) shall 
                        not exceed $50,000, and
                          (iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person 
                required to file such return knowingly fails to 
                file the return, such penalty shall also be 
                imposed on such person who shall be personally 
                liable for such penalty.
          (3) Disclosure under section 6033(a)(2).--
                  (A) Penalty on entities.--In the case of a 
                failure to file a disclosure required under 
                section 6033(a)(2), there shall be paid by the 
                tax-exempt entity (the entity manager in the 
                case of a tax-exempt entity described in 
                paragraph (4), (5), (6), or (7) of section 
                4965(c)) $100 for each day during which such 
                failure continues. The maximum penalty under 
                this subparagraph on failures with respect to 
                any 1 disclosure shall not exceed $50,000.
                  (B) Written demand.--
                          (i) In general.--The Secretary may 
                        make a written demand on any entity or 
                        manager subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        disclosure shall be filed for purposes 
                        of this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any entity or manager fails to 
                        comply with any demand under clause (i) 
                        on or before the date specified in such 
                        demand, there shall be paid by such 
                        entity or manager failing to so comply 
                        $100 for each day after the expiration 
                        of the time specified in such demand 
                        during which such failure continues. 
                        The maximum penalty imposed under this 
                        subparagraph on all entities and 
                        managers for failures with respect to 
                        any 1 disclosure shall not exceed 
                        $10,000.
                  (C) Definitions.--Any term used in this 
                section which is also used in section 4965 
                shall have the meaning given such term under 
                section 4965.
          (4) Notices under section 506.--
                  (A) Penalty on organization.--In the case of 
                a failure to submit a notice required under 
                section 506(a) (relating to organizations 
                required to notify Secretary of intent to 
                operate as 501(c)(4)) on the date and in the 
                manner prescribed therefor, there shall be paid 
                by the organization failing to so submit $20 
                for each day during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on any organization for 
                failure to submit any one notice shall not 
                exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization subject to penalty 
                under subparagraph (A) specifying in such 
                demand a reasonable future date by which the 
                notice shall be submitted for purposes of this 
                subparagraph. If such notice is not submitted 
                on or before such date, there shall be paid by 
                the person failing to so submit $20 for each 
                day after the expiration of the time specified 
                in the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                submit any one notice shall not exceed $5,000.
          (5) Reasonable cause exception.--No penalty shall be 
        imposed under this subsection with respect to any 
        failure if it is shown that such failure is due to 
        reasonable cause.
          (6) Other special rules.--
                  (A) Treatment as tax.--Any penalty imposed 
                under this subsection shall be paid on notice 
                and demand of the Secretary and in the same 
                manner as tax.
                  (B) Joint and several liability.--If more 
                than 1 person is liable under this subsection 
                for any penalty with respect to any failure, 
                all such persons shall be jointly and severally 
                liable with respect to such failure.
                  (C) Person.--For purposes of this subsection, 
                the term ``person'' means any officer, 
                director, trustee, employee, or other 
                individual who is under a duty to perform the 
                act in respect of which the violation occurs.
          (7) Adjustment for inflation.--
                  (A) In general.--In the case of any failure 
                relating to a return required to be filed in a 
                calendar year beginning after 2014, each of the 
                dollar amounts under paragraphs (1), (2), and 
                (3) shall be increased by such dollar amount 
                multiplied by the cost-of-living adjustment 
                determined under section 1(f)(3) determined by 
                substituting ``calendar year 2013'' for 
                ``calendar year 1992'' in subparagraph (B) 
                thereof.
                  (B) Rounding.--If any amount adjusted under 
                subparagraph (A)--
                          (i) is not less than $5,000 and is 
                        not a multiple of $500, such amount 
                        shall be rounded to the next lowest 
                        multiple of $500, and
                          (ii) is not described in clause (i) 
                        and is not a multiple of $5, such 
                        amount shall be rounded to the next 
                        lowest multiple of $5.
  (d) Annual Registration and Other Notification by Pension 
Plan.--
          (1) Registration.--In the case of any failure to file 
        a registration statement required under section 6057(a) 
        (relating to annual registration of certain plans) 
        which includes all participants required to be included 
        in such statement, on the date prescribed therefor 
        (determined without regard to any extension of time for 
        filing), unless it is shown that such failure is due to 
        reasonable cause, there shall be paid (on notice and 
        demand by the Secretary and in the same manner as tax) 
        by the person failing so to file, an amount equal to $1 
        for each participant with respect to whom there is a 
        failure to file, multiplied by the number of days 
        during which such failure continues, but the total 
        amount imposed under this paragraph on any person for 
        any failure to file with respect to any plan year shall 
        not exceed $5,000.
          (2) Notification of change of status.--In the case of 
        failure to file a notification required under section 
        6057(b) (relating to notification of change of status) 
        on the date prescribed therefor (determined without 
        regard to any extension of time for filing), unless it 
        is shown that such failure is due to reasonable cause, 
        there shall be paid (on notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing so to file, $1 for each day during which such 
        failure continues, but the total amounts imposed under 
        this paragraph on any person for failure to file any 
        notification shall not exceed $1,000.
  (e) Information Required in Connection With Certain Plans of 
Deferred Compensation, Etc..--In the case of failure to file a 
return or statement required under section 6058 (relating to 
information required in connection with certain plans of 
deferred compensation), 6047 (relating to information relating 
to certain trusts and annuity and bond purchase plans), or 
6039D (relating to returns and records with respect to certain 
fringe benefit plans) on the date and in the manner prescribed 
therefor (determined with regard to any extension of time for 
filing), unless it is shown that such failure is due to 
reasonable cause, there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing so to file, $25 for each day during which such failure 
continues, but the total amount imposed under this subsection 
on any person for failure to file any return shall not exceed 
$15,000. This subsection shall not apply to any return or 
statement which is an information return described in section 
6724(d)(1)(C)(ii) or a payee statement described in section 
6724(d)(2)(Y).
  (f) Returns Required Under Section 6039C.--
          (1) In general.--In the case of each failure to make 
        a return required by section 6039C which contains the 
        information required by such section on the date 
        prescribed therefor (determined with regard to any 
        extension of time for filing), unless it is shown that 
        such failure is due to reasonable cause and not to 
        willful neglect, the amount determined under paragraph 
        (2) shall be paid (upon notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing to make such return.
          (2) Amount of penalty.--For purposes of paragraph 
        (1), the amount determined under this paragraph with 
        respect to any failure shall be $25 for each day during 
        which such failure continues.
          (3) Limitation.--The amount determined under 
        paragraph (2) with respect to any person for failing to 
        meet the requirements of section 6039C for any calendar 
        year shall not exceed the lesser of--
                  (A) $25,000, or
                  (B) 5 percent of the aggregate of the fair 
                market value of the United States real property 
                interests owned by such person at any time 
                during such year.
        For purposes of the preceding sentence, fair market 
        value shall be determined as of the end of the calendar 
        year (or, in the case of any property disposed of 
        during the calendar year, as of the date of such 
        disposition).
  (h) Failure to Give Notice to Recipients of Certain Pension, 
Etc., Distributions.--In the case of each failure to provide 
notice as required by section 3405(e)(10)(B), at the time 
prescribed therefor, unless it is shown that such failure is 
due to reasonable cause and not to willful neglect, there shall 
be paid, on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such notice, an 
amount equal to $10 for each such failure, but the total amount 
imposed on such person for all such failures during any 
calendar year shall not exceed $5,000.
  (i) Failure to Give Written Explanation to Recipients of 
Certain Qualifying Rollover Distributions.--In the case of each 
failure to provide a written explanation as required by section 
402(f), at the time prescribed therefor, unless it is shown 
that such failure is due to reasonable cause and not to willful 
neglect, there shall be paid, on notice and demand of the 
Secretary and in the same manner as tax, by the person failing 
to provide such written explanation, an amount equal to $100 
for each such failure, but the total amount imposed on such 
person for all such failures during any calendar year shall not 
exceed $50,000.
  (j) Failure to File Certification With Respect to Certain 
Residential Rental Projects.--In the case of each failure to 
provide a certification as required by section 142(d)(7) at the 
time prescribed therefor, unless it is shown that such failure 
is due to reasonable cause and not to willful neglect, there 
shall be paid, on notice and demand of the Secretary and in the 
same manner as tax, by the person failing to provide such 
certification, an amount equal to $100 for each such failure.
  (k)  Failure to Make Reports Required Under Section 1202.--
   In the case of a failure to make a report required under 
section 1202(d)(1)(C) which contains the information required 
by such section on the date prescribed therefor (determined 
with regard to any extension of time for filing), there shall 
be paid (on notice and demand by the Secretary and in the same 
manner as tax) by the person failing to make such report, an 
amount equal to $50 for each report with respect to which there 
was such a failure. In the case of any failure due to 
negligence or intentional disregard, the preceding sentence 
shall be applied by substituting ``$100'' for ``$50''. In the 
case of a report covering periods in 2 or more years, the 
penalty determined under preceding provisions of this 
subsection shall be multiplied by the number of such years. No 
penalty shall be imposed under this subsection on any failure 
which is shown to be due to reasonable cause and not willful 
neglect.
  (l) Failure to File Return With Respect to Certain Corporate 
Transactions.--In the case of any failure to make a return 
required under section 6043(c) containing the information 
required by such section on the date prescribed therefor 
(determined with regard to any extension of time for filing), 
unless it is shown that such failure is due to reasonable 
cause, there shall be paid (on notice and demand by the 
Secretary and in the same manner as tax) by the person failing 
to file such return, an amount equal to $500 for each day 
during which such failure continues, but the total amount 
imposed under this subsection with respect to any return shall 
not exceed $100,000.
  (m) Alcohol and Tobacco Taxes for Penalties for Failure to 
File Certain Information Returns.--with respect to alcohol and 
tobacco taxes, see, generally, subtitle E.
  (n) Failure to Make Reports Required Under Sections 3511, 
6053(C)(8), and 7705.--In the case of a failure to make a 
report required under section 3511, 6053(c)(8), or 7705 which 
contains the information required by such section on the date 
prescribed therefor (determined with regard to any extension of 
time for filing), there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing to make such report, an amount equal to $50 for each 
report with respect to which there was such a failure. In the 
case of any failure due to negligence or intentional disregard 
the preceding sentence shall be applied by substituting 
``$100'' for ``$50''.

           *       *       *       *       *       *       *


Subtitle K--Group Health Plan Requirements

           *       *       *       *       *       *       *


CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS

           *       *       *       *       *       *       *


                    Subchapter C--General Provisions

SEC. 9831. GENERAL EXCEPTIONS.

  (a) Exception for Certain Plans.--The requirements of this 
chapter shall not apply to--
          (1) any governmental plan, and
          (2) any group health plan for any plan year if, on 
        the first day of such plan year, such plan has less 
        than 2 participants who are current employees.
  (b) Exception for Certain Benefits.--The requirements of this 
chapter shall not apply to any group health plan in relation to 
its provision of excepted benefits described in section 
9832(c)(1).
  (c) Exception for Certain Benefits if Certain Conditions 
Met.--
          (1) Limited, excepted benefits.--The requirements of 
        this chapter shall not apply to any group health plan 
        in relation to its provision of excepted benefits 
        described in section 9832(c)(2) if the benefits--
                  (A) are provided under a separate policy, 
                certificate, or contract of insurance; or
                  (B) are otherwise not an integral part of the 
                plan.
          (2) Noncoordinated, excepted benefits.--The 
        requirements of this chapter shall not apply to any 
        group health plan in relation to its provision of 
        excepted benefits described in section 9832(c)(3) if 
        all of the following conditions are met:
                  (A) The benefits are provided under a 
                separate policy, certificate, or contract of 
                insurance.
                  (B) There is no coordination between the 
                provision of such benefits and any exclusion of 
                benefits under any group health plan maintained 
                by the same plan sponsor.
                  (C) Such benefits are paid with respect to an 
                event without regard to whether benefits are 
                provided with respect to such an event under 
                any group health plan maintained by the same 
                plan sponsor.
          (3) Supplemental excepted benefits.--The requirements 
        of this chapter shall not apply to any group health 
        plan in relation to its provision of excepted benefits 
        described in section 9832(c)(4) if the benefits are 
        provided under a separate policy, certificate, or 
        contract of insurance.

           *       *       *       *       *       *       *

                              ----------                              


               PATIENT PROTECTION AND AFFORDABLE CARE ACT




           *       *       *       *       *       *       *
TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

           *       *       *       *       *       *       *


       Subtitle E--Affordable Coverage Choices for All Americans

PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS

           *       *       *       *       *       *       *


                 Subpart B--Eligibility Determinations

SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE 
                    PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED 
                    COST-SHARING, AND INDIVIDUAL RESPONSIBILITY 
                    EXEMPTIONS.

  (a) Establishment of Program.--The Secretary shall establish 
a program meeting the requirements of this section for 
determining--
          (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 coverage 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 individual 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.
          (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 
        essential 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 minimum essential coverage.
                  (C) If the employer provides such minimum 
                essential coverage, the lowest cost option for 
                the enrollee's or individual'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 essential 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 
        requirements.--In the case of an individual who is 
        seeking an exemption certificate under section 
        1311(d)(4)(H) from any requirement 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 
                Secretary shall prescribe.
                  (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 accordance with the requirements of 
        this subsection and subsection (d).
          (2) Citizenship or immigration status.--
                  (A) Commissioner of Social Security.--The 
                Secretary 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 individual 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 Homeland Security the 
                        information described in clause (ii) 
                        for a determination as to whether the 
                        information provided 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 
        reduction.--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 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 information 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 responsibility for 
verification to the Exchange.
  (e) Actions Relating to Verification.--
          (1) In general.--Each person to whom the Secretary 
        provided information under subsection (c) shall report 
        to the Secretary 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 Secretary 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 
                shall issue the certification of exemption 
                described in section 1311(d)(4)(H).
          (3) Inconsistencies involving attestation of 
        citizenship 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 
        medicaid 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 
                        typographical 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 contained on the 
                        application.
                          (ii) Eligibility or amount of credit 
                        or reduction.--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 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 inconsistency involving, or 
                        inability to verify, information 
                        provided 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 procedures 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 appropriate circumstances.
          (2) Employer liability.--
                  (A) In general.--The Secretary shall 
                establish a separate 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 
                        contributions 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--
                          (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 coverage 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 information 
                                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 determines 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 addition to 
                any other penalties that may be prescribed by 
                law, to a civil penalty of not more than 
                $250,000.
          (2) Improper use or disclosure of information.--Any 
        person who knowingly and willfully uses or discloses 
        information 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 determine 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 recommendations 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.

           *       *       *       *       *       *       *

                              ----------                              


            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974




           *       *       *       *       *       *       *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *



Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *



Part 6--Continuation Coverage and Additional Standards for Group Health 
Plans

           *       *       *       *       *       *       *



SEC. 607. DEFINITIONS AND SPECIAL RULES.

   For purposes of this part--
          (1) Group health plan.--The term ``group health 
        plan'' means an employee welfare benefit plan providing 
        medical care (as defined in section 213(d) of the 
        Internal Revenue Code of 1986) to participants or 
        beneficiaries directly or through insurance, 
        reimbursement, or otherwise. Such term shall not 
        include any plan substantially all of the coverage 
        under which is for qualified long-term care services 
        (as defined in section 7702B(c) of such Code).
          (2) Covered employee.--The term ``covered employee'' 
        means an individual who is (or was) provided coverage 
        under a group health plan by virtue of the performance 
        of services by the individual for 1 or more persons 
        maintaining the plan (including as an employee defined 
        in section 401(c)(1) of the Internal Revenue Code of 
        1986).
          (3) Qualified beneficiary.--
                  (A) In general.--The term ``qualified 
                beneficiary'' means, with respect to a covered 
                employee under a group health plan, any other 
                individual who, on the day before the 
                qualifying event for that employee, is a 
                beneficiary under the plan--
                          (i) as the spouse of the covered 
                        employee, or
                          (ii) as the dependent child of the 
                        employee.
        Such term shall also include a child who is born to or 
        placed for adoption with the covered employee during 
        the period of continuation coverage under this part.
                  (B) Special rule for terminations and reduced 
                employment.--In the case of a qualifying event 
                described in section 603(2), the term 
                ``qualified beneficiary'' includes the covered 
                employee.
                  (C) Special rule for retirees and widows.--In 
                the case of a qualifying event described in 
                section 603(6), the term ``qualified 
                beneficiary'' includes a covered employee who 
                had retired on or before the date of 
                substantial elimination of coverage and any 
                other individual who, on the day before such 
                qualifying event, is a beneficiary under the 
                plan--
                          (i) as the spouse of the covered 
                        employee,
                          (ii) as the dependent child of the 
                        employee, or
                          (iii) as the surviving spouse of the 
                        covered employee.
          (4) Employer.--Subsection (n) (relating to leased 
        employees) and subsection (t) (relating to application 
        of controlled group rules to certain employee benefits) 
        of section 414 of the Internal Revenue Code of 1986 
        shall apply for purposes of this part in the same 
        manner and to the same extent as such subsections apply 
        for purposes of section 106 of such Code. Any 
        regulations prescribed by the Secretary pursuant to the 
        preceding sentence shall be consistent and coextensive 
        with any regulations prescribed for similar purposes by 
        the Secretary of the Treasury (or such Secretary's 
        delegate) under such subsections.
          (5) Optional extension of required periods.--A group 
        health plan shall not be treated as failing to meet the 
        requirements of this part solely because the plan 
        provides both--
                  (A) that the period of extended coverage 
                referred to in section 602(2) commences with 
                the date of the loss of coverage, and
                  (B) that the applicable notice period 
                provided under section 606(a)(2) commences with 
                the date of the loss of coverage.

           *       *       *       *       *       *       *


Part 7--Group Health Plan Requirements

           *       *       *       *       *       *       *



Subpart C--General Provisions

           *       *       *       *       *       *       *



SEC. 733. DEFINITIONS.

  (a) Group Health Plan.--For purposes of this part--
          (1) In general.--The term ``group health plan'' means 
        an employee welfare benefit plan to the extent that the 
        plan provides medical care (as defined in paragraph (2) 
        and including items and services paid for as medical 
        care) to employees or their dependents (as defined 
        under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise.
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
  (b) Definitions Relating to Health Insurance.--For purposes 
of this part--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2)). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of 
                the Public Health Service Act (42 U.S.C. 
                300e(a))),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
  (c) Excepted Benefits.--For purposes of this part, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--For purposes of this part--
          (1) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Part 6 of this subtitle.
                  (B) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (C) Title XXII of the Public Health Service 
                Act.
          (2) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 702(a)(1).
          (3) Network plan.--The term ``network plan'' means 
        health insurance coverage offered by a health insurance 
        issuer under which the financing and delivery of 
        medical care (including items and services paid for as 
        medical care) are provided, in whole or in part, 
        through a defined set of providers under contract with 
        the issuer.
          (4) Placed for adoption.--The term ``placement'', or 
        being ``placed'', for adoption, has the meaning given 
        such term in section 609(c)(3)(B).
          (5) Family member.--The term ``family member'' means, 
        with respect to an individual--
                  (A) a dependent (as such term is used for 
                purposes of section 701(f)(2)) of such 
                individual, and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (6) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (7) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (8) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (9) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.

           *       *       *       *       *       *       *

                              ----------                              


                       PUBLIC HEALTH SERVICE ACT




           *       *       *       *       *       *       *
  TITLE XXII--REQUIREMENTS FOR CERTAIN GROUP HEALTH PLANS FOR CERTAIN 
STATE AND LOCAL EMPLOYEES

           *       *       *       *       *       *       *



SEC. 2208. DEFINITIONS.

   For purposes of this title--
          (1) Group health plan.--The term ``group health 
        plan'' has the meaning given such term in 5000(b) of 
        the Internal Revenue Code of 1986. Such term shall not 
        include any plan substantially all of the coverage 
        under which is for qualified long-term care services 
        (as defined in section 7702B(c) of such Code).
          (2) Covered employee.--The term ``covered employee'' 
        means an individual who is (or was) provided coverage 
        under a group health plan by virtue of the performance 
        of services by the individual for 1 or more persons 
        maintaining the plan (including as an employee defined 
        in section 401(c)(1) of the Internal Revenue Code of 
        1986).
          (3) Qualified beneficiary.--
                  (A) In general.--The term ``qualified 
                beneficiary'' means, with respect to a covered 
                employee under a group health plan, any other 
                individual who, on the day before the 
                qualifying event for that employee, is a 
                beneficiary under the plan--
                          (i) as the spouse of the covered 
                        employee, or
                          (ii) as the dependent child of the 
                        employee.
        Such term shall also include a child who is born to or 
        placed for adoption with the covered employee during 
        the period of continuation coverage under this title.
                  (B) Special rule for terminations and reduced 
                employment.--In the case of a qualifying event 
                described in section 2203(2), the term 
                ``qualified beneficiary'' includes the covered 
                employee.
          (4) Plan administrator.--The term ``plan 
        administrator'' has the meaning given the term 
        ``administrator'' by section 3(16)(A) of the Employee 
        Retirement Income Security Act of 1974.

           *       *       *       *       *       *       *


TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

           *       *       *       *       *       *       *



             Part C--Definitions; Miscellaneous Provisions


SEC. 2791. DEFINITIONS.

  (a) Group Health Plan.--
          (1) Definition.--The term ``group health plan'' means 
        an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 
        1974) to the extent that the plan provides medical care 
        (as defined in paragraph (2)) and including items and 
        services paid for as medical care) to employees or 
        their dependents (as defined under the terms of the 
        plan) directly or through insurance, reimbursement, or 
        otherwise.
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
          (3) Treatment of certain plans as group health plan 
        for notice provision.--A program under which creditable 
        coverage described in subparagraph (C), (D), (E), or 
        (F) of section 2701(c)(1) is provided shall be treated 
        as a group health plan for purposes of applying section 
        2701(e).
  (b) Definitions Relating to Health Insurance.--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2) of the Employee Retirement 
        Income Security Act of 1974). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a Federally qualified health maintenance 
                organization (as defined in section 1301(a)),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
          (5) Individual health insurance coverage.--The term 
        ``individual health insurance coverage'' means health 
        insurance coverage offered to individuals in the 
        individual market, but does not include short-term 
        limited duration insurance.
  (c) Excepted Benefits.--For purposes of this title, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability 
                insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--
          (1) Applicable state authority.--The term 
        ``applicable State authority'' means, with respect to a 
        health insurance issuer in a State, the State insurance 
        commissioner or official or officials designated by the 
        State to enforce the requirements of this title for the 
        State involved with respect to such issuer.
          (2) Beneficiary.--The term ``beneficiary'' has the 
        meaning given such term under section 3(8) of the 
        Employee Retirement Income Security Act of 1974.
          (3) Bona fide association.--The term ``bona fide 
        association'' means, with respect to health insurance 
        coverage offered in a State, an association which--
                  (A) has been actively in existence for at 
                least 5 years;
                  (B) has been formed and maintained in good 
                faith for purposes other than obtaining 
                insurance;
                  (C) does not condition membership in the 
                association on any health status-related factor 
                relating to an individual (including an 
                employee of an employer or a dependent of an 
                employee);
                  (D) makes health insurance coverage offered 
                through the association available to all 
                members regardless of any health status-related 
                factor relating to such members (or individuals 
                eligible for coverage through a member);
                  (E) does not make health insurance coverage 
                offered through the association available other 
                than in connection with a member of the 
                association; and
                  (F) meets such additional requirements as may 
                be imposed under State law.
          (4) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (B) Part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 
                1974, other than section 609 of such Act.
                  (C) Title XXII of this Act.
          (5) Employee.--The term ``employee'' has the meaning 
        given such term under section 3(6) of the Employee 
        Retirement Income Security Act of 1974.
          (6) Employer.--The term ``employer'' has the meaning 
        given such term under section 3(5) of the Employee 
        Retirement Income Security Act of 1974, except that 
        such term shall include only employers of two or more 
        employees.
          (7) Church plan.--The term ``church plan'' has the 
        meaning given such term under section 3(33) of the 
        Employee Retirement Income Security Act of 1974.
          (8) Governmental plan.--(A) The term ``governmental 
        plan'' has the meaning given such term under section 
        3(32) of the Employee Retirement Income Security Act of 
        1974 and any Federal governmental plan.
          (B) Federal governmental plan.--The term ``Federal 
        governmental plan'' means a governmental plan 
        established or maintained for its employees by the 
        Government of the United States or by any agency or 
        instrumentality of such Government.
          (C) Non-Federal governmental plan.--The term ``non-
        Federal governmental plan'' means a governmental plan 
        that is not a Federal governmental plan.
          (9) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 2702(a)(1).
          (10) Network plan.--The term ``network plan'' means 
        health insurance coverage of a health insurance issuer 
        under which the financing and delivery of medical care 
        (including items and services paid for as medical care) 
        are provided, in whole or in part, through a defined 
        set of providers under contract with the issuer.
          (11) Participant.--The term ``participant'' has the 
        meaning given such term under section 3(7) of the 
        Employee Retirement Income Security Act of 1974.
          (12) Placed for adoption defined.--The term 
        ``placement'', or being ``placed'', for adoption, in 
        connection with any placement for adoption of a child 
        with any person, means the assumption and retention by 
        such person of a legal obligation for total or partial 
        support of such child in anticipation of adoption of 
        such child. The child's placement with such person 
        terminates upon the termination of such legal 
        obligation.
          (13) Plan sponsor.--The term ``plan sponsor'' has the 
        meaning given such term under section 3(16)(B) of the 
        Employee Retirement Income Security Act of 1974.
          (14) State.--The term ``State'' means each of the 
        several States, the District of Columbia, Puerto Rico, 
        the Virgin Islands, Guam, American Samoa, and the 
        Northern Mariana Islands.
          (15) Family member.--The term ``family member'' 
        means, with respect to any individual--
                  (A) a dependent (as such term is used for 
                purposes of section 2701(f)(2)) of such 
                individual; and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (16) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (17) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (18) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (19) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.
          (20) Qualified health plan.--The term ``qualified 
        health plan'' has the meaning given such term in 
        section 1301(a) of the Patient Protection and 
        Affordable Care Act.
          (21) Exchange.--The term ``Exchange'' means an 
        American Health Benefit Exchange established under 
        section 1311 of the Patient Protection and Affordable 
        Care Act.
  (e) Definitions Relating to Markets and Small Employers.--For 
purposes of this title:
          (1) Individual market.--
                  (A) In general.--The term ``individual 
                market'' means the market for health insurance 
                coverage offered to individuals other than in 
                connection with a group health plan.
                  (B) Treatment of very small groups.--
                          (i) In general.--Subject to clause 
                        (ii), such terms includes coverage 
                        offered in connection with a group 
                        health plan that has fewer than two 
                        participants as current employees on 
                        the first day of the plan year.
                          (ii) State exception.--Clause (i) 
                        shall not apply in the case of a State 
                        that elects to regulate the coverage 
                        described in such clause as coverage in 
                        the small group market.
          (2) Large employer.--The term ``large employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 51 employees on 
        business days during the preceding calendar year and 
        who employs at least 2 employees on the first day of 
        the plan year.
          (3) Large group market.--The term ``large group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a large employer.
          (4) Small employer.--The term ``small employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 1 but not more than 
        50 employees on business days during the preceding 
        calendar year and who employs at least 1 employees on 
        the first day of the plan year.
          (5) Small group market.--The term ``small group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a small employer.
          (6) Application of certain rules in determination of 
        employer size.--For purposes of this subsection--
                  (A) 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.
                  (B) 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 a small or 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.
                  (C) Predecessors.--Any reference in this 
                subsection to an employer shall include a 
                reference to any predecessor of such employer.
          (7) State option to extend definition of small 
        employer.--Notwithstanding paragraphs (2) and (4), 
        nothing in this section shall prevent a State from 
        applying this subsection by treating as a small 
        employer, with respect to a calendar year and a plan 
        year, an employer who employed an average of at least 1 
        but not more than 100 employees on business days during 
        the preceding calendar year and who employs at least 1 
        employee on the first day of the plan year.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italics, existing law in 
which no change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italics, and existing law in 
which no change is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *


PART IV--CREDITS AGAINST TAX

           *       *       *       *       *       *       *



Subpart C--Refundable Credits

           *       *       *       *       *       *       *



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 
        paragraph (2) with respect to all coverage months of 
        the taxpayer occurring during the taxable year.
          (2) Premium assistance amount.--The premium 
        assistance 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
                          (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 
        assistance amounts.--For purposes of paragraph (2)--
                  (A) Applicable percentage.--
                          (i) In general.--Except as provided 
                        in clause (ii), the applicable 
                        percentage for any taxable year shall 
                        be the percentage such that the 
                        applicable percentage for any taxpayer 
                        whose household income is within an 
                        income tier specified in the following 
                        table shall increase, on a sliding 
                        scale in a linear manner, from the 
                        initial premium percentage to the final 
                        premium percentage specified in such 
                        table for such income tier:


 
------------------------------------------------------------------------
     In the case of
    household income
(expressed as a percent    The initial premium       The final premium
of poverty line) within      percentage is--          percentage is--
  the following income
         tier:
------------------------------------------------------------------------
Up to 133%               2.0%                     2.0%
133% up to 150%          3.0%                     4.0%
150% up to 200%          4.0%                     6.3%
200% up to 250%          6.3%                     8.05%
250% up to 300%          8.05%                    9.5%
300% up to 400%          9.5%                     9.5%
------------------------------------------------------------------------

                          (ii) Indexing.--
                                  (I) In general.--Subject to 
                                subclause (II), in the case of 
                                taxable years beginning in any 
                                calendar year after 2014, the 
                                initial and final applicable 
                                percentages under clause (i) 
                                (as in effect for the preceding 
                                calendar year after application 
                                of this clause) shall be 
                                adjusted to reflect the excess 
                                of the rate of premium growth 
                                for the preceding calendar year 
                                over the rate of income growth 
                                for the preceding calendar 
                                year.
                                  (II) Additional adjustment.--
                                Except as provided in subclause 
                                (III), in the case of any 
                                calendar year after 2018, the 
                                percentages described in 
                                subclause (I) shall, in 
                                addition to the adjustment 
                                under subclause (I), be 
                                adjusted to reflect the excess 
                                (if any) of the rate of premium 
                                growth estimated under 
                                subclause (I) for the preceding 
                                calendar year over the rate of 
                                growth in the consumer price 
                                index for the preceding 
                                calendar year.
                                  (III) Failsafe.--Subclause 
                                (II) shall apply for any 
                                calendar year only if the 
                                aggregate amount of premium tax 
                                credits under this section and 
                                cost-sharing reductions under 
                                section 1402 of the Patient 
                                Protection and Affordable Care 
                                Act for the preceding calendar 
                                year exceeds an amount equal to 
                                0.504 percent of the gross 
                                domestic product for the 
                                preceding calendar year.
                  (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 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 
                premium 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 Taxpayers, 
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 equals or 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--
                          (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 household 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 subsection (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 respect to 
                                the plan exceeds 9.5 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 
                        coverage 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 beginning in any calendar year 
                        after 2014, the Secretary shall adjust 
                        the 9.5 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 
                ``grandfathered health plan'' has the meaning 
                given such term by section 1251 of the Patient 
                Protection and Affordable Care Act.
          (4) Special rules for qualified small employer health 
        reimbursement arrangements.--
                  (A) In general.--The term ``coverage month'' 
                shall not include any month with respect to an 
                employee (or any spouse or dependent of such 
                employee) if for such month the employee is 
                provided a qualified small employer health 
                reimbursement arrangement which constitutes 
                affordable coverage.
                  (B) Denial of double benefit.--In the case of 
                any employee who is provided a qualified small 
                employer health reimbursement arrangement for 
                any coverage month (determined without regard 
                to subparagraph (A)), the credit otherwise 
                allowable under subsection (a) to the taxpayer 
                for such month shall be reduced (but not below 
                zero) by the amount described in subparagraph 
                (C)(i)(II) for such month.
                  (C) Affordable coverage.--For purposes of 
                subparagraph (A), a qualified small employer 
                health reimbursement arrangement shall be 
                treated as constituting affordable coverage for 
                a month if--
                          (i) the excess of--
                                  (I) the amount that would be 
                                paid by the employee as the 
                                premium for such month for 
                                self-only coverage under the 
                                second lowest cost silver plan 
                                offered in the relevant 
                                individual health insurance 
                                market, over
                                  (II) \1/12\ of the employee's 
                                permitted benefit (as defined 
                                in section 9831(d)(3)(C)) under 
                                such arrangement, does not 
                                exceed--
                          (ii) \1/12\ of 9.5 percent of the 
                        employee's household income.
                  (D) Qualified small employer health 
                reimbursement arrangement.--For purposes of 
                this paragraph, the term ``qualified small 
                employer health reimbursement arrangement'' has 
                the meaning given such term by section 
                9831(d)(2).
                  (E) Coverage for less than entire year.--In 
                the case of an employee who is provided a 
                qualified small employer health reimbursement 
                arrangement for less than an entire year, 
                subparagraph (C)(i)(II) shall be applied by 
                substituting ``the number of months during the 
                year for which such arrangement was provided'' 
                for ``12''.
                  (F) Indexing.--In the case of plan years 
                beginning in any calendar year after 2014, the 
                Secretary shall adjust the 9.5 percent amount 
                under subparagraph (C)(ii) in the same manner 
                as the percentages are adjusted under 
                subsection (b)(3)(A)(ii).
  (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 adjusted gross 
                        income of the taxpayer, plus
                          (ii) the aggregate modified adjusted 
                        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 adjusted gross income.--The term 
                ``modified adjusted gross income'' means 
                adjusted gross income increased by--
                          (i) any amount excluded from gross 
                        income under section 911,
                          (ii) any amount of interest received 
                        or accrued by the taxpayer during the 
                        taxable year which is exempt from tax, 
                        and
                          (iii) an amount equal to the portion 
                        of the taxpayer's social security 
                        benefits (as defined in section 86(d)) 
                        which is not included in gross income 
                        under section 86 for the taxable year.
          (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 taxable 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 determination 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 poverty 
                                        line for the taxpayer's 
                                        family size determined 
                                        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 individual 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 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 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 Affordable Care Act.
          (2) Excess advance payments.--
                  (A) In general.--If the advance payments to a 
                taxpayer 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 paragraph 
                (1)), the tax imposed by this chapter for the 
                taxable year shall be increased by the amount 
                of such excess.
                  (B) Limitation on increase.--
                          (i) In general.--In the case of a 
                        taxpayer 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 the applicable 
                        dollar amount determined in accordance 
                        with the following table (one-half of 
                        such amount in the case of a taxpayer 
                        whose tax is determined under section 
                        1(c) for the taxable year):


 
------------------------------------------------------------------------
 If the household income (expressed
 as a percent of poverty line) is:     The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200%                       $600
At least 200% but less than 300%     $1,500
At least 300% but less than 400%     $2,500
------------------------------------------------------------------------

                          (ii) Indexing of amount.--In the case 
                        of any calendar year beginning after 
                        2014, each of the dollar amounts in the 
                        table contained 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, determined by 
                                substituting ``calendar year 
                                2013'' 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.
          (3) Information requirement.--Each Exchange (or any 
        person carrying out 1 or more responsibilities of an 
        Exchange under section 1311(f)(3) or 1321(c) of the 
        Patient Protection and Affordable Care Act) shall 
        provide the following information to the Secretary and 
        to the taxpayer with respect to any health plan 
        provided through the Exchange:
                  (A) The level of coverage described in 
                section 1302(d) of the Patient Protection and 
                Affordable Care Act and the period such 
                coverage was in effect.
                  (B) The total premium for the coverage 
                without regard to the credit under this section 
                or cost-sharing reductions under section 1402 
                of such Act.
                  (C) The aggregate amount of any advance 
                payment of such credit or reductions under 
                section 1412 of such Act.
                  (D) The name, address, and TIN of the primary 
                insured and the name and TIN of each other 
                individual obtaining coverage under the policy.
                  (E) Any information provided to the Exchange, 
                including any change of circumstances, 
                necessary to determine eligibility for, and the 
                amount of, such credit.
                  (F) Information necessary to determine 
                whether a taxpayer has received excess advance 
                payments.
  (g) Regulations.--The Secretary shall prescribe such 
regulations 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.

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME

           *       *       *       *       *       *       *


SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.

  (a) General Rule.--Except as otherwise provided in this 
section, gross income of an employee does not include employer-
provided coverage under an accident or health plan.
  (b) Contributions to Archer Msas.--
          (1) In general.--In the case of an employee who is an 
        eligible individual, amounts contributed by such 
        employee's employer to any Archer MSA of such employee 
        shall be treated as employer-provided coverage for 
        medical expenses under an accident or health plan to 
        the extent such amounts do not exceed the limitation 
        under section 220(b)(1) (determined without regard to 
        this subsection) which is applicable to such employee 
        for such taxable year.
          (2) No constructive receipt.--No amount shall be 
        included in the gross income of any employee solely 
        because the employee may choose between the 
        contributions referred to in paragraph (1) and employer 
        contributions to another health plan of the employer.
          (3) Special rule for deduction of employer 
        contributions.--Any employer contribution to an Archer 
        MSA, if otherwise allowable as a deduction under this 
        chapter, shall be allowed only for the taxable year in 
        which paid.
          (4) Employer MSA contributions required to be shown 
        on return.--Every individual required to file a return 
        under section 6012 for the taxable year shall include 
        on such return the aggregate amount contributed by 
        employers to the Archer MSAs of such individual or such 
        individual's spouse for such taxable year.
          (5) MSA contributions not part of COBRA coverage.--
        Paragraph (1) shall not apply for purposes of section 
        4980B.
          (6) Definitions.--For purposes of this subsection, 
        the terms ``eligible individual'' and ``Archer MSA'' 
        have the respective meanings given to such terms by 
        section 220.
          (7) Cross reference.--For penalty on failure by 
        employer to make comparable contributions to the Archer 
        MSAs of comparable employees, see section 4980E.
  (c) Inclusion of Long-Term Care Benefits Provided Through 
Flexible Spending Arrangements.--
          (1) In general.--Gross income of an employee shall 
        include employer-provided coverage for qualified long-
        term care services (as defined in section 7702B(c)) to 
        the extent that such coverage is provided through a 
        flexible spending or similar arrangement.
          (2) Flexible spending arrangement.--For purposes of 
        this subsection, a flexible spending arrangement is a 
        benefit program which provides employees with coverage 
        under which--
                  (A) specified incurred expenses may be 
                reimbursed (subject to reimbursement maximums 
                and other reasonable conditions), and
                  (B) the maximum amount of reimbursement which 
                is reasonably available to a participant for 
                such coverage is less than 500 percent of the 
                value of such coverage.
        In the case of an insured plan, the maximum amount 
        reasonably available shall be determined on the basis 
        of the underlying coverage.
  (d) Contributions to Health Savings Accounts.--
          (1) In general.--In the case of an employee who is an 
        eligible individual (as defined in section 223(c)(1)), 
        amounts contributed by such employee's employer to any 
        health savings account (as defined in section 223(d)) 
        of such employee shall be treated as employer-provided 
        coverage for medical expenses under an accident or 
        health plan to the extent such amounts do not exceed 
        the limitation under section 223(b) (determined without 
        regard to this subsection) which is applicable to such 
        employee for such taxable year.
          (2) Special rules.--Rules similar to the rules of 
        paragraphs (2), (3), (4), and (5) of subsection (b) 
        shall apply for purposes of this subsection.
          (3) Cross reference.--For penalty on failure by 
        employer to make comparable contributions to the health 
        savings accounts of comparable employees, see section 
        4980G.
  (e) Fsa and Hra Terminations to Fund Hsas.--
          (1) In general.--A plan shall not fail to be treated 
        as a health flexible spending arrangement or health 
        reimbursement arrangement under this section or section 
        105 merely because such plan provides for a qualified 
        HSA distribution.
          (2) Qualified HSA distribution.--The term ``qualified 
        HSA distribution'' means a distribution from a health 
        flexible spending arrangement or health reimbursement 
        arrangement to the extent that such distribution--
                  (A) does not exceed the lesser of the balance 
                in such arrangement on September 21, 2006, or 
                as of the date of such distribution, and
                  (B) is contributed by the employer directly 
                to the health savings account of the employee 
                before January 1, 2012.
        Such term shall not include more than 1 distribution 
        with respect to any arrangement.
          (3) Additional tax for failure to maintain high 
        deductible health plan coverage.--
                  (A) In general.--If, at any time during the 
                testing period, the employee is not an eligible 
                individual, then the amount of the qualified 
                HSA distribution--
                          (i) shall be includible in the gross 
                        income of the employee for the taxable 
                        year in which occurs the first month in 
                        the testing period for which such 
                        employee is not an eligible individual, 
                        and
                          (ii) the tax imposed by this chapter 
                        for such taxable year on the employee 
                        shall be increased by 10 percent of the 
                        amount which is so includible.
                  (B) Exception for disability or death.--
                Clauses (i) and (ii) of subparagraph (A) shall 
                not apply if the employee ceases to be an 
                eligible individual by reason of the death of 
                the employee or the employee becoming disabled 
                (within the meaning of section 72(m)(7)).
          (4) Definitions and special rules.--For purposes of 
        this subsection--
                  (A) Testing period.--The term ``testing 
                period'' means the period beginning with the 
                month in which the qualified HSA distribution 
                is contributed to the health savings account 
                and ending on the last day of the 12th month 
                following such month.
                  (B) Eligible individual.--The term ``eligible 
                individual'' has the meaning given such term by 
                section 223(c)(1).
                  (C) Treatment as rollover contribution.--A 
                qualified HSA distribution shall be treated as 
                a rollover contribution described in section 
                223(f)(5).
          (5) Tax treatment relating to distributions.--For 
        purposes of this title--
                  (A) In general.--A qualified HSA distribution 
                shall be treated as a payment described in 
                subsection (d).
                  (B) Comparability excise tax.--
                          (i) In general.--Except as provided 
                        in clause (ii), section 4980G shall not 
                        apply to qualified HSA distributions.
                          (ii) Failure to offer to all 
                        employees.--In the case of a qualified 
                        HSA distribution to any employee, the 
                        failure to offer such distribution to 
                        any eligible individual covered under a 
                        high deductible health plan of the 
                        employer shall (notwithstanding section 
                        4980G(d)) be treated for purposes of 
                        section 4980G as a failure to meet the 
                        requirements of section 4980G(b).
  (f) Reimbursements for Medicine Restricted to Prescribed 
Drugs and Insulin.--For purposes of this section and section 
105, reimbursement for expenses incurred for a medicine or a 
drug shall be treated as a reimbursement for medical expenses 
only if such medicine or drug is a prescribed drug (determined 
without regard to whether such drug is available without a 
prescription) or is insulin.
  (g) Qualified Small Employer Health Reimbursement 
Arrangement.--For purposes of this section and section 105, 
payments or reimbursements from a qualified small employer 
health reimbursement arrangement (as defined in section 
9831(d)) of an individual for medical care (as defined in 
section 213(d)) shall not be treated as paid or reimbursed 
under employer-provided coverage for medical expenses under an 
accident or health plan if for the month in which such medical 
care is provided the individual does not have minimum essential 
coverage (within the meaning of section 5000A(f)).

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Subtitle D--Miscellaneous Excise Taxes

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CHAPTER 43--QUALIFIED PENSION, ETC., PLANS

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SEC. 4980I. EXCISE TAX ON HIGH COST EMPLOYER-SPONSORED HEALTH COVERAGE.

  (a) Imposition of Tax.--If--
          (1) an employee is covered under any applicable 
        employer-sponsored coverage of an employer at any time 
        during a taxable period, and
          (2) there is any excess benefit with respect to the 
        coverage, there is hereby imposed a tax equal to 40 
        percent of the excess benefit.
  (b) Excess Benefit.--For purposes of this section--
          (1) In general.--The term ``excess benefit'' means, 
        with respect to any applicable employer-sponsored 
        coverage made available by an employer to an employee 
        during any taxable period, the sum of the excess 
        amounts determined under paragraph (2) for months 
        during the taxable period.
          (2) Monthly excess amount.--The excess amount 
        determined under this paragraph for any month is the 
        excess (if any) of--
                  (A) the aggregate cost of the applicable 
                employer- sponsored coverage of the employee 
                for the month, over
                  (B) an amount equal to \1/12\ of the annual 
                limitation under paragraph (3) for the calendar 
                year in which the month occurs.
          (3) Annual limitation.--For purposes of this 
        subsection--
                  (A) In general.--The annual limitation under 
                this paragraph for any calendar year is the 
                dollar limit determined under subparagraph (C) 
                for the calendar year.
                  (B) Applicable annual limitation.--
                          (i) In general.--Except as provided 
                        in clause (ii), the annual limitation 
                        which applies for any month shall be 
                        determined on the basis of the type of 
                        coverage (as determined under 
                        subsection (f)(1)) provided to the 
                        employee by the employer as of the 
                        beginning of the month.
                          (ii) Multiemployer plan coverage.--
                        Any coverage provided under a 
                        multiemployer plan (as defined in 
                        section 414(f)) shall be treated as 
                        coverage other than self-only coverage.
                  (C) Applicable dollar limit.--
                          (i) 2018.--In the case of 2018, the 
                        dollar limit under this subparagraph 
                        is--
                                  (I) in the case of an 
                                employee with self-only 
                                coverage, $10,200 multiplied by 
                                the health cost adjustment 
                                percentage (determined by only 
                                taking into account self-only 
                                coverage), and
                                  (II) in the case of an 
                                employee with coverage other 
                                than self-only coverage, 
                                $27,500 multiplied by the 
                                health cost adjustment 
                                percentage (determined by only 
                                taking into account coverage 
                                other than self-only coverage).
                          (ii) Health cost adjustment 
                        percentage.--For purposes of clause 
                        (i), the health cost adjustment 
                        percentage is equal to 100 percent plus 
                        the excess (if any) of--
                                  (I) the percentage by which 
                                the per employee cost for 
                                providing coverage under the 
                                Blue Cross/Blue Shield standard 
                                benefit option under the 
                                Federal Employees Health 
                                Benefits Plan for plan year 
                                2018 (determined by using the 
                                benefit package for such 
                                coverage in 2010) exceeds such 
                                cost for plan year 2010, over
                                  (II) 55 percent.
                          (iii) Age and gender adjustment.--
                                  (I) In general.--The amount 
                                determined under subclause (I) 
                                or (II) of clause (i), 
                                whichever is applicable, for 
                                any taxable period shall be 
                                increased by the amount 
                                determined under subclause 
                                (II).
                                  (II) Amount determined.--The 
                                amount determined under this 
                                subclause is an amount equal to 
                                the excess (if any) of--
                                          (aa) the premium cost 
                                        of the Blue Cross/Blue 
                                        Shield standard benefit 
                                        option under the 
                                        Federal Employees 
                                        Health Benefits Plan 
                                        for the type of 
                                        coverage provided such 
                                        individual in such 
                                        taxable period if 
                                        priced for the age and 
                                        gender characteristics 
                                        of all employees of the 
                                        individual's employer, 
                                        over
                                          (bb) that premium 
                                        cost for the provision 
                                        of such coverage under 
                                        such option in such 
                                        taxable period if 
                                        priced for the age and 
                                        gender characteristics 
                                        of the national 
                                        workforce.
                          (iv) Exception for certain 
                        individuals.--In the case of an 
                        individual who is a qualified retiree 
                        or who participates in a plan sponsored 
                        by an employer the majority of whose 
                        employees covered by the plan are 
                        engaged in a high-risk profession or 
                        employed to repair or install 
                        electrical or telecommunications 
                        lines--
                                  (I) the dollar amount in 
                                clause (i)(I) shall be 
                                increased by $1,650, and
                                  (II) the dollar amount in 
                                clause (i)(II) shall be 
                                increased by $3,450,
                          (v) Subsequent years.--In the case of 
                        any calendar year after 2018, each of 
                        the dollar amounts under clauses (i) 
                        (after the application of clause (ii)) 
                        and (iv) shall be increased to the 
                        amount equal to such amount as 
                        determined for for the calendar year 
                        preceding such year, increased by an 
                        amount equal to the product of--
                                  (I) such amount as so 
                                determined, multiplied by
                                  (II) the cost-of-living 
                                adjustment determined under 
                                section 1(f)(3) for such year 
                                (determined by substituting the 
                                calendar year that is 2 years 
                                before such year for ``1992'' 
                                in subparagraph (B) thereof), 
                                increased by 1 percentage point 
                                in the case of determinations 
                                for calendar years beginning 
                                before 2020.
                        If any amount determined under this 
                        clause is not a multiple of $50, such 
                        amount shall be rounded to the nearest 
                        multiple of $50.
  (c) Liability to Pay Tax.--
          (1) In general.--Each coverage provider shall pay the 
        tax imposed by subsection (a) on its applicable share 
        of the excess benefit with respect to an employee for 
        any taxable period.
          (2) Coverage provider.--For purposes of this 
        subsection, the term ``coverage provider'' means each 
        of the following:
                  (A) Health insurance coverage.--If the 
                applicable employer-sponsored coverage consists 
                of coverage under a group health plan which 
                provides health insurance coverage, the health 
                insurance issuer.
                  (B) HSA and MSA contributions.--If the 
                applicable employer-sponsored coverage consists 
                of coverage under an arrangement under which 
                the employer makes contributions described in 
                subsection (b) or (d) of section 106, the 
                employer.
                  (C) Other coverage.--In the case of any other 
                applicable employer-sponsored coverage, the 
                person that administers the plan benefits.
          (3) Applicable share.--For purposes of this 
        subsection, a coverage provider's applicable share of 
        an excess benefit for any taxable period is the amount 
        which bears the same ratio to the amount of such excess 
        benefit as--
                  (A) the cost of the applicable employer-
                sponsored coverage provided by the provider to 
                the employee during such period, bears to
                  (B) the aggregate cost of all applicable 
                employer-sponsored coverage provided to the 
                employee by all coverage providers during such 
                period.
          (4) Responsibility to calculate tax and applicable 
        shares.--
                  (A) In general.--Each employer shall--
                          (i) calculate for each taxable period 
                        the amount of the excess benefit 
                        subject to the tax imposed by 
                        subsection (a) and the applicable share 
                        of such excess benefit for each 
                        coverage provider, and
                          (ii) notify, at such time and in such 
                        manner as the Secretary may prescribe, 
                        the Secretary and each coverage 
                        provider of the amount so determined 
                        for the provider.
                  (B) Special rule for multiemployer plans.--In 
                the case of applicable employer-sponsored 
                coverage made available to employees through a 
                multiemployer plan (as defined in section 
                414(f)), the plan sponsor shall make the 
                calculations, and provide the notice, required 
                under subparagraph (A).
  (d) Applicable Employer-Sponsored Coverage; Cost.--For 
purposes of this section--
          (1) Applicable employer-sponsored coverage.--
                  (A) In general.--The term ``applicable 
                employer-sponsored coverage'' means, with 
                respect to any employee, coverage under any 
                group health plan made available to the 
                employee by an employer which is excludable 
                from the employee's gross income under section 
                106, or would be so excludable if it were 
                employer-provided coverage (within the meaning 
                of such section 106).
                  (B) Exceptions.--The term ``applicable 
                employer-sponsored coverage'' shall not 
                include--
                          (i) any coverage (whether through 
                        insurance or otherwise) described in 
                        section 9832(c)(1) (other than 
                        subparagraph (G) thereof) or for long-
                        term care, or
                          (ii) any coverage under a separate 
                        policy, certificate, or contract of 
                        insurance which provides benefits 
                        substantially all of which are for 
                        treatment of the mouth (including any 
                        organ or structure within the mouth) or 
                        for treatment of the eye, or
                          (iii) any coverage described in 
                        section 9832(c)(3) the payment for 
                        which is not excludable from gross 
                        income and for which a deduction under 
                        section 162(l) is not allowable.
                  (C) Coverage includes employee paid 
                portion.--Coverage shall be treated as 
                applicable employer-sponsored coverage without 
                regard to whether the employer or employee pays 
                for the coverage.
                  (D) Self-employed individual.--In the case of 
                an individual who is an employee within the 
                meaning of section 401(c)(1), coverage under 
                any group health plan providing health 
                insurance coverage shall be treated as 
                applicable employer-sponsored coverage if a 
                deduction is allowable under section 162(l) 
                with respect to all or any portion of the cost 
                of the coverage.
                  (E) Governmental plans included.--Applicable 
                employer-sponsored coverage shall include 
                coverage under any group health plan 
                established and maintained primarily for its 
                civilian employees by the Government of the 
                United States, by the government of any State 
                or political subdivision thereof, or by any 
                agency or instrumentality of any such 
                government.
          (2) Determination of cost.--
                  (A) In general.--The cost of applicable 
                employer- sponsored coverage shall be 
                determined under rules similar to the rules of 
                section 4980B(f)(4), except that in determining 
                such cost, any portion of the cost of such 
                coverage which is attributable to the tax 
                imposed under this section shall not be taken 
                into account and the amount of such cost shall 
                be calculated separately for self-only coverage 
                and other coverage. In the case of applicable 
                employer-sponsored coverage which provides 
                coverage to retired employees, the plan may 
                elect to treat a retired employee who has not 
                attained the age of 65 and a retired employee 
                who has attained the age of 65 as similarly 
                situated beneficiaries.
                  (B) Health FSAS.--In the case of applicable 
                employer- sponsored coverage consisting of 
                coverage under a flexible spending arrangement 
                (as defined in section 106(c)(2)), the cost of 
                the coverage shall be equal to the sum of--
                          (i) the amount of employer 
                        contributions under any salary 
                        reduction election under the 
                        arrangement, plus
                          (ii) the amount determined under 
                        subparagraph (A) with respect to any 
                        reimbursement under the arrangement in 
                        excess of the contributions described 
                        in clause (i).
                  (C) Archer MSAS and HSAS.--In the case of 
                applicable employer-sponsored coverage 
                consisting of coverage under an arrangement 
                under which the employer makes contributions 
                described in subsection (b) or (d) of section 
                106, the cost of the coverage shall be equal to 
                the amount of employer contributions under the 
                arrangement.
                  (D) Qualified small employer health 
                reimbursement arrangements.--In the case of 
                applicable employer-sponsored coverage 
                consisting of coverage under any qualified 
                small employer health reimbursement arrangement 
                (as defined in section 9831(d)(2)), the cost of 
                coverage shall be equal to the amount described 
                in section 6051(a)(15).
                  [(D)] (E) Allocation on a monthly basis.--If 
                cost is determined on other than a monthly 
                basis, the cost shall be allocated to months in 
                a taxable period on such basis as the Secretary 
                may prescribe.
          (3) Employee.--The term ``employee'' includes any 
        former employee, surviving spouse, or other primary 
        insured individual.
  (e) Penalty for Failure to Properly Calculate Excess 
Benefit.--
          (1) In general.--If, for any taxable period, the tax 
        imposed by subsection (a) exceeds the tax determined 
        under such subsection with respect to the total excess 
        benefit calculated by the employer or plan sponsor 
        under subsection (c)(4)--
                  (A) each coverage provider shall pay the tax 
                on its applicable share (determined in the same 
                manner as under subsection (c)(4)) of the 
                excess, but no penalty shall be imposed on the 
                provider with respect to such amount, and
                  (B) the employer or plan sponsor shall, in 
                addition to any tax imposed by subsection (a), 
                pay a penalty in an amount equal to such 
                excess, plus interest at the underpayment rate 
                determined under section 6621 for the period 
                beginning on the due date for the payment of 
                tax imposed by subsection (a) to which the 
                excess relates and ending on the date of 
                payment of the penalty.
          (2) Limitations on penalty.--
                  (A) Penalty not to apply where failure not 
                discovered exercising reasonable diligence.--No 
                penalty shall be imposed by paragraph (1)(B) on 
                any failure to properly calculate the excess 
                benefit during any period for which it is 
                established to the satisfaction of the 
                Secretary that the employer or plan sponsor 
                neither knew, nor exercising reasonable 
                diligence would have known, that such failure 
                existed.
                  (B) Penalty not to apply to failures 
                corrected within 30 days.--No penalty shall be 
                imposed by paragraph (1)(B) on any such failure 
                if--
                          (i) such failure was due to 
                        reasonable cause and not to willful 
                        neglect, and
                          (ii) such failure is corrected during 
                        the 30-day period beginning on the 1st 
                        date that the employer knew, or 
                        exercising reasonable diligence would 
                        have known, that such failure existed.
                  (C) Waiver by Secretary.--In the case of any 
                such failure which is due to reasonable cause 
                and not to willful neglect, the Secretary may 
                waive part or all of the penalty imposed by 
                paragraph (1), to the extent that the payment 
                of such penalty would be excessive or otherwise 
                inequitable relative to the failure involved.
  (f) Other Definitions and Special Rules.--For purposes of 
this section--
          (1) Coverage determinations.--
                  (A) In general.--Except as provided in 
                subparagraph (B), an employee shall be treated 
                as having self-only coverage with respect to 
                any applicable employer-sponsored coverage of 
                an employer.
                  (B) Minimum essential coverage.--An employee 
                shall be treated as having coverage other than 
                self-only coverage only if the employee is 
                enrolled in coverage other than self-only 
                coverage in a group health plan which provides 
                minimum essential coverage (as defined in 
                section 5000A(f)) to the employee and at least 
                one other beneficiary, and the benefits 
                provided under such minimum essential coverage 
                do not vary based on whether any individual 
                covered under such coverage is the employee or 
                another beneficiary.
          (2) Qualified retiree.--The term ``qualified 
        retiree'' means any individual who--
                  (A) is receiving coverage by reason of being 
                a retiree,
                  (B) has attained age 55, and
                  (C) is not entitled to benefits or eligible 
                for enrollment under the Medicare program under 
                title XVIII of the Social Security Act.
          (3) Employees engaged in high-risk profession.--The 
        term ``employees engaged in a high-risk profession'' 
        means law enforcement officers (as such term is defined 
        in section 1204 of the Omnibus Crime Control and Safe 
        Streets Act of 1968), employees in fire protection 
        activities (as such term is defined in section 3(y) of 
        the Fair Labor Standards Act of 1938), individuals who 
        provide out- of-hospital emergency medical care 
        (including emergency medical technicians, paramedics, 
        and first-responders), individuals whose primary work 
        is longshore work (as defined in section 258(b) of the 
        Immigration and Nationality Act (8 U.S.C. 1288(b)), 
        determined without regard to paragraph (2) thereof), 
        and individuals engaged in the construction, mining, 
        agriculture (not including food processing), forestry, 
        and fishing industries. Such term includes an employee 
        who is retired from a high-risk profession described in 
        the preceding sentence, if such employee satisfied the 
        requirements of such sentence for a period of not less 
        than 20 years during the employee's employment.
          (4) Group health plan.--The term ``group health 
        plan'' has the meaning given such term by section 
        5000(b)(1). Section 9831(d)(1) shall not apply for 
        purposes of this section.
          (5) Health insurance coverage; health insurance 
        issuer.--
                  (A) Health insurance coverage.--The term 
                ``health insurance coverage'' has the meaning 
                given such term by section 9832(b)(1) (applied 
                without regard to subparagraph (B) thereof, 
                except as provided by the Secretary in 
                regulations).
                  (B) Health insurance issuer.--The term 
                ``health insurance issuer'' has the meaning 
                given such term by section 9832(b)(2).
          (6) Person that administers the plan benefits.--The 
        term ``person that administers the plan benefits'' 
        shall include the plan sponsor if the plan sponsor 
        administers benefits under the plan.
          (7) 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.
          (8) Taxable period.--The term ``taxable period'' 
        means the calendar year or such shorter period as the 
        Secretary may prescribe. The Secretary may have 
        different taxable periods for employers of varying 
        sizes.
          (9) 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.
          (10) Deductibility of tax.--Section 275(a)(6) shall 
        not apply to the tax imposed by subsection (a).
  (g) Regulations.--The Secretary shall prescribe such 
regulations as may be necessary to carry out this section.

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Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *


CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *


Subchapter A--Returns and Records

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PART III--INFORMATION RETURNS

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         Subpart C--Information Regarding Wages Paid Employees

SEC. 6051. RECEIPTS FOR EMPLOYEES.

  (a) Requirement.--Every person required to deduct and 
withhold from an employee a tax under section 3101 or 3402, or 
who would have been required to deduct and withhold a tax under 
section 3402 (determined without regard to subsection (n)) if 
the employee had claimed no more than one withholding 
exemption, or every employer engaged in a trade or business who 
pays remuneration for services performed by an employee, 
including the cash value of such remuneration paid in any 
medium other than cash, shall furnish to each such employee in 
respect of the remuneration paid by such person to such 
employee during the calendar year, on or before January 31 of 
the succeeding year, or, if his employment is terminated before 
the close of such calendar year, within 30 days after the date 
of receipt of a written request from the employee if such 30-
day period ends before January 31, a written statement showing 
the following:
          (1) the name of such person,
          (2) the name of the employee (and an identifying 
        number for the employee if wages as defined in section 
        3121(a) have been paid),
          (3) the total amount of wages as defined in section 
        3401(a),
          (4) the total amount deducted and withheld as tax 
        under section 3402,
          (5) the total amount of wages as defined in section 
        3121(a),
          (6) the total amount deducted and withheld as tax 
        under section 3101,
          (8) the total amount of elective deferrals (within 
        the meaning of section 402(g)(3)) and compensation 
        deferred under section 457, including the amount of 
        designated Roth contributions (as defined in section 
        402A),
          (9) the total amount incurred for dependent care 
        assistance with respect to such employee under a 
        dependent care assistance program described in section 
        129(d),
          (10) in the case of an employee who is a member of 
        the Armed Forces of the United States, such employee's 
        earned income as determined for purposes of section 32 
        (relating to earned income credit),
          (11) the amount contributed to any Archer MSA (as 
        defined in section 220(d)) of such employee or such 
        employee's spouse,
          (12) the amount contributed to any health savings 
        account (as defined in section 223(d)) of such employee 
        or such employee's spouse,
          (13) the total amount of deferrals for the year under 
        a nonqualified deferred compensation plan (within the 
        meaning of section 409A(d)), [and]
          (14) the aggregate cost (determined under rules 
        similar to the rules of section 4980B(f)(4)) of 
        applicable employer-sponsored coverage (as defined in 
        section 4980I(d)(1)), except that this paragraph shall 
        not apply to--
                  (A) coverage to which paragraphs (11) and 
                (12) apply, or
                  (B) the amount of any salary reduction 
                contributions to a flexible spending 
                arrangement (within the meaning of section 
                125)[.], and
          (15) the total amount of permitted benefit (as 
        defined in section 9831(d)(3)(C)) for the year under a 
        qualified small employer health reimbursement 
        arrangement (as defined in section 9831(d)(2)) with 
        respect to the employee.
In the case of compensation paid for service as a member of a 
uniformed service, the statement shall show, in lieu of the 
amount required to be shown by paragraph (5), the total amount 
of wages as defined in section 3121(a), computed in accordance 
with such section and section 3121(i)(2). In the case of 
compensation paid for service as a volunteer or volunteer 
leader within the meaning of the Peace Corps Act, the statement 
shall show, in lieu of the amount required to be shown by 
paragraph (5), the total amount of wages as defined in section 
3121(a), computed in accordance with such section and section 
3121(i)(3). In the case of tips received by an employee in the 
course of his employment, the amounts required to be shown by 
paragraphs (3) and (5) shall include only such tips as are 
included in statements furnished to the employer pursuant to 
section 6053(a). The amounts required to be shown by paragraph 
(5) shall not include wages which are exempted pursuant to 
sections 3101(c) and 3111(c) from the taxes imposed by sections 
3101 and 3111. In the case of the amounts required to be shown 
by paragraph (13), the Secretary may (by regulation) establish 
a minimum amount of deferrals below which paragraph (13) does 
not apply.
  (b) Special Rule as to Compensation of Members of Armed 
Forces.--In the case of compensation paid for service as a 
member of the Armed Forces, the statement required by 
subsection (a) shall be furnished if any tax was withheld 
during the calendar year under section 3402, or if any of the 
compensation paid during such year is includible in gross 
income under chapter 1, or if during the calendar year any 
amount was required to be withheld as tax under section 3101. 
In lieu of the amount required to be shown by paragraph (3) of 
subsection (a), such statement shall show as wages paid during 
the calendar year the amount of such compensation paid during 
the calendar year which is not excluded from gross income under 
chapter 1 (whether or not such compensation constituted wages 
as defined in section 3401(a)).
  (c) Additional Requirements.--The statements required to be 
furnished pursuant to this section in respect of any 
remuneration shall be furnished at such other times, shall 
contain such other information, and shall be in such form as 
the Secretary may by regulations prescribe. The statements 
required under this section shall also show the proportion of 
the total amount withheld as tax under section 3101 which is 
for financing the cost of hospital insurance benefits under 
part A of title XVIII of the Social Security Act.
  (d) Statements to Constitute Information Returns.--A 
duplicate of any statement made pursuant to this section and in 
accordance with regulations prescribed by the Secretary shall, 
when required by such regulations, be filed with the Secretary.
  (e) Railroad Employees.--
          (1) Additional requirement.--Every person required to 
        deduct and withhold tax under section 3201 from an 
        employee shall include on or with the statement 
        required to be furnished such employee under subsection 
        (a) a notice concerning the provisions of this title 
        with respect to the allowance of a credit or refund of 
        the tax on wages imposed by section 3101(b) and the tax 
        on compensation imposed by section 3201 or 3211 which 
        is treated as a tax on wages imposed by section 
        3101(b).
          (2) Information to be supplied to employees.--Each 
        person required to deduct and withhold tax under 
        section 3201 during any year from an employee who has 
        also received wages during such year subject to the tax 
        imposed by section 3101(b) shall, upon request of such 
        employee, furnish to him a written statement showing--
                  (A) the total amount of compensation with 
                respect to which the tax imposed by section 
                3201 was deducted,
                  (B) the total amount deducted as tax under 
                section 3201, and
                  (C) the portion of the total amount deducted 
                as tax under section 3201 which is for 
                financing the cost of hospital insurance under 
                part A of title XVIII of the Social Security 
                Act.
  (f) Statements Required in Case of Sick Pay Paid by Third 
Parties.--
          (1) Statements required from payor.--
                  (A) In general.--If, during any calendar 
                year, any person makes a payment of third-party 
                sick pay to an employee, such person shall, on 
                or before January 15 of the succeeding year, 
                furnish a written statement to the employer in 
                respect of whom such payment was made showing--
                          (i) the name and, if there is 
                        withholding under section 3402(o), the 
                        social security number of such 
                        employee,
                          (ii) the total amount of the third-
                        party sick pay paid to such employee 
                        during the calendar year, and
                          (iii) the total amount (if any) 
                        deducted and withheld from such sick 
                        pay under section 3402.
                For purposes of the preceding sentence, the 
                term ``third-party sick pay'' means any sick 
                pay (as defined in section 3402(o)(2)(C)) which 
                does not constitute wages for purposes of 
                chapter 24 (determined without regard to 
                section 3402(o)(1)).
                  (B) Special rules.--
                          (i) Statements are in lieu of other 
                        reporting requirements.--The reporting 
                        requirements of subparagraph (A) with 
                        respect to any payments shall, with 
                        respect to such payments, be in lieu of 
                        the requirements of subsection (a) and 
                        of section 6041.
                          (ii) Penalties made applicable.--For 
                        purposes of sections 6674 and 7204, the 
                        statements required to be furnished by 
                        subparagraph (A) shall be treated as 
                        statements required under this section 
                        to be furnished to employees.
          (2) Information required to be furnished by 
        employer.--Every employer who receives a statement 
        under paragraph (1)(A) with respect to sick pay paid to 
        any employee during any calendar year shall, on or 
        before January 31 of the succeeding year, furnish a 
        written statement to such employee showing--
                  (A) the information shown on the statement 
                furnished under paragraph (1)(A), and
                  (B) if any portion of the sick pay is 
                excludable from gross income under section 
                104(a)(3), the portion which is not so 
                excludable and the portion which is so 
                excludable.
        To the extent practicable, the information required 
        under the preceding sentence shall be furnished on or 
        with the statement (if any) required under subsection 
        (a).

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 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *


Subchapter A--Additions to the Tax and Additional Amounts

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

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SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION 
                    STATEMENTS, ETC.

  (a) Returns With Respect to Certain Payments Aggregating Less 
Than $10.--In the case of each failure to file a statement of a 
payment to another person required under the authority of--
          (1) section 6042(a)(2) (relating to payments of 
        dividends aggregating less than $10), or
          (2) section 6044(a)(2) (relating to payments of 
        patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any 
extension of time for filing), unless it is shown that such 
failure is due to reasonable cause and not to willful neglect, 
there shall be paid (upon notice and demand by the Secretary 
and in the same manner as tax) by the person failing to so file 
the statement, $1 for each such statement not so filed, but the 
total amount imposed on the delinquent person for all such 
failures during the calendar year shall not exceed $1,000.
  (b) Failure to Report Tips.--In the case of failure by an 
employee to report to his employer on the date and in the 
manner prescribed therefor any amount of tips required to be so 
reported by section 6053(a) which are wages (as defined in 
section 3121(a)) or which are compensation (as defined in 
section 3231(e)), unless it is shown that such failure is due 
to reasonable cause and not due to willful neglect, there shall 
be paid by the employee, in addition to the tax imposed by 
section 3101 or section 3201 (as the case may be) with respect 
to the amount of tips which he so failed to report, an amount 
equal to 50 percent of such tax.
  (c) Returns by Exempt Organizations and by Certain Trusts.--
          (1) Annual returns under section 6033(a)(1) or 
        6012(a)(6).--
                  (A) Penalty on organization.--In the case 
                of--
                          (i) a failure to file a return 
                        required under section 6033(a)(1) 
                        (relating to returns by exempt 
                        organizations) or section 6012(a)(6) 
                        (relating to returns by political 
                        organizations) on the date and in the 
                        manner prescribed therefor (determined 
                        with regard to any extension of time 
                        for filing), or
                          (ii) a failure to include any of the 
                        information required to be shown on a 
                        return filed under section 6033(a)(1) 
                        or section 6012(a)(6) or to show the 
                        correct information,
                there shall be paid by the exempt organization 
                $20 for each day during which such failure 
                continues. The maximum penalty under this 
                subparagraph on failures with respect to any 1 
                return shall not exceed the lesser of $10,000 
                or 5 percent of the gross receipts of the 
                organization for the year. In the case of an 
                organization having gross receipts exceeding 
                $1,000,000 for any year, with respect to the 
                return required under section 6033(a)(1) or 
                section 6012(a)(6) for such year, in applying 
                the first sentence of this subparagraph, the 
                amount of the penalty for each day during which 
                a failure continues shall be $100 in lieu of 
                the amount otherwise specified, and, in lieu of 
                applying the second sentence of this 
                subparagraph, the maximum penalty under this 
                subparagraph shall not exceed $50,000.
                  (B) Managers.--
                          (i) In general.--The Secretary may 
                        make a written demand on any 
                        organization subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        return shall be filed (or the 
                        information furnished) for purposes of 
                        this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any person fails to comply with any 
                        demand under clause (i) on or before 
                        the date specified in such demand, 
                        there shall be paid by the person 
                        failing to so comply $10 for each day 
                        after the expiration of the time 
                        specified in such demand during which 
                        such failure continues. The maximum 
                        penalty imposed under this subparagraph 
                        on all persons for failures with 
                        respect to any 1 return shall not 
                        exceed $5,000.
                  (C) Public inspection of annual returns and 
                reports.--In the case of a failure to comply 
                with the requirements of section 6104(d) with 
                respect to any annual return on the date and in 
                the manner prescribed therefor (determined with 
                regard to any extension of time for filing) or 
                report required under section 527(j), there 
                shall be paid by the person failing to meet 
                such requirements $20 for each day during which 
                such failure continues. The maximum penalty 
                imposed under this subparagraph on all persons 
                for failures with respect to any 1 return or 
                report shall not exceed $10,000.
                  (D) Public inspection of applications for 
                exemption and notice of status.--In the case of 
                a failure to comply with the requirements of 
                section 6104(d) with respect to any exempt 
                status application materials (as defined in 
                such section) or notice materials (as defined 
                in such section) on the date and in the manner 
                prescribed therefor, there shall be paid by the 
                person failing to meet such requirements $20 
                for each day during which such failure 
                continues.
                  (E) No penalty for certain annual notices.--
                This paragraph shall not apply with respect to 
                any notice required under section 6033(i).
          (2) Returns under section 6034 or 6043(b).--
                  (A) Penalty on organization or trust.--In the 
                case of a failure to file a return required 
                under section 6034 (relating to returns by 
                certain trusts) or section 6043(b) (relating to 
                terminations, etc., of exempt organizations), 
                on the date and in the manner prescribed 
                therefor (determined with regard to any 
                extension of time for filing), there shall be 
                paid by the exempt organization or trust 
                failing so to file $10 for each day during 
                which such failure continues, but the total 
                amount imposed under this subparagraph on any 
                organization or trust for failure to file any 1 
                return shall not exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization or trust failing to 
                file under subparagraph (A) specifying therein 
                a reasonable future date by which such filing 
                shall be made for purposes of this 
                subparagraph. If such filing is not made on or 
                before such date, there shall be paid by the 
                person failing so to file $10 for each day 
                after the expiration of the time specified in 
                the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                file any 1 return shall not exceed $5,000.
                  (C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under 
                section 6034(a), subparagraphs (A) and (B) of 
                this paragraph shall not apply and paragraph 
                (1) shall apply in the same manner as if such 
                return were required under section 6033, except 
                that--
                          (i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) 
                        shall not apply,
                          (ii) in the case of any trust with 
                        gross income in excess of $250,000, in 
                        applying the first sentence of 
                        paragraph (1)(A), the amount of the 
                        penalty for each day during which a 
                        failure continues shall be $100 in lieu 
                        of the amount otherwise specified, and 
                        in lieu of applying the second sentence 
                        of paragraph (1)(A), the maximum 
                        penalty under paragraph (1)(A) shall 
                        not exceed $50,000, and
                          (iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person 
                required to file such return knowingly fails to 
                file the return, such penalty shall also be 
                imposed on such person who shall be personally 
                liable for such penalty.
          (3) Disclosure under section 6033(a)(2).--
                  (A) Penalty on entities.--In the case of a 
                failure to file a disclosure required under 
                section 6033(a)(2), there shall be paid by the 
                tax-exempt entity (the entity manager in the 
                case of a tax-exempt entity described in 
                paragraph (4), (5), (6), or (7) of section 
                4965(c)) $100 for each day during which such 
                failure continues. The maximum penalty under 
                this subparagraph on failures with respect to 
                any 1 disclosure shall not exceed $50,000.
                  (B) Written demand.--
                          (i) In general.--The Secretary may 
                        make a written demand on any entity or 
                        manager subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        disclosure shall be filed for purposes 
                        of this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any entity or manager fails to 
                        comply with any demand under clause (i) 
                        on or before the date specified in such 
                        demand, there shall be paid by such 
                        entity or manager failing to so comply 
                        $100 for each day after the expiration 
                        of the time specified in such demand 
                        during which such failure continues. 
                        The maximum penalty imposed under this 
                        subparagraph on all entities and 
                        managers for failures with respect to 
                        any 1 disclosure shall not exceed 
                        $10,000.
                  (C) Definitions.--Any term used in this 
                section which is also used in section 4965 
                shall have the meaning given such term under 
                section 4965.
          (4) Notices under section 506.--
                  (A) Penalty on organization.--In the case of 
                a failure to submit a notice required under 
                section 506(a) (relating to organizations 
                required to notify Secretary of intent to 
                operate as 501(c)(4)) on the date and in the 
                manner prescribed therefor, there shall be paid 
                by the organization failing to so submit $20 
                for each day during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on any organization for 
                failure to submit any one notice shall not 
                exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization subject to penalty 
                under subparagraph (A) specifying in such 
                demand a reasonable future date by which the 
                notice shall be submitted for purposes of this 
                subparagraph. If such notice is not submitted 
                on or before such date, there shall be paid by 
                the person failing to so submit $20 for each 
                day after the expiration of the time specified 
                in the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                submit any one notice shall not exceed $5,000.
          (5) Reasonable cause exception.--No penalty shall be 
        imposed under this subsection with respect to any 
        failure if it is shown that such failure is due to 
        reasonable cause.
          (6) Other special rules.--
                  (A) Treatment as tax.--Any penalty imposed 
                under this subsection shall be paid on notice 
                and demand of the Secretary and in the same 
                manner as tax.
                  (B) Joint and several liability.--If more 
                than 1 person is liable under this subsection 
                for any penalty with respect to any failure, 
                all such persons shall be jointly and severally 
                liable with respect to such failure.
                  (C) Person.--For purposes of this subsection, 
                the term ``person'' means any officer, 
                director, trustee, employee, or other 
                individual who is under a duty to perform the 
                act in respect of which the violation occurs.
          (7) Adjustment for inflation.--
                  (A) In general.--In the case of any failure 
                relating to a return required to be filed in a 
                calendar year beginning after 2014, each of the 
                dollar amounts under paragraphs (1), (2), and 
                (3) shall be increased by such dollar amount 
                multiplied by the cost-of-living adjustment 
                determined under section 1(f)(3) determined by 
                substituting ``calendar year 2013'' for 
                ``calendar year 1992'' in subparagraph (B) 
                thereof.
                  (B) Rounding.--If any amount adjusted under 
                subparagraph (A)--
                          (i) is not less than $5,000 and is 
                        not a multiple of $500, such amount 
                        shall be rounded to the next lowest 
                        multiple of $500, and
                          (ii) is not described in clause (i) 
                        and is not a multiple of $5, such 
                        amount shall be rounded to the next 
                        lowest multiple of $5.
  (d) Annual Registration and Other Notification by Pension 
Plan.--
          (1) Registration.--In the case of any failure to file 
        a registration statement required under section 6057(a) 
        (relating to annual registration of certain plans) 
        which includes all participants required to be included 
        in such statement, on the date prescribed therefor 
        (determined without regard to any extension of time for 
        filing), unless it is shown that such failure is due to 
        reasonable cause, there shall be paid (on notice and 
        demand by the Secretary and in the same manner as tax) 
        by the person failing so to file, an amount equal to $1 
        for each participant with respect to whom there is a 
        failure to file, multiplied by the number of days 
        during which such failure continues, but the total 
        amount imposed under this paragraph on any person for 
        any failure to file with respect to any plan year shall 
        not exceed $5,000.
          (2) Notification of change of status.--In the case of 
        failure to file a notification required under section 
        6057(b) (relating to notification of change of status) 
        on the date prescribed therefor (determined without 
        regard to any extension of time for filing), unless it 
        is shown that such failure is due to reasonable cause, 
        there shall be paid (on notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing so to file, $1 for each day during which such 
        failure continues, but the total amounts imposed under 
        this paragraph on any person for failure to file any 
        notification shall not exceed $1,000.
  (e) Information Required in Connection With Certain Plans of 
Deferred Compensation, Etc..--In the case of failure to file a 
return or statement required under section 6058 (relating to 
information required in connection with certain plans of 
deferred compensation), 6047 (relating to information relating 
to certain trusts and annuity and bond purchase plans), or 
6039D (relating to returns and records with respect to certain 
fringe benefit plans) on the date and in the manner prescribed 
therefor (determined with regard to any extension of time for 
filing), unless it is shown that such failure is due to 
reasonable cause, there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing so to file, $25 for each day during which such failure 
continues, but the total amount imposed under this subsection 
on any person for failure to file any return shall not exceed 
$15,000. This subsection shall not apply to any return or 
statement which is an information return described in section 
6724(d)(1)(C)(ii) or a payee statement described in section 
6724(d)(2)(Y).
  (f) Returns Required Under Section 6039C.--
          (1) In general.--In the case of each failure to make 
        a return required by section 6039C which contains the 
        information required by such section on the date 
        prescribed therefor (determined with regard to any 
        extension of time for filing), unless it is shown that 
        such failure is due to reasonable cause and not to 
        willful neglect, the amount determined under paragraph 
        (2) shall be paid (upon notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing to make such return.
          (2) Amount of penalty.--For purposes of paragraph 
        (1), the amount determined under this paragraph with 
        respect to any failure shall be $25 for each day during 
        which such failure continues.
          (3) Limitation.--The amount determined under 
        paragraph (2) with respect to any person for failing to 
        meet the requirements of section 6039C for any calendar 
        year shall not exceed the lesser of--
                  (A) $25,000, or
                  (B) 5 percent of the aggregate of the fair 
                market value of the United States real property 
                interests owned by such person at any time 
                during such year.
        For purposes of the preceding sentence, fair market 
        value shall be determined as of the end of the calendar 
        year (or, in the case of any property disposed of 
        during the calendar year, as of the date of such 
        disposition).
  (h) Failure to Give Notice to Recipients of Certain Pension, 
Etc., Distributions.--In the case of each failure to provide 
notice as required by section 3405(e)(10)(B), at the time 
prescribed therefor, unless it is shown that such failure is 
due to reasonable cause and not to willful neglect, there shall 
be paid, on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such notice, an 
amount equal to $10 for each such failure, but the total amount 
imposed on such person for all such failures during any 
calendar year shall not exceed $5,000.
  (i) Failure to Give Written Explanation to Recipients of 
Certain Qualifying Rollover Distributions.--In the case of each 
failure to provide a written explanation as required by section 
402(f), at the time prescribed therefor, unless it is shown 
that such failure is due to reasonable cause and not to willful 
neglect, there shall be paid, on notice and demand of the 
Secretary and in the same manner as tax, by the person failing 
to provide such written explanation, an amount equal to $100 
for each such failure, but the total amount imposed on such 
person for all such failures during any calendar year shall not 
exceed $50,000.
  (j) Failure to File Certification With Respect to Certain 
Residential Rental Projects.--In the case of each failure to 
provide a certification as required by section 142(d)(7) at the 
time prescribed therefor, unless it is shown that such failure 
is due to reasonable cause and not to willful neglect, there 
shall be paid, on notice and demand of the Secretary and in the 
same manner as tax, by the person failing to provide such 
certification, an amount equal to $100 for each such failure.
  (k)  Failure to Make Reports Required Under Section 1202.--
   In the case of a failure to make a report required under 
section 1202(d)(1)(C) which contains the information required 
by such section on the date prescribed therefor (determined 
with regard to any extension of time for filing), there shall 
be paid (on notice and demand by the Secretary and in the same 
manner as tax) by the person failing to make such report, an 
amount equal to $50 for each report with respect to which there 
was such a failure. In the case of any failure due to 
negligence or intentional disregard, the preceding sentence 
shall be applied by substituting ``$100'' for ``$50''. In the 
case of a report covering periods in 2 or more years, the 
penalty determined under preceding provisions of this 
subsection shall be multiplied by the number of such years. No 
penalty shall be imposed under this subsection on any failure 
which is shown to be due to reasonable cause and not willful 
neglect.
  (l) Failure to File Return With Respect to Certain Corporate 
Transactions.--In the case of any failure to make a return 
required under section 6043(c) containing the information 
required by such section on the date prescribed therefor 
(determined with regard to any extension of time for filing), 
unless it is shown that such failure is due to reasonable 
cause, there shall be paid (on notice and demand by the 
Secretary and in the same manner as tax) by the person failing 
to file such return, an amount equal to $500 for each day 
during which such failure continues, but the total amount 
imposed under this subsection with respect to any return shall 
not exceed $100,000.
  (m) Alcohol and Tobacco Taxes for Penalties for Failure to 
File Certain Information Returns.--with respect to alcohol and 
tobacco taxes, see, generally, subtitle E.
  (n) Failure to Make Reports Required Under Sections 3511, 
6053(C)(8), and 7705.--In the case of a failure to make a 
report required under section 3511, 6053(c)(8), or 7705 which 
contains the information required by such section on the date 
prescribed therefor (determined with regard to any extension of 
time for filing), there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing to make such report, an amount equal to $50 for each 
report with respect to which there was such a failure. In the 
case of any failure due to negligence or intentional disregard 
the preceding sentence shall be applied by substituting 
``$100'' for ``$50''.
  (o) Failure to Provide Notices With Respect To Qualified 
Small Employer Health Reimbursement Arrangements.--In the case 
of each failure to provide a written notice as required by 
section 9831(d)(4), unless it is shown that such failure is due 
to reasonable cause and not willful neglect, there shall be 
paid, on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such written 
notice, an amount equal to $50 per employee per incident of 
failure to provide such notice, but the total amount imposed on 
such person for all such failures during any calendar year 
shall not exceed $2,500.

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Subtitle K--Group Health Plan Requirements

           *       *       *       *       *       *       *


CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS

           *       *       *       *       *       *       *


                    Subchapter C--General Provisions

SEC. 9831. GENERAL EXCEPTIONS.

  (a) Exception for Certain Plans.--The requirements of this 
chapter shall not apply to--
          (1) any governmental plan, and
          (2) any group health plan for any plan year if, on 
        the first day of such plan year, such plan has less 
        than 2 participants who are current employees.
  (b) Exception for Certain Benefits.--The requirements of this 
chapter shall not apply to any group health plan in relation to 
its provision of excepted benefits described in section 
9832(c)(1).
  (c) Exception for Certain Benefits if Certain Conditions 
Met.--
          (1) Limited, excepted benefits.--The requirements of 
        this chapter shall not apply to any group health plan 
        in relation to its provision of excepted benefits 
        described in section 9832(c)(2) if the benefits--
                  (A) are provided under a separate policy, 
                certificate, or contract of insurance; or
                  (B) are otherwise not an integral part of the 
                plan.
          (2) Noncoordinated, excepted benefits.--The 
        requirements of this chapter shall not apply to any 
        group health plan in relation to its provision of 
        excepted benefits described in section 9832(c)(3) if 
        all of the following conditions are met:
                  (A) The benefits are provided under a 
                separate policy, certificate, or contract of 
                insurance.
                  (B) There is no coordination between the 
                provision of such benefits and any exclusion of 
                benefits under any group health plan maintained 
                by the same plan sponsor.
                  (C) Such benefits are paid with respect to an 
                event without regard to whether benefits are 
                provided with respect to such an event under 
                any group health plan maintained by the same 
                plan sponsor.
          (3) Supplemental excepted benefits.--The requirements 
        of this chapter shall not apply to any group health 
        plan in relation to its provision of excepted benefits 
        described in section 9832(c)(4) if the benefits are 
        provided under a separate policy, certificate, or 
        contract of insurance.
  (d) Exception for Qualified Small Employer Health 
Reimbursement Arrangements.--
          (1) In general.--For purposes of this title (except 
        as provided in section 4980I(f)(4) and notwithstanding 
        any other provision of this title), the term ``group 
        health plan'' shall not include any qualified small 
        employer health reimbursement arrangement.
          (2) Qualified small employer health reimbursement 
        arrangement.--For purposes of this subsection--
                  (A) In general.--The term ``qualified small 
                employer health reimbursement arrangement'' 
                means an arrangement which--
                          (i) is described in subparagraph (B), 
                        and
                          (ii) is provided on the same terms to 
                        all eligible employees of the eligible 
                        employer.
                  (B) Arrangement described.--An arrangement is 
                described in this subparagraph if--
                          (i) such arrangement is funded solely 
                        by an eligible employer and no salary 
                        reduction contributions may be made 
                        under such arrangement,
                          (ii) such arrangement provides, after 
                        the employee provides proof of 
                        coverage, for the payment of, or 
                        reimbursement of, an eligible employee 
                        for expenses for medical care (as 
                        defined in section 213(d)) incurred by 
                        the eligible employee or the eligible 
                        employee's family members (as 
                        determined under the terms of the 
                        arrangement), and
                          (iii) the amount of payments and 
                        reimbursements described in clause (ii) 
                        for any year do not exceed $5,130 
                        ($10,260 in the case of an arrangement 
                        that also provides for payments or 
                        reimbursements for family members of 
                        the employee).
                  (C) Certain variation permitted.--For 
                purposes of subparagraph (A)(ii), an 
                arrangement shall not fail to be treated as 
                provided on the same terms to each eligible 
                employee merely because the employee's 
                permitted benefits under such arrangement vary 
                in accordance with the variation in the price 
                of an insurance policy in the relevant 
                individual health insurance market based on--
                          (i) the age of the eligible employee 
                        (and, in the case of an arrangement 
                        which covers medical expenses of the 
                        eligible employee's family members, the 
                        age of such family members), or
                          (ii) the number of family members of 
                        the eligible employee the medical 
                        expenses of which are covered under 
                        such arrangement.
                The variation permitted under the preceding 
                sentence shall be determined by reference to 
                the same insurance policy with respect to all 
                eligible employees.
                  (D) Rules relating to maximum dollar 
                limitation.--
                          (i) Amount prorated in certain 
                        cases.--In the case of an individual 
                        who is not covered by an arrangement 
                        for the entire year, the limitation 
                        under subparagraph (A)(iii) for such 
                        year shall be an amount which bears the 
                        same ratio to the amount which would 
                        (but for this clause) be in effect for 
                        such individual for such year under 
                        subparagraph (A)(iii) as the number of 
                        months for which such individual is 
                        covered by the arrangement for such 
                        year bears to 12.
                          (ii) Inflation adjustment.--In the 
                        case of any year beginning after 2016, 
                        each of the dollar amounts in 
                        subparagraph (A)(iii) 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 in which the 
                                taxable year begins, determined 
                                by substituting ``calendar year 
                                2015'' for ``calendar year 
                                1992'' in subparagraph (B) 
                                thereof.
                        If any dollar amount increased under 
                        the preceding sentence is not a 
                        multiple of $100, such dollar amount 
                        shall be rounded to the next lowest 
                        multiple of $100.
          (3) Other definitions.--For purposes of this 
        subsection--
                  (A) Eligible employee.--The term ``eligible 
                employee'' means any employee of an eligible 
                employer, except that the terms of the 
                arrangement may exclude from consideration 
                employees described in any clause of section 
                105(h)(3)(B) (applied by substituting ``90 
                days'' for ``3 years'' in clause (i) thereof).
                  (B) Eligible employer.--The term ``eligible 
                employer'' means an employer that--
                          (i) is not an applicable large 
                        employer as defined in section 
                        4980H(c)(2), and
                          (ii) does not offer a group health 
                        plan to any of its employees.
                  (C) Permitted benefit.--The term ``permitted 
                benefit'' means, with respect to any eligible 
                employee, the maximum dollar amount of payments 
                and reimbursements which may be made under the 
                terms of the qualified small employer health 
                reimbursement arrangement for the year with 
                respect to such employee.
          (4) Notice.--
                  (A) In general.--An employer funding a 
                qualified small employer health reimbursement 
                arrangement for any year shall, not later than 
                90 days before the beginning of such year (or, 
                in the case of an employee who is not eligible 
                to participate in the arrangement as of the 
                beginning of such year, the date on which such 
                employee is first so eligible), provide a 
                written notice to each eligible employee which 
                includes the information described in 
                subparagraph (B).
                  (B) Contents of notice.--The notice required 
                under subparagraph (A) shall include each of 
                the following:
                          (i) A statement of the amount which 
                        would be such eligible employee's 
                        permitted benefits under the 
                        arrangement for the year.
                          (ii) A statement that the eligible 
                        employee should provide the information 
                        described in clause (i) to any health 
                        insurance exchange to which the 
                        employee applies for advance payment of 
                        the premium assistance tax credit.
                          (iii) A statement that if the 
                        employee is not covered under minimum 
                        essential coverage for any month the 
                        employee may be subject to tax under 
                        section 5000A for such month and 
                        reimbursements under the arrangement 
                        may be includible in gross income.

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               PATIENT PROTECTION AND AFFORDABLE CARE ACT



           *       *       *       *       *       *       *
TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS

           *       *       *       *       *       *       *


       Subtitle E--Affordable Coverage Choices for All Americans

PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS

           *       *       *       *       *       *       *


                 Subpart B--Eligibility Determinations

SEC. 1411. PROCEDURES FOR DETERMINING ELIGIBILITY FOR EXCHANGE 
                    PARTICIPATION, PREMIUM TAX CREDITS AND REDUCED 
                    COST-SHARING, AND INDIVIDUAL RESPONSIBILITY 
                    EXEMPTIONS.

  (a) Establishment of Program.--The Secretary shall establish 
a program meeting the requirements of this section for 
determining--
          (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 coverage 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 individual 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.
          (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) Certain individual health insurance 
                policies obtained through small employers.--The 
                amount of the enrollee's permitted benefit (as 
                defined in section 9831(d)(3)(C) of the 
                Internal Revenue Code of 1986) under a 
                qualified small employer health reimbursement 
                arrangement (as defined in section 9831(d)(2) 
                of such Code).
                  [(B)] (C) 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 
        essential 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 minimum essential coverage.
                  (C) If the employer provides such minimum 
                essential coverage, the lowest cost option for 
                the enrollee's or individual'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 essential 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 
        requirements.--In the case of an individual who is 
        seeking an exemption certificate under section 
        1311(d)(4)(H) from any requirement 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 
                Secretary shall prescribe.
                  (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 accordance with the requirements of 
        this subsection and subsection (d).
          (2) Citizenship or immigration status.--
                  (A) Commissioner of Social Security.--The 
                Secretary 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 individual 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 Homeland Security the 
                        information described in clause (ii) 
                        for a determination as to whether the 
                        information provided 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 
        reduction.--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 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 information 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 responsibility for 
verification to the Exchange.
  (e) Actions Relating to Verification.--
          (1) In general.--Each person to whom the Secretary 
        provided information under subsection (c) shall report 
        to the Secretary 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 Secretary 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 
                shall issue the certification of exemption 
                described in section 1311(d)(4)(H).
          (3) Inconsistencies involving attestation of 
        citizenship 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 
        medicaid 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 
                        typographical 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 contained on the 
                        application.
                          (ii) Eligibility or amount of credit 
                        or reduction.--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 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 inconsistency involving, or 
                        inability to verify, information 
                        provided 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 procedures 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 appropriate circumstances.
          (2) Employer liability.--
                  (A) In general.--The Secretary shall 
                establish a separate 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 
                        contributions 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--
                          (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 coverage 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 information 
                                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 determines 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 addition to 
                any other penalties that may be prescribed by 
                law, to a civil penalty of not more than 
                $250,000.
          (2) Improper use or disclosure of information.--Any 
        person who knowingly and willfully uses or discloses 
        information 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 determine 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 recommendations 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.

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                              ----------                              


            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974



           *       *       *       *       *       *       *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *


Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *


Part 6--Continuation Coverage and Additional Standards for Group Health 
Plans

           *       *       *       *       *       *       *


SEC. 607. DEFINITIONS AND SPECIAL RULES.

   For purposes of this part--
          (1) Group health plan.--The term ``group health 
        plan'' means an employee welfare benefit plan providing 
        medical care (as defined in section 213(d) of the 
        Internal Revenue Code of 1986) to participants or 
        beneficiaries directly or through insurance, 
        reimbursement, or otherwise. Such term shall not 
        include any plan substantially all of the coverage 
        under which is for qualified long-term care services 
        (as defined in section 7702B(c) of such Code). Such 
        term shall not include any qualified small employer 
        health reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Covered employee.--The term ``covered employee'' 
        means an individual who is (or was) provided coverage 
        under a group health plan by virtue of the performance 
        of services by the individual for 1 or more persons 
        maintaining the plan (including as an employee defined 
        in section 401(c)(1) of the Internal Revenue Code of 
        1986).
          (3) Qualified beneficiary.--
                  (A) In general.--The term ``qualified 
                beneficiary'' means, with respect to a covered 
                employee under a group health plan, any other 
                individual who, on the day before the 
                qualifying event for that employee, is a 
                beneficiary under the plan--
                          (i) as the spouse of the covered 
                        employee, or
                          (ii) as the dependent child of the 
                        employee.
        Such term shall also include a child who is born to or 
        placed for adoption with the covered employee during 
        the period of continuation coverage under this part.
                  (B) Special rule for terminations and reduced 
                employment.--In the case of a qualifying event 
                described in section 603(2), the term 
                ``qualified beneficiary'' includes the covered 
                employee.
                  (C) Special rule for retirees and widows.--In 
                the case of a qualifying event described in 
                section 603(6), the term ``qualified 
                beneficiary'' includes a covered employee who 
                had retired on or before the date of 
                substantial elimination of coverage and any 
                other individual who, on the day before such 
                qualifying event, is a beneficiary under the 
                plan--
                          (i) as the spouse of the covered 
                        employee,
                          (ii) as the dependent child of the 
                        employee, or
                          (iii) as the surviving spouse of the 
                        covered employee.
          (4) Employer.--Subsection (n) (relating to leased 
        employees) and subsection (t) (relating to application 
        of controlled group rules to certain employee benefits) 
        of section 414 of the Internal Revenue Code of 1986 
        shall apply for purposes of this part in the same 
        manner and to the same extent as such subsections apply 
        for purposes of section 106 of such Code. Any 
        regulations prescribed by the Secretary pursuant to the 
        preceding sentence shall be consistent and coextensive 
        with any regulations prescribed for similar purposes by 
        the Secretary of the Treasury (or such Secretary's 
        delegate) under such subsections.
          (5) Optional extension of required periods.--A group 
        health plan shall not be treated as failing to meet the 
        requirements of this part solely because the plan 
        provides both--
                  (A) that the period of extended coverage 
                referred to in section 602(2) commences with 
                the date of the loss of coverage, and
                  (B) that the applicable notice period 
                provided under section 606(a)(2) commences with 
                the date of the loss of coverage.

           *       *       *       *       *       *       *


Part 7--Group Health Plan Requirements

           *       *       *       *       *       *       *


Subpart C--General Provisions

           *       *       *       *       *       *       *


SEC. 733. DEFINITIONS.

  (a) Group Health Plan.--For purposes of this part--
          (1) In general.--The term ``group health plan'' means 
        an employee welfare benefit plan to the extent that the 
        plan provides medical care (as defined in paragraph (2) 
        and including items and services paid for as medical 
        care) to employees or their dependents (as defined 
        under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise. Such term shall 
        not include any qualified small employer health 
        reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
  (b) Definitions Relating to Health Insurance.--For purposes 
of this part--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2)). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of 
                the Public Health Service Act (42 U.S.C. 
                300e(a))),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
  (c) Excepted Benefits.--For purposes of this part, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--For purposes of this part--
          (1) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Part 6 of this subtitle.
                  (B) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (C) Title XXII of the Public Health Service 
                Act.
          (2) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 702(a)(1).
          (3) Network plan.--The term ``network plan'' means 
        health insurance coverage offered by a health insurance 
        issuer under which the financing and delivery of 
        medical care (including items and services paid for as 
        medical care) are provided, in whole or in part, 
        through a defined set of providers under contract with 
        the issuer.
          (4) Placed for adoption.--The term ``placement'', or 
        being ``placed'', for adoption, has the meaning given 
        such term in section 609(c)(3)(B).
          (5) Family member.--The term ``family member'' means, 
        with respect to an individual--
                  (A) a dependent (as such term is used for 
                purposes of section 701(f)(2)) of such 
                individual, and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (6) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (7) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (8) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (9) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.

           *       *       *       *       *       *       *

                              ----------                              


                       PUBLIC HEALTH SERVICE ACT



           *       *       *       *       *       *       *
  TITLE XXII--REQUIREMENTS FOR CERTAIN GROUP HEALTH PLANS FOR CERTAIN 
STATE AND LOCAL EMPLOYEES

           *       *       *       *       *       *       *


SEC. 2208. DEFINITIONS.

   For purposes of this title--
          (1) Group health plan.--The term ``group health 
        plan'' has the meaning given such term in 5000(b) of 
        the Internal Revenue Code of 1986. Such term shall not 
        include any plan substantially all of the coverage 
        under which is for qualified long-term care services 
        (as defined in section 7702B(c) of such Code). Such 
        term shall not include any qualified small employer 
        health reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Covered employee.--The term ``covered employee'' 
        means an individual who is (or was) provided coverage 
        under a group health plan by virtue of the performance 
        of services by the individual for 1 or more persons 
        maintaining the plan (including as an employee defined 
        in section 401(c)(1) of the Internal Revenue Code of 
        1986).
          (3) Qualified beneficiary.--
                  (A) In general.--The term ``qualified 
                beneficiary'' means, with respect to a covered 
                employee under a group health plan, any other 
                individual who, on the day before the 
                qualifying event for that employee, is a 
                beneficiary under the plan--
                          (i) as the spouse of the covered 
                        employee, or
                          (ii) as the dependent child of the 
                        employee.
        Such term shall also include a child who is born to or 
        placed for adoption with the covered employee during 
        the period of continuation coverage under this title.
                  (B) Special rule for terminations and reduced 
                employment.--In the case of a qualifying event 
                described in section 2203(2), the term 
                ``qualified beneficiary'' includes the covered 
                employee.
          (4) Plan administrator.--The term ``plan 
        administrator'' has the meaning given the term 
        ``administrator'' by section 3(16)(A) of the Employee 
        Retirement Income Security Act of 1974.

           *       *       *       *       *       *       *


TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

           *       *       *       *       *       *       *


             Part C--Definitions; Miscellaneous Provisions

SEC. 2791. DEFINITIONS.

  (a) Group Health Plan.--
          (1) Definition.--The term ``group health plan'' means 
        an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 
        1974) to the extent that the plan provides medical care 
        (as defined in paragraph (2)) and including items and 
        services paid for as medical care) to employees or 
        their dependents (as defined under the terms of the 
        plan) directly or through insurance, reimbursement, or 
        otherwise. Except for purposes of part C of title XI of 
        the Social Security Act (42 U.S.C. 1320d et seq.), such 
        term shall not include any qualified small employer 
        health reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
          (3) Treatment of certain plans as group health plan 
        for notice provision.--A program under which creditable 
        coverage described in subparagraph (C), (D), (E), or 
        (F) of section 2701(c)(1) is provided shall be treated 
        as a group health plan for purposes of applying section 
        2701(e).
  (b) Definitions Relating to Health Insurance.--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2) of the Employee Retirement 
        Income Security Act of 1974). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a Federally qualified health maintenance 
                organization (as defined in section 1301(a)),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
          (5) Individual health insurance coverage.--The term 
        ``individual health insurance coverage'' means health 
        insurance coverage offered to individuals in the 
        individual market, but does not include short-term 
        limited duration insurance.
  (c) Excepted Benefits.--For purposes of this title, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability 
                insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--
          (1) Applicable state authority.--The term 
        ``applicable State authority'' means, with respect to a 
        health insurance issuer in a State, the State insurance 
        commissioner or official or officials designated by the 
        State to enforce the requirements of this title for the 
        State involved with respect to such issuer.
          (2) Beneficiary.--The term ``beneficiary'' has the 
        meaning given such term under section 3(8) of the 
        Employee Retirement Income Security Act of 1974.
          (3) Bona fide association.--The term ``bona fide 
        association'' means, with respect to health insurance 
        coverage offered in a State, an association which--
                  (A) has been actively in existence for at 
                least 5 years;
                  (B) has been formed and maintained in good 
                faith for purposes other than obtaining 
                insurance;
                  (C) does not condition membership in the 
                association on any health status-related factor 
                relating to an individual (including an 
                employee of an employer or a dependent of an 
                employee);
                  (D) makes health insurance coverage offered 
                through the association available to all 
                members regardless of any health status-related 
                factor relating to such members (or individuals 
                eligible for coverage through a member);
                  (E) does not make health insurance coverage 
                offered through the association available other 
                than in connection with a member of the 
                association; and
                  (F) meets such additional requirements as may 
                be imposed under State law.
          (4) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (B) Part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 
                1974, other than section 609 of such Act.
                  (C) Title XXII of this Act.
          (5) Employee.--The term ``employee'' has the meaning 
        given such term under section 3(6) of the Employee 
        Retirement Income Security Act of 1974.
          (6) Employer.--The term ``employer'' has the meaning 
        given such term under section 3(5) of the Employee 
        Retirement Income Security Act of 1974, except that 
        such term shall include only employers of two or more 
        employees.
          (7) Church plan.--The term ``church plan'' has the 
        meaning given such term under section 3(33) of the 
        Employee Retirement Income Security Act of 1974.
          (8) Governmental plan.--(A) The term ``governmental 
        plan'' has the meaning given such term under section 
        3(32) of the Employee Retirement Income Security Act of 
        1974 and any Federal governmental plan.
          (B) Federal governmental plan.--The term ``Federal 
        governmental plan'' means a governmental plan 
        established or maintained for its employees by the 
        Government of the United States or by any agency or 
        instrumentality of such Government.
          (C) Non-Federal governmental plan.--The term ``non-
        Federal governmental plan'' means a governmental plan 
        that is not a Federal governmental plan.
          (9) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 2702(a)(1).
          (10) Network plan.--The term ``network plan'' means 
        health insurance coverage of a health insurance issuer 
        under which the financing and delivery of medical care 
        (including items and services paid for as medical care) 
        are provided, in whole or in part, through a defined 
        set of providers under contract with the issuer.
          (11) Participant.--The term ``participant'' has the 
        meaning given such term under section 3(7) of the 
        Employee Retirement Income Security Act of 1974.
          (12) Placed for adoption defined.--The term 
        ``placement'', or being ``placed'', for adoption, in 
        connection with any placement for adoption of a child 
        with any person, means the assumption and retention by 
        such person of a legal obligation for total or partial 
        support of such child in anticipation of adoption of 
        such child. The child's placement with such person 
        terminates upon the termination of such legal 
        obligation.
          (13) Plan sponsor.--The term ``plan sponsor'' has the 
        meaning given such term under section 3(16)(B) of the 
        Employee Retirement Income Security Act of 1974.
          (14) State.--The term ``State'' means each of the 
        several States, the District of Columbia, Puerto Rico, 
        the Virgin Islands, Guam, American Samoa, and the 
        Northern Mariana Islands.
          (15) Family member.--The term ``family member'' 
        means, with respect to any individual--
                  (A) a dependent (as such term is used for 
                purposes of section 2701(f)(2)) of such 
                individual; and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (16) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (17) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (18) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (19) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.
          (20) Qualified health plan.--The term ``qualified 
        health plan'' has the meaning given such term in 
        section 1301(a) of the Patient Protection and 
        Affordable Care Act.
          (21) Exchange.--The term ``Exchange'' means an 
        American Health Benefit Exchange established under 
        section 1311 of the Patient Protection and Affordable 
        Care Act.
  (e) Definitions Relating to Markets and Small Employers.--For 
purposes of this title:
          (1) Individual market.--
                  (A) In general.--The term ``individual 
                market'' means the market for health insurance 
                coverage offered to individuals other than in 
                connection with a group health plan.
                  (B) Treatment of very small groups.--
                          (i) In general.--Subject to clause 
                        (ii), such terms includes coverage 
                        offered in connection with a group 
                        health plan that has fewer than two 
                        participants as current employees on 
                        the first day of the plan year.
                          (ii) State exception.--Clause (i) 
                        shall not apply in the case of a State 
                        that elects to regulate the coverage 
                        described in such clause as coverage in 
                        the small group market.
          (2) Large employer.--The term ``large employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 51 employees on 
        business days during the preceding calendar year and 
        who employs at least 2 employees on the first day of 
        the plan year.
          (3) Large group market.--The term ``large group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a large employer.
          (4) Small employer.--The term ``small employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 1 but not more than 
        50 employees on business days during the preceding 
        calendar year and who employs at least 1 employees on 
        the first day of the plan year.
          (5) Small group market.--The term ``small group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a small employer.
          (6) Application of certain rules in determination of 
        employer size.--For purposes of this subsection--
                  (A) 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.
                  (B) 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 a small or 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.
                  (C) Predecessors.--Any reference in this 
                subsection to an employer shall include a 
                reference to any predecessor of such employer.
          (7) State option to extend definition of small 
        employer.--Notwithstanding paragraphs (2) and (4), 
        nothing in this section shall prevent a State from 
        applying this subsection by treating as a small 
        employer, with respect to a calendar year and a plan 
        year, an employer who employed an average of at least 1 
        but not more than 100 employees on business days during 
        the preceding calendar year and who employs at least 1 
        employee on the first day of the plan year.

           *       *       *       *       *       *       *