bill 5.19.16

8/16/2019 BILL 5.19.16

1/117

.....................................................................

(Original Signature of Member)

114TH CONGRESS2D SESSION H. R. ll

To eliminate the individual and employer health coverage mandates under

the Patient Protection and Affordable Care Act, to expand beyond that

Act the choices in obtaining and financing affordable health insurance

coverage, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Mr. SESSIONS introduced the following bill; which was referred to the

Committee on llllllllllllll

A BILLTo eliminate the individual and employer health coverage

mandates under the Patient Protection and Affordable

Care Act, to expand beyond that Act the choices in

obtaining and financing affordable health insurance cov-

erage, and for other purposes.

Be it enacted by the Senate and House of Representa-1

tives of the United States of America in Congress assembled,2

SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CON-3

TENTS.4

(a) SHORT TITLE.—This Act may be cited as the5

‘‘World’s Greatest Healthcare Plan Act of 2016’’.6

VerDate Nov 24 2008 10:00 May 19, 2016 Jkt 000000 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 C:\USERS\EGGROS~1\APPDATA\ROAMING\SOFTQUAD\XMETAL\7.0\GEN\May 19, 2016 (10:00 a.m.)

F:\M14\SESSIO\SESSIO_007.XML

f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

2/117

2

(b) PURPOSES.—The purposes of this Act are as fol-1

lows:2

(1) ELIMINATION OF INDIVIDUAL AND EM-3

PLOYER MANDATES UNDER ACA .—To eliminate man-4

dates on individuals and employers, and other tax5

requirements, imposed under Patient Protection and6

Affordable Care Act.7

(2) PROVIDING STATES WITH ALTERNATIVE,8

AFFORDABLE COVERAGE OPTIONS.—To provide9

greater flexibility in providing States with options in10

making affordable health insurance coverage avail-11

able by eliminating certain mandates under PPACA,12

while retaining essential consumer protections, by13

promoting health savings accounts to pay for such14

coverage and long-term care coverage, while permit-15

ting States to continue coverage as provided under16

PPACA.17

(c) T ABLE OF CONTENTS.—The table of contents of18

this Act is as follows:19

Sec. 1. Short title; purposes; table of contents.

Sec. 2. Definitions.

TITLE I—REVISIONS OF PPACA

Subtitle A—Elimination of Individual and Employer Mandates

Sec. 101. Repeal of individual health insurance mandate.

Sec. 102. Repeal of employer health insurance mandate.

Sec. 103. Clarifying employer’s ability to reimburse employee premiums for

purchase of individual health insurance coverage.

Subtitle B—Limitation on Application of PPACA Plan Requirements

Sec. 121. Limiting application of requirements to consumer protections.



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

3/117

3

Sec. 122. Offering of basic health insurance; protection of assets from liability

or attachment or seizure.

Subtitle C—Universal Health Insurance Tax Benefit

Sec. 131. Universal health insurance tax benefit.

Sec. 132. Application of portion of unused tax credits by States for indigent

health care.Sec. 133. Medicaid option of enrollment under private plan and contribution to

an HSA.

TITLE II—IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE

ACCOUNTABILITY

Sec. 201. Transition to non-deductible HSAs.

Sec. 202. Elimination of medical expense deduction.

Sec. 203. Treatment of HSA after death of account beneficiary.

Sec. 204. Treatment of concierge medicine.

TITLE III—STATE FLEXIBILITY IN REGULATION OF HEALTH

INSURANCE COVERAGE

Sec. 301. State flexibility in regulation of health insurance coverage.

TITLE IV—MEDICAID PAYMENT REFORM

Sec. 401. Medicaid payment reform.

TITLE V—INCREASING PRICE TRANSPARENCY AND FREEDOM OF

PRACTICE

Sec. 501. Ensuring access to emergency services without excessive charges for

out-of-network services.

Sec. 502. Publishing of cash price for care paid through health savings ac-

counts.Sec. 503. Liberating the local practice of health care.

SEC. 2. DEFINITIONS.1

Except as otherwise provided, in this Act:2

(1) B ASIC HEALTH INSURANCE.—The term3

‘‘basic health insurance’’ is defined in section4

122(a).5

(2) DEFAULT HEALTH INSURANCE COV -6

ERAGE.—The term ‘‘default health insurance cov-7

erage’’ is defined in section 121(b)(4)(B).8

(3) E XCHANGE.—The term ‘‘Exchange’’ means9

an Exchange established under title I of PPACA.10



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

4/117

4

(4) HEALTH INSURANCE COVERAGE; GROUP 1

HEALTH PLAN, ETC.—The terms defined in section2

2791 of the Public Health Service Act, including3

‘‘health insurance coverage’’, ‘‘group health plan’’4

‘‘individual market’’, shall apply.5

(5) LIMITED BENEFIT INSURANCE.—The term6

‘‘limited benefit insurance’’ is defined in section7

122(b).8

(6) PPACA.—The term ‘‘PPACA’’ means the9

Patient Protection and Affordable Care Act (Public10

Law 111–148).11

(7) SECRETARY .—The term ‘‘Secretary’’ means12

the Secretary of Health and Human Services.13

(8) STATE.—The term ‘‘State’’ includes the14

District of Columbia, Puerto Rico, the United States15

Virgin Islands, American Samoa, Guam, and the16

Northern Mariana Islands.17

TITLE I—REVISIONS OF PPACA18

Subtitle A—Elimination of19

Individual and Employer Mandates20

SEC. 101. REPEAL OF INDIVIDUAL HEALTH INSURANCE21

MANDATE.22

Section 5000A of the Internal Revenue Code of 198623

is amended by adding at the end the following new sub-24

section:25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

5/117

5

‘‘(h) TERMINATION.—This section shall not apply1

with respect to any month beginning more than 30 days2

after the date of the enactment of the World’s Greatest3

Healthcare Plan Act of 2016.’’.4

SEC. 102. REPEAL OF EMPLOYER HEALTH INSURANCE MAN-5

DATE.6

(a) IN GENERAL.—Chapter 43 of the Internal Rev-7

enue Code of 1986 is amended—8

(1) by striking section 4980H; and9

(2) by striking the item relating to section10

4980H from the table of sections for such chapter.11

(b) REPEAL OF RELATED REPORTING REQUIRE-12

MENTS.—Subpart D of part III of subchapter A of chap-13

ter 61 of such Code is amended by striking section 605614

and by striking the item relating to section 6056 in the15

table of sections for such subpart.16

(c) CONFORMING A MENDMENTS.—17

(1) Section 6724(d)(1)(B) of such Code is18

amended—19

(A) by inserting ‘‘or’’ at the end of clause20

(xxiii);21

(B) by striking ‘‘, or’’ at the end of clause22

(xxiv) and inserting a period; and23

(C) by striking clause (xxv).24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

6/117

6

(2) Section 6724(d)(2) of such Code is amend-1

ed by inserting ‘‘or’’ at the end of subparagraph2

(FF), by striking ‘‘, or’’ at the end of subparagraph3

(GG) and inserting a period, and by striking sub-4

paragraph (HH).5

(3) Section 1513 of the Patient Protection and6

Affordable Care Act is amended by striking sub-7

section (c).8

(d) EFFECTIVE D ATES.—9

(1) IN GENERAL.—Except as otherwise pro-10

vided in this subsection, the amendments made by11

this section shall apply to months and other periods12

beginning more than 30 days after the date of the13

enactment of this Act.14

(2) REPEAL OF STUDY AND REPORT.—The15

amendment made by subsection (c)(3) shall take ef-16

fect on the date of the enactment of this Act.17

SEC. 103. CLARIFYING EMPLOYER’S ABILITY TO REIM-18

BURSE EMPLOYEE PREMIUMS FOR PUR-19

CHASE OF INDIVIDUAL HEALTH INSURANCE20

COVERAGE.21

An employer health care arrangement, such as a22

health or medical reimbursement arrangement (HRA) or23

other employment plans, under which an employer reim-24

burses an employee for the premiums for the purchase of25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

7/117

8/16/2019 BILL 5.19.16

8/117

8

Subtitle B—Limitation on Applica-1

tion of PPACA Plan Require-2

ments3

SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO4

CONSUMER PROTECTIONS.5

(a) REMOVAL OF PPACA PLAN REQUIREMENTS,6

OTHER THAN CERTAIN CONSUMER PROTECTIONS.—7

(1) IN GENERAL.—Notwithstanding any other8

provision of law, with respect to group health plans9

and health insurance coverage whether or not of-10

fered through an Exchange, except as provided in11

paragraphs (2) and (3), the provisions of title12

XXVII of the Public Health Service Act as in effect13

before the date of the enactment of PPACA shall14

apply instead of the provisions of such title as in ef-15

fect after such date. .16

(2) PPACA CONSUMER PROTECTIONS CON-17

TINUING TO BE APPLIED.—The following sections of18

the Public Health Service Act, that were added or19

amended by subtitles A and C of title I of PPACA,20

shall continue to apply to group health plans and to21

health insurance coverage offered in the individual22

and group market:23

(A) NO LIFETIME OR ANNUAL LIMITS.—24

Section 2711 (relating to no lifetime or annual25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

9/117

9

limits), except in the case of limited benefit in-1

surance (as defined in section 122(b)).2

(B) DEPENDENT COVERAGE THROUGH 3

AGE 26.—Section 2714 (relating to extension of4

dependent coverage).5

(C) MODIFIED GUARANTEED AVAIL-6

ABILITY .—Section 2702 (relating to guaranteed7

availability of coverage), subject to paragraph8

(3) and subsection (c).9

(D) GUARANTEED RENEWABILITY .—Sec-10

tion 2703 (relating to guaranteed renewability11

of coverage).12

(E) PROHIBITING PRE-EXISTING CONDI-13

TION EXCLUSIONS.—Section 2704 (relating to14

prohibition on preexisting conditions).15

(F) PROHIBITING DISCRIMINATION BASED 16

ON HEALTH STATUS.—Section 2705 (relating to17

prohibiting discrimination against individual18

participants and beneficiaries based on health19

status), subject to subsection (c).20

(G) NON-DISCRIMINATION IN HEALTH 21

CARE.—Section 2706 (relating to non-discrimi-22

nation in health care).23



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

10/117

10

(3) A PPLICATION OF A LATE ENROLLMENT 1

PENALTY FOR THOSE WITHOUT CONTINUOUS COV -2

ERAGE.—3

(A) IN GENERAL.—In the case of an indi-4

vidual who seeks to enroll in health insurance5

coverage and who, as of the effective date of6

such enrollment, does not have a continuous pe-7

riod of at least 12 months of creditable cov-8

erage, there shall be imposed a late enrollment9

penalty in the form of an increase in the10

monthly premiums for coverage of under the11

plan of 20 percent of the monthly premium oth-12

erwise determined for each consecutive full 12-13

month period (ending before such effective14

date) in which the individual was not enrolled15

in creditable coverage. Such increase shall apply16

during a period, to be specified under regula-17

tions of the Secretary but in no case longer18

than 3 times the length of the most recent pe-19

riod in which the individual did not have contin-20

uous coverage.21

(B) STATE WAIVER.—A State may apply22

to the Secretary for a waiver of the provisions23

of subparagraph (A) and the application of al-24

ternative provisions providing incentives for25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

11/117

11

State residents to enroll in creditable coverage1

and maintain continuous creditable coverage.2

The Secretary shall approve such waiver if the3

Secretary determines that the alternative provi-4

sions provide similar or greater incentives for5

such enrollment than the incentives otherwise6

applicable.7

(4) COORDINATING IMPLEMENTATION OF PRE-8

PPACA PHSA PROVISIONS WITH PPACA CONSUMER 9

PROTECTIONS.—10

(A) IN GENERAL.—In applying this sub-11

section, the provisions described in paragraph12

(2) shall be treated as if they were included in13

title XXVII of the Public Health Service Act,14

as in effect before the date of enactment of15

PPACA, and, with respect to group health16

plans and health insurance coverage offered in17

connection with such plans, in part 7 of subtitle18

B of title I of the Employee Retirement and In-19

come Security Act of 1974, and, with respect to20

group health plans, in chapter 100 of the Inter-21

nal Revenue Code of 1986 as follows:22

(i) LIFETIME LIMITS; DEPENDENT 23

COVERAGE.—The provisions described in24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

12/117

12

paragraphs (2)(A) and (2)(B) shall be1

treated as included—2

(I) with respect to group health3

plans (and health insurance coverage4

offered with respect to such plans),5

under subpart 2 of part A of title6

XXVII of the Public Health Service7

Act and subpart B of part 7 of sub-8

title B of title I of the Employee Re-9

tirement and Income Security Act of10

1974;11

(II) also with respect to group12

health plans, under subchapter B of13

chapter 100 of the Internal Revenue14

Code of 1986; and15

(III) with respect to individual16

health insurance coverage, under sub-17

part 2 of part B of title XXVII of the18

Public Health Service Act.19

(ii) REMAINING PROVISIONS.—The20

provision described in paragraph (2) (other21

than in subparagraph (A) or (B) of such22

paragraph) shall be treated as included—23

(I) with respect to group health24

plans (and health insurance coverage25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

13/117

13

offered with respect to such plans),1

under subpart 1 of part A of title2

XXVII of the Public Health Service3

Act and subpart A of part 7 of sub-4

title B of title I of the Employee Re-5

tirement and Income Security Act of6

1974;7

(II) also with respect to group8

health plans, under subchapter A of9

chapter 100 of the Internal Revenue10

Code of 1986; and11

(III) with respect to individual12

health insurance coverage, under sub-13

part 1 of part B of title XXVII of the14

Public Health Service Act.15

(B) CONFLICTING PROVISIONS.—In the16

case described in paragraph (1) where there is17

a conflict between a provision described in para-18

graph (2) and a provision of law described in19

paragraph (1), the provision described in para-20

graph (2) shall control and the Secretary, in21

consultation with the Secretary of the Treasury22

and the Secretary of Labor, shall establish such23

rules as may be necessary to carry out this sub-24

paragraph.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

14/117

14

(5) CONFORMING AMENDMENTS.—1

(A) ERISA.—Section 715 of the Employee2

Retirement Income Security Act of 1974 (293

U.S.C. 1185d) is amended—4

(i) in subsection (a), by striking ‘‘sub-5

section (b)’’ and inserting ‘‘subsections (b)6

and (c)’’; and7

(ii) by adding at the end the following8

new subsection:9

‘‘(c) A DDITIONAL E XCEPTION.—Pursuant to section10

121 of the World’s Greatest Healthcare Plan Act of 2016,11

the provisions of part A of title XXVII of the Public12

Health Service Act referred to in subsection (a), other13

than those provisions specified in section 121(a)(2) of the14

World’s Greatest Healthcare Plan Act of 2016, shall not15

apply to plans and coverage described in subsection (a),16

whether or not the plans or coverage are offered through17

an Exchange established under the Patient Protection and18

Affordable Care Act.’’.19

(B) IRC.—Section 9815 of the Internal20

Revenue Code of 1986 is amended—21

(i) in subsection (a), by striking ‘‘sub-22

section (b)’’ and inserting ‘‘subsections (b)23

and (c)’’; and24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

15/117

8/16/2019 BILL 5.19.16

16/117

16

position of any underwriting as the State determines1

to be appropriate in ensuring initial access to such2

coverage.3

(2) FLEXIBILITY IN IMPOSING ADDITIONAL RE-4

QUIREMENTS.—Nothing in this section shall be con-5

strued as preventing a State from continuing to6

apply, to health insurance coverage issued in the7

State, requirements under the provisions of title8

XXVII of the Public Health Service Act (as amend-9

ed by subtitles A and C of title I of PPACA) that10

are not continued under subsection (a).11

(3) STATE FLEXIBILITY WITH RESPECT TO EX -12

CHANGES.—A State may waive such provisions of13

part II of subtitle D of title I of PPACA, in relation14

to the establishment of an Exchange in such State,15

as the State determines appropriate in order for the16

State to implement and administer a market-based17

system for the availability of health insurance cov-18

erage throughout the State.19

(4) STATE DEFAULT ENROLLMENT OPTION.—20

(A) ENROLLMENT, SUBJECT TO INDI-21

VIDUAL OPT-OUT.—Subject to subparagraph22

(D), a State may elect to provide for the enroll-23

ment of residents of the State who are unin-24

sured in default health insurance coverage (as25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

17/117

17

defined in subparagraph (B)) and establishing a1

Roth HSA for such residents who do not have2

a Roth HSA unless the resident has affirma-3

tively elected not to be so enrolled and not to4

have such an account. respectively. If a State5

makes such an election, the State shall permit6

eligible residents to enroll in such coverage on7

a continuous basis.8

(B) DEFAULT HEALTH INSURANCE COV -9

ERAGE DEFINED.—In this paragraph, the term10

‘‘default health insurance coverage’’ means,11

with respect to a State, health insurance cov-12

erage that—13

(i) is a high deductible health plan14

(within the meaning of section 223(c)(2) of15

the Internal Revenue Code of 1986) with16

prescription drug coverage limited to ge-17

neric drugs for a limited number of chronic18

conditions (commonly referred to as tier I19

pharmacy benefit);20

(ii) meets such requirements as may21

apply to qualify for the payment of plan22

premiums from a health savings account23

under section 223 of such Code (such as24

age-related premiums and limitation on25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

18/117

18

imposition of preexisting condition exclu-1

sions);2

(iii) has a provider network for cov-3

ered benefits that is adequate (as deter-4

mined consistent with guidelines issued by5

the Secretary) to ensure access to health6

benefits under such plan;7

(iv) provides for coverage of childhood8

immunizations without cost sharing re-9

quirements to the extent such immuniza-10

tions have in effect a recommendation11

from the Advisory Committee on Immuni-12

zation Practices of the Centers for Disease13

Control and Prevention with respect to the14

individual involved; and15

(v) meets such other requirements as16

the State may specify.17

(C) ROTH HSA .—In this paragraph, the18

term ‘‘Roth HSA’’ shall have the meaning given19

such term by section 530A(c) of the Internal20

Revenue Code of 1986.21

(D) SIMPLE PROCESS FOR INDIVIDUALS TO 22

OPT-OUT.—As a condition of a State providing23

for the enrollment function described in sub-24

paragraph (A), the State must establish an25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

19/117

19

easy-to-use and transparent means by which in-1

dividuals may elect not to be enrolled in default2

health insurance coverage or to have a Roth3

HSA established on the individual’s behalf, or4

both.5

(c) INAPPLICABILITY OF REQUIRED ESSENTIAL 6

HEALTH BENEFITS.—7


provision of law, no health benefits plan shall be re-9

quired by reason of Federal law to comply with the10

requirements of sections 1301(a)(1)(B) and 1302 of11

PPACA (42 U.S.C. 18021(a)(1)(B), 18022).12

(2) STATE FLEXIBILITY .—Nothing in this sub-13

section shall be construed as preventing a State14

from applying, at its option with respect to health15

insurance coverage offered through an Exchange or16

otherwise in the State, the requirements referred to17

in paragraph (1).18

(d) EFFECTIVE D ATE; TRANSITION.—19

(1) IN GENERAL.—Subsection (a), (b), and (c)20

shall apply to plan years beginning after the date of21

the enactment of this Act.22

(2) SUNSETTING REQUIRED CONTRIBUTION FOR 23

ACA REINSURANCE PROGRAM.—No contribution shall24

be required under section 1341 of PPACA (4225



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

20/117

20

U.S.C. 18061) from any group health plan or health1

insurance issuer for portions of plans years occur-2

ring in months beginning more than 30 days after3

the date of the enactment of this Act.4

(e) SECRETARIAL GUIDANCE.—The Secretary of5

Health and Human Services, in coordination with the Sec-6

retary of Labor and the Secretary of the Treasury, shall7

provide such guidance as may be necessary for the coordi-8

nated implementation of this section on a timely basis.9

(f) TRANSFERRING HEALTH PLAN RECORDS UPON 10

CHANGING PLANS.—11

(1) IN GENERAL.—In the case of an individual12

who is covered under health insurance coverage or as13

a beneficiary or participant in a group health plan14

(as such terms are defined in section 2791 of the15

Public Health Service Act), if such coverage is ended16

and the individual obtains other health insurance17

coverage, group health plan coverage, or other cred-18

itable coverage (as defined for purposes of title19

XXVII of such Act), the issuer of the prior coverage20

or administrator of the prior plan shall forward in-21

formation respecting such prior coverage to the22

issuer of the new coverage or administrator of the23

new plan or coverage, as the case may be, subject24

to such rules as the Secretary establishes regarding25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

21/117

21

the right of the beneficiary or participant to object1

to such forwarding of information.2

(2) TREATMENT AS PLAN REQUIREMENT 3

UNDER PHSA , ERISA , IRC.—The requirement of4

paragraph (1) shall apply as if it were a section5

under part A of title XXVII of the Public Health6

Service Act, including for purposes of applying sec-7

tion 715 of the Employee Retirement Income Secu-8

rity Act of 1976 (29 U.S.C. 1185d) and section9

9815 of the Internal Revenue Code of 1986.10

(g) A PPLICATION OF RISK A DJUSTMENT.—11

(1) IN GENERAL.—Any issuer that offers health12

insurance coverage in the individual market in any13

of the 50 States or the District of Columbia shall14

participate in a risk adjustment mechanism under15

this subsection with respect to any health insurance16

coverage it so offers in such market, whether or not17

such coverage is offered through an Exchange.18

(2) FORM AND DESIGN OF RISK ADJUSTMENT 19

MECHANISM.—The Secretary shall, in consultation20

with the National Association of Insurance Commis-21

sioners and other interested parties, develop a mech-22

anism to permit the adjustment of risk among23


market throughout the 50 States and the District of25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

22/117

22

Columbia. Such mechanism shall be designed to ef-1

fect the same type of risk adjustment among such2

coverage that is applicable to risk adjustment of3

payments among Medicare Advantage organizations4

under part C of title XVIII of the Social Security5

Act.6

(3) TRANSITION FOR NEW COVERAGE.—The7

mechanism developed under paragraph (2) shall pro-8

vide for transitional protection, over a 3 year period,9

in the case of health insurance coverage that has not10

been previously marketed.11

(4) DEVELOPMENT OF FURTHER RISK ADJUST-12

MENT MECHANISM.—The Secretary shall request the13

National Association of Insurance Commissioners to14

develop a permanent model for adjustment of risk15

among health insurance issuers with respect to16


market, with the intention that such a model would18

substitute for the mechanism developed under para-19

graph (2).20

(5) TREATMENT AS PLAN REQUIREMENT 21

UNDER PHSA , ERISA , IRC.—The requirement of22

paragraph (1) shall apply as if it were a section23

under part A of title XXVII of the Public Health24

Service Act, including for purposes of applying sec-25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

23/117

23

tion 715 of the Employee Retirement Income Secu-1

rity Act of 1976 (29 U.S.C. 1185d) and section2

9815 of the Internal Revenue Code of3

1986.requirement.4

SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PRO-5

TECTION OF ASSETS FROM LIABILITY OR AT-6

TACHMENT OR SEIZURE.7

(a) REQUIREMENT FOR E XCHANGES.—8

(1) IN GENERAL.—No tax credit shall be allow-9

able under section 36B or 36C of the Internal Rev-10

enue Code of 1986 for residents of a State unless11

any Exchange established in the State provides for12

the offering of basic health insurance in all areas of13

the State.14

(2) B ASIC HEALTH INSURANCE DEFINED.—In15

this subsection, the term ‘‘basic health insurance’’16

means, with respect to a State, such health insur-17

ance coverage as the State may specify and includes18

limited benefit insurance (as defined in subsection19

(b)).20

(b) LIMITED BENEFIT INSURANCE DEFINED.—21

(1) IN GENERAL.—In this title, the term ‘‘lim-22

ited benefit insurance’’ means individual health in-23

surance coverage that, with respect to a plan year,24

imposes (consistent with paragraph (2)) an annual25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

24/117

24

limit on the amounts that may be payable under the1

coverage with respect to expenses incurred for items2

and services furnished in that plan year.3

(2) SPECIFICATION OF ANNUAL LIMIT; VARI-4

ATION IN LIMIT FOR INDIVIDUAL AND FAMILY COV -5

ERAGE.—The Secretary shall specify, from year to6

year, the annual limit (or range of annual limits)7

that may be applied under paragraph (1). Such a8

limit may distinguish between coverage that is only9

provided for an individual and coverage that is pro-10

vided also for family members of the individual.11

(c) PROTECTION OF CERTAIN A SSETS IN C ASE OF 12

INDIVIDUALS COVERED UNDER LIMITED BENEFIT IN-13

SURANCE.—14


provision of law, if an individual is covered under16

limited benefit insurance for a plan year and bene-17

fits under such insurance have reached the annual18

limit under such insurance for items and services19

furnished in the plan year, the individual is not lia-20

ble for debt incurred and arising from the provision21

of subsequently furnished items and services during22

the plan year, regardless of whether benefits are oth-23

erwise covered for such items and services under24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

25/117

25

such policy, insofar as the liability attributable to1

such items and services exceeds—2

(A) the bankruptcy valuation of the indi-3

vidual’s property at the time the debt is in-4

curred; reduced by5

(B) such annual limit of benefits under the6

limited benefit insurance for the plan year.7

Property in the amount so protected from liability8

shall be exempt and immune from attachment or sei-9

zure with respect to any judgment related to such10

debt.11

(2) B ANKRUPTCY VALUATION DEFINED.—In12

this subsection, the term ‘‘bankruptcy valuation’’13

means, with respect to property of an individual as14

of a date, the value of the property as of such date15

as determined as if the individual were a debtor in16

a bankruptcy case that could have been filed under17

title 11 of the United States Code and the property18

could not be exempt under section 522 of such title.19

(3) NO REQUIREMENT FOR PROVIDERS TO FUR-20

NISH SUBSEQUENT SERVICES WITHOUT ENSURING 21

PAYMENT.—Except as may be explicitly provided in22

other law (such as under section 1867 of the Social23

Security Act, popularly known as EMTALA), a24

health care provider is not required to furnish any25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

26/117

26

items or services to an individual who has exhausted1

benefits under limited benefit insurance for a plan2

year without the individual (or another person on3

the individual’s behalf) providing for such advance4

or guarantee of payment for such items and services5

as may be arranged between the health care provider6

and the individual.7

Subtitle C—Universal Health8

Insurance Tax Benefit9

SEC. 131. UNIVERSAL HEALTH INSURANCE TAX BENEFIT.10

(a) IN GENERAL.—Subpart C of part IV of sub-11

chapter A of chapter 1 of the Internal Revenue Code of12

1986 is amended by inserting after section 36B the fol-13

lowing new section:14

‘‘SEC. 36C. UNIVERSAL HEALTH INSURANCE TAX CREDIT.15

‘‘(a) IN GENERAL.—In the case of an individual who16

is a qualified resident, there shall be allowed as a credit17

against the tax imposed by this subtitle for any taxable18

year an amount equal to the universal health credit19

amount of the taxpayer for the taxable year.20

‘‘(b) UNIVERSAL HEALTH CREDIT A MOUNT.—For21

purposes of this section—22

‘‘(1) IN GENERAL.—The term ‘universal health23

credit amount’ means the sum of the amounts deter-24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

27/117

27

mined under paragraph (2) with respect to all1

months of the taxpayer for the taxable year.2

‘‘(2) MONTHLY CREDIT AMOUNT.—3

‘‘(A) IN GENERAL.—Subject to paragraph4

(4), the amount determined under this para-5

graph with respect to any month shall be an6

amount equal to the sum of—7

‘‘(i) 1 ⁄ 12 of $2,500 in the case of any8

month the first day of which the taxpayer9

is a qualified resident and is covered by10

creditable coverage (twice such amount in11

the case of a joint return if both spouses12

are so covered by creditable coverage and13

are qualified residents), plus14

‘‘(ii) 1 ⁄ 12 of an amount equal to15

$1,500 multiplied by the number of quali-16

fying children (within the meaning of sec-17

tion 152) who are qualified residents18

and—19

‘‘(I) for whom the taxpayer is al-20

lowed a deduction under section 15121

for the taxable year in which such22

month ends, and23



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

28/117

8/16/2019 BILL 5.19.16

29/117

29

‘‘(B) C ARRYFORWARD OF MONTHLY LIMI-1

TATION IN CASE HSA CONTRIBUTIONS AND PRE-2

MIUM PAYMENTS EXCEED MONTHLY CREDIT 3

AMOUNT.—In the case of any month for which4

the amount determined with respect to the tax-5

payer under subparagraph (A) exceeds the cred-6

it amount determined with respect to the tax-7

payer for such month under paragraph (2),8

such excess may be carried forward to any sub-9

sequent month during the taxable year for pur-10

poses of determining the limitation under sub-11

paragraph (A).12

‘‘(4) A DJUSTMENT FOR LIMITED BENEFIT IN-13

SURANCE.—In the case of a taxpayer whose only14

health insurance coverage for a month is limited15

benefit insurance (as defined in section 123(b) of the16

World’s Greatest Healthcare Plan Act of 2016), the17

amount determined under paragraph (2) shall be de-18

creased by such proportion as the Secretary, in con-19

sultation with the Secretary of Health and Human20

Services, determines appropriate, taking into ac-21

count the ratio of the actuarial value of such limited22

benefit insurance to the average actuarial value of23

health insurance coverage that is not limited benefit24

insurance.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

30/117

30

‘‘(5) A DJUSTMENT FOR GEOGRAPHIC AREA AND 1

AGE OF COVERED INDIVIDUAL.—The amount deter-2

mined under paragraph (2) shall be adjusted, in a3

manner specified by the Secretary, in consultation4

with and based on data collected by the Secretary of5

Health and Human Services, to take into account,6

for a taxpayer or other covered individual of an age7

and residing in an area, the ratio of the average cost8

of typical individual health insurance coverage for an9

individual of such age and residing in such area to10

the national average cost of such typical health in-11

surance coverage. Such adjustment shall be made in12

a manner so that the application of this paragraph13

is estimated not to change the aggregate amount of14

the credits allowable under this section for taxable15

years ending in a year.16

‘‘(c) COORDINATION W ITH EMPLOYER-PROVIDED 17

HEALTH INSURANCE T AX SUBSIDY .—18

‘‘(1) CREDIT LIMITED BY EMPLOYER-PROVIDED 19

HEALTH INSURANCE TAX SUBSIDY .—The credit al-20

lowed under this section for any taxable year shall21

not exceed an amount equal to the excess (if any)22

of—23

‘‘(A) the maximum credit which would be24

allowed for all months of the taxpayer during25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

31/117

31

the taxable year (determined under subsection1

(b)(2) and without regard to this subsection,2

the limitation under subsection (b)(3), and any3

reduction under subsection (d)(1)), over4

‘‘(B) the taxpayer’s employer-provided5

health insurance tax subsidy for the taxable6

year.7

‘‘(2) RECAPTURE OF EXCESS EMPLOYER-PRO-8

VIDED HEALTH INSURANCE TAX SUBSIDY .—In the9

case of any taxpayer with respect to whom for any10

taxable year the amount described in subparagraph11

(B) of paragraph (1) exceeds the amount described12

in subparagraph (A) of such paragraph, the credit13

allowed under this section shall be treated as zero14

and the tax imposed by this chapter for the taxable15

year shall be increased by the amount of such ex-16

cess.17

‘‘(3) EMPLOYER-PROVIDED HEALTH INSURANCE 18

TAX SUBSIDY .—For purposes of this subsection—19

‘‘(A) IN GENERAL.—The term ‘employer-20

provided health insurance tax subsidy’ means,21

with respect to any taxpayer for a taxable year,22

the sum of—23

‘‘(i) the Federal income tax subsidy of24

the taxpayer for the taxable year, plus25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

32/117

8/16/2019 BILL 5.19.16

33/117

33

21 with respect to any wages of the1

taxpayer paid during the taxable year2

had such tax been determined by in-3

cluding amounts otherwise excluded4

from wages which were paid by or on5

behalf of the taxpayer during the tax-6

able year for employer-provided insur-7

ance that constitutes medical care,8

plus9

‘‘(II) the amount of tax that10

would have been imposed by chapter 211

on any self-employment income of the12

taxpayer for such taxable year had13

self-employment income been deter-14

mined without regard to any deduc-15

tion from gross income for amounts16

paid for insurance which constitutes17

medical care for the taxpayer, the tax-18

payer’s spouse, and any qualifying19

children (within the meaning of sec-20

tion 152) for whom the taxpayer is al-21

lowed a deduction under section 15122

for the taxable year, over23

‘‘(ii) the amount of tax imposed with24

respect to the taxpayer during such taxable25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

34/117

34

year under chapter 21 and for such taxable1

year under chapter 2.2

‘‘(4) NO CREDIT OR RECAPTURE FOR INSUR-3

ANCE PROVIDED BY EMPLOYER ELECTING EXCLU-4

SION REGIME.—In the case of an individual who for5

any month is covered by insurance that constitutes6

medical care and that is provided by an employer7

with respect to which an election is in effect for such8

month under section 131(b) of the World’s Greatest9

Healthcare Plan Act of 2016—10

‘‘(A) the monthly credit amount deter-11

mined under subsection (b)(2) for such month12

with respect to such individual shall be zero,13

and14

‘‘(B) such month shall not be taken into15

account for purposes of determining any recap-16

ture under paragraph (2) with respect to such17

individual.18

‘‘(d) RECONCILIATION OF CREDIT AND A DVANCE 19

CREDIT.—20

‘‘(1) IN GENERAL.—The amount of the credit21

allowed under this section for any taxable year (after22

the application of subsections (b) and (c)) shall be23

reduced (but not below zero) by the amount of any24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

35/117

35

advance payment of such credit under subsection1

(e)(1).2

‘‘(2) E XCESS ADVANCE PAYMENTS.—3

‘‘(A) IN GENERAL.—If the advance pay-4

ments to a taxpayer under subsection (e)(1) for5

a taxable year exceed the credit allowed by this6

section (determined without regard to para-7

graph (1)), the tax imposed by this chapter for8

the taxable year shall be increased by the9

amount of such excess.10

‘‘(B) LIMITATION ON INCREASE.—In the11

case of a taxpayer whose household income is12

less than 400 percent of the poverty line for the13

size of the family involved for the taxable year,14

the amount of the increase under subparagraph15

(A) shall in no event exceed the applicable dol-16

lar amount determined in accordance with the17

following table (one-half of such amount in the18

case of a taxpayer whose tax is determined19

under section 1(c) for the taxable year):20‘‘If the household income (ex-

pressed as a percent of

poverty line) is:

The applicable dollar amountis:

Less than 200% ........................................................................... $600

At least 200% but less than 300% .............................................. $1,500

At least 300% but less than 400% .............................................. $2,500

‘‘(e) SPECIAL RULES.—For purpose of this section—21

‘‘(1) A DVANCE PAYMENT PROGRAM.—22



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

36/117

36

‘‘(A) IN GENERAL.—The Secretary of the1

Treasury, in consultation with the Secretary of2

Health and Human Services, shall establish a3

program—4

‘‘(i) to make advance determinations5

with respect to the eligibility of individuals6

for the credit allowed under this section,7

and8

‘‘(ii) to make advance payments of the9

credit allowed under this section, at the10

election of any such individual so eligible,11

directly to the health savings account of12

any such individual, or, as a subsidy to the13

cost of health insurance coverage provided14

to any such individual, to the health insur-15

ance issuer providing such coverage or the16

person that administers the plan benefits17

with respect to such coverage.18

‘‘(B) PROGRAM REQUIREMENTS.—Such19

program shall be established under rules similar20

to the rules of section 1412 of the Patient Pro-21

tection and Affordable Care Act, as in effect on22

the day before the date of the enactment of this23

section, except that advance determinations and24

advance payments shall be made on request of25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

37/117

37

the individual with respect to whom the deter-1

mination is to be made.2

‘‘(2) INFORMATION REQUIREMENTS.—3

‘‘(A) IN GENERAL.—Each person providing4

health insurance coverage which constitutes5

medical care, and each trustee of a health sav-6

ings account, shall provide the following infor-7

mation to the Secretary and to the taxpayer8

with respect to such coverage or such account:9

‘‘(i) The total premium for the cov-10

erage without regard to the credit under11

this section.12

‘‘(ii) The aggregate amount of any ad-13

vance payment of such credit made with14

respect to such coverage or to such ac-15

count.16

‘‘(iii) The name, address, age, and17

TIN of the primary insured or account18

holder (as the case may be) and the name,19

age, and TIN of each other individual ob-20

taining coverage under such policy of in-21

surance.22

‘‘(iv) Any information provided to23

such person necessary to determine eligi-24

bility for, and the amount of, such credit.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

38/117

38

‘‘(v) Information necessary to deter-1

mine whether a taxpayer has received ex-2

cess advance payments.3

‘‘(B) E XCEPTION.—Subparagraph (A)4

shall not apply to any coverage with respect to5

which reporting under section 6051 is required.6

‘‘(3) INDEXING.—7

‘‘(A) IN GENERAL.—In the case of any cal-8

endar year beginning after 2016, each of the9

dollar amounts in subsection (b)(2) and in the10

table contained under subsection (d)(2)(B) shall11

be equal to such dollar amount multiplied by12

the ratio of—13

‘‘(i) the current dollar gross domestic14

product (as determined based on the third15

estimate of the Bureau of Economic Anal-16

ysis of the Department of Commerce for17

the second quarter of the previous year), to18

‘‘(ii) the current dollar gross domestic19

product (as so determined) for the second20

quarter of 2015.21

‘‘(B) ROUNDING.—If the amount of any22

change under subparagraph (A) is not a mul-23

tiple of $50, such change shall be rounded to24

the next lowest multiple of $50.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

39/117

39

‘‘(f) DEFINITIONS.—For purposes of this section—1

‘‘(1) CREDITABLE COVERAGE.—The term ‘cred-2

itable coverage’ has the meaning given such term for3

purposes of title XXVII of the Public Health Service4

Act.5

‘‘(2) QUALIFIED RESIDENT.—The term ‘quali-6

fied resident’ means an individual who is a citizen or7

national of the United States or otherwise lawfully8

residing in the United States under color of law.’’.9

(b) ELECTION BY EMPLOYER TO M AKE E XCISE T AX 10

A PPLICABLE AND TO BE GOVERNED SOLELY BY E XCLU-11

SION REGIME.—12

(1) IN GENERAL.—If an eligible employer13

makes the election under this subsection (at such14

time and in such form and manner as the Secretary15

shall prescribe) the tax imposed by section 4980I of16

the Internal Revenue Code of 1986 shall apply to17

any excess benefit with respect to employer-spon-18

sored health coverage provided by such employer and19

the credit and recapture under section 36C of such20

Code shall not apply with respect to individuals cov-21

ered by such coverage. Such election, once made,22

may be revoked only with the consent of the Sec-23

retary.24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

40/117

40

(2) ELIGIBLE EMPLOYER.—For purposes of1

this subsection, the term ‘‘eligible employer’’ means2

an employer in existence before the date of the en-3

actment of this Act.4

(3) CONTROLLED GROUPS.—For purposes of5

this subsection, all persons treated as a single em-6

ployer under subsection (a) or (b) of section 52 of7

the Internal Revenue Code of 1986 or subsection8

(m) or (o) of section 414 of such Code shall be9

treated as a single covered entity.10

(4) REGULATIONS.—The Secretary of the11

Treasury shall prescribe such regulations as may be12

necessary to prevent the avoidance of the purposes13

of this subsection.14

(c) E XCISE T AX ON HIGH COST EMPLOYER-SPON-15

SORED HEALTH INSURANCE ONLY TO A PPLY TO EM-16

PLOYERS M AKING ELECTION.—Section 4980I(d)(1)(B) of17

such Code (relating to exceptions) is amended by striking18

‘‘or’’ at the end of clause (ii), by striking the period at19

the end of clause (iii) and inserting ‘‘, or’’, and by adding20

at the end the following new clause:21

‘‘(iv) any group health plan made22

available by an employer which does not23

have in effect an election under section24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

41/117

41

131(b) of the World’s Greatest Healthcare1

Plan Act of 2016.’’.2

(d) DISQUALIFICATION FROM E XCHANGE PLAN SUB-3

SIDIES FOR INDIVIDUAL ONCE THEY ELECT T AX BENE-4

FITS.—Section 36B(c)(1) of such Code is amended by5

adding at the end the following new subparagraph:6

‘‘(E) DENIAL OF CREDIT FOR THOSE 7

ELECTING UNIVERSAL CREDIT.—In the case of8

an individual who is allowed a credit under sec-9

tion 36C for any taxable year, no credit shall be10

allowed under this section to such individual for11

such taxable year or any subsequent taxable12

year.’’.13

(e) GUIDANCE.—The Secretary of the Treasury shall14

issue such guidance as is necessary—15

(1) to assist employees and employers in adjust-16

ing Federal income tax withholding to take into ac-17

count the universal health insurance tax credit under18

section 36C of the Internal Revenue Code of 198619

(and any advance payment thereof), and20

(2) to require employers to report to each em-21

ployee with respect to periods not longer than quar-22

terly the employer-provided health insurance tax23

subsidy (as defined in section 36C(c)(3) of such24

Code) with respect to such employee for such period.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

42/117

42

(f) CLERICAL A MENDMENT.—The table of sections1

for subpart C of part IV of subchapter A of chapter 12

of the Internal Revenue Code of 1986 is amended by in-3

serting after the item relating to section 36B the following4

new item:5

‘‘Sec. 36C. Universal health insurance tax credit.’’.

(g) EFFECTIVE D ATE.—The amendments made by6

this section shall apply to taxable years beginning after7

December 31, 2015.8

SEC. 132. APPLICATION OF PORTION OF UNUSED TAX9

CREDITS BY STATES FOR INDIGENT HEALTH10

CARE.11

(a) COMPUTATION OF UNUSED CREDITS.—The Sec-12

retary, in consultation with the Secretary of the Treasury,13

shall calculate for each State for each year, beginning with14

2017, using the most recent data available —15

(1) the maximum aggregate amount of credits16

under section 36C of the Internal Revenue Code of17

1986 that would have been allowed for the year for18

qualified residents of the State for taxable years19

ending in the year if all eligible qualified residents20

had qualified for such credits;21

(2) the aggregate amount of credits under such22

section that were allowed for taxable years ending in23

that the year by qualified residents of such State;24

and25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

43/117

43

(3) 25 percent of the amount by which—1

(A) the amount determined under para-2

graph (1) with respect to qualified residents of3

the State for such year; exceeds4

(B) the amount determined under para-5

graph (2) for such State for that year.6

(b) A PPROPRIATION.—For the purpose of making7

grants to States under this section, there is hereby appro-8

priated to the Secretary, out of any funds in the Treasury9

not otherwise appropriated, for each year (beginning with10

2017) an amount equivalent to the amount determined11

under subsection (a)(3) for all States under subsection (a)12

for the year in which such fiscal year ends, subject to ad-13

justment under subsection (d)(2).14

(c) GRANTS TO STATES FOR INDIGENT A SSIST-15

ANCE.—16

(1) A PPLICATION.—A State may file with the17

Secretary (in a form and manner specified by the18

Secretary) an application to provide assistance in19

furnishing health services to indigent individuals re-20

siding in the State. Such application shall dem-21

onstrate the manner in which such assistance is fur-22

nished in an equitable manner to individuals residing23

in all parts of the State.24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

44/117

44

(2) A MOUNT OF FUNDS.—From the funds ap-1

propriated under subsection (b) for a year, the2

amount of funds paid to any State in any year3

under this section with an application filed in ac-4

cordance with paragraph (1) is equal to an amount5

specified in the application, but not to exceed the6

amount computed under subsection (a)(3) for the7

State and the year.8

(3) USE OF FUNDS.—Funds paid to a State9

under this subsection may be used only to assist in10

the furnishing of health services to uninsured indi-11

viduals residing in the State or for purposes of in-12

creasing the payment adjustments made under sec-13

tions 1886(d)(5)(F) and 1923 of the Social Security14

Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hos-15

pitals that serve a disproportionate share of such in-16

dividuals in the State.17

(d) INITIAL ESTIMATE; FINAL C ALCULATION AND 18

RECONCILIATION.—19

(1) USE OF ESTIMATES.—The calculations20

under subsection (a) for a year shall initially be esti-21

mated before the beginning of the year. Payments22

under this section to a State for a year shall be23

made, subject to reconciliation under paragraph (2),24

based on the amount so estimated.25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

45/117

45

(2) RECONCILIATION BASED ON FINAL CAL-1

CULATION.—The calculations under subsection (a)2

for a year shall also be made after the end of the3

year. Insofar as the amount calculated under this4

paragraph for subsection (a)(3) for a State for a5

year exceeds (or is less than) by a material amount6

from the amount for subsection (a)(3) estimated and7

applied for the State and year under paragraph (1),8

the amount calculated under subsection (a)(3) for9

the State for the 2nd year beginning after such year,10

shall be reduced or increased, respectively by the11

amount of such excess or deficit.12

SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRI-13

VATE PLAN AND CONTRIBUTION TO AN HSA.14

(a) IN GENERAL.—Notwithstanding any other provi-15

sion of law, a State plan under title XIX of the Social16

Security Act (42 U.S.C. 1396 et seq.) may make available17

to an individual, who is entitled to medical assistance for18

a full range of acute care items and services under such19

title and at the individual’s option, instead of the medical20

assistance otherwise provided, medical assistance con-21

sisting of coverage under a health plan that qualifies for22

a tax credit under section 36C of the Internal Revenue23

Code of 1986, but only if the State provides for the indi-24

vidual medical assistance, in the form of a deposit into25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

46/117

46

a health savings account for the individual, an amount1

equivalent to the amount by which the amount of tax cred-2

it for the individual under such section exceeds the cost3

of coverage of the individual under the plan.4

(b) FFP TREATMENT.—The payments by a State de-5

scribed in subsection (a) for coverage under a health plan6

and for deposit into a health savings account shall be7

treated as medical assistance for purposes of section 19038

of the Social Security Act (42 U.S.C. 1396b) and subject9

to Federal financial participating, including the applica-10

tion of State matching payments, in the same manner as11

other medical assistance furnished under title XIX of such12

Act, except that such amount shall be reduced by the13

amount of .any health insurance credits provided under14

section 36C of the Internal Revenue Code of 1986 with15

respect to such coverage or deposit.16

TITLE II—IMPROVING HEALTH17

SAVINGS ACCOUNTS TO PRO-18

MOTE ACCOUNTABILITY19

SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS.20

(a) NON-DEDUCTIBLE HSA S.—Subchapter F of21

chapter 1 of the Internal Revenue Code of 1986 is amend-22

ed by adding at the end the following new part:23

‘‘PART IX—HEALTH SAVINGS ACCOUNTS24

‘‘Sec. 530A. Roth HSAs.



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

47/117

47

‘‘SEC. 530A. ROTH HSAS.1

‘‘(a) IN GENERAL.—A Roth HSA shall be exempt2

from taxation under this subtitle. Notwithstanding the3

preceding sentence, the Roth HSA shall be subject to the4

taxes imposed by section 511 (relating to imposition of5

tax on unrelated business income of charitable organiza-6

tions). No deduction shall be allowed for any contribution7

to a Roth HSA.8

‘‘(b) DOLLAR LIMITATION.—9

‘‘(1) IN GENERAL.—The aggregate amount of10

contributions for any taxable year to all Roth HSAs11

maintained for the benefit of an individual shall not12

exceed the sum of the monthly limitations for month13

during such taxable year that the individual is an el-14

igible individual.15

‘‘(2) MONTHLY LIMITATION.—The monthly lim-16

itation for any month is 1 ⁄ 12 of—17

‘‘(A) in the case of an eligible individual18

who has self-only creditable coverage as of the19

first day of such month, $5,000, and20

‘‘(B) in the case of an eligible individual21

who has family creditable coverage as of the22

first day of such month, the amount in effect23

under subparagraph (A) for the taxable year24

multiplied by the number of individuals (includ-25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

48/117

48

ing the eligible individual) covered under such1

family creditable coverage as of such day.2

‘‘(3) A DDITIONAL CONTRIBUTIONS FOR INDI-3

VIDUALS 55 OR OLDER.—In the case of an individual4

who has attained age 55 before the close of the tax-5

able year, the applicable limitation under subpara-6

graphs (A) and (B) of paragraph (2) shall be in-7

creased by $1,000.8

‘‘(4) COORDINATION WITH OTHER CONTRIBU-9

TIONS.—The limitation which would (but for this10

paragraph) apply under this subsection to an indi-11

vidual for any taxable year shall be reduced (but not12

below zero) by the sum of—13

‘‘(A) the aggregate amount paid for such14

taxable year to Archer MSAs of such individual,15

‘‘(B) the aggregate amount contributed to16

Roth HSAs of such individual which is exclud-17

able from the taxpayer’s gross income for such18

taxable year under section 106(d) (and such19

amount shall not be allowed as a deduction20

under subsection (a)), and21

‘‘(C) the aggregate amount contributed to22

Roth HSAs of such individual for such taxable23

year under section 408(d)(9) (and such amount24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

49/117

49

shall not be allowed as a deduction under sub-1

section (a)).2

Subparagraph (A) shall not apply with respect to3

any individual to whom paragraph (5) applies.4

‘‘(5) SPECIAL RULE FOR MARRIED INDIVID-5

UALS.—In the case of individuals who are married6

to each other, if either spouse has family coverage—7

‘‘(A) both spouses shall be treated as hav-8

ing only such family coverage (and if such9

spouses each have family coverage under dif-10

ferent plans, as having the family coverage with11

the lowest annual deductible), and12

‘‘(B) the limitation under paragraph (1)13

(after the application of subparagraph (A) and14

without regard to any additional contribution15

amount under paragraph (3))—16

‘‘(i) shall be reduced by the aggregate17

amount paid to Archer MSAs of such18

spouses for the taxable year, and19

‘‘(ii) after such reduction, shall be di-20

vided equally between them unless they21

agree on a different division.22

‘‘(6) DENIAL OF DEDUCTION TO DEPEND-23

ENTS.—No contribution may be made to a Roth24

HSA under this section by any individual with re-25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

50/117

50

spect to whom a deduction under section 151 is al-1

lowable to another taxpayer for a taxable year begin-2

ning in the calendar year in which such individual’s3

taxable year begins.4

‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The5

limitation under this subsection for any month with6

respect to an individual shall be zero for the first7

month such individual is entitled to benefits under8

title XVIII of the Social Security Act and for each9

month thereafter.10

‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE-11

COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN-12

NING OF THE YEAR.—13

‘‘(A) IN GENERAL.—For purposes of com-14

puting the limitation under paragraph (1) for15

any taxable year, an individual who is an eligi-16

ble individual during the last month of such17

taxable year shall be treated—18

‘‘(i) as having been an eligible indi-19

vidual during each of the months in such20

taxable year, and21

‘‘(ii) as having been enrolled, during22

each of the months such individual is23

treated as an eligible individual solely by24

reason of clause (i), in the same high de-25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

51/117

51

ductible health plan in which the individual1

was enrolled for the last month of such2

taxable year.3

‘‘(B) F AILURE TO MAINTAIN CREDITABLE 4

COVERAGE.—5

‘‘(i) IN GENERAL.—If, at any time6

during the testing period, the individual is7

not an eligible individual, then—8

‘‘(I) gross income of the indi-9

vidual for the taxable year in which10

occurs the first month in the testing11

period for which such individual is not12

an eligible individual is increased by13

the aggregate amount of all contribu-14

tions to the Roth HSA of the indi-15

vidual which could not have been16

made but for subparagraph (A), and17

‘‘(II) the tax imposed by this18

chapter for any taxable year on the19

individual shall be increased by 1020

percent of the amount of such in-21

crease.22

‘‘(ii) E XCEPTION FOR DISABILITY OR 23

DEATH.—Subclauses (I) and (II) of clause24

(i) shall not apply if the individual ceased25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

52/117

52

to be an eligible individual by reason of the1

death of the individual or the individual2

becoming disabled (within the meaning of3

section 72(m)(7)).4

‘‘(iii) TESTING PERIOD.—The term5

‘testing period’ means the period beginning6

with the last month of the taxable year re-7

ferred to in subparagraph (A) and ending8

on the last day of the 12th month fol-9

lowing such month.10

‘‘(c) ROTH HSA.—For purposes of this section—11

‘‘(1) IN GENERAL.—The term ‘Roth HSA’12

means a trust created or organized in the United13

States as a Roth HSA exclusively for the purpose of14

paying the qualified medical expenses of the account15

beneficiary, but only if the written governing instru-16

ment creating the trust meets the following require-17

ments:18

‘‘(A) Except in the case of a rollover con-19

tribution described in subsection (f)(5) or sec-20

tion 220(f)(5), no contribution will be accept-21

ed—22

‘‘(i) unless it is in cash, or23

‘‘(ii) to the extent such contribution,24

when added to previous contributions to25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

53/117

53

the trust for the calendar year, exceeds the1

sum of—2

‘‘(I) the dollar amount in effect3

under subsection (b)(2)(B), and4

‘‘(II) the dollar amount in effect5

under subsection (b)(3).6

‘‘(B) The trustee is a bank (as defined in7

section 408(n)), an insurance company (as de-8

fined in section 816), or another person who9

demonstrates to the satisfaction of the Sec-10

retary that the manner in which such person11

will administer the trust will be consistent with12

the requirements of this section.13

‘‘(C) No part of the trust assets will be in-14

vested in life insurance contracts.15

‘‘(D) The assets of the trust will not be16

commingled with other property except in a17

common trust fund or common investment18

fund.19

‘‘(E) The interest of an individual in the20

balance in his account is nonforfeitable.21

‘‘(2) QUALIFIED MEDICAL EXPENSES.—For22

purposes of this section—23

‘‘(A) IN GENERAL.—The term ‘qualified24

medical expenses’ means, with respect to an ac-25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

54/117

54

count beneficiary, amounts paid by such bene-1

ficiary for medical care (as defined in section2

213(d) as in effect on the day before the date3

of the enactment of the World’s Greatest4

Healthcare Plan Act of 2016) for such indi-5

vidual, the spouse of such individual, and any6

dependent (as defined in section 152, deter-7

mined without regard to subsections (b)(1),8

(b)(2), and (d)(1)(B) thereof) of such indi-9

vidual, but only to the extent such amounts are10

not compensated for by insurance or otherwise.11

‘‘(B) LIMITATION ON HEALTH INSURANCE 12

PURCHASED FROM ACCOUNT.—Such term shall13

not include any payment for health benefits cov-14

erage that is not creditable coverage (as defined15

in section 36C).16

‘‘(C) E XCEPTIONS.—Subparagraph (B)17

shall not apply to any expense for coverage18

under—19

‘‘(i) a health plan during any period20

of continuation coverage required under21

any Federal law,22

‘‘(ii) a qualified long-term care insur-23

ance contract (as defined in section24

7702B(b)),25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

55/117

55

‘‘(iii) a health plan during a period in1

which the individual is receiving unemploy-2

ment compensation under any Federal or3

State law, or4

‘‘(iv) in the case of an account bene-5

ficiary who has attained the age specified6

in section 1811 of the Social Security Act,7

any health insurance other than a medi-8

care supplemental policy (as defined in sec-9

tion 1882 of the Social Security Act).10

‘‘(3) A CCOUNT BENEFICIARY .—The term ‘ac-11

count beneficiary’ means the individual on whose be-12

half the Roth HSA was established.13

‘‘(4) CERTAIN RULES TO APPLY .—Rules similar14

to the following rules shall apply for purposes of this15

section:16

‘‘(A) Section 219(f)(3) (relating to time17

when contributions deemed made).18

‘‘(B) Except as provided in section 106(d),19

section 219(f)(5) (relating to employer pay-20

ments).21

‘‘(C) Section 408(g) (relating to commu-22

nity property laws).23

‘‘(D) Section 408(h) (relating to custodial24

accounts).25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

56/117

56

‘‘(d) ELIGIBLE INDIVIDUAL; CREDITABLE COV -1

ERAGE.—For purposes of this section—2

‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible3

individual’ means, with respect to any month, any4

individual if such individual is covered under cred-5

itable coverage as of the 1st day of such month.6

‘‘(2) CREDITABLE COVERAGE.—The term ‘cred-7

itable coverage’ shall have the meaning given such8

term in section 36C(f).9

‘‘(e) T AX TREATMENT OF DISTRIBUTIONS.—10

‘‘(1) A MOUNTS USED FOR QUALIFIED MEDICAL 11

EXPENSES.—Any amount paid or distributed out of12

a Roth HSA which is used exclusively to pay quali-13

fied medical expenses of any account beneficiary14

shall not be includible in gross income.15

‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 16

QUALIFIED MEDICAL EXPENSES.—Any amount paid17

or distributed out of a Roth HSA which is not used18

exclusively to pay the qualified medical expenses of19

the account beneficiary shall be included in the gross20

income of such beneficiary.21

‘‘(3) E XCESS CONTRIBUTIONS RETURNED BE-22

FORE DUE DATE OF RETURN.—23

‘‘(A) IN GENERAL.—If any excess con-24

tribution is contributed for a taxable year to25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

57/117

57

any Roth HSA of an individual, paragraph (2)1

shall not apply to distributions from the Roth2

HSAs of such individual (to the extent such dis-3

tributions do not exceed the aggregate excess4

contributions to all such accounts of such indi-5

vidual for such year) if—6

‘‘(i) such distribution is received by7

the individual on or before the last day8

prescribed by law (including extensions of9

time) for filing such individual’s return for10

such taxable year, and11

‘‘(ii) such distribution is accompanied12

by the amount of net income attributable13

to such excess contribution.14

Any net income described in clause (ii) shall be15

included in the gross income of the individual16

for the taxable year in which it is received.17

‘‘(B) E XCESS CONTRIBUTION.—For pur-18

poses of subparagraph (A), the term ‘excess19

contribution’ means any contribution (other20

than a rollover contribution described in para-21

graph (5) or section 220(f)(5)) which exceeds22

the contribution limitation with respect to the23

individual for the taxable year.24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

58/117

58

‘‘(4) A DDITIONAL TAX ON DISTRIBUTIONS NOT 1

USED FOR QUALIFIED MEDICAL EXPENSES.—2

‘‘(A) IN GENERAL.—The tax imposed by3

this chapter on the account beneficiary for any4

taxable year in which there is a payment or dis-5

tribution from a Roth HSA of such beneficiary6

which is includible in gross income under para-7

graph (2) shall be increased by 10 percent of8

the amount which is so includible.9

‘‘(B) E XCEPTION FOR DISABILITY OR 10

DEATH.—Subparagraph (A) shall not apply if11

the payment or distribution is made after the12

account beneficiary becomes disabled within the13

meaning of section 72(m)(7) or dies.14

‘‘(C) E XCEPTION FOR DISTRIBUTIONS 15

AFTER MEDICARE ELIGIBILITY .—Subparagraph16

(A) shall not apply to any payment or distribu-17

tion after the date on which the account bene-18

ficiary attains the age specified in section 181119

of the Social Security Act.20

‘‘(5) ROLLOVER CONTRIBUTION.—An amount is21

described in this paragraph as a rollover contribu-22

tion if it meets the requirements of subparagraphs23

(A) and (B).24



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

59/117

59

‘‘(A) IN GENERAL.—Paragraph (2) shall1

not apply to any amount paid or distributed2

from a health savings account (as defined in3

section 223) or a Roth HSA to the account4

beneficiary to the extent the amount received is5

paid into a Roth HSA for the benefit of such6

beneficiary not later than the 60th day after7

the day on which the beneficiary receives the8

payment or distribution.9

‘‘(B) LIMITATION.—This paragraph shall10

not apply to any amount described in subpara-11

graph (A) received by an individual from a12

health savings account or a Roth HSA if, at13

any time during the 1-year period ending on the14

day of such receipt, such individual received any15

other amount described in subparagraph (A)16

from a health savings account or Roth HSA17

which was not includible in the individual’s18

gross income because of the application of this19

paragraph.20

‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI-21

VORCE.—The transfer of an individual’s interest in22

a Roth HSA to an individual’s spouse or former23

spouse under a divorce or separation instrument de-24

scribed in subparagraph (A) of section 71(b)(2) shall25



f:\VHLC\051916\051916.014.xml (594428|72)

8/16/2019 BILL 5.19.16

60/117

60

not be considered a taxable transfer made by such1

individual notwithstanding any other provision of2

this subtitle, and such interest shall, after such3

transfer, be treated as a Roth HSA with respect to4

which such spouse is the account beneficiary.5

‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 6

BENEFICIARY .—If an individual acquires an account7

beneficiary’s interest in a health savings account by8

reason of the death of the account beneficiary, such9

health savings account shall be treated as if the indi-10

vidual were the account beneficiary.11

‘‘(f) COST-OF-LIVING A DJUSTMENT.—12

‘‘(1) IN GENERAL.—In the case of any calendar13

year beginning after 2016, the $5,000 dollar amount14

in subsection (b)(2) shall be increased by an amount15

equal to—16

‘‘(A) such dollar amount, multiplied by17

‘‘(B) the cost-of-living adjustment deter-18

mined under section 1(f)(3) for the calendar19

year, determined—20

‘‘(i) by substituting ‘calendar year21

2015’ for ‘calendar year 1992’ in subpara-22

graph (B) thereof, and23

‘‘(ii) by substituting ‘CPI medical care24

component’ for ‘CPI’.25



f:\VHLC\051916\051916.014.xml (594428|7

bill 5.19.16

Documents