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(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
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(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.
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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
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(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
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‘‘(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
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(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
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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
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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
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(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
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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
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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
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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
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(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
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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
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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
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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
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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
(1) IN GENERAL.—Notwithstanding any other8
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
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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
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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
health insurance coverage offered in the individual24
market throughout the 50 States and the District of25
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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
health insurance coverage offered in the individual17
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
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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
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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
(1) IN GENERAL.—Notwithstanding any other15
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
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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
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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
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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
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‘‘(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
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‘‘(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
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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
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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
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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
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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
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‘‘(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
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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
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‘‘(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
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‘‘(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
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(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
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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
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(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
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(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
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(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
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(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
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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.
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‘‘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
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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
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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
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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
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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
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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
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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
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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
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‘‘(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
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‘‘(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
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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
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‘‘(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
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‘‘(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
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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
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