[House Report 114-475]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-475
======================================================================
PROTECTING TAXPAYERS BY RECOVERING IMPROPER OBAMACARE SUBSIDY
OVERPAYMENTS ACT
_______
March 23, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 4723]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 4723) to amend the Internal Revenue Code of 1986 to
provide for the recovery of improper overpayments resulting
from certain Federally subsidized health insurance, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................3
A. Recovery of Improper Overpayments Resulting From
Certain Federally Subsidized Health Insurance (sec.
2 of the bill and sec. 36B of the Code)............ 3
III. VOTES OF THE COMMITTEE...........................................6
IV. BUDGET EFFECTS OF THE BILL.......................................7
A. Committee Estimate of Budgetary Effects............. 7
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 7
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 8
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......11
A. Committee Oversight Findings and Recommendations.... 11
B. Statement of General Performance Goals and
Objectives......................................... 11
C. Information Relating to Unfunded Mandates........... 11
D. Applicability of House Rule XXI 5(b)................ 11
E. Tax Complexity Analysis............................. 12
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 12
G. Duplication of Federal Programs..................... 12
H. Disclosure of Directed Rule Makings................. 12
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........12
A. Text of Existing Law Amended or Repealed by the
Bill, as Reported.................................. 12
B. Changes in Existing Law Proposed by the Bill, as
Reported........................................... 13
VII. DISSENTING VIEWS................................................44
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Taxpayers by Recovering
Improper Obamacare Subsidy Overpayments Act''.
SEC. 2. RECOVERY OF IMPROPER OVERPAYMENTS RESULTING FROM CERTAIN
FEDERALLY SUBSIDIZED HEALTH INSURANCE.
(a) In General.--Section 36B(f)(2) of the Internal Revenue Code of
1986 is amended by striking subparagraph (B).
(b) Conforming Amendments.--
(1) Clause (ii) of section 35(g)(12)(B) of such Code is
amended by striking ``, except that'' and all that follows and
inserting a period.
(2) So much of paragraph (2) of section 36B(f) of such Code
as precedes ``advance payments'' is amended to read as follows:
``(2) Excess advance payments.--If the''.
(c) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after December 31, 2016.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 4723, as reported by the Committee on Ways
and Means, amends the provisions of the Internal Revenue Code
of 1986 relating to premium assistance credits for the purchase
of health insurance by removing the limits on the amount of
excess advance premium assistance payments that must be repaid.
Thus, under the bill, the full amount of excess advance premium
assistance payments would be required to be repaid.
B. Background and Need for Legislation
Given the Federal government's current fiscal situation and
growing financial commitment to health care services, it is
imperative that Congress scrutinize the Federal budget to
identify potential improper payments resulting from waste,
fraud, and abuse. Once identified, it is incumbent on Congress
to amend statutes and address programs that fail to fully
protect taxpayer dollars. The Patient Protection and Affordable
Care Act's (PPACA) design of advanceable and refundable tax
credits for the purchase of certain government-approved health
insurance creates the potential for such waste, fraud, and
abuse. The combination of income determination rules, limits on
the amount of subsidy overpayments that can be recouped, and
the large amount of Federal funds being expended (more than
$800 billion will be spent over the next ten years on both
Obamacare's advanceable refundable tax credits and cost-sharing
reductions) make the program particularly susceptible to
improper payments. Accordingly, the bill seeks to reduce waste,
fraud, and abuse by repealing the limit on the amount of
improper overpayments the government can recoup.
C. Legislative History
Background
H.R. 4723 was introduced by Representative Lynn Jenkins (R-
KS) on March 10, 2016, and was referred to the Committee on
Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 4723, the
Protecting Taxpayers by Recovering Improper Obamacare Subsidy
Overpayments Act, on March 16, 2016, and ordered the bill, as
amended, favorably reported by a vote of 22 yeas to 15 nays
(with a quorum being present).
Committee hearings
The full Committee on Ways and Means held hearings
regarding the President's Fiscal Year 2017 budget submission on
February 10, 2016, and February 11, 2016, with Secretary of
Health and Human Services Sylvia Burwell and Secretary of the
Treasury Jacob Lew, respectively, in which implementation of
PPACA was a focal point. The President's health care law also
was discussed at hearings on the law's implementation with
Secretary Burwell with the full Committee on June 10, 2015, and
on the law's mandates with the Health Subcommittee on April 14,
2015.
II. EXPLANATION OF THE BILL
A. Recovery of Improper Overpayments Resulting From Certain Federally
Subsidized Health Insurance (sec. 2 of the bill and sec. 36B of the
Code)
PRESENT LAW
Premium assistance credit--in general
A refundable tax credit (the ``premium assistance credit'')
is available for certain taxpayers who purchase health
insurance (referred to as a ``qualified health plan'') for
themselves and their families through an American Health
Benefit Exchange (``Exchange'').\1\ The premium assistance
credit, which is payable in advance directly to the insurer,
subsidizes the purchase of a qualified health plan through an
Exchange.\2\
---------------------------------------------------------------------------
\1\Sec. 36B. Unless otherwise specified, all section references are
made to the Internal Revenue Code of 1986, as amended.
\2\Sections 1411 and 1412 of the Patient Protection and Affordable
Care Act (``PPACA''), Pub. L. No. 111-148, provide rules relating to
advance payment of the premium assistance credit.
---------------------------------------------------------------------------
The premium assistance credit is available for taxpayers
with household incomes between 100 and 400 percent of the
Federal poverty level (``FPL'') for the family size involved
who do not receive health insurance through an employer or a
spouse's employer, as discussed below, and are not eligible for
certain other types of coverage, such as Medicare or Medicaid.
Household income is defined as the sum of (1) the taxpayer's
modified adjusted gross income, plus (2) the aggregate modified
adjusted gross incomes of all other individuals taken into
account in determining that taxpayer's family size who are
required to file a tax return for the taxable year. Modified
adjusted gross income is defined as adjusted gross income
increased by: (1) any amount excluded from gross income for
citizens or residents living abroad,\3\ (2) any tax-exempt
interest received or accrued during the tax year, and (3) an
amount equal to the portion of the taxpayer's Social Security
benefits that is not included in gross income (that is, the
amount of the taxpayer's Social Security benefits that are
excluded from gross income).\4\ To be eligible for the premium
assistance credit, taxpayers who are married must file a joint
return. Individuals who are listed as dependents on a return
are ineligible for the premium assistance credit.
---------------------------------------------------------------------------
\3\Sec. 911.
\4\The amount of Social Security benefits included in gross income
is determined under section 86.
---------------------------------------------------------------------------
Generally, a taxpayer who is an employee and is offered
minimum essential coverage\5\ under an employer-sponsored
health plan is ineligible for the premium assistance credit.
---------------------------------------------------------------------------
\5\Minimum essential coverage is defined in section 5000A(f).
---------------------------------------------------------------------------
However, if an employee's share of the premium for self-
only coverage exceeds 9.66 percent (for 2016) of the employee's
household income, or the plan's share of total allowed costs of
benefits provided under the plan is less than 60 percent of
such costs, and the employee declines the employer-offered
coverage, the employee may be eligible for the premium
assistance credit.
Amount of credit
The premium assistance credit amount is generally the lower
of (1) the premium for the qualified health plan in which the
individual or family enrolls and (2) the premium for the second
lowest cost silver plan\6\ in the rating area where the
individual resides, reduced by the individual's or family's
share of premiums.\7\ As shown in Table 1 below, an
individual's or family's share of premiums is a certain
percentage of household income for household income up to 133
percent of FPL and is determined on a sliding scale in a linear
manner as household income rises from 133 percent of FPL to 400
percent of FPL.
---------------------------------------------------------------------------
\6\A qualified health plan is categorized by level (bronze, silver,
gold or platinum), depending on its actuarial value, that is, the
percentage of the plan's share of the total costs of benefits under the
plan. A silver level plan must have an actuarial value of 70 percent.
\7\The premium assistance amount is determined on a monthly basis
and the credit for a year is the sum of the monthly amounts.
\8\Rev. Proc. 2014-62, 2014-2 C.B. 948. The percentages are indexed
to the excess of premium growth over income growth for the preceding
calendar year. After 2018, if the aggregate amount of premium
assistance credits (and cost-sharing reductions under section 1402 of
PPACA) exceeds 0.504 percent of the gross domestic product for that
year, the percentage of income is also adjusted to reflect the excess
(if any) of premium growth over the rate of growth in the consumer
price index for the preceding calendar year.
TABLE 1--TAXPAYER'S SHARE OF PREMIUMS (for 2016)\8\
------------------------------------------------------------------------
Household income
(expressed as a percent Initial percentage of Final percentage of
of FPL) household income household income
------------------------------------------------------------------------
100% up to 133% 2.03 2.03
133% up to 150% 3.05 4.07
150% up to 200% 4.07 6.41
200% up to 250% 6.41 8.18
250% up to 300% 8.18 9.66
300% up to 400% 9.66 9.66
------------------------------------------------------------------------
Reconciliation
A taxpayer on whose behalf advance payments of the premium
assistance credit for a taxable year are made is required to
file an income tax return to reconcile the advance payments
with the credit to which the taxpayer is entitled for the
taxable year.\9\
---------------------------------------------------------------------------
\9\A taxpayer is not required to apply for advance payments and may
instead just claim the credit on his or her income tax return.
---------------------------------------------------------------------------
If the advance payments of the premium assistance credit
exceed the amount of credit to which the taxpayer is entitled,
the excess (``excess advance payments'') is treated as an
additional tax liability on the taxpayer's income tax return
for the taxable year, subject to a limitation on the amount of
liability in some cases.\10\ For persons with household income
below 400 percent of FPL, the liability for the overpayment for
a taxable year is limited to a specific dollar amount (the
``applicable dollar amount'') as shown in Table 2 below (one-
half of the applicable dollar amount shown in Table 2 for
unmarried individuals who are not surviving spouses or filing
as head of households).
---------------------------------------------------------------------------
\10\Section 35 also provides an advanceable, refundable credit for
the purchase of health insurance, the health coverage tax credit
(``HCTC''), for certain individuals. Section 35(g)(12) provides rules
for coordination between HCTC and premium assistance credit eligibility
and advance payments.
\11\Rev. Proc. 2015-53, 2015-44 I.R.B. 615. The applicable dollar
amounts are indexed to reflect cost-of-living increases, with the
amount of any increase rounded down to the next lowest multiple of $50.
TABLE 2.--RECONCILIATION LIMIT ON ADDITIONAL TAX LIABILITY (for
2016)\11\
------------------------------------------------------------------------
Household income (expressed as a
percent of FPL) Applicable dollar amount
------------------------------------------------------------------------
Less than 200% $600
At least 200% but less than 300% $1,500
At least 300% but less than 400% $2,550
------------------------------------------------------------------------
If the advance payments of the premium assistance credit
for a taxable year are less than the amount of the credit to
which the taxpayer is entitled, the additional credit amount is
also reflected on the taxpayer's income tax return for the
year.
REASONS FOR CHANGE
The Committee believes that overpayments resulting from
certain Federally-subsidized health insurance programs should
be fully recouped and that failure to do so will result in the
mismanagement of taxpayer funds. The Committee believes that it
is appropriate to align repayment requirements for this program
with those of similar tax credits, like the earned income tax
credit. Given that, in the case of an exchange subsidy
underpayment, the Federal government is required to pay the
filer the additional appropriate amount of funds, the Committee
believes it is appropriate for the government to be able to
recoup overpayments. Thus, the Committee believes that
recipients should be required to repay the full amount of any
overpayment of the advance premium assistance credit.
EXPLANATION OF PROVISION
The provision repeals the present-law rule under which, in
the case of a taxpayer with household income below 400 percent
of FPL, the additional tax liability resulting from excess
advance payments is limited to the applicable dollar
amount.\12\ Thus, under the provision, the full amount of the
excess advance payments would be required to be repaid.
---------------------------------------------------------------------------
\12\The provision includes a conforming change to section
35(g)(12).
---------------------------------------------------------------------------
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2016.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 4723, the ``Protecting Taxpayers by
Recovering Improper Obamacare Subsidy Overpayments Act,'' on
March 16, 2016.
MOTION TO REPORT THE BILL
The bill, H.R. 4723, as amended, was ordered favorably
reported to the House of Representatives by a roll call vote of
22 yeas to 15 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Nunes...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Reichert................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Price...................... ........ ........ ......... Mr. Thompson..... ........ X .........
Mr. Buchanan................... ........ ........ ......... Mr. Larson....... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Blumenauer... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Crowley...... ........ X .........
Ms. Black...................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Reed....................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Young...................... X ........ .........
Mr. Kelly...................... X ........ .........
Mr. Renacci.................... X ........ .........
Mr. Meehan..................... X ........ .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Dold....................... X ........ .........
Mr. Rice....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 4723, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal fiscal year budget receipts for the period
2016-2026:
FISCAL YEARS
[Billions of Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Item 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-21 2016-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
On-budget revenues............................ -- 0.3 1.6 1.7 1.7 1.7 1.8 1.8 1.9 2.0 2.0 7.1 16.6
Off-budget revenues........................... -- \1\ -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.3 -0.7
Outlays\2\.................................... -- 2.7 4.2 4.3 4.3 4.5 4.7 4.9 5.2 5.4 5.6 19.9 45.8
Total......................................... -- 3.0 5.7 5.9 6.0 6.1 6.4 6.7 7.0 7.3 7.5 26.7 61.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details may not add to totals due to rounding.
\1\Loss of less than $50 million.
\2\Reduction in outlays.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: The gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that there are no new or increased tax
expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 22, 2016.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4723, the
Protecting Taxpayers by Recovering Improper Obamacare Subsidy
Overpayments Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Nathaniel
Frentz, who can be reached at 226-2860.
Sincerely,
Keith Hall.
Enclosure.
H.R. 4723--Protecting Taxpayers by Recovering Improper Obamacare
Subsidy Overpayments Act
H.R. 4723 would amend the Internal Revenue Code to provide
for the recovery of overpayments resulting from certain
federally subsidized health insurance. Under current law,
qualified taxpayers are eligible to receive refundable tax
credits to assist in the purchase of health insurance through
the health insurance marketplaces established by the Affordable
Care Act. The amount of those premium assistance credits are
based on family size and income, and the advance payments of
the credits is based on income estimated for the current year.
If taxpayers' circumstances change and their advance payments
exceed the premium assistance credits to which they are
entitled, they may be required to repay some or all of the
credits, subject to certain limits based on income. Enacting
H.R. 4723 would eliminate existing limits on the amounts
required to be repaid by taxpayers. Taxpayers would therefore
be liable for the full amount of overpayments, beginning in tax
year 2017.
The staff of the Joint Committee on Taxation (JCT)
estimates that relative to CBO's January 2016 baseline, the
legislation would decrease outlays by $45.8 billion and
increase revenues by $15.8 billion over the 2016-2026 period.
JCT therefore estimates that the legislation would reduce
federal budget deficits by $61.6 billion over the 2016-2026
period. The change in revenues includes a reduction of about
$718 million over the 2016-2026 period that would result from
changes in off-budget revenues (from Social Security payroll
taxes).
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending and revenues. The estimated net decrease in the
deficit is shown in the following table. Only on-budget changes
to outlays or revenues are subject to pay-as-you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4723, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MARCH 16, 2016
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2016-2021 2016-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact.............................. 0 -3,015 -5,763 -5,992 -6,024 -6,204 -6,496 -6,778 -7,076 -7,344 -7,622 -27,000 -62,315
Memorandum:a
Change in Outlays....................................... 0 -2,724 -4,156 -4,272 -4,306 -4,478 -4,719 -4,943 -5,176 -5,386 -5,603 -19,936 -45,763
Change in On-Budget Revenues............................ 0 291 1,607 1,720 1,718 1,726 1,777 1,835 1,900 1,958 2,019 7,064 16,552
Change in Off-Budget Revenues........................... 0 0 -64 -69 -72 -76 -80 -84 -87 -91 -94 -282 -718
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
aA negative sign for outlays indicates a reduction in outlays. A positive sign for revenues indicates an increase in revenues.
JCT estimates that enacting the bill would not increase net
direct spending or on-budget deficits in any of the four 10-
year periods beginning in 2027.
JCT has determined that the bill contains no
intergovernmental mandates but would impose a private-sector
mandate as defined in the Unfunded Mandates Reform Act (UMRA).
Based on information provided by JCT, the cost of the
provision's private-sector mandate would exceed the annual
threshold established in UMRA for private-sector mandates ($157
million in 2017, adjusted annually for inflation) beginning in
2017.
The CBO staff contact for this estimate is Nathaniel
Frentz. The estimate was approved by Mark Booth, Unit Chief,
Revenue Estimating.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 4723 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill contains one
private sector mandate: changes to the limitations on recapture
of overpayments resulting from advance premium assistance
payments for Federally-subsidized health insurance. The
Committee has determined that the bill does not impose a
Federal intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code of 1986 and has widespread applicability
to individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
INTERNAL REVENUE CODE OF 1986
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--Determination of Tax Liability
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart C--Refundable Credits
* * * * * * *
SEC. 35. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.
(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by subtitle A an
amount equal to 72.5 percent of the amount paid by the taxpayer
for coverage of the taxpayer and qualifying family members
under qualified health insurance for eligible coverage months
beginning in the taxable year.
(b) Eligible Coverage Month.--For purposes of this section--
(1) In general.--The term ``eligible coverage month''
means any month if--
(A) as of the first day of such month, the
taxpayer--
(i) is an eligible individual,
(ii) is covered by qualified health
insurance, the premium for which is
paid by the taxpayer,
(iii) does not have other specified
coverage, and
(iv) is not imprisoned under Federal,
State, or local authority, and
(B) such month begins more than 90 days after
the date of the enactment of the Trade Act of
2002, and before January 1, 2020.
(2) Joint returns.--In the case of a joint return,
the requirements of paragraph (1)(A) shall be treated
as met with respect to any month if at least 1 spouse
satisfies such requirements.
(c) Eligible Individual.--For purposes of this section--
(1) In general.--The term ``eligible individual''
means--
(A) an eligible TAA recipient,
(B) an eligible alternative TAA recipient,
and
(C) an eligible PBGC pension recipient.
(2) Eligible TAA recipient.--
(A) In general.--Except as provided in
subparagraph (B), the term ``eligible TAA
recipient'' means, with respect to any month,
any individual who is receiving for any day of
such month a trade readjustment allowance under
chapter 2 of title II of the Trade Act of 1974
or who would be eligible to receive such
allowance if section 231 of such Act were
applied without regard to subsection (a)(3)(B)
of such section. An individual shall continue
to be treated as an eligible TAA recipient
during the first month that such individual
would otherwise cease to be an eligible TAA
recipient by reason of the preceding sentence.
(B) Special rule.--In the case of any
eligible coverage month beginning after the
date of the enactment of this paragraph, the
term ``eligible TAA recipient'' means, with
respect to any month, any individual who--
(i) is receiving for any day of such
month a trade readjustment allowance
under chapter 2 of title II of the
Trade Act of 1974,
(ii) would be eligible to receive
such allowance except that such
individual is in a break in training
provided under a training program
approved under section 236 of such Act
that exceeds the period specified in
section 233(e) of such Act, but is
within the period for receiving such
allowances provided under section
233(a) of such Act, or
(iii) is receiving unemployment
compensation (as defined in section
85(b)) for any day of such month and
who would be eligible to receive such
allowance for such month if section 231
of such Act were applied without regard
to subsections (a)(3)(B) and (a)(5)
thereof.
An individual shall continue to be treated as
an eligible TAA recipient during the first
month that such individual would otherwise
cease to be an eligible TAA recipient by reason
of the preceding sentence.
(3) Eligible alternative TAA recipient.--The term
``eligible alternative TAA recipient'' means, with
respect to any month, any individual who--
(A) is a worker described in section
246(a)(3)(B) of the Trade Act of 1974 who is
participating in the program established under
section 246(a)(1) of such Act, and
(B) is receiving a benefit for such month
under section 246(a)(2) of such Act.
An individual shall continue to be treated as an
eligible alternative TAA recipient during the first
month that such individual would otherwise cease to be
an eligible alternative TAA recipient by reason of the
preceding sentence.
(4) Eligible PBGC pension recipient.--The term
``eligible PBGC pension recipient'' means, with respect
to any month, any individual who--
(A) has attained age 55 as of the first day
of such month, and
(B) is receiving a benefit for such month any
portion of which is paid by the Pension Benefit
Guaranty Corporation under title IV of the
Employee Retirement Income Security Act of
1974.
(d) Qualifying Family Member.--For purposes of this section--
(1) In general.--The term ``qualifying family
member'' means--
(A) the taxpayer's spouse, and
(B) any dependent of the taxpayer with
respect to whom the taxpayer is entitled to a
deduction under section 151(c).
Such term does not include any individual who has other
specified coverage.
(2) Special dependency test in case of divorced
parents, etc..--If section 152(e) applies to any child
with respect to any calendar year, in the case of any
taxable year beginning in such calendar year, such
child shall be treated as described in paragraph (1)(B)
with respect to the custodial parent (as defined in
section 152(e)(4)(A)) and not with respect to the
noncustodial parent.
(e) Qualified Health Insurance.--For purposes of this
section--
(1) In general.--The term ``qualified health
insurance'' means any of the following:
(A) Coverage under a COBRA continuation
provision (as defined in section 9832(d)(1)).
(B) State-based continuation coverage
provided by the State under a State law that
requires such coverage.
(C) Coverage offered through a qualified
State high risk pool (as defined in section
2744(c)(2) of the Public Health Service Act).
(D) Coverage under a health insurance program
offered for State employees.
(E) Coverage under a State-based health
insurance program that is comparable to the
health insurance program offered for State
employees.
(F) Coverage through an arrangement entered
into by a State and--
(i) a group health plan (including
such a plan which is a multiemployer
plan as defined in section 3(37) of the
Employee Retirement Income Security Act
of 1974),
(ii) an issuer of health insurance
coverage,
(iii) an administrator, or
(iv) an employer.
(G) Coverage offered through a State
arrangement with a private sector health care
coverage purchasing pool.
(H) Coverage under a State-operated health
plan that does not receive any Federal
financial participation.
(I) Coverage under a group health plan that
is available through the employment of the
eligible individual's spouse.
(J) In the case of any eligible individual
and such individual's qualifying family
members, coverage under individual health
insurance (other than coverage enrolled in
through an Exchange established under the
Patient Protection and Affordable Care Act).
For purposes of this subparagraph, the term
``individual health insurance'' means any
insurance which constitutes medical care
offered to individuals other than in connection
with a group health plan and does not include
Federal- or State-based health insurance
coverage.
(K) Coverage under an employee benefit plan
funded by a voluntary employees' beneficiary
association (as defined in section 501(c)(9))
established pursuant to an order of a
bankruptcy court, or by agreement with an
authorized representative, as provided in
section 1114 of title 11, United States Code.
(2) Requirements for State-based coverage.--
(A) In general.--The term ``qualified health
insurance'' does not include any coverage
described in subparagraphs (B) through (H) of
paragraph (1) unless the State involved has
elected to have such coverage treated as
qualified health insurance under this section
and such coverage meets the following
requirements:
(i) Guaranteed issue.--Each
qualifying individual is guaranteed
enrollment if the individual pays the
premium for enrollment or provides a
qualified health insurance costs credit
eligibility certificate described in
section 7527 and pays the remainder of
such premium.
(ii) No imposition of preexisting
condition exclusion.--No pre-existing
condition limitations are imposed with
respect to any qualifying individual.
(iii) Nondiscriminatory premium.--The
total premium (as determined without
regard to any subsidies) with respect
to a qualifying individual may not be
greater than the total premium (as so
determined) for a similarly situated
individual who is not a qualifying
individual.
(iv) Same benefits.--Benefits under
the coverage are the same as (or
substantially similar to) the benefits
provided to similarly situated
individuals who are not qualifying
individuals.
(B) Qualifying individual.--For purposes of
this paragraph, the term ``qualifying
individual'' means--
(i) an eligible individual for whom,
as of the date on which the individual
seeks to enroll in the coverage
described in subparagraphs (B) through
(H) of paragraph (1), the aggregate of
the periods of creditable coverage (as
defined in section 9801(c)) is 3 months
or longer and who, with respect to any
month, meets the requirements of
clauses (iii) and (iv) of subsection
(b)(1)(A); and
(ii) the qualifying family members of
such eligible individual.
(3) Exception.--The term ``qualified health
insurance'' shall not include--
(A) a flexible spending or similar
arrangement, and
(B) any insurance if substantially all of its
coverage is of excepted benefits described in
section 9832(c).
(f) Other Specified Coverage.--For purposes of this section,
an individual has other specified coverage for any month if, as
of the first day of such month--
(1) Subsidized coverage.--
(A) In general.--Such individual is covered
under any insurance which constitutes medical
care (except insurance substantially all of the
coverage of which is of excepted benefits
described in section 9832(c)) under any health
plan maintained by any employer (or former
employer) of the taxpayer or the taxpayer's
spouse and at least 50 percent of the cost of
such coverage (determined under section 4980B)
is paid or incurred by the employer.
(B) Eligible alternative TAA recipients.--In
the case of an eligible alternative TAA
recipient, such individual is either--
(i) eligible for coverage under any
qualified health insurance (other than
insurance described in subparagraph
(A), (B), or (F) of subsection (e)(1))
under which at least 50 percent of the
cost of coverage (determined under
section 4980B(f)(4)) is paid or
incurred by an employer (or former
employer) of the taxpayer or the
taxpayer's spouse, or
(ii) covered under any such qualified
health insurance under which any
portion of the cost of coverage (as so
determined) is paid or incurred by an
employer (or former employer) of the
taxpayer or the taxpayer's spouse.
(C) Treatment of cafeteria plans.--For
purposes of subparagraphs (A) and (B), the cost
of coverage shall be treated as paid or
incurred by an employer to the extent the
coverage is in lieu of a right to receive cash
or other qualified benefits under a cafeteria
plan (as defined in section 125(d)).
(2) Coverage under medicare, medicaid, or SCHIP.--
Such individual--
(A) is entitled to benefits under part A of
title XVIII of the Social Security Act or is
enrolled under part B of such title, or
(B) is enrolled in the program under title
XIX or XXI of such Act (other than under
section 1928 of such Act).
(3) Certain other coverage.--Such individual--
(A) is enrolled in a health benefits plan
under chapter 89 of title 5, United States
Code, or
(B) is entitled to receive benefits under
chapter 55 of title 10, United States Code.
(g) Special Rules.--
(1) Coordination with advance payments of credit.--
With respect to any taxable year, the amount which
would (but for this subsection) be allowed as a credit
to the taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount paid on
behalf of such taxpayer under section 7527 for months
beginning in such taxable year.
(2) Coordination with other deductions.--Amounts
taken into account under subsection (a) shall not be
taken into account in determining any deduction allowed
under section 162(l) or 213.
(3) Medical and health savings accounts.--Amounts
distributed from an Archer MSA (as defined in section
220(d)) or from a health savings account (as defined in
section 223(d)) shall not be taken into account under
subsection (a).
(4) Denial of credit to dependents.--No credit shall
be allowed under this section to any individual with
respect to whom a deduction under section 151 is
allowable to another taxpayer for a taxable year
beginning in the calendar year in which such
individual's taxable year begins.
(5) Both spouses eligible individuals.--The spouse of
the taxpayer shall not be treated as a qualifying
family member for purposes of subsection (a), if--
(A) the taxpayer is married at the close of
the taxable year,
(B) the taxpayer and the taxpayer's spouse
are both eligible individuals during the
taxable year, and
(C) the taxpayer files a separate return for
the taxable year.
(6) Marital status; certain married individuals
living apart.--Rules similar to the rules of paragraphs
(3) and (4) of section 21(e) shall apply for purposes
of this section.
(7) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for qualified health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and qualifying family members.
(8) Treatment of payments.--For purposes of this
section--
(A) Payments by Secretary.--Payments made by
the Secretary on behalf of any individual under
section 7527 (relating to advance payment of
credit for health insurance costs of eligible
individuals) shall be treated as having been
made by the taxpayer on the first day of the
month for which such payment was made.
(B) Payments by taxpayer.--Payments made by
the taxpayer for eligible coverage months shall
be treated as having been made by the taxpayer
on the first day of the month for which such
payment was made.
(9) COBRA premium assistance.--In the case of an
assistance eligible individual who receives premium
reduction for COBRA continuation coverage under section
3001(a) of title III of division B of the American
Recovery and Reinvestment Act of 2009 for any month
during the taxable year, such individual shall not be
treated as an eligible individual, a certified
individual, or a qualifying family member for purposes
of this section or section 7527 with respect to such
month.
(10) Continued qualification of family members after
certain events.--
(A) Medicare eligibility.--In the case of any
month which would be an eligible coverage month
with respect to an eligible individual but for
subsection (f)(2)(A), such month shall be
treated as an eligible coverage month with
respect to such eligible individual solely for
purposes of determining the amount of the
credit under this section with respect to any
qualifying family members of such individual
(and any advance payment of such credit under
section 7527). This subparagraph shall only
apply with respect to the first 24 months after
such eligible individual is first entitled to
the benefits described in subsection (f)(2)(A).
(B) Divorce.--In the case of the finalization
of a divorce between an eligible individual and
such individual's spouse, such spouse shall be
treated as an eligible individual for purposes
of this section and section 7527 for a period
of 24 months beginning with the date of such
finalization, except that the only qualifying
family members who may be taken into account
with respect to such spouse are those
individuals who were qualifying family members
immediately before such finalization.
(C) Death.--In the case of the death of an
eligible individual--
(i) any spouse of such individual
(determined at the time of such death)
shall be treated as an eligible
individual for purposes of this section
and section 7527 for a period of 24
months beginning with the date of such
death, except that the only qualifying
family members who may be taken into
account with respect to such spouse are
those individuals who were qualifying
family members immediately before such
death, and
(ii) any individual who was a
qualifying family member of the
decedent immediately before such death
(or, in the case of an individual to
whom paragraph (4) applies, the
taxpayer to whom the deduction under
section 151 is allowable) shall be
treated as an eligible individual for
purposes of this section and section
7527 for a period of 24 months
beginning with the date of such death,
except that in determining the amount
of such credit only such qualifying
family member may be taken into
account.
(11) Election.--
(A) In general.--This section shall not apply
to any taxpayer for any eligible coverage month
unless such taxpayer elects the application of
this section for such month.
(B) Timing and applicability of election.--
Except as the Secretary may provide--
(i) an election to have this section
apply for any eligible coverage month
in a taxable year shall be made not
later than the due date (including
extensions) for the return of tax for
the taxable year; and
(ii) any election for this section to
apply for an eligible coverage month
shall apply for all subsequent eligible
coverage months in the taxable year
and, once made, shall be irrevocable
with respect to such months.
(12) Coordination with premium tax credit.--
(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as a coverage
month (as defined in section 36B(c)(2)) for
purposes of section 36B with respect to the
taxpayer.
(B) Coordination with advance payments of
premium tax credit.--In the case of a taxpayer
who makes the election under paragraph (11)
with respect to any eligible coverage month in
a taxable year or on behalf of whom any advance
payment is made under section 7527 with respect
to any month in such taxable year--
(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
(I) the sum of any advance
payments made on behalf of the
taxpayer under section 1412 of
the Patient Protection and
Affordable Care Act and section
7527 for months during such
taxable year, over
(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36B
(determined without regard to
subsection (f)(1) thereof) for
such taxable year; and
(ii) section 36B(f)(2) shall not
apply with respect to such taxpayer for
such taxable year, except that if such
taxpayer received any advance payments
under section 7527 for any month in
such taxable year and is later allowed
a credit under section 36B for such
taxable year, then section 36B(f)(2)(B)
shall be applied by substituting the
amount determined under clause (i) for
the amount determined under section
36B(f)(2)(A).
(13) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050T,
and section 7527.
* * * * * * *
SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH PLAN.
(a) In General.--In the case of an applicable taxpayer, there
shall be allowed as a credit against the tax imposed by this
subtitle for any taxable year an amount equal to the premium
assistance credit amount of the taxpayer for the taxable year.
(b) Premium Assistance Credit Amount.--For purposes of this
section--
(1) In general.--The term ``premium assistance credit
amount'' means, with respect to any taxable year, the
sum of the premium assistance amounts determined under
paragraph (2) with respect to all coverage months of
the taxpayer occurring during the taxable year.
(2) Premium assistance amount.--The premium
assistance amount determined under this subsection with
respect to any coverage month is the amount equal to
the lesser of--
(A) the monthly premiums for such month for 1
or more qualified health plans offered in the
individual market within a State which cover
the taxpayer, the taxpayer's spouse, or any
dependent (as defined in section 152) of the
taxpayer and which were enrolled in through an
Exchange established by the State under 1311 of
the Patient Protection and Affordable Care Act,
or
(B) the excess (if any) of--
(i) the adjusted monthly premium for
such month for the applicable second
lowest cost silver plan with respect to
the taxpayer, over
(ii) an amount equal to 1/12 of the
product of the applicable percentage
and the taxpayer's household income for
the taxable year.
(3) Other terms and rules relating to premium
assistance amounts.--For purposes of paragraph (2)--
(A) Applicable percentage.--
(i) In general.--Except as provided
in clause (ii), the applicable
percentage for any taxable year shall
be the percentage such that the
applicable percentage for any taxpayer
whose household income is within an
income tier specified in the following
table shall increase, on a sliding
scale in a linear manner, from the
initial premium percentage to the final
premium percentage specified in such
table for such income tier:
------------------------------------------------------------------------
In the case of
household income
(expressed as a percent The initial premium The final premium
of poverty line) within percentage is-- percentage is--
the following income
tier:
------------------------------------------------------------------------
Up to 133% 2.0% 2.0%
133% up to 150% 3.0% 4.0%
150% up to 200% 4.0% 6.3%
200% up to 250% 6.3% 8.05%
250% up to 300% 8.05% 9.5%
300% up to 400% 9.5% 9.5%
------------------------------------------------------------------------
(ii) Indexing.--
(I) In general.--Subject to
subclause (II), in the case of
taxable years beginning in any
calendar year after 2014, the
initial and final applicable
percentages under clause (i)
(as in effect for the preceding
calendar year after application
of this clause) shall be
adjusted to reflect the excess
of the rate of premium growth
for the preceding calendar year
over the rate of income growth
for the preceding calendar
year.
(II) Additional adjustment.--
Except as provided in subclause
(III), in the case of any
calendar year after 2018, the
percentages described in
subclause (I) shall, in
addition to the adjustment
under subclause (I), be
adjusted to reflect the excess
(if any) of the rate of premium
growth estimated under
subclause (I) for the preceding
calendar year over the rate of
growth in the consumer price
index for the preceding
calendar year.
(III) Failsafe.--Subclause
(II) shall apply for any
calendar year only if the
aggregate amount of premium tax
credits under this section and
cost-sharing reductions under
section 1402 of the Patient
Protection and Affordable Care
Act for the preceding calendar
year exceeds an amount equal to
0.504 percent of the gross
domestic product for the
preceding calendar year.
(B) Applicable second lowest cost silver
plan.--The applicable second lowest cost silver
plan with respect to any applicable taxpayer is
the second lowest cost silver plan of the
individual market in the rating area in which
the taxpayer resides which--
(i) is offered through the same
Exchange through which the qualified
health plans taken into account under
paragraph (2)(A) were offered, and
(ii) provides--
(I) self-only coverage in the
case of an applicable
taxpayer--
(aa) whose tax for
the taxable year is
determined under
section 1(c) (relating
to unmarried
individuals other than
surviving spouses and
heads of households)
and who is not allowed
a deduction under
section 151 for the
taxable year with
respect to a dependent,
or
(bb) who is not
described in item (aa)
but who purchases only
self-only coverage, and
(II) family coverage in the
case of any other applicable
taxpayer.
If a taxpayer files a joint return and no
credit is allowed under this section with
respect to 1 of the spouses by reason of
subsection (e), the taxpayer shall be treated
as described in clause (ii)(I) unless a
deduction is allowed under section 151 for the
taxable year with respect to a dependent other
than either spouse and subsection (e) does not
apply to the dependent.
(C) Adjusted monthly premium.--The adjusted
monthly premium for an applicable second lowest
cost silver plan is the monthly premium which
would have been charged (for the rating area
with respect to which the premiums under
paragraph (2)(A) were determined) for the plan
if each individual covered under a qualified
health plan taken into account under paragraph
(2)(A) were covered by such silver plan and the
premium was adjusted only for the age of each
such individual in the manner allowed under
section 2701 of the Public Health Service Act.
In the case of a State participating in the
wellness discount demonstration project under
section 2705(d) of the Public Health Service
Act, the adjusted monthly premium shall be
determined without regard to any premium
discount or rebate under such project.
(D) Additional benefits.--If--
(i) a qualified health plan under
section 1302(b)(5) of the Patient
Protection and Affordable Care Act
offers benefits in addition to the
essential health benefits required to
be provided by the plan, or
(ii) a State requires a qualified
health plan under section 1311(d)(3)(B)
of such Act to cover benefits in
addition to the essential health
benefits required to be provided by the
plan,
the portion of the premium for the plan
properly allocable (under rules prescribed by
the Secretary of Health and Human Services) to
such additional benefits shall not be taken
into account in determining either the monthly
premium or the adjusted monthly premium under
paragraph (2).
(E) Special rule for pediatric dental
coverage.--For purposes of determining the
amount of any monthly premium, if an individual
enrolls in both a qualified health plan and a
plan described in section 1311(d)(2)(B)(ii) (I)
of the Patient Protection and Affordable Care
Act for any plan year, the portion of the
premium for the plan described in such section
that (under regulations prescribed by the
Secretary) is properly allocable to pediatric
dental benefits which are included in the
essential health benefits required to be
provided by a qualified health plan under
section 1302(b)(1)(J) of such Act shall be
treated as a premium payable for a qualified
health plan.
(c) Definition and Rules Relating to Applicable Taxpayers,
Coverage Months, and Qualified Health Plan.--For purposes of
this section--
(1) Applicable taxpayer.--
(A) In general.--The term ``applicable
taxpayer'' means, with respect to any taxable
year, a taxpayer whose household income for the
taxable year equals or exceeds 100 percent but
does not exceed 400 percent of an amount equal
to the poverty line for a family of the size
involved.
(B) Special rule for certain individuals
lawfully present in the United States.--If--
(i) a taxpayer has a household income
which is not greater than 100 percent
of an amount equal to the poverty line
for a family of the size involved, and
(ii) the taxpayer is an alien
lawfully present in the United States,
but is not eligible for the medicaid
program under title XIX of the Social
Security Act by reason of such alien
status,
the taxpayer shall, for purposes of the credit
under this section, be treated as an applicable
taxpayer with a household income which is equal
to 100 percent of the poverty line for a family
of the size involved.
(C) Married couples must file joint return.--
If the taxpayer is married (within the meaning
of section 7703) at the close of the taxable
year, the taxpayer shall be treated as an
applicable taxpayer only if the taxpayer and
the taxpayer's spouse file a joint return for
the taxable year.
(D) Denial of credit to dependents.--No
credit shall be allowed under this section to
any individual with respect to whom a deduction
under section 151 is allowable to another
taxpayer for a taxable year beginning in the
calendar year in which such individual's
taxable year begins.
(2) Coverage month.--For purposes of this
subsection--
(A) In general.--The term ``coverage month''
means, with respect to an applicable taxpayer,
any month if--
(i) as of the first day of such month
the taxpayer, the taxpayer's spouse, or
any dependent of the taxpayer is
covered by a qualified health plan
described in subsection (b)(2)(A) that
was enrolled in through an Exchange
established by the State under section
1311 of the Patient Protection and
Affordable Care Act, and
(ii) the premium for coverage under
such plan for such month is paid by the
taxpayer (or through advance payment of
the credit under subsection (a) under
section 1412 of the Patient Protection
and Affordable Care Act).
(B) Exception for minimum essential
coverage.--
(i) In general.--The term ``coverage
month'' shall not include any month
with respect to an individual if for
such month the individual is eligible
for minimum essential coverage other
than eligibility for coverage described
in section 5000A(f)(1)(C) (relating to
coverage in the individual market).
(ii) Minimum essential coverage.--The
term ``minimum essential coverage'' has
the meaning given such term by section
5000A(f).
(C) Special rule for employer-sponsored
minimum essential coverage.--For purposes of
subparagraph (B)--
(i) Coverage must be affordable.--
Except as provided in clause (iii), an
employee shall not be treated as
eligible for minimum essential coverage
if such coverage--
(I) consists of an eligible
employer-sponsored plan (as
defined in section
5000A(f)(2)), and
(II) the employee's required
contribution (within the
meaning of section
5000A(e)(1)(B)) with respect to
the plan exceeds 9.5 percent of
the applicable taxpayer's
household income.
This clause shall also apply to an
individual who is eligible to enroll in
the plan by reason of a relationship
the individual bears to the employee.
(ii) Coverage must provide minimum
value.--Except as provided in clause
(iii), an employee shall not be treated
as eligible for minimum essential
coverage if such coverage consists of
an eligible employer-sponsored plan (as
defined in section 5000A(f)(2)) and the
plan's share of the total allowed costs
of benefits provided under the plan is
less than 60 percent of such costs.
(iii) Employee or family must not be
covered under employer plan.--Clauses
(i) and (ii) shall not apply if the
employee (or any individual described
in the last sentence of clause (i)) is
covered under the eligible employer-
sponsored plan or the grandfathered
health plan.
(iv) Indexing.--In the case of plan
years beginning in any calendar year
after 2014, the Secretary shall adjust
the 9.5 percent under clause (i)(II) in
the same manner as the percentages are
adjusted under subsection
(b)(3)(A)(ii).
(3) Definitions and other rules.--
(A) Qualified health plan.--The term
``qualified health plan'' has the meaning given
such term by section 1301(a) of the Patient
Protection and Affordable Care Act, except that
such term shall not include a qualified health
plan which is a catastrophic plan described in
section 1302(e) of such Act.
(B) Grandfathered health plan.--The term
``grandfathered health plan'' has the meaning
given such term by section 1251 of the Patient
Protection and Affordable Care Act.
(d) Terms Relating to Income and Families.--For purposes of
this section--
(1) Family size.--The family size involved with
respect to any taxpayer shall be equal to the number of
individuals for whom the taxpayer is allowed a
deduction under section 151 (relating to allowance of
deduction for personal exemptions) for the taxable
year.
(2) Household income.--
(A) Household income.--The term ``household
income'' means, with respect to any taxpayer,
an amount equal to the sum of--
(i) the modified adjusted gross
income of the taxpayer, plus
(ii) the aggregate modified adjusted
gross incomes of all other individuals
who--
(I) were taken into account
in determining the taxpayer's
family size under paragraph
(1), and
(II) were required to file a
return of tax imposed by
section 1 for the taxable year.
(B) Modified adjusted gross income.--The term
``modified adjusted gross income'' means
adjusted gross income increased by--
(i) any amount excluded from gross
income under section 911,
(ii) any amount of interest received
or accrued by the taxpayer during the
taxable year which is exempt from tax,
and
(iii) an amount equal to the portion
of the taxpayer's social security
benefits (as defined in section 86(d))
which is not included in gross income
under section 86 for the taxable year.
(3) Poverty line.--
(A) In general.--The term ``poverty line''
has the meaning given that term in section
2110(c)(5) of the Social Security Act (42
U.S.C. 1397jj(c)(5)).
(B) Poverty line used.--In the case of any
qualified health plan offered through an
Exchange for coverage during a taxable year
beginning in a calendar year, the poverty line
used shall be the most recently published
poverty line as of the 1st day of the regular
enrollment period for coverage during such
calendar year.
(e) Rules for Individuals Not Lawfully Present.--
(1) In general.--If 1 or more individuals for whom a
taxpayer is allowed a deduction under section 151
(relating to allowance of deduction for personal
exemptions) for the taxable year (including the
taxpayer or his spouse) are individuals who are not
lawfully present--
(A) the aggregate amount of premiums
otherwise taken into account under clauses (i)
and (ii) of subsection (b)(2)(A) shall be
reduced by the portion (if any) of such
premiums which is attributable to such
individuals, and
(B) for purposes of applying this section,
the determination as to what percentage a
taxpayer's household income bears to the
poverty level for a family of the size involved
shall be made under one of the following
methods:
(i) A method under which--
(I) the taxpayer's family
size is determined by not
taking such individuals into
account, and
(II) the taxpayer's household
income is equal to the product
of the taxpayer's household
income (determined without
regard to this subsection) and
a fraction--
(aa) the numerator of
which is the poverty
line for the taxpayer's
family size determined
after application of
subclause (I), and
(bb) the denominator
of which is the poverty
line for the taxpayer's
family size determined
without regard to
subclause (I).
(ii) A comparable method reaching the
same result as the method under clause
(i).
(2) Lawfully present.--For purposes of this section,
an individual shall be treated as lawfully present only
if the individual is, and is reasonably expected to be
for the entire period of enrollment for which the
credit under this section is being claimed, a citizen
or national of the United States or an alien lawfully
present in the United States.
(3) Secretarial authority.--The Secretary of Health
and Human Services, in consultation with the Secretary,
shall prescribe rules setting forth the methods by
which calculations of family size and household income
are made for purposes of this subsection. Such rules
shall be designed to ensure that the least burden is
placed on individuals enrolling in qualified health
plans through an Exchange and taxpayers eligible for
the credit allowable under this section.
(f) Reconciliation of Credit and Advance Credit.--
(1) In general.--The amount of the credit allowed
under this section for any taxable year shall be
reduced (but not below zero) by the amount of any
advance payment of such credit under section 1412 of
the Patient Protection and Affordable Care Act.
(2) Excess advance payments.--
(A) In general.--If the advance payments to a
taxpayer under section 1412 of the Patient
Protection and Affordable Care Act for a
taxable year exceed the credit allowed by this
section (determined without regard to paragraph
(1)), the tax imposed by this chapter for the
taxable year shall be increased by the amount
of such excess.
(B) Limitation on increase.--
(i) In general.--In the case of a
taxpayer whose household income is less
than 400 percent of the poverty line
for the size of the family involved for
the taxable year, the amount of the
increase under subparagraph (A) shall
in no event exceed the applicable
dollar amount determined in accordance
with the following table (one-half of
such amount in the case of a taxpayer
whose tax is determined under section
1(c) for the taxable year):
------------------------------------------------------------------------
If the household income (expressed
as a percent of poverty line) is: The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200% $600
At least 200% but less than 300% $1,500
At least 300% but less than 400% $2,500
------------------------------------------------------------------------
(ii) Indexing of amount.--In the case
of any calendar year beginning after
2014, each of the dollar amounts in the
table contained under clause (i) shall
be increased by an amount equal to--
(I) such dollar amount,
multiplied by
(II) the cost-of-living
adjustment determined under
section 1(f)(3) for the
calendar year, determined by
substituting ``calendar year
2013'' for ``calendar year
1992'' in subparagraph (B)
thereof.
If the amount of any increase under
clause (i) is not a multiple of $50,
such increase shall be rounded to the
next lowest multiple of $50.
(3) Information requirement.--Each Exchange (or any
person carrying out 1 or more responsibilities of an
Exchange under section 1311(f)(3) or 1321(c) of the
Patient Protection and Affordable Care Act) shall
provide the following information to the Secretary and
to the taxpayer with respect to any health plan
provided through the Exchange:
(A) The level of coverage described in
section 1302(d) of the Patient Protection and
Affordable Care Act and the period such
coverage was in effect.
(B) The total premium for the coverage
without regard to the credit under this section
or cost-sharing reductions under section 1402
of such Act.
(C) The aggregate amount of any advance
payment of such credit or reductions under
section 1412 of such Act.
(D) The name, address, and TIN of the primary
insured and the name and TIN of each other
individual obtaining coverage under the policy.
(E) Any information provided to the Exchange,
including any change of circumstances,
necessary to determine eligibility for, and the
amount of, such credit.
(F) Information necessary to determine
whether a taxpayer has received excess advance
payments.
(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the provisions of
this section, including regulations which provide for--
(1) the coordination of the credit allowed under this
section with the program for advance payment of the
credit under section 1412 of the Patient Protection and
Affordable Care Act, and
(2) the application of subsection (f) where the
filing status of the taxpayer for a taxable year is
different from such status used for determining the
advance payment of the credit.
* * * * * * *
B. Changes in Existing Law Proposed by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italics, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
made by the bill, as reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--Determination of Tax Liability
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart C--Refundable Credits
* * * * * * *
SEC. 35. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.
(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by subtitle A an
amount equal to 72.5 percent of the amount paid by the taxpayer
for coverage of the taxpayer and qualifying family members
under qualified health insurance for eligible coverage months
beginning in the taxable year.
(b) Eligible Coverage Month.--For purposes of this section--
(1) In general.--The term ``eligible coverage month''
means any month if--
(A) as of the first day of such month, the
taxpayer--
(i) is an eligible individual,
(ii) is covered by qualified health
insurance, the premium for which is
paid by the taxpayer,
(iii) does not have other specified
coverage, and
(iv) is not imprisoned under Federal,
State, or local authority, and
(B) such month begins more than 90 days after
the date of the enactment of the Trade Act of
2002, and before January 1, 2020.
(2) Joint returns.--In the case of a joint return,
the requirements of paragraph (1)(A) shall be treated
as met with respect to any month if at least 1 spouse
satisfies such requirements.
(c) Eligible Individual.--For purposes of this section--
(1) In general.--The term ``eligible individual''
means--
(A) an eligible TAA recipient,
(B) an eligible alternative TAA recipient,
and
(C) an eligible PBGC pension recipient.
(2) Eligible TAA recipient.--
(A) In general.--Except as provided in
subparagraph (B), the term ``eligible TAA
recipient'' means, with respect to any month,
any individual who is receiving for any day of
such month a trade readjustment allowance under
chapter 2 of title II of the Trade Act of 1974
or who would be eligible to receive such
allowance if section 231 of such Act were
applied without regard to subsection (a)(3)(B)
of such section. An individual shall continue
to be treated as an eligible TAA recipient
during the first month that such individual
would otherwise cease to be an eligible TAA
recipient by reason of the preceding sentence.
(B) Special rule.--In the case of any
eligible coverage month beginning after the
date of the enactment of this paragraph, the
term ``eligible TAA recipient'' means, with
respect to any month, any individual who--
(i) is receiving for any day of such
month a trade readjustment allowance
under chapter 2 of title II of the
Trade Act of 1974,
(ii) would be eligible to receive
such allowance except that such
individual is in a break in training
provided under a training program
approved under section 236 of such Act
that exceeds the period specified in
section 233(e) of such Act, but is
within the period for receiving such
allowances provided under section
233(a) of such Act, or
(iii) is receiving unemployment
compensation (as defined in section
85(b)) for any day of such month and
who would be eligible to receive such
allowance for such month if section 231
of such Act were applied without regard
to subsections (a)(3)(B) and (a)(5)
thereof.
An individual shall continue to be treated as
an eligible TAA recipient during the first
month that such individual would otherwise
cease to be an eligible TAA recipient by reason
of the preceding sentence.
(3) Eligible alternative TAA recipient.--The term
``eligible alternative TAA recipient'' means, with
respect to any month, any individual who--
(A) is a worker described in section
246(a)(3)(B) of the Trade Act of 1974 who is
participating in the program established under
section 246(a)(1) of such Act, and
(B) is receiving a benefit for such month
under section 246(a)(2) of such Act.
An individual shall continue to be treated as an
eligible alternative TAA recipient during the first
month that such individual would otherwise cease to be
an eligible alternative TAA recipient by reason of the
preceding sentence.
(4) Eligible PBGC pension recipient.--The term
``eligible PBGC pension recipient'' means, with respect
to any month, any individual who--
(A) has attained age 55 as of the first day
of such month, and
(B) is receiving a benefit for such month any
portion of which is paid by the Pension Benefit
Guaranty Corporation under title IV of the
Employee Retirement Income Security Act of
1974.
(d) Qualifying Family Member.--For purposes of this section--
(1) In general.--The term ``qualifying family
member'' means--
(A) the taxpayer's spouse, and
(B) any dependent of the taxpayer with
respect to whom the taxpayer is entitled to a
deduction under section 151(c).
Such term does not include any individual who has other
specified coverage.
(2) Special dependency test in case of divorced
parents, etc..--If section 152(e) applies to any child
with respect to any calendar year, in the case of any
taxable year beginning in such calendar year, such
child shall be treated as described in paragraph (1)(B)
with respect to the custodial parent (as defined in
section 152(e)(4)(A)) and not with respect to the
noncustodial parent.
(e) Qualified Health Insurance.--For purposes of this
section--
(1) In general.--The term ``qualified health
insurance'' means any of the following:
(A) Coverage under a COBRA continuation
provision (as defined in section 9832(d)(1)).
(B) State-based continuation coverage
provided by the State under a State law that
requires such coverage.
(C) Coverage offered through a qualified
State high risk pool (as defined in section
2744(c)(2) of the Public Health Service Act).
(D) Coverage under a health insurance program
offered for State employees.
(E) Coverage under a State-based health
insurance program that is comparable to the
health insurance program offered for State
employees.
(F) Coverage through an arrangement entered
into by a State and--
(i) a group health plan (including
such a plan which is a multiemployer
plan as defined in section 3(37) of the
Employee Retirement Income Security Act
of 1974),
(ii) an issuer of health insurance
coverage,
(iii) an administrator, or
(iv) an employer.
(G) Coverage offered through a State
arrangement with a private sector health care
coverage purchasing pool.
(H) Coverage under a State-operated health
plan that does not receive any Federal
financial participation.
(I) Coverage under a group health plan that
is available through the employment of the
eligible individual's spouse.
(J) In the case of any eligible individual
and such individual's qualifying family
members, coverage under individual health
insurance (other than coverage enrolled in
through an Exchange established under the
Patient Protection and Affordable Care Act).
For purposes of this subparagraph, the term
``individual health insurance'' means any
insurance which constitutes medical care
offered to individuals other than in connection
with a group health plan and does not include
Federal- or State-based health insurance
coverage.
(K) Coverage under an employee benefit plan
funded by a voluntary employees' beneficiary
association (as defined in section 501(c)(9))
established pursuant to an order of a
bankruptcy court, or by agreement with an
authorized representative, as provided in
section 1114 of title 11, United States Code.
(2) Requirements for State-based coverage.--
(A) In general.--The term ``qualified health
insurance'' does not include any coverage
described in subparagraphs (B) through (H) of
paragraph (1) unless the State involved has
elected to have such coverage treated as
qualified health insurance under this section
and such coverage meets the following
requirements:
(i) Guaranteed issue.--Each
qualifying individual is guaranteed
enrollment if the individual pays the
premium for enrollment or provides a
qualified health insurance costs credit
eligibility certificate described in
section 7527 and pays the remainder of
such premium.
(ii) No imposition of preexisting
condition exclusion.--No pre-existing
condition limitations are imposed with
respect to any qualifying individual.
(iii) Nondiscriminatory premium.--The
total premium (as determined without
regard to any subsidies) with respect
to a qualifying individual may not be
greater than the total premium (as so
determined) for a similarly situated
individual who is not a qualifying
individual.
(iv) Same benefits.--Benefits under
the coverage are the same as (or
substantially similar to) the benefits
provided to similarly situated
individuals who are not qualifying
individuals.
(B) Qualifying individual.--For purposes of
this paragraph, the term ``qualifying
individual'' means--
(i) an eligible individual for whom,
as of the date on which the individual
seeks to enroll in the coverage
described in subparagraphs (B) through
(H) of paragraph (1), the aggregate of
the periods of creditable coverage (as
defined in section 9801(c)) is 3 months
or longer and who, with respect to any
month, meets the requirements of
clauses (iii) and (iv) of subsection
(b)(1)(A); and
(ii) the qualifying family members of
such eligible individual.
(3) Exception.--The term ``qualified health
insurance'' shall not include--
(A) a flexible spending or similar
arrangement, and
(B) any insurance if substantially all of its
coverage is of excepted benefits described in
section 9832(c).
(f) Other Specified Coverage.--For purposes of this section,
an individual has other specified coverage for any month if, as
of the first day of such month--
(1) Subsidized coverage.--
(A) In general.--Such individual is covered
under any insurance which constitutes medical
care (except insurance substantially all of the
coverage of which is of excepted benefits
described in section 9832(c)) under any health
plan maintained by any employer (or former
employer) of the taxpayer or the taxpayer's
spouse and at least 50 percent of the cost of
such coverage (determined under section 4980B)
is paid or incurred by the employer.
(B) Eligible alternative TAA recipients.--In
the case of an eligible alternative TAA
recipient, such individual is either--
(i) eligible for coverage under any
qualified health insurance (other than
insurance described in subparagraph
(A), (B), or (F) of subsection (e)(1))
under which at least 50 percent of the
cost of coverage (determined under
section 4980B(f)(4)) is paid or
incurred by an employer (or former
employer) of the taxpayer or the
taxpayer's spouse, or
(ii) covered under any such qualified
health insurance under which any
portion of the cost of coverage (as so
determined) is paid or incurred by an
employer (or former employer) of the
taxpayer or the taxpayer's spouse.
(C) Treatment of cafeteria plans.--For
purposes of subparagraphs (A) and (B), the cost
of coverage shall be treated as paid or
incurred by an employer to the extent the
coverage is in lieu of a right to receive cash
or other qualified benefits under a cafeteria
plan (as defined in section 125(d)).
(2) Coverage under medicare, medicaid, or SCHIP.--
Such individual--
(A) is entitled to benefits under part A of
title XVIII of the Social Security Act or is
enrolled under part B of such title, or
(B) is enrolled in the program under title
XIX or XXI of such Act (other than under
section 1928 of such Act).
(3) Certain other coverage.--Such individual--
(A) is enrolled in a health benefits plan
under chapter 89 of title 5, United States
Code, or
(B) is entitled to receive benefits under
chapter 55 of title 10, United States Code.
(g) Special Rules.--
(1) Coordination with advance payments of credit.--
With respect to any taxable year, the amount which
would (but for this subsection) be allowed as a credit
to the taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount paid on
behalf of such taxpayer under section 7527 for months
beginning in such taxable year.
(2) Coordination with other deductions.--Amounts
taken into account under subsection (a) shall not be
taken into account in determining any deduction allowed
under section 162(l) or 213.
(3) Medical and health savings accounts.--Amounts
distributed from an Archer MSA (as defined in section
220(d)) or from a health savings account (as defined in
section 223(d)) shall not be taken into account under
subsection (a).
(4) Denial of credit to dependents.--No credit shall
be allowed under this section to any individual with
respect to whom a deduction under section 151 is
allowable to another taxpayer for a taxable year
beginning in the calendar year in which such
individual's taxable year begins.
(5) Both spouses eligible individuals.--The spouse of
the taxpayer shall not be treated as a qualifying
family member for purposes of subsection (a), if--
(A) the taxpayer is married at the close of
the taxable year,
(B) the taxpayer and the taxpayer's spouse
are both eligible individuals during the
taxable year, and
(C) the taxpayer files a separate return for
the taxable year.
(6) Marital status; certain married individuals
living apart.--Rules similar to the rules of paragraphs
(3) and (4) of section 21(e) shall apply for purposes
of this section.
(7) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for qualified health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and qualifying family members.
(8) Treatment of payments.--For purposes of this
section--
(A) Payments by Secretary.--Payments made by
the Secretary on behalf of any individual under
section 7527 (relating to advance payment of
credit for health insurance costs of eligible
individuals) shall be treated as having been
made by the taxpayer on the first day of the
month for which such payment was made.
(B) Payments by taxpayer.--Payments made by
the taxpayer for eligible coverage months shall
be treated as having been made by the taxpayer
on the first day of the month for which such
payment was made.
(9) COBRA premium assistance.--In the case of an
assistance eligible individual who receives premium
reduction for COBRA continuation coverage under section
3001(a) of title III of division B of the American
Recovery and Reinvestment Act of 2009 for any month
during the taxable year, such individual shall not be
treated as an eligible individual, a certified
individual, or a qualifying family member for purposes
of this section or section 7527 with respect to such
month.
(10) Continued qualification of family members after
certain events.--
(A) Medicare eligibility.--In the case of any
month which would be an eligible coverage month
with respect to an eligible individual but for
subsection (f)(2)(A), such month shall be
treated as an eligible coverage month with
respect to such eligible individual solely for
purposes of determining the amount of the
credit under this section with respect to any
qualifying family members of such individual
(and any advance payment of such credit under
section 7527). This subparagraph shall only
apply with respect to the first 24 months after
such eligible individual is first entitled to
the benefits described in subsection (f)(2)(A).
(B) Divorce.--In the case of the finalization
of a divorce between an eligible individual and
such individual's spouse, such spouse shall be
treated as an eligible individual for purposes
of this section and section 7527 for a period
of 24 months beginning with the date of such
finalization, except that the only qualifying
family members who may be taken into account
with respect to such spouse are those
individuals who were qualifying family members
immediately before such finalization.
(C) Death.--In the case of the death of an
eligible individual--
(i) any spouse of such individual
(determined at the time of such death)
shall be treated as an eligible
individual for purposes of this section
and section 7527 for a period of 24
months beginning with the date of such
death, except that the only qualifying
family members who may be taken into
account with respect to such spouse are
those individuals who were qualifying
family members immediately before such
death, and
(ii) any individual who was a
qualifying family member of the
decedent immediately before such death
(or, in the case of an individual to
whom paragraph (4) applies, the
taxpayer to whom the deduction under
section 151 is allowable) shall be
treated as an eligible individual for
purposes of this section and section
7527 for a period of 24 months
beginning with the date of such death,
except that in determining the amount
of such credit only such qualifying
family member may be taken into
account.
(11) Election.--
(A) In general.--This section shall not apply
to any taxpayer for any eligible coverage month
unless such taxpayer elects the application of
this section for such month.
(B) Timing and applicability of election.--
Except as the Secretary may provide--
(i) an election to have this section
apply for any eligible coverage month
in a taxable year shall be made not
later than the due date (including
extensions) for the return of tax for
the taxable year; and
(ii) any election for this section to
apply for an eligible coverage month
shall apply for all subsequent eligible
coverage months in the taxable year
and, once made, shall be irrevocable
with respect to such months.
(12) Coordination with premium tax credit.--
(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as a coverage
month (as defined in section 36B(c)(2)) for
purposes of section 36B with respect to the
taxpayer.
(B) Coordination with advance payments of
premium tax credit.--In the case of a taxpayer
who makes the election under paragraph (11)
with respect to any eligible coverage month in
a taxable year or on behalf of whom any advance
payment is made under section 7527 with respect
to any month in such taxable year--
(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
(I) the sum of any advance
payments made on behalf of the
taxpayer under section 1412 of
the Patient Protection and
Affordable Care Act and section
7527 for months during such
taxable year, over
(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36B
(determined without regard to
subsection (f)(1) thereof) for
such taxable year; and
(ii) section 36B(f)(2) shall not
apply with respect to such taxpayer for
such taxable year[, except that if such
taxpayer received any advance payments
under section 7527 for any month in
such taxable year and is later allowed
a credit under section 36B for such
taxable year, then section 36B(f)(2)(B)
shall be applied by substituting the
amount determined under clause (i) for
the amount determined under section
36B(f)(2)(A).].
(13) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050T,
and section 7527.
* * * * * * *
SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A QUALIFIED HEALTH PLAN.
(a) In General.--In the case of an applicable taxpayer, there
shall be allowed as a credit against the tax imposed by this
subtitle for any taxable year an amount equal to the premium
assistance credit amount of the taxpayer for the taxable year.
(b) Premium Assistance Credit Amount.--For purposes of this
section--
(1) In general.--The term ``premium assistance credit
amount'' means, with respect to any taxable year, the
sum of the premium assistance amounts determined under
paragraph (2) with respect to all coverage months of
the taxpayer occurring during the taxable year.
(2) Premium assistance amount.--The premium
assistance amount determined under this subsection with
respect to any coverage month is the amount equal to
the lesser of--
(A) the monthly premiums for such month for 1
or more qualified health plans offered in the
individual market within a State which cover
the taxpayer, the taxpayer's spouse, or any
dependent (as defined in section 152) of the
taxpayer and which were enrolled in through an
Exchange established by the State under 1311 of
the Patient Protection and Affordable Care Act,
or
(B) the excess (if any) of--
(i) the adjusted monthly premium for
such month for the applicable second
lowest cost silver plan with respect to
the taxpayer, over
(ii) an amount equal to 1/12 of the
product of the applicable percentage
and the taxpayer's household income for
the taxable year.
(3) Other terms and rules relating to premium
assistance amounts.--For purposes of paragraph (2)--
(A) Applicable percentage.--
(i) In general.--Except as provided
in clause (ii), the applicable
percentage for any taxable year shall
be the percentage such that the
applicable percentage for any taxpayer
whose household income is within an
income tier specified in the following
table shall increase, on a sliding
scale in a linear manner, from the
initial premium percentage to the final
premium percentage specified in such
table for such income tier:
------------------------------------------------------------------------
In the case of
household income
(expressed as a percent The initial premium The final premium
of poverty line) within percentage is-- percentage is--
the following income
tier:
------------------------------------------------------------------------
Up to 133% 2.0% 2.0%
133% up to 150% 3.0% 4.0%
150% up to 200% 4.0% 6.3%
200% up to 250% 6.3% 8.05%
250% up to 300% 8.05% 9.5%
300% up to 400% 9.5% 9.5%
------------------------------------------------------------------------
(ii) Indexing.--
(I) In general.--Subject to
subclause (II), in the case of
taxable years beginning in any
calendar year after 2014, the
initial and final applicable
percentages under clause (i)
(as in effect for the preceding
calendar year after application
of this clause) shall be
adjusted to reflect the excess
of the rate of premium growth
for the preceding calendar year
over the rate of income growth
for the preceding calendar
year.
(II) Additional adjustment.--
Except as provided in subclause
(III), in the case of any
calendar year after 2018, the
percentages described in
subclause (I) shall, in
addition to the adjustment
under subclause (I), be
adjusted to reflect the excess
(if any) of the rate of premium
growth estimated under
subclause (I) for the preceding
calendar year over the rate of
growth in the consumer price
index for the preceding
calendar year.
(III) Failsafe.--Subclause
(II) shall apply for any
calendar year only if the
aggregate amount of premium tax
credits under this section and
cost-sharing reductions under
section 1402 of the Patient
Protection and Affordable Care
Act for the preceding calendar
year exceeds an amount equal to
0.504 percent of the gross
domestic product for the
preceding calendar year.
(B) Applicable second lowest cost silver
plan.--The applicable second lowest cost silver
plan with respect to any applicable taxpayer is
the second lowest cost silver plan of the
individual market in the rating area in which
the taxpayer resides which--
(i) is offered through the same
Exchange through which the qualified
health plans taken into account under
paragraph (2)(A) were offered, and
(ii) provides--
(I) self-only coverage in the
case of an applicable
taxpayer--
(aa) whose tax for
the taxable year is
determined under
section 1(c) (relating
to unmarried
individuals other than
surviving spouses and
heads of households)
and who is not allowed
a deduction under
section 151 for the
taxable year with
respect to a dependent,
or
(bb) who is not
described in item (aa)
but who purchases only
self-only coverage, and
(II) family coverage in the
case of any other applicable
taxpayer.
If a taxpayer files a joint return and no
credit is allowed under this section with
respect to 1 of the spouses by reason of
subsection (e), the taxpayer shall be treated
as described in clause (ii)(I) unless a
deduction is allowed under section 151 for the
taxable year with respect to a dependent other
than either spouse and subsection (e) does not
apply to the dependent.
(C) Adjusted monthly premium.--The adjusted
monthly premium for an applicable second lowest
cost silver plan is the monthly premium which
would have been charged (for the rating area
with respect to which the premiums under
paragraph (2)(A) were determined) for the plan
if each individual covered under a qualified
health plan taken into account under paragraph
(2)(A) were covered by such silver plan and the
premium was adjusted only for the age of each
such individual in the manner allowed under
section 2701 of the Public Health Service Act.
In the case of a State participating in the
wellness discount demonstration project under
section 2705(d) of the Public Health Service
Act, the adjusted monthly premium shall be
determined without regard to any premium
discount or rebate under such project.
(D) Additional benefits.--If--
(i) a qualified health plan under
section 1302(b)(5) of the Patient
Protection and Affordable Care Act
offers benefits in addition to the
essential health benefits required to
be provided by the plan, or
(ii) a State requires a qualified
health plan under section 1311(d)(3)(B)
of such Act to cover benefits in
addition to the essential health
benefits required to be provided by the
plan,
the portion of the premium for the plan
properly allocable (under rules prescribed by
the Secretary of Health and Human Services) to
such additional benefits shall not be taken
into account in determining either the monthly
premium or the adjusted monthly premium under
paragraph (2).
(E) Special rule for pediatric dental
coverage.--For purposes of determining the
amount of any monthly premium, if an individual
enrolls in both a qualified health plan and a
plan described in section 1311(d)(2)(B)(ii) (I)
of the Patient Protection and Affordable Care
Act for any plan year, the portion of the
premium for the plan described in such section
that (under regulations prescribed by the
Secretary) is properly allocable to pediatric
dental benefits which are included in the
essential health benefits required to be
provided by a qualified health plan under
section 1302(b)(1)(J) of such Act shall be
treated as a premium payable for a qualified
health plan.
(c) Definition and Rules Relating to Applicable Taxpayers,
Coverage Months, and Qualified Health Plan.--For purposes of
this section--
(1) Applicable taxpayer.--
(A) In general.--The term ``applicable
taxpayer'' means, with respect to any taxable
year, a taxpayer whose household income for the
taxable year equals or exceeds 100 percent but
does not exceed 400 percent of an amount equal
to the poverty line for a family of the size
involved.
(B) Special rule for certain individuals
lawfully present in the United States.--If--
(i) a taxpayer has a household income
which is not greater than 100 percent
of an amount equal to the poverty line
for a family of the size involved, and
(ii) the taxpayer is an alien
lawfully present in the United States,
but is not eligible for the medicaid
program under title XIX of the Social
Security Act by reason of such alien
status,
the taxpayer shall, for purposes of the credit
under this section, be treated as an applicable
taxpayer with a household income which is equal
to 100 percent of the poverty line for a family
of the size involved.
(C) Married couples must file joint return.--
If the taxpayer is married (within the meaning
of section 7703) at the close of the taxable
year, the taxpayer shall be treated as an
applicable taxpayer only if the taxpayer and
the taxpayer's spouse file a joint return for
the taxable year.
(D) Denial of credit to dependents.--No
credit shall be allowed under this section to
any individual with respect to whom a deduction
under section 151 is allowable to another
taxpayer for a taxable year beginning in the
calendar year in which such individual's
taxable year begins.
(2) Coverage month.--For purposes of this
subsection--
(A) In general.--The term ``coverage month''
means, with respect to an applicable taxpayer,
any month if--
(i) as of the first day of such month
the taxpayer, the taxpayer's spouse, or
any dependent of the taxpayer is
covered by a qualified health plan
described in subsection (b)(2)(A) that
was enrolled in through an Exchange
established by the State under section
1311 of the Patient Protection and
Affordable Care Act, and
(ii) the premium for coverage under
such plan for such month is paid by the
taxpayer (or through advance payment of
the credit under subsection (a) under
section 1412 of the Patient Protection
and Affordable Care Act).
(B) Exception for minimum essential
coverage.--
(i) In general.--The term ``coverage
month'' shall not include any month
with respect to an individual if for
such month the individual is eligible
for minimum essential coverage other
than eligibility for coverage described
in section 5000A(f)(1)(C) (relating to
coverage in the individual market).
(ii) Minimum essential coverage.--The
term ``minimum essential coverage'' has
the meaning given such term by section
5000A(f).
(C) Special rule for employer-sponsored
minimum essential coverage.--For purposes of
subparagraph (B)--
(i) Coverage must be affordable.--
Except as provided in clause (iii), an
employee shall not be treated as
eligible for minimum essential coverage
if such coverage--
(I) consists of an eligible
employer-sponsored plan (as
defined in section
5000A(f)(2)), and
(II) the employee's required
contribution (within the
meaning of section
5000A(e)(1)(B)) with respect to
the plan exceeds 9.5 percent of
the applicable taxpayer's
household income.
This clause shall also apply to an
individual who is eligible to enroll in
the plan by reason of a relationship
the individual bears to the employee.
(ii) Coverage must provide minimum
value.--Except as provided in clause
(iii), an employee shall not be treated
as eligible for minimum essential
coverage if such coverage consists of
an eligible employer-sponsored plan (as
defined in section 5000A(f)(2)) and the
plan's share of the total allowed costs
of benefits provided under the plan is
less than 60 percent of such costs.
(iii) Employee or family must not be
covered under employer plan.--Clauses
(i) and (ii) shall not apply if the
employee (or any individual described
in the last sentence of clause (i)) is
covered under the eligible employer-
sponsored plan or the grandfathered
health plan.
(iv) Indexing.--In the case of plan
years beginning in any calendar year
after 2014, the Secretary shall adjust
the 9.5 percent under clause (i)(II) in
the same manner as the percentages are
adjusted under subsection
(b)(3)(A)(ii).
(3) Definitions and other rules.--
(A) Qualified health plan.--The term
``qualified health plan'' has the meaning given
such term by section 1301(a) of the Patient
Protection and Affordable Care Act, except that
such term shall not include a qualified health
plan which is a catastrophic plan described in
section 1302(e) of such Act.
(B) Grandfathered health plan.--The term
``grandfathered health plan'' has the meaning
given such term by section 1251 of the Patient
Protection and Affordable Care Act.
(d) Terms Relating to Income and Families.--For purposes of
this section--
(1) Family size.--The family size involved with
respect to any taxpayer shall be equal to the number of
individuals for whom the taxpayer is allowed a
deduction under section 151 (relating to allowance of
deduction for personal exemptions) for the taxable
year.
(2) Household income.--
(A) Household income.--The term ``household
income'' means, with respect to any taxpayer,
an amount equal to the sum of--
(i) the modified adjusted gross
income of the taxpayer, plus
(ii) the aggregate modified adjusted
gross incomes of all other individuals
who--
(I) were taken into account
in determining the taxpayer's
family size under paragraph
(1), and
(II) were required to file a
return of tax imposed by
section 1 for the taxable year.
(B) Modified adjusted gross income.--The term
``modified adjusted gross income'' means
adjusted gross income increased by--
(i) any amount excluded from gross
income under section 911,
(ii) any amount of interest received
or accrued by the taxpayer during the
taxable year which is exempt from tax,
and
(iii) an amount equal to the portion
of the taxpayer's social security
benefits (as defined in section 86(d))
which is not included in gross income
under section 86 for the taxable year.
(3) Poverty line.--
(A) In general.--The term ``poverty line''
has the meaning given that term in section
2110(c)(5) of the Social Security Act (42
U.S.C. 1397jj(c)(5)).
(B) Poverty line used.--In the case of any
qualified health plan offered through an
Exchange for coverage during a taxable year
beginning in a calendar year, the poverty line
used shall be the most recently published
poverty line as of the 1st day of the regular
enrollment period for coverage during such
calendar year.
(e) Rules for Individuals Not Lawfully Present.--
(1) In general.--If 1 or more individuals for whom a
taxpayer is allowed a deduction under section 151
(relating to allowance of deduction for personal
exemptions) for the taxable year (including the
taxpayer or his spouse) are individuals who are not
lawfully present--
(A) the aggregate amount of premiums
otherwise taken into account under clauses (i)
and (ii) of subsection (b)(2)(A) shall be
reduced by the portion (if any) of such
premiums which is attributable to such
individuals, and
(B) for purposes of applying this section,
the determination as to what percentage a
taxpayer's household income bears to the
poverty level for a family of the size involved
shall be made under one of the following
methods:
(i) A method under which--
(I) the taxpayer's family
size is determined by not
taking such individuals into
account, and
(II) the taxpayer's household
income is equal to the product
of the taxpayer's household
income (determined without
regard to this subsection) and
a fraction--
(aa) the numerator of
which is the poverty
line for the taxpayer's
family size determined
after application of
subclause (I), and
(bb) the denominator
of which is the poverty
line for the taxpayer's
family size determined
without regard to
subclause (I).
(ii) A comparable method reaching the
same result as the method under clause
(i).
(2) Lawfully present.--For purposes of this section,
an individual shall be treated as lawfully present only
if the individual is, and is reasonably expected to be
for the entire period of enrollment for which the
credit under this section is being claimed, a citizen
or national of the United States or an alien lawfully
present in the United States.
(3) Secretarial authority.--The Secretary of Health
and Human Services, in consultation with the Secretary,
shall prescribe rules setting forth the methods by
which calculations of family size and household income
are made for purposes of this subsection. Such rules
shall be designed to ensure that the least burden is
placed on individuals enrolling in qualified health
plans through an Exchange and taxpayers eligible for
the credit allowable under this section.
(f) Reconciliation of Credit and Advance Credit.--
(1) In general.--The amount of the credit allowed
under this section for any taxable year shall be
reduced (but not below zero) by the amount of any
advance payment of such credit under section 1412 of
the Patient Protection and Affordable Care Act.
[(2) Excess advance payments.--]
[(A) In general.--If the]
(2) Excess advance payments.--If the advance payments
to a taxpayer under section 1412 of the Patient
Protection and Affordable Care Act for a taxable year
exceed the credit allowed by this section (determined
without regard to paragraph (1)), the tax imposed by
this chapter for the taxable year shall be increased by
the amount of such excess.
[(B) Limitation on increase.--
[(i) In general.--In the case of a
taxpayer whose household income is less
than 400 percent of the poverty line
for the size of the family involved for
the taxable year, the amount of the
increase under subparagraph (A) shall
in no event exceed the applicable
dollar amount determined in accordance
with the following table (one-half of
such amount in the case of a taxpayer
whose tax is determined under section
1(c) for the taxable year):
------------------------------------------------------------------------
[If the household income (expressed
as a percent of poverty line) is: The applicable dollar amount is:
------------------------------------------------------------------------
Less than 200% $600
At least 200% but less than 300% $1,500
At least 300% but less than 400% $2,500
------------------------------------------------------------------------
[(ii) Indexing of amount.--In the
case of any calendar year beginning
after 2014, each of the dollar amounts
in the table contained under clause (i)
shall be increased by an amount equal
to--
[(I) such dollar amount,
multiplied by
[(II) the cost-of-living
adjustment determined under
section 1(f)(3) for the
calendar year, determined by
substituting ``calendar year
2013'' for ``calendar year
1992'' in subparagraph (B)
thereof.
If the amount of any increase under
clause (i) is not a multiple of $50,
such increase shall be rounded to the
next lowest multiple of $50.]
(3) Information requirement.--Each Exchange (or any
person carrying out 1 or more responsibilities of an
Exchange under section 1311(f)(3) or 1321(c) of the
Patient Protection and Affordable Care Act) shall
provide the following information to the Secretary and
to the taxpayer with respect to any health plan
provided through the Exchange:
(A) The level of coverage described in
section 1302(d) of the Patient Protection and
Affordable Care Act and the period such
coverage was in effect.
(B) The total premium for the coverage
without regard to the credit under this section
or cost-sharing reductions under section 1402
of such Act.
(C) The aggregate amount of any advance
payment of such credit or reductions under
section 1412 of such Act.
(D) The name, address, and TIN of the primary
insured and the name and TIN of each other
individual obtaining coverage under the policy.
(E) Any information provided to the Exchange,
including any change of circumstances,
necessary to determine eligibility for, and the
amount of, such credit.
(F) Information necessary to determine
whether a taxpayer has received excess advance
payments.
(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the provisions of
this section, including regulations which provide for--
(1) the coordination of the credit allowed under this
section with the program for advance payment of the
credit under section 1412 of the Patient Protection and
Affordable Care Act, and
(2) the application of subsection (f) where the
filing status of the taxpayer for a taxable year is
different from such status used for determining the
advance payment of the credit.
* * * * * * *
VII. DISSENTING VIEWS
With the economy still recovering and hardworking Americans
feeling left behind, we should be focusing in our Committee on
proposals to grow the economy, create good-paying jobs, and
strengthen the programs that reduce poverty and protect
children and seniors, not tearing those very programs apart.
This bill was part of a misguided effort to win support from
extreme, right-wing Republicans for their party's budget
resolution. Committee Democrats strongly oppose both this
specific bill and the general tactic of appeasing hardliners by
offering legislation that harms seniors, children, and
Americans trying to work their way out of poverty and obtain
health coverage for their families.
We oppose H.R. 4723--the Protecting Taxpayers by Recovering
Obamacare Subsidy Overpayments Act. Rather than protecting
taxpayers, this bill really serves to scare families away from
obtaining coverage under the Affordable Care Act (ACA).
The ACA provides advanceable tax credits, payable directly
to health insurance companies, so that families receive real-
time assistance in purchasing health coverage. This is a
critical component of the health care reform law because a
credit available several months after the close of the coverage
and tax year is far too late to help most families afford
coverage. In fact, 83 percent of people (10.5 million) who
selected coverage through the ACA Marketplaces for 2016 receive
advanced premium tax credits.
The credits are advanced based on a family's estimated
income and family size, since the actual income and family size
for a tax and coverage year is not known until the end of that
year. Sensibly, the ACA requires families to report changes in
status during the tax and coverage year so that increases and
decreases in income and family size are reflected in the credit
that is advanced.
The ACA also requires reconciliation of the advanced
credits with the credit that a family is entitled to, based on
the actual income and family size for the tax and coverage
year. If too much credit has been advanced, families must pay
back some or all of the advanced credit, depending on income;
if too little credit has been advanced, families will receive
additional credit on their tax return.
Sensibly, the ACA places limits on the amount of repayment
that families face so that they are not discouraged from
applying for the advanceable credits that are crucial to
coverage affordability. Families cannot predict the future--
tellingly, for the 2014 tax and coverage year, only 8% of
taxpayers were able to accurately predict their family size and
income for the year ahead such that their advanced credits were
equal to the actual credits to which they were entitled.
H.R. 4723 would completely repeal the ACA's protections
that limit the repayment burden for advanced premium tax
credits if a person's circumstances change.
The Joint Committee on Taxation estimates that H.R. 4723
will result in 220,000 to 250,000 Americans losing health
coverage. This is because they would rather forgo coverage than
be faced with a large year-end tax bill.
H.R. 4723 is not a sensible change to the ACA. This is
moving reform backward--not forward.
Sander M. Levin,
Ranking Member.
[all]