BAI17159 S.L.C. 115TH CONGRESS 1ST SESSION S. ll To improve patient choice by allowing States to adopt market-based alternatives to the Affordable Care Act that increase access to affordable health insurance and reduce costs while ensuring important consumer protections and improving patient care. IN THE SENATE OF THE UNITED STATES llllllllll Mr. CASSIDY (for himself, Ms. COLLINS, Mrs. CAPITO, and Mr. ISAKSON) introduced the following bill; which was read twice and referred to the Committee on llllllllll A BILL To improve patient choice by allowing States to adopt market-based alternatives to the Affordable Care Act that increase access to affordable health insurance and reduce costs while ensuring important consumer protections and improving patient care. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 4 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the 5 ‘‘Patient Freedom Act of 2017’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: BAI17159 S.L.C. 2 Sec. 1. Short title; table of contents. TITLE I—HEALTH REFORM Sec. 100. Definitions. Subtitle A—Insurance Market Reform Sec. 101. Ending the ‘‘one size fits all’’ ACA approach; continuing consumer protection policies by covering adult children, protecting individuals with preexisting conditions, and not applying lifetime or annual limits. Sec. 102. State health insurance options. Sec. 103. State alternative option. Sec. 104. Computation of monthly Roth HSA deposit amount for deposit qualifying residents. Sec. 105. State options for improved access to health insurance coverage in each State. Sec. 106. State flexibility in ensuring orderly health insurance market outside of an Exchange. Sec. 107. Expanded access and patient protections. Sec. 108. Application of health savings accounts in relation to Medicaid. Subtitle B—Provider Price Transparency Sec. 121. Ensuring access to emergency services without excessive charges for out-of-network services. TITLE II—REFORM OF TAX PROVISIONS RELATING TO HEALTH CARE Subtitle A—Health Savings Accounts Sec. 201. Transition to non-deductible HSAs. Sec. 202. Treatment of direct primary care. Sec. 203. Treatment of HSA after death of account beneficiary. Subtitle B—Health Care Tax Credits Sec. 211. Limited application of PPACA health premium credit. Sec. 212. New Roth HSA credit. 1 TITLE I—HEALTH REFORM 2 SEC. 100. DEFINITIONS. 3 In this title: 4 (1) PATIENT-GRANT ELECTING STATE.—The 5 term ‘‘patient-grant electing State’’ means an elect- 6 ing State that specifies under section 103(a)(3)(B) 7 that it will carry out section 103(b) itself (and not BAI17159 S.L.C. 3 1 to have section 103(b) carried out by means of the 2 credit under section 36C of the Internal Revenue 3 Code of 1986). 4 (2) BUDGET NEUTRAL.—The term ‘‘budget 5 neutral’’ with respect to expenditures provided for in 6 this Act, means the same amount of expenditures as 7 are provided for under the Patient Protection and 8 Affordable Care Act (Public Law 111-148). 9 (3) CHIP.—The term ‘‘CHIP’’ means the Chil- 10 dren’s Health Insurance Program established under 11 title XXI of the Social Security Act (42 U.S.C. 1396 12 et seq.). 13 (4) CREDITABLE COVERAGE.—The term ‘‘cred- 14 itable coverage’’ has the meaning given such term in 15 section 2704(c)(1) of the Public Health Service Act 16 (42 U.S.C. 300gg–3(c)(1)), as in effect as of the day 17 before the date of the enactment of this Act. 18 (5) 19 ERAGE.—The 20 erage’’ has the meaning given such term in section 21 107(c)(2). 22 (6) DEFAULT HEALTH INSURANCE COV- term ‘‘default health insurance cov- DEPOSIT QUALIFYING RESIDENT.—The 23 term ‘‘deposit qualifying resident’’ has the meaning 24 given such term in section 103(b)(2). BAI17159 S.L.C. 4 1 (7) ELECTING STATE.—The term ‘‘electing 2 State’’ means a State that elects under section 3 102(a)(2) the alternative option described in section 4 103. 5 (8) HEALTH INSURANCE COVERAGE.—The term 6 ‘‘health insurance coverage’’ has the meaning given 7 such term in section 2791(b)(1) of the Public Health 8 Service Act (42 U.S.C. 300gg–91(b)(1)). 9 (9) HEALTH SAVINGS DEPOSIT.—The term 10 ‘‘health savings deposit’’ means a deposit made into 11 a Roth HSA pursuant to section 103. 12 (10) MEDICAID.—The term ‘‘Medicaid’’ means 13 the program under title XIX of the Social Security 14 Act (42 U.S.C. 1396 et seq.). 15 (11) MEDICARE.—The term ‘‘Medicare’’ means 16 the program under part A or B of title XVIII of the 17 Social Security Act (42 U.S.C. 1395 et seq.). 18 (12) PPACA.—The term ‘‘PPACA’’ means the 19 Patient Protection and Affordable Care Act (Public 20 Law 111–148), as in effect on the day before the 21 date of the enactment of this Act, unless otherwise 22 specified. 23 (13) QUALIFIED HEALTH PLAN COVERAGE.— 24 The term ‘‘qualified health plan coverage’’ means, 25 with respect to residents of a State, health insurance BAI17159 S.L.C. 5 1 coverage that meets applicable standards under 2 State law, which standards need not be the same as 3 that previously required of qualified health plans 4 under title I of PPACA, and includes a high deduct- 5 ible health plan (as defined in section 223(c)(2) of 6 the Internal Revenue Code of 1986) and includes 7 coverage under a group health plan. 8 (14) QUALIFIED RESIDENT.—The term ‘‘quali- 9 fied resident’’ means, with respect to a State for a 10 month, an individual who is a resident of the State 11 as of the first day of the month and is a citizen or 12 national of the United States or otherwise lawfully 13 residing in the State under color of law. 14 (15) ROTH HEALTH SAVINGS ACCOUNT; ROTH 15 HSA.—The 16 ‘‘Roth HSA’’ mean a Roth HSA established under 17 section 530A of the Internal Revenue Code of 1986. 18 (16) terms ‘‘Roth health savings account’’ and SECRETARY.—The term ‘‘Secretary’’ 19 means the Secretary of Health and Human Services. 20 (17) STATE.—The term ‘‘State’’ means the 50 21 22 States and the District of Columbia. (18) UNINSURED.—The term ‘‘uninsured’’ 23 means, with respect to an individual, that the indi- 24 vidual does not have creditable coverage. BAI17159 S.L.C. 6 2 Subtitle A—Insurance Market Reform 3 SEC. 101. ENDING THE ‘‘ONE SIZE FITS ALL’’ ACA AP- 4 PROACH; CONTINUING CONSUMER PROTEC- 5 TION POLICIES BY COVERING ADULT CHIL- 6 DREN, PROTECTING INDIVIDUALS WITH PRE- 7 EXISTING CONDITIONS, AND NOT APPLYING 8 LIFETIME OR ANNUAL LIMITS. 1 9 (a) IN GENERAL.—Subject to subsections (b) and (c), 10 title I of the Patient Protection and Affordable Care Act 11 (including the amendments made by such title) shall not 12 apply (and the provisions of law amended by such title 13 are restored as if such title had not been enacted) in the 14 case of any State that does not have in effect the election 15 described in section 102(a)(1). 16 (b) CONTINUATION OF 17 DEPENDENT COVERAGE 18 PROHIBITION OF POLICIES FOR LIFETIME FOR EXTENSION ADULT CHILDREN AND OF AND ANNUAL COVERAGE 19 LIMITS; PRESERVATION OF BLACK LUNG BENEFITS.— 20 (1) PUBLIC HEALTH SERVICE ACT PROVI- 21 SIONS.—Notwithstanding 22 lowing sections of the Public Health Service Act, 23 that were added or amended by subtitles A and C 24 of title I of PPACA, shall continue to apply to group subsection (a), the fol- BAI17159 S.L.C. 7 1 health plans and to health insurance coverage of- 2 fered in the individual and group market: 3 (A) NO LIFETIME OR ANNUAL LIMITS.— 4 Section 2711 (relating to no lifetime or annual 5 limits), except in the case of limited benefit in- 6 surance. 7 (B) DEPENDENT 8 AGE 26.—Section 9 dependent coverage). COVERAGE 2714 (relating to extension of 10 (C) PROHIBITING 11 TION EXCLUSIONS.—Section 12 prohibition on preexisting conditions). 13 THROUGH (D) PROHIBITING PRE-EXISTING CONDI- 2704 (relating to DISCRIMINATION BASED 14 ON HEALTH STATUS.—Section 15 prohibiting discrimination against individual 16 participants and beneficiaries based on health 17 status), subject to subsection (c). 2705 (relating to 18 (E) PRESERVATION OF PREVENTIVE SERV- 19 ICE COVERAGE.—Section 2713 (relating to cov- 20 erage of preventive health services), if employ- 21 ers do not contribute to the individual’s Roth 22 HSA. 23 (2) PRESERVATION 24 HEALTH CARE.—Subsection OF NON-DISCRIMINATION IN (a) shall not apply with BAI17159 S.L.C. 8 1 respect to section 1557 of title I of the Patient Pro- 2 tection and Affordable Care Act (42 U.S.C. 18116). 3 (3) PRESERVATION OF COVERAGE OF MENTAL 4 HEALTH SERVICES, AND APPLICABILITY OF MENTAL 5 HEALTH PARITY.—For 6 ous emotional disturbance, and substance use dis- 7 order, subsection (a) shall not apply with respect to 8 section 1302(b)(1)(E) of title I of the Patient Pro- 9 tection and Affordable Care Act (relating to cov- 10 erage of mental health and substance use treatment 11 at limited cost sharing) (42 U.S.C. 18022(b)(1)(E)). 12 Section 2726 of the Public Health Service Act shall 13 apply to qualified health plans in the same manner 14 and to the same extent as such section applies to 15 health insurance coverage and group health plans. 16 (4) PRESERVATION serious mental illness, seri- OF BLACK LUNG BENEFITS 17 FOR COAL MINERS.—Subsection 18 with respect to section 1556 of title I of the Patient 19 Protection and Affordable Care Act (amending the 20 Black Lung Benefits Act). 21 (5) PRESERVATION (a) shall not apply OF STATE INNOVATIONS.— 22 Subsection (a) shall not apply with respect to section 23 1332 of title I of the Patient Protection and Afford- 24 able Care Act (42 U.S.C. 18052). BAI17159 S.L.C. 9 1 (c) CONTINUATION OF FEDERAL EXCHANGES.—Sub- 2 section (a) shall not apply with respect to Federal Ex3 changes established pursuant to section 1321(c) of the Pa4 tient Protection and Affordable Care Act (42 U.S.C. 5 18041(c)) and such Exchanges shall continue to operate 6 as provided for by the Secretary. 7 8 SEC. 102. STATE HEALTH INSURANCE OPTIONS. (a) IN GENERAL.—Each State may elect, through 9 written notice to the Secretary after the date of the enact10 ment of this Act and in accordance with this title, 1 of 11 the following 3 options in relation to the implementation 12 of title I of the Patient Protection and Affordable Care 13 Act after the date of enactment of this Act: 14 (1) 15 PPACA.—The CONTINUING IMPLEMENTATION OF State continuing— 16 (A) the Federal premium and cost-sharing 17 subsidies for coverage offered under title I of 18 PPACA (and the amendments made thereby), 19 reduced for qualified residents of such State for 20 any year by the amount (if any) by which such 21 subsidies would exceed the amount of contribu- 22 tions that would have been made under section 23 103(b) to all such residents for such year if the 24 State had elected the option under paragraph 25 (3); and BAI17159 S.L.C. 10 1 (B) all other requirements under such title. 2 (2) ESTABLISHING NEW STATE AND MARKET- 3 BASED ALTERNATIVE, WITH ALTERNATIVE PER BEN- 4 EFICIARY FEDERAL DEPOSIT SYSTEM.—The 5 implementing the alternative option described in sec- 6 tion 103, which includes— 7 State (A) the waiver of most requirements im- 8 posed under such title I; and 9 (B) the provision of a new, Roth HSA- and 10 market-based deposit system for individuals 11 who do not otherwise qualify for Federal or 12 State subsidies for health benefits coverage. 13 (3) REJECTION OF PPACA.—The State rejecting 14 title I of PPACA (and the amendments made there- 15 by), except as otherwise required in this title. 16 If a State fails to make an election described in this sub17 section during the 1-year period beginning on the date of 18 enactment of this Act, the State shall be deemed to have 19 made the election described in paragraph (2). A State 20 may, through written notice to the Secretary, change an 21 election previously made under this subsection. 22 23 (b) RELATION ERAGE TO CURRENT MEDICAID ACA COV- OPTION.—Nothing in this section shall be con- 24 strued to change the option of a State with respect to the 25 implementation of Medicaid ACA coverage under section BAI17159 S.L.C. 11 1 1902(a)(10)(A)(i)(VIII) of the Social Security Act (42 2 U.S.C. 1396a(a)(10)(A)(i)(VIII)), except that a State that 3 elects not to provide medical assistance to individuals 4 under such section may make such individuals deposit 5 qualifying residents under this title. 6 7 SEC. 103. STATE ALTERNATIVE OPTION. (a) IN GENERAL.—In the case of a State that elects 8 under section 102(a)(2) the alternative option under this 9 section, subject to subsection (d) and section 107, the fol10 lowing shall apply: 11 (1) ELIMINATION OF INDIVIDUAL AND EM- 12 PLOYER 13 CARE TAX REQUIREMENTS FOR RESIDENTS AND EM- 14 PLOYEES IN STATE.—The 15 health care responsibilities under the amendments 16 made by title I of PPACA (including under sections 17 5000A and 4980H of the Internal Revenue Code of 18 1986) shall no longer apply pursuant to section 101 19 with respect to individuals who are residents of such 20 State and with respect to individuals who are em- 21 ployed in such State, respectively. 22 SHARED RESPONSIBILITY (2) MODIFICATION FOR HEALTH individual and employer OF INSURANCE REQUIRE- 23 MENTS.—Except 24 the requirements under title I of PPACA (including 25 amendments made by such title) relating to health as specifically provided in this title, BAI17159 S.L.C. 12 1 insurance coverage offered in the State shall not 2 apply except to the extent specified by the State. 3 4 (3) NEW DEPOSIT SYSTEM THROUGH FUNDING ROTH HSAS.— 5 (A) IN GENERAL.—Deposit qualifying resi- 6 dents (as defined in subsection (b)(2)) who are 7 residing in the State are eligible for a deposit 8 to a Roth HSA that may be used for premiums 9 and cost-sharing for health insurance coverage 10 in accordance with subsection (b). 11 (B) STATE SPECIFICATION OF MANNER OF 12 CARRYING OUT ROTH HSA DEPOSIT SYSTEM 13 (PATIENT-GRANT ELECTING STATE).—In 14 ing the election under this subsection, a State 15 shall specify whether the State will carry out 16 subsection (b) or if such subsection shall be car- 17 ried out by means of the credit under section 18 36C of the Internal Revenue Code of 1986. 19 (4) ADDITIONAL mak- AMOUNTS FOR POPULATION 20 HEALTH 21 ROTH HSA DEPOSIT SYSTEM.—A 22 ing State (as defined in section 100(1)) is entitled 23 to receive additional funding under subsection (c) for 24 population health initiatives. INITIATIVES FOR STATE ADMINISTERED patient-grant elect- BAI17159 S.L.C. 13 1 2 3 (b) DEPOSIT THROUGH PAYMENT INTO ROTH HSA FOR DEPOSIT QUALIFYING RESIDENTS.— (1) IN GENERAL.—The subsidies described in 4 subsection (a)(3) for an electing State shall be fur- 5 nished for each deposit qualifying resident through 6 the deposit of a contribution into a Roth HSA of the 7 individual in the amount determined under section 8 104. For purposes of the Internal Revenue Code of 9 1986, the amount of any contribution to a Roth 10 HSA made under this paragraph shall be included 11 in the gross income of the individual for whose ben- 12 efit the Roth HSA was established. 13 (2) DEPOSIT QUALIFYING RESIDENT DE- 14 FINED.—In 15 resident’’ means, with respect to a State and a 16 month, an individual— this title, the term ‘‘deposit qualifying 17 (A) who is a qualified resident (as defined 18 in section 100(14)) of the State as of the first 19 day of the month (or such other day in the 20 month as the Secretary may specify); 21 (B) with respect to whom a Roth HSA has 22 been established, which Roth HSA may have 23 been established by the State in carrying out 24 this section; BAI17159 S.L.C. 14 1 (C) who is enrolled in qualified health plan 2 coverage (as defined in section 100(13)), which 3 enrollment may have been effected by the State 4 in carrying out this section; and 5 (D) who is not eligible for coverage under 6 Medicare, is not enrolled for benefits under 7 Medicaid or CHIP, and is not enrolled for bene- 8 fits under chapter 55 of title 10, United States 9 Code (relating to TRICARE), or title 39 of 10 such Code (relating to veterans’ benefits) or 11 chapter 89 of title 5 of such Code (relating to 12 the Federal Employees Health Benefits Pro- 13 gram). 14 (3) PAYMENT ADMINISTRATION.— 15 (A) STATE.—In the case of an electing 16 State that elects to carry out this subsection 17 through the State, the Secretary shall provide 18 for payment to the State in amounts and in a 19 time and manner sufficient to permit the State 20 to make timely monthly contributions to Roth 21 HSAs under this subsection. The Secretary may 22 provide for payment to the State using the pay- 23 ment methodology described in subsection (d) of 24 section 1903 of the Social Security Act for pay- 25 ments under subsection (a) of such section (ap- BAI17159 S.L.C. 15 1 plied without regard to any State matching re- 2 quirement) and may condition such payments 3 upon the provision of such information as the 4 Secretary may require to ensure the proper pay- 5 ments under this subsection. As a condition of 6 receiving payment under this section, a State 7 shall submit such information, in such form, 8 and manner, as the Secretary shall specify, in- 9 cluding information necessary to make the com- 10 putations of amounts under this section. 11 (B) FEDERAL.—In the case of a State 12 electing to carry out this subsection other than 13 through the State, subsidies described in sub- 14 section (a)(3) shall be provided through a re- 15 fundable tax credit under section 36C of the In- 16 ternal Revenue Code of 1986. 17 (4) CONSTRUCTION.—Nothing in this sub- 18 section shall be construed— 19 (A) to prevent an individual from affirma- 20 tively electing not to have a Roth HSA estab- 21 lished on the individual’s behalf and not to be 22 enrolled in health insurance coverage; 23 (B) subject to subparagraph (A), to pre- 24 vent a State from establishing a Roth HSA for BAI17159 S.L.C. 16 1 each deposit qualifying resident who does not 2 otherwise have a Roth HSA; 3 (C) subject to subparagraph (A), to pre- 4 vent a State from establishing a mechanism 5 whereby individuals who would be deposit quali- 6 fying residents but for paragraph (2)(C) are en- 7 rolled in health insurance coverage; and 8 (D) to prevent a State from changing its 9 State Medicaid plan to eliminate coverage under 10 section 1902(a)(10)(A)(i)(VIII) of the Social 11 Security 12 1396a(a)(10)(A)(i)(VIII)), in order that indi- 13 viduals otherwise covered under such section 14 may qualify for subsidies under this section. 15 16 Act (42 U.S.C. (c) POPULATION HEALTH INITIATIVE FUNDING.— (1) IN GENERAL.—In the case of an electing 17 State for a year, the State is entitled to receive pay- 18 ment from the Secretary after the end of such year 19 in an amount equal to 2 percent of the actual aggre- 20 gate amount deposited under subsection (b) into 21 Roth HSAs for residents of the State for the year. 22 (2) USE OF FUNDS.—Amounts paid to a State 23 under paragraph (1) may only be used for popu- 24 lation health initiatives (as defined by the Sec- 25 retary). BAI17159 S.L.C. 17 1 (3) ENTITLEMENT.—Paragraph (1) constitutes 2 budget authority in advance of appropriations Acts 3 and represents the obligation of the Federal Govern- 4 ment to provide for the payment to States of 5 amounts provided under such paragraph. 6 (d) REQUIRING RULES 7 CUSTOMARY, AND FOR COMPUTING USUAL, REASONABLE (UCR) PRICES.—As a 8 condition for a State’s election of the alternative option 9 under this section, the State must provide, through its de10 partment of insurance or equivalent agency, for establish11 ment of rules to carry out section 1867(j)(1)(A)(ii) of the 12 Social Security Act, as added by section 121(a)(2). 13 SEC. 104. COMPUTATION OF MONTHLY ROTH HSA DEPOSIT 14 AMOUNT FOR DEPOSIT QUALIFYING RESI- 15 DENTS. 16 17 (a) COMPUTATION.— (1) IN GENERAL.—The Secretary shall develop 18 a standardized methodology to determine consistent 19 with this section a monthly Roth HSA deposit 20 amount for deposit qualifying residents in each State 21 for months in each year. Subject to paragraphs (3) 22 and (4), such amount shall be equal to 1⁄12 of the 23 average per capita annual amount computed under 24 subsection (b) for the State for the year, as adjusted 25 for the deposit qualifying resident involved— BAI17159 S.L.C. 18 1 2 (A) for age and geographic area under subsection (c); and 3 4 (B) for income under subsection (d). (2) NO VARIATION BASED ON HOW DEPOSIT 5 AMOUNT DISTRIBUTED.—Such 6 same for a deposit qualifying individual without re- 7 gard to whether the contribution to the individual’s 8 Roth HSA is made by a State under this section or 9 by the Federal Government through the operation of 10 section 36C of the Internal Revenue Code of 1986. 11 (3) PATIENT-GRANT amount shall be the ELECTING STATE HAS 12 FLEXIBILITY TO MAINTAIN LEVEL OF BENEFITS FOR 13 CURRENT 14 electing State may elect to increase the amount of 15 the deposit for all deposit qualifying individuals 16 under this section to the amounts that the Secretary 17 estimates would have been paid with respect to such 18 individuals under section 36B of the Internal Rev- 19 enue Code of 1986 and section 1402 of PPACA if 20 those sections had remained in effect in the State 21 with respect to such individuals. Such election shall 22 be made for a year and shall continue from year to 23 year until the State elects to terminate such election. 24 The Secretary shall, in conjunction with the Actu- 25 ary, ensure such changes to the amount of deposit ACA BENEFICIARIES.—A patient-grant BAI17159 S.L.C. 19 1 for qualifying individuals shall remain budget neu- 2 tral. 3 (4) SPECIAL RULE FOR PARTIAL DEPOSIT FOR 4 LOW-INCOME INDIVIDUALS WITH EMPLOYER-SPON- 5 SORED INSURANCE (ESI).—In 6 vidual who is covered under a group health plan and 7 with respect to such coverage there is a contribution 8 by an employer which is excluded from the individ- 9 ual’s gross income under the Internal Revenue Code 10 of 1986, insofar as the individual is a deposit quali- 11 fying resident, the amount of the deposit with re- 12 spect to the individual shall be reduced, in a manner 13 specified by the Secretary in consultation with the 14 Secretary of the Treasury and taking into account 15 the income of the individual’s household, by an 16 amount that is approximately equivalent to the esti- 17 mated amount of the reduction in the amount of in- 18 come tax resulting from such exclusion (and any re- 19 duction in taxes imposed by chapter 21 or chapter 20 2 of such Code by reason of any exclusion of such 21 contributions from wages and self employment in- 22 come). 23 (b) COMPUTATION OF the case of an indi- UNADJUSTED AVERAGE PER 24 CAPITA ANNUAL AMOUNT.— BAI17159 S.L.C. 20 1 2 3 (1) FOR STATES THAT CONTINUE PPACA MED- ICAID COVERAGE.— (A) IN GENERAL.—In the case of a State 4 that provides medical assistance under section 5 1902(a)(10)(A)(i)(VIII) of the Social Security 6 Act (42 U.S.C. 1396b(a)(10)(A)(i)(VIII)) dur- 7 ing a year, subject to paragraphs (3) and (4), 8 the Secretary shall compute an average per cap- 9 ita annual amount for the State for the year 10 11 12 equal to— (i) the amount specified in subparagraph (B), divided by 13 (ii) the average monthly number of 14 deposit qualifying residents of the State in 15 the year. 16 (B) AMOUNT BASED ON PPACA PROJECTED 17 FEDERAL EXPENDITURES.—The 18 fied in this subparagraph for a State for a year 19 is 95 percent of the Secretary’s estimate of the 20 total payments that would have been made (as- 21 suming the existence of a State established Ex- 22 change in the State) under section 36B of the 23 Internal Revenue Code of 1986 and under sec- 24 tion 1402 of PPACA with respect to all quali- 25 fied residents in the State in the year (or tax- amount speci- BAI17159 S.L.C. 21 1 able year ending with such year, if applicable). 2 The Secretary shall, in conjunction with the Ac- 3 tuary, ensure such changes to the amount of 4 deposit for qualifying individuals shall remain 5 budget neutral. 6 (2) FOR 7 8 STATES THAT DO NOT PROVIDE PPACA MEDICAID COVERAGE.— (A) IN GENERAL.—In the case of a State 9 not described in paragraph (1) for a year, sub- 10 ject to paragraphs (3) and (4), the Secretary 11 shall compute an average per capita annual 12 amount for the State for the year equal to— 13 (i) the amount specified in subpara- 14 graph (B) for the State and year, divided 15 by 16 (ii) the average monthly number of 17 deposit qualifying residents of the State in 18 the year. 19 (B) AMOUNT BASED ON PPACA AND MED- 20 ICAID PROJECTED FEDERAL EXPENDITURES.— 21 The amount specified in this subparagraph for 22 a State for a year is equal to the sum of— 23 (i) 95 percent of the Secretary’s esti- 24 mate of the total payments that would 25 have been made (assuming the existence of BAI17159 S.L.C. 22 1 a State-established Exchange in the State) 2 under section 36B of the Internal Revenue 3 Code of 1986 and under section 1402 of 4 PPACA with respect to all qualified resi- 5 dents in the year (or taxable year ending 6 with such year, if applicable); and 7 (ii) the Secretary’s estimate of the 8 total payments that would have been made 9 to the State under title XIX of the Social 10 Security Act for individuals eligible to be 11 covered 12 1902(a)(10)(A)(i)(VIII) of the Social Secu- 13 rity Act assuming the election of a State to 14 provide Medicaid coverage under such sec- 15 tion and assuming the applicable Federal 16 medical assistance percentage were 95 per- 17 cent with respect to such individuals. 18 (3) BUDGET under section NEUTRAL ADJUSTMENT IN PAY- 19 MENTS TO TAKE INTO ACCOUNT ELECTION OF HIGH- 20 ER DEPOSITS TO MAINTAIN ACA SUBSIDY LEVELS.— 21 If a State makes the election described in subsection 22 (a)(3) with respect to providing higher deposit 23 amounts for certain individuals described in such 24 subsection, then the Secretary shall adjust the aver- BAI17159 S.L.C. 23 1 age per capita annual amount under paragraph (1) 2 or (2), as applicable to the State, by— 3 (A) reducing the amount described in 4 paragraph (1)(B) (or, if applicable, paragraph 5 (2)(B)(i)) by an amount equal to 95 percent of 6 the aggregate increased deposit level attrib- 7 utable to subsection (a)(3); and 8 (B) not counting such an individual as a 9 qualifying resident for purposes of paragraph 10 (1)(A)(ii) 11 (2)(A)(ii)). (or, if applicable, paragraph 12 The Secretary shall, in conjunction with the Actu- 13 ary, ensure changes, as outlined in this subsection, 14 to the amount of deposit for qualifying individuals 15 shall remain budget neutral. 16 (4) ADJUSTMENT FOR COSTS OF PARTIAL DE- 17 POSITS FOR LOW-INCOME ESI INDIVIDUALS.—The 18 Secretary shall adjust the average per capita annual 19 amount under paragraph (1) or (2), as applicable to 20 the State, by— 21 (A) reducing the amount described in 22 paragraph (1)(B) (or, if applicable, paragraph 23 (2)(B)(i)) by an amount equal to 95 percent of 24 the amount of payments under this section that BAI17159 S.L.C. 24 1 are attributable to individuals described in sub- 2 section (a)(4); and 3 (B) not counting any individual described 4 in subsection (a)(4) as a qualifying resident for 5 purposes of paragraph (1)(A)(ii) (or, if applica- 6 ble, paragraph (2)(A)(ii)). 7 (c) ADJUSTMENT FOR AGE, GEOGRAPHIC AREA, AND 8 INCOME DISTRIBUTION WITHIN STATE.— 9 (1) IN GENERAL.—The Secretary shall apply 10 such adjustments to the per capita amount com- 11 puted under subsection (b) as is designed to take 12 into account, in a budget neutral manner and based 13 on the costs estimated under paragraph (2), actu- 14 arial differences in health care costs attributable to 15 individuals in different age categories and different 16 geographic locations of primary residences in the 17 State and the reductions based on income under 18 subsection (d). No such adjustment shall be made 19 based on sex. 20 (2) DATA ON AVERAGE COSTS OF SERVICES.— 21 Not later than December 15 before the beginning of 22 each year, the Agency for Healthcare Research and 23 Quality shall estimate the average cost of health 24 care for such year for individuals under 65 years of 25 age and may estimate how such average varies for BAI17159 S.L.C. 25 1 different populations of individuals under age 65. 2 The adjustments under paragraph (1) for age cat- 3 egories for a year shall be based on such estimates 4 made. Not later than such date, the Secretary shall 5 prescribe tables for purposes of making adjustments 6 based on age under paragraph (1) based on such de- 7 termination which shall apply for taxable years be- 8 ginning in the succeeding calendar year. 9 (d) INCOME-RELATED PHASE-OUT.— 10 (1) IN GENERAL.—The per capita amount as 11 computed under subsection (b) and adjusted and ap- 12 plied to a deposit qualifying individual under sub- 13 section (c) shall be multiplied by a phase-out per- 14 centage equal to 100 percent reduced by 1 percent- 15 age point for each $1,000 (or fraction thereof) by 16 which the taxpayer’s modified adjusted gross income 17 for the taxable year exceeds $90,000 (or, in the case 18 of a joint return, $150,000), multiplied, for a tax- 19 able year ending in a year beginning after December 20 31, 2015, by the cost-of-living adjustment for the 21 year as described in section 1(f)(3) of the Internal 22 Revenue Code of 1986, but substituting ‘‘2015’’ for 23 ‘‘1992’’ in subparagraph (B) of such section. 24 25 (2) ZERO PER CAPITA AMOUNT FOR MARRIED FILING SEPARATELY.—The per capita amount under BAI17159 S.L.C. 26 1 this section shall be zero in the case of a married 2 couple filing separately. 3 SEC. 105. STATE OPTIONS FOR IMPROVED ACCESS TO 4 HEALTH INSURANCE COVERAGE IN EACH 5 STATE. 6 7 (a) STATE OPTIONS TO IMPROVE ACCESS.— (1) IN GENERAL.—Each State may carry out 8 any of the functions described in this section in 9 order to improve the access of residents of the State 10 11 to health insurance coverage. (2) REPURPOSING STATE EXCHANGES.—A 12 State may use or adapt an Exchange that the State 13 has established under title I of PPACA to carry out 14 any such function. 15 (3) REPURPOSING FEDERAL EXCHANGE.—The 16 Federal Government shall make available to States 17 current capabilities of the Federal Exchange, includ- 18 ing the Federal Data Services Hub and Agent 19 Broker Portal, to the extent requested by a State for 20 activities related to enrollment of citizens of the 21 State into health insurance coverage. 22 (b) TRANSPARENCY PORTAL.—Each State may es- 23 tablish and operate an open and transparent marketplace 24 mechanism whereby qualified residents of the State can 25 readily compare, through the use of the Internet, the bene- BAI17159 S.L.C. 27 1 fits and prices between different health insurance coverage 2 options made available to them. 3 (c) ENROLLMENT, SUBJECT TO INDIVIDUAL OPT- 4 OUT.—A State may provide for the enrollment of qualified 5 residents of the State who are uninsured in default health 6 insurance coverage offered under section 107(c) and es7 tablishing a Roth HSA for such residents who do not have 8 a Roth HSA unless the resident has affirmatively elected 9 not to be so enrolled and not to have a Roth HSA, respec10 tively. Any such enrollment under this paragraph shall be 11 coordinated with the annual open enrollment periods pro12 vided under section 107(b). 13 14 15 (d) RISK MITIGATION MECHANISMS ANCE AND AND REINSUR- GENERAL.—Notwithstanding any other RISK-CORRIDOR PROGRAMS.— (1) IN 16 provision of this title or section 223(c)(2) of the In- 17 ternal Revenue Code of 1986, a State may estab- 18 lish— 19 (A) mechanisms for risk mitigation or risk 20 adjustment in order to limit volatility in the 21 premiums based on health experience to class- 22 average premiums; and 23 (B) a reinsurance and risk-corridor pro- 24 gram that involves no Federal funds with re- BAI17159 S.L.C. 28 1 spect to coverage both in the individual market 2 and in the small group market. 3 (2) BASIS FOR RISK ADJUSTMENT.—Mecha- 4 nisms and programs under paragraph (1) may be 5 based on the health status score of each individual 6 enrolled in health insurance coverage in the indi- 7 vidual market and not solely based on the aggregate 8 risk of the risk pool with respect to each plan of 9 health insurance coverage. 10 11 12 (e) MODIFIED HEALTH STATUS INSURANCE MECHANISM.— (1) IN GENERAL.—A State may establish a 13 mechanism for providing modified health status in- 14 surance in the State to encourage health plans to 15 implement adequate benefit designs and services for 16 a chronically ill individual. 17 (2) REQUIREMENTS.—A mechanism under 18 paragraph (1) may implement the following require- 19 ments: 20 (A) During the first open enrollment pe- 21 riod after the date of enactment of this Act, an 22 individual health plan shall provide coverage for 23 health benefits as defined in the health plan for 24 a period of 12 months. BAI17159 S.L.C. 29 1 (B) If an individual enrolls in a new health 2 plan during the open enrollment period at the 3 end of the first 12 months of coverage under 4 subparagraph (A), the plan in which the indi- 5 vidual was enrolled prior to such period shall be 6 responsible for financing 75 percent of the 7 health benefits administered to the individual 8 under any other health plan in which the indi- 9 vidual enrolls for the initial 3-month period of 10 coverage under such other plan. 11 (C) During the 3-month period described 12 in subparagraph (B), the plan in which the in- 13 dividual was enrolled prior to such period shall 14 receive 75 percent of the premiums paid for the 15 individual’s coverage under the other health 16 plan. 17 (D) During the third open enrollment pe- 18 riod after the date of enactment of this Act, 19 and during all subsequent open enrollment peri- 20 ods, a health plan that has enrollees terminate 21 their coverage in order to enroll in other health 22 plans shall be responsible for financing 75 per- 23 cent of the health benefits administered to such 24 enrollees under the other plans and shall receive 25 75 percent of the premiums paid for such en- BAI17159 S.L.C. 30 1 rollees’ coverage under such other health plans 2 for the first 3 months of coverage in new plan 3 year. 4 SEC. 106. STATE FLEXIBILITY IN ENSURING ORDERLY 5 HEALTH INSURANCE MARKET OUTSIDE OF 6 AN EXCHANGE. 7 (a) IN GENERAL.—With respect to health insurance 8 coverage offered in a State, the State may, in consultation 9 with the Secretary, take such steps, such as limiting the 10 availability of general open enrollment periods, imposing 11 delays in the effectiveness for coverage, permitting dif12 ferentials in premiums based on age and other factors, as 13 the State determines necessary in order to ensure an or14 derly market for health insurance coverage in the State 15 that is not offered through an Exchange. Such steps may 16 include the establishment of an initial open enrollment pe17 riod during which qualified residents may enroll in health 18 insurance coverage without the imposition of any under19 writing as the State determines to be appropriate in ensur20 ing initial access to such coverage. 21 22 (b) FLEXIBILITY QUIREMENTS.—Nothing IN IMPOSING ADDITIONAL RE- in this section shall be construed 23 as preventing a State from continuing to apply, to health 24 insurance coverage issued in the State, requirements 25 under the provisions of title XXVII of the Public Health BAI17159 S.L.C. 31 1 Service Act (as amended by subtitles A and C of title I 2 of PPACA), that are not continued under section 101(b). 3 4 (c) STATE FLEXIBILITY WITH RESPECT CHANGES.—A TO EX - State may waive such provisions of part 2 5 of subtitle D of title I of PPACA, in relation to the estab6 lishment of an Exchange in such State, as the State deter7 mines appropriate in order for the State to implement and 8 administer a market-based system for the availability of 9 health insurance coverage throughout the State. 10 SEC. 107. EXPANDED ACCESS AND PATIENT PROTECTIONS. 11 (a) IN GENERAL.—As a condition for the election of 12 the alternative option under section 103 in a State, the 13 State must meet the requirements of this section. 14 15 16 (b) ANNUAL AND OTHER OPEN ENROLLMENT PERI- ODS.— (1) IN GENERAL.—The State shall require, in 17 connection with the offering of health insurance cov- 18 erage in the individual market in the State, that 19 there are uniform annual and other open enrollment 20 periods (such as those for changes in life events, 21 changes in State residency, and involuntary changes 22 in eligibility for coverage under a group health plan) 23 in order to permit qualified residents to enroll in 24 qualified health plan coverage in a manner that pro- 25 motes continuity of coverage. Such periods shall be BAI17159 S.L.C. 32 1 consistent with the open enrollment periods estab- 2 lished under title I of PPACA, as in effect on the 3 day before the date of the enactment of this Act. 4 (2) INITIAL OPEN ENROLLMENT PERIOD.—In 5 addition, the State shall establish an initial open en- 6 rollment period during which qualified residents may 7 enroll in qualified health plan coverage without the 8 imposition of any underwriting described in sub- 9 section (d)(1)(B). Such period shall be a period of 10 not less than 45 days and shall provide for enroll- 11 ment to become effective on January 1 of the year 12 specified by the State in which such State election 13 first becomes effective. 14 (c) OFFERING OF DEFAULT HEALTH INSURANCE 15 COVERAGE.— 16 (1) ENROLLMENT, SUBJECT TO INDIVIDUAL 17 OPT-OUT.—Subject 18 elect to provide for the enrollment of residents of the 19 State who are uninsured in default health insurance 20 coverage (as defined in paragraph (2)) and estab- 21 lishing a Roth HSA for such residents who do not 22 have a Roth HSA unless the resident has affirma- 23 tively elected not to be so enrolled and not to have 24 such an account. respectively. If a State makes such to paragraph (4), a State may BAI17159 S.L.C. 33 1 an election, the State shall permit eligible residents 2 to enroll in such coverage on a continuous basis. 3 (2) DEFAULT HEALTH INSURANCE COVERAGE 4 DEFINED.—In 5 health insurance coverage’’ means, with respect to a 6 State, health insurance coverage that— this subsection, the term ‘‘default 7 (A) is a high deductible health plan (within 8 the meaning of section 223(c)(2) of the Internal 9 Revenue Code of 1986) with prescription drug 10 coverage limited to a Tier 1 formulary benefit 11 (as commonly understood) for a limited number 12 of chronic conditions (commonly referred to as 13 tier I pharmacy benefit); 14 (B) meets such requirements as may apply 15 to qualify for the payment of plan premiums 16 from a health savings account under section 17 223 of such Code (such as age-related pre- 18 miums and limitation on imposition of pre- 19 existing condition exclusions); 20 (C) has a provider network for covered 21 benefits that is adequate (as determined con- 22 sistent with the guidelines issued by the Sec- 23 retary relating to provider access requirements 24 for Medicare Advantage organizations under 25 section 1852(d) of the Social Security Act (42 BAI17159 S.L.C. 34 1 U.S.C. 1395w–22(d))) to ensure access to 2 health benefits under such plan; 3 (D) provides for coverage of childhood im- 4 munizations without cost sharing requirements 5 to the extent such immunizations have in effect 6 a recommendation from the Advisory Com- 7 mittee on Immunization Practices of the Cen- 8 ters for Disease Control and Prevention with 9 respect to the individual involved; and 10 (E) meets such other requirements as the 11 State may specify. 12 (3) ROTH HSA.—In this subsection, the term 13 ‘‘Roth HSA’’ shall have the meaning given such 14 term by section 530A(c) of the Internal Revenue 15 Code of 1986. 16 (4) SIMPLE PROCESS FOR INDIVIDUALS TO OPT- 17 OUT.—As 18 enrollment function described in paragraph (1), the 19 State shall establish an easy-to-use and transparent 20 means by which individuals may elect not to be en- 21 rolled in default health insurance coverage or to 22 have a Roth HSA established on the individual’s be- 23 half, or both. 24 (d) CONSEQUENCES RESPECTING CONTINUOUS COV- 25 ERAGE.— a condition of a State providing for the BAI17159 S.L.C. 35 1 2 3 4 5 (1) CONSEQUENCES FOR NOT MAINTAINING CONTINUOUS COVERAGE.— (A) AVOIDANCE OF CONSEQUENCES BY MAINTAINING CONTINUOUS COVERAGE.— (i) IN GENERAL.—All qualified resi- 6 dents of a State are eligible during the ini- 7 tial open enrollment period provided under 8 subsection (b)(2) to enroll in qualified 9 health plan coverage and, thereafter, to 10 maintain continuous coverage in order to 11 avoid the adverse consequences described 12 in the succeeding provisions of this para- 13 graph. 14 (ii) SPECIAL ENROLLMENT PERI- 15 ODS.—The 16 enrollment periods based on birth, becom- 17 ing 26 years of age, and independence 18 from family coverage, during which certain 19 individuals will be eligible to enroll in 20 qualified health plan coverage for purposes 21 of this subsection. 22 (B) UNDERWRITING State may provide for special PERMITTED.—In the 23 case of a qualified resident of the State who 24 fails to maintain continuous creditable coverage BAI17159 S.L.C. 36 1 (not including any breaks in coverage of less 2 than 63 days), the State shall— 3 (i) permit health insurance issuers for 4 the period specified in subparagraph (C) to 5 medically underwrite (through denial of 6 health insurance coverage, application of 7 preexisting condition limitations, differen- 8 tial premiums, or otherwise) the issuance 9 of health insurance coverage, other than 10 with respect to the issuance of default 11 health insurance coverage under subsection 12 (c); and 13 (ii) require health insurance issuers, 14 during the subsequent 2-year period in the 15 case of issuance of health insurance cov- 16 erage other than such default health insur- 17 ance coverage, to impose a monthly late 18 enrollment penalty in the amount specified 19 in subparagraph (D)(i) and to remit the 20 amount of such penalty collected to the 21 Federal Treasury in accordance with sub- 22 paragraph (D)(ii). 23 (C) PERIOD FOR APPLICATION OF UNDER- 24 WRITING.—For 25 (B)(i), the period specified in this subparagraph purposes of subparagraph BAI17159 S.L.C. 37 1 is, with respect to an uninsured individual as of 2 a date, a period (not to exceed 18 months) 3 equivalent to the number of months in the pre- 4 vious 18-month period in which the individual 5 did not have continuous creditable coverage de- 6 scribed in subparagraph (B). 7 8 9 (D) MONTHLY LATE ENROLLMENT PEN- ALTY AMOUNT.— (i) IN GENERAL.—The monthly late 10 enrollment penalty amount specified in this 11 clause for a month is equal to the lesser of 12 10 percent or the product of— 13 (I) 1 percent of the monthly pre- 14 mium amount for default health in- 15 surance coverage with respect to the 16 individual and month; and 17 (II) the number of months dur- 18 ing the 2-year period (preceding the 19 18-month period described in subpara- 20 graph (B)(i)) in which the resident 21 failed to maintain the continuous cov- 22 erage described in paragraph (1)(D). 23 (ii) PAYMENT OF PENALTY AMOUNT 24 TO FEDERAL TREASURY.—The 25 the monthly late enrollment penalty col- amount of BAI17159 S.L.C. 38 1 lected under this subparagraph shall be 2 paid to the Treasury of the United States 3 in a form and manner specified by the Sec- 4 retary of the Treasury. 5 (2) CHANGES IN ENROLLMENT PERMITTED 6 WITHOUT MEDICAL UNDERWRITING DURING ANNUAL 7 OPEN ENROLLMENT PERIODS FOR THOSE MAINTAIN- 8 ING CONTINUOUS COVERAGE.— 9 (A) DURING SECOND OPEN ENROLLMENT 10 PERIOD.—In 11 who maintains continuous coverage (not includ- 12 ing any breaks in coverage of less than 63 13 days) during the period after the initial open 14 enrollment period under subsection (b)(2) and 15 through the second annual open enrollment pe- 16 riod established by the State consistent with 17 subsection (b)(1), the State shall require health 18 insurance issuers to permit such residents dur- 19 ing such second annual open enrollment period 20 to change the qualified health plan coverage in 21 which the individual is enrolled without medical 22 underwriting. 23 the case of a qualified resident (B) DURING THIRD AND SUBSEQUENT 24 OPEN ENROLLMENT PERIODS.—In 25 qualified resident who maintains continuous the case of a BAI17159 S.L.C. 39 1 coverage for a period of 18 months or longer 2 (not including any breaks in coverage of less 3 than 63 days) as of the initial date of a third 4 or subsequent annual open enrollment period 5 established by the State under subsection 6 (b)(1), the State shall require health insurance 7 issuers to permit such residents during such an 8 open enrollment period to change the qualified 9 health plan coverage in which the individual is 10 enrolled without medical underwriting. 11 SEC. 108. APPLICATION OF HEALTH SAVINGS ACCOUNTS IN 12 13 RELATION TO MEDICAID. (a) IN GENERAL.—Title XIX of the Social Security 14 Act (42 U.S.C. 1396 et seq.) is amended by adding at 15 the end the following new section: 16 ‘‘SEC. 1947. PROVISIONS RELATING TO HEALTH SAVINGS 17 18 ACCOUNTS. ‘‘(a) DISREGARDING ROTH HSA 19 ASSETS 20 AND INCOME TERMINATIONS FOR IN DETERMINING MEDICAID ELIGIBILITY DE- OTHER THAN FOR LONG-TERM CARE 21 SERVICES.—The assets in a health savings account under 22 section 223 of the Internal Revenue Code of 1986, and 23 any income from such assets in such account, shall be dis24 regarded for purposes of determining eligibility for and 25 amount of medical assistance under this title, other than BAI17159 S.L.C. 40 1 for purposes of determining eligibility for and the amount 2 of medical assistance for long-term care services (de3 scribed in section 1917(c)(1)(C)(i)). 4 ‘‘(b) NOTIFICATIONS OF TREASURY OF MEDICAID 5 ELIGIBILITY.—In order to meet the requirements of this 6 subsection (for purposes of section 1902(a)(78)), a State 7 shall provide such notice to the Secretary of the Treasury, 8 in such form and manner as the Secretary shall specify, 9 as may be necessary to identify individuals who are eligible 10 for, and receiving, medical assistance under this title in 11 a month in order to carry out section 223 of the Internal 12 Revenue Code of 1986.’’. 13 14 (b) IMPLEMENTATION MENT OF NOTIFICATION REQUIRE- THROUGH STATE PLAN.—Section 1902(a) of the 15 Social Security Act (42 U.S.C. 1396a(a)) is amended by 16 inserting after paragraph (77) the following new para17 graph: 18 ‘‘(78) provide for notice in accordance with sec- 19 tion 1947(b) to the Secretary of the Treasury of the 20 identity of individuals who are eligible for and re- 21 ceiving medical assistance under this title;’’. 22 (c) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to eligibility determinations with 24 respect to medical assistance for periods beginning on or 25 after January 1, 2018. BAI17159 S.L.C. 41 2 Subtitle B—Provider Price Transparency 3 SEC. 121. ENSURING ACCESS TO EMERGENCY SERVICES 4 WITHOUT EXCESSIVE CHARGES FOR OUT-OF- 5 NETWORK SERVICES. 1 6 (a) IN GENERAL.—Section 1867 of the Social Secu- 7 rity Act (42 U.S.C. 1395dd) is amended— 8 (1) in subsection (d), by adding at the end the 9 following new paragraph: 10 ‘‘(5) ENFORCEMENT WITH RESPECT TO EXCES- 11 SIVE CHARGES.—A 12 ty that violates the requirements of subsection (j)(1) 13 with respect to the furnishing of items and services 14 is subject to a civil money penalty of not more than 15 $25,000 for each such violation. The provisions of 16 section 1128A (other than subsections (a) and (b)) 17 shall apply to a civil money penalty under this para- 18 graph in the same manner as such provisions apply 19 with respect to a penalty or proceeding under section 20 1128A(a).’’; and 21 hospital, physician, or other enti- (2) by adding at the end the following new sub- 22 section: 23 ‘‘(j) PROTECTIONS AGAINST EXCESSIVE OUT-OF- 24 NETWORK CHARGES FOR EMERGENCY SERVICES.— BAI17159 S.L.C. 42 1 ‘‘(1) IN GENERAL.—In the absence of State 2 regulations, if items or services to screen or treat an 3 emergency medical condition are furnished under 4 this section in a participating hospital with respect 5 to an individual and the individual has not, directly 6 or through a health insurance issuer, group health 7 plan, or other third party, negotiated a payment rate 8 for such items and services, subject to paragraph 9 (2), the charges imposed for such items and services 10 may not be in excess of the following: 11 ‘‘(A) PHYSICIANS’ AND OTHER PROFES- 12 SIONAL SERVICES.—For 13 services of a health care provider which con- 14 stitute medical care (as defined under section 15 213(d) of the Internal Revenue Code of 1986, 16 as in effect before the date of the enactment of 17 this subsection) (and including drugs and 18 biologicals furnished in conjunction with and 19 billed as part of such services), the lesser of— 20 ‘‘(i) the cash price for such services 21 posted pursuant to section 121(b) of the 22 Patient Freedom Act of 2017; or physicians’ services or 23 ‘‘(ii) 85 percent of the usual, cus- 24 tomary, and reasonable (UCR) charge for 25 such services, as determined under rules BAI17159 S.L.C. 43 1 established by the department of insurance 2 for the State in which the services are fur- 3 nished. 4 ‘‘(B) HOSPITAL SERVICES.—For inpatient 5 and outpatient hospital services for which pay- 6 ment rates are established under this title (and 7 including drugs and biologicals furnished in 8 conjunction with and billed as part of such 9 services), the lesser of— 10 ‘‘(i) the cash price for such services 11 posted pursuant to section 121(b) of the 12 Patient Freedom Act of 2017; or 13 ‘‘(ii) 110 percent of the payment rate 14 applicable to such services in the case of 15 an individual entitled to benefits under 16 part A and enrolled under part B. 17 ‘‘(C) DRUGS AND BIOLOGICALS.—For 18 drugs and other pharmaceuticals furnished to 19 which a previous subparagraph does not apply, 20 the lesser of— 21 ‘‘(i) twice the acquisition cost to the 22 hospital or other provider for the dose in- 23 volved; or 24 25 ‘‘(ii) the acquisition cost to the hospital or other provider plus $250. BAI17159 S.L.C. 44 1 The dollar amount in clause (ii) shall be in- 2 creased from year to year (beginning with the 3 year after the first year in which this subsection 4 applies) by the same percentage as the percent- 5 age increase in the consumer price index for all 6 urban consumers (all items; U.S. city average) 7 for the year involved (as determined by the Sec- 8 retary). Any such dollar amount as so increased 9 that is not a multiple of $5 shall be rounded to 10 the nearest multiple of $5 (or, if a multiple of 11 $2.50, to the next highest multiple of $5). 12 13 ‘‘(D) OTHER ITEMS AND SERVICES.—For any other items or services, the lesser of— 14 ‘‘(i) the cash price for such items and 15 services posted pursuant to section 121(b) 16 of the Patient Freedom Act of 2017; or 17 ‘‘(ii) 110 percent of the payment basis 18 that would be applicable to payment for 19 such items and services under this title in 20 the case of an individual entitled to bene- 21 fits under part A and enrolled under part 22 B. 23 ‘‘(2) SPECIAL RULE FOR ITEMS AND SERVICES 24 FURNISHED AS A BUNDLE.—In 25 and services for which there is a single price for a the case of items BAI17159 S.L.C. 45 1 group or bundle of such items and services, the max- 2 imum charge permitted under paragraph (1) may 3 not exceed the lesser of— 4 ‘‘(A) the price charged for such bundled 5 services; or 6 ‘‘(B) the aggregate of the maximum 7 charges permitted under paragraph (1) with re- 8 spect to items and services included in such 9 bundle.’’. 10 11 12 (b) REFERENCE TO PRICE DISCLOSURE PROVI- SION.— (1) IN GENERAL.—Persons providing medical 13 care (as defined in section 213(d) of the Internal 14 Revenue Code of 1986, as in effect before the date 15 of the enactment of this Act) are required to post 16 prices under this subsection. 17 (2) FORM OF DISCLOSURE.—The disclosure of 18 prices under this subsection shall be in a form and 19 manner specified by the Secretary, in consultation 20 with the Secretary of the Treasury, and shall be de- 21 signed— 22 (A) to establish a single price for related 23 items and services in a manner similar to the 24 manner in which pricing and payment for such 25 items and services is provided under the Medi- BAI17159 S.L.C. 46 1 care program under title XVIII of the Social 2 Security Act (42 U.S.C. 1395 et seq.); and 3 (B) to make it easy for consumers to com- 4 pare the prices for similar items and services 5 furnished by different providers. 6 (c) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to charges imposed for items and 8 services furnished on or after January 1, 2018. 13 TITLE II—REFORM OF TAX PROVISIONS RELATING TO HEALTH CARE Subtitle A—Health Savings Accounts 14 SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS. 9 10 11 12 15 (a) NON-DEDUCTIBLE HSAS.—Subchapter F of 16 chapter 1 of the Internal Revenue Code of 1986 is amend17 ed by adding at the end the following new part: 18 ‘‘PART IX—HEALTH SAVINGS ACCOUNTS ‘‘Sec. 530A. Roth HSAs. 19 20 ‘‘SEC. 530A. ROTH HSAS. ‘‘(a) IN GENERAL.—With the exception of the taxes 21 imposed by section 511 (relating to imposition of tax on 22 unrelated business income of charitable organizations), a 23 Roth HSA shall be exempt from taxation under this sub- BAI17159 S.L.C. 47 1 title. No deduction shall be allowed for any contribution 2 to a Roth HSA. 3 4 ‘‘(b) DOLLAR LIMITATION.— ‘‘(1) IN GENERAL.—The aggregate amount of 5 contributions for any taxable year to all Roth HSAs 6 maintained for the benefit of an individual shall not 7 exceed the sum of the monthly limitations for any 8 month during such taxable year that the individual 9 is an eligible individual. 10 ‘‘(2) MONTHLY 11 LIMITATION.—The monthly lim- itation for any month is 1⁄12 of— 12 ‘‘(A) in the case of an eligible individual 13 who has self-only creditable coverage as of the 14 first day of such month, $5,000, and 15 ‘‘(B) in the case of an eligible individual 16 who has family creditable coverage as of the 17 first day of such month, the amount in effect 18 under subparagraph (A) for the taxable year 19 multiplied by the number of individuals (includ- 20 ing the eligible individual) covered under such 21 family creditable coverage as of such day. 22 ‘‘(3) ADDITIONAL 23 VIDUALS 55 OR OLDER.—In 24 who has attained age 55 before the close of the tax- 25 able year, the applicable limitation under subpara- CONTRIBUTIONS FOR INDI- the case of an individual BAI17159 S.L.C. 48 1 graphs (A) and (B) of paragraph (2) shall be in- 2 creased by $1,000. 3 ‘‘(4) COORDINATION WITH OTHER CONTRIBU- 4 TIONS.—The 5 paragraph) apply under this subsection to an indi- 6 vidual for any taxable year shall be reduced (but not 7 below zero) by the sum of— limitation which would (but for this 8 ‘‘(A) the aggregate amount paid for such 9 taxable year to Archer MSAs of such individual, 10 and 11 ‘‘(B) the aggregate amount contributed to 12 Roth HSAs of such individual for such taxable 13 year under section 408(d)(9). 14 Subparagraph (A) shall not apply with respect to 15 any individual to whom paragraph (5) applies. 16 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID- 17 UALS.—In 18 to each other, if either spouse has family coverage— 19 ‘‘(A) both spouses shall be treated as hav- 20 ing only such family coverage (and if such 21 spouses each have family coverage under dif- 22 ferent plans, as having the family coverage with 23 the lowest annual deductible), and the case of individuals who are married 24 ‘‘(B) the limitation under paragraph (1) 25 (after the application of subparagraph (A) and BAI17159 S.L.C. 49 1 without regard to any additional contribution 2 amount under paragraph (3))— 3 ‘‘(i) shall be reduced by the aggregate 4 amount paid to Archer MSAs of such 5 spouses for the taxable year, and 6 ‘‘(ii) after such reduction, shall be di- 7 vided equally between them unless they 8 agree on a different division. 9 ‘‘(6) DENIAL OF DEDUCTION TO DEPEND- 10 ENTS.—No 11 HSA under this section by any individual with re- 12 spect to whom a deduction under section 151 is al- 13 lowable to another taxpayer for a taxable year begin- 14 ning in the calendar year in which such individual’s 15 taxable year begins. 16 contribution may be made to a Roth ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 17 limitation under this subsection for any month with 18 respect to an individual shall be zero for the first 19 month such individual is entitled to benefits under 20 title XVIII of the Social Security Act and for each 21 month thereafter. 22 ‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE- 23 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN- 24 NING OF THE YEAR.— BAI17159 S.L.C. 50 1 ‘‘(A) IN GENERAL.—For purposes of com- 2 puting the limitation under paragraph (1) for 3 any taxable year, an individual who is an eligi- 4 ble individual during the last month of such 5 taxable year shall be treated— 6 ‘‘(i) as having been an eligible indi- 7 vidual during each of the months in such 8 taxable year, and 9 ‘‘(ii) as having been enrolled, during 10 each of the months such individual is 11 treated as an eligible individual solely by 12 reason of clause (i), in the same health 13 plan in which the individual was enrolled 14 for the last month of such taxable year. 15 ‘‘(B) FAILURE 16 17 TO MAINTAIN CREDITABLE COVERAGE.— ‘‘(i) IN GENERAL.—If, at any time 18 during the testing period, the individual is 19 not an eligible individual, then— 20 ‘‘(I) the gross income of the indi- 21 vidual for the taxable year in which 22 occurs the first month in the testing 23 period for which such individual is not 24 an eligible individual shall be in- 25 creased by the aggregate amount of BAI17159 S.L.C. 51 1 all contributions to the Roth HSA of 2 the individual which could not have 3 been made but for subparagraph (A), 4 and 5 ‘‘(II) the tax imposed by this 6 chapter for any taxable year on the 7 individual shall be increased by 10 8 percent of the amount of such in- 9 crease. 10 ‘‘(ii) EXCEPTION FOR DISABILITY OR 11 DEATH.—Clause 12 individual ceased to be an eligible indi- 13 vidual by reason of the death of the indi- 14 vidual or the individual becoming disabled 15 (within the meaning of section 72(m)(7)). 16 (i) shall not apply if the ‘‘(iii) TESTING PERIOD.—The term 17 ‘testing period’ means the period beginning 18 with the last month of the taxable year re- 19 ferred to in subparagraph (A) and ending 20 on the last day of the 12th month fol- 21 lowing such month. 22 ‘‘(9) LIMITATION NOT TO APPLY TO CERTAIN 23 CONTRIBUTIONS MADE UNDER PATIENT FREEDOM 24 ACT.—Any 25 Patient Freedom Act of 2017 or as provided in sec- contributions made under 103(b) of the BAI17159 S.L.C. 52 1 tion 36C shall not be taken into account for pur- 2 poses of determining whether the limitation under 3 paragraph (1) has been met. 4 ‘‘(c) ROTH HSA.—For purposes of this title— 5 ‘‘(1) IN GENERAL.—The term ‘Roth HSA’ or 6 ‘Roth health savings account’ means a trust created 7 or organized in the United States as a Roth HSA 8 exclusively for the purpose of paying the qualified 9 medical expenses of the account beneficiary, but only 10 if the written governing instrument creating the 11 trust meets the following requirements: 12 ‘‘(A) Except in the case of a rollover con- 13 tribution described in subsection (e)(5) or sec- 14 tions 220(f)(5) or 223(f)(5), no contribution 15 will be accepted— 16 ‘‘(i) unless it is in cash, or 17 ‘‘(ii) to the extent such contribution, 18 when added to previous contributions to 19 the trust for the calendar year, exceeds the 20 sum of— 21 22 23 24 ‘‘(I) the dollar amount in effect under subsection (b)(2)(B), and ‘‘(II) the dollar amount in effect under subsection (b)(3). BAI17159 S.L.C. 53 1 ‘‘(B) The trustee is a bank (as defined in 2 section 408(n)), an insurance company (as de- 3 fined in section 816), or another person who 4 demonstrates to the satisfaction of the Sec- 5 retary that the manner in which such person 6 will administer the trust will be consistent with 7 the requirements of this section. 8 9 ‘‘(C) No part of the trust assets will be invested in life insurance contracts. 10 ‘‘(D) The assets of the trust will not be 11 commingled with other property except in a 12 common trust fund or common investment 13 fund. 14 ‘‘(E) The interest of an individual in the 15 balance in his account is nonforfeitable. 16 ‘‘(2) QUALIFIED 17 18 MEDICAL EXPENSES.—For purposes of this section— ‘‘(A) IN GENERAL.—The term ‘qualified 19 medical expenses’ means, with respect to an ac- 20 count beneficiary, amounts paid by such bene- 21 ficiary for medical care (as defined in section 22 213(d) as in effect on the day before the date 23 of the enactment of the Patient Freedom Act of 24 2017) for such individual, the spouse of such 25 individual, and any dependent (as defined in BAI17159 S.L.C. 54 1 section 152, determined without regard to sub- 2 sections (b)(1), (b)(2), and (d)(1)(B) thereof) 3 of such individual, but only to the extent such 4 amounts are not compensated for by insurance 5 or otherwise. 6 ‘‘(B) LIMITATION ON HEALTH INSURANCE 7 PURCHASED FROM ACCOUNT.—Such 8 not include any payment for health benefits cov- 9 erage that is not creditable coverage (within the 10 meaning of title XXVII of the Public Health 11 Service Act). 12 ‘‘(C) term shall EXCEPTIONS.—Subparagraph (B) 13 shall not apply to any expense for coverage 14 under— 15 ‘‘(i) a health plan during any period 16 of continuation coverage required under 17 any Federal law, 18 ‘‘(ii) a qualified long-term care insur- 19 ance 20 7702B(b)), contract (as defined in section 21 ‘‘(iii) a health plan during a period in 22 which the individual is receiving unemploy- 23 ment compensation under any Federal or 24 State law, or BAI17159 S.L.C. 55 1 ‘‘(iv) in the case of an account bene- 2 ficiary who has attained the age specified 3 in section 1811 of the Social Security Act, 4 any health insurance other than a medi- 5 care supplemental policy (as defined in sec- 6 tion 1882 of the Social Security Act). 7 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac- 8 count beneficiary’ means the individual on whose be- 9 half the Roth HSA was established. 10 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 11 to the following rules shall apply for purposes of this 12 section: 13 14 15 16 17 18 19 ‘‘(A) Section 219(f)(3) (relating to time when contributions deemed made). ‘‘(B) Section 219(f)(5) (relating to employer payments). ‘‘(C) Section 408(g) (relating to community property laws). ‘‘(D) Section 408(h) (relating to custodial 20 accounts). 21 ‘‘(5) ACCOUNT TERMINATIONS.—Rules similar 22 to the rules of paragraphs (2) and (4) of section 23 408(e) shall apply to Roth HSAs, and any amount 24 treated as distributed under such rules shall be BAI17159 S.L.C. 56 1 treated as not used to pay qualified medical ex- 2 penses. 3 ‘‘(d) ELIGIBLE INDIVIDUAL.—For purposes of this 4 section, the term ‘eligible individual’ means, with respect 5 to any month, any individual who is covered under cred6 itable coverage (within the meaning of title XXVII of the 7 Public Health Service Act) as of the 1st day of such 8 month. 9 10 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 11 EXPENSES.—Any 12 a Roth HSA which is used exclusively to pay quali- 13 fied medical expenses of any account beneficiary 14 shall not be includible in gross income in the manner 15 provided in section 72. 16 amount paid or distributed out of ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 17 QUALIFIED MEDICAL EXPENSES.—Any 18 or distributed out of a Roth HSA which is not used 19 exclusively to pay the qualified medical expenses of 20 the account beneficiary shall be included in the gross 21 income of such beneficiary. 22 23 24 25 ‘‘(3) EXCESS amount paid CONTRIBUTIONS RETURNED BE- FORE DUE DATE OF RETURN.— ‘‘(A) IN GENERAL.—If any excess con- tribution is contributed for a taxable year to BAI17159 S.L.C. 57 1 any Roth HSA of an individual, paragraph (2) 2 shall not apply to distributions from the Roth 3 HSAs of such individual (to the extent such dis- 4 tributions do not exceed the aggregate excess 5 contributions to all such accounts of such indi- 6 vidual for such year) if— 7 ‘‘(i) such distribution is received by 8 the individual on or before the last day 9 prescribed by law (including extensions of 10 time) for filing such individual’s return for 11 such taxable year, and 12 ‘‘(ii) such distribution is accompanied 13 by the amount of net income attributable 14 to such excess contribution. 15 Any net income described in clause (ii) shall be 16 included in the gross income of the individual 17 for the taxable year in which it is received. 18 ‘‘(B) EXCESS CONTRIBUTION.—For pur- 19 poses of subparagraph (A), the term ‘excess 20 contribution’ means any contribution (other 21 than a rollover contribution described in para- 22 graph (5) or sections 220(f)(5) or 223(f)(5)) 23 which exceeds the contribution limitation with 24 respect to the individual for the taxable year. BAI17159 S.L.C. 58 1 2 3 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT USED FOR QUALIFIED MEDICAL EXPENSES.— ‘‘(A) IN GENERAL.—The tax imposed by 4 this chapter on the account beneficiary for any 5 taxable year in which there is a payment or dis- 6 tribution from a Roth HSA of such beneficiary 7 which is includible in gross income under para- 8 graph (2) shall be increased by 10 percent of 9 the amount which is so includible. 10 ‘‘(B) EXCEPTION 11 DEATH.—Subparagraph 12 the payment or distribution is made after the 13 account beneficiary becomes disabled within the 14 meaning of section 72(m)(7) or dies. 15 ‘‘(C) FOR DISABILITY OR (A) shall not apply if EXCEPTION FOR DISTRIBUTIONS 16 AFTER MEDICARE ELIGIBILITY.—Subparagraph 17 (A) shall not apply to any payment or distribu- 18 tion after the date on which the account bene- 19 ficiary attains the age specified in section 1811 20 of the Social Security Act. 21 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 22 described in this paragraph as a rollover contribu- 23 tion if it meets the requirements of subparagraphs 24 (A) and (B). BAI17159 S.L.C. 59 1 ‘‘(A) IN GENERAL.—Paragraph (2) shall 2 not apply to any amount paid or distributed 3 from a health savings account (as defined in 4 section 223) or a Roth HSA to the account 5 beneficiary to the extent the amount received is 6 paid into a Roth HSA for the benefit of such 7 beneficiary not later than the 60th day after 8 the day on which the beneficiary receives the 9 payment or distribution. 10 ‘‘(B) LIMITATION.—This paragraph shall 11 not apply to any amount described in subpara- 12 graph (A) received by an individual from a 13 health savings account or a Roth HSA if, at 14 any time during the 1-year period ending on the 15 day of such receipt, such individual received any 16 other amount described in subparagraph (A) 17 from a health savings account or Roth HSA 18 which was not includible in the individual’s 19 gross income because of the application of this 20 paragraph. 21 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI- 22 VORCE.—The 23 a Roth HSA to an individual’s spouse or former 24 spouse under a divorce or separation instrument de- 25 scribed in subparagraph (A) of section 71(b)(2) shall transfer of an individual’s interest in BAI17159 S.L.C. 60 1 not be considered a taxable transfer made by such 2 individual notwithstanding any other provision of 3 this subtitle, and such interest shall, after such 4 transfer, be treated as a Roth HSA with respect to 5 which such spouse is the account beneficiary. 6 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT 7 BENEFICIARY.—If 8 beneficiary’s interest in a health savings account by 9 reason of the death of the account beneficiary, such 10 health savings account shall be treated as if the indi- 11 vidual were the account beneficiary. 12 ‘‘(f) COST-OF-LIVING ADJUSTMENT.— 13 ‘‘(1) IN an individual acquires an account GENERAL.—In the case of any calendar 14 year beginning after 2017, the $5,000 dollar amount 15 in subsection (b)(2) shall be increased by an amount 16 equal to— 17 ‘‘(A) such dollar amount, multiplied by 18 ‘‘(B) the cost-of-living adjustment deter- 19 mined under section 1(f)(3) for the calendar 20 year, determined— 21 ‘‘(i) by substituting ‘calendar year 22 2016’ for ‘calendar year 1992’ in subpara- 23 graph (B) thereof, and 24 25 ‘‘(ii) by substituting ‘CPI medical care component’ for ‘CPI’. BAI17159 S.L.C. 61 1 ‘‘(2) CPI MEDICAL CARE COMPONENT.—For 2 purposes of this paragraph, the term ‘CPI medical 3 care component’ means the medical care component 4 for the Consumer Price Index for All Urban Con- 5 sumers published by the Department of Labor. 6 ‘‘(3) ROUNDING.—If the amount of any in- 7 crease under the preceding sentence is not a mul- 8 tiple of $50, such increase shall be rounded to the 9 next lowest multiple of $50. 10 ‘‘(g) REPORTS.—The Secretary may require— 11 ‘‘(1) the trustee of a Roth HSA to make such 12 reports regarding such account to the Secretary and 13 to the account beneficiary with respect to contribu- 14 tions, distributions, the return of excess contribu- 15 tions, and such other matters as the Secretary deter- 16 mines appropriate, and 17 ‘‘(2) any person who provides an individual with 18 creditable coverage to make such reports to the Sec- 19 retary and to the account beneficiary with respect to 20 such plan as the Secretary determines appropriate. 21 The reports required by this subsection shall be filed at 22 such time and in such manner and furnished to such indi23 viduals at such time and in such manner as may be re24 quired by the Secretary.’’. BAI17159 S.L.C. 62 1 (b) LIMIT ON CONTRIBUTIONS TO DEDUCTIBLE 2 HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 3 is amended by adding at the end the following new sub4 section: 5 6 ‘‘(i) LIMITED CONTRIBUTIONS AFTER 2016.— ‘‘(1) IN GENERAL.—No contribution may be ac- 7 cepted by a health savings account after the date of 8 the enactment of this subsection. 9 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 10 apply to a rollover contribution described in sub- 11 section (f)(5).’’. 12 (c) CONFORMING AMENDMENTS.— 13 14 15 (1) Section 26(b)(2) of the Internal Revenue Code of 1986 is amended— (A) in subparagraph (S), by striking ‘‘and 16 408(d)(9)(D)(i)(II)’’ 17 ‘‘408(d)(9)(D)(i)(II), 18 530A(b)(8)(B)(i)(II)’’, and and inserting and 19 (B) in subparagraph (U), by inserting 20 ‘‘and section 530A(e)(4)’’ before the comma at 21 the end. 22 (2) Section 35(g)(3) of such Code is amended— 23 (A) by striking ‘‘or from’’ and inserting ‘‘, 24 from’’, and BAI17159 S.L.C. 63 1 (B) by inserting ‘‘or from a Roth HSA (as 2 defined in section 530A(c))’’ after ‘‘223(d))’’. 3 (3) Section 220(f)(5)(A) of such Code is 4 amended by inserting ‘‘or a Roth HSA (as defined 5 in section 530A(c))’’ after ‘‘223(d))’’. 6 (4) Section 223(f)(5)(A) of such Code is 7 amended by inserting ‘‘or a Roth HSA (as defined 8 in section 530A(c))’’ after ‘‘paid into a health sav- 9 ings account’’. 10 (5) Section 408(d)(9) of such Code is amended 11 by adding at the end the following new subpara- 12 graph: 13 ‘‘(F) APPLICATION TO ROTH HSAS.—Rules 14 similar to the rules of the preceding subpara- 15 graphs of this paragraph shall apply with re- 16 spect to eligible individuals (as defined in sec- 17 tion 530A(d)) making contributions to Roth 18 HSAs, except that subparagraph (C) shall be 19 applied by substituting ‘section 530A(b)’ for 20 ‘section 223(b)’.’’. 21 (6) Section 848(e)(1)(B)(v) of such Code is 22 amended by inserting ‘‘or a Roth HSA (as defined 23 in section 530A(c))’’ after ‘‘223(d))’’. BAI17159 S.L.C. 64 1 (7) Section 877A(e)(2) of such Code is amend- 2 ed by inserting ‘‘a Roth HSA (as defined in section 3 530A(c),’’ after ‘‘223),’’. 4 (8) Section 4973 of such Code is amended— 5 (A) in subsection (a), by striking ‘‘or’’ at 6 the end of paragraph (5), by inserting ‘‘or’’ at 7 the end of paragraph (6), and by inserting after 8 paragraph (6) the following new paragraph: 9 ‘‘(7) a Roth HSA (within the meaning of sec- 10 11 12 13 tion 530A),’’, and (B) by adding at the end the following new subsection: ‘‘(j) EXCESS CONTRIBUTION TO ROTH HSAS.—For 14 purposes of this section, in the case of Roth HSA (within 15 the meaning of section 530A(c)), the term ‘excess con16 tributions’ means the sum of— 17 ‘‘(1) the aggregate amount contributed for the 18 taxable year to the accounts (other than a rollover 19 contribution 20 223(f)(5), or 530A(e)(5)), and described in section 220(f)(5), 21 ‘‘(2) the amount determined under this sub- 22 section for the preceding taxable year, reduced by 23 the sum of— BAI17159 S.L.C. 65 1 ‘‘(A) the distributions out of the accounts 2 which were included in gross income under sec- 3 tion 530A(e)(2), and 4 ‘‘(B) the excess (if any) of— 5 ‘‘(i) the maximum amount allowable 6 as a contribution under section 530A(b) 7 for the taxable year, over 8 9 ‘‘(ii) the amount contributed to the accounts for the taxable year. 10 For purposes of this subsection, any contribution which 11 is distributed out of the Roth HSA in a distribution to 12 which section 530A(e)(3) applies shall be treated as an 13 amount not contributed.’’. 14 15 16 (9) Section 4975(c) of such Code is amended by adding at the end the following new paragraph: ‘‘(7) SPECIAL RULE FOR ROTH HSAS.—An indi- 17 vidual for whose benefit a Roth HSA (within the 18 meaning of section 530A(c)) is established shall be 19 exempt from the tax imposed by this section with re- 20 spect to any transaction concerning such account 21 (which would otherwise be taxable under this sec- 22 tion) if, with respect to such transaction, the ac- 23 count ceases to be a Roth HSA by reason of the ap- 24 plication of section 530A(c)(5) to such account.’’. BAI17159 S.L.C. 66 1 (10) Section 6051(a)(12) of such Code is 2 amended by inserting ‘‘and to any Roth HSA (as de- 3 fined in section 530A(c))’’ after ‘‘223(d))’’. 4 (11) Section 6693(a)(2) of such Code is amend- 5 ed by striking ‘‘and’’ at the end of subparagraph 6 (E), by striking the period at the end of subpara- 7 graph (F) and inserting ‘‘, and’’, and by adding at 8 the end the following new subparagraph: 9 10 11 ‘‘(G) section 530A(g) (relating to Roth HSAs).’’. (d) CLERICAL AMENDMENT.—The table of parts for 12 subchapter F of chapter 1 of such Code is amended by 13 adding at the end the following new item: ‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS.’’. 14 (e) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to taxable years beginning after 16 December 31, 2016. 17 18 19 SEC. 202. TREATMENT OF DIRECT PRIMARY CARE. (a) HSAS.— (1) ROTH HSA.—Section 530A(c)(2)(A) of the 20 Internal Revenue Code of 1986, as added by this 21 Act, is amended by adding at the end the following: 22 ‘‘Such term shall include the payment of a monthly 23 or other prepaid amount for the furnishing (or ac- 24 cess to the furnishing) by a physician or group of BAI17159 S.L.C. 67 1 physicians of physician professional services (and an- 2 cillary services).’’. 3 (2) HSA.—Section 223(d)(2)(A) of such Code 4 is amended by adding at the end the following: 5 ‘‘Such term shall include the payment of a monthly 6 or other prepaid amount for the furnishing (or ac- 7 cess to the furnishing) by a physician or group of 8 physicians of physician professional services (and an- 9 cillary services).’’. 10 11 12 (b) NOT TREATED AS HEALTH INSURANCE COV- ERAGE.— (1) IN GENERAL.—For purposes of title XXVII 13 of the Public Health Service Act, subtitle B of title 14 I of the Employee Retirement and Income Security 15 Act of 1974, PPACA, and this Act, the offering of 16 direct primary care shall not be treated as the offer- 17 ing of health insurance coverage and shall not be 18 subject to regulations as such coverage under such 19 Acts. 20 (2) DIRECT PRIMARY CARE DEFINED.—In this 21 subsection, the term ‘‘direct primary care’’ means 22 the furnishing (or access to the furnishing) by a 23 physician or group of physicians of physician profes- 24 sional services (and ancillary services) in return for 25 payment of a monthly or other prepaid amount. BAI17159 S.L.C. 68 1 2 3 SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT BENEFICIARY. (a) IN GENERAL.—Section 223(e)(8) of the Internal 4 Revenue Code of 1986, as redesignated by section 5 201(c)(3) of this Act, is amended to read as follows: 6 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 7 BENEFICIARY.—If 8 beneficiary’s interest in a health savings account by 9 reason of the death of the account beneficiary, such 10 health savings account shall be treated as if the indi- 11 vidual were the account beneficiary.’’. 12 (b) EFFECTIVE DATE.—The amendment made by an individual acquires an account 13 this section shall apply with respect to interests acquired 14 after the date of the enactment of this Act. 16 Subtitle B—Health Care Tax Credits 17 SEC. 211. LIMITED APPLICATION OF PPACA HEALTH PRE- 15 18 19 MIUM CREDIT. (a) IN GENERAL.—Section 36B(c)(1) of the Internal 20 Revenue Code of 1986 is amended by adding at the end 21 the following: 22 ‘‘(E) SPECIAL RULE FOR RESIDENTS OF 23 STATES 24 TION.—No 25 section to any individual who is not a qualified 26 resident (as defined in section 100(15) of the CONTINUING PPACA IMPLEMENTA- credit shall be allowed under this BAI17159 S.L.C. 69 1 Patient Freedom Act of 2017) of a State that 2 has elected the option under section 102(a)(1) 3 of such Act in relation to the implementation of 4 title I of the Patient Protection and Affordable 5 Care Act.’’. 6 (b) LIMITATION ON AMOUNT OF CREDIT.—Section 7 36B(b) of the Internal Revenue Code of 1986 is amended 8 by adding at the end the following new paragraph: 9 ‘‘(4) LIMITATION ON AMOUNT OF CREDIT.—In 10 the case of any taxable year beginning in a calendar 11 year which begins after the date of the enactment of 12 this paragraph, the Secretary shall reduce the 13 amount determined under this subsection (deter- 14 mined before the application of this paragraph) for 15 each qualified resident (as defined in section 100 of 16 the Patient Freedom Act of 2017) of a State that 17 makes an election under section 102(a)(1) of such 18 Act by an amount equal to— 19 ‘‘(A) the amount of the reduction described 20 in section 102(a)(1)(A) of such Act for such 21 year (calculated by only taking into account 22 credit allowed under this section), divided by 23 ‘‘(B) the total number of such qualified 24 residents of such State estimated by the Sec- BAI17159 S.L.C. 70 1 retary to claim the credit allowed under sub- 2 section (a) for such year.’’. 3 (c) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to taxable years beginning after 5 January 1, 2018. 6 7 SEC. 212. NEW ROTH HSA CREDIT. (a) IN GENERAL.—Subpart C of part IV of sub- 8 chapter A of chapter 1 of the Internal Revenue Code of 9 1986 is amended by inserting after section 36B the fol10 lowing new section: 11 12 ‘‘SEC. 36C. ROTH HSA CREDIT. ‘‘(a) IN GENERAL.—In the case of a qualifying indi- 13 vidual, there shall be allowed as a credit against the tax 14 imposed by this subtitle for any taxable year, an amount 15 equal to the Roth HSA credit amount of the individual 16 for the taxable year. 17 ‘‘(b) QUALIFYING INDIVIDUAL.—For purposes of this 18 section, the term ‘qualifying individual’ means, with re19 spect to any month, any individual who for such month 20 is a deposit qualifying resident (as defined in section 21 103(b)(2) of the Patient Freedom Act of 2017) of a State 22 described in section 102(a)(2) of such Act that elects to 23 have section 103(b) of such Act carried out by way of the 24 credit determined under this section. BAI17159 S.L.C. 71 1 ‘‘(c) ROTH HSA CREDIT AMOUNT.—For purposes of 2 this section, the term ‘Roth HSA credit amount’ means, 3 with respect to any taxable year, the sum of the Roth HSA 4 deposit amounts determined under section 104 of the Pa5 tient Freedom Act of 2017 with respect to the individual 6 for all months ending during the taxable year. 7 ‘‘(d) SPECIAL RULES.—For purposes of this sec- 8 tion— 9 10 11 ‘‘(1) RECONCILIATION OF CREDIT AND AD- VANCE CREDIT.— ‘‘(A) EXCESS ADVANCE PAYMENTS.—If the 12 advance payments to an individual for a taxable 13 year under subsection (e) exceed the credit al- 14 lowed by this section with respect to such indi- 15 vidual for such taxable year, the tax imposed by 16 this chapter for the taxable year shall be in- 17 creased by the amount of such excess. 18 ‘‘(B) ADVANCE PAYMENT SHORTFALL.—If 19 the credit allowed by this section (determined 20 without regard to this subparagraph) with re- 21 spect to an individual for a taxable year exceeds 22 the advance payments to such individual for 23 such taxable year under subsection (e), the Sec- 24 retary shall, in lieu of a credit allowed against 25 the tax imposed by this subtitle, make a pay- BAI17159 S.L.C. 72 1 ment on behalf of such individual to such indi- 2 vidual’s health savings account in an amount 3 equal to such excess. 4 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE- 5 TURN.—If 6 ing of section 7703) at the close of the taxable year, 7 the credit shall be allowed under this section only if 8 the taxpayer and the taxpayer’s spouse file a joint 9 return for the taxable year. 10 11 the taxpayer is married (within the mean- ‘‘(e) ADVANCE PAYMENT PROGRAM.— ‘‘(1) IN GENERAL.—The Secretary of the 12 Treasury, in consultation with the Secretary of 13 Health and Human Services, shall establish a pro- 14 gram— 15 ‘‘(A) to make advance determinations with 16 respect to the eligibility of individuals for the 17 credit allowed under this section, and 18 ‘‘(B) to make advance payments of the 19 credit allowed under this section directly to the 20 Roth HSA of any such individual so eligible. 21 ‘‘(2) PROGRAM REQUIREMENTS.—Such pro- 22 gram shall be established under rules similar to the 23 rules of section 1412 of the Patient Protection and 24 Affordable Care Act, except that advance determina- 25 tions and advance payments shall be made on re- BAI17159 S.L.C. 73 1 quest of the individual with respect to whom the de- 2 termination is to be made and taking into account 3 the enrollment process (including any opt-out elec- 4 tion under such process) established under section 5 105(c) of the Patient Freedom Act of 2017. 6 ‘‘(3) TREATMENT AS INCOME.—The amount of 7 any credit allowed under this section shall be in- 8 cluded in gross income.’’. 9 (b) CLERICAL AMENDMENT.—The table of sections 10 for such subpart is amended by inserting after the item 11 relating to section 36B the following new item: ‘‘Sec. 36C. Roth HSA credit.’’. 12 (c) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 January 1, 2018.