,,ib ,union ,calendar ,no4 #hc #aahth   
,,congress  #ast ,session  ,h4 ,r4 #cgii
 ,report ,no4 #aah-ajg ,,in ,,the       
,,house ,,of ,,representatives  ,june   
#e1 #bjbc,mr4 ,hern introduced the      
following bill2 which was referred to   
the ,committee on ,ways and ,means      
,june #ab1 #bjbc;,additional sponsor3   
,ms4 ,malliotakis  ,june #ab1           
#bjbc,reported with an amendment1       
committed to the ,committee of the      
,whole ,house on the ,state of the      
,union1 and ordered to be printed,strike
 out all after the enacting clause and  
insert the part printed in italic,for   
text of introduced bill1 see copy of    
bill as introduced on ,june #e1 #bjbc   
,a ,,bill  ,to amend the ,internal      
,revenue ,code of #aihf to provide for  
health reimbursement arrangements       
integrated with individual health       
insurance coverage4  #a4 ,short title   
,this ,act may be cited as the ,custom  
,health ,option and ,individual ,care   
,expense ,arrangement ,act or the       

,,choice ,arrangement ,act4  #b4        
,treatment of health reimbursement      
arrangements integrated with individual 
market coverage  7a7 ,in general        
,section #ihae7;b7 of the ,internal     
,revenue ,code of #aihf is amended--    
7#a7 by striking                        
,exception4--,notwithstanding subsection
 7a7 and inserting the following3       
,exceptions4-- 7#a7 ,self-insured group 
health plans ,notwithstanding subsection
 7a7  1 and  7#b7 by adding at the end  
the following new paragraph3  7#b7      
,custom health option and individual    
care expense arrangements  7,a7 ,in     
general ,for purposes of this           
subchapter1 a custom health option and  
individual care expense arrangement     
shall be treated as meeting the         
requirements of section #bgaa and #bgac 
of title ,,xxvii of the ,public ,health 
,service ,act4  7,b7 ,custom health     
option and individual care expense      
arrangements defined ,for purposes of   
this section1 the term custom health    

option and individual care expense      
arrangement means a health reimbursement
 arrangement-- 7i7 which is an          
employer-provided group health plan     
funded solely by employer contributions 
to provide payments or reimbursements   
for medical care subject to a maximum   
fixed dollar amount for a period1  7ii7 
under which such payments or            
reimbursements may only be made for     
medical care provided during periods    
during which the individual is covered--
 7,i7 under individual health insurance 
coverage 7other than coverage that      
consists solely of excepted benefits71  
or  7,,ii7 under part ,a and ,b of title
 ,,xviii of the ,social ,security ,act  
or part ,c of such title1  7iii7 which  
meets the nondiscrimination requirements
 of subparagraph 7,c71  7iv7 which meets
 the substantiation requirements of     
subparagraph 7,d71 and  7v7 which meets 
the notice requirements of subparagraph 
7,e74  7,c7 ,nondiscrimination  7i7 ,in 
general ,an arrangement meets the       

requirements of this subparagraph if an 
employer offering such arrangement to an
 employee within a specified class of   
employee-- 7,i7 offers such arrangement 
to all employees within such specified  
class on the same terms1 and  7,,ii7    
does not offer any other group health   
plan to any employees within such       
specified class4  7ii7 ,specified class 
of employee ,for purposes of this       
subparagraph1 any of the following may  
be designated as a specified class of   
employee3 7,i7 ,full-time employees4    
7,,ii7 ,part-time employees4  7,,iii7   
,salaried employees4  7,,iv7            
,non-salaried employees4  7,v7          
,employees whose primary site of        
employment is in the same rating area4  
7,,vi7 ,employees who are included in a 
unit of employees covered under a       
collective bargaining agreement to which
 the employer is subject 7determined    
under rules similar to the rules of     
section #aje7;h774  7,,vii7 ,employees  
who have not met a group health plan1 or

 health insurance issuer offering group 
health insurance coverage1 waiting      
period requirement that satisfies the of
 section #bgjh of the ,public ,health   
,service ,act4  7,,viii7 ,seasonal      
employees4  7,,ix7 ,employees who are   
nonresident aliens and who receive no   
earned income 7within the meaning of    
section #iaa7;d77#b77 from the employer 
which constitutes income from sources   
within the ,united ,states 7within the  
meaning of section #hfa7;a77#c774  7,x7 
,such other classes of employees as the 
,secretary may designate4  ,an employer 
may designate 7in such manner as is     
prescribed by the ,secretary7 two or    
more of the classes described in the    
preceding subclauses as the specified   
class of employees to which the         
arrangement is offered for purposes of  
applying this subparagraph4  7iii7      
,special rule for new hires ,an employer
 may designate prospectively so much of 
a specified class of employees as are   
hired after a date set by the employer4 

,such subclass of employees shall be    
treated as the specified class for      
purposes of applying clause 7i74  7iv7  
,rules for determining type of employee 
,for purposes for clause 7ii71 any      
determination of full-time1 part-time1  
or seasonal employment status shall be  
made under rules similar to the rules of
 section #aje7;h7 or #dihj;,h1 whichever
 the employer elects for the plan year4 
,such election shall apply with respect 
to all employees of the employer for the
 plan year4  7v7 ,permitted variation   
,for purposes of clause 7i77,i71 an     
arrangement shall not fail to be treated
 as provided on the same terms within a 
specified class merely because the      
maximum dollar amount of payments and   
reimbursements which may be made under  
the terms of the arrangement for the    
year with respect to each employee      
within such class-- 7,i7 increases as   
additional dependents of the employee   
are covered under the arrangement1 and  
7,,ii7 increases with respect to a      

participant as the age of the           
participant increases1 but not in excess
 of an amount equal to #cjj percent the 
lowest maximum dollar amount with       
respect to such a participant determined
 without regard to age4  7,d7           
,substantiation requirements ,an        
arrangement meets the requirements of   
this subparagraph if the arrangement has
 reasonable procedures to substantiate--
 7i7 that the participant is1 or will   
be1 enrolled in coverage described in   
subparagraph 7,b77ii7 as of the         
beginning of the plan year of the       
arrangement 7or as of the beginning of  
coverage under the arrangement in the   
case of an employee who first becomes   
eligible to participate in the          
arrangement after the date notice is    
given with respect to the plan under    
subparagraph 7,e7 7determined without   
regard to clause 7iii7 thereof71 and    
7ii7 any requests made for payment or   
reimbursement of medical care under the 
arrangement and that the participant    

remains so enrolled4  7,e7 ,notice  7i7 
,in general ,except as provided in      
clause 7iii71 an arrangement meets the  
requirements of this subparagraph if1   
under the arrangement1 each employee    
eligible to participate is1 not later   
than #ij days before the beginning of   
the plan year1 given written notice of  
the employee's rights and obligations   
under the arrangement which-- 7,i7 is   
sufficiently accurate and comprehensive 
to appraise the employee of such rights 
and obligations1 and  7,,ii7 is written 
in a manner calculated to be understood 
by the average employee eligible to     
participate4  7ii7 ,notice requirements 
,such notice shall include such         
information as the ,secretary may by    
regulation prescribe4  7iii7 ,notice    
deadline for certain employees ,in the  
case of an employee-- 7,i7 who first    
becomes eligible to participate in the  
arrangement after the date notice is    
given with respect to the plan under    
clause 7i7 7determined without regard to

 this clause71 or  7,,ii7 whose employer
 is first established fewer than #abj   
days before the beginning of the first  
plan year of the arrangement1  the      
requirements of this subparagraph shall 
be treated as met if the notice required
 under clause 7i7 is provided not later 
than the date the arrangement may take  
effect with respect to such employee4  4
  7b7 ,no inference ,to the extent not  
inconsistent with the amendments made by
 this section-- 7#a7 no inference shall 
be made from such amendments with       
respect to the rules prescribed in the  
,federal ,register on ,june #bj1 #bjai1 
7#hd ,fed4 ,reg4 #bhhhh7 relating to    
health reimbursement arrangements and   
other account-based group health plans1 
and  7#b7 any reference to custom health
 option and individual care expense     
arrangements shall for purposes of such 
rules be treated as including a         
reference to individual coverage health 
reimbursement arrangements4  7c7        
,effective date ,the amendments made by 

this section shall apply to plan years  
beginning after ,december #ca1 #bjbc4   
,june #ab1 #bjbc,reported with an       
amendment1 committed to the ,committee  
of the ,whole ,house on the ,state of   
the ,union1 and ordered to be printed