,,ii #aaith ,,congress #ast ,session ,s4 #bhge ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #ah 7legislative day1 ,september #af71 #bjbe ,mr4 ,sheehy introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide for the treatment of health reimbursement arrangements integrated with individual market coverage4 #a4 ,short title ,this ,act may be cited as the ,custom ,health ,option and ,individual ,care ,expense ,act or the ,,choice ,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 #ihjb and sections #bgje1 #bgaa1 #bgac1 and #bgae 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 7other than an account-based group health plan or a group health plan that consists solely of excepted benefits7 to any employees within such specified class4 ,in the case of an employer who offers a group health plan provided through health insurance coverage in the small group market 7that is subject to section #bgja of the ,public ,health ,service ,act7 to all employees within such specified class1 subclause 7,,ii7 shall not apply to such group health plan4 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 home location 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 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 ,under such rules as the ,secretary may prescribe1 employees who are hired for temporary placement with an unrelated person that is not the common law employer4 7,,xi7 ,employees who are hired in the same date range4 7,,xii7 ,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 of 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 and any dependents are1 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 thereof771 and 7ii7 any requests made for payment or reimbursement of medical care under the arrangement and that the participant and any dependents remain 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 #fj 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 apprise 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 ,inclusion of ,,choice arrangement permitted benefits on ,w-#b 7#a7 ,in general ,section #fjea7;a7 of such ,code is amended by striking and at the end of paragraph 7#ah71 by striking the period at the end of paragraph 7#ai7 and inserting 1 and1 and by inserting after paragraph 7#ai7 the following new paragraph3 7#bj7 the total amount of permitted benefits for enrolled individuals under a custom health option and individual care expense arrangement 7as defined in section #ihae7;b77#b77 with respect to such employee4 4 7c7 ,treatment of current rules relating to certain arrangements 7#a7 ,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 7#b7 ,other conforming of rules ,the ,secretary of the ,treasury1 the ,secretary of ,health and ,human ,services1 and the ,secretary of ,labor shall modify such rules as may be necessary to conform to the amendments made by this section4 7d7 ,effective date ,the amendments made by this section shall apply to plan years beginning after ,december #ca1 #bjbe4 #c4 ,participants in ,,choice arrangement eligible for purchase of ,exchange insurance under cafeteria plan 7a7 ,in general ,section #abe7;f77#c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,c7 ,exception for participants in ,,choice arrangement ,subparagraph 7,a7 shall not apply in the case of an employee participating in an custom health option and individual care expense arrangement 7within the meaning of section #ihae7;b77#b77 offered by the employee's employer4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjbe4 #d4 ,employer credit for ,,choice arrangement 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de;,,bb4 ,employer credit for ,,choice arrangement 7a7 ,in general ,for purposes of section #ch1 in the case of an eligible employer1 the ,,choice arrangement credit determined under this section for any taxable year is an amount1 with respect to each employee enrolled during the credit period in a ,,choice arrangement maintained by the employer1 equal to-- 7#a7 #ajj multiplied by the number of months for which the employee is so enrolled during the first year in the credit period1 and 7#b7 one-half of the dollar amount in effect under paragraph 7#a7 for the taxable year1 multiplied by the number of months for which the employee is so enrolled during the second year of the credit period4 7b7 ,arrangement must constitute minimum essential coverage ,an employee shall not be taken into account under subsection 7a7 unless such employee's eligibility for the ,,choice arrangement 7determined without regard to the employee being enrolled7 would cause the employee to be treated under section #cf;,b7c77#b7 as being eligible for minimum essential coverage consisting of an eligible employer-sponsored plan 7as defined in section #ejjj;,a7f77#b774 7c7 ,definitions ,for purposes of this section-- 7#a7 ,,choice arrangement ,the term ,,choice arrangement means a custom health option and individual care expense arrangement 7as defined in section #ihae7;b77#b77;,b774 7#b7 ,credit period ,the credit period with respect to an eligible employer is the first #b one-year periods beginning with the month during which the employer first establishes a ,,choice arrangement on behalf of employees of the employer4 7#c7 ,eligible employer ,the term eligible employer means1 with respect to any taxable year beginning in a calendar year1 an employer who is not an applicable large employer for the calendar year under section #dihj;,h4 7d7 ,inflation adjustment 7#a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjbf1 the dollar amount in subsection 7a7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which such taxable year begins by substituting calendar year #bjbe for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7#b7 ,rounding ,if any amount after adjustment under paragraph 7#a7 is not a multiple of #aj1 such amount shall be rounded to the next lower multiple of #aj4 4 7b7 ,credit made part of general business credit ,section #ch7;b7 of such ,code is amended by striking plus at the end of paragraph 7#dj71 by striking the period at the end of paragraph 7#da7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#db7 the ,,choice arrangement credit determined under section #de;,,bb7a74 4 7c7 ,credit allowed against alternative minimum tax ,section #ch7;c77#d77;,b7 of such ,code is amended-- 7#a7 by redesignating clauses 7x71 7xi71 and 7xii7 as clauses 7xi71 7xii71 and 7xiii71 respectively1 and 7#b7 by inserting after clause 7ix7 the following new clause3 7x7 the credit determined under section #de;,,bb1 4 7d7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #de;,,bb4 ,employer credit for ,,choice arrangement4 4 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbe4