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Section 10106

SEC. 10106. AMENDMENTS TO SUBTITLE F.

[a] Section 1501[a][2] of this Act is amended to read as follows:

'[2] EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE COMMERCE- The effects described in this paragraph are the following:

'[A] The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased. In the absence of the requirement, some individuals would make an economic and financial decision to forego health insurance coverage and attempt to self-insure, which increases financial risks to households and medical providers.

'[B] Health insurance and health care services are a significant part of the national economy. National health spending is projected to increase from $2,500,000,000,000, or 17.6 percent of the economy, in 2009 to $4,700,000,000,000 in 2019. Private health insurance spending is projected to be $854,000,000,000 in 2009, and pays for medical supplies, drugs, and equipment that are shipped in interstate commerce. Since most health insurance is sold by national or regional health insurance companies, health insurance is sold in interstate commerce and claims payments flow through interstate commerce.

'[C] The requirement, together with the other provisions of this Act, will add millions of new consumers to the health insurance market, increasing the supply of, and demand for, health care services, and will increase the number and share of Americans who are insured.

'[D] The requirement achieves near-universal coverage by building upon and strengthening the private employer-based health insurance system, which covers 176,000,000 Americans nationwide. In Massachusetts, a similar requirement has strengthened private employer-based coverage: despite the economic downturn, the number of workers offered employer-based coverage has actually increased.

'[E] The economy loses up to $207,000,000,000 a year because of the poorer health and shorter lifespan of the uninsured. By significantly reducing the number of the uninsured, the requirement, together with the other provisions of this Act, will significantly reduce this economic cost.

'[F] The cost of providing uncompensated care to the uninsured was $43,000,000,000 in 2008. To pay for this cost, health care providers pass on the cost to private insurers, which pass on the cost to families. This cost-shifting increases family premiums by on average over $1,000 a year. By significantly reducing the number of the uninsured, the requirement, together with the other provisions of this Act, will lower health insurance premiums.

'[G] 62 percent of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.

'[H] Under the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1001 et seq.], the Public Health Service Act [42 U.S.C. 201 et seq.], and this Act, the Federal Government has a significant role in regulating health insurance. The requirement is an essential part of this larger regulation of economic activity, and the absence of the requirement would undercut Federal regulation of the health insurance market.

'[I] Under sections 2704 and 2705 of the Public Health Service Act [as added by section 1201 of this Act], if there were no requirement, many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.

'[J] Administrative costs for private health insurance, which were $90,000,000,000 in 2006, are 26 to 30 percent of premiums in the current individual and small group markets. By significantly increasing health insurance coverage and the size of purchasing pools, which will increase economies of scale, the requirement, together with the other provisions of this Act, will significantly reduce administrative costs and lower health insurance premiums. The requirement is essential to creating effective health insurance markets that do not require underwriting and eliminate its associated administrative costs.'.

[b][1] Section 5000A[b][1] of the Internal Revenue Code of 1986, as added by section 1501[b] of this Act, is amended to read as follows:

'[1] IN GENERAL- If a taxpayer who is an applicable individual, or an applicable individual for whom the taxpayer is liable under paragraph [3], fails to meet the requirement of subsection [a] for 1 or more months, then, except as provided in subsection [e], there is hereby imposed on the taxpayer a penalty with respect to such failures in the amount determined under subsection [c].'.

[2] Paragraphs [1] and [2] of section 5000A[c] of the Internal Revenue Code of 1986, as so added, are amended to read as follows:

'[1] IN GENERAL- The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection [b][1] shall be equal to the lesser of--

'[A] the sum of the monthly penalty amounts determined under paragraph [2] for months in the taxable year during which 1 or more such failures occurred, or

'[B] an amount equal to the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends.

'[2] MONTHLY PENALTY AMOUNTS- For purposes of paragraph [1][A], the monthly penalty amount with respect to any taxpayer for any month during which any failure described in subsection [b][1] occurred is an amount equal to 1/12 of the greater of the following amounts:

'[A] FLAT DOLLAR AMOUNT- An amount equal to the lesser of--

'[i] the sum of the applicable dollar amounts for all individuals with respect to whom such failure occurred during such month, or

'[ii] 300 percent of the applicable dollar amount [determined without regard to paragraph [3][C]] for the calendar year with or within which the taxable year ends.

'[B] PERCENTAGE OF INCOME- An amount equal to the following percentage of the taxpayer's household income for the taxable year:

'[i] 0.5 percent for taxable years beginning in 2014.

'[ii] 1.0 percent for taxable years beginning in 2015.

'[iii] 2.0 percent for taxable years beginning after 2015.'.

[3] Section 5000A[c][3] of the Internal Revenue Code of 1986, as added by section 1501[b] of this Act, is amended by striking '$350' and inserting '$495'.

[c] Section 5000A[d][2][A] of the Internal Revenue Code of 1986, as added by section 1501[b] of this Act, is amended to read as follows:

'[A] RELIGIOUS CONSCIENCE EXEMPTION- Such term shall not include any individual for any month if such individual has in effect an exemption under section 1311[d][4][H] of the Patient Protection and Affordable Care Act which certifies that such individual is--

'[i] a member of a recognized religious sect or division thereof which is described in section 1402[g][1], and

'[ii] an adherent of established tenets or teachings of such sect or division as described in such section.'.

[d] Section 5000A[e][1][C] of the Internal Revenue Code of 1986, as added by section 1501[b] of this Act, is amended to read as follows:

'[C] SPECIAL RULES FOR INDIVIDUALS RELATED TO EMPLOYEES- For purposes of subparagraph [B][i], if an applicable individual is eligible for minimum essential coverage through an employer by reason of a relationship to an employee, the determination under subparagraph [A] shall be made by reference to required contribution of the employee.'.

[e] Section 4980H[b] of the Internal Revenue Code of 1986, as added by section 1513[a] of this Act, is amended to read as follows:

'[b] Large Employers With Waiting Periods Exceeding 60 Days-

'[1] IN GENERAL- In the case of any applicable large employer which requires an extended waiting period to enroll in any minimum essential coverage under an employer-sponsored plan [as defined in section 5000A[f][2]], there is hereby imposed on the employer an assessable payment of $600 for each full-time employee of the employer to whom the extended waiting period applies.

'[2] EXTENDED WAITING PERIOD- The term 'extended waiting period' means any waiting period [as defined in section 2701[b][4] of the Public Health Service Act] which exceeds 60 days.'.

[f][1] Subparagraph [A] of section 4980H[d][4] of the Internal Revenue Code of 1986, as added by section 1513[a] of this Act, is amended by inserting ', with respect to any month,' after 'means'.

[2] Section 4980H[d][2] of the Internal Revenue Code of 1986, as added by section 1513[a] of this Act, is amended by adding at the end the following:

'[D] APPLICATION TO CONSTRUCTION INDUSTRY EMPLOYERS- In the case of any employer the substantial annual gross receipts of which are attributable to the construction industry--

'[i] subparagraph [A] shall be applied by substituting 'who employed an average of at least 5 full-time employees on business days during the preceding calendar year and whose annual payroll expenses exceed $250,000 for such preceding calendar year' for 'who employed an average of at least 50 full-time employees on business days during the preceding calendar year', and

'[ii] subparagraph [B] shall be applied by substituting '5' for '50'.'.

[3] The amendment made by paragraph [2] shall apply to months beginning after December 31, 2013.

[g] Section 6056[b] of the Internal Revenue Code of 1986, as added by section 1514[a] of the Act, is amended by adding at the end the following new flush sentence:

'The Secretary shall have the authority to review the accuracy of the information provided under this subsection, including the applicable large employer's share under paragraph [2][C][iv].'.