SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOYERS.

[a] In General- Section- 3111 of the Internal Revenue Code of 1986 is amended by redesignating subsection [c] as subsection [d] and by inserting after subsection [b] the following new subsection:

'[c] Employers Electing to Not Provide Health Benefits-

'[1] IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages [as defined in section 3121[a]] paid by him with respect to employment [as defined in section 3121[b]].

'[2] SPECIAL RULES FOR SMALL EMPLOYERS-

'[A] IN GENERAL- In the case of any employer who is small employer for any calendar year, paragraph [1] shall be applied by substituting the applicable percentage determined in accordance with the following table for '8 percent':

'If the annual payroll of such employer for the preceding calendar year: The applicable percentage is:

Does not exceed $250,000 0 percent

Exceeds $250,000, but does not exceed $300,000 2 percent

Exceeds $300,000, but does not exceed $350,000 4 percent

Exceeds $350,000, but does not exceed $400,000 6 percent

'[B] SMALL EMPLOYER- For purposes of this paragraph, the term 'small employer' means any employer for any calendar year if the annual payroll of such employer for the preceding calendar year does not exceed $400,000.

'[C] ANNUAL PAYROLL- For purposes of this paragraph, the term 'annual payroll' means, with respect to any employer for any calendar year, the aggregate wages [as defined in section 3121[a]] paid by him with respect to employment [as defined in section 3121[b]] during such calendar year.

'[3] NONELECTING EMPLOYER- For purposes of paragraph [1], the term 'nonelecting employer' means any employer for any period with respect to which such employer does not have an election under section 4980H[a] in effect.

'[4] SPECIAL RULE FOR SEPARATE ELECTIONS- In the case of an employer who makes a separate election described in section 4980H[a][4] for any period, paragraph [1] shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.

'[5] AGGREGATION; PREDECESSORS- For purposes of this subsection--

'[A] all persons treated as a single employer under subsection [b], [c], [m], or [o] of section 414 shall be treated as 1 employer, and

'[B] any reference to any person shall be treated as including a reference to any predecessor of such person.'.

[b] Definitions- Section- 3121 of such Code is amended by adding at the end the following new subsection:

'[aa] Special Rules for Tax on Employers Electing Not To Provide Health Benefits- For purposes of section 3111[c]--

'[1] Paragraphs [1], [5], and [19] of subsection [b] shall not apply.

'[2] Paragraph [7] of subsection [b] shall apply by treating all services as not covered by the retirement systems referred to in subparagraphs [C] and [F] thereof.

'[3] Subsection [e] shall not apply and the term 'State' shall include the District of Columbia.'.

[c] Conforming Amendment- Subsection [d] of section 3111 of such Code, as redesignated by this section, is amended by striking 'this section' and inserting 'subsections [a] and [b]'.

[d] Application to Railroads-

[1] IN GENERAL- Section- 3221 of such Code is amended by redesignating subsection [c] as subsection [d] and by inserting after subsection [b] the following new subsection:

'[c] Employers Electing to Not Provide Health Benefits-

'[1] IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the compensation paid during any calendar year by such employer for services rendered to such employer.

'[2] EXCEPTION FOR SMALL EMPLOYERS- Rules similar to the rules of section 3111[c][2] shall apply for purposes of this subsection.

'[3] NONELECTING EMPLOYER- For purposes of paragraph [1], the term 'nonelecting employer' means any employer for any period with respect to which such employer does not have an election under section 4980H[a] in effect.

'[4] SPECIAL RULE FOR SEPARATE ELECTIONS- In the case of an employer who makes a separate election described in section 4980H[a][4] for any period, subsection [a] shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.'.

[2] DEFINITIONS- Subsection [e] of section 3231 of such Code is amended by adding at the end the following new paragraph:

'[13] SPECIAL RULES FOR TAX ON EMPLOYERS ELECTING NOT TO PROVIDE HEALTH BENEFITS- For purposes of section 3221[c]--

'[A] Paragraph [1] shall be applied without regard to the third sentence thereof.

'[B] Paragraph [2] shall not apply.'.

[3] CONFORMING AMENDMENT- Subsection [d] of section 3221 of such Code, as redesignated by this section, is amended by striking 'subsections [a] and [b], see section 3231[e][2]' and inserting 'this section, see paragraphs [2] and [13][B] of section 3231[e]'.

[e] Effective Date- The amendments made by this section shall apply to periods beginning after December 31, 2012.