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Internal Revenue Code, § 35. Health Insurance Costs Of Eligible Individuals

I.R.C. § 35(a) In General
In the case of an individual, there shall be allowed as a credit against the tax imposed by subtitle A an amount equal to 72.5 percent of the amount paid by the taxpayer for coverage of the taxpayer and qualifying family members under qualified health insurance for eligible coverage months beginning in the taxable year.
I.R.C. § 35(b) Eligible Coverage Month
For purposes of this section—
I.R.C. § 35(b)(1) In General
The term “eligible coverage month” means any month if—
I.R.C. § 35(b)(1)(A)
as of the first day of such month, the taxpayer—
I.R.C. § 35(b)(1)(A)(i)
is an eligible individual,
I.R.C. § 35(b)(1)(A)(ii)
is covered by qualified health insurance, the premium for which is paid by the taxpayer,
I.R.C. § 35(b)(1)(A)(iii)
does not have other specified coverage, and
I.R.C. § 35(b)(1)(A)(iv)
is not imprisoned under Federal, State, or local authority, and
I.R.C. § 35(b)(1)(B)
such month begins more than 90 days after the date of the enactment of the Trade Act of 2002, and before January 1, 2020.
I.R.C. § 35(b)(2) Joint Returns
In the case of a joint return, the requirements of paragraph (1)(A) shall be treated as met with respect to any month if at least 1 spouse satisfies such requirements.
I.R.C. § 35(c) Eligible Individual
For purposes of this section—
I.R.C. § 35(c)(1) In General
The term “eligible individual” means—
I.R.C. § 35(c)(1)(A)
an eligible TAA recipient,
I.R.C. § 35(c)(1)(B)
an eligible alternative TAA recipient, and
I.R.C. § 35(c)(1)(C)
an eligible PBGC pension recipient.
I.R.C. § 35(c)(2) Eligible TAA Recipient
I.R.C. § 35(c)(2)(A) In General
Except as provided in subparagraph (B), the term “eligible TAA recipient” means, with respect to any month, any individual who is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974 or who would be eligible to receive such allowance if section 231 of such Act were applied without regard to subsection (a)(3)(B) of such section. An individual shall continue to be treated as an eligible TAA recipient during the first month that such individual would otherwise cease to be an eligible TAA recipient by reason of the preceding sentence.
I.R.C. § 35(c)(2)(B) Special Rule
In the case of any eligible coverage month beginning after the date of the enactment of this paragraph, the term “eligible TAA recipient” means, with respect to any month, any individual who—
I.R.C. § 35(c)(2)(B)(i)
is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974,
I.R.C. § 35(c)(2)(B)(ii)
would be eligible to receive such allowance except that such individual is in a break in training provided under a training program approved under section 236 of such Act that exceeds the period specified in section 233(e) of such Act, but is within the period for receiving such allowances provided under section 233(a) of such Act, or
I.R.C. § 35(c)(2)(B)(iii)
is receiving unemployment compensation (as defined in section 85(b)) for any day of such month and who would be eligible to receive such allowance for such month if section 231 of such Act were applied without regard to subsections (a)(3)(B) and (a)(5) thereof.
An individual shall continue to be treated as an eligible TAA recipient during the first month that such individual would otherwise cease to be an eligible TAA recipient by reason of the preceding sentence.
I.R.C. § 35(c)(3) Eligible Alternative TAA Recipient
The term “eligible alternative TAA recipient” means, with respect to any month, any individual who—
I.R.C. § 35(c)(3)(A)
is a worker described in section 246(a)(3)(B) of the Trade Act of 1974 who is participating in the program established under section 246(a)(1) of such Act, and
I.R.C. § 35(c)(3)(B)
is receiving a benefit for such month under section 246(a)(2) of such Act.
An individual shall continue to be treated as an eligible alternative TAA recipient during the first month that such individual would otherwise cease to be an eligible alternative TAA recipient by reason of the preceding sentence.
I.R.C. § 35(c)(4) Eligible PBGC Pension Recipient
The term “eligible PBGC pension recipient” means, with respect to any month, any individual who—
I.R.C. § 35(c)(4)(A)
has attained age 55 as of the first day of such month, and
I.R.C. § 35(c)(4)(B)
is receiving a benefit for such month any portion of which is paid by the Pension Benefit Guaranty Corporation under title IV of the Employee Retirement Income Security Act of 1974.
I.R.C. § 35(d) Qualifying Family Member
For purposes of this section—
I.R.C. § 35(d)(1) In General
The term “qualifying family member” means—
I.R.C. § 35(d)(1)(A)
the taxpayer's spouse, and
I.R.C. § 35(d)(1)(B)
any dependent of the taxpayer with respect to whom the taxpayer is entitled to a deduction under section 151(c).
Such term does not include any individual who has other specified coverage.
I.R.C. § 35(d)(2) Special Dependency Test In Case Of Divorced Parents, Etc.
If section 152(e) applies to any child with respect to any calendar year, in the case of any taxable year beginning in such calendar year, such child shall be treated as described in paragraph (1)(B) with respect to the custodial parent (as defined in section 152(e)(4)(A)) and not with respect to the noncustodial parent.
I.R.C. § 35(e) Qualified Health Insurance
For purposes of this section—
I.R.C. § 35(e)(1) In General
The term “qualified health insurance” means any of the following:
I.R.C. § 35(e)(1)(A)
Coverage under a COBRA continuation provision (as defined in section 9832(d)(1)).
I.R.C. § 35(e)(1)(B)
State-based continuation coverage provided by the State under a State law that requires such coverage.
I.R.C. § 35(e)(1)(C)
Coverage offered through a qualified State high risk pool (as defined in section 2744(c)(2) of the Public Health Service Act).
I.R.C. § 35(e)(1)(D)
Coverage under a health insurance program offered for State employees.
I.R.C. § 35(e)(1)(E)
Coverage under a State-based health insurance program that is comparable to the health insurance program offered for State employees.
I.R.C. § 35(e)(1)(F)
Coverage through an arrangement entered into by a State and—
I.R.C. § 35(e)(1)(F)(i)
a group health plan (including such a plan which is a multiemployer plan as defined in section 3(37) of the Employee Retirement Income Security Act of 1974),
I.R.C. § 35(e)(1)(F)(ii)
an issuer of health insurance coverage,
I.R.C. § 35(e)(1)(F)(iii)
an administrator, or
I.R.C. § 35(e)(1)(F)(iv)
an employer.
I.R.C. § 35(e)(1)(G)
Coverage offered through a State arrangement with a private sector health care coverage purchasing pool.
I.R.C. § 35(e)(1)(H)
Coverage under a State-operated health plan that does not receive any Federal financial participation.
I.R.C. § 35(e)(1)(I)
Coverage under a group health plan that is available through the employment of the eligible individual's spouse.
I.R.C. § 35(e)(1)(J)
In the case of any eligible individual and such individual's qualifying family members, coverage under individual health insurance (other than coverage enrolled in through an Exchange established under the Patient Protection and Affordable Care Act). For purposes of this subparagraph, the term “individual health insurance” means any insurance which constitutes medical care offered to individuals other than in connection with a group health plan and does not include Federal- or State-based health insurance coverage.
I.R.C. § 35(e)(1)(K)
Coverage under an employee benefit plan funded by a voluntary employees' beneficiary association (as defined in section 501(c)(9)) established pursuant to an order of a bankruptcy court, or by agreement with an authorized representative, as provided in section 1114 of title 11, United States Code.
I.R.C. § 35(e)(2) Requirements For State-Based Coverage
I.R.C. § 35(e)(2)(A) In General
The term “qualified health insurance” does not include any coverage described in subparagraphs (B) through (H) of paragraph (1) unless the State involved has elected to have such coverage treated as qualified health insurance under this section and such coverage meets the following requirements:
I.R.C. § 35(e)(2)(A)(i) Guaranteed Issue
Each qualifying individual is guaranteed enrollment if the individual pays the premium for enrollment or provides a qualified health insurance costs credit eligibility certificate described in section 7527 and pays the remainder of such premium.
I.R.C. § 35(e)(2)(A)(ii) No Imposition Of Preexisting Condition Exclusion
No pre-existing condition limitations are imposed with respect to any qualifying individual.
I.R.C. § 35(e)(2)(A)(iii) Nondiscriminatory Premium
The total premium (as determined without regard to any subsidies) with respect to a qualifying individual may not be greater than the total premium (as so determined) for a similarly situated individual who is not a qualifying individual.
I.R.C. § 35(e)(2)(A)(iv) Same Benefits
Benefits under the coverage are the same as (or substantially similar to) the benefits provided to similarly situated individuals who are not qualifying individuals.
I.R.C. § 35(e)(2)(B) Qualifying Individual
For purposes of this paragraph, the term “qualifying individual” means—
I.R.C. § 35(e)(2)(B)(i)
an eligible individual for whom, as of the date on which the individual seeks to enroll in the coverage described in subparagraphs (B) through (H) of paragraph (1), the aggregate of the periods of creditable coverage (as defined in section 9801(c)) is 3 months or longer and who, with respect to any month, meets the requirements of clauses (iii) and (iv) of subsection (b)(1)(A); and
I.R.C. § 35(e)(2)(B)(ii)
the qualifying family members of such eligible individual.
I.R.C. § 35(e)(3) Exception
The term “qualified health insurance” shall not include—
I.R.C. § 35(e)(3)(A)
a flexible spending or similar arrangement, and
I.R.C. § 35(e)(3)(B)
any insurance if substantially all of its coverage is of excepted benefits described in section 9832(c).
I.R.C. § 35(f) Other Specified Coverage
For purposes of this section, an individual has other specified coverage for any month if, as of the first day of such month—
I.R.C. § 35(f)(1) Subsidized Coverage
I.R.C. § 35(f)(1)(A) In General
Such individual is covered under any insurance which constitutes medical care (except insurance substantially all of the coverage of which is of excepted benefits described in section 9832(c)) under any health plan maintained by any employer (or former employer) of the taxpayer or the taxpayer's spouse and at least 50 percent of the cost of such coverage (determined under section 4980B) is paid or incurred by the employer.
I.R.C. § 35(f)(1)(B) Eligible Alternative TAA Recipients
In the case of an eligible alternative TAA recipient, such individual is either—
I.R.C. § 35(f)(1)(B)(i)
eligible for coverage under any qualified health insurance (other than insurance described in subparagraph (A), (B), or (F) of subsection (e)(1)) under which at least 50 percent of the cost of coverage (determined under section 4980B(f)(4)) is paid or incurred by an employer (or former employer) of the taxpayer or the taxpayer's spouse, or
I.R.C. § 35(f)(1)(B)(ii)
covered under any such qualified health insurance under which any portion of the cost of coverage (as so determined) is paid or incurred by an employer (or former employer) of the taxpayer or the taxpayer's spouse.
I.R.C. § 35(f)(1)(C) Treatment Of Cafeteria Plans
For purposes of subparagraphs (A) and (B), the cost of coverage shall be treated as paid or incurred by an employer to the extent the coverage is in lieu of a right to receive cash or other qualified benefits under a cafeteria plan (as defined in section 125(d)).
I.R.C. § 35(f)(2) Coverage Under Medicare, Medicaid, Or SCHIP
Such individual—
I.R.C. § 35(f)(2)(A)
is entitled to benefits under part A of title XVIII of the Social Security Act or is enrolled under part B of such title, or
I.R.C. § 35(f)(2)(B)
is enrolled in the program under title XIX or XXI of such Act (other than under section 1928 of such Act).
I.R.C. § 35(f)(3) Certain Other Coverage
Such individual—
I.R.C. § 35(f)(3)(A)
is enrolled in a health benefits plan under chapter 89 of title 5, United States Code, or
I.R.C. § 35(f)(3)(B)
is entitled to receive benefits under chapter 55 of title 10, United States Code.
I.R.C. § 35(g) Special Rules
I.R.C. § 35(g)(1) Coordination With Advance Payments Of Credit
With respect to any taxable year, the amount which would (but for this subsection) be allowed as a credit to the taxpayer under subsection (a) shall be reduced (but not below zero) by the aggregate amount paid on behalf of such taxpayer under section 7527 for months beginning in such taxable year.
I.R.C. § 35(g)(2) Coordination With Other Deductions
Amounts taken into account under subsection (a) shall not be taken into account in determining any deduction allowed under section 162(l) or 213.
I.R.C. § 35(g)(3) Medical And Health Savings Accounts
Amounts distributed from an Archer MSA (as defined in section 220(d)) or from a health savings account (as defined in section 223(d)) shall not be taken into account under subsection (a).
I.R.C. § 35(g)(4) Denial Of Credit To Dependents
No credit shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins.
I.R.C. § 35(g)(5) Both Spouses Eligible Individuals
The spouse of the taxpayer shall not be treated as a qualifying family member for purposes of subsection (a), if—
I.R.C. § 35(g)(5)(A)
the taxpayer is married at the close of the taxable year,
I.R.C. § 35(g)(5)(B)
the taxpayer and the taxpayer's spouse are both eligible individuals during the taxable year, and
I.R.C. § 35(g)(5)(C)
the taxpayer files a separate return for the taxable year.
I.R.C. § 35(g)(6) Marital Status; Certain Married Individuals Living Apart
Rules similar to the rules of paragraphs (3) and (4) of section 21(e) shall apply for purposes of this section.
I.R.C. § 35(g)(7) Insurance Which Covers Other Individuals
For purposes of this section, rules similar to the rules of section 213(d)(6) shall apply with respect to any contract for qualified health insurance under which amounts are payable for coverage of an individual other than the taxpayer and qualifying family members.
I.R.C. § 35(g)(8) Treatment Of Payments
For purposes of this section—
I.R.C. § 35(g)(8)(A) Payments By Secretary
Payments made by the Secretary on behalf of any individual under section 7527 (relating to advance payment of credit for health insurance costs of eligible individuals) shall be treated as having been made by the taxpayer on the first day of the month for which such payment was made.
I.R.C. § 35(g)(8)(B) Payments By Taxpayer
Payments made by the taxpayer for eligible coverage months shall be treated as having been made by the taxpayer on the first day of the month for which such payment was made.
I.R.C. § 35(g)(9) COBRA Premium Assistance
In the case of an assistance eligible individual who receives premium reduction for COBRA continuation coverage under section 3001(a) of title III of division B of the American Recovery and Reinvestment Act of 2009 for any month during the taxable year, such individual shall not be treated as an eligible individual, a certified individual, or a qualifying family member for purposes of this section or section 7527 with respect to such month.
I.R.C. § 35(g)(10) Continued Qualification Of Family Members After Certain Events
I.R.C. § 35(g)(10)(A) Medicare Eligibility
In the case of any month which would be an eligible coverage month with respect to an eligible individual but for subsection (f)(2)(A), such month shall be treated as an eligible coverage month with respect to such eligible individual solely for purposes of determining the amount of the credit under this section with respect to any qualifying family members of such individual (and any advance payment of such credit under section 7527). This subparagraph shall only apply with respect to the first 24 months after such eligible individual is first entitled to the benefits described in subsection (f)(2)(A).
I.R.C. § 35(g)(10)(B) Divorce
In the case of the finalization of a divorce between an eligible individual and such individual's spouse, such spouse shall be treated as an eligible individual for purposes of this section and section 7527 for a period of 24 months beginning with the date of such finalization, except that the only qualifying family members who may be taken into account with respect to such spouse are those individuals who were qualifying family members immediately before such finalization.
I.R.C. § 35(g)(10)(C) Death
In the case of the death of an eligible individual—
I.R.C. § 35(g)(10)(C)(i)
any spouse of such individual (determined at the time of such death) shall be treated as an eligible individual for purposes of this section and section 7527 for a period of 24 months beginning with the date of such death, except that the only qualifying family members who may be taken into account with respect to such spouse are those individuals who were qualifying family members immediately before such death, and
I.R.C. § 35(g)(10)(C)(ii)
any individual who was a qualifying family member of the decedent immediately before such death (or, in the case of an individual to whom paragraph (4) applies, the taxpayer to whom the deduction under section 151 is allowable) shall be treated as an eligible individual for purposes of this section and section 7527 for a period of 24 months beginning with the date of such death, except that in determining the amount of such credit only such qualifying family member may be taken into account.
I.R.C. § 35(g)(11) Election
I.R.C. § 35(g)(11)(A) In General
This section shall not apply to any taxpayer for any eligible coverage month unless such taxpayer elects the application of this section for such month.
I.R.C. § 35(g)(11)(B) Timing And Applicability Of Election
Except as the Secretary may provide—
I.R.C. § 35(g)(11)(B)(i)
an election to have this section apply for any eligible coverage month in a taxable year shall be made not later than the due date (including extensions) for the return of tax for the taxable year; and
I.R.C. § 35(g)(11)(B)(ii)
any election for this section to apply for an eligible coverage month shall apply for all subsequent eligible coverage months in the taxable year and, once made, shall be irrevocable with respect to such months.
I.R.C. § 35(g)(12) Coordination With Premium Tax Credit
I.R.C. § 35(g)(12)(A) In General
An eligible coverage month to which the election under paragraph (11) applies shall not be treated as a coverage month (as defined in section 36B(c)(2)) for purposes of section 36B with respect to the taxpayer.
I.R.C. § 35(g)(12)(B) Coordination With Advance Payments Of Premium Tax Credit
In the case of a taxpayer who makes the election under paragraph (11) with respect to any eligible coverage month in a taxable year or on behalf of whom any advance payment is made under section 7527 with respect to any month in such taxable year—
I.R.C. § 35(g)(12)(B)(i)
the tax imposed by this chapter for the taxable year shall be increased by the excess, if any, of—
I.R.C. § 35(g)(12)(B)(i)(I)
the sum of any advance payments made on behalf of the taxpayer under section 1412 of the Patient Protection and Affordable Care Act and section 7527 for months during such taxable year, over
I.R.C. § 35(g)(12)(B)(i)(II)
the sum of the credits allowed under this section (determined without regard to paragraph (1)) and section 36B (determined without regard to subsection (f)(1) thereof) for such taxable year; and
I.R.C. § 35(g)(12)(B)(ii)
section 36B(f)(2) shall not apply with respect to such taxpayer for such taxable year, except that if such taxpayer received any advance payments under section 7527 for any month in such taxable year and is later allowed a credit under section 36B for such taxable year, then section 36B(f)(2)(B) shall be applied by substituting the amount determined under clause (i) for the amount determined under section 36B(f)(2)(A).
I.R.C. § 35(g)(13) Regulations
The Secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section, section 6050T, and section 7527.
(Aug. 6, 2002, Pub. L. 107-210, title II, Sec. 201(a), 116 Stat. 933; amended by Pub. L. 108-311, title IV, Sec. 401(a)(2), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 110-172, Sec. 11(a)(5), Dec. 29, 2007, 121 Stat. 2473; Pub. L. 111-5, div. B, title I, Sec. 1899A(a)(1), 1899C, 1899E(a), 1899G(a), title III, Sec. 3001(a)(14), Feb. 17, 2009, 123 Stat. 115; Pub. L. 111-144, Sec. 3(b)(5)(A), Mar. 2, 2010, 124 Stat. 42; Pub. L. 111-344, title I, Sec. 111(a), 113, 115(a), 117, Dec. 29, 2010, 124 Stat. 3611; Pub. L. 112-40, title II, Sec. 241, Oct. 21, 2011, 125 Stat. 401; Pub. L. 113-295, Div. A, title II, Sec. 209(j)(3), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-27, title IV, Sec. 407, June 29, 2015.)
BACKGROUND NOTES
AMENDMENTS
2015 - Subsec. (b)(1)(B). Pub. L. 114-27, Sec. 407(a), amended subpar. (B) by substituting “before January 1, 2020” for “January 1, 2014”.
Subsec. (e)(1)(J). Pub. L. 114-27, Sec. 407(d)(1), amended subpar. (J) by substituting “insurance. For purposes of” for “insurance if the eligible individual was covered under individual health insurance during the entire 30-day period that ends on the date that such individual became separated from the employment which qualified such individual for—
“(i) in the case of an eligible TAA recipient, the allowance described in subsection (c)(2),
“(ii) in the case of an eligible alternative TAA recipient, the benefit described in subsection (c)(3)(B), or
“(iii) in the case of any eligible PBGC pension recipient, the benefit described in subsection (c)(4)(B).
“For purposes of”.
Subsec. (e)(1)(J). Pub. L. 114-27, Sec. 407(d)(2), amended subpar. (J) by substituting “insurance (other than coverage enrolled in through an Exchange established under the Patient Protection and Affordable Care Act” for “insurance”.
Subsec. (g)(11)-(13). Pub. L. 114-27, Sec. 407(b), amended subsec. (g) by redesignating par. (11) as par. (13) and by adding new par. (11) and (12).
2014 - Subsec. (g)(9)-(11). Pub. L. 113-295, Div. A, Sec. 209(j)(3), amended Pub. L. 111-5, Div. B, Sec. 3001(a)(14)(A), which resulted in redesignating par. (9) and (10) as par. (10) and (11), respectively.
2011 - Subsec. (a). Pub. L. 112-40, Sec. 241(b)(1), amended subsec. (a) by substituting “72.5 percent” for “65 percent (80 percent in the case of eligible coverage months beginning before February 13, 2011)”.
Subsec. (b)(1)(B). Pub. L. 112-40, Sec. 241(a), amended subpar. (B) by inserting “, and before January 1, 2014” before the period.
Subsec. (c)(2)(B). Pub. L. 112-40, Sec. 241(b)(3)(A), amended subpar. (B) by striking “and before February 13, 2011”.
Subsec. (e)(1)(K). Pub. L. 112-40, Sec. 241(b)(3)(B), amended subpar. (K) by substituting “Coverage” for “In the case of eligible coverage months beginning before February 13, 2012, coverage”.
Subsec. (g)(9). Pub. L. 112-40, Sec. 241(b)(3)(C), amended the introductory language of par. (9) (as added by Pub. L. 111-5, Sec. 1899E(a)) by striking “In the case of eligible coverage months beginning before February 13, 2011—”.
2010 - Subsec. (a). Pub. L. 111-344, Sec. 111(a), amended subsec. (a) by substituting “February 13, 2011” for “January 1, 2011”.
Subsec. (c)(2)(B). Pub. L. 111-344, Sec. 113(a), amended subpar. (B) by substituting “February 13, 2011” for “January 1, 2011”.
Subsec. (e)(1)(K). Pub. L. 111-344, Sec. 117(a), amended subpar. (K) by substituting “February 13, 2012” for “January 1, 2011”.
Subsec. (g)(9). Pub. L. 111-344, Sec. 115(a), amended par. (9) by substituting “February 13, 2011” for “January 1, 2011”.
Subsec. (g)(9). Pub. L. 111-144, Sec. 3(b)(5)(A), amended par. (9) by substituting “section 3001(a) of title III of division B of the American Recovery and Reinvestment Act of 2009” for “section 3002(a) of the Health Insurance Assistance for the Unemployed Act of 2009”.
2009 - Subsec. (a). Pub. L. 111-5, Div. B, Sec. 1899A(a)(1), amended subsec. (a) by inserting “(80 percent in the case of eligible coverage months beginning before January 1, 2011)”.
Subsec. (c)(2). Pub. L. 111-5, Div. B, Sec. 1899C, amended par. (2). Before amendment, it read as follows:
“(2) Eligible TAA Recipient.— The term “eligible TAA recipient” means, with respect to any month, any individual who is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974 or who would be eligible to receive such allowance if section 231 of such Act were applied without regard to subsection (a)(3)(B) of such section. An individual shall continue to be treated as an eligible TAA recipient during the first month that such individual would otherwise cease to be an eligible TAA recipient by reason of the preceding sentence.”
Subsec. (e)(1)(K). Pub. L. 111-5, Div. B, Sec. 1899G(a), amended par. (1) by adding subpar. (K).
Subsec. (g)(9)-(10). Pub. L. 111-5, Div. B, Sec. 1899E(a), amended subsec. (g) by redesignating par. (9) as par. (10) and by adding a new par. (9).
Subsec. (g)(9)-(10). Pub. L. 111-5, Div. B, Sec. 3001(a)(14)(A), amended subsec. (g) by redesignating par. (9) as par. (10) and by adding a new par. (9).
2007 - Subsec. (d)(2). Pub. L. 110-172, Sec. 11(a)(5), amended par. (2) by striking “paragraph (2) or (4) of” before “section 152(e)” and by substituting “(as defined in section 152(e)(4)(A))” for “(within the meaning of section 152(e)(1))”.
2004 - Sec. 35(g)(3). Pub. L. 108-311, Sec. 401(a)(2), amended par. (3). Before amendment it read as follows:
“(3) MSA distributions.--Amounts distributed from an Archer MSA (as defined in section 220(d)) shall not be taken into account under subsection (a).”
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-27, Sec. 407, effective for coverage months in taxable years beginning after December 31, 2013, except for the amendment by Sec. 407(d)(2), which is effective for coverage months in taxable years beginning after December 31, 2015.
Section 407(f)(3) of Pub. L. 114-27 provided the following transitional rule:
“(3) TRANSITION RULE.—Notwithstanding section 35(g)(11)(B)(i) of the Internal Revenue Code of 1986 (as added by this title), an election to apply section 35 of such Code to an eligible coverage month (as defined in section 35(b) of such Code) (and not to claim the credit under section 36B of such Code with respect to such month) in a taxable year beginning after December 31, 2013, and before the date of the enactment of this Act—
“(A) may be made at any time on or after such date of enactment and before the expiration of the 3-year period of limitation prescribed in section 6511(a) with respect to such taxable year; and
“(B) may be made on an amended return.”
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendment by Pub. L. 113-295, Div. A, Sec. 209(j)(3), effective as if included in the provision of the American Recovery and Reinvestment Tax Act of 2009 [Pub. L. 111-5, Div. B, Sec. 3001(a)(14)(A)] to which it relates [Effective for taxable years ending after Feb. 17, 2009].
EFFECTIVE DATE OF 2011 AMENDMENTS
Amendments by Sec. 241 of Pub. L. 112-40 effective for coverage months beginning after February 12, 2011.
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendment by Sec. 111(a) of Pub. L. 111-344 effective for coverage months beginning after December 31, 2010.
Amendment by Sec. 113(a) of Pub. L. 111-344 effective for coverage months beginning after December 31, 2010.
Amendment by Sec. 115(a) of Pub. L. 111-344 effective for months beginning after December 31, 2010.
Amendment by Sec. 117(a) of Pub. L. 111-344 effective for coverage months beginning after December 31, 2010.
Amendment by Sec. 3(b)(5)(A) of Pub. L. 111-144 effective as if included in the provisions of section 3001 of Pub. L. 111-5, Div. B, to which it relates [Effective for taxable years ending after the date of the enactment (Feb. 17, 2009)].
EFFECTIVE DATE OF 2009 AMENDMENTS
Amendment by Sec. 1899A(a)(1) of Pub. L. 111-5, Div. B, effective for coverage months beginning on or after the first day of the first month beginning 60 days after the date of enactment of this Act [Enacted: Feb. 17, 2009].
Amendment by Sec. 1899C of Pub. L. 111-5, Div. B, effective for coverage months beginning after the date of the enactment of this Act [Enacted: Feb. 17, 2009].
Amendments by Sec. 1899E(a) of Pub. L. 111-5, Div. B, effective for months beginning after December 31, 2009.
Amendment by Sec. 1899G(a) of Pub. L. 111-5, Div. B, effective for coverage months beginning after the date of the enactment of this Act [Enacted: Feb. 17, 2009].
Amendments by Sec. 3001(a)(14)(A) of Pub. L. 111-5, Div. B, effective for taxable years ending after the date of the enactment of this Act [Enacted: Feb. 17, 2009].
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendments by Sec. 11(a)(5) of Pub. L. 110-172 effective on the date of the enactment of this Act [Enacted: Dec. 29, 2007].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Sec. 401(a)(2) of Pub. L. 108-311 effective as if included in Sec. 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 [Effective: Taxable years beginning after December 31, 2003].
EFFECTIVE DATE
Effective for taxable years beginning after December 31, 2001.
AGENCY OUTREACH
Section 407(g) of Pub. L. 114-27 provided that:
“(g) AGENCY OUTREACH.—As soon as possible after the date of the enactment of this Act, the Secretaries of the Treasury, Health and Human Services, and Labor (or such Secretaries’ delegates) and the Director of the Pension Benefit Guaranty Corporation (or the Director's delegate) shall carry out programs of public outreach, including on the Internet, to inform potential eligible individuals (as defined in section 35(c)(1) of the Internal Revenue Code of 1986) of the extension of the credit under section 35 of the Internal Revenue Code of 1986 and the availability of the election to claim such credit retroactively for coverage months beginning after December 31, 2013.”
PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE FOR INDIVIDUALS AND THEIR FAMILIES
Sec. 3001(a)(1)-(11) of Pub. L. 111-5, Div. B, as amended by Pub. L. 111-118, Div. B, Sec. 1010, Pub. L. 111-144, Sec. 3(a) and 3(b)(1)-(4), and Pub. L. 111-157, Sec. 3(a), provided that:
“(a) PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE FOR INDIVIDUALS AND THEIR FAMILIES.—
“(1) PROVISION OF PREMIUM ASSISTANCE.—
“(A) REDUCTION OF PREMIUMS PAYABLE.—In the case of any premium for a period of coverage beginning on or after the date of the enactment of this Act for COBRA continuation coverage with respect to any assistance eligible individual, such individual shall be treated for purposes of any COBRA continuation provision as having paid the amount of such premium if such individual pays (or a person other than such individual's employer pays on behalf of such individual) 35 percent of the amount of such premium (as determined without regard to this subsection).
“(B) PLAN ENROLLMENT OPTION.—
“(i) IN GENERAL.—Notwithstanding the COBRA continuation provisions, an assistance eligible individual may, not later than 90 days after the date of notice of the plan enrollment option described in this subparagraph, elect to enroll in coverage under a plan offered by the employer involved, or the employee organization involved (including, for this purpose, a joint board of trustees of a multiemployer trust affiliated with one or more multiemployer plans), that is different than coverage under the plan in which such individual was enrolled at the time the qualifying event occurred, and such coverage shall be treated as COBRA continuation coverage for purposes of the applicable COBRA continuation coverage provision.
“(ii) REQUIREMENTS.—An assistance eligible individual may elect to enroll in different coverage as described in clause (i) only if—
“(I) the employer involved has made a determination that such employer will permit assistance eligible individuals to enroll in different coverage as provided for this subparagraph;
“(II) the premium for such different coverage does not exceed the premium for coverage in which the individual was enrolled at the time the qualifying event occurred;
“(III) the different coverage in which the individual elects to enroll is coverage that is also offered to the active employees of the employer at the time at which such election is made; and
“(IV) the different coverage is not—
“(aa) coverage that provides only dental, vision, counseling, or referral services (or a combination of such services);
“(bb) a flexible spending arrangement (as defined in section 106(c)(2) of the Internal Revenue Code of 1986); or
“(cc) coverage that provides coverage for services or treatments furnished in an on-site medical facility maintained by the employer and that consists primarily of first-aid services, prevention and wellness care, or similar care (or a combination of such care).
“(C) PREMIUM REIMBURSEMENT.—For provisions providing the balance of such premium, see section 6432 of the Internal Revenue Code of 1986, as added by paragraph (12).
“(2) LIMITATION OF PERIOD OF PREMIUM ASSISTANCE.—
“(A) IN GENERAL.—Paragraph (1)(A) shall not apply with respect to any assistance eligible individual for months of coverage beginning on or after the earlier of—
“(i) the first date that such individual is eligible for coverage under any other group health plan (other than coverage consisting of only dental, vision, counseling, or referral services (or a combination thereof), coverage under a flexible spending arrangement (as defined in section 106(c)(2) of the Internal Revenue Code of 1986), or coverage of treatment that is furnished in an on-site medical facility maintained by the employer and that consists primarily of first-aid services, prevention and wellness care, or similar care (or a combination thereof)) or is eligible for benefits under title XVIII of the Social Security Act, or
“(ii) the earliest of—
“(I) the date which is 15 months after the first day that paragraph (1)(A) applies with respect to such individual,
“(II) the date following the expiration of the maximum period of continuation coverage required under the applicable COBRA continuation coverage provision, or
“(III) the date following the expiration of the period of continuation coverage allowed under paragraph (4)(B)(ii).
“(B) TIMING OF ELIGIBILITY FOR ADDITIONAL COVERAGE.—For purposes of subparagraph (A)(i), an individual shall not be treated as eligible for coverage under a group health plan before the first date on which such individual could be covered under such plan.
“(C) NOTIFICATION REQUIREMENT.—An assistance eligible individual shall notify in writing the group health plan with respect to which paragraph (1)(A) applies if such paragraph ceases to apply by reason of subparagraph (A)(i). Such notice shall be provided to the group health plan in such time and manner as may be specified by the Secretary of Labor.
“(3) ASSISTANCE ELIGIBLE INDIVIDUAL.—For purposes of this section, the term “assistance eligible individual” means any qualified beneficiary if—
“(A) such qualified beneficiary is eligible for COBRA continuation coverage related to a qualifying event occurring during the period that begins with September 1, 2008, and ends with May 31, 2010,
“(B) such qualified beneficiary elects such coverage, and
“(C) the qualifying event with respect to the COBRA continuation coverage consists of the involuntary termination of the covered employee's employment and occurred during such period or consists of a reduction of hours followed by such an involuntary termination of employment during such period (as described in paragraph (17)(C)).
“(4) EXTENSION OF ELECTION PERIOD AND EFFECT ON COVERAGE.—
“(A) IN GENERAL.—For purposes of applying section 605(a) of the Employee Retirement Income Security Act of 1974, section 4980B(f)(5)(A) of the Internal Revenue Code of 1986, section 2205(a) of the Public Health Service Act, and section 8905a(c)(2) of title 5, United States Code, in the case of an individual who does not have an election of COBRA continuation coverage in effect on the date of the enactment of this Act but who would be an assistance eligible individual if such election were so in effect, such individual may elect the COBRA continuation coverage under the COBRA continuation coverage provisions containing such sections during the period beginning on the date of the enactment of this Act and ending 60 days after the date on which the notification required under paragraph (7)(C) is provided to such individual.
“(B) COMMENCEMENT OF COVERAGE; NO REACH-BACK.—Any COBRA continuation coverage elected by a qualified beneficiary during an extended election period under subparagraph (A)—
“(i) shall commence with the first period of coverage beginning on or after the date of the enactment of this Act, and
“(ii) shall not extend beyond the period of COBRA continuation coverage that would have been required under the applicable COBRA continuation coverage provision if the coverage had been elected as required under such provision.
“(C) PREEXISTING CONDITIONS.—With respect to a qualified beneficiary who elects COBRA continuation coverage pursuant to subparagraph (A), the period—
“(i) beginning on the date of the qualifying event, and
”(ii) ending with the beginning of the period described in subparagraph (B)(i),
“shall be disregarded for purposes of determining the 63-day periods referred to in section 701(c)(2) of the Employee Retirement Income Security Act of 1974, section 9801(c)(2) of the Internal Revenue Code of 1986, and section 2701(c)(2) of the Public Health Service Act.
“(5) EXPEDITED REVIEW OF DENIALS OF PREMIUM ASSISTANCE.—In any case in which an individual requests treatment as an assistance eligible individual and is denied such treatment by the group health plan, the Secretary of Labor (or the Secretary of Health and Human Services in connection with COBRA continuation coverage which is provided other than pursuant to part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974), in consultation with the Secretary of the Treasury, shall provide for expedited review of such denial. An individual shall be entitled to such review upon application to such Secretary in such form and manner as shall be provided by such Secretary. Such Secretary shall make a determination regarding such individual's eligibility within 15 business days after receipt of such individual's application for review under this paragraph. Either Secretary's determination upon review of the denial shall be de novo and shall be the final determination of such Secretary. A reviewing court shall grant deference to such Secretary's determination. The provisions of this paragraph, paragraphs (1) through (4), and paragraph (7) shall be treated as provisions of title I of the Employee Retirement Income Security Act of 1974 for purposes of part 5 of subtitle B of such title. In addition to civil actions that may be brought to enforce applicable provisions of such Act or other laws, the appropriate Secretary or an affected individual may bring a civil action to enforce such determinations and for appropriate relief. In addition, such Secretary may assess a penalty against a plan sponsor or health insurance issuer of not more than $110 per day for each failure to comply with such determination of such Secretary after 10 days after the date of the plan sponsor's or issuer's receipt of the determination.
“(6) DISREGARD OF SUBSIDIES FOR PURPOSES OF FEDERAL AND STATE PROGRAMS.—Notwithstanding any other provision of law, any premium reduction with respect to an assistance eligible individual under this subsection shall not be considered income or resources in determining eligibility for, or the amount of assistance or benefits provided under, any other public benefit provided under Federal law or the law of any State or political subdivision thereof.
“(7) NOTICES TO INDIVIDUALS.—
“(A) GENERAL NOTICE.—
“(i) IN GENERAL.—In the case of notices provided under section 606(a)(4) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1166(4)), section 4980B(f)(6)(D) of the Internal Revenue Code of 1986, section 2206(4) of the Public Health Service Act (42 U.S.C. 300bb-6(4)), or section 8905a(f)(2)(A) of title 5, United States Code, with respect to individuals who, during the period described in paragraph (3)(A), have a qualifying event relating to COBRA continuation coverage, the requirements of such sections shall not be treated as met unless such notices include an additional notification to the recipient of—
“(I) the availability of premium reduction with respect to such coverage under this subsection, and
“(II) the option to enroll in different coverage if the employer permits assistance eligible individuals to elect enrollment in different coverage (as described in paragraph (1)(B)).
“(ii) ALTERNATIVE NOTICE.—In the case of COBRA continuation coverage to which the notice provision under such sections does not apply, the Secretary of Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall, in consultation with administrators of the group health plans (or other entities) that provide or administer the COBRA continuation coverage involved, provide rules requiring the provision of such notice.
“(iii) FORM.—The requirement of the additional notification under this subparagraph may be met by amendment of existing notice forms or by inclusion of a separate document with the notice otherwise required.
“(B) SPECIFIC REQUIREMENTS.—Each additional notification under subparagraph (A) shall include—
“(i) the forms necessary for establishing eligibility for premium reduction under this subsection,
“(ii) the name, address, and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with such premium reduction,
“(iii) a description of the extended election period provided for in paragraph (4)(A),
“(iv) a description of the obligation of the qualified beneficiary under paragraph (2)(C) to notify the plan providing continuation coverage of eligibility for subsequent coverage under another group health plan or eligibility for benefits under title XVIII of the Social Security Act and the penalty provided under section 6720C of the Internal Revenue Code of 1986 for failure to so notify the plan,
“(v) a description, displayed in a prominent manner, of the qualified beneficiary's right to a reduced premium and any conditions on entitlement to the reduced premium, and
“(vi) a description of the option of the qualified beneficiary to enroll in different coverage if the employer permits such beneficiary to elect to enroll in such different coverage under paragraph (1)(B).
“(C) NOTICE IN CONNECTION WITH EXTENDED ELECTION PERIODS.—In the case of any assistance eligible individual (or any individual described in paragraph (4)(A)) who became entitled to elect COBRA continuation coverage before the date of the enactment of this Act, the administrator of the group health plan (or other entity) involved shall provide (within 60 days after the date of enactment of this Act) for the additional notification required to be provided under subparagraph (A) and failure to provide such notice shall be treated as a failure to meet the notice requirements under the applicable COBRA continuation provision.
“(D) MODEL NOTICES.—Not later than 30 days after the date of enactment of this Act—
“(i) the Secretary of the Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall prescribe models for the additional notification required under this paragraph (other than the additional notification described in clause (ii)), and
“(ii) in the case of any additional notification provided pursuant to subparagraph (A) under section 8905a(f)(2)(A) of title 5, United States Code, the Office of Personnel Management shall prescribe a model for such additional notification.
“(8) REGULATIONS.—The Secretary of the Treasury may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this subsection, including the prevention of fraud and abuse under this subsection, except that the Secretary of Labor and the Secretary of Health and Human Services may prescribe such regulations (including interim final regulations) or other guidance as may be necessary or appropriate to carry out the provisions of paragraphs (5), (7), and (9).
“(9) OUTREACH.—The Secretary of Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall provide outreach consisting of public education and enrollment assistance relating to premium reduction provided under this subsection. Such outreach shall target employers, group health plan administrators, public assistance programs, States, insurers, and other entities as determined appropriate by such Secretaries. Such outreach shall include an initial focus on those individuals electing continuation coverage who are referred to in paragraph (7)(C). Information on such premium reduction, including enrollment, shall also be made available on websites of the Departments of Labor, Treasury, and Health and Human Services.
“(10) DEFINITIONS.—For purposes of this section—
“(A) ADMINISTRATOR.—The term “administrator” has the meaning given such term in section 3(16)(A) of the Employee Retirement Income Security Act of 1974.
“(B) COBRA CONTINUATION COVERAGE.— The term “COBRA continuation coverage” means continuation coverage provided pursuant to part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (other than under section 609), title XXII of the Public Health Service Act, section 4980B of the Internal Revenue Code of 1986 (other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines), or section 8905a of title 5, United States Code, or under a State program that provides comparable continuation coverage. Such term does not include coverage under a health flexible spending arrangement under a cafeteria plan within the meaning of section 125 of the Internal Revenue Code of 1986.
“(C) COBRA CONTINUATION PROVISION.— The term “COBRA continuation provision” means the provisions of law described in subparagraph (B).
“(D) COVERED EMPLOYEE.—The term “covered employee” has the meaning given such term in section 607(2) of the Employee Retirement Income Security Act of 1974.
“(E) QUALIFIED BENEFICIARY.—The term “qualified beneficiary” has the meaning given such term in section 607(3) of the Employee Retirement Income Security Act of 1974.
“(F) GROUP HEALTH PLAN.—The term “group health plan” has the meaning given such term in section 607(1) of the Employee Retirement Income Security Act of 1974.
“(G) STATE.—The term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
“(H) PERIOD OF COVERAGE.—Any reference in this subsection to a period of coverage shall be treated as a reference to a monthly or shorter period of coverage with respect to which premiums are charged with respect to such coverage.
“(11) REPORTS.—
“(A) INTERIM REPORT.—The Secretary of the Treasury shall submit an interim report to the Committee on Education and Labor, the Committee on Ways and Means, and the Committee on Energy and Commerce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate regarding the premium reduction provided under this subsection that includes—
“(i) the number of individuals provided such assistance as of the date of the report; and
“(ii) the total amount of expenditures incurred (with administrative expenditures noted separately) in connection with such assistance as of the date of the report.
“(B) FINAL REPORT.—As soon as practicable after the last period of COBRA continuation coverage for which premium reduction is provided under this section, the Secretary of the Treasury shall submit a final report to each Committee referred to in subparagraph (A) that includes—
“(i) the number of individuals provided premium reduction under this section;
“(ii) the average dollar amount (monthly and annually) of premium reductions provided to such individuals; and
“(iii) the total amount of expenditures incurred (with administrative expenditures noted separately) in connection with premium reduction under this section.”
RULES RELATED TO 2009 EXTENSION
Sec. 1010(c) of Pub. L. 111-118, Div. B, as amended by Pub. L. 111-144, Sec. 3(b)(2), which added par. (16) to Sec. 3001(a) of Pub. L. 111-5, Div. B, provided that:
‘’(16) RULES RELATED TO 2009 EXTENSION.—
‘’(A) ELECTION TO PAY PREMIUMS RETROACTIVELY AND MAINTAIN COBRA COVERAGE.—In the case of any premium for a period of coverage during an assistance eligible individual's transition period, such individual shall be treated for purposes of any COBRA continuation provision as having timely paid the amount of such premium if—
‘’(i) such individual was covered under the COBRA continuation coverage to which such premium relates for the period of coverage immediately preceding such transition period, and
‘’(ii) such individual pays, the amount of such premium, after the application of paragraph (1)(A), by the latest of—
“(I) 60 days after the date of the enactment of this paragraph,
“(II) 30 days after the date of provision of the notification required under subparagraph (D)(ii), or
“(III) the end of the period described in section 4980B(f)(2)(B)(iii) of the Internal Revenue Code of 1986.
‘’(B) REFUNDS AND CREDITS FOR RETROACTIVE PREMIUM ASSISTANCE ELIGIBILITY.—In the case of an assistance eligible individual who pays, with respect to any period of COBRA continuation coverage during such individual's transition period, the premium amount for such coverage without regard to paragraph (1)(A), rules similar to the rules of paragraph (12)(E) shall apply.
‘’(C) TRANSITION PERIOD.—
‘’(i) IN GENERAL.—For purposes of this paragraph, the term ‘transition period’ means, with respect to any assistance eligible individual, any period of coverage if—
‘’(I) such assistance eligible individual experienced an involuntary termination that was a qualifying event prior to the date of the enactment of the Department of Defense Appropriations Act, 2010; and
‘’(II) paragraph (1)(A) applies to such period by reason of the amendment made by section 1010(b) of the Department of Defense Appropriations Act, 2010.
‘’(ii) CONSTRUCTION.—Any period during the period described in subclauses (I) and (II) of clause (i) for which the applicable premium has been paid pursuant to subparagraph (A) shall be treated as a period of coverage referred to in such paragraph, irrespective of any failure to timely pay the applicable premium (other than pursuant to subparagraph (A)) for such period.
‘’(D) NOTIFICATION.—
‘’(i) IN GENERAL.—
In the case of an individual who was an assistance eligible individual at any time on or after October 31, 2009, or experiences a qualifying event (consisting of termination of employment) relating to COBRA continuation coverage on or after such date, the administrator of the group health plan (or other entity) involved shall provide an additional notification with information regarding the amendments made by section 1010 of the Department of Defense Appropriations Act, 2010, within 60 days after the date of the enactment of such Act or, in the case of a qualifying event occurring after such date of enactment, consistent with the timing of notifications under paragraph (7)(A).
‘’(ii) TO INDIVIDUALS WHO LOST ASSISTANCE.—In the case of an assistance eligible individual described in subparagraph (A)(i) who did not timely pay the premium for any period of coverage during such individual's transition period or paid the premium for such period without regard to paragraph (1)(A), the administrator of the group health plan (or other entity) involved shall provide to such individual, within the first 60 days of such individual's transition period, an additional notification with information regarding the amendments made by section 1010 of the Department of Defense Appropriations Act, 2010, including information on the ability under subparagraph (A) to make retroactive premium payments with respect to the transition period of the individual in order to maintain COBRA continuation coverage.
‘’(iii) APPLICATION OF RULES.—Rules similar to the rules of paragraph (7) shall apply with respect to notifications under this subparagraph.”.
SPECIAL RULES IN CASE OF INDIVIDUALS LOSING COVERAGE BECAUSE OF A REDUCTION OF HOURS
Sec. 3(b)(1)(B) of Pub. L. 111-144, which added par. (17) to Sec. 3001(a) of Pub. L. 111-5, Div. B, provided that:
“(17) SPECIAL RULES IN CASE OF INDIVIDUALS LOSING COVERAGE BECAUSE OF A REDUCTION OF HOURS-
“(A) NEW ELECTION PERIOD-
“(i) IN GENERAL- For the purposes of the COBRA continuation provisions, in the case of an individual described in subparagraph (C) who did not make (or who made and discontinued) an election of COBRA continuation coverage on the basis of the reduction of hours of employment, the involuntary termination of employment of such individual on or after the date of the enactment of this paragraph shall be treated as a qualifying event.
“(ii) COUNTING COBRA DURATION PERIOD FROM PREVIOUS QUALIFYING EVENT- In any case of an individual referred to in clause (i), the period of such individual's continuation coverage shall be determined as though the qualifying event were the reduction of hours of employment.
“(iii) CONSTRUCTION- Nothing in this paragraph shall be construed as requiring an individual referred to in clause (i) to make a payment for COBRA continuation coverage between the reduction of hours and the involuntary termination of employment.
“(iv) PREEXISTING CONDITIONS- With respect to an individual referred to in clause (i) who elects COBRA continuation coverage pursuant to such clause, rules similar to the rules in paragraph (4)(C) shall apply.
“(B) NOTICES- In the case of an individual described in subparagraph (C), the administrator of the group health plan (or other entity) involved shall provide, during the 60-day period beginning on the date of such individual's involuntary termination of employment, an additional notification described in paragraph (7)(A), including information on the provisions of this paragraph. Rules similar to the rules of paragraph (7) shall apply with respect to such notification.
“(C) INDIVIDUALS DESCRIBED- Individuals described in this subparagraph are individuals who are assistance eligible individuals on the basis of a qualifying event consisting of a reduction of hours occurring during the period described in paragraph (3)(A) followed by an involuntary termination of employment insofar as such involuntary termination of employment occurred on or after the date of the enactment of this paragraph.”.
RULES RELATED TO 2010 EXTENSION
Sec. 3(b) of Pub. L. 111-157, which added par. (18) to Sec. 3001(a) of Pub. L. 111-5, Div. B, provided that:
“(18) RULES RELATED TO APRIL AND MAY 2010 EXTENSION- In the case of an individual who, with regard to coverage described in paragraph (10)(B), experiences a qualifying event related to a termination of employment on or after April 1, 2010 and prior to the date of the enactment of this paragraph, rules similar to those in paragraphs (4)(A) and (7)(C) shall apply with respect to all continuation coverage, including State continuation coverage programs.”.
ELIMINATION OF PREMIUM SUBSIDY FOR HIGH-INCOME INDIVIDUALS
Sec. 3001(b) of Pub. L. 111-5, Div. B, provided that:
“(b) ELIMINATION OF PREMIUM SUBSIDY FOR HIGH-INCOME INDIVIDUALS.—
“(1) RECAPTURE OF SUBSIDY FOR HIGH-INCOME INDIVIDUALS.—If—
“(A) premium assistance is provided under this section with respect to any COBRA continuation coverage which covers the taxpayer, the taxpayer's spouse, or any dependent (within the meaning of section 152 of the Internal Revenue Code of 1986, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of the taxpayer during any portion of the taxable year, and
“(B) the taxpayer's modified adjusted gross income for such taxable year exceeds $125,000 ($250,000 in the case of a joint return),
“then the tax imposed by chapter 1 of such Code with respect to the taxpayer for such taxable year shall be increased by the amount of such assistance.
“(2) PHASE-IN OF RECAPTURE.—
“(A) IN GENERAL.—In the case of a taxpayer whose modified adjusted gross income for the taxable year does not exceed $145,000 ($290,000 in the case of a joint return), the increase in the tax imposed under paragraph (1) shall not exceed the phase-in percentage of such increase (determined without regard to this paragraph).
“(B) PHASE-IN PERCENTAGE.—For purposes of this subsection, the term “phase-in percentage” means the ratio (expressed as a percentage) obtained by dividing—
“(i) the excess of described in subparagraph (B) of paragraph (1), by
“(ii) $20,000 ($40,000 in the case of a joint return).
“(3) OPTION FOR HIGH-INCOME INDIVIDUALS TO WAIVE ASSISTANCE AND AVOID RECAPTURE.—Notwithstanding subsection (a)(3), an individual shall not be treated as an assistance eligible individual for purposes of this section and section 6432 of the Internal Revenue Code of 1986 if such individual—
“(A) makes a permanent election (at such time and in such form and manner as the Secretary of the Treasury may prescribe) to waive the right to the premium assistance provided under this section, and
“(B) notifies the entity to whom premiums are reimbursed under section 6432(a) of such Code of such election.
“(4) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this subsection, the term “modified adjusted gross income” means the adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986) of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933 of such Code.
“(5) CREDITS NOT ALLOWED AGAINST TAX, ETC.—For purposes determining regular tax liability under section 26(b) of such Code, the increase in tax under this subsection shall not be treated as a tax imposed under chapter 1 of such Code.
“(6) REGULATIONS.—The Secretary of the Treasury shall issue such regulations or other guidance as are necessary or appropriate to carry out this subsection, including requirements that the entity to whom premiums are reimbursed under section 6432(a) of the Internal Revenue Code of 1986 report to the Secretary, and to each assistance eligible individual, the amount of premium assistance provided under subsection (a) with respect to each such individual.
“(7) EFFECTIVE DATE.—The provisions of this subsection shall apply to taxable years ending after the date of the enactment of this Act [Enacted: Feb. 17, 2009].”
SURVEY AND REPORT ON ENHANCED HEALTH COVERAGE TAX CREDIT PROGRAM
Section 1899I of Pub. L. 111-5, Div. B, provided that:
“ (a) SURVEY.—
“(1) IN GENERAL.—The Secretary of the Treasury shall conduct a biennial survey of eligible individuals (as defined in section 35(c) of the Internal Revenue Code of 1986) relating to the health coverage tax credit under section 35 of the Internal Revenue Code of 1986 (hereinafter in this section referred to as the “health coverage tax credit”).
“(2) INFORMATION OBTAINED.—The survey conducted under subsection (a) shall obtain the following information:
“(A) HCTC PARTICIPANTS.—In the case of eligible individuals receiving the health coverage tax credit (including individuals participating in the health coverage tax credit program under section 7527 of such Code, hereinafter in this section referred to as the “HCTC program”)—
“(i) demographic information of such individuals, including income and education levels,
“(ii) satisfaction of such individuals with the enrollment process in the HCTC program,
“(iii) satisfaction of such individuals with available health coverage options under the credit, including level of premiums, benefits, deductibles, cost-sharing requirements, and the adequacy of provider networks, and
“(iv) any other information that the Secretary determines is appropriate.
“(B) NON-HCTC PARTICIPANTS.—In the case of eligible individuals not receiving the health coverage tax credit—
“(i) demographic information of each individual, including income and education levels,
“(ii) whether the individual was aware of the health coverage tax credit or the HCTC program,
“(iii) the reasons the individual has not enrolled in the HCTC program, including whether such reasons include the burden of the process of enrollment and the affordability of coverage,
“(iv) whether the individual has health insurance coverage, and, if so, the source of such coverage, and
“(v) any other information that the Secretary determines is appropriate.
“(3) REPORT.—Not later than December 31 of each year in which a survey is conducted under paragraph (1) (beginning in 2010), the Secretary of the Treasury shall report to the Committee on Finance and the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Ways and Means, the Committee on Education and Labor, and the Committee on Energy and Commerce of the House of Representatives the findings of the most recent survey conducted under paragraph (1).
“(b) REPORT.—Not later than October 1 of each year (beginning in 2010), the Secretary of the Treasury (after consultation with the Secretary of Health and Human Services, and, in the case of the information required under paragraph (7), the Secretary of Labor) shall report to the Committee on Finance and the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Ways and Means, the Committee on Education and Labor, and the Committee on Energy and Commerce of the House of Representatives the following information with respect to the most recent taxable year ending before such date:
“(1) In each State and nationally—
“(A) the total number of eligible individuals (as defined in section 35(c) of the Internal Revenue Code of 1986) and the number of eligible individuals receiving the health coverage tax credit,
“(B) the total number of such eligible individuals who receive an advance payment of the health coverage tax credit through the HCTC program,
“(C) the average length of the time period of the participation of eligible individuals in the HCTC program, and
“(D) the total number of participating eligible individuals in the HCTC program who are enrolled in each category of coverage as described in section 35(e)(1) of such Code,
“with respect to each category of eligible individuals described in section 35(c)(1) of such Code.
“(2) In each State and nationally, an analysis of—
“(A) the range of monthly health insurance premiums, for self-only coverage and for family coverage, for individuals receiving the health coverage tax credit, and
“(B) the average and median monthly health insurance premiums, for self-only coverage and for family coverage, for individuals receiving the health coverage tax credit,
“with respect to each category of coverage as described in section 35(e)(1) of such Code.
“(3) In each State and nationally, an analysis of the following information with respect to the health insurance coverage of individuals receiving the health coverage tax credit who are enrolled in coverage described in subparagraphs (B) through (H) of section 35(e)(1) of such Code:
“(A) Deductible amounts.
“(B) Other out-of-pocket cost-sharing amounts.
“(C) A description of any annual or lifetime limits on coverage or any other significant limits on coverage services, or benefits.
“The information required under this paragraph shall be reported with respect to each category of coverage described in such subparagraphs.
“(4) In each State and nationally, the gender and average age of eligible individuals (as defined in section 35(c) of such Code) who receive the health coverage tax credit, in each category of coverage described in section 35(e)(1) of such Code, with respect to each category of eligible individuals described in such section.
“(5) The steps taken by the Secretary of the Treasury to increase the participation rates in the HCTC program among eligible individuals, including outreach and enrollment activities.
“(6) The cost of administering the HCTC program by function, including the cost of subcontractors, and recommendations on ways to reduce administrative costs, including recommended statutory changes.
“(7) The number of States applying for and receiving national emergency grants under section 173(f) of the Workforce Investment Act of 1998 (29 U.S.C. 2918(f)), the activities funded by such grants on a State-by-State basis, and the time necessary for application approval of such grants.”
GAO STUDY AND REPORT
Sec. 1899L of Pub. L. 111-5, Div. B, provided that:
“(a) STUDY.—The Comptroller General of the United States shall conduct a study regarding the health insurance tax credit allowed under section 35 of the Internal Revenue Code of 1986.
“(b) REPORT.—Not later than March 1, 2010, the Comptroller General shall submit a report to Congress regarding the results of the study conducted under subsection (a). Such report shall include an analysis of—
“(1) the administrative costs—
“(A) of the Federal Government with respect to such credit and the advance payment of such credit under section 7527 of such Code, and
“(B) of providers of qualified health insurance with respect to providing such insurance to eligible individuals and their qualifying family members,
“(2) the health status and relative risk status of eligible individuals and qualifying family members covered under such insurance,
“(3) participation in such credit and the advance payment of such credit by eligible individuals and their qualifying family members, including the reasons why such individuals did or did not participate and the effect of the amendments made by this part on such participation, and
“(4) the extent to which eligible individuals and their qualifying family members—
“(A) obtained health insurance other than qualifying health insurance, or
“(B) went without health insurance coverage.
“(c) ACCESS TO RECORDS.—For purposes of conducting the study required under this section, the Comptroller General and any of his duly authorized representatives shall have access to, and the right to examine and copy, all documents, records, and other recorded information—
“(1) within the possession or control of providers of qualified health insurance, and
“(2) determined by the Comptroller General (or any such representative) to be relevant to the study.
“The Comptroller General shall not disclose the identity of any provider of qualified health insurance or any eligible individual in making any information obtained under this section available to the public.
“(d) DEFINITIONS.—Any term which is defined in section 35 of the Internal Revenue Code of 1986 shall have the same meaning when used in this section.”
PRIOR PROVISIONS
A prior Section 35 was redesignated as Section 36 by Pub. L. 107-210.