American Recovery and Reinvestment Act of 2009 - Cobra Premium Assistance

SEC 6432 - Cobra Premium Assistance ‘‘(a) IN GENERAL.—The person to whom premiums are payable under COBRA continuation coverage shall be reimbursed as provided in subsection (c) for the amount of premiums not paid by assistance eligible individuals by reason of section 3002(a) of the Health Insurance Assistance for the Unemployed Act of 2009. ‘‘(b) PERSON ENTITLED TO REIMBURSEMENT.—For purposes of subsection (a), except as otherwise provided by the Secretary, the person to whom premiums are payable under COBRA continuation coverage shall be treated as being— ‘‘(1) in the case of any group health plan which is a multi-employer plan (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974), the plan, ‘‘(2) in the case of any group health plan not described in paragraph (1)— ‘‘(A) which is subject to the COBRA continuation provi sions contained in— ‘‘(i) the Internal Revenue Code of 1986, ‘‘(ii) the Employee Retirement Income Security Act of 1974, ‘‘(iii) the Public Health Service Act, or ‘‘(iv) title 5, United States Code, or ‘‘(B) under which some or all of the coverage is not provided by insurance, the employer maintaining the plan, and ‘‘(3) in the case of any group health plan not described in paragraph (1) or (2), the insurer providing the coverage under the group health plan. ‘‘(c) METHOD OF REIMBURSEMENT.—Except as otherwise pro vided by the Secretary— ‘‘(1) TREATMENT AS PAYMENT OF PAYROLL TAXES.—Each person entitled to reimbursement under subsection (a) (and filing a claim for such reimbursement at such time and in such manner as the Secretary may require) shall be treated for purposes of this title and section 1324(b)(2) of title 31, United States Code, as having paid to the Secretary, on the date that the assistance eligible individual’s premium payment is received, payroll taxes in an amount equal to the portion of such reimbursement which relates to such premium. To the extent that the amount treated as paid under the preceding sentence exceeds the amount of such person’s liability for such taxes, the Secretary shall credit or refund such excess in the same manner as if it were an overpayment of such taxes. graph (1)—

‘‘(2) OVERSTATEMENTS.—Any overstatement of the reimbursement to which a person is entitled under this section (and any amount paid by the Secretary as a result of such overstatement) shall be treated as an underpayment of payroll taxes by such person and may be assessed and collected by the Secretary in the same manner as payroll taxes.

‘‘(3) REIMBURSEMENT CONTINGENT ON PAYMENT OF REMAINING PREMIUM.—No reimbursement may be made under this section to a person with respect to any assistance eligible individual until after the reduced premium required under

H. R. 1—349

section 3002(a)(1)(A) of such Act with respect to such individual has been received. ‘‘(d) DEFINITIONS.—For purposes of this section—

‘‘(1) PAYROLL TAXES.—The term ‘payroll taxes’ means—

‘‘(A) amounts required to be deducted and withheld for the payroll period under section 3402 (relating to wage withholding),

‘‘(B) amounts required to be deducted for the payroll period under section 3102 (relating to FICA employee taxes), and

‘‘(C) amounts of the taxes imposed for the payroll period under section 3111 (relating to FICA employer taxes). ‘‘(2) PERSON.—The term ‘person’ includes any governmental

entity.

‘‘(e) REPORTING.—Each person entitled to reimbursement under

subsection (a) for any period shall submit such reports (at such

time and in such manner) as the Secretary may require, including— ‘‘(1) an attestation of involuntary termination of employment for each covered employee on the basis of whose termination entitlement to reimbursement is claimed under subsection (a), ‘‘(2) a report of the amount of payroll taxes offset under subsection (a) for the reporting period and the estimated offsets of such taxes for the subsequent reporting period in connection with reimbursements under subsection (a), and ‘‘(3) a report containing the TINs of all covered employees, the amount of subsidy reimbursed with respect to each covered employee and qualified beneficiaries, and a designation with respect to each covered employee as to whether the subsidy reimbursement is for coverage of 1 individual or 2 or more individuals. ‘‘(f) REGULATIONS.—The Secretary shall issue such regulations

or other guidance as may be necessary or appropriate to carry

out this section, including— ‘‘(1) the requirement to report information or the establishment of other methods for verifying the correct amounts of reimbursements under this section, and ‘‘(2) the application of this section to group health plans that are multiemployer plans (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974).’’.

(B)
SOCIAL SECURITY TRUST FUNDS HELD HARMLESS.— In determining any amount transferred or appropriated to any fund under the Social Security Act, section 6432 of the Internal Revenue Code of 1986 shall not be taken into account.
(C)
CLERICAL AMENDMENT.—The table of sections for subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
‘‘Sec. 6432. COBRA premium assistance.’’.

(D) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to premiums to which subsection (a)(1)(A) applies.

(E)
SPECIAL RULE.—
(i)
IN GENERAL.—In the case of an assistance eligible individual who pays, with respect to the first
H. R. 1—350

period of COBRA continuation coverage to which subsection (a)(1)(A) applies or the immediately subsequent period, the full premium amount for such coverage, the person to whom such payment is payable shall—

(I)
make a reimbursement payment to such individual for the amount of such premium paid in excess of the amount required to be paid under subsection (a)(1)(A); or
(II)
provide credit to the individual for such amount in a manner that reduces one or more subsequent premium payments that the individual is required to pay under such subsection for the coverage involved.
(ii) REIMBURSING EMPLOYER.—A person to which clause (i) applies shall be reimbursed as provided for in section 6432 of the Internal Revenue Code of 1986 for any payment made, or credit provided, to the employee under such clause.

(iii) PAYMENT OR CREDITS.—Unless it is reasonable to believe that the credit for the excess payment in clause (i)(II) will be used by the assistance eligible individual within 180 days of the date on which the person receives from the individual the payment of the full premium amount, a person to which clause

(i) applies shall make the payment required under such clause to the individual within 60 days of such payment of the full premium amount. If, as of any day within the 180-day period, it is no longer reasonable to believe that the credit will be used during that period, payment equal to the remainder of the credit outstanding shall be made to the individual within 60 days of such day.

(13) PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR PREMIUM ASSISTANCE.—

(A) IN GENERAL.—Part I of subchapter B of chapter 68 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR COBRA PREMIUM ASSISTANCE.

‘‘(a) IN GENERAL.—Any person required to notify a group health plan under section 3002(a)(2)(C)) of the Health Insurance Assistance for the Unemployed Act of 2009 who fails to make such a notification at such time and in such manner as the Secretary of Labor may require shall pay a penalty of 110 percent of the premium reduction provided under such section after termination of eligibility under such subsection.

‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty shall be imposed under subsection (a) with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.’’.

H. R. 1—351

(B) CLERICAL AMENDMENT.—The table of sections of part I of subchapter B of chapter 68 of such Code is amended by adding at the end the following new item:

‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility for COBRA premium assistance.’’.

(C)
EFFECTIVE DATE.—The amendments made by this paragraph shall apply to failures occurring after the date of the enactment of this Act.
(14)
COORDINATION WITH HCTC.—
(A)
IN GENERAL.—Subsection (g) of section 35 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (9) as paragraph (10) and inserting after paragraph (8) the following new paragraph: ‘‘(9) COBRA PREMIUM ASSISTANCE.—In the case of an assist
ance eligible individual who receives premium reduction for COBRA continuation coverage under section 3002(a) of the Health Insurance Assistance for the Unemployed 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.’’.

(B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall apply to taxable years ending after the date of the enactment of this Act.

(15) EXCLUSION OF COBRA PREMIUM ASSISTANCE FROM GROSS INCOME.—

(A) IN GENERAL.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139B the following new section:

‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE.

‘‘In the case of an assistance eligible individual (as defined in section 3002 of the Health Insurance Assistance for the Unemployed Act of 2009), gross income does not include any premium reduction provided under subsection (a) of such section.’’.

(B) CLERICAL AMENDMENT.—The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139B the following new item:

‘‘Sec. 139C. COBRA premium assistance.’’.

(C) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to taxable years ending after the date of the enactment of this Act.

(b) ELIMINATION OF PREMIUM SUBSIDY FOR HIGH-INCOME INDIVIDUALS.—

(1) RECAPTURE OF SUBSIDY FOR HIGH-INCOME INDIVID-UALS.—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),
H. R. 1—352

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.
H. R. 1—353