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Statutory Text

SEC. 1501 [42 U.S.C. 18091]. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL
COVERAGE.
(a) FINDINGS.—Congress makes the following findings:
(1) IN GENERAL.—The individual responsibility requirement
provided for in this section (in this subsection referred to
as the ‘‘requirement’’) is commercial and economic in nature,
and substantially affects interstate commerce, as a result of
the effects described in paragraph (2).
(2) EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE
COMMERCE.—øReplaced by section 10106(a)¿ 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 employerbased
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.
(3) SUPREME COURT RULING.—In United States v. SouthEastern
Underwriters Association (322 U.S. 533 (1944)), the
Supreme Court of the United States ruled that insurance is
interstate commerce subject to Federal regulation.
(b) IN GENERAL.—Subtitle D of the Internal Revenue Code of
1986 is amended by adding at the end the following new chapter:
‘‘CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL
COVERAGE
Sec. 15015000A IRC
‘‘Sec. 5000A. Requirement to maintain minimum essential coverage.
‘‘SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.

‘‘(a) REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.—An
applicable individual shall for each month beginning
after 2013 ensure that the individual, and any dependent of the individual
who is an applicable individual, is covered under minimum
essential coverage for such month.
‘‘(b) SHARED RESPONSIBILITY PAYMENT.—
‘‘(1) IN GENERAL.—øReplaced by section 10106(b)¿ 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) INCLUSION WITH RETURN.—Any penalty imposed by
this section with respect to any month shall be included with
a taxpayer’s return under chapter 1 for the taxable year which
includes such month.
‘‘(3) PAYMENT OF PENALTY.—If an individual with respect
to whom a penalty is imposed by this section for any month—
‘‘(A) is a dependent (as defined in section 152) of another
taxpayer for the other taxpayer’s taxable year including
such month, such other taxpayer shall be liable for
such penalty, or
‘‘(B) files a joint return for the taxable year including
such month, such individual and the spouse of such individual
shall be jointly liable for such penalty.
‘‘(c) AMOUNT OF PENALTY.—[Paragraphs (1) and (2) were revised
in their entirety by section 10106(b)(2)]
‘‘(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.—øAs revised by section
1002(a)(1) of HCERA¿ An amount equal to the following
percentage of the excess of the taxpayer’s household income
for the taxable year over the amount of gross income
specified in section 6012(a)(1) with respect to the taxpayer
for the taxable year:
‘‘(i) 1.0 percent for taxable years beginning in
2014.
‘‘(ii) 2.0 percent for taxable years beginning in
2015.
‘‘(iii) 2.5 percent for taxable years beginning after
2015.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—[As revised by section
10106(b)(3) and by section 1002(a)(2) of HCERA] For purposes
of paragraph (1)—
‘‘(A) IN GENERAL.—Except as provided in subparagraphs
(B) and (C), the applicable dollar amount is $695.
‘‘(B) PHASE IN.—The applicable dollar amount is $95
for 2014 and $325 for 2015.
‘‘(C) SPECIAL RULE FOR INDIVIDUALS UNDER AGE 18.—
If an applicable individual has not attained the age of 18
as of the beginning of a month, the applicable dollar
amount with respect to such individual for the month shall
be equal to one-half of the applicable dollar amount for the
calendar year in which the month occurs.
‘‘(D) INDEXING OF AMOUNT.—In the case of any calendar
year beginning after 2016, the applicable dollar
amount shall be equal to $695, increased by an amount
equal to—
‘‘(i) $695, multiplied by
‘‘(ii) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year, determined
by substituting ‘calendar year 2015’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If the amount of any increase under clause (i) is not a multiple
of $50, such increase shall be rounded to the next
lowest multiple of $50.
‘‘(4) TERMS RELATING TO INCOME AND FAMILIES.—For purposes
of this section—
‘‘(A) FAMILY SIZE.—The family size involved with respect
to any taxpayer shall be equal to the number of individuals
for whom the taxpayer is allowed a deduction
under section 151 (relating to allowance of deduction for
personal exemptions) for the taxable year.
‘‘(B) HOUSEHOLD INCOME.—The term ‘household income’
means, with respect to any taxpayer for any taxable
year, an amount equal to the sum of—[shown to reflect
probable amendment made by section 1004(a)(1)(C) of
HCERA]
‘‘(i) the modified adjusted gross income of the taxpayer,
plus
‘‘(ii) the aggregate modified adjusted gross incomes
of all other individuals who—
‘‘(I) were taken into account in determining
the taxpayer’s family size under paragraph (1),
and
‘‘(II) were required to file a return of tax imposed
by section 1 for the taxable year.
‘‘(C) MODIFIED ADJUSTED GROSS INCOME.—[Replaced
by section 1004(a)(2)(B)] The term ‘modified adjusted gross
income’ means adjusted gross income increased by—
‘‘(i) any amount excluded from gross income under
section 911, and
‘‘(ii) any amount of interest received or accrued by
the taxpayer during the taxable year which is exempt
from tax.
‘‘(d) APPLICABLE INDIVIDUAL.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘applicable individual’ means,
with respect to any month, an individual other than an individual
described in paragraph (2), (3), or (4).
‘‘(2) RELIGIOUS EXEMPTIONS.—
‘‘(A) RELIGIOUS CONSCIENCE EXEMPTION.—[Replaced
by section 10106(c)] 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.
‘‘(B) HEALTH CARE SHARING MINISTRY.— ‘‘(i) IN GENERAL.—Such term shall not include any
individual for any month if such individual is a member
of a health care sharing ministry for the month.
‘‘(ii) HEALTH CARE SHARING MINISTRY.—The term
‘health care sharing ministry’ means an organization—
‘‘(I) which is described in section 501(c)(3) and
is exempt from taxation under section 501(a),
‘‘(II) members of which share a common set of
ethical or religious beliefs and share medical expenses
among members in accordance with those
beliefs and without regard to the State in which
a member resides or is employed,
‘‘(III) members of which retain membership
even after they develop a medical condition,
‘‘(IV) which (or a predecessor of which) has
been in existence at all times since December 31,
1999, and medical expenses of its members have
been shared continuously and without interruption
since at least December 31, 1999, and
‘‘(V) which conducts an annual audit which is
performed by an independent certified public accounting
firm in accordance with generally accepted
accounting principles and which is made available
to the public upon request.
‘‘(3) INDIVIDUALS NOT LAWFULLY PRESENT.—Such term
shall not include an individual for any month if for the month
the individual is not a citizen or national of the United States
or an alien lawfully present in the United States.
‘‘(4) INCARCERATED INDIVIDUALS.—Such term shall not include
an individual for any month if for the month the individual
is incarcerated, other than incarceration pending the
disposition of charges.
‘‘(e) EXEMPTIONS.—No penalty shall be imposed under subsection
(a) with respect to—
‘‘(1) INDIVIDUALS WHO CANNOT AFFORD COVERAGE.—
‘‘(A) IN GENERAL.—Any applicable individual for any
month if the applicable individual’s required contribution
(determined on an annual basis) for coverage for the
month exceeds 8 percent of such individual’s household income
for the taxable year described in section 1412(b)(1)(B)
of the Patient Protection and Affordable Care Act. For purposes
of applying this subparagraph, the taxpayer’s household
income shall be increased by any exclusion from gross
income for any portion of the required contribution made
through a salary reduction arrangement.
‘‘(B) REQUIRED CONTRIBUTION.—For purposes of this
paragraph, the term ‘required contribution’ means—
‘‘(i) in the case of an individual eligible to purchase
minimum essential coverage consisting of coverage
through an eligible-employer-sponsored plan, the
portion of the annual premium which would be paid
by the individual (without regard to whether paid
through salary reduction or otherwise) for self-only
coverage, or
‘‘(ii) in the case of an individual eligible only to
purchase minimum essential coverage described in
subsection (f)(1)(C), the annual premium for the lowest
cost bronze plan available in the individual market
through the Exchange in the State in the rating area
in which the individual resides (without regard to
whether the individual purchased a qualified health
plan through the Exchange), reduced by the amount of
the credit allowable under section 36B for the taxable
year (determined as if the individual was covered by
a qualified health plan offered through the Exchange
for the entire taxable year).
‘‘(C) SPECIAL RULES FOR INDIVIDUALS RELATED TO EM- PLOYEES.—øReplaced by section 10106(d)¿ 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.
‘‘(D) INDEXING.—In the case of plan years beginning in
any calendar year after 2014, subparagraph (A) shall be
applied by substituting for ‘8 percent’ the percentage the
Secretary of Health and Human Services determines reflects
the excess of the rate of premium growth between
the preceding calendar year and 2013 over the rate of income
growth for such period.
‘‘(2) TAXPAYERS WITH INCOME BELOW FILING THRESHOLD.—
[As revised by section 1002(b)(2) of HCERA] Any applicable individual
for any month during a calendar year if the individual’s
household income for the taxable year described in section
1412(b)(1)(B) of the Patient Protection and Affordable Care Act
is less than the amount of gross income specified in section
6012(a)(1) with respect to the taxpayer.
‘‘(3) MEMBERS OF INDIAN TRIBES.—Any applicable individual
for any month during which the individual is a member
of an Indian tribe (as defined in section 45A(c)(6)).
‘‘(4) MONTHS DURING SHORT COVERAGE GAPS.—
‘‘(A) IN GENERAL.—Any month the last day of which
occurred during a period in which the applicable individual
was not covered by minimum essential coverage for a continuous
period of less than 3 months.
‘‘(B) SPECIAL RULES.—For purposes of applying this
paragraph—
‘‘(i) the length of a continuous period shall be determined
without regard to the calendar years in
which months in such period occur,
‘‘(ii) if a continuous period is greater than the period
allowed under subparagraph (A), no exception
shall be provided under this paragraph for any month
in the period, and
‘‘(iii) if there is more than 1 continuous period described
in subparagraph (A) covering months in a calendar
year, the exception provided by this paragraph
shall only apply to months in the first of such periods.
The Secretary shall prescribe rules for the collection of the
penalty imposed by this section in cases where continuous
periods include months in more than 1 taxable year.
‘‘(5) HARDSHIPS.—Any applicable individual who for any
month is determined by the Secretary of Health and Human
Services under section 1311(d)(4)(H) to have suffered a hardship
with respect to the capability to obtain coverage under a
qualified health plan.
‘‘(f) MINIMUM ESSENTIAL COVERAGE.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘minimum essential coverage’
means any of the following:
‘‘(A) GOVERNMENT SPONSORED PROGRAMS.—Coverage
under—
‘‘(i) the Medicare program under part A of title
XVIII of the Social Security Act,
‘‘(ii) the Medicaid program under title XIX of the
Social Security Act,
‘‘(iii) the CHIP program under title XXI of the Social
Security Act,
‘‘(iv) the TRICARE for Life program,
‘‘(v) the veteran’s health care program under chapter
17 of title 38, United States Code, or
‘‘(vi) a health plan under section 2504(e) of title
22, United States Code (relating to Peace Corps volunteers).

‘‘(B) EMPLOYER-SPONSORED PLAN.—Coverage under an
eligible employer-sponsored plan.
‘‘(C) PLANS IN THE INDIVIDUAL MARKET.—Coverage
under a health plan offered in the individual market within
a State.
‘‘(D) GRANDFATHERED HEALTH PLAN.—Coverage under
a grandfathered health plan.
‘‘(E) OTHER COVERAGE.—Such other health benefits
coverage, such as a State health benefits risk pool, as the
Secretary of Health and Human Services, in coordination
with the Secretary, recognizes for purposes of this subsection.

‘‘(2) ELIGIBLE EMPLOYER-SPONSORED PLAN.—The term ‘eligible
employer-sponsored plan’ means, with respect to any employee,
a group health plan or group health insurance coverage
offered by an employer to the employee which is—
‘‘(A) a governmental plan (within the meaning of section
2791(d)(8) of the Public Health Service Act), or
‘‘(B) any other plan or coverage offered in the small or
large group market within a State.
Such term shall include a grandfathered health plan described
in paragraph (1)(D) offered in a group market.
‘‘(3) EXCEPTED BENEFITS NOT TREATED AS MINIMUM ESSENTIAL
COVERAGE.—The term ‘minimum essential coverage’ shall
not include health insurance coverage which consists of coverage
of excepted benefits—
‘‘(A) described in paragraph (1) of subsection (c) of section
2791 of the Public Health Service Act; or
‘‘(B) described in paragraph (2), (3), or (4) of such subsection
if the benefits are provided under a separate policy,
certificate, or contract of insurance.
‘‘(4) INDIVIDUALS RESIDING OUTSIDE UNITED STATES OR
RESIDENTS OF TERRITORIES.—Any applicable individual shall be
treated as having minimum essential coverage for any
month—
‘‘(A) if such month occurs during any period described
in subparagraph (A) or (B) of section 911(d)(1) which is applicable
to the individual, or
‘‘(B) if such individual is a bona fide resident of any
possession of the United States (as determined under section
937(a)) for such month.
‘‘(5) INSURANCE-RELATED TERMS.—Any term used in this
section which is also used in title I of the Patient Protection
and Affordable Care Act shall have the same meaning as when
used in such title.
‘‘(g) ADMINISTRATION AND PROCEDURE.—
‘‘(1) IN GENERAL.—The penalty provided by this section
shall be paid upon notice and demand by the Secretary, and
except as provided in paragraph (2), shall be assessed and collected
in the same manner as an assessable penalty under subchapter
B of chapter 68.
‘‘(2) SPECIAL RULES.—Notwithstanding any other provision
of law—
‘‘(A) WAIVER OF CRIMINAL PENALTIES.—In the case of
any failure by a taxpayer to timely pay any penalty imposed
by this section, such taxpayer shall not be subject to
any criminal prosecution or penalty with respect to such
failure.
‘‘(B) LIMITATIONS ON LIENS AND LEVIES.—The Secretary
shall not—
‘‘(i) file notice of lien with respect to any property
of a taxpayer by reason of any failure to pay the penalty
imposed by this section, or
‘‘(ii) levy on any such property with respect to
such failure.’’.
(c) CLERICAL AMENDMENT.—The table of chapters for subtitle
D of the Internal Revenue Code of 1986 is amended by inserting
after the item relating to chapter 47 the following new item:
‘‘CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending after December 31, 2013.