H.R. 3200/Division A/Title IV/Subtitle A/Part 2

PART 2 — EMPLOYER RESPONSIBILITY

Sec. 411. Election to Satisfy Health Coverage Participation Requirements.

(a) In General.—

Chapter 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

``SEC. 4980H. Election with respect to health coverage participation requirements.

``(a) Election of employer responsibility To provide health coverage.—

``(1) In general.—Subsection (b) shall apply to any employer with respect to whom an election under paragraph (2) is in effect.

``(2) Time and manner.—An employer may make an election under this paragraph at such time and in such form and manner as the Secretary may prescribe.

``(3) Affiliated groups.—In the case of any employer which is part of a group of employers who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414, the election under paragraph (2) shall be made by such person as the Secretary may provide. Any such election, once made, shall apply to all members of such group.

``(4) Separate elections.—Under regulations prescribed by the Secretary, separate elections may be made under paragraph (2) with respect to—

``(A) separate lines of business, and

``(B) full-time employees and employees who are not full-time employees.

``(5) Termination of election in cases of substantial noncompliance.—The Secretary may terminate the election of any employer under paragraph (2) if the Secretary (in coordination with the Health Choices Commissioner) determines that such employer is in substantial noncompliance with the health coverage participation requirements.

``(b) Excise tax with respect to failure To meet health coverage participation requirements.—

``(1) In general.—In the case of any employer who fails (during any period with respect to which the election under subsection (a) is in effect) to satisfy the health coverage participation requirements with respect to any employee to whom such election applies, there is hereby imposed on each such failure with respect to each such employee a tax of $100 for each day in the period beginning on the date such failure first occurs and ending on the date such failure is corrected.

``(2) Limitations on amount of tax.—

``(A) Tax not to apply where failure not discovered exercising reasonable diligence.—No tax shall be imposed by paragraph (1) on any failure during any period for which it is established to the satisfaction of the Secretary that the employer neither knew, nor exercising reasonable diligence would have known, that such failure existed.

``(B) Tax not to apply to failures corrected within 30 days.—No tax shall be imposed by paragraph (1) on any failure if—

``(i) such failure was due to reasonable cause and not to willful neglect, and

``(ii) such failure is corrected during the 30-day period beginning on the 1st date that the employer knew, or exercising reasonable diligence would have known, that such failure existed.

``(C) Overall limitation for unintentional failures.—In the case of failures which are due to reasonable cause and not to willful neglect, the tax imposed by subsection (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of—

``(i) 10 percent of the aggregate amount paid or incurred by the employer (or predecessor employer) during the preceding taxable year for employment-based health plans, or

``(ii) $500,000.

``(D) Coordination with other enforcement provisions.—The tax imposed under paragraph (1) with respect to any failure shall be reduced (but not below zero) by the amount of any civil penalty collected under section 502(c)(11) of the Employee Retirement Income Security Act of 1974 or section 2793(g) of the Public Health Service Act with respect to such failure.

``(c) Health coverage participation requirements.—For purposes of this section, the term ‘health coverage participation requirements’ means the requirements of part I of subtitle B of title III of the America’s Affordable Health Choices Act of 2009 (as in effect on the date of the enactment of this section).´´.

(b) Clerical Amendment.—

The table of sections for chapter 43 of such Code is amended by adding at the end the following new item:

``Sec. 4980H. Election to satisfy health coverage participation requirements.´´.

(c) Effective Date.—

The amendments made by this section shall apply to periods beginning after December 31, 2012.

Sec. 412. Responsibilities of Nonelecting Employers.

(a) In General.—

Section 3111 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

``(c) Employers electing to not provide health benefits.—

``(1) In general.—In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b)).

``(2) Special rules for small employers.—

``(A) In general.—In the case of any employer who is small employer for any calendar year, paragraph (1) shall be applied by substituting the applicable percentage determined in accordance with the following table for ‘8 percent’:

``If the annual payroll of such employer for the preceding calendar year:	The applicable percentage is:
Does not exceed $250,000	0 percent
Exceeds $250,000, but does not exceed $300,000	2 percent
Exceeds $300,000, but does not exceed $350,000	4 percent
Exceeds $350,000, but does not exceed $400,000	6 percent

``(B) Small employer.—For purposes of this paragraph, the term ‘small employer’ means any employer for any calendar year if the annual payroll of such employer for the preceding calendar year does not exceed $400,000.

``(C) Annual payroll.—For purposes of this paragraph, the term ‘annual payroll’ means, with respect to any employer for any calendar year, the aggregate wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b)) during such calendar year.

``(3) Nonelecting employer.—For purposes of paragraph (1), the term ‘nonelecting employer’ means any employer for any period with respect to which such employer does not have an election under section 4980H(a) in effect.

``(4) Special rule for separate elections.—In the case of an employer who makes a separate election described in section 4980H(a)(4) for any period, paragraph (1) shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.

``(5) Aggregation; predecessors.—For purposes of this subsection—

``(A) all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer, and

``(B) any reference to any person shall be treated as including a reference to any predecessor of such person.´´.

(b) Definitions.—

Section 3121 of such Code is amended by adding at the end the following new subsection:

``(aa) Special rules for tax on employers electing not To provide health benefits.—For purposes of section 3111(c)—

``(1) Paragraphs (1), (5), and (19) of subsection (b) shall not apply.

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

``(3) Subsection (e) shall not apply and the term ‘State’ shall include the District of Columbia.´´.

(c) Conforming Amendment.—

Subsection (d) of section 3111 of such Code, as redesignated by this section, is amended by striking ``this section´´ and inserting ``subsections (a) and (b)´´.

(d) Application to Railroads.—

(1) In General.—

Section 3221 of such Code is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

``(c) Employers electing to not provide health benefits.—

``(1) In general.—In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the compensation paid during any calendar year by such employer for services rendered to such employer.

``(2) Exception for small employers.—Rules similar to the rules of section 3111(c)(2) shall apply for purposes of this subsection.

``(3) Nonelecting employer.—For purposes of paragraph (1), the term ‘nonelecting employer’ means any employer for any period with respect to which such employer does not have an election under section 4980H(a) in effect.

``(4) Special rule for separate elections.—In the case of an employer who makes a separate election described in section 4980H(a)(4) for any period, subsection (a) shall be applied for such period by taking into account only the wages paid to employees who are not subject to such election.´´.

(2) Definitions.—

Subsection (e) of section 3231 of such Code is amended by adding at the end the following new paragraph:

``(13) Special rules for tax on employers electing not to provide health benefits.—For purposes of section 3221(c)—

``(A) Paragraph (1) shall be applied without regard to the third sentence thereof.

``(B) Paragraph (2) shall not apply.´´.

(3) Conforming Amendment.—

Subsection (d) of section 3221 of such Code, as redesignated by this section, is amended by striking ``subsections (a) and (b), see section 3231(e)(2)´´ and inserting ``this section, see paragraphs (2) and (13)(B) of section 3231(e)´´.

(e) Effective Date.—

The amendments made by this section shall apply to periods beginning after December 31, 2012.