“There is hereby established the ‘Improve Health Insurance Affordability Fund’ to be administered by the Secretary of Health and Human Services, acting through the Administrator of the Centers for Medicare & Medicaid Services (in this section referred to as the ‘Administrator’), to provide funding, in accordance with this title, to the 50 States and the District of Columbia (each referred to in this section as a ‘State’) beginning on January 1, 2020, for the purposes described in section 1352.

“(a) In general.—A State shall use the funds allocated to the State under this part for one of the following purposes:

“(1) To provide reinsurance payments to health insurance issuers with respect to individuals enrolled under individual health insurance coverage (other than through a plan described in subsection (b)) offered by such issuers.

“(2) To provide assistance (other than through payments described in paragraph (1)) to reduce out-of-pocket costs, such as copayments, coinsurance, premiums, and deductibles, of individuals enrolled under qualified health plans offered on the individual market through an Exchange.

“(b) Exclusion of certain grandfathered and transitional plans.—For purposes of subsection (a), a plan described in this subsection is the following:

“(1) A grandfathered health plan (as defined in section 1251).

“(2) A plan (commonly referred to as a ‘transitional plan’) continued under the letter issued by the Centers for Medicare & Medicaid Services on November 14, 2013, to the State Insurance Commissioners outlining a transitional policy for coverage in the individual and small group markets to which section 1251 does not apply, and under the extension of the transitional policy for such coverage set forth in the Insurance Standards Bulletin Series guidance issued by the Centers for Medicare & Medicaid Services on March 5, 2014, February 29, 2016, February 13, 2017, and April 9, 2018, or under any subsequent extensions thereof.

“(a) Encouraging State options for allocations.—

“(1) IN GENERAL.—To be eligible for an allocation of funds under this part for a year (beginning with 2020), a State shall submit to the Administrator an application at such time (but, in the case of allocations for 2020, not later than 90 days after the date of the enactment of this title and, in the case of allocations for a subsequent year, not later than March 31 of the previous year) and in such form and manner as specified by the Administrator containing—

“(A) a description of how the funds will be used; and

“(B) such other information as the Administrator may require.

“(2) AUTOMATIC APPROVAL.—An application so submitted is approved unless the Administrator notifies the State submitting the application, not later than 60 days after the date of the submission of such application, that the application has been denied for not being in compliance with any requirement of this part and of the reason for such denial.

“(3) 5-YEAR APPLICATION APPROVAL.—If an application of a State is approved for a purpose described in section 1352 for a year, such application shall be treated as approved for such purpose for each of the subsequent 4 years.

“(b) Default Federal safeguard.—

“(1) 2020.—For allocations made under this part for 2020, in the case of a State that does not submit an application under subsection (a) by the 90-day submission date applicable to such year under subsection (a)(1) and in the case of a State that does submit such an application by such date that is not approved, the Administrator, in consultation with the State insurance commissioner, shall use, in accordance with paragraph (3), the allocation that would otherwise be provided to the State under this part for such year for such State.

“(2) 2021 AND SUBSEQUENT YEARS.—In the case of a State that does not have in effect an approved application under this section for 2021 or a subsequent year, the Administrator, in consultation with the State insurance commissioner, shall use, in accordance with paragraph (3), the allocation that would otherwise be provided to the State under this part for such year for such State.

“(3) SPECIFIED USE.—An allocation for a State made pursuant to paragraph (1) or (2) for a year shall be used to carry out the purpose described in section 1352(1) in such State by providing reinsurance payments to health insurance issuers with respect to attachment range claims (as defined in section 1354(b)(2), using the dollar amounts specified in subparagraph (B) of such section for such year) in an amount equal to the percentage (specified for such year by the Secretary under such subparagraph) of the amount of such claims.

“(a) Appropriation.—For the purpose of providing allocations for States under this part there is appropriated, out of any money in the Treasury not otherwise appropriated $10,000,000,000 for 2020 and each subsequent year.

“(b) Allocations.—

“(1) PAYMENT.—

“(A) IN GENERAL.—From amounts appropriated under subsection (a) for a year, the Secretary shall, with respect to a State and not later than the date specified under subparagraph (B) for such year, allocate for such State the amount determined for such State and year under paragraph (2).

“(B) SPECIFIED DATE.—For purposes of subparagraph (A), the date specified in this subparagraph is—

“(i) for 2020, the date that is 45 days after the date of the enactment of this title; and

“(ii) for 2021 or a subsequent year, January 1 of the respective year.

“(C) NOTIFICATIONS OF ALLOCATION AMOUNTS.—For 2021 and each subsequent year, the Secretary shall notify each State of the amount determined for such State under paragraph (2) for such year by not later than January 1 of the previous year.

“(2) ALLOCATION AMOUNT DETERMINATIONS.—

“(A) IN GENERAL.—For purposes of paragraph (1), the amount determined under this paragraph for a year for a State is the amount that the Secretary estimates would be expended under this part for such year on attachment range claims of individuals residing in such State if all States used such funds only for the purpose described in paragraph (1) of section 1352 at the dollar amounts and percentage specified under subparagraph (B) for such year. For purposes of the previous sentence and section 1353(b)(3), the term ‘attachment range claims’ means, with respect to an individual, the claims for such individual that exceed a dollar amount specified by the Secretary for a year, but do not exceed a ceiling dollar amount specified by the Secretary for such year, under subparagraph (B).

“(B) SPECIFICATIONS.—For purposes of subparagraph (A) and section 1353(b)(3), the Secretary shall determine the dollar amounts and the percentage to be specified under subparagraph (A) for a year in a manner to ensure that the total amount of expenditures under this part for such year is estimated to equal the total amount appropriated for such year under subsection (a) if such expenditures were used solely for the purpose described in paragraph (1) of section 1352 for attachment range claims at the dollar amounts and percentage so specified for such year.

“(3) AVAILABILITY.—Funds allocated to a State under this subsection for a year shall remain available through the end of the subsequent year.

“(c) Annual distribution of previous year’s remaining funds.—

“(1) IN GENERAL.—In carrying out subsection (b), the Secretary shall, with respect to a year (beginning with 2021), not later than March 31 of such year—

“(A) determine the amount of funds, if any, from the amounts appropriated under subsection (a) for the previous year but not allocated for such previous year; and