Beneficiary Health Coverage Notification Rights Act of 1999

Summary: Amends such Acts and the Internal Revenue Code to deem any participant or beneficiary notified of a group health plan termination or lapse only after the fact to have been covered during the deeming period between the effective date of the termination or lapse and the date of notification. Limits the application of the deeming period to certain purposes, including reduction of pre-existing condition exclusion periods and avoidance of a significant break in coverage. Declares that nothing in this Act shall be construed as entitling any individual to any plan or coverage benefits during such deeming period.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Beneficiary Health Coverage 
Notification Rights Act of 1999''.

SEC. 2. NOTIFICATION OF DISCONTINUATION OF HEALTH INSURANCE COVERAGE TO 
              PARTICIPANTS AND BENEFICIARIES.

    (a) Group Health Plans.--
            (1) Public health service act amendment.--(A) Subpart 2 of 
        part A of title XXVII of the Public Health Service Act is 
        amended by adding at the end the following new section:

``SEC. 2707. PROHIBITION OF RETROACTIVE TERMINATION; ADVANCE 
              NOTIFICATION OF DISCONTINUATION OF HEALTH INSURANCE 
              COVERAGE TO PARTICIPANTS AND BENEFICIARIES.

    ``A health insurance issuer offering group health insurance 
coverage in connection with a group health plan may not terminate the 
coverage with respect to the plan (or allow the coverage to lapse) 
because the plan failed to pay to the issuer premiums necessary to 
maintain the coverage unless the issuer, at least 30 days before the 
effective date of termination or lapse of the coverage, provides 
written notice to each participant or beneficiary whose coverage would 
so terminate or lapse, indicating the fact and effective date of such 
termination or lapse of coverage.''.
            (B) Section 2723(c) of such Act (42 U.S.C. 300gg-23(c)) is 
        amended by striking ``section 2704'' and inserting ``sections 
        2704 and 2707''.
            (2) ERISA amendment.--(A) Subpart B of part 7 of subtitle B 
        of title I of the Employee Retirement Income Security Act of 
        1974 is amended by adding at the end the following new section:

``SEC. 714. PROHIBITION OF RETROACTIVE TERMINATION; ADVANCE 
              NOTIFICATION OF DISCONTINUATION OF HEALTH INSURANCE 
              COVERAGE TO PARTICIPANTS AND BENEFICIARIES.

    ``A health insurance issuer offering group health insurance 
coverage in connection with a group health plan may not terminate the 
coverage with respect to the plan (or allow the coverage to lapse) 
because the plan failed to pay to the issuer premiums necessary to 
maintain the coverage unless the issuer, at least 30 days before the 
effective date of termination or lapse of the coverage, provides 
written notice to each participant or beneficiary whose coverage would 
so terminate or lapse, indicating the fact and effective date of such 
termination or lapse of coverage.''.
            (B) Section 732(a) of such Act (29 U.S.C. 1191a(a)) is 
        amended by striking ``section 711'' and inserting ``sections 
        711 and 714''.
            (C) The table of contents in section 1 of such Act is 
        amended by inserting after the item relating to section 713 the 
        following new item:

``Sec. 714. Prohibition of retroactive termination; advance 
                            notification of discontinuation of health 
                            insurance coverage to participants and 
                            beneficiaries.''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to terminations and lapses of coverage occurring on or 
after the first day of the first month that begins more than 60 days 
after the date of the enactment of this Act, regardless of the 
effective date of such terminations and lapses, but do not apply to 
terminations and lapses for which notice has been provided before such 
first day.

SEC. 3. DEEMING PERIOD OF HEALTH INSURANCE COVERAGE FOR PARTICIPANTS 
              AND BENEFICIARIES BETWEEN DISCONTINUATION AND NOTICE OF 
              DISCONTINUATION OF COVERAGE.

    (a) Group Health Plans.--
            (1) Public health service act amendments.--
                    (A) Section 2701(c) of the Public Health Service 
                Act (42 U.S.C. 300gg(c)) is amended by adding at the 
                end the following new paragraph:
            ``(5) Deeming period of coverage for participants and 
        beneficiaries between discontinuation and notice of 
        discontinuation of coverage.--
                    ``(A) In general.--If--
                            ``(i)(I) a health insurance issuer offering 
                        group health insurance coverage in connection 
                        with a group health plan terminates the 
                        coverage with respect to the plan (or allows 
                        the coverage to lapse), or (II) coverage under 
                        a group health plan is terminated; and
                            ``(ii) a participant or beneficiary whose 
                        coverage is so terminated or lapsed only 
                        receives notice of such termination or lapse 
                        after the date that the termination or lapse 
                        takes effect,
                for the purposes described in subparagraph (B), such 
                individual shall be treated as being covered under the 
                terminated or lapsed group health insurance coverage or 
                group health plan during the deeming period, as defined 
                in subparagraph (C).
                    ``(B) Application.--Subparagraph (A) shall apply--
                            ``(i) for purposes of this part (including 
                        for purposes of reducing pre-existing condition 
                        exclusion periods and avoiding a significant 
                        break in coverage); and
                            ``(ii) for purposes of applying any State 
                        law that provides for a conversion or any other 
                        health insurance option based on (or taking 
                        into account) loss of group health insurance 
                        coverage or loss of coverage under a group 
                        health plan.
                    ``(C) Deeming period defined.--For purposes of this 
                paragraph, the term `deeming period' is the period 
                beginning on the effective date of the termination or 
                lapse of coverage described in subparagraph (A)(i) and 
                ending on the date on which the participant or 
                beneficiary receives notice described in subparagraph 
                (A)(ii).
                    ``(D) No entitlement to benefits during deeming 
                period.--Nothing in this paragraph shall be construed 
                as entitling any individual to any benefits under the 
                plan or coverage during the deeming period.''.
                    (B) Section 2701(f)(1)(D) of such Act (42 U.S.C. 
                300gg(f)(1)(D)) is amended by inserting before the 
                period ``or if later, the date the employee is notified 
                of such termination''.
            (2) ERISA amendments.--
                    (A) Section 701(c) of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1181(c)) is 
                amended by adding at the end the following new 
                paragraph:
            ``(5) Deeming period of coverage for participants and 
        beneficiaries between discontinuation and notice of 
        discontinuation of coverage.--
                    ``(A) In general.--If--
                            ``(i)(I) a health insurance issuer offering 
                        group health insurance coverage in connection 
                        with a group health plan terminates the 
                        coverage with respect to the plan (or allows 
                        the coverage to lapse), or (II) coverage under 
                        a group health plan is terminated; and
                            ``(ii) a participant or beneficiary whose 
                        coverage is so terminated or lapsed only 
                        receives notice of such termination or lapse 
                        after the date that the termination or lapse 
                        takes effect,
                for the purposes described in subparagraph (B), such 
                individual shall be treated as being covered under the 
                terminated or lapsed group health insurance coverage or 
                group health plan during the deeming period, as defined 
                in subparagraph (C).
                    ``(B) Application.--Subparagraph (A) shall apply 
                for purposes of this part (including for purposes of 
                reducing pre-existing condition exclusion periods and 
                avoiding a significant break in coverage).
                    ``(C) Deeming period defined.--For purposes of this 
                paragraph, the term `deeming period' is the period 
                beginning on the effective date of the termination or 
                lapse of coverage described in subparagraph (A)(i) and 
                ending on the date on which the participant or 
                beneficiary receives notice described in subparagraph 
                (A)(ii).
                    ``(D) No entitlement to benefits during deeming 
                period.--Nothing in this paragraph shall be construed 
                as entitling any individual to any benefits under the 
                plan or coverage during the deeming period.''.
                    (B) Section 701(f)(1)(D) of such Act (29 U.S.C. 
                1181(f)(1)(D)) is amended by inserting before the 
                period ``or if later, the date the employee is notified 
                of such termination''.
            (3) Internal revenue code amendments.--Section 9801(c) of 
        the Internal Revenue Code of 1986 is amended by adding at the 
        end the following new paragraph:
            ``(5) Deeming period of coverage for participants and 
        beneficiaries between discontinuation and notice of 
        discontinuation of coverage.--
                    ``(A) In general.--If--
                            ``(i)(I) a health insurance issuer offering 
                        group health insurance coverage in connection 
                        with a group health plan terminates the 
                        coverage with respect to the plan (or allows 
                        the coverage to lapse), or (II) coverage under 
                        a group health plan is terminated; and
                            ``(ii) a participant or beneficiary whose 
                        coverage is so terminated or lapsed only 
                        receives notice of such termination or lapse 
                        after the date that the termination or lapse 
                        takes effect,
                for the purposes described in subparagraph (B), such 
                individual shall be treated as being covered under the 
                terminated or lapsed group health insurance coverage or 
                group health plan during the deeming period, as defined 
                in subparagraph (C).
                    ``(B) Application.--Subparagraph (A) shall apply 
                for purposes of this part (including for purposes of 
                reducing pre-existing condition exclusion periods and 
                avoiding a significant break in coverage).
                    ``(C) Deeming period defined.--For purposes of this 
                paragraph, the term `deeming period' is the period 
                beginning on the effective date of the termination or 
                lapse of coverage described in subparagraph (A)(i) and 
                ending on the date on which the participant or 
                beneficiary receives notice described in subparagraph 
                (A)(ii).
                    ``(D) No entitlement to benefits during deeming 
                period.--Nothing in this paragraph shall be construed 
                as entitling any individual to any benefits under the 
                plan or coverage during the deeming period.''.
                    (B) Section 9801(f)(1)(D) of such Code is amended 
                by inserting before the period ``or if later, the date 
                the employee is notified of such termination''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to terminations and lapses of coverage occurring on or 
after the first day of the first month that begins after the date of 
the enactment of this Act, regardless of the effective date of such 
terminations and lapses, but do not apply to terminations and lapses 
for which notice has been provided before such first day.