To amend the Internal Revenue Code of 1986 to require employer-provided group health plans to credit coverage under a prior group health plan against any preexisting condition limitation.

SECTION 1. CREDIT FOR COVERAGE UNDER PRIOR GROUP HEALTH PLAN AGAINST 
              ANY PREEXISTING CONDITION LIMITATION.

    (a) In General.--Section 4980B of the Internal Revenue Code of 1986 
is amended by redesignating subsection (g) as subsection (i) and by 
inserting after subsection (f) the following new subsections:
    ``(g) Preexisting Condition Limitation Requirements of Group Health 
Plans.--
            ``(1) In general.--A group health plan meets the 
        requirements of this subsection only if the preexisting 
        condition limitation period (if any) under the plan with 
        respect to any individual who commences coverage under the plan 
        after December 31, 1995, is reduced by the length of the 
        aggregate period of qualified prior coverage (if any) 
        applicable to such individual as of the date of such 
        commencement.
            ``(2) Preexisting condition limitation period.--For 
        purposes of paragraph (1), the term `preexisting condition 
        limitation period' means, with respect to coverage of an 
        individual under a group health plan, the period during which 
        benefits with respect to treatment of a condition of such 
        individual are not provided based on the fact that the 
        condition was preexisting.
            ``(3) Aggregate period of qualified prior coverage.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `aggregate period of qualified prior coverage' 
                means, with respect to commencement of coverage of an 
                individual under a group health plan, the aggregate of 
                the qualified coverage periods of such individual 
                occurring before the date of such commencement. Such 
                period shall be treated as zero if there is more than a 
                60-day break in coverage under a group health plan 
                between the date the most recent qualified coverage 
                period ends and the date of such commencement.
                    ``(B) Qualified coverage period.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `qualified coverage period' 
                        means, with respect to an individual, any 
                        period of coverage of the individual under a 
                        group health plan.
                            ``(ii) Disregarding periods before breaks 
                        in coverage.--Such term does not include any 
                        period occurring before any 60-day break in 
                        coverage under a group health plan.
                    ``(C) Waiting period not treated as a break in 
                coverage.--For purposes of subparagraphs (A) and (B), 
                any period that is in a waiting period for any coverage 
                under a group health plan shall not be considered to be 
                a break in coverage under a group health plan.
                    ``(D) Inclusion of continuation coverage.--For 
                purposes of this paragraph, continuation coverage, as 
                defined in subsection (f)(2), is treated as coverage 
                under the group health plan to which such continuation 
                coverage relates.
                    ``(E) Establishment of period.--A qualified 
                coverage period with respect to an individual shall be 
                established through presentation of certifications 
                described in paragraph (4) or in such other manner as 
                may be specified in regulation.
                    ``(F) Treatment of coverage before january 1, 
                1996.--In no event shall a qualified coverage period 
                with respect to an individual include any coverage 
                before January 1, 1996, unless such coverage is under 
                the group health plan under which the individual was 
                covered as of December 31, 1995.
            ``(4) Certification of period of prior coverage.--The plan 
        administrator of a group health plan shall, on request made on 
        behalf of an individual covered (or previously covered) under 
        the plan, provide for a certification of the period of coverage 
        of the individual under the plan and of the waiting period (if 
        any) imposed with respect to the individual for any coverage 
        under the plan.
            ``(5) Application to small employer plans.--For purposes of 
        applying this subsection and so much of this section as relates 
        to this subsection, subsection (d)(1) shall not apply.
    ``(h) Nondiscrimination in Eligibility Based on Health Status for 
Certain Previously Covered Individuals.--
            ``(1) In general.--A group health plan meets the 
        requirements of this subsection only if the plan does not 
        establish eligibility, continuation, enrollment, or 
        contribution requirements for a qualified individual based on 
        factors directly related to the health status, medical 
        condition, claims experience, receipt of health care, medical 
        history, disability, or evidence of insurability of the 
        individual.
            ``(2) Qualified individual defined.--For purposes of this 
        subsection, the term `qualified individual' means an individual 
        who (at the time of determining eligibility, continuation, 
        enrollment, or contributions with respect to a group health 
        plan) has an aggregate period of qualified prior coverage (as 
        defined in subsection (g)(3)(A)) of greater than zero.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed as preventing a group health plan from establishing 
        preexisting condition limitations and restrictions consistent 
        with subsection (g).''
    (b) Notice.--Subsection (f)(6)(A) of section 4980B of such Code is 
amended by inserting before the period the following: ``and subsections 
(g) and (h)''.
    (c) Technical Amendments.--
            (1) Subsection (a) of section 4980B of such Code is amended 
        by striking ``the requirements of'' and all that follows and 
        inserting ``the requirements of--
            ``(1) subsection (f) with respect to any qualified 
        beneficiary,
            ``(2) subsection (g) with respect to any individual covered 
        under the group health plan, or
            ``(3) subsection (h) with respect to any individual.''
            (2) Subsection (f) of section 4980B of such Code is further 
        amended--
                    (A) in paragraph (2)(B)(i)(III), by striking 
                ``(g)(1)(D)(iii)'' and inserting ``(i)(1)(D)(iii)'',
                    (B) in paragraph (2)(B)(iv)(II), by striking 
                ``(g)(1)(D)'' and inserting ``(i)(1)(D)'',
                    (C) in the last sentence of paragraph (3), by 
                striking ``(g)(1)(D)'' and inserting ``(i)(1)(D)'', and
                    (D) in paragraph (5)(B), by striking ``(g)(1)'' and 
                inserting ``(i)(1)''.
    (d) Effective Date.-- The amendments made by this section shall 
apply to plan years beginning after December 31, 1995.

Summary: Amends the Internal Revenue Code, with respect to imposition of the excise tax for failure of group health plans to meet certain requirements, to require any preexisting condition limitation period with respect to an individual who commences coverage after December 31, 1995, to be reduced by the aggregate of the individual's prior periods of coverage under a plan. Treats a period as zero if a break in coverage of greater than 60 days has occurred between the most recent qualified coverage and commencement of the current coverage. Prohibits, with respect to an individual whose periods of previous coverage are greater than zero, the establishment by a plan of eligibility, continuation, enrollment, or contribution requirements based on factors directly related to health status, medical condition, claims experience, receipt of health care, medical history, disability, or evidence of insurability.