I 

108TH CONGRESS 

1ST SESSION H. R. 2850

To amend title I of the Employee Retirement Income Security Act of 1974 

to provide for the establishment in the Department of Labor of a Small 

Employer Health Benefits Program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 24, 2003

Mr. KIND (for himself, Mr. ANDREWS, Mr. HINCHEY, Mr. FROST, Mr. KILDEE, Mr. ABERCROMBIE, Mr. PAYNE, Ms. WOOLSEY, Mr. VAN HOLLEN, 

Mr. HOLT, Ms. MCCOLLUM, Mr. SERRANO, Mr. OBERSTAR, Mr. EMANUEL, Mr. FORD, Mr. PASTOR, Mr. GEORGE MILLER of California, and 

Mr. HINOJOSA) introduced the following bill; which was referred to the 

Committee on Education and the Workforce 

A BILL

To amend title I of the Employee Retirement Income Security Act of 1974 to provide for the establishment in 

the Department of Labor of a Small Employer Health 

Benefits Program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Employer Health Benefits Program Act of 2003’’. 
2

•HR 2850 IH 

1 (b) TABLE OF CONTENTS.—The table of contents of 

2 this Act is as follows:

Sec. 1. Short title. 

Sec. 2. Establishment of Small Employer Health Benefits Program (SEHBP). 

PART 8—SMALL EMPLOYER HEALTH BENEFITS PROGRAM

Sec. 801. Establishment of program. 

Sec. 802. Contracts with qualifying insurers. 

Sec. 803. Additional conditions. 

Sec. 804. Dissemination of information. 

Sec. 805. Subsidies. 

Sec. 806. Authorization of appropriations.

3 SEC. 2. ESTABLISHMENT OF SMALL EMPLOYER HEALTH 

4 BENEFITS PROGRAM (SEHBP). 

5 (a) IN GENERAL.—Subtitle B of title I of the Em6 ployee Retirement Income Security Act of 1974 is amend7 ed by adding after part 7 the following new part: 

8 ‘‘PART 8—SMALL EMPLOYER HEALTH BENEFITS 

9 PROGRAM (SEHBP) 

10 ‘‘SEC. 801. ESTABLISHMENT OF PROGRAM. 

11 ‘‘(a) IN GENERAL.—The Secretary shall establish, in 

12 accordance with this part, a program under which—

13 ‘‘(1) qualifying small employers (as defined in 

14 subsection (b)) are provided access to qualifying 

15 health insurance coverage (as defined in subsection 

16 (c)) for their employees, and 

17 ‘‘(2) such employees may elect alternative forms 

18 of coverage offered by various health insurance 

19 issuers. 
3

•HR 2850 IH 

1 ‘‘(b) QUALIFYING SMALL EMPLOYER DEFINED; 

2 OTHER DEFINITIONS.—For purposes of this part: 

3 ‘‘(1) QUALIFYING SMALL EMPLOYER.—

4 ‘‘(A) IN GENERAL.—The term ‘qualifying 

5 small employer’ means a small employer (as de6 fined in paragraph (2)) that—

7 ‘‘(i) elects to offer health insurance 

8 coverage provided under this part to each 

9 employee who has been employed by that 

10 employer for 3 months or longer; and 

11 ‘‘(ii) elects, with respect to an em12 ployee electing coverage under qualified 

13 health insurance coverage, to pay at least 

14 50 percent of the total premium for quali15 fying health insurance coverage provided 

16 under this part. 

17 ‘‘(B) ELECTIONS.—Elections under sub18 paragraph (A) may be filed with the Secretary 

19 during the 180-day period beginning with the 

20 first enrollment period occurring under section 

21 803 and during open enrollment periods occur22 ring thereafter under such section. Such elec23 tions shall be filed in such form and manner as 

24 shall be prescribed by the Secretary. 
4

•HR 2850 IH 

1 ‘‘(C) PART-TIME EMPLOYMENT.—Under 

2 regulations of the Secretary, in the case of an 

3 employee serving in a position in which service 

4 is customarily less than 1,500 hours per year, 

5 the reference in subparagraph (A)(ii) to ‘50 

6 percent’ shall be deemed a percentage reduced 

7 to a percentage that bears the same ratio to 50 

8 percent as the number of hours of service per 

9 year customarily in such position bears to 

10 1,500. 

11 ‘‘(2) SMALL EMPLOYER.—The term ‘small em12 ployer’ means, with respect to a year, an employer 

13 who employed an average of fewer than 100 employ14 ees on business days during the preceding calendar 

15 year and who employs at least 1 employee on the 

16 first day of the year. 

17 ‘‘(3) SEHBP.—The term ‘SEHBP’ means the 

18 small employer health benefits program provided 

19 under this part. 

20 ‘‘(c) QUALIFYING HEALTH INSURANCE COVERAGE.—

21 For purposes of this part, the term ‘qualifying health in22 surance coverage’ means health insurance coverage that 

23 meets the following requirements: 

24 ‘‘(1) The coverage is offered by a health insur25 ance issuer. 
5

•HR 2850 IH 

1 ‘‘(2) The benefits under such coverage are 

2 equivalent to or greater than the lower level of bene3 fits provided under the service benefit plan described 

4 in section 8903(1) of title 5, United States Code. 

5 ‘‘(3) The coverage includes, with respect to an 

6 eligible individual that elects coverage, coverage of 

7 the same dependents that would be covered if the 

8 coverage were offered under FEHBP. 

9 ‘‘(4)(A) Subject to subparagraph (B), there is 

10 no underwriting, through a preexisting condition 

11 limitation, differential benefits, or different premium 

12 levels, or otherwise, with respect to such coverage for 

13 covered individuals or their dependents. 

14 ‘‘(B) The premiums charged for such coverage 

15 are community-rated for individuals within any 

16 State and may vary only—

17 ‘‘(i) by individual or family enrollment, and 

18 ‘‘(ii) to the extent permitted under the 

19 laws of such State relating to health insurance 

20 coverage offered in the small group market, on 

21 the basis of geography. 

22 ‘‘(d) OTHER TERMS.—

23 ‘‘(1) HEALTH INSURANCE COVERAGE; HEALTH

24 INSURANCE ISSUER; HEALTH STATUS-RELATED FAC25 TOR.—The terms ‘health insurance coverage’, ‘health
6

•HR 2850 IH 

1 insurance issuer’, ‘health status-related factor’ have 

2 the meanings provided such terms in section 733. 

3 ‘‘(2) SMALL GROUP MARKET.—The term ‘small 

4 group market’ has the meaning provided such term 

5 in section 2791(e)(5) of the Public Health Service 

6 Act (42 U.S.C. 300gg–91(e)(5)). 

7 ‘‘(3) FEHBP.—The term ‘FEHBP’ means the 

8 Federal Employees Health Benefits Program under 

9 chapter 89 of title 5, United States Code. 

10 ‘‘(e) TREATMENT OF PARTNERSHIPS AND SELF-EM11 PLOYED INDIVIDUALS.—For purposes of this part, and for 

12 purposes of applying section 3 to this part and to part 

13 5 as it applies to this part, in any case in which qualifying 

14 health insurance coverage is, or is to be, provided under 

15 a plan, fund, or program to individuals covered there16 under—

17 ‘‘(1) if such plan, fund, or program is main18 tained by a partnership, the term ‘employer’ (as de19 fined in section 3(5)) includes the partnership in re20 lation to the partners, and the term ‘employee’ (as 

21 defined in section 3(6)) includes any partner in rela22 tion to the partnership; and 

23 ‘‘(2) if such plan, fund, or program is main24 tained by a self-employed individual, the term ‘em25 ployer’ (as defined in section 3(5)) and the term 
7

•HR 2850 IH 

1 ‘employee’ (as defined in section 3(6)) shall include 

2 such individual. 

3 ‘‘SEC. 802. CONTRACTS WITH QUALIFYING INSURERS. 

4 ‘‘(a) IN GENERAL.—The Secretary shall enter into 

5 contracts with health insurance issuers for the offering of 

6 qualifying health insurance coverage under this part in the 

7 States in such manner as to offer coverage to employees 

8 of employers that elect to offer coverage under this part. 

9 Nothing in this part shall be construed as requiring the 

10 Secretary to enter into arrangements with all such issuers 

11 seeking to offer qualifying health insurance coverage in 

12 a State. 

13 ‘‘(b) CONTINUED REGULATION.—Nothing in this 

14 part shall be construed as preempting State laws applica15 ble to health insurance issuers that offer coverage under 

16 this part in such State. 

17 ‘‘(c) COORDINATION WITH STATE INSURANCE COM18 MISSIONERS.—The Secretary shall coordinate with the in19 surance commissioners for the various States in estab20 lishing a process for handling and resolving any com21 plaints relating to health insurance coverage offered under 

22 this part, to the extent necessary to augment processes 

23 otherwise available under State law. 
8

•HR 2850 IH 

1 ‘‘SEC. 803. ADDITIONAL CONDITIONS. 

2 ‘‘(a) LIMITATION ON ENROLLMENT PERIODS.—The 

3 Secretary may limit the periods of times during which em4 ployees may elect coverage offered under this part, but 

5 such election shall be consistent with the elections per6 mitted for employees under FEHBP and shall provide for 

7 at least annual open enrollment periods and enrollment 

8 at the time of initial eligibility to enroll and upon appro9 priate changes in family circumstances. 

10 ‘‘(b) AUTHORIZING USE OF STATES IN MAKING AR11 RANGEMENTS FOR COVERAGE.—In lieu of the coverage 

12 otherwise arranged by the Secretary under this part, the 

13 Secretary may enter an arrangement with a State under 

14 which a State arranges for the provision of qualifying 

15 health insurance coverage to qualifying small employers 

16 in such manner as the Secretary would otherwise arrange 

17 for such coverage. 

18 ‘‘(c) USE OF FEHBP MODEL.—The Secretary shall 

19 carry out the SEHBP using the model of the FEHBP 

20 to the extent practicable and consistent with the provisions 

21 of this part, and, in carrying out such model, the Secretary 

22 shall, to the maximum extent practicable, negotiate the 

23 most affordable and substantial coverage possible for 

24 small employers. 
9

•HR 2850 IH 

1 ‘‘SEC. 804. DISSEMINATION OF INFORMATION. 

2 ‘‘The Secretary shall widely disseminate information 

3 about SEHBP through the media, the Internet, public 

4 service announcements, and other employer and employee 

5 directed communications. 

6 ‘‘SEC. 805. SUBSIDIES. 

7 ‘‘(a) EMPLOYER SUBSIDIES.—

8 ‘‘(1) ENROLLMENT DISCOUNT.—

9 ‘‘(A) IN GENERAL.—In the case of a quali10 fying small employer who is eligible under sub11 paragraph (B), the portion of the total pre12 mium for coverage otherwise payable by such 

13 employer under this part shall be reduced by 5 

14 percent. Such reduction shall not cause an in15 crease in the portion of the total premium pay16 able by employees. 

17 ‘‘(B) EMPLOYERS ELIGIBLE FOR DIS18 COUNTS.—A qualifying small employer is eligi19 ble under this subparagraph if such employer 

20 employed an average of fewer than 25 employ21 ees on business days during the preceding cal22 endar year. 

23 ‘‘(2) EMPLOYER PREMIUM SUBSIDY.—

24 ‘‘(A) IN GENERAL.—The Secretary shall 

25 provide to qualifying small employers who are 

26 eligible under subparagraph (C) and who elect
10

•HR 2850 IH 

1 to offer health insurance coverage under this 

2 part a subsidy for premiums paid by the em3 ployer for coverage of employees whose indi4 vidual income (as determined by the Secretary) 

5 is at or below 200 percent of the poverty line 

6 (as defined in section 673(2) of the Community 

7 Services Block Grant Act (42 U.S.C. 9902(2)), 

8 including any revision required by such section) 

9 for an individual. 

10 ‘‘(B) SUBSIDY SCALED ACCORDING TO

11 SIZE OF EMPLOYER.—The subsidy provided 

12 under subparagraph (A) shall be designed so 

13 that the subsidy equals, for any calendar year—

14 ‘‘(i) 50 percent of the portion of the 

15 premium payable by the employer for the 

16 coverage, in the case of eligible qualifying 

17 small employers who employ an average of 

18 fewer than 11 employees on business days 

19 during the preceding calendar year; 

20 ‘‘(ii) 35 percent of the portion of the 

21 premium payable by the employer for the 

22 coverage, in the case of eligible qualifying 

23 small employers who employ an average of 

24 more than 10 employees but fewer than 26 
11

•HR 2850 IH 

1 employees on business days during the pre2 ceding calendar year; and 

3 ‘‘(iii) 25 percent of the portion of the 

4 premium payable by the employer for the 

5 coverage, in the case of eligible qualifying 

6 small employers who employ an average of 

7 more than 25 employees but fewer than 51 

8 employees on business days during the pre9 ceding calendar year. 

10 ‘‘(C) EMPLOYERS ELIGIBLE FOR PREMIUM

11 SUBSIDY.—A qualifying small employer is eligi12 ble under this subparagraph if such employer 

13 employed an average of fewer than 50 employ14 ees on business days during the preceding cal15 endar year. 

16 ‘‘(b) EMPLOYEE SUBSIDIES.—

17 ‘‘(1) IN GENERAL.—The Secretary shall provide 

18 subsidies to employees whose family income (as de19 termined by the Secretary) is at or below 200 per20 cent of the poverty line (as defined in section 673(2) 

21 of the Community Services Block Grant Act (42 

22 U.S.C. 9902(2)), including any revision required by 

23 such section) for a family of the size involved. 

24 ‘‘(2) AMOUNT OF SUBSIDY.—Such subsidies 

25 shall be in an amount equal to the excess of the por-
12

•HR 2850 IH 

1 tion of the total premium for coverage otherwise 

2 payable by the employee under this part for any pe3 riod, over 5 percent of the family income (as deter4 mined under paragraph (1)(A)) of the employee for 

5 such period. 

6 ‘‘(3) COORDINATION OF SUBSIDIES.—Notwith7 standing paragraph (1), under regulations of the 

8 Secretary, an employee may be entitled to subsidies 

9 under this subsection for any period only if such em10 ployee is not eligible for subsidies for such period 

11 under any Federal or State health insurance subsidy 

12 program (including a program under title V, XIX, or 

13 XXI of the Social Security Act). For purposes of 

14 this paragraph, an employee is ‘eligible’ for a sub15 sidy under a program if such employee is entitled to 

16 such subsidy or would, upon filing application there17 fore, be entitled to such subsidy. 

18 ‘‘(4) AUTHORITY TO EXPAND ELIGIBILITY.—

19 The Secretary may, to the extent of available fund20 ing, provide for expansion of the subsidy program 

21 under this subsection to employees whose family in22 come (as defined by the Secretary) is at or below 

23 300 percent of the poverty line (as determined under 

24 paragraph (1)). 
13

•HR 2850 IH 

1 ‘‘(c) PROCEDURES.—The Secretary shall establish by 

2 regulation applications, methods, and procedures for car3 rying out this section, including measures to ascertain or 

4 confirm levels of income. 

5 ‘‘SEC. 806. AUTHORIZATION OF APPROPRIATIONS. 

6 ‘‘There are authorized to be appropriated, for the pe7 riod beginning with fiscal year 2004 and ending with fiscal 

8 year 2013, $50,000,000,000 to carry out this part, includ9 ing the establishment of subsidies under section 805.’’. 

10 (b) REPORT ON OFFERING NATIONAL HEALTH

11 PLANS.—Not later than 18 months after the date of the 

12 enactment of this Act, the Secretary of Labor shall report 

13 to Congress the Secretary’s recommendations regarding 

14 the feasibility of offering national health plans under part 

15 8 of subtitle B of title I of the Employee Retirement In16 come Security Act of 1974, as added by subsection (a). 

17 (c) CLERICAL AMENDMENT.—The table of contents 

18 in section 1 of the Employee Retirement Income Security 

19 Act of 1974 is amended by inserting after the item relat20 ing to section 734 the following new items:

‘‘PART 8—SMALL EMPLOYER HEALTH BENEFITS PROGRAM (SEHBP) 

‘‘801. Establishment of program. 

‘‘802. Contracts with qualifying insurers. 

‘‘803. Additional conditions. 

‘‘804. Dissemination of information. 

‘‘805. Subsidies. 

‘‘806. Authorization of appropriations.’’.

Æ