I

106TH CONGRESS

1ST SESSION H. R. 845

To amend the Public Health Service Act, the Employee Retirement Income

Security Act of 1974, and the Internal Revenue Code of 1986 to require

a health insurance issuer to notify participants and beneficiaries of impending termination of coverage resulting from the failure of a group

health plan to pay premiums necessary to maintain coverage, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 24, 1999

Mrs. THURMAN (for herself, Mr. STARK, Mr. YOUNG of Florida, Mr.

KUCINICH, Mr. WAXMAN, and Mr. DAVIS of Florida) introduced the following bill; which was referred to the Committee on Commerce, and in

addition to the Committees on Education and the Workforce, and Ways

and Means, for a period to be subsequently determined by the Speaker,

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Public Health Service Act, the Employee Retirement Income Security Act of 1974, and the Internal

Revenue Code of 1986 to require a health insurance

issuer to notify participants and beneficiaries of impending termination of coverage resulting from the failure

of a group health plan to pay premiums necessary to

maintain coverage, and for other purposes.

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

2 This Act may be cited as the ‘‘Beneficiary Health

3 Coverage Notification Rights Act of 1999’’.

4 SEC. 2. NOTIFICATION OF DISCONTINUATION OF HEALTH

5 INSURANCE COVERAGE TO PARTICIPANTS

6 AND BENEFICIARIES.

7 (a) GROUP HEALTH PLANS.—

8 (1) PUBLIC HEALTH SERVICE ACT AMEND9 MENT.—(A) Subpart 2 of part A of title XXVII of

10 the Public Health Service Act is amended by adding

11 at the end the following new section:

12 ‘‘SEC. 2707. PROHIBITION OF RETROACTIVE TERMINATION;

13 ADVANCE NOTIFICATION OF DISCONTINU14 ATION OF HEALTH INSURANCE COVERAGE

15 TO PARTICIPANTS AND BENEFICIARIES.

16 ‘‘A health insurance issuer offering group health in17 surance coverage in connection with a group health plan

18 may not terminate the coverage with respect to the plan

19 (or allow the coverage to lapse) because the plan failed

20 to pay to the issuer premiums necessary to maintain the

21 coverage unless the issuer, at least 30 days before the ef22 fective date of termination or lapse of the coverage, pro23 vides written notice to each participant or beneficiary

24 whose coverage would so terminate or lapse, indicating the

25 fact and effective date of such termination or lapse of cov26 erage.’’.
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1 (B) Section 2723(c) of such Act (42 U.S.C.

2 300gg–23(c)) is amended by striking ‘‘section 2704’’

3 and inserting ‘‘sections 2704 and 2707’’.

4 (2) ERISA AMENDMENT.—(A) Subpart B of

5 part 7 of subtitle B of title I of the Employee Re6 tirement Income Security Act of 1974 is amended by

7 adding at the end the following new section:

8 ‘‘SEC. 714. PROHIBITION OF RETROACTIVE TERMINATION;

9 ADVANCE NOTIFICATION OF DISCONTINU10 ATION OF HEALTH INSURANCE COVERAGE

11 TO PARTICIPANTS AND BENEFICIARIES.

12 ‘‘A health insurance issuer offering group health in13 surance coverage in connection with a group health plan

14 may not terminate the coverage with respect to the plan

15 (or allow the coverage to lapse) because the plan failed

16 to pay to the issuer premiums necessary to maintain the

17 coverage unless the issuer, at least 30 days before the ef18 fective date of termination or lapse of the coverage, pro19 vides written notice to each participant or beneficiary

20 whose coverage would so terminate or lapse, indicating the

21 fact and effective date of such termination or lapse of cov22 erage.’’.

23 (B) Section 732(a) of such Act (29 U.S.C.

24 1191a(a)) is amended by striking ‘‘section 711’’ and

25 inserting ‘‘sections 711 and 714’’.
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1 (C) The table of contents in section 1 of such

2 Act is amended by inserting after the item relating

3 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.’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 subsection (a) apply with respect to terminations and

6 lapses of coverage occurring on or after the first day of

7 the first month that begins more than 60 days after the

8 date of the enactment of this Act, regardless of the effec9 tive date of such terminations and lapses, but do not apply

10 to terminations and lapses for which notice has been pro11 vided before such first day.

12 SEC. 3. DEEMING PERIOD OF HEALTH INSURANCE COV13 ERAGE FOR PARTICIPANTS AND BENE14 FICIARIES BETWEEN DISCONTINUATION AND

15 NOTICE OF DISCONTINUATION OF COV16 ERAGE.

17 (a) GROUP HEALTH PLANS.—

18 (1) PUBLIC HEALTH SERVICE ACT AMEND19 MENTS.—

20 (A) Section 2701(c) of the Public Health

21 Service Act (42 U.S.C. 300gg(c)) is amended

22 by adding at the end the following new para23 graph:
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1 ‘‘(5) DEEMING PERIOD OF COVERAGE FOR PAR2 TICIPANTS AND BENEFICIARIES BETWEEN DIS3 CONTINUATION AND NOTICE OF DISCONTINUATION

4 OF COVERAGE.—

5 ‘‘(A) IN GENERAL.—If—

6 ‘‘(i)(I) a health insurance issuer offer7 ing group health insurance coverage in

8 connection with a group health plan termi9 nates the coverage with respect to the plan

10 (or allows the coverage to lapse), or (II)

11 coverage under a group health plan is ter12 minated; and

13 ‘‘(ii) a participant or beneficiary

14 whose coverage is so terminated or lapsed

15 only receives notice of such termination or

16 lapse after the date that the termination or

17 lapse takes effect,

18 for the purposes described in subparagraph (B),

19 such individual shall be treated as being covered

20 under the terminated or lapsed group health in21 surance coverage or group health plan during

22 the deeming period, as defined in subparagraph

23 (C).

24 ‘‘(B) APPLICATION.—Subparagraph (A)

25 shall apply—
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1 ‘‘(i) for purposes of this part (includ2 ing for purposes of reducing pre-existing

3 condition exclusion periods and avoiding a

4 significant break in coverage); and

5 ‘‘(ii) for purposes of applying any

6 State law that provides for a conversion or

7 any other health insurance option based on

8 (or taking into account) loss of group

9 health insurance coverage or loss of cov10 erage under a group health plan.

11 ‘‘(C) DEEMING PERIOD DEFINED.—For

12 purposes of this paragraph, the term ‘deeming

13 period’ is the period beginning on the effective

14 date of the termination or lapse of coverage de15 scribed in subparagraph (A)(i) and ending on

16 the date on which the participant or beneficiary

17 receives notice described in subparagraph

18 (A)(ii).

19 ‘‘(D) NO ENTITLEMENT TO BENEFITS

20 DURING DEEMING PERIOD.—Nothing in this

21 paragraph shall be construed as entitling any

22 individual to any benefits under the plan or cov23 erage during the deeming period.’’.

24 (B) Section 2701(f)(1)(D) of such Act (42

25 U.S.C. 300gg(f)(1)(D)) is amended by inserting
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1 before the period ‘‘or if later, the date the em2 ployee is notified of such termination’’.

3 (2) ERISA AMENDMENTS.—

4 (A) Section 701(c) of the Employee Retire5 ment Income Security Act of 1974 (29 U.S.C.

6 1181(c)) is amended by adding at the end the

7 following new paragraph:

8 ‘‘(5) DEEMING PERIOD OF COVERAGE FOR PAR9 TICIPANTS AND BENEFICIARIES BETWEEN DIS10 CONTINUATION AND NOTICE OF DISCONTINUATION

11 OF COVERAGE.—

12 ‘‘(A) IN GENERAL.—If—

13 ‘‘(i)(I) a health insurance issuer offer14 ing group health insurance coverage in

15 connection with a group health plan termi16 nates the coverage with respect to the plan

17 (or allows the coverage to lapse), or (II)

18 coverage under a group health plan is ter19 minated; and

20 ‘‘(ii) a participant or beneficiary

21 whose coverage is so terminated or lapsed

22 only receives notice of such termination or

23 lapse after the date that the termination or

24 lapse takes effect,
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1 for the purposes described in subparagraph (B),

2 such individual shall be treated as being covered

3 under the terminated or lapsed group health in4 surance coverage or group health plan during

5 the deeming period, as defined in subparagraph

6 (C).

7 ‘‘(B) APPLICATION.—Subparagraph (A)

8 shall apply for purposes of this part (including

9 for purposes of reducing pre-existing condition

10 exclusion periods and avoiding a significant

11 break in coverage).

12 ‘‘(C) DEEMING PERIOD DEFINED.—For

13 purposes of this paragraph, the term ‘deeming

14 period’ is the period beginning on the effective

15 date of the termination or lapse of coverage de16 scribed in subparagraph (A)(i) and ending on

17 the date on which the participant or beneficiary

18 receives notice described in subparagraph

19 (A)(ii).

20 ‘‘(D) NO ENTITLEMENT TO BENEFITS

21 DURING DEEMING PERIOD.—Nothing in this

22 paragraph shall be construed as entitling any

23 individual to any benefits under the plan or cov24 erage during the deeming period.’’.
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1 (B) Section 701(f)(1)(D) of such Act (29

2 U.S.C. 1181(f)(1)(D)) is amended by inserting

3 before the period ‘‘or if later, the date the em4 ployee is notified of such termination’’.

5 (3) INTERNAL REVENUE CODE AMEND6 MENTS.—Section 9801(c) of the Internal Revenue

7 Code of 1986 is amended by adding at the end the

8 following new paragraph:

9 ‘‘(5) DEEMING PERIOD OF COVERAGE FOR PAR10 TICIPANTS AND BENEFICIARIES BETWEEN DIS11 CONTINUATION AND NOTICE OF DISCONTINUATION

12 OF COVERAGE.—

13 ‘‘(A) IN GENERAL.—If—

14 ‘‘(i)(I) a health insurance issuer offer15 ing group health insurance coverage in

16 connection with a group health plan termi17 nates the coverage with respect to the plan

18 (or allows the coverage to lapse), or (II)

19 coverage under a group health plan is ter20 minated; and

21 ‘‘(ii) a participant or beneficiary

22 whose coverage is so terminated or lapsed

23 only receives notice of such termination or

24 lapse after the date that the termination or

25 lapse takes effect,
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1 for the purposes described in subparagraph (B),

2 such individual shall be treated as being covered

3 under the terminated or lapsed group health in4 surance coverage or group health plan during

5 the deeming period, as defined in subparagraph

6 (C).

7 ‘‘(B) APPLICATION.—Subparagraph (A)

8 shall apply for purposes of this part (including

9 for purposes of reducing pre-existing condition

10 exclusion periods and avoiding a significant

11 break in coverage).

12 ‘‘(C) DEEMING PERIOD DEFINED.—For

13 purposes of this paragraph, the term ‘deeming

14 period’ is the period beginning on the effective

15 date of the termination or lapse of coverage de16 scribed in subparagraph (A)(i) and ending on

17 the date on which the participant or beneficiary

18 receives notice described in subparagraph

19 (A)(ii).

20 ‘‘(D) NO ENTITLEMENT TO BENEFITS

21 DURING DEEMING PERIOD.—Nothing in this

22 paragraph shall be construed as entitling any

23 individual to any benefits under the plan or cov24 erage during the deeming period.’’.
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1 (B) Section 9801(f)(1)(D) of such Code is

2 amended by inserting before the period ‘‘or if

3 later, the date the employee is notified of such

4 termination’’.

5 (b) EFFECTIVE DATE.—The amendments made by

6 subsection (a) apply with respect to terminations and

7 lapses of coverage occurring on or after the first day of

8 the first month that begins after the date of the enactment

9 of this Act, regardless of the effective date of such termi10 nations and lapses, but do not apply to terminations and

11 lapses for which notice has been provided before such first

12 day.

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