```

[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1136 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 1136

    To increase the availability and choice of quality health care.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 16, 1999

 Mr. Norwood (for himself, Mr. Armey, Mr. Burr of North Carolina, and 
    Mr. Weldon 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 increase the availability and choice of quality health care.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS

    (a) Short Title.--This Act may be cited as the ``Affordable Health 
Care Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
         TITLE I--PROVIDING AFFORDABLE CARE THROUGH HEALTHMARTS

Sec. 101. Expansion of consumer choice through healthmarts.
                      ``Title XXVIII--Healthmarts.

        ``Sec. 2801. Definition of healthmart.
        ``Sec. 2802. Application of certain laws and requirements.
        ``Sec. 2803. Administration.
        ``Sec. 2804. Definitions.
 TITLE II--PROVIDING AFFORDABLE CARE THROUGH ASSOCIATION HEALTH PLANS.

Sec. 201. Rules governing association health plans.
           ``Part 8--Rules Governing Association Health Plans

        ``Sec. 801. Association health plans.
        ``Sec. 802. Certification of association health plans.
        ``Sec. 803. Requirements relating to sponsors and boards of 
                            trustees.
        ``Sec. 804. Participation and coverage requirements.
        ``Sec. 805. Other requirements relating to plan documents, 
                            contribution rates, and benefit options.
        ``Sec. 806. Maintenance of reserves and provisions for solvency 
                            for plans providing health benefits in 
                            addition to health insurance coverage.
        ``Sec. 807. Requirements for application and related 
                            requirements.
        ``Sec. 808. Notice requirements for voluntary termination.
        ``Sec. 809. Corrective actions and mandatory termination.
        ``Sec. 810. Trusteeship by the secretary of insolvent 
                            association health plans providing health 
                            benefits in addition to health insurance 
                            coverage.
        ``Sec. 811. State assessment authority.
        ``Sec. 812. Special rules for church plans.
        ``Sec. 813. Definitions and rules of construction.

Sec. 202. Clarification of treatment of single employer arrangements.
Sec. 203. Clarification of treatment of certain collectively bargained 
                            agreements.
Sec. 204. Enforcement provisions relating to association health plans.
Sec. 205. Cooperation between Federal and State authorities.
Sec. 206. Effective date and transitional and other rules.
 TITLE III--PROVIDING AFFORDABLE CARE BY ALLOWING HEALTH CARE COVERAGE 
                         CREDITS TO INDIVIDUALS

Sec. 301. Refundable credit for providers of qualified health coverage.
 TITLE IV--PROVIDING AFFORDABLE CARE THROUGH MEDICAL SAVINGS ACCOUNTS.

Sec. 401. Enhancement of availability of medical savings accounts.

         TITLE I--PROVIDING AFFORDABLE CARE THROUGH HEALTHMARTS

SEC. 101. EXPANSION OF CONSUMER CHOICE THROUGH HEALTHMARTS.

    (a) In General.--The Public Health Service Act is amended by adding 
at the end the following new title:

                      ``TITLE XXVIII--HEALTHMARTS

``SEC. 2801. DEFINITION OF HEALTHMART.

    ``(a) In General.--For purposes of this title, the term 
`HealthMart' means a legal entity that meets the following 
requirements:
            ``(1) Organization.--The HealthMart is an organization 
        operated under the direction of a board of directors which is 
        composed of representatives of not fewer than 2 from each of 
        the following:
                    ``(A) Employers.
                    ``(B) Employees.
                    ``(C) Health care providers, which may be 
                physicians, other health care professionals, health 
                care facilities, or any combination thereof.
                    ``(D) Entities, such as insurance companies, health 
                maintenance organizations, and licensed provider-
                sponsored organizations, that underwrite or administer 
                health benefits coverage.
            ``(2) Offering health benefits coverage.--
                    ``(A) In general.--The HealthMart, in conjunction 
                with those health insurance issuers that offer health 
                benefits coverage through the HealthMart, makes 
                available health benefits coverage in the manner 
                described in subsection (b) to all employers and 
                eligible employees in the manner described in 
                subsection (c)(2) at rates (including employer's and 
                employee's share) that are established by the health 
                insurance issuer on a policy or product specific basis 
                and that may vary only as permissible under State law. 
                A HealthMart is deemed to be a group health plan for 
                purposes of applying section 702 of the Employee 
                Retirement Income Security Act of 1974, section 2702 of 
                this Act, and section 9802(b) of the Internal Revenue 
                Code of 1986 (which limit variation among similarly 
                situated individuals of required premiums for health 
                benefits coverage on the basis of health status-related 
                factors).
                    ``(B) Nondiscrimination in coverage offered.--
                            ``(i) In general.--Subject to clause (ii), 
                        the HealthMart may not offer health benefits 
                        coverage to an eligible employee in a 
                        geographic area (as specified under paragraph 
                        (3)(A)) unless the same coverage is offered to 
                        all such employees in the same geographic area. 
                        Section 2711(a)(1)(B) of this Act limits denial 
                        of enrollment of certain eligible individuals 
                        under health benefits coverage in the small 
                        group market.
                            ``(ii) Construction.--Nothing in this title 
                        shall be construed as requiring or permitting a 
                        health insurance issuer to provide coverage 
                        outside the service area of the issuer, as 
                        approved under State law.
                    ``(C) No financial underwriting.--The HealthMart 
                provides health benefits coverage only through 
                contracts with health insurance issuers and does not 
                assume insurance risk with respect to such coverage.
                    ``(D) Minimum coverage.--By the end of the first 
                year of its operation and thereafter, the HealthMart 
                maintains not fewer than 10 purchasers and 100 members.
            ``(3) Geographic areas.--
                    ``(A) Specification of geographic areas.--The 
                HealthMart shall specify the geographic area (or areas) 
                in which it makes available health benefits coverage 
                offered by health insurance issuers to employers. Such 
                an area shall encompass at least one entire county or 
                equivalent area.
                    ``(B) Multistate areas.--In the case of a 
                HealthMart that serves more than one State, such 
                geographic areas may be areas that include portions of 
                two or more contiguous States.
                    ``(C) Multiple healthmarts permitted in single 
                geographic area.--Nothing in this title shall be 
                construed as preventing the establishment and operation 
                of more than one HealthMart in a geographic area or as 
                limiting the number of HealthMarts that may operate in 
                any area.
            ``(4) Provision of administrative services to purchasers.--
                    ``(A) In general.--The HealthMart provides 
                administrative services for purchasers. Such services 
                may include accounting, billing, enrollment 
                information, and employee coverage status reports.
                    ``(B) Construction.--Nothing in this subsection 
                shall be construed as preventing a HealthMart from 
                serving as an administrative service organization to 
                any entity.
            ``(5) Dissemination of information.--The HealthMart 
        collects and disseminates (or arranges for the collection and 
        dissemination of) consumer-oriented information on the scope, 
        cost, and enrollee satisfaction of all coverage options offered 
        through the HealthMart to its members and eligible individuals. 
        Such information shall be defined by the HealthMart and shall 
        be in a manner appropriate to the type of coverage offered. To 
        the extent practicable, such information shall include 
        information on provider performance, locations and hours of 
        operation of providers, outcomes, and similar matters. Nothing 
        in this section shall be construed as preventing the 
        dissemination of such information or other information by the 
        HealthMart or by health insurance issuers through electronic or 
        other means.
            ``(6) Filing information.--The Health-
        Mart--
                    ``(A) files with the applicable Federal authority 
                information that demonstrates the HealthMart's 
                compliance with the applicable requirements of this 
                title; or
                    ``(B) in accordance with rules established under 
                section 2803(a), files with a State such information as 
                the State may require to demonstrate such compliance.
    ``(b) Health Benefits Coverage Requirements.--
            ``(1) Compliance with consumer protection requirements.--
        Any health benefits coverage offered through a HealthMart 
        shall--
                    ``(A) be underwritten by a health insurance issuer 
                that--
                            ``(i) is licensed (or otherwise regulated) 
                        under State law (or is a community health 
                        organization that is offering health insurance 
                        coverage pursuant to section 330D(a));
                            ``(ii) meets all applicable State standards 
                        relating to consumer protection, subject to 
                        section 2802(b); and
                            ``(iii) offers the coverage under a 
                        contract with the HealthMart;
                    ``(B) subject to paragraph (2), be approved or 
                otherwise permitted to be offered under State law; and
                    ``(C) provide full portability of creditable 
                coverage for individuals who remain members of the same 
                HealthMart notwithstanding that they change the 
                employer through which they are members in accordance 
                with the provisions of the parts 6 and 7 of subtitle B 
                of title I of the Employee Retirement Income Security 
                Act of 1974 and titles XXII and XXVII of this Act, so 
                long as both employers are purchasers in the 
                HealthMart.
            ``(2) Alternative process for approval of health benefits 
        coverage in case of discrimination or delay.--
                    ``(A) In general.--The requirement of paragraph 
                (1)(B) shall not apply to a policy or product of health 
                benefits coverage offered in a State if the health 
                insurance issuer seeking to offer such policy or 
                product files an application to waive such requirement 
                with the applicable Federal authority, and the 
                authority determines, based on the application and 
                other evidence presented to the authority, that--
                    ``(i) either (or both) of the grounds described in 
                subparagraph (B) for approval of the application has 
                been met; and
                    ``(ii) the coverage meets the applicable State 
                standards (other than those that have been preempted 
                under section 2802).
            ``(B) Grounds.--The grounds described in this subparagraph 
        with respect to a policy or product of health benefits coverage 
        are as follows:
                    ``(i) Failure to act on policy, product, or rate 
                application on a timely basis.--The State has failed to 
                complete action on the policy or product (or rates for 
                the policy or product) within 90 days of the date of 
                the State's receipt of a substantially complete 
                application. No period before the date of the enactment 
                of this section shall be included in determining such 
                90-day period.
                    ``(ii) Denial of application based on 
                discriminatory treatment.--The State has denied such an 
                application and--
                            ``(I) the standards or review process 
                        imposed by the State as a condition of approval 
                        of the policy or product imposes either any 
                        material requirements, procedures, or standards 
                        to such policy or product that are not 
                        generally applicable to other policies and 
                        products offered or any requirements that are 
                        preempted under section 2802; or
                            ``(II) the State requires the issuer, as a 
                        condition of approval of the policy or product, 
                        to offer any policy or product other than such 
                        policy or product.
                    ``(C) Enforcement.--In the case of a waiver granted 
                under subparagraph (A) to an issuer with respect to a 
                State, the Secretary may enter into an agreement with 
                the State under which the State agrees to provide for 
                monitoring and enforcement activities with respect to 
                compliance of such an issuer and its health insurance 
                coverage with the applicable State standards described 
                in subparagraph (A)(ii). Such monitoring and 
                enforcement shall be conducted by the State in the same 
                manner as the State enforces such standards with 
                respect to other health insurance issuers and plans, 
                without discrimination based on the type of issuer to 
                which the standards apply. Such an agreement shall 
                specify or establish mechanisms by which compliance 
                activities are undertaken, while not lengthening the 
                time required to review and process applications for 
                waivers under subparagraph (A).
            ``(3) Examples of types of coverage.--The health benefits 
        coverage made available through a HealthMart may include, but 
        is not limited to, any of the following if it meets the other 
        applicable requirements of this title:
                    ``(A) Coverage through a health maintenance 
                organization.
                    ``(B) Coverage in connection with a preferred 
                provider organization.
                    ``(C) Coverage in connection with a licensed 
                provider-sponsored organization.
                    ``(D) Indemnity coverage through an insurance 
                company.
                    ``(E) Coverage offered in connection with a 
                contribution into a medical savings account or flexible 
                spending account.
                    ``(F) Coverage that includes a point-of-service 
                option.
                    ``(G) Coverage offered by a community health 
                organization (as defined in section 330D(e)).
                    ``(H) Any combination of such types of coverage.
            ``(4) Wellness bonuses for health promotion.--Nothing in 
        this title shall be construed as precluding a health insurance 
        issuer offering health benefits coverage through a HealthMart 
        from establishing premium discounts or rebates for members or 
        from modifying otherwise applicable copayments or deductibles 
        in return for adherence to programs of health promotion and 
        disease prevention so long as such programs are agreed to in 
        advance by the HealthMart and comply with all other provisions 
        of this title and do not discriminate among similarly situated 
        members.
    ``(c) Purchasers; Members; Health Insurance Issuers.--
            ``(1) Purchasers.--
                    ``(A) In general.--Subject to the provisions of 
                this title, a HealthMart shall permit any employer to 
                contract with the HealthMart for the purchase of health 
                benefits coverage for its employees and dependents of 
                those employees and may not vary conditions of 
                eligibility (including premium rates and membership 
                fees) of an employer to be a purchaser.
                    ``(B) Role of associations, brokers, and licensed 
                health insurance agents.--Nothing in this section shall 
                be construed as preventing an association, broker, 
                licensed health insurance agent, or other entity from 
                assisting or representing a HealthMart or employers 
                from entering into appropriate arrangements to carry 
                out this title.
                    ``(C) Period of contract.--The HealthMart may not 
                require a contract under subparagraph (A) between a 
                HealthMart and a purchaser to be effective for a period 
                of longer than 12 months. The previous sentence shall 
                not be construed as preventing such a contract from 
                being extended for additional 12-month periods or 
                preventing the purchaser from voluntarily electing a 
                contract period of longer than 12 months.
                    ``(D) Exclusive nature of contract.--Such a 
                contract shall provide that the purchaser agrees not to 
                obtain or sponsor health benefits coverage, on behalf 
                of any eligible employees (and their dependents), other 
                than through the HealthMart. The previous sentence 
                shall not apply to an eligible individual who resides 
                in an area for which no coverage is offered by any 
                health insurance issuer through the HealthMart.
            ``(2) Members.--
                    ``(A) In general.--Under rules established to carry 
                out this title, with respect to an employer that has a 
                purchaser contract with a HealthMart, individuals who 
                are employees of the employer may enroll for health 
                benefits coverage (including coverage for dependents of 
                such enrolling employees) offered by a health insurance 
                issuer through the HealthMart.
                    ``(B) Nondiscrimination in enrollment.--A 
                HealthMart may not deny enrollment as a member to an 
                individual who is an employee (or dependent of such an 
                employee) eligible to be so enrolled based on health 
                status-related factors, except as may be permitted 
                consistent with section 2742(b).
                    ``(C) Annual open enrollment period.--In the case 
                of members enrolled in health benefits coverage offered 
                by a health insurance issuer through a HealthMart, 
                subject to subparagraph (D), the HealthMart shall 
                provide for an annual open enrollment period of 30 days 
                during which such members may change the coverage 
                option in which the members are enrolled.
                    ``(D) Rules of eligibility.--Nothing in this 
                paragraph shall preclude a HealthMart from establishing 
                rules of employee eligibility for enrollment and 
                reenrollment of members during the annual open 
                enrollment period under subparagraph (C). Such rules 
                shall be applied consistently to all purchasers and 
                members within the HealthMart and shall not be based in 
                any manner on health status-related factors and may not 
                conflict with sections 2701 and 2702 of this Act.
            ``(3) Health insurance issuers.--
                    ``(A) Premium collection.--The contract between a 
                HealthMart and a health insurance issuer shall provide, 
                with respect to a member enrolled with health benefits 
                coverage offered by the issuer through the HealthMart, 
                for the payment of the premiums collected by the 
                HealthMart (or the issuer) for such coverage (less a 
                pre-determined administrative charge negotiated by the 
                HealthMart and the issuer) to the issuer.
                    ``(B) Scope of service area.--Nothing in this title 
                shall be construed as requiring the service area of a 
                health insurance issuer with respect to health 
                insurance coverage to cover the entire geographic area 
                served by a HealthMart.
                    ``(C) Availability of coverage options.--
                            ``(i) In general.--A HealthMart shall enter 
                        into contracts with one or more health 
                        insurance issuers in a manner that assures that 
                        at least 4 health insurance coverage options 
                        are made available in the geographic area 
                        specified under subsection (a)(3)(A).
                            ``(ii) Requirement of non network option.--
                        At least 1 of the health insurance coverage 
                        options made available under clause (i) shall 
                        be a non network coverage option.
                            ``(iii) Exemption from state mandates.--The 
                        provisions of section 2802(b)(1) shall not 
                        apply to at least 2 of the health insurance 
coverage options made available under clause (i).
    ``(d) Prevention of Conflicts of Interest.--
            ``(1) For boards of directors.--A member of a board of 
        directors of a HealthMart may not serve as an employee or paid 
        consultant to the HealthMart, but may receive reasonable 
        reimbursement for travel expenses for purposes of attending 
        meetings of the board or committees thereof.
            ``(2) For boards of directors or employees.--An individual 
        is not eligible to serve in a paid or unpaid capacity on the 
        board of directors of a HealthMart or as an employee of the 
        HealthMart, if the individual is employed by, represents in any 
        capacity, owns, or controls any ownership interest in a 
        organization from whom the HealthMart receives contributions, 
        grants, or other funds not connected with a contract for 
        coverage through the HealthMart.
            ``(3) Employment and employee representatives.--
                    ``(A) In general.--An individual who is serving on 
                a board of directors of a HealthMart as a 
                representative described in subparagraph (A) or (B) of 
                section 2801(a)(1) shall not be employed by or 
                affiliated with a health insurance issuer or be 
                licensed as or employed by or affiliated with a health 
                care provider.
                    ``(B) Construction.--For purposes of subparagraph 
                (A), the term `affiliated' does not include membership 
                in a health benefits plan or the obtaining of health 
                benefits coverage offered by a health insurance issuer.
    ``(e) Construction.--
            ``(1) Network of affiliated healthmarts.--Nothing in this 
        section shall be construed as preventing one or more 
        HealthMarts serving different areas (whether or not contiguous) 
        from providing for some or all of the following (through a 
        single administrative organization or otherwise):
                    ``(A) Coordinating the offering of the same or 
                similar health benefits coverage in different areas 
                served by the different HealthMarts.
                    ``(B) Providing for crediting of deductibles and 
                other cost-sharing for individuals who are provided 
                health benefits coverage through the HealthMarts (or 
                affiliated HealthMarts) after--
                            ``(i) a change of employers through which 
                        the coverage is provided; or
                            ``(ii) a change in place of employment to 
                        an area not served by the previous HealthMart.
            ``(2) Permitting healthmarts to adjust distributions among 
        issuers to reflect relative risk of enrollees.--Nothing in this 
        section shall be construed as precluding a HealthMart from 
        providing for adjustments in amounts distributed among the 
        health insurance issuers offering health benefits coverage 
        through the HealthMart based on factors such as the relative 
        health care risk of members enrolled under the coverage offered 
        by the different issuers.
            ``(3) Application of uniform minimum participation and 
        contribution rules.--Nothing in this section shall be construed 
        as precluding a HealthMart from establishing minimum 
        participation and contribution rules (described in section 
        2711(e)(1)) for employers that apply to become purchasers in 
        the HealthMart, so long as such rules are applied uniformly for 
        all health insurance issuers.

``SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

    ``(a) Authority of States.--Nothing in this section shall be 
construed as preempting State laws relating to the following:
            ``(1) The regulation of underwriters of health coverage, 
        including licensure and solvency requirements.
            ``(2) The application of premium taxes and required 
        payments for guaranty funds or for contributions to high-risk 
        pools.
            ``(3) The application of fair marketing requirements and 
        other consumer protections (other than those specifically 
        relating to an item described in subsection (b)).
            ``(4) The application of requirements relating to the 
        adjustment of rates for health insurance coverage.
    ``(b) Treatment of Benefit and Grouping Requirements.--State laws 
insofar as they relate to any of the following are superseded and shall 
not apply to health benefits coverage options made available through a 
HealthMart:
            ``(1) Benefit requirements for health benefits coverage 
        offered through a HealthMart, including (but not limited to) 
        requirements relating to coverage of specific providers, 
specific services or conditions, or the amount, duration, or scope of 
benefits, but not including requirements to the extent required to 
implement title XXVII or other Federal law.
            ``(2) Requirements (commonly referred to as fictitious 
        group laws) relating to grouping and similar requirements for 
        such coverage to the extent such requirements impede the 
        establishment and operation of HealthMarts pursuant to this 
        title.
            ``(3) Any other requirements (including limitations on 
        compensation arrangements) that, directly or indirectly, 
        preclude (or have the effect of precluding) the offering of 
        such coverage through a HealthMart, if the HealthMart meets the 
        requirements of this title.
Any State law or regulation relating to the composition or organization 
of a HealthMart is preempted to the extent the law or regulation is 
inconsistent with the provisions of this title.
    ``(c) Application of ERISA Fiduciary and Disclosure Requirements.--
The board of directors of a HealthMart is deemed to be a plan 
administrator of an employee welfare benefit plan which is a group 
health plan for purposes of applying parts 1 and 4 of subtitle B of 
title I of the Employee Retirement Income Security Act of 1974 and 
those provisions of part 5 of such subtitle which are applicable to 
enforcement of such parts 1 and 4, and the HealthMart shall be treated 
as such a plan and the enrollees shall be treated as participants and 
beneficiaries for purposes of applying such provisions pursuant to this 
subsection.
    ``(d) Application of ERISA Renewability Protection.--A HealthMart 
is deemed to be group health plan that is a multiple employer welfare 
arrangement for purposes of applying section 703 of the Employee 
Retirement Income Security Act of 1974.
    ``(e) Application of Rules for Network Plans and Financial 
Capacity.--The provisions of subsections (c) and (d) of section 2711 
apply to health benefits coverage offered by a health insurance issuer 
through a HealthMart.
    ``(f) Construction Relating to Offering Requirement.--Nothing in 
section 2711(a) of this Act or 703 of the Employee Retirement Income 
Security Act of 1974 shall be construed as permitting the offering 
outside the HealthMart of health benefits coverage that is only made 
available through a HealthMart under this section because of the 
application of subsection (b).
    ``(g) Application to Guaranteed Renewability Requirements in Case 
of Discontinuation of an Issuer.--For purposes of applying section 2712 
in the case of health insurance coverage offered by a health insurance 
issuer through a HealthMart, if the contract between the HealthMart and 
the issuer is terminated and the HealthMart continues to make available 
any health insurance coverage after the date of such termination, the 
following rules apply:
            ``(1) Renewability.--The HealthMart shall fulfill the 
        obligation under such section of the issuer renewing and 
        continuing in force coverage by offering purchasers (and 
        members and their dependents) all available health benefits 
        coverage that would otherwise be available to similarly-
        situated purchasers and members from the remaining 
        participating health insurance issuers in the same manner as 
        would be required of issuers under section 2712(c).
            ``(2) Application of association rules.--The HealthMart 
        shall be considered an association for purposes of applying 
        section 2712(e).
    ``(h) Construction in Relation to Certain Other Laws.--Nothing in 
this title shall be construed as modifying or affecting the 
applicability to HealthMarts or health benefits coverage offered by a 
health insurance issuer through a HealthMart of parts 6 and 7 of 
subtitle B of title I of the Employee Retirement Income Security Act of 
1974 or titles XXII and XXVII of this Act.

``SEC. 2803. ADMINISTRATION.

    ``(a) In General.--The applicable Federal authority shall 
administer this title through the division established under subsection 
(b) and is authorized to issue such regulations as may be required to 
carry out this title. Such regulations shall be subject to 
Congressional review under the provisions of chapter 8 of title 5, 
United States Code. The applicable Federal authority shall incorporate 
the process of deemed file and use' with respect to the information 
filed under section 2801(a)(6)(A) and shall determine whether 
information filed by a HealthMart demonstrates compliance with the 
applicable requirements of this title. Such authority shall exercise 
its authority under this title in a manner that fosters and promotes 
the development of HealthMarts in order to improve access to health 
care coverage and services.
    ``(b) Administration Through Health Care Marketplace Division.--
            ``(1) In general.--The applicable Federal authority shall 
        carry out its duties under this title through a separate Health 
        Care Marketplace Division, the sole duty of which (including 
        the staff of which) shall be to administer this title.
            ``(2) Additional duties.--In addition to other 
        responsibilities provided under this title, such Division is 
        responsible for--
                    ``(A) oversight of the operations of HealthMarts 
                under this title; and
                    ``(B) the periodic submittal to Congress of reports 
                on the performance of HealthMarts under this title 
                under subsection (c).
    ``(c) Periodic Reports.--The applicable Federal authority shall 
submit to Congress a report every 30 months, during the 10-year period 
beginning on the effective date of the rules promulgated by the 
applicable Federal authority to carry out this title, on the 
effectiveness of this title in promoting coverage of uninsured 
individuals. Such authority may provide for the production of such 
reports through one or more contracts with appropriate private 
entities.

``SEC. 2804. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Applicable federal authority.--The term `Applicable 
        Federal Authority' means the Secretary of Health and Human 
        Services.
            ``(2) Eligible employee or individual.--The term `eligible' 
        means, with respect to an employee or other individual and a 
        HealthMart, an employee or individual who is eligible under 
        section 2801(c)(2) to enroll or be enrolled in health benefits 
        coverage offered through the HealthMart.
            ``(3) Employer; employee; dependent.--Except as the 
        applicable Federal authority may otherwise provide, the terms 
        `employer', `employee', and `dependent', as applied to health 
        insurance coverage offered by a health insurance issuer 
        licensed (or otherwise regulated) in a State, shall have the 
        meanings applied to such terms with respect to such coverage 
        under the laws of the State relating to such coverage and such 
        an issuer.
            ``(4) Health benefits coverage.--The term `health benefits 
        coverage' has the meaning given the term group health insurance 
        coverage insection 2791(b)(4).
            ``(5) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2) 
        and includes a community health organization that is offering 
        coverage pursuant to section 330D(a).
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning given such term in 
        section 2791(d)(9).
            ``(7) Healthmart.--The term `HealthMart' is defined in 
        section 2801(a).
            ``(8) Member.--The term `member' means, with respect to a 
        HealthMart, an individual enrolled for health benefits coverage 
        through the HealthMart under section 2801(c)(2).
            ``(9) Network coverage.--The term ``network coverage'' 
        means, with respect to a group health plan or health insurance 
        coverage offered by a health insurance issuer, health benefits 
        coverage that provides or arranges for the provision of health 
        care items and services to participants, beneficiaries, or 
        enrollees through participating health professionals and 
        providers.
            ``(10) Purchaser.--The term `purchaser' means, with respect 
        to a HealthMart, a employer that has contracted under section 
        2801(c)(1)(A) with the HealthMart for the purchase of health 
        benefits coverage.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2000. The Secretary of Health and Human 
Services shall first issue all regulations necessary to carry out such 
amendment before such date.

 TITLE II--PROVIDING AFFORDABLE CARE THROUGH ASSOCIATION HEALTH PLANS.

SEC. 201. RULES GOVERNING ASSOCIATION HEALTH PLANS.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

           ``Part 8--Rules Governing Association Health Plans

``SEC. 801. ASSOCIATION HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `association 
health plan' means a group health plan whose sponsor is (or is deemed 
under this part to be) described in subsection (b).
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a trade association, an industry association (including a rural 
        electric cooperative association or a rural telephone 
        cooperative association), a professional association, or a 
        chamber of commerce (or similar business association, including 
        a corporation or similar organization that operates on a 
        cooperative basis (within the meaning of section 1381 of the 
        Internal Revenue Code of 1986)), for substantial purposes other 
        than that of obtaining or providing medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and collects from its members 
        on a periodic basis dues or payments necessary to maintain 
        eligibility for membership in the sponsor; and
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1) and (2) shall be deemed to be a sponsor 
described in this subsection.

``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

    ``(a) In General.--The applicable authority shall prescribe by 
regulation a procedure under which, subject to subsection (b), the 
applicable authority shall certify association health plans which apply 
for certification as meeting the requirements of this part.
    ``(b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), the applicable authority shall certify an association 
health plan as meeting the requirements of this part only if the 
applicable authority is satisfied that--
            ``(1) such certification--
                    ``(A) is administratively feasible;
                    ``(B) is not adverse to the interests of the 
                individuals covered under the plan; and
                    ``(C) is protective of the rights and benefits of 
                the individuals covered under the plan; and
            ``(2) the applicable requirements of this part are met (or, 
        upon the date on which the plan is to commence operations, will 
        be met) with respect to the plan.
    ``(c) Requirements Applicable to Certified Plans.--An association 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification of 
association health plans under this part, including requirements 
relating to commencement of new benefit options by plans which do not 
consist of health insurance coverage.
    ``(e) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for 
association health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such association health plans upon appropriate 
filing under such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to an association health plan if--
            ``(1) the sponsor (together with its immediate predecessor, 
        if any) has met (or is deemed under this part to have met) for 
        a continuous period of not less than 3 years ending with the 
        date of the application for certification under this part, the 
        requirements of paragraphs (1) and (2) of section 801(b); and
            ``(2) the sponsor meets (or is deemed under this part to 
        meet) the requirements of section 801(b)(3).
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to an association health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        trust agreement, by a board of trustees which has complete 
        fiscal control over the plan and which is responsible for all 
        operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the members of the board of trustees 
                are individuals selected from individuals who are the 
                owners, officers, directors, or employees of the 
                participating employers or who are partners in the 
                participating employers and actively participate in the 
                business.
                    ``(B) Limitation.--
                            ``(i) General rule.--Except as provided in 
                        clauses (ii) and (iii), no such member is an 
                        owner, officer, director, or employee of, or 
                        partner in, a contract administrator or other 
                        service provider to the plan.
                            ``(ii) Limited exception for providers of 
                        services solely on behalf of the sponsor.--
                        Officers or employees of a sponsor which is a 
                        service provider (other than a contract 
                        administrator) to the plan may be members of 
                        the board if they constitute not more than 25 
                        percent of the membership of the board and they 
                        do not provide services to the plan other than 
                        on behalf of the sponsor.
                            ``(iii) Treatment of providers of medical 
                        care.--In the case of a sponsor which is an 
                        association whose membership consists primarily 
                        of providers of medical care, clause (i) shall 
                        not apply in the case of any service provider 
                        described in subparagraph (A) who is a provider 
                        of medical care under the plan.
                    ``(C) Sole authority.--The board has sole authority 
                to approve applications for participation in the plan 
                and to contract with a service provider to administer 
                the day-to-day affairs of the plan.
    ``(c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
            ``(1) the requirements of subsection (a) and section 
        801(a)(1) shall be deemed met if such requirements would 
        otherwise be met if the franchiser were deemed to be the 
        sponsor referred to in section 801(b), such network were deemed 
        to be an association described in section 801(b), and each 
        franchisee were deemed to be a member (of the association and 
        the sponsor) referred to in section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
    ``(d) Certain Collectively Bargained Plans.---
            ``(1) In general.--In the case of a group health plan 
        described in paragraph (2)--
                    ``(A) the requirements of subsection (a) and 
                section 801(a)(1) shall be deemed met;
                    ``(B) the joint board of trustees shall be deemed a 
                board of trustees with respect to which the 
                requirements of subsection (b) are met; and
                    ``(C) the requirements of section 804 shall be 
                deemed met.
            ``(2) Requirements.--A group health plan is described in 
        this paragraph if--
                    ``(A) the plan is a multiemployer plan; or
                    ``(B) the plan is in existence on April 1, 1997, 
                and would be described in section 3(40)(A)(i) but 
                solely for the failure to meet the requirements of 
                section 3(40)(C)(ii).

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan--
            ``(1) all participating employers must be members or 
        affiliated members of the sponsor, except that, in the case of 
        a sponsor which is a professional association or other 
        individual-based association, if at least one of the officers, 
        directors, or employees of an employer, or at least one of the 
        individuals who are partners in an employer and who actively 
        participates in the business, is a member or affiliated member 
        of the sponsor, participating employers may also include such 
        employer; and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
    ``(b) Coverage of Previously Uninsured Employees.--The requirements 
of this subsection are met with respect to an association health plan 
if, under the terms of the plan, no affiliated member of the sponsor 
may be offered coverage under the plan as a participating employer, 
unless--
            ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
            ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such association health plan.
    ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan, no participating employer may provide health 
insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible to Participate.--The requirements of this subsection are met 
with respect to an association health plan if--
            ``(1) under the terms of the plan, no employer meeting the 
        preceding requirements of this section is excluded as a 
        participating employer, unless participation or contribution 
        requirements of the type referred to in section 2711 of the 
        Public Health Service Act are not met with respect to the 
        excluded employer;
            ``(2) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan; and
            ``(3) applicable benefit options under the plan are 
        actively marketed to all eligible participating employers.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if the following requirements are 
met:
            ``(1) Contents of governing instruments.--The instruments 
        governing the plan include a written instrument, meeting the 
        requirements of an instrument required under section 402(a)(1), 
        which--
                    ``(A) provides that the board of trustees serves as 
                the named fiduciary required for plans under section 
                402(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A));
                    ``(B) provides that the sponsor of the plan is to 
                serve as plan sponsor (referred to in section 
                3(16)(B)); and
                    ``(C) incorporates the requirements of section 806.
            ``(2) Contribution rates must be nondiscriminatory.--
                    ``(A) The contribution rates for any participating 
                small employer do not vary on the basis of the claims 
                experience of such employer and do not vary on the 
                basis of the type of business or industry in which such 
                employer is engaged.
                    ``(B) Nothing in this title or any other provision 
                of law shall be construed to preclude an association 
                health plan, or a health insurance issuer offering 
                health insurance coverage in connection with an 
                association health plan, from--
                            ``(i) setting contribution rates based on 
                        the claims experience of the plan; or
                            ``(ii) varying contribution rates for small 
                        employers in a State to the extent that such 
                        rates could vary using the same methodology 
                        employed in such State for regulating premium 
                        rates in the small group market, subject to the 
                        requirements of section 702(b) relating to 
                        contribution rates.
            ``(3) Floor for number of covered individuals with respect 
        to certain plans.--If any benefit option under the plan does 
        not consist of health insurance coverage, the plan has as of 
        the beginning of the plan year not fewer than 1,000 
        participants and beneficiaries.
            ``(4) Marketing requirements.--
                    ``(A) In general.--If a benefit option which 
                consists of health insurance coverage is offered under 
                the plan, State-licensed insurance agents shall be used 
                to distribute to small employers coverage which does 
                not consist of health insurance coverage in a manner 
                comparable to the manner in which such agents are used 
                to distribute health insurance coverage.
                    ``(B) State-licensed insurance agents.--For 
                purposes of subparagraph (A), the term State-licensed 
                insurance agents' means one or more agents who are 
                licensed in a State and are subject to the laws of such 
                State relating to licensure, qualification, testing, 
                examination, and continuing education of persons 
                authorized to offer, sell, or solicit health insurance 
                coverage in such State.
            ``(5) Regulatory requirements.--Such other requirements as 
        the applicable authority may prescribe by regulation as 
        necessary to carry out the purposes of this part.
    ``(b) Health Benefits Under an Association Health Plan.--
            ``(1) Examples of types of coverage.--The health benefits 
        coverage made available through an association health plan may 
        include, but is not limited to, any of the following if it 
        meets the other applicable requirements of this title:
                    ``(A) Coverage through a health maintenance 
                organization.
                    ``(B) Coverage in connection with a preferred 
                provider organization.
                    ``(C) Coverage in connection with a licensed 
                provider-sponsored organization.
                    ``(D) Indemnity coverage through an insurance 
                company.
                    ``(E) Coverage offered in connection with a 
                contribution into a medical savings account or flexible 
                spending account.
                    ``(F) Coverage that includes a point-of-service 
                option.
                    ``(G) Coverage offered by a community health 
                organization (as defined in section 330D(e) of the 
                Public Health Service Act).
                    ``(H) Any combination of such types of coverage.
            ``(2) Health insurance coverage options.--
                    ``(A) In general.--An association health plan shall 
                include a minimum of 4 health insurance coverage 
                options. At least 1 option shall be a non network 
                option. At least 2 options shall meet all applicable 
                State benefit mandates.
                    ``(B) Model benefits package.--The Secretary in 
                consultation with the National Association of Insurance 
                Commissioners shall develop a model benefits package 
                for health insurance coverage not later than one year 
                after the date of the enactment of the Affordable 
                Health Care Act of 1999.
                    ``(C) Exception to general rule.--An association 
                health plan may offer 2 options that meet the 
                requirements of the model benefits package in lieu of 
                the State benefit mandate offerings required under 
                subparagraph (A).
            ``(3) Permitting association health plans to adjust 
        distributions among issuers to reflect relative risk of 
        enrollees.--Nothing in this section shall be construed as 
        precluding an association health plan from providing for 
        adjustments in amounts distributed among the health insurance 
        issuers offering health benefits coverage through the 
        association health plan based on factors such as the relative 
        health care risk of members enrolled under the coverage offered 
        by the different issuers.
            ``(4) Construction.--Except as provided in subparagraph 
        (2), nothing in this part or any provision of State law (as 
        defined in section 514(c)(1)) shall be construed to preclude an 
        association health plan, or a health insurance issuer offering 
        health insurance coverage in connection with an association 
        health plan, from exercising its sole discretion in selecting 
the specific items and services consisting of medical care to be 
included as benefits under such plan or coverage, except (subject to 
section 514) in the case of any law to the extent that it (1) prohibits 
an exclusion of a specific disease from such coverage, or (2) is not 
preempted under section 731(a)(1) with respect to matters governed by 
section 711 or 712.

``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR 
              PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH 
              INSURANCE COVERAGE.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if--
            ``(1) the benefits under the plan consist solely of health 
        insurance coverage; or
            ``(2) if the plan provides any additional benefit options 
        which do not consist of health insurance coverage, the plan--
                    ``(A) establishes and maintains reserves with 
                respect to such additional benefit options, in amounts 
                recommended by the qualified actuary, consisting of--
                            ``(i) a reserve sufficient for unearned 
                        contributions;
                            ``(ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, which 
                        have not been satisfied, and for which risk of 
                        loss has not yet been transferred, and for 
                        expected administrative costs with respect to 
                        such benefit liabilities;
                            ``(iii) a reserve sufficient for any other 
                        obligations of the plan; and
                            ``(iv) a reserve sufficient for a margin of 
                        error and other fluctuations, taking into 
                        account the specific circumstances of the plan; 
                        and
                    ``(B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and solvency 
                indemnification, with respect to such additional 
                benefit options for which risk of loss has not yet been 
                transferred, as follows:
                            ``(i) The plan shall secure aggregate 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is not greater than 125 
                        percent of expected gross annual claims. The 
                        applicable authority may by regulation provide 
                        for upward adjustments in the amount of such 
                        percentage in specified circumstances in which 
                        the plan specifically provides for and 
                        maintains reserves in excess of the amounts 
                        required under subparagraph (A).
                            ``(ii) The plan shall secure specific 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is at least equal to an 
                        amount recommended by the plan's qualified 
                        actuary (but not more than $200,000). The 
                        applicable authority may by regulation provide 
                        for adjustments in the amount of such insurance 
                        in specified circumstances in which the plan 
                        specifically provides for and maintains 
                        reserves in excess of the amounts required 
                        under subparagraph (A).
                            ``(iii) The plan shall secure 
                        indemnification insurance for any claims which 
                        the plan is unable to satisfy by reason of a 
                        plan termination.
                Any regulations prescribed by the applicable authority 
                pursuant to clause (i) or (ii) of subparagraph (B) may 
                allow for such adjustments in the required levels of 
                excess/stop loss insurance as the qualified actuary may 
                recommend, taking into account the specific 
                circumstances of the plan.
    ``(b) Minimum Surplus in Addition to Claims Reserves.--The 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to $2,000,000, reduced in 
accordance with a scale, prescribed in regulations of the applicable 
authority to an amount not less than $500,000, based on the level of 
aggregate and specific excess/stop loss insurance provided with respect 
to such plan.
    ``(c) Additional Requirements.--In the case of any association 
health plan described in subsection (a)(2), the applicable authority 
may provide such additional requirements relating to reserves and 
excess/stop loss insurance as the applicable authority considers 
appropriate. Such requirements may be provided, by regulation or 
otherwise, with respect to any such plan or any class of such plans.
    ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable 
authority may provide for adjustments to the levels of reserves 
otherwise required under subsections (a) and (b) with respect to any 
plan or class of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans.
    ``(e) Alternative Means of Compliance.--The applicable authority 
may permit an association health plan described in subsection (a)(2) to 
substitute, for all or part of the requirements of this section (except 
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable authority 
determines to be adequate to enable the plan to fully meet all its 
financial obligations on a timely basis and is otherwise no less 
protective of the interests of participants and beneficiaries than the 
requirements for which it is substituted. The applicable authority may 
take into account, for purposes of this subsection, evidence provided 
by the plan or sponsor which demonstrates an assumption of liability 
with respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter of 
credit, recourse under applicable terms of the plan in the form of 
assessments of participating employers, security, or other financial 
arrangement.
    ``(f) Measures To Ensure Continued Payment of Benefits by Certain 
Plans in Distress.--
            ``(1) Payments by certain plans to association health plan 
        fund.--
                    ``(A) In general.--In the case of an association 
                health plan described in subsection (a)(2), the 
                requirements of this subsection are met if the plan 
                makes payments into the Association Health Plan Fund 
                under this subparagraph when they are due. Such 
                payments shall consist of annual payments in the amount 
                of $5,000, and, in addition to such annual payments, 
                such supplemental payments as the Secretary may 
                determine to be necessary under paragraph (2). Payments 
                under this paragraph are payable to the Fund at the 
                time determined by the Secretary. Initial payments are 
                due in advance of certification under this part. 
                Payments shall continue to accrue until a plan's assets 
                are distributed pursuant to a termination procedure.
                    ``(B) Penalties for failure to make payments.--If 
                any payment is not made by a plan when it is due, a 
                late payment charge of not more than 100 percent of the 
                payment which was not timely paid shall be payable by 
                the plan to the Fund.
                    ``(C) Continued duty of the secretary.--The 
                Secretary shall not cease to carry out the provisions 
                of paragraph (2) on account of the failure of a plan to 
                pay any payment when due.
            ``(2) Payments by secretary to continue excess/stop loss 
        insurance coverage and indemnification insurance coverage for 
        certain plans.--In any case in which the applicable authority 
        determines that there is, or that there is reason to believe 
        that there will be: (A) a failure to take necessary corrective 
        actions under section 809(a) with respect to an association 
        health plan described in subsection (a)(2); or (B) a 
        termination of such a plan under section 809(b) or 810(b)(8) 
        (and, if the applicable authority is not the Secretary, 
        certifies such determination to the Secretary), the Secretary 
        shall determine the amounts necessary to make payments to an 
        insurer (designated by the Secretary) to maintain in force 
        excess/stop loss insurance coverage or indemnification 
        insurance coverage for such plan, if the Secretary determines 
        that there is a reasonable expectation that, without such 
        payments, claims would not be satisfied by reason of 
        termination of such coverage. The Secretary shall, to the 
        extent provided in advance in appropriation Acts, pay such 
        amounts so determined to the insurer designated by the 
        Secretary.
            ``(3) Association health plan fund.--
                    ``(A) In general.--There is established on the 
                books of the Treasury a fund to be known as the 
                `Association Health Plan Fund'. The Fund shall be 
                available for making payments pursuant to paragraph 
                (2). The Fund shall be credited with payments received 
                pursuant to paragraph (1)(A), penalties received 
                pursuant to paragraph (1)(B); and earnings on 
                investments of amounts of the Fund under subparagraph 
                (B).
                    ``(B) Investment.--Whenever the Secretary 
                determines that the moneys of the fund are in excess of 
                current needs, the Secretary may request the investment 
                of such amounts as the Secretary determines advisable 
                by the Secretary of the Treasury in obligations issued 
                or guaranteed by the United States.
    ``(g) Excess/Stop Loss Insurance.--For purposes of this section--
            ``(1) Aggregate excess/stop loss insurance.--The term 
        aggregate excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as may be prescribed in regulations of the 
                applicable authority) provides for payment to the plan 
                with respect to aggregate claims under the plan in 
excess of an amount or amounts specified in such contract;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
            ``(2) Specific excess/stop loss insurance.--The term 
        `specific excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as may be prescribed in regulations of the 
                applicable authority) provides for payment to the plan 
                with respect to claims under the plan in connection 
                with a covered individual in excess of an amount or 
                amounts specified in such contract in connection with 
                such covered individual;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
    ``(h) Indemnification Insurance.--For purposes of this section, the 
term `indemnification insurance' means, in connection with an 
association health plan, a contract--
            ``(1) under which an insurer (meeting such minimum 
        standards as may be prescribed in regulations of the applicable 
        authority) provides for payment to the plan with respect to 
        claims under the plan which the plan is unable to satisfy by 
        reason of a termination pursuant to section 809(b) (relating to 
        mandatory termination);
            ``(2) which is guaranteed renewable and noncancellable for 
        any reason (except as may be provided in regulations of the 
        applicable authority); and
            ``(3) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
    ``(i) Reserves.--For purposes of this section, the term `reserves' 
means, in connection with an association health plan, plan assets which 
meet the fiduciary standards under part 4 and such additional 
requirements regarding liquidity as may be prescribed in regulations of 
the applicable authority.
    ``(j) Regulations Prescribed Under Negotiated Rulemaking.--The 
regulations under this section shall be prescribed under negotiated 
rulemaking in accordance with subchapter III of chapter 5 of title 5, 
United States Code, except that, in establishing the negotiated 
rulemaking committee for purposes of such rulemaking, the applicable 
authority shall include among persons invited to membership on the 
committee at least one of each of the following:
            ``(1) a representative of the National Association of 
        Insurance Commissioners;
            ``(2) a representative of the American Academy of 
        Actuaries;
            ``(3) a representative of the State governments, or their 
        interests;
            ``(4) a representative of existing self-insured 
        arrangements, or their interests;
            ``(5) a representative of associations of the type referred 
        to in section 801(b)(1), or their interests; and
            ``(6) a representative of multiemployer plans that are 
        group health plans, or their interests.

``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), an association health plan shall pay to the applicable 
authority at the time of filing an application for certification under 
this part a filing fee in the amount of $5,000, which shall be 
available in the case of the Secretary, to the extent provided in 
appropriation Acts, for the sole purpose of administering the 
certification procedures applicable with respect to association health 
plans.
    ``(b) Information To Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form prescribed in regulations of the applicable authority, at least 
the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators and 
        other service providers.
            ``(6) Funding report.--In the case of association health 
        plans providing benefits options in addition to health 
        insurance coverage, a report setting forth information with 
        respect to such additional benefit options determined as of a 
        date within the 120-day period ending with the date of the 
        application, including the following:
                    ``(A) Reserves.--A statement, certified by the 
                board of trustees of the plan, and a statement of 
                actuarial opinion, signed by a qualified actuary, that 
                all applicable requirements of section 806 are or will 
                be met in accordance with regulations which the 
                applicable authority shall prescribe.
                    ``(B) Adequacy of contribution rates.--A statement 
                of actuarial opinion, signed by a qualified actuary, 
                which sets forth a description of the extent to which 
                contribution rates are adequate to provide for the 
                payment of all obligations and the maintenance of 
                required reserves under the plan for the 12-month 
                period beginning with such date within such 120-day 
                period, taking into account the expected coverage and 
                experience of the plan. If the contribution rates are 
                not fully adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates are 
                inadequate and the changes needed to ensure adequacy.
                    ``(C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion signed 
                by a qualified actuary, which sets forth the current 
                value of the assets and liabilities accumulated under 
                the plan and a projection of the assets, liabilities, 
                income, and expenses of the plan for the 12-month 
                period referred to in subparagraph (B). The income 
                statement shall identify separately the plan's 
                administrative expenses and claims.
                    ``(D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage to be 
                charged, including an itemization of amounts for 
                administration, reserves, and other expenses associated 
                with the operation of the plan.
                    ``(E) Other information.--Any other information 
                which may be prescribed in regulations of the 
                applicable authority as necessary to carry out the 
                purposes of this part.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to an association health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
    ``(d) Notice of Material Changes.--In the case of any association 
health plan certified under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the certification under this part shall be filed in 
such form and manner as shall be prescribed in regulations of the 
applicable authority. The applicable authority may require by 
regulation prior notice of material changes with respect to specified 
matters which might serve as the basis for suspension or revocation of 
the certification.
    ``(e) Reporting Requirements for Certain Association Health 
Plans.--An association health plan certified under this part which 
provides benefit options in addition to health insurance coverage for 
such plan year shall meet the requirements of section 103 by filing an 
annual report under such section which shall include information 
described in subsection (b)(6) with respect to the plan year and, 
notwithstanding section 104(a)(1)(A), shall be filed with the 
applicable authority not later than 90 days after the close of the plan 
year (or on such later date as may be prescribed by the applicable 
authority).
    ``(f) Engagement of Qualified Actuary.--The board of trustees of 
each association health plan which provides benefits options in 
addition to health insurance coverage and which is applying for 
certification under this part or is certified under this part shall 
engage, on behalf of all participants and beneficiaries, a qualified 
actuary who shall be responsible for the preparation of the materials 
comprising information necessary to be submitted by a qualified actuary 
under this part. The qualified actuary shall utilize such assumptions 
and techniques as are necessary to enable such actuary to form an 
opinion as to whether the contents of the matters reported under this 
part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the plan.
    The opinion by the qualified actuary shall be made with respect to, 
and shall be made a part of, the annual report.

``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``Except as provided in section 809(b), an association health plan 
which is or has been certified under this part may terminate (upon or 
at any time after cessation of accruals in benefit liabilities) only if 
the board of trustees--
            ``(1) not less than 60 days before the proposed termination 
        date, provides to the participants and beneficiaries a written 
        notice of intent to terminate stating that such termination is 
        intended and the proposed termination date;
            ``(2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner which will 
result in timely payment of all benefits for which the plan is 
obligated; and
            ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed in regulations of the applicable authority.

``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

    ``(a) Actions To Avoid Depletion of Reserves.--An association 
health plan which is certified under this part and which provides 
benefits other than health insurance coverage shall continue to meet 
the requirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of such plan 
shall determine quarterly whether the requirements of section 806 are 
met. In any case in which the board determines that there is reason to 
believe that there is or will be a failure to meet such requirements, 
or the applicable authority makes such a determination and so notifies 
the board, the board shall immediately notify the qualified actuary 
engaged by the plan, and such actuary shall, not later than the end of 
the next following month, make such recommendations to the board for 
corrective action as the actuary determines necessary to ensure 
compliance with section 806. Not later than 30 days after receiving 
from the actuary recommendations for corrective actions, the board 
shall notify the applicable authority (in such form and manner as the 
applicable authority may prescribe by regulation) of such 
recommendations of the actuary for corrective action, together with a 
description of the actions (if any) that the board has taken or plans 
to take in response to such recommendations. The board shall thereafter 
report to the applicable authority, in such form and frequency as the 
applicable authority may specify to the board, regarding corrective 
action taken by the board until the requirements of section 806 are 
met.
    ``(b) Mandatory Termination.--In any case in which--
            ``(1) the applicable authority has been notified under 
        subsection (a) of a failure of an association health plan which 
        is or has been certified under this part and is described in 
        section 806(a)(2) to meet the requirements of section 806 and 
        has not been notified by the board of trustees of the plan that 
        corrective action has restored compliance with such 
        requirements; and
            ``(2) the applicable authority determines that there is a 
        reasonable expectation that the plan will continue to fail to 
        meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of the 
applicable authority, terminate the plan and, in the course of the 
termination, take such actions as the applicable authority may require, 
including satisfying any claims referred to in section 
806(a)(2)(B)(iii) and recovering for the plan any liability under 
subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent possible, 
wound up in a manner which will result in timely provision of all 
benefits for which the plan is obligated.

``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION 
              HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO 
              HEALTH INSURANCE COVERAGE.

    ``(a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary determines that an association health plan which 
is or has been certified under this part and which is described in 
section 806(a)(2) will be unable to provide benefits when due or is 
otherwise in a financially hazardous condition as defined in 
regulations of such Secretary, the Secretary shall, upon notice to the 
plan, apply to the appropriate United States district court for 
appointment of the Secretary as trustee to administer the plan for the 
duration of the insolvency. The plan may appear as a party and other 
interested persons may intervene in the proceedings at the discretion 
of the court. The court shall appoint such Secretary trustee if the 
court determines that the trusteeship is necessary to protect the 
interests of the participants and beneficiaries or providers of medical 
care or to avoid any unreasonable deterioration of the financial 
condition of the plan. The trusteeship of such Secretary shall continue 
until the conditions described in the first sentence of this subsection 
are remedied or the plan is terminated.
    ``(b) Powers as Trustee.--The Secretary, upon appointment as 
trustee under subsection (a), shall have the power--
            ``(1) to do any act authorized by the plan, this title, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan;
            ``(2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee;
            ``(3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations of the Secretary, and applicable provisions of law;
            ``(4) to require the sponsor, the plan administrator, any 
        participating employer, and any employee organization 
        representing plan participants to furnish any information with 
        respect to the plan which the Secretary as trustee may 
        reasonably need in order to administer the plan;
            ``(5) to collect for the plan any amounts due the plan and 
        to recover reasonable expenses of the trusteeship;
            ``(6) to commence, prosecute, or defend on behalf of the 
        plan any suit or proceeding involving the plan;
            ``(7) to issue, publish, or file such notices, statements, 
        and reports as may be required under regulations of the 
        Secretary or by any order of the court;
            ``(8) to terminate the plan (or provide for its termination 
        in accordance with section 809(b)) and liquidate the plan 
        assets, to restore the plan to the responsibility of the 
        sponsor, or to continue the trusteeship;
            ``(9) to provide for the enrollment of plan participants 
        and beneficiaries under appropriate coverage options; and
            ``(10) to do such other acts as may be necessary to comply 
        with this title or any order of the court and to protect the 
        interests of plan participants and beneficiaries and providers 
        of medical care.
    ``(c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            ``(1) the sponsor and plan administrator;
            ``(2) each participant;
            ``(3) each participating employer; and
            ``(4) if applicable, each employee organization which, for 
        purposes of collective bargaining, represents plan 
        participants.
    ``(d) Additional Duties.--Except to the extent inconsistent with 
the provisions of this title, or as may be otherwise ordered by the 
court, the Secretary, upon appointment as trustee under this section, 
shall be subject to the same duties as those of a trustee under section 
704 of title 11, United States Code, and shall have the duties of a 
fiduciary for purposes of this title.
    ``(e) Other Proceedings.--An application by the Secretary under 
this subsection may be filed notwithstanding the pendency in the same 
or any other court of any bankruptcy, mortgage foreclosure, or equity 
receivership proceeding, or any proceeding to reorganize, conserve, or 
liquidate such plan or its property, or any proceeding to enforce a 
lien against property of the plan.
    ``(f) Jurisdiction of Court.--
            ``(1) In general.--Upon the filing of an application for 
        the appointment as trustee or the issuance of a decree under 
        this section, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this section, of a court of the 
        United States having jurisdiction over cases under chapter 11 
        of title 11, United States Code. Pending an adjudication under 
        this section such court shall stay, and upon appointment by it 
        of the Secretary as trustee, such court shall continue the stay 
        of, any pending mortgage foreclosure, equity receivership, or 
        other proceeding to reorganize, conserve, or liquidate the 
        plan, the sponsor, or property of such plan or sponsor, and any 
        other suit against any receiver, conservator, or trustee of the 
        plan, the sponsor, or property of the plan or sponsor. Pending 
        such adjudication and upon the appointment by it of the 
        Secretary as trustee, the court may stay any proceeding to 
        enforce a lien against property of the plan or the sponsor or 
        any other suit against the plan or the sponsor.
            ``(2) Venue.--An action under this section may be brought 
        in the judicial district where the sponsor or the plan 
        administrator resides or does business or where any asset of 
        the plan is situated. A district court in which such action is 
        brought may issue process with respect to such action in any 
        other judicial district.
    ``(g) Personnel.--In accordance with regulations of the Secretary, 
the Secretary shall appoint, retain, and compensate accountants, 
actuaries, and other professional service personnel as may be necessary 
in connection with the Secretary's service as trustee under this 
section.

``SEC. 811. STATE ASSESSMENT AUTHORITY.

    ``(a) In General.--Notwithstanding section 514, a State may impose 
by law a contribution tax on an association health plan described in 
section 806(a)(2).
    ``(b) Contribution Tax.--For purposes of this section, the term 
`contribution tax' imposed by a State on an association health plan 
means any tax imposed by such State if--
            ``(1) such tax is computed by applying a rate to the amount 
        of premiums or contributions, with respect to individuals 
        covered under the plan who are residents of such State, which 
        are received by the plan from participating employers located 
        in such State or from such individuals;
            ``(2) the rate of such tax does not exceed the rate of any 
        tax imposed by such State on premiums or contributions received 
        by insurers or health maintenance organizations for health 
        insurance coverage offered in such State in connection with a 
        group health plan;
            ``(3) such tax is otherwise nondiscriminatory; and
            ``(4) the amount of any such tax assessed on the plan is 
        reduced by the amount of any tax or assessment otherwise 
        imposed by the State on premiums, contributions, or both 
        received by insurers or health maintenance organizations for 
        health insurance coverage, aggregate excess/stop loss insurance 
        (as defined in section 806(g)(1)), specific excess/stop loss 
        insurance (as defined in section 806(g)(2)), other insurance 
        related to the provision of medical care under the plan, or any 
        combination thereof provided by such insurers or health 
        maintenance organizations in such State in connection with such 
        plan.

``SEC. 812. SPECIAL RULES FOR CHURCH PLANS.

    ``(a) Election for Church Plans.--Notwithstanding section 4(b)(2), 
if a church, a convention or association of churches, or an 
organization described in section 3(33)(C)(i) maintains a church plan 
which is a group health plan (as defined in section 733(a)(1)), and 
such church, convention, association, or organization makes an election 
with respect to such plan under this subsection (in such form and 
manner as the Secretary may by regulation prescribe), then the 
provisions of this section shall apply to such plan, with respect to 
benefits provided under such plan consisting of medical care, as if 
section 4(b)(2) did not contain an exclusion for church plans. Nothing 
in this subsection shall be construed to render any other section of 
this title applicable to church plans, except to the extent that such 
other section is incorporated by reference in this section.
    ``(b) Effect of Election.--
            ``(1) Preemption of state insurance laws regulating covered 
        church plans.--Subject to paragraphs (2) and (3), this section 
        shall supersede any and all State laws which regulate insurance 
        insofar as they may now or hereafter regulate church plans to 
        which this section applies or trusts established under such 
        church plans.
            ``(2) General state insurance regulation unaffected.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and paragraph (3), nothing in this 
                section shall be construed to exempt or relieve any 
                person from any provision of State law which regulates 
                insurance.
                    ``(B) Church plans not to be deemed insurance 
                companies or insurers.--Neither a church plan to which 
                this section applies, nor any trust established under 
                such a church plan, shall be deemed to be an insurance 
                company or other insurer or to be engaged in the 
                business of insurance for purposes of any State law 
                purporting to regulate insurance companies or insurance 
                contracts.
            ``(3) Preemption of certain state laws relating to premium 
        rate regulation and benefit mandates.--The provisions of 
        subsections (a)(2)(B) and (b) of section 805 shall apply with 
        respect to a church plan to which this section applies in the 
        same manner and to the same extent as such provisions apply 
        with respect to association health plans.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) State law.--The term `State law' includes all 
                laws, decisions, rules, regulations, or other State 
                action having the effect of law, of any State. A law of 
                the United States applicable only to the District of 
                Columbia shall be treated as a State law rather than a 
                law of the United States.
                    ``(B) State.--The term `State' includes a State, 
                any political subdivision thereof, or any agency or 
                instrumentality of either, which purports to regulate, 
                directly or indirectly, the terms and conditions of 
                church plans covered by this section.
    ``(c) Requirements for Covered Church Plans.--
            ``(1) Fiduciary rules and exclusive purpose.--A fiduciary 
        shall discharge his duties with respect to a church plan to 
        which this section applies--
                    ``(A) for the exclusive purpose of:
                            ``(i) providing benefits to participants 
                        and their beneficiaries; and
                            ``(ii) defraying reasonable expenses of 
                        administering the plan;
                    ``(B) with the care, skill, prudence and diligence 
                under the circumstances then prevailing that a prudent 
                man acting in a like capacity and familiar with such 
                matters would use in the conduct of an enterprise of a 
                like character and with like aims; and
                    ``(C) in accordance with the documents and 
                instruments governing the plan.
        The requirements of this paragraph shall not be treated as not 
        satisfied solely because the plan assets are commingled with 
        other church assets, to the extent that such plan assets are 
        separately accounted for.
            ``(2) Claims procedure.--In accordance with regulations of 
        the Secretary, every church plan to which this section applies 
        shall--
                    ``(A) provide adequate notice in writing to any 
                participant or beneficiary whose claim for benefits 
                under the plan has been denied, setting forth the 
                specific reasons for such denial, written in a manner 
                calculated to be understood by the participant;
                    ``(B) afford a reasonable opportunity to any 
                participant whose claim for benefits has been denied 
                for a full and fair review by the appropriate fiduciary 
                of the decision denying the claim; and
                    ``(C) provide a written statement to each 
                participant describing the procedures established 
                pursuant to this paragraph.
            ``(3) Annual statements.--In accordance with regulations of 
        the Secretary, every church plan to which this section applies 
        shall file with the Secretary an annual statement--
                    ``(A) stating the names and addresses of the plan 
                and of the church, convention, or association 
                maintaining the plan (and its principal place of 
                business);
                    ``(B) certifying that it is a church plan to which 
                this section applies and that it complies with the 
                requirements of paragraphs (1) and (2);
                    ``(C) identifying the States in which participants 
                and beneficiaries under the plan are or likely will be 
                located during the 1-year period covered by the 
                statement; and
                    ``(D) containing a copy of a statement of actuarial 
                opinion signed by a qualified actuary that the plan 
                maintains capital, reserves, insurance, other financial 
                arrangements, or any combination thereof adequate to 
                enable the plan to fully meet all of its financial 
                obligations on a timely basis.
            ``(4) Disclosure.--At the time that the annual statement is 
        filed by a church plan with the Secretary pursuant to paragraph 
        (3), a copy of such statement shall be made available by the 
        Secretary to the State insurance commissioner (or similar 
        official) of any State. The name of each church plan and 
        sponsoring organization filing an annual statement in 
        compliance with paragraph (3) shall be published annually in 
        the Federal Register.
    ``(d) Enforcement.--The Secretary may enforce the provisions of 
this section in a manner consistent with section 502, to the extent 
applicable with respect to actions under section 502(a)(5), and with 
section 3(33)(D), except that, other than for the purpose of seeking a 
temporary restraining order, a civil action may be brought with respect 
to the plan's failure to meet any requirement of this section only if 
the plan fails to correct its failure within the correction period 
described in section 3(33)(D). The other provisions of part 5 (except 
sections 501(a), 503, 512, 514, and 515) shall apply with respect to 
the enforcement and administration of this section.
    ``(e) Definitions and Other Rules.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        section, any term used in this section which is defined in any 
        provision of this title shall have the definition provided such 
        term by such provision.
            ``(2) Seminary students.--Seminary students who are 
        enrolled in an institution of higher learning described in 
        section 3(33)(C)(iv) and who are treated as participants under 
        the terms of a church plan to which this section applies shall 
        be deemed to be employees as defined in section 3(6) if the 
        number of such students constitutes an insignificant portion of 
        the total number of individuals who are treated as participants 
        under the terms of the plan.

``SEC. 813. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
            ``(2) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1).
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
            ``(5) Applicable authority.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `applicable authority' 
                means, in connection with an association health plan--
                            ``(i) the State recognized pursuant to 
                        subsection (c) of section 506 as the State to 
                        which authority has been delegated in 
                        connection with such plan; or
                            ``(ii) if there is no State referred to in 
                        clause (i), the Secretary.
                    ``(B) Exceptions.--
                            ``(i) Joint authorities.--Where such term 
                        appears in section 808(3), section 807(e) (in 
                        the first instance), section 809(a) (in the 
                        second instance), section 809(a) (in the fourth 
                        instance), and section 809(b)(1), such term 
                        means, in connection with an association health 
                        plan, the Secretary and the State referred to 
                        in subparagraph (A)(i) (if any) in connection 
                        with such plan.
                            ``(ii) Regulatory authorities.--Where such 
                        term appears in section 802(a) (in the first 
                        instance), section 802(d), section 802(e), 
                        section 803(d), section 805(a)(5), section 
                        806(a)(2), section 806(b), section 806(c), 
                        section 806(d), paragraphs (1)(A) and (2)(A) of 
                        section 806(g), section 806(h), section 806(i), 
                        section 807(a) (in the second instance), 
                        section 807(b), section 807(d), section 807(e) 
                        (in the second instance), section 808 (in the 
                        matter after paragraph (3)), and section 809(a) 
                        (in the third instance), such term means, in 
                        connection with an association health plan, the 
                        Secretary.
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning provided in section 
        733(d)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 2 participants as current employees 
                        or participants described in section 732(d)(3) 
                        on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        coverage offered in a State if such State 
                        regulates the coverage described in such clause 
                        in the same manner and to the same extent as 
                        coverage in the small group market (as defined 
                        in section 2791(e)(5) of the Public Health 
                        Service Act) is regulated by such State.
            ``(8) Participating employer.--The term `participating 
        employer' means, in connection with an association health plan, 
        any employer, if any individual who is an employee of such 
        employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(9) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(10) Qualified actuary.--The term `qualified actuary' 
        means an individual who is a member of the American Academy of 
        Actuaries or meets such reasonable standards and qualifications 
        as the Secretary may provide by regulation.
            ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor, a person eligible to be a 
        member of the sponsor or, in the case of a sponsor with member 
        associations, a person who is a member, or is eligible to be a 
        member, of a member association.
            ``(12) Large employer.--The term `large employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who employed an average of at least 51 
        employees on business days during the preceding calendar year 
        and who employs at least 2 employees on the first day of the 
        plan year.
            ``(13) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who is not a large employer.
            ``(14) Network coverage.--The term ``network coverage'' 
        means, with respect to a group health plan or health insurance 
        coverage offered by a health insurance issuer, health benefits 
        coverage that provides or arranges for the provision of health 
        care items and services to participants, beneficiaries, or 
        enrollees through participating health professionals and 
        providers.
    ``(b) Rules of Construction.--
            ``(1) Employers and employees.--For purposes of determining 
        whether a plan, fund, or program is an employee welfare benefit 
        plan which is an association health plan, and for purposes of 
        applying this title in connection with such plan, fund, or 
        program so determined to be such an employee welfare benefit 
        plan--
                    ``(A) in the case of a partnership, the term 
                `employer' (as defined in section (3)(5)) includes the 
                partnership in relation to the partners, and the term 
                `employee' (as defined in section (3)(6)) includes any 
                partner in relation to the partnership; and
                    ``(B) in the case of a self-employed individual, 
                the term `employer' (as defined in section 3(5)) and 
                the term `employee' (as defined in section 3(6)) shall 
                include such individual.
            ``(2) Plans, funds, and programs treated as employee 
        welfare benefit plans.--In the case of any plan, fund, or 
        program which was established or is maintained for the purpose 
        of providing medical care (through the purchase of insurance or 
        otherwise) for employees (or their dependents) covered 
        thereunder and which demonstrates to the Secretary that all 
        requirements for certification under this part would be met 
        with respect to such plan, fund, or program if such plan, fund, 
        or program were a group health plan, such plan, fund, or 
        program shall be treated for purposes of this title as an 
        employee welfare benefit plan on and after the date of such 
        demonstration.''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
                    ``(E) The preceding subparagraphs of this paragraph 
                do not apply with respect to any State law in the case 
                of an association health plan which is certified under 
                part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude, or have the effect of precluding, a health 
insurance issuer from offering health insurance coverage in connection 
with an association health plan which is certified under part 8.
    ``(2) Except as provided in paragraphs (4) and (5) of subsection 
(b) of this section--
            ``(A) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan 
        certified under part 8 to a participating employer operating in 
        such State, the provisions of this title shall supersede any 
        and all laws of such State insofar as they may preclude a 
        health insurance issuer from offering health insurance coverage 
        of the same policy type to other employers operating in the 
        State which are eligible for coverage under such association 
        health plan, whether or not such other employers are 
        participating employers in such plan.
            ``(B) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan in a 
        State and the filing, with the applicable State authority, of 
        the policy form in connection with such policy type is approved 
        by such State authority, the provisions of this title shall 
        supersede any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as they may 
        preclude, upon the filing in the same form and manner of such 
        policy form with the applicable State authority in such other 
        State, the approval of the filing in such other State.
    ``(3) For additional provisions relating to association health 
plans, see subsections (a)(2)(B) and (b) of section 805.
    ``(4) For purposes of this subsection, the term `association health 
plan' has the meaning provided in section 801(a), and the terms `health 
insurance coverage', `participating employer', and `health insurance 
issuer' have the meanings provided such terms in section 811, 
respectively.''.
            (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                    (A) in clause (i)(II), by striking ``and'' at the 
                end;
                    (B) in clause (ii), by inserting and which does not 
                provide medical care (within the meaning of ``(section 
                733(a)(2)),'' after ``arrangement,'', and by striking 
                ``title.'' and inserting ``title, and''; and
                    (C) by adding at the end the following new clause:
            ``(iii) subject to subparagraph (E), in the case of any 
        other employee welfare benefit plan which is a multiple 
        employer welfare arrangement and which provides medical care 
        (within the meaning of section 733(a)(2)), any law of any State 
        which regulates insurance may apply.''.
            (4) Section 514(e) of such Act (as redesignated by 
        paragraph (2)(C)) is amended--
                    (A) by striking ``Nothing'' and inserting ``(1) 
                Except as provided in paragraph (2), nothing''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2) Nothing in any other provision of law enacted on or after the 
date of the enactment of the Affordable Health Care Act of 1999 shall 
be construed to alter, amend, modify, invalidate, impair, or supersede 
any provision of this title, except by specific cross-reference to the 
affected section.''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of an 
association health plan under part 8.''.
    (d) Disclosure of Solvency Protections Related to Self-Insured and 
Fully Insured Options Under Association Health Plans.--Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the 
following: ``An association health plan shall include in its summary 
plan description, in connection with each benefit option, a description 
of the form of solvency or guarantee fund protection secured pursuant 
to this Act or applicable State law, if any.''.
    (e) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (f) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
                            plans providing health benefits in addition 
                            to health insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
                            health plans providing health benefits in 
                            addition to health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Special rules for church plans.
``Sec. 813. Definitions and rules of construction.''.

SEC. 202. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
            (1) in clause (i), by inserting ``for any plan year of any 
        such plan, or any fiscal year of any such other arrangement;'' 
        after ``single employer'', and by inserting ``during such year 
        or at any time during the preceding 1-year period'' after 
        ``control group'';
            (2) in clause (iii)--
                    (A) by striking ``common control shall not be based 
                on an interest of less than 25 percent'' and inserting 
                ``an interest of greater than 25 percent may not be 
                required as the minimum interest necessary for common 
                control''; and
                    (B) by striking ``similar to'' and inserting 
                ``consistent and coextensive with'';
            (3) by redesignating clauses (iv) and (v) as clauses (v) 
        and (vi), respectively; and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in determining, after the application of clause (i), 
        whether benefits are provided to employees of two or more 
        employers, the arrangement shall be treated as having only one 
        participating employer if, after the application of clause (i), 
        the number of individuals who are employees and former 
        employees of any one participating employer and who are covered 
        under the arrangement is greater than 75 percent of the 
        aggregate number of all individuals who are employees or former 
        employees of participating employers and who are covered under 
        the arrangement;''.

SEC. 203. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED 
              ARRANGEMENTS.

    (a) In General.--Section 3(40)(A)(i) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to 
read as follows:
            ``(i)(I) under or pursuant to one or more collective 
        bargaining agreements which are reached pursuant to collective 
        bargaining described in section 8(d) of the National Labor 
        Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 
        2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or 
        which are reached pursuant to labor-management negotiations 
        under similar provisions of State public employee relations 
        laws, and (II) in accordance with subparagraphs (C), (D), and 
        (E);''.
    (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is 
amended by adding at the end the following new subparagraphs:
    ``(C) For purposes of subparagraph (A)(i)(II), a plan or other 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if the following requirements are met:
            ``(i) The plan or other arrangement, and the employee 
        organization or any other entity sponsoring the plan or other 
        arrangement, do not--
                    ``(I) utilize the services of any licensed 
                insurance agent or broker for soliciting or enrolling 
                employers or individuals as participating employers or 
                covered individuals under the plan or other 
                arrangement; or
                    ``(II) pay a commission or any other type of 
                compensation to a person, other than a full time 
                employee of the employee organization (or a member of 
                the organization to the extent provided in regulations 
                of the Secretary), that is related either to the volume 
                or number of employers or individuals solicited or 
                enrolled as participating employers or covered 
                individuals under the plan or other arrangement, or to 
                the dollar amount or size of the contributions made by 
                participating employers or covered individuals to the 
                plan or other arrangement;
        except to the extent that the services used by the plan, 
        arrangement, organization, or other entity consist solely of 
        preparation of documents necessary for compliance with the 
        reporting and disclosure requirements of part 1 or 
        administrative, investment, or consulting services unrelated to 
        solicitation or enrollment of covered individuals.
            ``(ii) As of the end of the preceding plan year, the number 
        of covered individuals under the plan or other arrangement who 
        are identified to the plan or arrangement and who are neither--
                    ``(I) employed within a bargaining unit covered by 
                any of the collective bargaining agreements with a 
                participating employer (nor covered on the basis of an 
                individual's employment in such a bargaining unit); nor
                    ``(II) present employees (or former employees who 
                were covered while employed) of the sponsoring employee 
                organization, of an employer who is or was a party to 
                any of the collective bargaining agreements, or of the 
                plan or other arrangement or a related plan or 
                arrangement (nor covered on the basis of such present 
or former employment);
        does not exceed 15 percent of the total number of individuals 
        who are covered under the plan or arrangement and who are 
        present or former employees who are or were covered under the 
        plan or arrangement pursuant to a collective bargaining 
        agreement with a participating employer.
            ``(iii) The employee organization or other entity 
        sponsoring the plan or other arrangement certifies to the 
        Secretary each year, in a form and manner which shall be 
        prescribed in regulations of the Secretary that the plan or 
        other arrangement meets the requirements of clauses (i) and 
        (ii).
    ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if--
            ``(i) all of the benefits provided under the plan or 
        arrangement consist of health insurance coverage; or
            ``(ii)(I) the plan or arrangement is a multiemployer plan; 
        and
            ``(II) the requirements of clause (B) of the proviso to 
        clause (5) of section 302(c) of the Labor Management Relations 
        Act, 1947 (29 U.S.C. 186(c)) are met with respect to such plan 
        or other arrangement.
    ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
arrangement shall be treated as established or maintained in accordance 
with this subparagraph only if the employee organization or other 
entity sponsoring the plan or arrangement--
            ``(i) has been in existence for at least 3 years or is 
        affiliated with another employee organization which has been in 
        existence for at least 3 years; or
            ``(ii) demonstrates to the satisfaction of the Secretary 
        that the requirements of subparagraphs (C) and (D) are met with 
        respect to the plan or other arrangement.''.
    (c) Conforming Amendments to Definitions of Participant and 
Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended 
by adding at the end the following new sentence: ``Such term includes 
an individual who is a covered individual described in paragraph 
(40)(C)(ii).''.

SEC. 204. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.

    (a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' after ``Sec. 501.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who, either willfully or with willful blindness, 
falsely represents, to any employee, any employee's beneficiary, any 
employer, the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or providing any 
benefit described in section 3(1) to employees or their beneficiaries 
as--
            ``(1) being an association health plan which has been 
        certified under part 8;
            ``(2) having been established or maintained under or 
        pursuant to one or more collective bargaining agreements which 
        are reached pursuant to collective bargaining described in 
        section 8(d) of the National Labor Relations Act (29 U.S.C. 
        158(d)) or paragraph Fourth of section 2 of the Railway Labor 
        Act (45 U.S.C. 152, paragraph Fourth) or which are reached 
        pursuant to labor-management negotiations under similar 
        provisions of State public employee relations laws; or
            ``(3) being a plan or arrangement with respect to which the 
        requirements of subparagraph (C), (D), or (E) of section 3(40) 
        are met;
shall, upon conviction, be imprisoned not more than 5 years, be fined 
under title 18, United States Code, or both.''.
    (b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132) is amended by adding at the end the following new subsection:
    ``(n)(1) Subject to paragraph (2), upon application by the 
Secretary showing the operation, promotion, or marketing of an 
association health plan (or similar arrangement providing benefits 
consisting of medical care (as defined in section 733(a)(2))) that--
            ``(A) is not certified under part 8, is subject under 
        section 514(b)(6) to the insurance laws of any State in which 
        the plan or arrangement offers or provides benefits, and is not 
        licensed, registered, or otherwise approved under the insurance 
        laws of such State; or
            ``(B) is an association health plan certified under part 8 
        and is not operating in accordance with the requirements under 
        part 8 for such certification,
a district court of the United States shall enter an order requiring 
that the plan or arrangement cease activities.
    ``(2) Paragraph (1) shall not apply in the case of an association 
health plan or other arrangement if the plan or arrangement shows 
that--
            ``(A) all benefits under it referred to in paragraph (1) 
        consist of health insurance coverage; and
            ``(B) with respect to each State in which the plan or 
        arrangement offers or provides benefits, the plan or 
        arrangement is operating in accordance with applicable State 
        laws that are not superseded under section 514.
    ``(3) The court may grant such additional equitable relief, 
including any relief available under this title, as it deems necessary 
to protect the interests of the public and of persons having claims for 
benefits against the plan.''.
    (c) Responsibility for Claims Procedure.--Section 503 of such Act 
(29 U.S.C. 1133) (as amended by title I) is amended by adding at the 
end the following new subsection:
    ``(c) Association Health Plans.--The terms of each association 
health plan which is or has been certified under part 8 shall require 
the board of trustees or the named fiduciary (as applicable) to ensure 
that the requirements of this section are met in connection with claims 
filed under the plan.''.

SEC. 205. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(c) Responsibility of States With Respect to Association Health 
Plans.--
            ``(1) Agreements with states.--A State may enter into an 
        agreement with the Secretary for delegation to the State of 
        some or all of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8;
                    ``(B) the Secretary's authority to certify 
                association health plans under part 8 in accordance 
                with regulations of the Secretary applicable to 
                certification under part 8; or
                    ``(C) any combination of the Secretary's authority 
                authorized to be delegated under subparagraphs (A) and 
                (B).
            ``(2) Delegations.--Any department, agency, or 
        instrumentality of a State to which authority is delegated 
        pursuant to an agreement entered into under this paragraph may, 
        if authorized under State law and to the extent consistent with 
        such agreement, exercise the powers of the Secretary under this 
        title which relate to such authority.
            ``(3) Recognition of Primary Domicile State.--In entering 
        into any agreement with a State under subparagraph (A), the 
        Secretary shall ensure that, as a result of such agreement and 
        all other agreements entered into under subparagraph (A), only 
        one State will be recognized, with respect to any particular 
        association health plan, as the State to which all authority 
        has been delegated pursuant to such agreements in connection 
        with such plan. In carrying out this paragraph, the Secretary 
        shall take into account the places of residence of the 
        participants and beneficiaries under the plan and the State in 
        which the trust is maintained.''.

SEC. 206. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by sections 201, 204, and 
205 shall take effect on January 1, 2000. The amendments made by 
sections 202 and 203 shall take effect on the date of the enactment of 
this Act. The Secretary of Labor shall first issue all regulations 
necessary to carry out the amendments made by this subtitle before 
January 1, 2000.
    (b) Exception.--Section 801(a)(2) of the Employee Retirement Income 
Security Act of 1974 (added by section 1302) does not apply in 
connection with an association health plan (certified under part 8 of 
subtitle B of title I of such Act) existing on April 1, 1997, if no 
benefits provided thereunder as of the date of the enactment of this 
Act consist of health insurance coverage (as defined in section 
733(b)(1) of such Act).
    (c) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 813(a)(5) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this Act)) by the arrangement of an application for 
        certification of the arrangement under part 8 of subtitle B of 
        title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a)(1) and 
                803(a)(1) of the Employee Retirement Income Security 
                Act of 1974 shall be deemed met with respect to such 
                arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of directors which--
                            (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                            (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement.
            (2) Definitions.--For purposes of this subsection, the 
        terms group ``health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 813 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``association health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.
    (d) Pilot Program for Self-Insured Association Health Plans.--
            (1) In general.--During the pilot program period, 
        association health plans which offer benefit options which do 
        not consist of health insurance coverage may be certified under 
        part 8 of subtitle B of title I of the Employee Retirement 
        Income Security Act of 1974 only if such plans consist of the 
        following:
                    (A) plans which offered such coverage on the date 
                of the enactment of this Act;
                    (B) plans under which the sponsor does not restrict 
                membership to one or more trades and businesses or 
                industries and whose eligible participating employers 
                represent a broad cross-section of trades and 
                businesses or industries; or
                    (C) plans whose eligible participating employers 
                represent one or more trades or businesses, or one or 
                more industries, which have been indicated as having 
                average or above-average health insurance risk or 
                health claims experience by reason of State rate 
                filings, denials of coverage, proposed premium rate 
                levels, and other means demonstrated by such plans in 
                accordance with regulations which the Secretary shall 
                prescribe, including (but not limited to) the 
                following: agriculture; automobile dealerships; 
                barbering and cosmetology; child care; construction; 
                dance, theatrical, and orchestra productions; 
                disinfecting and pest control; eating and drinking 
                establishments; fishing; hospitals; labor 
                organizations; logging; manufacturing (metals); mining; 
                medical and dental practices; medical laboratories; 
                sanitary services; transportation (local and freight); 
                and warehousing.
            (2) Pilot program period.--For purposes of this subsection, 
        the term ``pilot program period'' means the 5-year period 
        beginning on January 1, 2000.

 TITLE III--PROVIDING AFFORDABLE CARE BY ALLOWING HEALTH CARE COVERAGE 
                        CREDITS TO INDIVIDUALS.

SEC. 301. REFUNDABLE CREDIT FOR PROVIDERS OF QUALIFIED HEALTH COVERAGE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. CREDIT TO PROVIDERS OF QUALIFIED HEALTH COVERAGE.

    ``(a) General Rule.--Each eligible individual shall be allowed a 
credit against the tax imposed by this subtitle for the purchase of 
qualified health coverage. Such individual may designate a qualified 
health coverage provider to administer the credit.
    ``(b) Applicable Credit Amount.--For purposes of this section--
            ``(1) In general.--The applicable credit amount is \1/12\ 
        of the annual credit amount for each month that the individual 
        is covered by qualified health coverage provided by the 
        taxpayer.
            ``(2) Annual credit amount.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the annual credit amount is--
                            ``(i) $1,200 in the case of an individual 
                        who has attained age 18 as of the beginning of 
                        the calendar year in which the taxable year of 
                        the taxpayer ends, and
                            ``(ii) $600 for an individual not described 
                        in clause (i).
                Such credit shall not exceed $3,600 for any individual 
                policy.
                    ``(B) Individuals eligible to participate in 
                subsidized employer plans.--In the case of an 
                individual who is eligible for any month to participate 
                in any subsidized health plan maintained--
                            ``(i) by any employer of such individual or 
                        such individual's spouse, or
                            ``(ii) in the case of an individual who is 
                        a dependent of another individual, by any 
                        employer of such other individual or such other 
                        individual's spouse,
                subparagraph (A) shall be applied by substituting 
                `$400' for `$1,200', by substituting `$200' for `$600', 
                and by substituting `$1,200' for `$3,600'.
            ``(3) Credit limited to amount of premiums.--The applicable 
        credit amount for any individual for any month shall not exceed 
        the amount of premiums that such individual would (but for this 
        section) be required to pay for the coverage for such month.
    ``(c) Eligible Individual.--For purposes of this section--
            ``(1) In general.--The term `eligible individual' means any 
        individual who is a citizen of the United States or who is 
        lawfully residing in the United States.
            ``(2) Exception for individuals covered under certain other 
        health plans.--Such term shall not include any individual for 
        any month who is covered for such month under--
                    ``(A) title XVIII of the Social Security Act,
                    ``(B) chapter 55 of title 10, United States Code,
                    ``(C) chapter 17 of title 38, United States Code, 
                or
                    ``(D) the Indian Health Care Improvement Act.
    ``(d) Qualified Health Coverage.--For purposes of this section, the 
term `qualified health coverage' means coverage as defined in section 
9832(b), excluding coverage defined in section 9832(c).
    ``(e) Qualified Health Coverage Provider.--For purposes of this 
section, the term `qualified health coverage provider' means--
            ``(1) in the case of coverage provided to an employee by a 
        plan maintained by his employer, the employer, and
            ``(2) in any other case, the insurer providing the 
        coverage.
    ``(f) Coverage for Month.--An individual shall be treated as having 
a particular coverage for a month if the individual has such coverage 
as of the first day of such month.
    ``(g) Reporting Requirement.--The Secretary shall develop any 
reporting and filing requirements necessary to ensure proper 
administration of this section.''
    (b) Termination of Deduction for Health Insurance Costs of Self-
Employed Individuals.--Section 162(l) of such Code is amended by adding 
at the end the following new paragraph:
            ``(6) Termination of deduction for health insurance.--In 
        the case of taxable years beginning after December 31, 1999, 
        this subsection shall only apply to amounts paid for qualified 
        long-term care insurance contracts.''
    (c) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new items:

                              ``Sec. 35. Credit to providers of 
                                        qualified health coverage.
                              ``Sec. 36. Overpayments of tax.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.  

 TITLE IV--PROVIDING AFFORDABLE CARE THROUGH MEDICAL SAVINGS ACCOUNTS.

SEC. 401. ENHANCEMENT OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) Repeal of Limitations on Number of Medical Savings Accounts.--
            (1) In general.--Subsections (i) and (j) of section 220 of 
        the Internal Revenue Code of 1986 are hereby repealed.
            (2) Conforming amendment.--Paragraph (1) of section 220(c) 
        of such Code is amended by striking subparagraph (D).
    (b) All Employers May Offer Medical Savings Accounts.--
            (1) In general.--Subclause (I) of section 220(c)(1)(A)(iii) 
        of such Code (defining eligible individual) is amended by 
        striking ``and such employer is a small employer''.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 220(c) of such Code is 
                amended by striking subparagraph (C).
                    (B) Subsection (c) of section 220 of such Code is 
                amended by striking paragraph (4) and by redesignating 
                paragraph (5) as paragraph (4).
    (c) Increase in Amount of Deduction Allowed for Contributions to 
Medical Savings Accounts.--
            (1) In general.--Paragraph (2) of section 220(b) of such 
        Code is amended to read as follows:
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the amount equal to \1/12\ of the annual deductible 
        (as of the first day of such month) of the individual's 
        coverage under the high deductible health plan.''.
            (2) Conforming amendment.--Clause (ii) of section 
        220(d)(1)(A) of such Code is amended by striking ``75 percent 
        of''.
    (d) Both Employers and Employees May Contribute to Medical Savings 
Accounts.--Paragraph (5) of section 220(b) of such Code is amended to 
read as follows:
            ``(5) Coordination with exclusion for employer 
        contributions.--The limitation which would (but for this 
        paragraph) apply under this subsection to an individual for any 
        taxable year shall be reduced (but not below zero) by the 
        amount which would (but for section 106(b)) be includible in 
        the individual's gross income for such taxable year.''.
    (e) Reduction of Permitted Deductibles Under High Deductible Health 
Plans.--
            (1) In general.--Subparagraph (A) of section 220(c)(2) of 
        such Code (defining high deductible health plan) is amended--
                    (A) in clause (i), by striking ``$1,500'' and 
                inserting ``$1,000'', and
                    (B) in clause (ii), by striking ``$3,000'' and 
                inserting ``$2,000''.
            (2) Conforming amendment.--Subsection (g) of section 220 of 
        such Code is amended--
                    (A) in the matter preceding paragraph (1), by 
                striking ``1998'' and inserting ``2000'', and
                    (B) in paragraph (2), by striking ``1997'' and 
                inserting ``1999''.
    (f) Medical Savings Accounts May be Offered Under Cafeteria 
Plans.--Subsection (f) of section 125 of such Code is amended by 
striking ``106(b),''.
    (g) Individuals Receiving Immediate Federal Annuities Eligible for 
Medical Savings Accounts.--Paragraph (1) of section 220(c) of such Code 
(defining eligible individual), as amended by subsections (a) and (b), 
is further amended by adding at the end the following new subparagraph:
                    ``(C) Special Rules for Individuals Receiving 
                Immediate Federal Annuities.--
                            ``(i) In general.--Subparagraph (A)(iii) 
                        and subsection (b)(4) shall not apply for any 
                        month to an individual--
                                    ``(I) who, as of the first day of 
                                such month, is enrolled in a high 
                                deductible health plan under chapter 89 
                                of title 5, United States Code, and
                                    ``(II) who is entitled to receive 
                                for such month any amount by reason of 
                                being an annuitant (as defined in 
                                section 8901(3) of such title 5).
                            ``(ii) Special rule for spouse of 
                        annuitant.--In the case of the spouse of an 
                        individual described in clause (i) who is not 
                        also described in clause (i), subsection (b)(4) 
                        shall not apply to such spouse if such 
                        individual and spouse have family coverage 
                        under the same plan described in clause 
                        (i)(I).''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.
                                 <all>
```