I 

113TH CONGRESS 

1ST SESSION H. R. 3121 

To repeal the Patient Protection and Affordable Care Act and related reconciliation provisions, to promote patient-centered health care, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 18, 2013 

Mr. ROE of Tennessee (for himself, Mr. SCALISE, Mrs. BLACKBURN, Mrs. 

ELLMERS, Mr. FLEMING, Mr. GOSAR, Mr. PRICE of Georgia, Mr. 

ROKITA, Mr. FLORES, Mr. PEARCE, Mrs. HARTZLER, Mr. WALBERG, Mr. 

CULBERSON, Mr. WENSTRUP, Mr. MULVANEY, Mr. ROSS, Mr. STEWART, 

Mr. PALAZZO, Mr. LAMALFA, Mr. MCKINLEY, Mr. STOCKMAN, Mr. 

BUCSHON, Mr. COTTON, Mr. JORDAN, and Mr. SALMON) introduced the 

following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education 

and the Workforce, the Judiciary, Natural Resources, House Administration, Appropriations, and Rules, 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 repeal the Patient Protection and Affordable Care Act 

and related reconciliation provisions, to promote patientcentered health care, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘American Health Care Reform Act of 2013’’. 

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

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—REPEAL OF OBAMACARE 

Sec. 101. Repeal of PPACA and health care-related provisions in the Health 

Care and Education Reconciliation Act of 2010. 

TITLE II—INCREASING ACCESS TO PORTABLE, AFFORDABLE 

HEALTH INSURANCE 

Sec. 200. Amendment of 1986 Code. 

Subtitle A—Standard Deduction for Health Insurance 

Sec. 201. Standard deduction for health insurance. 

Sec. 202. Changes to existing tax preferences for medical coverage and costs 

for individuals eligible for standard deduction for health insurance. 

Sec. 203. Exclusion of standard deduction for health insurance from employment taxes. 

Sec. 204. Information reporting. 

Sec. 205. Election to disregard inclusion of contributions by employer to accident or health plan. 

Subtitle B—Enhancement of Health Savings Accounts 

Sec. 221. Allow both spouses to make catch-up contributions to the same HSA 

account. 

Sec. 222. Provisions relating to Medicare. 

Sec. 223. Individuals eligible for veterans benefits for a service-connected disability. 

Sec. 224. Individuals eligible for Indian Health Service assistance. 

Sec. 225. Individuals eligible for TRICARE coverage. 

Sec. 226. FSA and HRA interaction with HSAs. 

Sec. 227. Purchase of health insurance from HSA account. 

Sec. 228. Special rule for certain medical expenses incurred before establishment of account. 

Sec. 229. Preventive care prescription drug clarification. 

Sec. 230. Equivalent bankruptcy protections for health savings accounts as retirement funds. 

Sec. 231. Administrative error correction before due date of return. 

Sec. 232. Reauthorization of Medicaid health opportunity accounts. 

Sec. 233. Members of health care sharing ministries eligible to establish health 

savings accounts. 

Sec. 234. High deductible health plans renamed HSA qualified plans. 

Sec. 235. Treatment of direct primary care service arrangements. 


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Sec. 236. Certain exercise equipment and physical fitness programs treated as 

medical care. 

Sec. 237. Certain nutritional and dietary supplements to be treated as medical 

care. 

Sec. 238. Certain provider fees to be treated as medical care. 

Sec. 239. Increase the maximum contribution limit to an HSA to match deductible and out-of-pocket expense limitation. 

Sec. 240. Child health savings account. 

Sec. 241. Distributions for abortion expenses from health savings accounts included in gross income. 

Subtitle C—Enhanced Wellness Incentives 

Sec. 251. Providing financial incentives for treatment compliance. 

TITLE III—IMPROVING ACCESS TO INSURANCE FOR VULNERABLE 

AMERICANS 

Subtitle A—Eliminating Barriers to Insurance Coverage 

Sec. 301. Elimination of certain requirements for guaranteed availability in individual market. 

Subtitle B—Ensuring Coverage for Individuals With Preexisting Conditions 

and Multiple Health Care Needs Through High Risk Pools 

Sec. 311. Improvement of high risk pools. 

TITLE IV—ENCOURAGING A MORE COMPETITIVE HEALTH CARE 

MARKET 

Subtitle A—Expanding Patient Choice 

Sec. 401. Cooperative governing of individual health insurance coverage. 

Subtitle B—McCarran-Ferguson Reform 

Sec. 411. Restoring the application of antitrust laws to health sector insurers. 

Subtitle C—Medicare Price Transparency 

Sec. 421. Public availability of Medicare claims data. 

Subtitle D—State Transparency Portals 

Sec. 431. Providing information on health coverage options and health care 

providers. 

Subtitle E—Protecting the Doctor-Patient Relationship 

Sec. 441. Rule of construction. 

Sec. 442. Repeal of Federal Coordinating Council for Comparative Effectiveness Research. 

Subtitle F—Association Health Plans 

Sec. 451. Rules governing association health plans. 

Sec. 452. Clarification of treatment of single employer arrangements. 

Sec. 453. Enforcement provisions relating to association health plans. 

Sec. 454. Cooperation between Federal and State authorities. 


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Sec. 455. Effective date and transitional and other rules. 

TITLE V—REFORMING MEDICAL LIABILITY LAW 

Sec. 501. Encouraging speedy resolution of claims. 

Sec. 502. Compensating patient injury. 

Sec. 503. Maximizing patient recovery. 

Sec. 504. Punitive damages. 

Sec. 505. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 506. Definitions. 

Sec. 507. Effect on other laws. 

Sec. 508. State flexibility and protection of States’ rights. 

Sec. 509. Applicability; effective date. 

TITLE VI—RESPECTING HUMAN LIFE 

Sec. 601. Special rules regarding abortion. 

1 TITLE I—REPEAL OF 

2 OBAMACARE 

3 SEC. 101. REPEAL OF PPACA AND HEALTH CARE-RELATED 

4 PROVISIONS IN THE HEALTH CARE AND EDU5 CATION RECONCILIATION ACT OF 2010. 

6 (a) PPACA.—Effective as of the enactment of the 

7 Patient Protection and Affordable Care Act (Public Law 

8 111–148), such Act is repealed, and the provisions of law 

9 amended or repealed by such Act are restored or revived 

10 as if such Act had not been enacted. 

11 (b) HEALTH CARE-RELATED PROVISIONS IN THE

12 HEALTH CARE AND EDUCATION RECONCILIATION ACT OF

13 2010.—Effective as of the enactment of the Health Care 

14 and Education Reconciliation Act of 2010 (Public Law 

15 111–152), title I and subtitle B of title II of such Act 

16 are repealed, and the provisions of law amended or re17 pealed by such title or subtitle, respectively, are restored 


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1 or revived as if such title and subtitle had not been en2 acted. 

3 TITLE II—INCREASING ACCESS 

4 TO PORTABLE, AFFORDABLE 

5 HEALTH INSURANCE 

6 SEC. 200. AMENDMENT OF 1986 CODE. 

7 Except as otherwise expressly provided, whenever in 

8 this title an amendment or repeal is expressed in terms 

9 of an amendment to, or repeal of, a section or other provi10 sion, the reference shall be considered to be made to a 

11 section or other provision of the Internal Revenue Code 

12 of 1986. 

13 Subtitle A—Standard Deduction 

14 for Health Insurance 

15 SEC. 201. STANDARD DEDUCTION FOR HEALTH INSUR16 ANCE. 

17 (a) IN GENERAL.—Part VII of subchapter B of chap18 ter 1 is amended by redesignating section 224 as section 

19 225 and by inserting after section 223 the following new 

20 section: 

21 ‘‘SEC. 224. STANDARD DEDUCTION FOR HEALTH INSUR22 ANCE. 

23 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi24 vidual, there shall be allowed as a deduction to the taxVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 payer for the taxable year the standard deduction for 

2 health insurance. 

3 ‘‘(b) STANDARD DEDUCTION FOR HEALTH INSUR4 ANCE.—For purposes of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘standard deduc6 tion for health insurance’ means the sum of the 

7 monthly limitations for months during the taxable 

8 year. 

9 ‘‘(2) MONTHLY LIMITATION.— 

10 ‘‘(A) IN GENERAL.—The monthly limitation for any month is 1 11 ⁄12 of— 

12 ‘‘(i) $20,000, in the case of a tax13 payer who is allowed a deduction under 

14 section 151 for more than one individual 

15 who for such month is an eligible indi16 vidual, and 

17 ‘‘(ii) $7,500, in the case of a taxpayer 

18 who is allowed a deduction under section 

19 151 for only one individual who for such 

20 month is an eligible individual. 

21 ‘‘(B) COST-OF-LIVING ADJUSTMENT.— 

22 ‘‘(i) IN GENERAL.—In the case of tax23 able years beginning in calendar years 

24 after the first calendar year to which this 

25 section applies, the dollar amounts under 


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1 subparagraph (A) shall be increased by an 

2 amount equal to— 

3 ‘‘(I) such dollar amount, multi4 plied by 

5 ‘‘(II) the cost-of-living adjust6 ment determined under section 1(f)(3) 

7 for the calendar year in which such 

8 taxable year begins, determined by 

9 substituting ‘the calendar year pre10 ceding the first calendar year to which 

11 section 224 applies’ for ‘calendar year 

12 1992’ in subparagraph (B) thereof. 

13 ‘‘(ii) ROUNDING.—If any increase 

14 under clause (i) is not a multiple of $50, 

15 such increase shall be rounded to the near16 est multiple of $50. 

17 ‘‘(3) YEARLY LIMITATION.—The amount al18 lowed as a deduction under subsection (a) for any 

19 taxable year shall not exceed the taxpayer’s earned 

20 income (as defined in section 32(c)(2)) for such tax21 able year. 

22 ‘‘(c) LIMITATIONS AND SPECIAL RULES RELATING

23 TO STANDARD DEDUCTION.—For purposes of this sec24 tion— 


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1 ‘‘(1) SPECIAL RULE FOR MARRIED INDIVIDUALS

2 FILING SEPARATELY.—In the case of a married indi3 vidual who files a separate return for the taxable 

4 year, the deduction allowed under subsection (a) 

5 shall be equal to one-half of the amount which would 

6 otherwise be determined under subsection (a) if such 

7 individual filed a joint return for the taxable year. 

8 ‘‘(2) DENIAL OF DEDUCTION TO DEPEND9 ENTS.—No deduction shall be allowed under this 

10 section to any individual with respect to whom a de11 duction under section 151 is allowable to another 

12 taxpayer for a taxable year beginning in the cal13 endar year in which such individual’s taxable year 

14 begins. 

15 ‘‘(3) COORDINATION WITH OTHER HEALTH TAX

16 INCENTIVES.— 

17 ‘‘(A) DENIAL OF DEDUCTION IF HEALTH

18 INSURANCE COSTS CREDIT ALLOWED.—No de19 duction shall be allowed under this section to 

20 any taxpayer if a credit is allowed to the tax21 payer under section 35 for the taxable year. 

22 ‘‘(B) REDUCTION FOR INSURANCE PUR23 CHASED WITH MSA OR HSA FUNDS.—The 

24 amount allowed as a deduction under subsection 


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1 (a) for the taxable year shall be reduced by the 

2 aggregate amount— 

3 ‘‘(i) paid during the taxable year from 

4 an Archer MSA to which section 

5 220(d)(2)(B)(ii) (other than subclause (II) 

6 thereof) applies, and 

7 ‘‘(ii) paid during the taxable year 

8 from a health savings account to which 

9 section 223(d)(2)(C) (other than clause (ii) 

10 thereof) applies. 

11 ‘‘(4) SPECIAL RULE FOR DIVORCED PARENTS, 

12 ETC.—Notwithstanding subsection (b)(1), an indi13 vidual who is a child may be taken into account on 

14 the return of the parent other than the parent for 

15 whom a deduction with respect to the child is al16 lowed under section 151 for a taxable year beginning 

17 in a calendar year if— 

18 ‘‘(A) the parent for whom the deduction 

19 under section 151 is allowed for a taxable year 

20 beginning in such calendar year signs a written 

21 declaration (in such manner and form as the 

22 Secretary may by regulations prescribe) that 

23 such parent will not claim the deduction allow24 able under this section with respect to the child 


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1 for taxable years beginning in such calendar 

2 year, and 

3 ‘‘(B) the parent for whom the deduction 

4 under section 151 is not allowed attaches such 

5 written declaration to the parent’s return for 

6 the taxable year beginning in such calendar 

7 year. 

8 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

9 section— 

10 ‘‘(1) ELIGIBLE INDIVIDUAL.— 

11 ‘‘(A) IN GENERAL.—The term ‘eligible in12 dividual’ means, with respect to any month, an 

13 individual who is covered under a qualified 

14 health plan as of the 1st day of such month. 

15 ‘‘(B) COVERAGE UNDER MEDICARE, MED16 ICAID, SCHIP, TRICARE, AND GRANDFATHERED

17 EMPLOYER COVERAGE.—The term ‘eligible indi18 vidual’ shall not include any individual who for 

19 any month is— 

20 ‘‘(i) entitled to benefits under part A 

21 of title XVIII of the Social Security Act or 

22 enrolled under part B of such title, 

23 ‘‘(ii) enrolled in the program under 

24 title XIX or XXI of such Act (other than 

25 under section 1928 of such Act), 


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1 ‘‘(iii) receiving benefits (other than 

2 under continuation coverage under section 

3 4980B) which constitute medical care from 

4 an employer— 

5 ‘‘(I) from whom such individual 

6 is separated from service at the time 

7 of receipt of such benefits, and 

8 ‘‘(II) after such separation, if 

9 such benefits began before January 1, 

10 2015, unless such individual is also 

11 covered by a qualified health plan as 

12 of the 1st day of such month, or 

13 ‘‘(iv) entitled to receive benefits under 

14 chapter 55 of title 10, United States Code. 

15 ‘‘(C) IDENTIFICATION REQUIREMENTS.— 

16 The term ‘eligible individual’ shall not include 

17 any individual for any month unless the policy 

18 number associated with coverage under the 

19 qualified health plan and the TIN of each eligi20 ble individual covered under such coverage for 

21 such month is included on the return for the 

22 taxable year in which such month occurs. 

23 ‘‘(2) QUALIFIED HEALTH PLAN.— 

24 ‘‘(A) IN GENERAL.—The term ‘qualified 

25 health plan’ means a health plan (within the 


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1 meaning of section 223(c)(2), without regard to 

2 subparagraph (A)(i) thereof) which, under regu3 lations prescribed by the Secretary, meets the 

4 following requirements: 

5 ‘‘(i) The plan has coverage for inpa6 tient and outpatient care, emergency bene7 fits, and physician care. 

8 ‘‘(ii) The plan has coverage which 

9 meaningfully limits individual economic ex10 posure to extraordinary medical expenses 

11 ‘‘(B) EXCLUSION OF CERTAIN PLANS.— 

12 The term ‘qualified health plan’ does not in13 clude— 

14 ‘‘(i) a health plan if substantially all 

15 of its coverage is coverage described in sec16 tion 223(c)(1)(B), 

17 ‘‘(ii) any program or benefits referred 

18 to in clause (i), (ii), or (iii) of paragraph 

19 (1)(B), and 

20 ‘‘(iii) a medicare supplemental policy 

21 (as defined in section 1882 of the Social 

22 Security Act). 

23 ‘‘(e) REGULATIONS.—The Secretary may prescribe 

24 such regulations as may be necessary to carry out this 

25 section.’’. 


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1 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI2 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

3 of section 62 is amended by inserting before the last sen4 tence at the end the following new paragraph: 

5 ‘‘(22) STANDARD DEDUCTION FOR HEALTH IN6 SURANCE.—The deduction allowed by section 224.’’. 

7 (c) ELECTION TO TAKE HEALTH INSURANCE COSTS

8 CREDIT.—Section 35(g) is amended by redesignating the 

9 paragraph added by section 1899E(a) of the TAA Health 

10 Coverage Improvement Act of 2009, the paragraph added 

11 by section 3001(a)(14)(A) of the American Recovery and 

12 Reinvestment Act of 2009, and the last paragraph thereof 

13 (relating to regulations) as paragraphs (10), (11), and 

14 (12), respectively, and by inserting after paragraph (8) the 

15 following new paragraph: 

16 ‘‘(9) ELECTION NOT TO CLAIM CREDIT.—This 

17 section shall not apply to a taxpayer for any taxable 

18 year if such taxpayer elects to have this section not 

19 apply for such taxable year.’’. 

20 (d) CLERICAL AMENDMENT.—The table of sections 

21 for part VII of subchapter B of chapter 1 is amended by 

22 striking the item relating to section 224 and adding at 

23 the end the following new items: 

‘‘Sec. 224. Standard deduction for health insurance. 

‘‘Sec. 225. Cross reference.’’. 


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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2014. 

4 SEC. 202. CHANGES TO EXISTING TAX PREFERENCES FOR 

5 MEDICAL COVERAGE AND COSTS FOR INDI6 VIDUALS ELIGIBLE FOR STANDARD DEDUC7 TION FOR HEALTH INSURANCE. 

8 (a) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER

9 TO ACCIDENT AND HEALTH PLANS.— 

10 (1) IN GENERAL.—Section 106 is amended by 

11 adding at the end the following new subsection: 

12 ‘‘(g) SUBSECTIONS (a) AND (c) APPLY ONLY TO IN13 DIVIDUALS COVERED BY MEDICARE, MEDICAID, SCHIP, 

14 TRICARE, OR GRANDFATHERED EMPLOYER PLANS.— 

15 ‘‘(1) IN GENERAL.—Except as provided in para16 graph (2), subsections (a) and (c) shall not apply for 

17 any taxable year with respect to which a deduction 

18 under section 224 is allowable. 

19 ‘‘(2) EXCEPTION FOR INDIVIDUALS COVERED

20 BY MEDICARE, MEDICAID, SCHIP, OR GRAND21 FATHERED EMPLOYER PLANS.—Paragraph (1) shall 

22 not apply to an individual for any taxable year if 

23 such individual is not an eligible individual (as de24 fined in section 224(d)(1)) for any month during 


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1 such taxable year by reason of coverage described in 

2 section 224(d)(1)(B).’’. 

3 (2) CONFORMING AMENDMENTS.— 

4 (A) Section 106(b)(1) is amended— 

5 (i) by inserting ‘‘gross income does 

6 not include’’ before ‘‘amounts contrib7 uted’’, and 

8 (ii) by striking ‘‘shall be treated as 

9 employer-provided coverage for medical ex10 penses under an accident or health plan’’. 

11 (B) Section 106(d)(1) is amended— 

12 (i) by inserting ‘‘gross income does 

13 not include’’ before ‘‘amounts contrib14 uted’’, and 

15 (ii) by striking ‘‘shall be treated as 

16 employer-provided coverage for medical ex17 penses under an accident or health plan’’. 

18 (b) TERMINATION OF DEDUCTION FOR HEALTH IN19 SURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.— 

20 Subsection (l) of section 162 is amended by adding at the 

21 end the following new paragraph: 

22 ‘‘(6) TERMINATION.—This subsection shall not 

23 apply to taxable years with respect to which a deduc24 tion under section 224 is allowable.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2014. 

4 SEC. 203. EXCLUSION OF STANDARD DEDUCTION FOR 

5 HEALTH INSURANCE FROM EMPLOYMENT 

6 TAXES. 

7 (a) IN GENERAL.—Chapter 25 is amended by adding 

8 at the end the following new section: 

9 ‘‘SEC. 3511. EXCLUSION OF STANDARD DEDUCTION FROM 

10 EMPLOYMENT TAXES. 

11 ‘‘(a) IN GENERAL.—For purposes of chapters 21, 22, 

12 and 23, each of the following amounts for any period (de13 termined without regard to this section) shall be reduced 

14 by the portion of the standard deduction for health insur15 ance (as defined in section 224) allocable to the period: 

16 ‘‘(1) The amount of wages determined under 

17 section 3121(a). 

18 ‘‘(2) The amount of compensation determined 

19 under section 3231(e). 

20 ‘‘(3) The amount of wages determined under 

21 section 3306(b). 

22 ‘‘(b) DETERMINATION OF STANDARD DEDUCTION

23 ALLOCABLE TO A PERIOD.—For purposes of subsection 

24 (a)— 


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1 ‘‘(1) IN GENERAL.—The determination of the 

2 portion of the standard deduction for health insur3 ance allocable to a period shall be made on the basis 

4 of a qualified certificate of eligible coverage fur5 nished by the employee to the employer. 

6 ‘‘(2) QUALIFIED CERTIFICATE OF ELIGIBLE

7 COVERAGE.—The term ‘qualified certificate of eligi8 ble coverage’ means a statement of eligibility for the 

9 deduction allowable under section 224 which con10 tains such information, is in such form, and is pro11 vided at such times, as the Secretary may prescribe. 

12 ‘‘(3) ONLY 1 CERTIFICATE IN EFFECT AT A

13 TIME.—Except as provided by the Secretary, an em14 ployee may have only 1 qualified certificate of eligi15 ble coverage in effect for any period. 

16 ‘‘(4) ELECTION.—An employee may elect not to 

17 have this section apply for any period for purposes 

18 of chapter 21 or 22. 

19 ‘‘(c) RECONCILIATION OF ERRONEOUS PAYMENTS TO

20 BE MADE AT EMPLOYEE LEVEL.— 

21 ‘‘(1) IN GENERAL.—If the application of this 

22 subsection results in an incorrect amount being 

23 treated as wages or compensation for purposes of 

24 chapter 21, 22, or 23, whichever is applicable, with 


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1 respect to any employee for 1 or more periods end2 ing within a taxable year of the employee— 

3 ‘‘(A) in the case of an aggregate overpay4 ment of the taxes imposed by any such chapter 

5 for all such periods, there shall be allowed as a 

6 credit against the tax imposed by chapter 1 for 

7 such taxable year on such employee an amount 

8 equal to the amount of such overpayment, and 

9 ‘‘(B) in the case of an aggregate under10 payment of the taxes imposed by any such 

11 chapter for all such periods, the employee shall 

12 be liable for payment of the entire amount of 

13 such underpayment. 

14 ‘‘(2) CREDITS TREATED AS REFUNDABLE.—For 

15 purposes of this title, any credit determined under 

16 paragraph (1)(A) or subsection (d)(2) shall be treat17 ed as if it were a credit allowed under subpart C of 

18 part IV of subchapter A of chapter 1. 

19 ‘‘(3) RULES FOR REPORTING AND COLLECTION

20 OF TAX.—Any tax required to be paid by an em21 ployee under paragraph (1)(B) shall be included 

22 with the employee’s return of Federal income tax for 

23 the taxable year. 


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1 ‘‘(4) SECRETARIAL AUTHORITY.—The Secretary 

2 shall prescribe such rules as may be necessary to 

3 carry out the provisions of this subsection.’’. 

4 (b) SELF-EMPLOYMENT INCOME.—Section 1402 is 

5 amended by adding at the end the following: 

6 ‘‘(m) STANDARD DEDUCTION FOR HEALTH INSUR7 ANCE.—For purposes of this chapter— 

8 ‘‘(1) IN GENERAL.—The self-employment in9 come of a taxpayer for any period (determined with10 out regard to this subsection) shall be reduced by 

11 the excess (if any) of— 

12 ‘‘(A) the portion of the standard deduction 

13 for health insurance (as defined in section 224) 

14 allocable to the period, over 

15 ‘‘(B) the amount of any reduction in wages 

16 or compensation for such period under section 

17 3511. 

18 ‘‘(2) DETERMINATION OF STANDARD DEDUC19 TION ALLOCABLE TO A PERIOD.—For purposes of 

20 paragraph (1), the portion of the standard deduction 

21 allocable to any period shall be determined in a man22 ner similar to the manner under section 3511.’’. 

23 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 3121(a)(2) is amended by inserting 

2 ‘‘which is excludable from gross income under sec3 tion 105 or 106’’ after ‘‘such payment)’’. 

4 (2) Subsection (a) of section 209 of the Social 

5 Security Act (42 U.S.C. 409) is amended by striking 

6 ‘‘or’’ at the end of paragraph (18), by striking the 

7 period at the end of paragraph (19) and inserting ‘‘; 

8 or’’, and by inserting after paragraph (19) the fol9 lowing new paragraph: 

10 ‘‘(20) any amount excluded from wages under 

11 section 3511(a) of the Internal Revenue Code of 

12 1986 (relating to exclusion of standard deduction 

13 from employment taxes).’’. 

14 (3) Section 1324(b)(2) of title 31, United 

15 States Code, is amended by inserting ‘‘, or the credit 

16 under section 3511(c)(2) of such Code’’ before the 

17 period at the end. 

18 (4) Section 209(k)(2) of the Social Security Act 

19 (42 U.S.C. 409(k)(2)) is amended by redesignating 

20 subparagraphs (C) and (D) as subparagraphs (D) 

21 and (E), respectively, and by inserting after sub22 paragraph (B) the following new subparagraph: 

23 ‘‘(C) by disregarding the exclusion from 

24 wages in subsection (a)(20),’’. 


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1 (5) The table of sections for chapter 25 is 

2 amended by adding at the end the following new 

3 item: 

‘‘Sec. 3511. Exclusion of standard deduction from employment taxes.’’. 

4 (d) EFFECTIVE DATES.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendments made by this section 

7 shall apply to remuneration paid or accrued for peri8 ods on or after December 31, 2014. 

9 (2) RECONCILIATION AND SELF-EMPLOYED.— 

10 Sections 3511(c) and (d)(2) of the Internal Revenue 

11 Code of 1986 (as added by subsection (a)), and the 

12 amendments made by subsection (b), shall apply to 

13 taxable years beginning after December 31, 2014. 

14 SEC. 204. INFORMATION REPORTING. 

15 (a) HEALTH PLAN PROVIDERS.—Subpart B of part 

16 III of subchapter A of chapter 61 is amended by adding 

17 at the end the following new section: 

18 ‘‘SEC. 6050X. COVERAGE UNDER QUALIFIED HEALTH PLAN. 

19 ‘‘(a) IN GENERAL.—Every person providing coverage 

20 under a qualified health plan (as defined in section 

21 224(d)(2)) during a calendar year shall, on or before Jan22 uary 31 of the succeeding year, make a return described 

23 in subsection (b) with respect to each individual who is 

24 covered by such person under a qualified health plan for 

25 any month during the calendar year. 


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1 ‘‘(b) RETURN.—A return is described in this sub2 section if such return— 

3 ‘‘(1) is in such form as the Secretary pre4 scribes, and 

5 ‘‘(2) contains— 

6 ‘‘(A) the name of the person providing cov7 erage under the qualified health plan, 

8 ‘‘(B) the name, address, and TIN of the 

9 individual covered by the plan, 

10 ‘‘(C) if such individual is the owner of the 

11 policy under which such plan is provided, the 

12 name, address, and TIN of each other indi13 vidual covered by such policy and the relation14 ship of each such individual to such owner, and 

15 ‘‘(D) the specific months of the year for 

16 which each individual referred to in subpara17 graph (B) is, as of the first day of each such 

18 month, covered by such plan. 

19 ‘‘(c) STATEMENT TO BE FURNISHED WITH RE20 SPECT TO WHOM INFORMATION IS REQUIRED.—Every 

21 person required to make a return under subsection (a) 

22 shall furnish to each individual whose name is required 

23 to be set forth in such return under subsection (b)(2)(A) 

24 a written statement showing— 


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1 ‘‘(1) the name, address, and phone number of 

2 the information contact of the person required to 

3 make such return, and 

4 ‘‘(2) the information described in subsection 

5 (b)(2). 

6 The written statement required under the preceding sen7 tence shall be furnished on or before January 31 of the 

8 year following the calendar year for which the return 

9 under subsection (a) was required to be made.’’. 

10 (b) EMPLOYERS.—Subsection (a) of section 6051 is 

11 amended by striking ‘‘and’’ at the end of paragraph (12), 

12 by striking the period at the end of paragraph (13) and 

13 inserting ‘‘, and’’, and by inserting after paragraph (13) 

14 the following new paragraph: 

15 ‘‘(14) the value (determined under section 

16 4980B(f)(4)) of employer-provided coverage for each 

17 month under an accident or health plan and the cat18 egory of such coverage for purposes of section 

19 6116.’’. 

20 (c) APPLICATION TO RETIREES.—Subsection (a) of 

21 section 6051 is amended by adding at the end the fol22 lowing: ‘‘In the case of a retiree, this section shall (to the 

23 extent established by the Secretary by regulation) apply 

24 only with respect to paragraph (14).’’. 

25 (d) ASSESSABLE PENALTIES.— 


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1 (1) Subparagraph (B) of section 6724(d)(1) is 

2 amended by striking ‘‘or’’ at the end of clause 

3 (xxiv), by striking ‘‘and’’ at the end of clause (xxv) 

4 and inserting ‘‘or’’, and by adding at the end the fol5 lowing new clause: 

6 ‘‘(xxvi) section 6050X (relating to re7 turns relating to payments for qualified 

8 health insurance), and’’. 

9 (2) Paragraph (2) of section 6724(d) is amend10 ed by striking ‘‘or’’ at the end of subparagraph 

11 (GG), by striking the period at the end of subpara12 graph (HH) and inserting ‘‘, or’’ and by adding at 

13 the end the following new subparagraph: 

14 ‘‘(II) section 6050X(d) (relating to returns 

15 relating to payments for qualified health insur16 ance).’’. 

17 (e) CLERICAL AMENDMENT.—The table of sections 

18 for such subpart B is amended by adding at the end the 

19 following new item: 

‘‘Sec. 6050X. Coverage under qualified health plan.’’. 

20 (f) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to years beginning after December 

22 31, 2014. 


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1 SEC. 205. ELECTION TO DISREGARD INCLUSION OF CON2 TRIBUTIONS BY EMPLOYER TO ACCIDENT OR 

3 HEALTH PLAN. 

4 (a) IN GENERAL.—Subparagraph (B) of section 

5 32(c)(2) is amended by striking ‘‘and’’ at the end of clause 

6 (v), by striking the period at the end of clause (vi) and 

7 inserting ‘‘, and’’, and by adding at the end the following 

8 new clause: 

9 ‘‘(vii) a taxpayer may elect to exclude 

10 from earned income amounts that would 

11 have been excluded from gross income 

12 under section 106 but for subsection (g) 

13 thereof.’’. 

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

15 subsection (a) shall apply to taxable years beginning De16 cember 31, 2014. 

17 Subtitle B—Enhancement of Health 

18 Savings Accounts 

19 SEC. 221. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON20 TRIBUTIONS TO THE SAME HSA ACCOUNT. 

21 (a) IN GENERAL.—Paragraph (3) of section 223(b) 

22 is amended by adding at the end the following new sub23 paragraph: 

24 ‘‘(C) SPECIAL RULE WHERE BOTH

25 SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1

26 ACCOUNT.—If— 


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1 ‘‘(i) an individual and the individual’s 

2 spouse have both attained age 55 before 

3 the close of the taxable year, and 

4 ‘‘(ii) the spouse is not an account ben5 eficiary of a health savings account as of 

6 the close of such year, 

7 the additional contribution amount shall be 200 

8 percent of the amount otherwise determined 

9 under subparagraph (B).’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 SEC. 222. PROVISIONS RELATING TO MEDICARE. 

14 (a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN

15 MEDICARE PART A.—Paragraph (7) of section 223(b) is 

16 amended by adding at the end the following: ‘‘This para17 graph shall not apply to any individual during any period 

18 for which the individual’s only entitlement to such benefits 

19 is an entitlement to hospital insurance benefits under part 

20 A of title XVIII of such Act pursuant to an enrollment 

21 for such hospital insurance benefits under section 

22 226(a)(1) of such Act.’’. 

23 (b) MEDICARE BENEFICIARIES PARTICIPATING IN

24 MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR

25 OWN MONEY TO THEIR MSA.— 


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1 (1) IN GENERAL.—Subsection (b) of section 

2 138 is amended by striking paragraph (2) and by re3 designating paragraphs (3) and (4) as paragraphs 

4 (2) and (3), respectively. 

5 (2) CONFORMING AMENDMENT.—Paragraph (4) 

6 of section 138(c) is amended by striking ‘‘and para7 graph (2)’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 223. INDIVIDUALS ELIGIBLE FOR VETERANS BENE12 FITS FOR A SERVICE-CONNECTED DIS13 ABILITY. 

14 (a) IN GENERAL.—Paragraph (1) of section 223(c) 

15 is amended by adding at the end the following new sub16 paragraph: 

17 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI18 GIBLE FOR CERTAIN VETERANS BENEFITS.— 

19 For purposes of subparagraph (A)(ii), an indi20 vidual shall not be treated as covered under a 

21 health plan described in such subparagraph 

22 merely because the individual receives periodic 

23 hospital care or medical services for a service24 connected disability under any law administered 

25 by the Secretary of Veterans Affairs but only if 


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1 the individual is not eligible to receive such care 

2 or services for any condition other than a serv3 ice-connected disability.’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 224. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH 

8 SERVICE ASSISTANCE. 

9 (a) IN GENERAL.—Paragraph (1) of section 223(c), 

10 as amended by this Act, is amended by adding at the end 

11 the following new subparagraph: 

12 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS EL13 IGIBLE FOR ASSISTANCE UNDER INDIAN

14 HEALTH SERVICE PROGRAMS.—For purposes of 

15 subparagraph (A)(ii), an individual shall not be 

16 treated as covered under a health plan de17 scribed in such subparagraph merely because 

18 the individual receives hospital care or medical 

19 services under a medical care program of the 

20 Indian Health Service or of a tribal organiza21 tion.’’. 

22 (b) EFFECTIVE DATE.—The amendment made by 

23 this section shall apply to taxable years beginning after 

24 the date of the enactment of this Act. 


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1 SEC. 225. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE. 

2 (a) IN GENERAL.—Paragraph (1) of section 223(c), 

3 as amended by this Act, is amended by adding at the end 

4 the following new subparagraph: 

5 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL6 IGIBLE FOR ASSISTANCE UNDER TRICARE.—For 

7 purposes of subparagraph (A)(ii), an individual 

8 shall not be treated as covered under a health 

9 plan described in such subparagraph merely be10 cause the individual is eligible to receive hos11 pital care, medical services, or prescription 

12 drugs under TRICARE Extra or TRICARE 

13 Standard and such individual is not enrolled in 

14 TRICARE Prime.’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to taxable years beginning after 

17 the date of the enactment of this Act. 

18 SEC. 226. FSA AND HRA INTERACTION WITH HSAS. 

19 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA 

20 PARTICIPANTS.—Subparagraph (B) of section 223(c)(1) 

21 is amended— 

22 (1) by striking ‘‘and’’ at the end of clause (ii), 

23 (2) by striking the period at the end of clause 

24 (iii) and inserting ‘‘, and’’, and 

25 (3) by inserting after clause (iii) the following 

26 new clause: 


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1 ‘‘(iv) coverage under a health flexible 

2 spending arrangement or a health reim3 bursement arrangement in the plan year a 

4 qualified HSA distribution as described in 

5 section 106(e) is made on behalf of the in6 dividual if after the qualified HSA dis7 tribution is made and for the remaining 

8 duration of the plan year, the coverage 

9 provided under the health flexible spending 

10 arrangement or health reimbursement ar11 rangement is converted to— 

12 ‘‘(I) coverage that does not pay 

13 or reimburse any medical expense in14 curred before the minimum annual de15 ductible under paragraph (2)(A)(i) 

16 (prorated for the period occurring 

17 after the qualified HSA distribution is 

18 made) is satisfied, 

19 ‘‘(II) coverage that, after the 

20 qualified HSA distribution is made, 

21 does not pay or reimburse any med22 ical expense incurred after the quali23 fied HSA distribution is made other 

24 than preventive care as defined in 

25 paragraph (2)(C), 


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1 ‘‘(III) coverage that, after the 

2 qualified HSA distribution is made, 

3 pays or reimburses benefits for cov4 erage described in clause (ii) (but not 

5 through insurance or for long-term 

6 care services), 

7 ‘‘(IV) coverage that, after the 

8 qualified HSA distribution is made, 

9 pays or reimburses benefits for per10 mitted insurance or coverage de11 scribed in clause (ii) (but not for long12 term care services), 

13 ‘‘(V) coverage that, after the 

14 qualified HSA distribution is made, 

15 pays or reimburses only those medical 

16 expenses incurred after an individual’s 

17 retirement (and no expenses incurred 

18 before retirement), or 

19 ‘‘(VI) coverage that, after the 

20 qualified HSA distribution is made, is 

21 suspended, pursuant to an election 

22 made on or before the date the indi23 vidual elects a qualified HSA distribu24 tion or, if later, on the date of the in25 dividual enrolls in a high deductible 


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1 health plan, that does not pay or re2 imburse, at any time, any medical ex3 pense incurred during the suspension 

4 period except as defined in the pre5 ceding subclauses of this clause.’’. 

6 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF7 FECT FLEXIBLE SPENDING ARRANGEMENT.—Paragraph 

8 (1) of section 106(e) is amended to read as follows: 

9 ‘‘(1) IN GENERAL.—A plan shall not fail to be 

10 treated as a health flexible spending arrangement 

11 under this section, section 105, or section 125, or as 

12 a health reimbursement arrangement under this sec13 tion or section 105, merely because such plan pro14 vides for a qualified HSA distribution.’’. 

15 (c) FSA BALANCES AT YEAR END SHALL NOT FOR16 FEIT.—Paragraph (2) of section 125(d) is amended by 

17 adding at the end the following new subparagraph: 

18 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS19 TRIBUTIONS.—Subparagraph (A) shall not 

20 apply to the extent that there is an amount re21 maining in a health flexible spending account at 

22 the end of a plan year that an individual elects 

23 to contribute to a health savings account pursu24 ant to a qualified HSA distribution (as defined 

25 in section 106(e)(2)).’’. 


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1 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND

2 HRA ROLLOVERS.—Paragraph (2) of section 106(e) is 

3 amended to read as follows: 

4 ‘‘(2) QUALIFIED HSA DISTRIBUTION.— 

5 ‘‘(A) IN GENERAL.—The term ‘qualified 

6 HSA distribution’ means a distribution from a 

7 health flexible spending arrangement or health 

8 reimbursement arrangement to the extent that 

9 such distribution does not exceed the lesser 

10 of— 

11 ‘‘(i) the balance in such arrangement 

12 as of the date of such distribution, or 

13 ‘‘(ii) the amount determined under 

14 subparagraph (B). 

15 Such term shall not include more than 1 dis16 tribution with respect to any arrangement. 

17 ‘‘(B) DOLLAR LIMITATIONS.— 

18 ‘‘(i) DISTRIBUTIONS FROM A HEALTH

19 FLEXIBLE SPENDING ARRANGEMENT.—A 

20 qualified HSA distribution from a health 

21 flexible spending arrangement shall not ex22 ceed the applicable amount. 

23 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH

24 REIMBURSEMENT ARRANGEMENT.—A 

25 qualified HSA distribution from a health 


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1 reimbursement arrangement shall not ex2 ceed— 

3 ‘‘(I) the applicable amount di4 vided by 12, multiplied by 

5 ‘‘(II) the number of months dur6 ing which the individual is a partici7 pant in the health reimbursement ar8 rangement. 

9 ‘‘(iii) APPLICABLE AMOUNT.—For 

10 purposes of this subparagraph, the applica11 ble amount is— 

12 ‘‘(I) $2,250 in the case of an eli13 gible individual who has self-only cov14 erage under a high deductible health 

15 plan at the time of such distribution, 

16 and 

17 ‘‘(II) $4,500 in the case of an eli18 gible individual who has family cov19 erage under a high deductible health 

20 plan at the time of such distribu21 tion.’’. 

22 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE

23 TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COV24 ERAGE.—Subsection (e) of section 106 is amended— 


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1 (1) by striking paragraph (3) and redesignating 

2 paragraphs (4) and (5) as paragraphs (3) and (4), 

3 respectively, and 

4 (2) by striking subparagraph (A) of paragraph 

5 (3), as so redesignated, and redesignating subpara6 graphs (B) and (C) of such paragraph as subpara7 graphs (A) and (B) thereof, respectively. 

8 (f) LIMITED PURPOSE FSAS AND HRAS.—Sub9 section (e) of section 106, as amended by this section, is 

10 amended by adding at the end the following new para11 graph: 

12 ‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A 

13 plan shall not fail to be a health flexible spending 

14 arrangement or health reimbursement arrangement 

15 under this section or section 105 merely because the 

16 plan converts coverage for individuals who enroll in 

17 a high deductible health plan described in section 

18 223(c)(2) to coverage described in section 

19 223(c)(1)(B)(iv). Coverage for such individuals may 

20 be converted as of the date of enrollment in the high 

21 deductible health plan, without regard to the period 

22 of coverage under the health flexible spending ar23 rangement or health reimbursement arrangement, 

24 and without requiring any change in coverage to inVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 dividuals who do not enroll in a high deductible 

2 health plan.’’. 

3 (g) DISTRIBUTION AMOUNTS ADJUSTED FOR COST4 OF-LIVING.—Subsection (e) of section 106, as amended 

5 by this section, is amended by adding at the end the fol6 lowing new paragraph: 

7 ‘‘(6) COST-OF-LIVING ADJUSTMENT.— 

8 ‘‘(A) IN GENERAL.—In the case of any 

9 taxable year beginning in a calendar year after 

10 2013, each of the dollar amounts in paragraph 

11 (2)(B)(iii) shall be increased by an amount 

12 equal to such dollar amount, multiplied by the 

13 cost-of-living adjustment determined under sec14 tion 1(f)(3) for the calendar year in which such 

15 taxable year begins by substituting ‘calendar 

16 year 2012’ for ‘calendar year 1992’ in subpara17 graph (B) thereof. 

18 ‘‘(B) ROUNDING.—If any increase under 

19 paragraph (1) is not a multiple of $50, such in20 crease shall be rounded to the nearest multiple 

21 of $50.’’. 

22 (h) DISCLAIMER OF DISQUALIFYING COVERAGE.— 

23 Subparagraph (B) of section 223(c)(1), as amended by 

24 this section, is amended— 

25 (1) by striking ‘‘and’’ at the end of clause (iii), 


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1 (2) by striking the period at the end of clause 

2 (iv) and inserting ‘‘, and’’, and 

3 (3) by inserting after clause (iv) the following 

4 new clause: 

5 ‘‘(v) any coverage (including prospec6 tive coverage) under a health plan that is 

7 not a high deductible health plan which is 

8 disclaimed in writing, at the time of the 

9 creation or organization of the health sav10 ings account, including by execution of a 

11 trust described in subsection (d)(1) 

12 through a governing instrument that in13 cludes such a disclaimer, or by acceptance 

14 of an amendment to such a trust that in15 cludes such a disclaimer.’’. 

16 (i) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 SEC. 227. PURCHASE OF HEALTH INSURANCE FROM HSA 

20 ACCOUNT. 

21 (a) IN GENERAL.—Paragraph (2) of section 223(d) 

22 is amended to read as follows: 

23 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

24 ‘‘(A) IN GENERAL.—The term ‘qualified 

25 medical expenses’ means, with respect to an acVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 count beneficiary, amounts paid by such bene2 ficiary for medical care (as defined in section 

3 213(d)) for any individual covered by a high de4 ductible health plan of the account beneficiary, 

5 but only to the extent such amounts are not 

6 compensated for by insurance or otherwise. 

7 ‘‘(B) HEALTH INSURANCE MAY NOT BE

8 PURCHASED FROM ACCOUNT.—Except as pro9 vided in subparagraph (C), subparagraph (A) 

10 shall not apply to any payment for insurance. 

11 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

12 shall not apply to any expense for coverage 

13 under— 

14 ‘‘(i) a health plan during any period 

15 of continuation coverage required under 

16 any Federal law, 

17 ‘‘(ii) a qualified long-term care insur18 ance contract (as defined in section 

19 7702B(b)), 

20 ‘‘(iii) a health plan during any period 

21 in which the individual is receiving unem22 ployment compensation under any Federal 

23 or State law, 

24 ‘‘(iv) a high deductible health plan, or 


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1 ‘‘(v) any health insurance under title 

2 XVIII of the Social Security Act, other 

3 than a Medicare supplemental policy (as 

4 defined in section 1882 of such Act).’’. 

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

6 this section shall apply with respect to insurance pur7 chased after the date of the enactment of this Act in tax8 able years beginning after such date. 

9 SEC. 228. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

10 INCURRED BEFORE ESTABLISHMENT OF AC11 COUNT. 

12 (a) IN GENERAL.—Paragraph (2) of section 223(d), 

13 as amended by this Act, is amended by adding at the end 

14 the following new subparagraph: 

15 ‘‘(D) CERTAIN MEDICAL EXPENSES IN16 CURRED BEFORE ESTABLISHMENT OF ACCOUNT

17 TREATED AS QUALIFIED.—An expense shall not 

18 fail to be treated as a qualified medical expense 

19 solely because such expense was incurred before 

20 the establishment of the health savings account 

21 if such expense was incurred— 

22 ‘‘(i) during either— 

23 ‘‘(I) the taxable year in which the 

24 health savings account was estab25 lished, or 


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1 ‘‘(II) the preceding taxable year 

2 in the case of a health savings ac3 count established after the taxable 

4 year in which such expense was in5 curred but before the time prescribed 

6 by law for filing the return for such 

7 taxable year (not including extensions 

8 thereof), and 

9 ‘‘(ii) for medical care of an individual 

10 during a period that such individual was 

11 covered by a high deductible health plan 

12 and met the requirements of subsection 

13 (c)(1)(A)(ii) (after application of sub14 section (c)(1)(B)).’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to taxable years beginning after 

17 the date of the enactment of this Act. 

18 SEC. 229. PREVENTIVE CARE PRESCRIPTION DRUG CLARI19 FICATION. 

20 (a) CLARIFY USE OF DRUGS IN PREVENTIVE

21 CARE.—Subparagraph (C) of section 223(c)(2) is amend22 ed by adding at the end the following: ‘‘Preventive care 

23 shall include prescription and over-the-counter drugs and 

24 medicines which have the primary purpose of preventing 


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1 the onset of, further deterioration from, or complications 

2 associated with chronic conditions, illnesses, or diseases.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2003. 

6 SEC. 230. EQUIVALENT BANKRUPTCY PROTECTIONS FOR 

7 HEALTH SAVINGS ACCOUNTS AS RETIRE8 MENT FUNDS. 

9 (a) IN GENERAL.—Section 522 of title 11, United 

10 States Code, is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC13 COUNTS.—For purposes of this section, any health savings 

14 account (as described in section 223 of the Internal Rev15 enue Code of 1986) shall be treated in the same manner 

16 as an individual retirement account described in section 

17 408 of such Code.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to cases commencing under title 

20 11, United States Code, after the date of the enactment 

21 of this Act. 


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1 SEC. 231. ADMINISTRATIVE ERROR CORRECTION BEFORE 

2 DUE DATE OF RETURN. 

3 (a) IN GENERAL.—Paragraph (4) of section 223(f) 

4 is amended by adding at the end the following new sub5 paragraph: 

6 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE

7 ERRORS CORRECTED BEFORE DUE DATE OF RE8 TURN.—Subparagraph (A) shall not apply if 

9 any payment or distribution is made to correct 

10 an administrative, clerical or payroll contribu11 tion error and if— 

12 ‘‘(i) such distribution is received by 

13 the individual on or before the last day 

14 prescribed by law (including extensions of 

15 time) for filing such individual’s return for 

16 such taxable year, and 

17 ‘‘(ii) such distribution is accompanied 

18 by the amount of net income attributable 

19 to such contribution. 

20 Any net income described in clause (ii) shall be 

21 included in the gross income of the individual 

22 for the taxable year in which it is received.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall take effect on the date of the enactment 

25 of this Act. 


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1 SEC. 232. REAUTHORIZATION OF MEDICAID HEALTH OP2 PORTUNITY ACCOUNTS. 

3 (a) IN GENERAL.—Section 1938 of the Social Secu4 rity Act (42 U.S.C. 1396u–8) is amended— 

5 (1) in subsection (a)— 

6 (A) by striking paragraph (2) and insert7 ing the following: 

8 ‘‘(2) INITIAL DEMONSTRATION.—The dem9 onstration program under this section shall begin on 

10 January 1, 2007. The Secretary shall approve States 

11 to conduct demonstration programs under this sec12 tion for a 5-year period, with each State demonstra13 tion program covering one or more geographic areas 

14 specified by the State. With respect to a State, after 

15 the initial 5-year period of any demonstration pro16 gram conducted under this section by the State, un17 less the Secretary finds, taking into account cost-ef18 fectiveness and quality of care, that the State dem19 onstration program has been unsuccessful, the dem20 onstration program may be extended or made per21 manent in the State.’’; and 

22 (B) in paragraph (3), in the matter pre23 ceding subparagraph (A)— 

24 (i) by striking ‘‘not’’; and 

25 (ii) by striking ‘‘unless’’ and inserting 

26 ‘‘if’’; 


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1 (2) in subsection (b)— 

2 (A) in paragraph (3), by inserting ‘‘clause 

3 (i) through (vii), (viii) (without regard to the 

4 amendment made by section 2004(c)(2) of Pub5 lic Law 111–148), (x), or (xi) of’’ after ‘‘de6 scribed in’’; and 

7 (B) by striking paragraphs (4), (5), and 

8 (6); 

9 (3) in subsection (c)— 

10 (A) by striking paragraphs (3) and (4); 

11 (B) by redesignating paragraphs (5) 

12 through (8) as paragraphs (3) through (6), re13 spectively; and 

14 (C) in paragraph (4) (as redesignated by 

15 subparagraph (B)), by striking ‘‘Subject to sub16 paragraphs (D) and (E)’’ and inserting ‘‘Sub17 ject to subparagraph (D)’’; and 

18 (4) in subsection (d)— 

19 (A) in paragraph (2), by striking subpara20 graph (E); and 

21 (B) in paragraph (3)— 

22 (i) in subparagraph (A)(ii), by strik23 ing ‘‘Subject to subparagraph (B)(ii), in’’ 

24 and inserting ‘‘In’’; and 


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1 (ii) by striking subparagraph (B) and 

2 inserting the following: 

3 ‘‘(B) MAINTENANCE OF HEALTH OPPOR4 TUNITY ACCOUNT AFTER BECOMING INELI5 GIBLE FOR PUBLIC BENEFIT.—Notwithstanding 

6 any other provision of law, if an account holder 

7 of a health opportunity account becomes ineli8 gible for benefits under this title because of an 

9 increase in income or assets— 

10 ‘‘(i) no additional contribution shall be 

11 made into the account under paragraph 

12 (2)(A)(i); and 

13 ‘‘(ii) the account shall remain avail14 able to the account holder for 3 years after 

15 the date on which the individual becomes 

16 ineligible for such benefits for withdrawals 

17 under the same terms and conditions as if 

18 the account holder remained eligible for 

19 such benefits, and such withdrawals shall 

20 be treated as medical assistance in accord21 ance with subsection (c)(4).’’. 

22 (b) CONFORMING AMENDMENT.—Section 613 of 

23 Public Law 111–3 is repealed. 


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1 SEC. 233. MEMBERS OF HEALTH CARE SHARING MIN2 ISTRIES ELIGIBLE TO ESTABLISH HEALTH 

3 SAVINGS ACCOUNTS. 

4 (a) IN GENERAL.—Section 223 is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN7 ISTRIES.—For purposes of this section, membership in a 

8 health care sharing ministry (as defined in section 

9 5000A(d)(2)(B)(ii)) shall be treated as coverage under a 

10 high deductible health plan.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 234. HIGH DEDUCTIBLE HEALTH PLANS RENAMED 

15 HSA QUALIFIED PLANS. 

16 (a) IN GENERAL.—Section 223, as amended by this 

17 subtitle, is amended by striking ‘‘high deductible health 

18 plan’’ each place it appears and inserting ‘‘HSA qualified 

19 health plan’’. 

20 (b) CONFORMING AMENDMENTS.— 

21 (1) Section 106(e), as amended by this subtitle, 

22 is amended by striking ‘‘high deductible health plan’’ 

23 each place it appears and inserting ‘‘HSA qualified 

24 health plan’’. 

25 (2) The heading for paragraph (2) of section 

26 223(c) is amended by striking ‘‘HIGH DEDUCTIBLE


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1 HEALTH PLAN’’ and inserting ‘‘HSA QUALIFIED

2 HEALTH PLAN’’. 

3 (3) Section 408(d)(9) is amended— 

4 (A) by striking ‘‘high deductible health 

5 plan’’ each place it appears in subparagraph 

6 (C) and inserting ‘‘HSA qualified health plan’’, 

7 and 

8 (B) by striking ‘‘HIGH DEDUCTIBLE

9 HEALTH PLAN’’ in the heading of subparagraph 

10 (D) and inserting ‘‘HSA QUALIFIED HEALTH

11 PLAN’’. 

12 SEC. 235. TREATMENT OF DIRECT PRIMARY CARE SERVICE 

13 ARRANGEMENTS. 

14 (a) IN GENERAL.—Section 223(c) is amended by 

15 adding at the end the following new paragraph: 

16 ‘‘(6) TREATMENT OF DIRECT PRIMARY CARE

17 SERVICE ARRANGEMENTS.—An arrangement under 

18 which an individual is provided coverage restricted to 

19 primary care services in exchange for a fixed peri20 odic fee— 

21 ‘‘(A) shall not be treated as a health plan 

22 for purposes of paragraph (1)(A)(ii), and 

23 ‘‘(B) shall not be treated as insurance for 

24 purposes of subsection (d)(2)(B).’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 236. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL 

5 FITNESS PROGRAMS TREATED AS MEDICAL 

6 CARE. 

7 (a) IN GENERAL.—Subsection (d) of section 213 is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(12) EXERCISE EQUIPMENT AND PHYSICAL

11 FITNESS PROGRAMS.— 

12 ‘‘(A) IN GENERAL.—The term ‘medical 

13 care’ shall include amounts paid— 

14 ‘‘(i) to purchase or use equipment 

15 used in a program (including a self-di16 rected program) of physical exercise, 

17 ‘‘(ii) to participate, or receive instruc18 tion, in a program of physical exercise, and 

19 ‘‘(iii) for membership dues in a fitness 

20 club the primary purpose of which is to 

21 provide access to equipment and facilities 

22 for physical exercise. 

23 ‘‘(B) LIMITATION.—Amounts treated as 

24 medical care under subparagraph (A) shall not 


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1 exceed $1,000 with respect to any individual for 

2 any taxable year.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 237. CERTAIN NUTRITIONAL AND DIETARY SUPPLE7 MENTS TO BE TREATED AS MEDICAL CARE. 

8 (a) IN GENERAL.—Subsection (d) of section 213, as 

9 amended by this Act, is amended by adding at the end 

10 the following new paragraph: 

11 ‘‘(13) NUTRITIONAL AND DIETARY SUPPLE12 MENTS.— 

13 ‘‘(A) IN GENERAL.—The term ‘medical 

14 care’ shall include amounts paid to purchase 

15 herbs, vitamins, minerals, homeopathic rem16 edies, meal replacement products, and other di17 etary and nutritional supplements. 

18 ‘‘(B) LIMITATION.—Amounts treated as 

19 medical care under subparagraph (A) shall not 

20 exceed $1,000 with respect to any individual for 

21 any taxable year. 

22 ‘‘(C) MEAL REPLACEMENT PRODUCT.— 

23 For purposes of this paragraph, the term ‘meal 

24 replacement product’ means any product that— 


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1 ‘‘(i) is permitted to bear labeling mak2 ing a claim described in section 403(r)(3) 

3 of the Federal Food, Drug, and Cosmetic 

4 Act, and 

5 ‘‘(ii) is permitted to claim under such 

6 section that such product is low in fat and 

7 is a good source of protein, fiber, and mul8 tiple essential vitamins and minerals.’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 238. CERTAIN PROVIDER FEES TO BE TREATED AS 

13 MEDICAL CARE. 

14 (a) IN GENERAL.—Subsection (d) of section 213, as 

15 amended by this Act, is amended by adding at the end 

16 the following new paragraph: 

17 ‘‘(14) PERIODIC PROVIDER FEES.—The term 

18 ‘medical care’ shall include periodic fees paid to a 

19 primary care physician for the right to receive med20 ical services on an as-needed basis.’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 239. INCREASE THE MAXIMUM CONTRIBUTION LIMIT 

2 TO AN HSA TO MATCH DEDUCTIBLE AND 

3 OUT-OF-POCKET EXPENSE LIMITATION. 

4 (a) SELF-ONLY COVERAGE.—Subparagraph (A) of 

5 section 223(b)(2) is amended by striking ‘‘$2,250’’ and 

6 inserting ‘‘the amount in effect under subsection 

7 (c)(2)(A)(ii)(I)’’. 

8 (b) FAMILY COVERAGE.—Subparagraph (B) of sec9 tion 223(b)(2) is amended by striking ‘‘$4,500’’ and in10 serting ‘‘the amount in effect under subsection 

11 (c)(2)(A)(ii)(II)’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 the date of the enactment of this Act. 

15 SEC. 240. CHILD HEALTH SAVINGS ACCOUNT. 

16 (a) IN GENERAL.—Section 223, as amended by this 

17 Act, is amended by adding at the end the following new 

18 subsection: 

19 ‘‘(j) CHILD HEALTH SAVINGS ACCOUNTS.— 

20 ‘‘(1) IN GENERAL.—In the case of an indi21 vidual, in addition to any deduction allowed under 

22 subsection (a) for any taxable year, there shall be al23 lowed as a deduction under this section an amount 

24 equal to the aggregate amount paid in cash by the 

25 taxpayer during the taxable year to a child health 

26 savings account of a child of the taxpayer. 


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1 ‘‘(2) LIMITATION.—The amount taken into ac2 count under paragraph (1) with respect to each child 

3 of the taxpayer for the taxable year shall not exceed 

4 an amount equal to $3,000. 

5 ‘‘(3) CHILD HEALTH SAVINGS ACCOUNT.—For 

6 purposes of this subsection, the term ‘child health 

7 savings account’ means a health savings account 

8 designated as a child health savings account and es9 tablished for the benefit of a child of a taxpayer, but 

10 only if— 

11 ‘‘(A) such account was established for the 

12 benefit of the child before the child attains the 

13 age of 5, and 

14 ‘‘(B) under the written governing instru15 ment creating the trust, no contribution will be 

16 accepted to the extent such contribution, when 

17 added to previous contributions to the trust for 

18 the calendar year, exceeds the dollar amount in 

19 effect under paragraph (2). 

20 ‘‘(4) TREATMENT OF ACCOUNT BEFORE AGE

21 18.—For purposes of this section, except as other22 wise provided in this subsection, a child health sav23 ings account established for the benefit of the child 

24 of a taxpayer shall be treated as a health savings ac25 count of the taxpayer until the child attains the age 


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1 of 18, after which such account shall be treated as 

2 a health savings account of the child. 

3 ‘‘(5) DISTRIBUTIONS.— 

4 ‘‘(A) IN GENERAL.—In the case of a child 

5 health savings account established under this 

6 section for the benefit of a child of a tax7 payer— 

8 ‘‘(i) BEFORE AGE 18.—Any amount 

9 paid or distributed out of such account be10 fore the child has attained the age of 18, 

11 shall be included in the gross income of the 

12 taxpayer, and subparagraph (A) of sub13 section (f) shall apply (relating to addi14 tional tax on distributions not used for 

15 qualified medical expenses). 

16 ‘‘(ii) AGE 18 AND OLDER.—Any 

17 amount paid or distributed out of such ac18 count after the child has attained the age 

19 of 18 may only be treated as used to pay 

20 qualified medical expenses to the extent 

21 such child is not covered as a dependent 

22 under insurance (other than permitted in23 surance) of a parent. 

24 ‘‘(B) EXCEPTIONS FOR DISABILITY OR

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1 abled within the meaning of section 72(m)(7) or 

2 dies— 

3 ‘‘(i) subparagraph (A) shall not apply 

4 to any subsequent payment or distribution, 

5 and 

6 ‘‘(ii) the taxpayer may rollover the 

7 amount in such account to an individual 

8 retirement plan of the taxpayer, to any 

9 health savings account of the taxpayer, or 

10 to any child health savings account of any 

11 other child of the taxpayer. 

12 ‘‘(C) HEALTH INSURANCE MAY BE PUR13 CHASED FROM ACCOUNT.—Subparagraph (B) 

14 of subsection (d)(2) shall not apply to any 

15 health savings account originally established as 

16 a child health savings account. 

17 ‘‘(6) REGULATIONS.—The Secretary shall pre18 scribe such regulations as may be necessary to carry 

19 out the purposes of this subsection, including rules 

20 for determining application of this subsection in the 

21 case of legal guardians and in the case of parents 

22 of a child who file separately, are separated, or are 

23 not married.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

4 SEC. 241. DISTRIBUTIONS FOR ABORTION EXPENSES FROM 

5 HEALTH SAVINGS ACCOUNTS INCLUDED IN 

6 GROSS INCOME. 

7 (a) IN GENERAL.—Subsection (f) of section 223 is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(9) EXCEPTION FOR CERTAIN ABORTION EX11 PENSES.— 

12 ‘‘(A) IN GENERAL.—Notwithstanding para13 graph (1), any amount used to pay for an abor14 tion (other than an abortion described in sub15 paragraph (B)) shall be included in the gross 

16 income of such beneficiary. 

17 ‘‘(B) EXCEPTIONS.—Subparagraph (A) 

18 shall not apply to— 

19 ‘‘(i) an abortion— 

20 ‘‘(I) in the case of a pregnancy 

21 that is the result of an act of rape or 

22 incest, or 

23 ‘‘(II) in the case where a woman 

24 suffers from a physical disorder, phys25 ical injury, or physical illness that 


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1 would, as certified by a physician, 

2 place the woman in danger of death 

3 unless an abortion is performed, in4 cluding a life-endangering physical 

5 condition caused by or arising from 

6 the pregnancy, and 

7 ‘‘(ii) the treatment of any infection, 

8 injury, disease, or disorder that has been 

9 caused by or exacerbated by the perform10 ance of an abortion.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 Subtitle C—Enhanced Wellness 

15 Incentives 

16 SEC. 251. PROVIDING FINANCIAL INCENTIVES FOR TREAT17 MENT COMPLIANCE. 

18 (a) LIMITATION ON EXCEPTION FOR WELLNESS

19 PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 

20 (1) EMPLOYEE RETIREMENT INCOME SECURITY

21 ACT OF 1974 AMENDMENT.—Section 702(b)(2) of the 

22 Employee Retirement Income Security Act of 1974 

23 (29 U.S.C. 1182(b)(2)) is amended by adding after 

24 and below subparagraph (B) the following: 


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1 ‘‘In applying subparagraph (B), a group health plan 

2 (or a health insurance issuer with respect to health 

3 insurance coverage) may vary premiums and cost4 sharing by up to 50 percent of the value of the bene5 fits under the plan (or coverage) based on participa6 tion (or lack of participation) in a standards-based 

7 wellness program.’’. 

8 (2) PHSA AMENDMENT.—Section 2702(b)(2) 

9 of the Public Health Service Act (42 U.S.C. 300gg– 

10 1(b)(2)) is amended by adding after and below sub11 paragraph (B) the following: 

12 ‘‘In applying subparagraph (B), a group health plan 

13 (or a health insurance issuer with respect to health 

14 insurance coverage) may vary premiums and cost15 sharing by up to 50 percent of the value of the bene16 fits under the plan (or coverage) based on participa17 tion (or lack of participation) in a standards-based 

18 wellness program.’’. 

19 (3) IRC AMENDMENT.—Section 9802(b)(2) of 

20 the Internal Revenue Code of 1986 is amended by 

21 adding after and below subparagraph (B) the fol22 lowing: 

23 ‘‘In applying subparagraph (B), a group health plan 

24 may vary premiums and cost-sharing by up to 50 

25 percent of the value of the benefits under the plan 


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1 based on participation (or lack of participation) in a 

2 standards-based wellness program.’’. 

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

4 subsection (a) shall apply to plan years beginning more 

5 than 1 year after the date of the enactment of this Act. 

6 TITLE III—IMPROVING ACCESS 

7 TO INSURANCE FOR VULNER8 ABLE AMERICANS 

9 Subtitle A—Eliminating Barriers to 

10 Insurance Coverage 

11 SEC. 301. ELIMINATION OF CERTAIN REQUIREMENTS FOR 

12 GUARANTEED AVAILABILITY IN INDIVIDUAL 

13 MARKET. 

14 (a) IN GENERAL.—Section 2741(b) of the Public 

15 Health Service Act (42 U.S.C. 300gg–41(b)) is amend16 ed— 

17 (1) in paragraph (1)— 

18 (A) by striking ‘‘(1)(A)’’ and inserting 

19 ‘‘(1)’’; and 

20 (B) by striking ‘‘and (B)’’ and all that fol21 lows up to the semicolon at the end; 

22 (2) by adding ‘‘and’’ at the end of paragraph 

23 (2); 

24 (3) in paragraph (3)— 


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1 (A) by striking ‘‘(1)(A)’’ and inserting 

2 ‘‘(1)’’; and 

3 (B) by striking the semicolon at the end 

4 and inserting a period; and 

5 (4) by striking paragraphs (4) and (5). 

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

7 subsection (a) shall take effect on the date of the enact8 ment of this Act. 

9 Subtitle B—Ensuring Coverage for 

10 Individuals With Preexisting 

11 Conditions and Multiple Health 

12 Care Needs Through High Risk 

13 Pools 

14 SEC. 311. IMPROVEMENT OF HIGH RISK POOLS. 

15 Section 2745 of the Public Health Service Act (42 

16 U.S.C. 300gg–45) is amended— 

17 (1) in subsection (a), by adding at the end the 

18 following: ‘‘The Secretary shall provide from the 

19 funds appropriated under subsection (d)(3)(A) a 

20 grant of up to $5,000,000 to each State that has 

21 not created a qualified high risk pool as of Sep22 tember 1, 2013, for the State’s costs of creation and 

23 initial operation of such a pool.’’; 


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1 (2) in paragraphs (1) and (2) of subsection (b), 

2 by striking ‘‘and (2)(A)’’ and inserting ‘‘(2)(A), 

3 (3)(B), and (4)’’ each place it appears; 

4 (3) in subsection (b)(3), by inserting ‘‘with re5 spect to funds made available for fiscal years before 

6 fiscal year 2014,’’ after ‘‘applicable standard risks,’’; 

7 (4) by adding at the end of subsection (b) the 

8 following new paragraph: 

9 ‘‘(5) VERIFICATION OF CITIZENSHIP OR ALIEN

10 QUALIFICATION.— 

11 ‘‘(A) IN GENERAL.—Notwithstanding any 

12 other provision of law, effective upon the date 

13 of the enactment of this paragraph, only citi14 zens and nationals of the United States shall be 

15 eligible to participate in a qualified high risk 

16 pool that receives funds under this section. 

17 ‘‘(B) CONDITION OF PARTICIPATION.—As 

18 a condition of a State receiving such funds 

19 under this subsection for a fiscal year beginning 

20 with fiscal year 2014, the Secretary shall re21 quire the State to certify, to the satisfaction of 

22 the Secretary, that such State requires all ap23 plicants for coverage in the qualified high risk 

24 pool to provide satisfactory documentation of 


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1 citizenship or nationality in a manner consistent 

2 with section 1903(x) of the Social Security Act. 

3 ‘‘(C) RECORDS.—The Secretary shall keep 

4 sufficient records such that a determination of 

5 citizenship or nationality only has to be made 

6 once for any individual under this paragraph.’’; 

7 and 

8 (5) in subsection (d)— 

9 (A) in paragraphs (1)(B) and (2) by strik10 ing ‘‘paragraph (4)’’ and inserting ‘‘paragraph 

11 (6)’’; 

12 (B) in paragraph (4), by striking ‘‘or (2)’’ 

13 and inserting ‘‘(2), (3)(B), or (4)’’; 

14 (C) by redesignating paragraphs (3) 

15 through (5) as paragraphs (5) through (7), re16 spectively; and 

17 (D) by inserting after paragraph (2) the 

18 following: 

19 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS FOR

20 FISCAL YEAR 2014.—There are authorized to be ap21 propriated for fiscal year 2014— 

22 ‘‘(A) $50,000,000 to carry out the second 

23 sentence of subsection (a); and 


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1 ‘‘(B) $2,450,000,000 which, subject to 

2 paragraph (6), shall be made available for allot3 ments under subsection (b)(2). 

4 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS FOR

5 FISCAL YEARS 2015 THROUGH 2023.—There are au6 thorized to be appropriated $2,500,000,000 for each 

7 of fiscal years 2015 through 2023 which, subject to 

8 paragraph (6), shall be made available for allotments 

9 under subsection (b)(2).’’. 

10 TITLE IV—ENCOURAGING A 

11 MORE COMPETITIVE HEALTH 

12 CARE MARKET 

13 Subtitle A—Expanding Patient 

14 Choice 

15 SEC. 401. COOPERATIVE GOVERNING OF INDIVIDUAL 

16 HEALTH INSURANCE COVERAGE. 

17 (a) IN GENERAL.—Title XXVII of the Public Health 

18 Service Act (42 U.S.C. 300gg et seq.) is amended by add19 ing at the end the following new part: 

20 ‘‘PART D—COOPERATIVE GOVERNING OF 

21 INDIVIDUAL HEALTH INSURANCE COVERAGE 

22 ‘‘SEC. 2795. DEFINITIONS. 

23 ‘‘In this part: 

24 ‘‘(1) PRIMARY STATE.—The term ‘primary 

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1 ance coverage offered by a health insurance issuer, 

2 the State designated by the issuer as the State 

3 whose covered laws shall govern the health insurance 

4 issuer in the sale of such coverage under this part. 

5 An issuer, with respect to a particular policy, may 

6 only designate one such State as its primary State 

7 with respect to all such coverage it offers. Such an 

8 issuer may not change the designated primary State 

9 with respect to individual health insurance coverage 

10 once the policy is issued, except that such a change 

11 may be made upon renewal of the policy. With re12 spect to such designated State, the issuer is deemed 

13 to be doing business in that State. 

14 ‘‘(2) SECONDARY STATE.—The term ‘secondary 

15 State’ means, with respect to individual health insur16 ance coverage offered by a health insurance issuer, 

17 any State that is not the primary State. In the case 

18 of a health insurance issuer that is selling a policy 

19 in, or to a resident of, a secondary State, the issuer 

20 is deemed to be doing business in that secondary 

21 State. 

22 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

23 ‘health insurance issuer’ has the meaning given such 

24 term in section 2791(b)(2), except that such an 

25 issuer must be licensed in the primary State and be 


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1 qualified to sell individual health insurance coverage 

2 in that State. 

3 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV4 ERAGE.—The term ‘individual health insurance cov5 erage’ means health insurance coverage offered in 

6 the individual market, as defined in section 

7 2791(e)(1). 

8 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

9 term ‘applicable State authority’ means, with respect 

10 to a health insurance issuer in a State, the State in11 surance commissioner or official or officials des12 ignated by the State to enforce the requirements of 

13 this title for the State with respect to the issuer. 

14 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

15 term ‘hazardous financial condition’ means that, 

16 based on its present or reasonably anticipated finan17 cial condition, a health insurance issuer is unlikely 

18 to be able— 

19 ‘‘(A) to meet obligations to policyholders 

20 with respect to known claims and reasonably 

21 anticipated claims; or 

22 ‘‘(B) to pay other obligations in the normal 

23 course of business. 

24 ‘‘(7) COVERED LAWS.— 


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1 ‘‘(A) IN GENERAL.—The term ‘covered 

2 laws’ means the laws, rules, regulations, agree3 ments, and orders governing the insurance busi4 ness pertaining to— 

5 ‘‘(i) individual health insurance cov6 erage issued by a health insurance issuer; 

7 ‘‘(ii) the offer, sale, rating (including 

8 medical underwriting), renewal, and 

9 issuance of individual health insurance cov10 erage to an individual; 

11 ‘‘(iii) the provision to an individual in 

12 relation to individual health insurance cov13 erage of health care and insurance related 

14 services; 

15 ‘‘(iv) the provision to an individual in 

16 relation to individual health insurance cov17 erage of management, operations, and in18 vestment activities of a health insurance 

19 issuer; and 

20 ‘‘(v) the provision to an individual in 

21 relation to individual health insurance cov22 erage of loss control and claims adminis23 tration for a health insurance issuer with 

24 respect to liability for which the issuer pro25 vides insurance. 


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1 ‘‘(B) EXCEPTION.—Such term does not in2 clude any law, rule, regulation, agreement, or 

3 order governing the use of care or cost manage4 ment techniques, including any requirement re5 lated to provider contracting, network access or 

6 adequacy, health care data collection, or quality 

7 assurance. 

8 ‘‘(8) STATE.—The term ‘State’ means the 50 

9 States and includes the District of Columbia, Puerto 

10 Rico, the Virgin Islands, Guam, American Samoa, 

11 and the Northern Mariana Islands. 

12 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC13 TICES.—The term ‘unfair claims settlement prac14 tices’ means only the following practices: 

15 ‘‘(A) Knowingly misrepresenting to claim16 ants and insured individuals relevant facts or 

17 policy provisions relating to coverage at issue. 

18 ‘‘(B) Failing to acknowledge with reason19 able promptness pertinent communications with 

20 respect to claims arising under policies. 

21 ‘‘(C) Failing to adopt and implement rea22 sonable standards for the prompt investigation 

23 and settlement of claims arising under policies. 


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1 ‘‘(D) Failing to effectuate prompt, fair, 

2 and equitable settlement of claims submitted in 

3 which liability has become reasonably clear. 

4 ‘‘(E) Refusing to pay claims without con5 ducting a reasonable investigation. 

6 ‘‘(F) Failing to affirm or deny coverage of 

7 claims within a reasonable period of time after 

8 having completed an investigation related to 

9 those claims. 

10 ‘‘(G) A pattern or practice of compelling 

11 insured individuals or their beneficiaries to in12 stitute suits to recover amounts due under its 

13 policies by offering substantially less than the 

14 amounts ultimately recovered in suits brought 

15 by them. 

16 ‘‘(H) A pattern or practice of attempting 

17 to settle or settling claims for less than the 

18 amount that a reasonable person would believe 

19 the insured individual or his or her beneficiary 

20 was entitled by reference to written or printed 

21 advertising material accompanying or made 

22 part of an application. 

23 ‘‘(I) Attempting to settle or settling claims 

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1 ally altered without notice to, or knowledge or 

2 consent of, the insured. 

3 ‘‘(J) Failing to provide forms necessary to 

4 present claims within 15 calendar days of a re5 quests with reasonable explanations regarding 

6 their use. 

7 ‘‘(K) Attempting to cancel a policy in less 

8 time than that prescribed in the policy or by the 

9 law of the primary State. 

10 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

11 and abuse’ means an act or omission committed by 

12 a person who, knowingly and with intent to defraud, 

13 commits, or conceals any material information con14 cerning, one or more of the following: 

15 ‘‘(A) Presenting, causing to be presented 

16 or preparing with knowledge or belief that it 

17 will be presented to or by an insurer, a rein18 surer, broker or its agent, false information as 

19 part of, in support of or concerning a fact ma20 terial to one or more of the following: 

21 ‘‘(i) An application for the issuance or 

22 renewal of an insurance policy or reinsur23 ance contract. 

24 ‘‘(ii) The rating of an insurance policy 

25 or reinsurance contract. 


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1 ‘‘(iii) A claim for payment or benefit 

2 pursuant to an insurance policy or reinsur3 ance contract. 

4 ‘‘(iv) Premiums paid on an insurance 

5 policy or reinsurance contract. 

6 ‘‘(v) Payments made in accordance 

7 with the terms of an insurance policy or 

8 reinsurance contract. 

9 ‘‘(vi) A document filed with the com10 missioner or the chief insurance regulatory 

11 official of another jurisdiction. 

12 ‘‘(vii) The financial condition of an in13 surer or reinsurer. 

14 ‘‘(viii) The formation, acquisition, 

15 merger, reconsolidation, dissolution or 

16 withdrawal from one or more lines of in17 surance or reinsurance in all or part of a 

18 State by an insurer or reinsurer. 

19 ‘‘(ix) The issuance of written evidence 

20 of insurance. 

21 ‘‘(x) The reinstatement of an insur22 ance policy. 

23 ‘‘(B) Solicitation or acceptance of new or 

24 renewal insurance risks on behalf of an insurer 

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1 ness of insurance by a person who knows or 

2 should know that the insurer or other person 

3 responsible for the risk is insolvent at the time 

4 of the transaction. 

5 ‘‘(C) Transaction of the business of insur6 ance in violation of laws requiring a license, cer7 tificate of authority or other legal authority for 

8 the transaction of the business of insurance. 

9 ‘‘(D) Attempt to commit, aiding or abet10 ting in the commission of, or conspiracy to com11 mit the acts or omissions specified in this para12 graph. 

13 ‘‘SEC. 2796. APPLICATION OF LAW. 

14 ‘‘(a) IN GENERAL.—Except as provided in section 

15 601(c) of the American Health Care Reform Act of 2013, 

16 the covered laws of the primary State shall apply to indi17 vidual health insurance coverage offered by a health insur18 ance issuer in the primary State and in any secondary 

19 State, but only if the coverage and issuer comply with the 

20 conditions of this section with respect to the offering of 

21 coverage in any secondary State. 

22 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC23 ONDARY STATE.—Except as provided in this section, a 

24 health insurance issuer with respect to its offer, sale, rat25 ing (including medical underwriting), renewal, and 


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1 issuance of individual health insurance coverage in any 

2 secondary State is exempt from any covered laws of the 

3 secondary State (and any rules, regulations, agreements, 

4 or orders sought or issued by such State under or related 

5 to such covered laws) to the extent that such laws would— 

6 ‘‘(1) make unlawful, or regulate, directly or in7 directly, the operation of the health insurance issuer 

8 operating in the secondary State, except that any 

9 secondary State may require such an issuer— 

10 ‘‘(A) to pay, on a nondiscriminatory basis, 

11 applicable premium and other taxes (including 

12 high risk pool assessments) which are levied on 

13 insurers and surplus lines insurers, brokers, or 

14 policyholders under the laws of the State; 

15 ‘‘(B) to register with and designate the 

16 State insurance commissioner as its agent solely 

17 for the purpose of receiving service of legal doc18 uments or process; 

19 ‘‘(C) to submit to an examination of its fi20 nancial condition by the State insurance com21 missioner in any State in which the issuer is 

22 doing business to determine the issuer’s finan23 cial condition, if— 

24 ‘‘(i) the State insurance commissioner 

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1 amination within the period recommended 

2 by the National Association of Insurance 

3 Commissioners; and 

4 ‘‘(ii) any such examination is con5 ducted in accordance with the examiners’ 

6 handbook of the National Association of 

7 Insurance Commissioners and is coordi8 nated to avoid unjustified duplication and 

9 unjustified repetition; 

10 ‘‘(D) to comply with a lawful order 

11 issued— 

12 ‘‘(i) in a delinquency proceeding com13 menced by the State insurance commis14 sioner if there has been a finding of finan15 cial impairment under subparagraph (C); 

16 or 

17 ‘‘(ii) in a voluntary dissolution pro18 ceeding; 

19 ‘‘(E) to comply with an injunction issued 

20 by a court of competent jurisdiction, upon a pe21 tition by the State insurance commissioner al22 leging that the issuer is in hazardous financial 

23 condition; 

24 ‘‘(F) to participate, on a nondiscriminatory 

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1 sociation or similar association to which a 

2 health insurance issuer in the State is required 

3 to belong; 

4 ‘‘(G) to comply with any State law regard5 ing fraud and abuse (as defined in section 

6 2795(10)), except that if the State seeks an in7 junction regarding the conduct described in this 

8 subparagraph, such injunction must be obtained 

9 from a court of competent jurisdiction; 

10 ‘‘(H) to comply with any State law regard11 ing unfair claims settlement practices (as de12 fined in section 2795(9)); or 

13 ‘‘(I) to comply with the applicable require14 ments for independent review under section 

15 2798 with respect to coverage offered in the 

16 State; 

17 ‘‘(2) require any individual health insurance 

18 coverage issued by the issuer to be countersigned by 

19 an insurance agent or broker residing in that Sec20 ondary State; or 

21 ‘‘(3) otherwise discriminate against the issuer 

22 issuing insurance in both the primary State and in 

23 any secondary State. 

24 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

25 health insurance issuer shall provide the following notice, 


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1 in 12-point bold type, in any insurance coverage offered 

2 in a secondary State under this part by such a health in3 surance issuer and at renewal of the policy, with the 5 

4 blank spaces therein being appropriately filled with the 

5 name of the health insurance issuer, the name of primary 

6 State, the name of the secondary State, the name of the 

7 secondary State, and the name of the secondary State, re8 spectively, for the coverage concerned: 

9 ‘‘ ‘NOTICE

10 ‘‘ ‘This policy is issued by lllll and is gov11 erned by the laws and regulations of the State of 

12 lllll, and it has met all the laws of that State as 

13 determined by that State’s Department of Insurance. This 

14 policy may be less expensive than others because it is not 

15 subject to all of the insurance laws and regulations of the 

16 State of lllll, including coverage of some services 

17 or benefits mandated by the law of the State of 

18 lllll. Additionally, this policy is not subject to all 

19 of the consumer protection laws or restrictions on rate 

20 changes of the State of lllll. As with all insurance 

21 products, before purchasing this policy, you should care22 fully review the policy and determine what health care 

23 services the policy covers and what benefits it provides, 

24 including any exclusions, limitations, or conditions for 

25 such services or benefits.’. 


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1 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

2 AND PREMIUM INCREASES.— 

3 ‘‘(1) IN GENERAL.—For purposes of this sec4 tion, a health insurance issuer that provides indi5 vidual health insurance coverage to an individual 

6 under this part in a primary or secondary State may 

7 not upon renewal— 

8 ‘‘(A) move or reclassify the individual in9 sured under the health insurance coverage from 

10 the class such individual is in at the time of 

11 issue of the contract based on the health-status 

12 related factors of the individual; or 

13 ‘‘(B) increase the premiums assessed the 

14 individual for such coverage based on a health 

15 status-related factor or change of a health sta16 tus-related factor or the past or prospective 

17 claim experience of the insured individual. 

18 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

19 (1) shall be construed to prohibit a health insurance 

20 issuer— 

21 ‘‘(A) from terminating or discontinuing 

22 coverage or a class of coverage in accordance 

23 with subsections (b) and (c) of section 2742; 


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1 ‘‘(B) from raising premium rates for all 

2 policy holders within a class based on claims ex3 perience; 

4 ‘‘(C) from changing premiums or offering 

5 discounted premiums to individuals who engage 

6 in wellness activities at intervals prescribed by 

7 the issuer, if such premium changes or incen8 tives— 

9 ‘‘(i) are disclosed to the consumer in 

10 the insurance contract; 

11 ‘‘(ii) are based on specific wellness ac12 tivities that are not applicable to all indi13 viduals; and 

14 ‘‘(iii) are not obtainable by all individ15 uals to whom coverage is offered; 

16 ‘‘(D) from reinstating lapsed coverage; or 

17 ‘‘(E) from retroactively adjusting the rates 

18 charged an insured individual if the initial rates 

19 were set based on material misrepresentation by 

20 the individual at the time of issue. 

21 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

22 STATE.—A health insurance issuer may not offer for sale 

23 individual health insurance coverage in a secondary State 

24 unless that coverage is currently offered for sale in the 

25 primary State. 


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1 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

2 HEALTH INSURANCE ISSUERS.—Any State may require 

3 that a person acting, or offering to act, as an agent or 

4 broker for a health insurance issuer with respect to the 

5 offering of individual health insurance coverage obtain a 

6 license from that State, with commissions or other com7 pensation subject to the provisions of the laws of that 

8 State, except that a State may not impose any qualifica9 tion or requirement which discriminates against a non10 resident agent or broker. 

11 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN12 SURANCE COMMISSIONER.—Each health insurance issuer 

13 issuing individual health insurance coverage in both pri14 mary and secondary States shall submit— 

15 ‘‘(1) to the insurance commissioner of each 

16 State in which it intends to offer such coverage, be17 fore it may offer individual health insurance cov18 erage in such State— 

19 ‘‘(A) a copy of the plan of operation or fea20 sibility study or any similar statement of the 

21 policy being offered and its coverage (which 

22 shall include the name of its primary State and 

23 its principal place of business); 

24 ‘‘(B) written notice of any change in its 

25 designation of its primary State; and 


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1 ‘‘(C) written notice from the issuer of the 

2 issuer’s compliance with all the laws of the pri3 mary State; and 

4 ‘‘(2) to the insurance commissioner of each sec5 ondary State in which it offers individual health in6 surance coverage, a copy of the issuer’s quarterly fi7 nancial statement submitted to the primary State, 

8 which statement shall be certified by an independent 

9 public accountant and contain a statement of opin10 ion on loss and loss adjustment expense reserves 

11 made by— 

12 ‘‘(A) a member of the American Academy 

13 of Actuaries; or 

14 ‘‘(B) a qualified loss reserve specialist. 

15 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

16 Nothing in this section shall be construed to affect the 

17 authority of any Federal or State court to enjoin— 

18 ‘‘(1) the solicitation or sale of individual health 

19 insurance coverage by a health insurance issuer to 

20 any person or group who is not eligible for such in21 surance; or 

22 ‘‘(2) the solicitation or sale of individual health 

23 insurance coverage that violates the requirements of 

24 the law of a secondary State which are described in 


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1 subparagraphs (A) through (H) of section 

2 2796(b)(1). 

3 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD4 MINISTRATIVE ACTION.—Nothing in this section shall be 

5 construed to affect the authority of any State to enjoin 

6 conduct in violation of that State’s laws described in sec7 tion 2796(b)(1). 

8 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 

9 ‘‘(1) IN GENERAL.—Subject to the provisions of 

10 subsection (b)(1)(G) (relating to injunctions) and 

11 paragraph (2), nothing in this section shall be con12 strued to affect the authority of any State to make 

13 use of any of its powers to enforce the laws of such 

14 State with respect to which a health insurance issuer 

15 is not exempt under subsection (b). 

16 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

17 If a State seeks an injunction regarding the conduct 

18 described in paragraphs (1) and (2) of subsection 

19 (h), such injunction must be obtained from a Fed20 eral or State court of competent jurisdiction. 

21 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

22 section shall affect the authority of any State to bring ac23 tion in any Federal or State court. 

24 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

25 this section shall be construed to affect the applicability 


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1 of State laws generally applicable to persons or corpora2 tions. 

3 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

4 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

5 health insurance issuer is offering coverage in a primary 

6 State that does not accommodate residents of secondary 

7 States or does not provide a working mechanism for resi8 dents of a secondary State, and the issuer is offering cov9 erage under this part in such secondary State which has 

10 not adopted a qualified high risk pool as its acceptable 

11 alternative mechanism (as defined in section 2744(c)(2)), 

12 the issuer shall, with respect to any individual health in13 surance coverage offered in a secondary State under this 

14 part, comply with the guaranteed availability requirements 

15 for eligible individuals in section 2741. 

16 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

17 BEFORE ISSUER MAY SELL INTO SECONDARY 

18 STATES. 

19 ‘‘A health insurance issuer may not offer, sell, or 

20 issue individual health insurance coverage in a secondary 

21 State if the State insurance commissioner does not use 

22 a risk-based capital formula for the determination of cap23 ital and surplus requirements for all health insurance 

24 issuers. 


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1 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE2 DURES. 

3 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur4 ance issuer may not offer, sell, or issue individual health 

5 insurance coverage in a secondary State under the provi6 sions of this title unless— 

7 ‘‘(1) both the secondary State and the primary 

8 State have legislation or regulations in place estab9 lishing an independent review process for individuals 

10 who are covered by individual health insurance cov11 erage, or 

12 ‘‘(2) in any case in which the requirements of 

13 subparagraph (A) are not met with respect to the ei14 ther of such States, the issuer provides an inde15 pendent review mechanism substantially identical (as 

16 determined by the applicable State authority of such 

17 State) to that prescribed in the ‘Health Carrier Ex18 ternal Review Model Act’ of the National Association 

19 of Insurance Commissioners for all individuals who 

20 purchase insurance coverage under the terms of this 

21 part, except that, under such mechanism, the review 

22 is conducted by an independent medical reviewer, or 

23 a panel of such reviewers, with respect to whom the 

24 requirements of subsection (b) are met. 


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1 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

2 REVIEWERS.—In the case of any independent review 

3 mechanism referred to in subsection (a)(2)— 

4 ‘‘(1) IN GENERAL.—In referring a denial of a 

5 claim to an independent medical reviewer, or to any 

6 panel of such reviewers, to conduct independent 

7 medical review, the issuer shall ensure that— 

8 ‘‘(A) each independent medical reviewer 

9 meets the qualifications described in paragraphs 

10 (2) and (3); 

11 ‘‘(B) with respect to each review, each re12 viewer meets the requirements of paragraph (4) 

13 and the reviewer, or at least 1 reviewer on the 

14 panel, meets the requirements described in 

15 paragraph (5); and 

16 ‘‘(C) compensation provided by the issuer 

17 to each reviewer is consistent with paragraph 

18 (6). 

19 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde20 pendent medical reviewer shall be a physician 

21 (allopathic or osteopathic) or health care profes22 sional who— 

23 ‘‘(A) is appropriately credentialed or li24 censed in 1 or more States to deliver health 

25 care services; and 


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1 ‘‘(B) typically treats the condition, makes 

2 the diagnosis, or provides the type of treatment 

3 under review. 

4 ‘‘(3) INDEPENDENCE.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), each independent medical reviewer 

7 in a case shall— 

8 ‘‘(i) not be a related party (as defined 

9 in paragraph (7)); 

10 ‘‘(ii) not have a material familial, fi11 nancial, or professional relationship with 

12 such a party; and 

13 ‘‘(iii) not otherwise have a conflict of 

14 interest with such a party (as determined 

15 under regulations). 

16 ‘‘(B) EXCEPTION.—Nothing in subpara17 graph (A) shall be construed to— 

18 ‘‘(i) prohibit an individual, solely on 

19 the basis of affiliation with the issuer, 

20 from serving as an independent medical re21 viewer if— 

22 ‘‘(I) a non-affiliated individual is 

23 not reasonably available; 


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1 ‘‘(II) the affiliated individual is 

2 not involved in the provision of items 

3 or services in the case under review; 

4 ‘‘(III) the fact of such an affili5 ation is disclosed to the issuer and the 

6 enrollee (or authorized representative) 

7 and neither party objects; and 

8 ‘‘(IV) the affiliated individual is 

9 not an employee of the issuer and 

10 does not provide services exclusively or 

11 primarily to or on behalf of the issuer; 

12 ‘‘(ii) prohibit an individual who has 

13 staff privileges at the institution where the 

14 treatment involved takes place from serv15 ing as an independent medical reviewer 

16 merely on the basis of such affiliation if 

17 the affiliation is disclosed to the issuer and 

18 the enrollee (or authorized representative), 

19 and neither party objects; or 

20 ‘‘(iii) prohibit receipt of compensation 

21 by an independent medical reviewer from 

22 an entity if the compensation is provided 

23 consistent with paragraph (6). 

24 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

25 IN SAME FIELD.— 


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1 ‘‘(A) IN GENERAL.—In a case involving 

2 treatment, or the provision of items or serv3 ices— 

4 ‘‘(i) by a physician, a reviewer shall be 

5 a practicing physician (allopathic or osteo6 pathic) of the same or similar specialty, as 

7 a physician who, acting within the appro8 priate scope of practice within the State in 

9 which the service is provided or rendered, 

10 typically treats the condition, makes the 

11 diagnosis, or provides the type of treat12 ment under review; or 

13 ‘‘(ii) by a non-physician health care 

14 professional, the reviewer, or at least 1 

15 member of the review panel, shall be a 

16 practicing non-physician health care pro17 fessional of the same or similar specialty 

18 as the non-physician health care profes19 sional who, acting within the appropriate 

20 scope of practice within the State in which 

21 the service is provided or rendered, typi22 cally treats the condition, makes the diag23 nosis, or provides the type of treatment 

24 under review. 


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1 ‘‘(B) PRACTICING DEFINED.—For pur2 poses of this paragraph, the term ‘practicing’ 

3 means, with respect to an individual who is a 

4 physician or other health care professional, that 

5 the individual provides health care services to 

6 individual patients on average at least 2 days 

7 per week. 

8 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

9 external review relating to a child, a reviewer shall 

10 have expertise under paragraph (2) in pediatrics. 

11 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA12 TION.—Compensation provided by the issuer to an 

13 independent medical reviewer in connection with a 

14 review under this section shall— 

15 ‘‘(A) not exceed a reasonable level; and 

16 ‘‘(B) not be contingent on the decision ren17 dered by the reviewer. 

18 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

19 of this section, the term ‘related party’ means, with 

20 respect to a denial of a claim under a coverage relat21 ing to an enrollee, any of the following: 

22 ‘‘(A) The issuer involved, or any fiduciary, 

23 officer, director, or employee of the issuer. 

24 ‘‘(B) The enrollee (or authorized represent25 ative). 


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1 ‘‘(C) The health care professional that pro2 vides the items or services involved in the de3 nial. 

4 ‘‘(D) The institution at which the items or 

5 services (or treatment) involved in the denial 

6 are provided. 

7 ‘‘(E) The manufacturer of any drug or 

8 other item that is included in the items or serv9 ices involved in the denial. 

10 ‘‘(F) Any other party determined under 

11 any regulations to have a substantial interest in 

12 the denial involved. 

13 ‘‘(8) DEFINITIONS.—For purposes of this sub14 section: 

15 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

16 means, with respect to health insurance cov17 erage offered by a health insurance issuer, an 

18 individual enrolled with the issuer to receive 

19 such coverage. 

20 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

21 term ‘health care professional’ means an indi22 vidual who is licensed, accredited, or certified 

23 under State law to provide specified health care 

24 services and who is operating within the scope 

25 of such licensure, accreditation, or certification. 


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1 ‘‘SEC. 2799. ENFORCEMENT. 

2 ‘‘(a) IN GENERAL.—Subject to subsection (b) and ex3 cept as provided in section 601(c) of the American Health 

4 Care Reform Act of 2013, with respect to specific indi5 vidual health insurance coverage the primary State for 

6 such coverage has sole jurisdiction to enforce the primary 

7 State’s covered laws in the primary State and any sec8 ondary State. 

9 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

10 subsection (a) shall be construed to affect the authority 

11 of a secondary State to enforce its laws as set forth in 

12 the exception specified in section 2796(b)(1). 

13 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

14 initiated by the applicable secondary State authority, the 

15 court of competent jurisdiction shall apply the covered 

16 laws of the primary State. 

17 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

18 of individual health insurance coverage offered in a sec19 ondary State that fails to comply with the covered laws 

20 of the primary State, the applicable State authority of the 

21 secondary State may notify the applicable State authority 

22 of the primary State.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 subsection (a) shall apply to individual health insurance 

25 coverage offered, issued, or sold after the date that is one 

26 year after the date of the enactment of this Act. 


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1 (c) GAO ONGOING STUDY AND REPORTS.— 

2 (1) STUDY.—The Comptroller General of the 

3 United States shall conduct an ongoing study con4 cerning the effect of the amendment made by sub5 section (a) on— 

6 (A) the number of uninsured and under-in7 sured; 

8 (B) the availability and cost of health in9 surance policies for individuals with pre-existing 

10 medical conditions; 

11 (C) the availability and cost of health in12 surance policies generally; 

13 (D) the elimination or reduction of dif14 ferent types of benefits under health insurance 

15 policies offered in different States; and 

16 (E) cases of fraud or abuse relating to 

17 health insurance coverage offered under such 

18 amendment and the resolution of such cases. 

19 (2) ANNUAL REPORTS.—The Comptroller Gen20 eral shall submit to Congress an annual report, after 

21 the end of each of the 5 years following the effective 

22 date of the amendment made by subsection (a), on 

23 the ongoing study conducted under paragraph (1). 


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1 Subtitle B—McCarran-Ferguson 

2 Reform 

3 SEC. 411. RESTORING THE APPLICATION OF ANTITRUST 

4 LAWS TO HEALTH SECTOR INSURERS. 

5 (a) AMENDMENT TO MCCARRAN-FERGUSON ACT.— 

6 Section 3 of the Act of March 9, 1945 (15 U.S.C. 1013), 

7 commonly known as the McCarran-Ferguson Act, is 

8 amended by adding at the end the following: 

9 ‘‘(c)(1) Nothing contained in this Act shall modify, 

10 impair, or supersede the operation of any of the antitrust 

11 laws with respect to the business of health insurance (in12 cluding the business of dental insurance). For purposes 

13 of the preceding sentence, the term ‘antitrust laws’ has 

14 the meaning given it in subsection (a) of the first section 

15 of the Clayton Act, except that such term includes section 

16 5 of the Federal Trade Commission Act to the extent that 

17 such section 5 applies to unfair methods of competition. 

18 ‘‘(2) For purposes of paragraph (1), the term ‘busi19 ness of health insurance (including the business of dental 

20 insurance)’ does not include— 

21 ‘‘(A) the business of life insurance (including 

22 annuities); or 

23 ‘‘(B) the business of property or casualty insur24 ance, including but not limited to, any insurance or 

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1 graph (1), subparagraphs (B) or (C) of paragraph 

2 (2), or paragraph (3) of section 9832(c) of the In3 ternal Revenue Code of 1986 (26 U.S.C. 9832(c)) 

4 whether offered separately or in combination with 

5 insurance or benefits described in paragraph (2)(A) 

6 of such section.’’. 

7 (b) RELATED PROVISION.—For purposes of section 

8 5 of the Federal Trade Commission Act (15 U.S.C. 45) 

9 to the extent such section applies to unfair methods of 

10 competition, section 3(c) of the McCarran-Ferguson Act 

11 shall apply with respect to the business of health insurance 

12 without regard to whether such business is carried on for 

13 profit, notwithstanding the definition of ‘‘Corporation’’ 

14 contained in section 4 of the Federal Trade Commission 

15 Act. 

16 Subtitle C—Medicare Price 

17 Transparency 

18 SEC. 421. PUBLIC AVAILABILITY OF MEDICARE CLAIMS 

19 DATA. 

20 (a) IN GENERAL.—Section 1128J of the Social Secu21 rity Act (42 U.S.C. 1320a–7k) is amended by adding at 

22 the end the following new subsection: 

23 ‘‘(f) PUBLIC AVAILABILITY OF MEDICARE CLAIMS

24 DATA.— 


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1 ‘‘(1) IN GENERAL.—The Secretary shall, to the 

2 extent consistent with applicable information, pri3 vacy, security, and disclosure laws, including the 

4 regulations promulgated under the Health Insurance 

5 Portability and Accountability Act of 1996 and sec6 tion 552a of title 5, United States Code, make avail7 able to the public claims and payment data of the 

8 Department of Health and Human Services related 

9 to title XVIII, including data on payments made to 

10 any provider of services or supplier under such title. 

11 ‘‘(2) IMPLEMENTATION.— 

12 ‘‘(A) IN GENERAL.—Not later than De13 cember 31, 2014, the Secretary shall promul14 gate regulations to carry out this subsection. 

15 ‘‘(B) REQUIREMENTS.—The regulations 

16 promulgated under subparagraph (A) shall en17 sure that— 

18 ‘‘(i) the data described in paragraph 

19 (1) is made available to the public through 

20 a searchable database that the public can 

21 access at no cost; 

22 ‘‘(ii) such database— 

23 ‘‘(I) includes the amount paid to 

24 each provider of services or supplier 

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1 ices for which such payment was 

2 made, and the location of the provider 

3 of services or supplier; 

4 ‘‘(II) is organized based on the 

5 specialty or the type of provider of 

6 services or supplier involved; 

7 ‘‘(III) is searchable based on the 

8 type of items or services furnished; 

9 and 

10 ‘‘(IV) includes a disclaimer that 

11 the aggregate data in the database 

12 does not reflect on the quality of the 

13 items or services furnished or of the 

14 provider of services or supplier who 

15 furnished the items or services; and 

16 ‘‘(iii) each provider of services or sup17 plier in the database is identified by a 

18 unique identifier that is available to the 

19 public (such as the National Provider Iden20 tifier of the provider of services or sup21 plier). 

22 ‘‘(C) SCOPE OF DATA.—The database shall 

23 include data for fiscal year 2014, and each year 

24 fiscal year thereafter.’’. 


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1 (b) INFORMATION NOT EXEMPT UNDER THE FREE2 DOM OF INFORMATION ACT.—The term ‘‘personnel and 

3 medical files and similar files the disclosure of which 

4 would constitute a clearly unwarranted invasion of per5 sonal privacy’’, as used in section 552(b)(6) of title 5, 

6 United States Code, does not include the information re7 quired to be made available to the public under section 

8 1128J(f) of the Social Security Act, as added by sub9 section (a). 

10 Subtitle D—State Transparency 

11 Portals 

12 SEC. 431. PROVIDING INFORMATION ON HEALTH COV13 ERAGE OPTIONS AND HEALTH CARE PRO14 VIDERS. 

15 (a) STATE-BASED PORTAL.—A State (by itself or 

16 jointly with other States) may contract with a private enti17 ty to establish a Health Plan and Provider Portal Web 

18 site (referred to in this section as a ‘‘plan portal’’) for 

19 the purposes of providing standardized information— 

20 (1) on health insurance plans that have been 

21 certified to be available for purchase in that State; 

22 and 

23 (2) on price and quality information on health 

24 care providers (including physicians, hospitals, and 

25 other health care institutions). 


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1 (b) PROHIBITIONS.— 

2 (1) DIRECT ENROLLMENT.—A plan portal may 

3 not directly enroll individuals in health insurance 

4 plans or under a State Medicaid plan or a State 

5 children’s health insurance plan. 

6 (2) CONFLICTS OF INTEREST.— 

7 (A) COMPANIES.—A health insurance 

8 issuer offering a health insurance plan through 

9 a plan portal may not— 

10 (i) be the private entity developing 

11 and maintaining a plan portal under this 

12 section; or 

13 (ii) have an ownership interest in such 

14 private entity or in the plan portal. 

15 (B) INDIVIDUALS.—An individual em16 ployed by a health insurance issuer offering a 

17 health insurance plan through a plan portal 

18 may not serve as a director or officer for— 

19 (i) the private entity developing and 

20 maintaining a plan portal under this sec21 tion; or 

22 (ii) the plan portal. 

23 (c) CONSTRUCTION.—Nothing in this section shall be 

24 construed to prohibit health insurance brokers and agents 

25 from— 


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1 (1) utilizing the plan portal for any purpose; or 

2 (2) marketing or offering health insurance 

3 products. 

4 (d) STATE DEFINED.—In this section, the term 

5 ‘‘State’’ has the meaning given such term for purposes of 

6 title XIX of the Social Security Act. 

7 (e) HEALTH INSURANCE PLANS.—For purposes of 

8 this section, the term ‘‘health insurance plan’’ does not 

9 include coverage of excepted benefits, as defined in section 

10 2791(c) of the Public Health Service Act (42 U.S.C. 

11 300gg–91(c)). 

12 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated $50,000,000 for fiscal 

14 year 2014 to provide funding for the Secretary of Health 

15 and Human Services to award grants to States to enter 

16 into contracts to establish a portal plan under this section, 

17 to remain available until expended. 

18 Subtitle E—Protecting the Doctor19 Patient Relationship 

20 SEC. 441. RULE OF CONSTRUCTION. 

21 Nothing in this Act shall be construed to interfere 

22 with the doctor-patient relationship or the practice of med23 icine. 


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1 SEC. 442. REPEAL OF FEDERAL COORDINATING COUNCIL 

2 FOR COMPARATIVE EFFECTIVENESS RE3 SEARCH. 

4 Effective on the date of the enactment of this Act, 

5 section 804 of the American Recovery and Reinvestment 

6 Act of 2009 is repealed. 

7 Subtitle F—Association Health 

8 Plans 

9 SEC. 451. RULES GOVERNING ASSOCIATION HEALTH 

10 PLANS. 

11 (a) IN GENERAL.—Subtitle B of title I of the Em12 ployee Retirement Income Security Act of 1974 is amend13 ed by adding after part 7 the following new part: 

14 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

15 HEALTH PLANS 

16 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

17 ‘‘(a) IN GENERAL.—For purposes of this part, the 

18 term ‘association health plan’ means a group health plan 

19 whose sponsor is (or is deemed under this part to be) de20 scribed in subsection (b). 

21 ‘‘(b) SPONSORSHIP.—The sponsor of a group health 

22 plan is described in this subsection if such sponsor— 

23 ‘‘(1) is organized and maintained in good faith, 

24 with a constitution and bylaws specifically stating its 

25 purpose and providing for periodic meetings on at 

26 least an annual basis, as a bona fide trade associaVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00097 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 tion, a bona fide industry association (including a 

2 rural electric cooperative association or a rural tele3 phone cooperative association), a bona fide profes4 sional association, or a bona fide chamber of com5 merce (or similar bona fide business association, in6 cluding a corporation or similar organization that 

7 operates on a cooperative basis (within the meaning 

8 of section 1381 of the Internal Revenue Code of 

9 1986)), for substantial purposes other than that of 

10 obtaining or providing medical care; 

11 ‘‘(2) is established as a permanent entity which 

12 receives the active support of its members and re13 quires for membership payment on a periodic basis 

14 of dues or payments necessary to maintain eligibility 

15 for membership in the sponsor; and 

16 ‘‘(3) does not condition membership, such dues 

17 or payments, or coverage under the plan on the 

18 basis of health status-related factors with respect to 

19 the employees of its members (or affiliated mem20 bers), or the dependents of such employees, and does 

21 not condition such dues or payments on the basis of 

22 group health plan participation. 

23 Any sponsor consisting of an association of entities which 

24 meet the requirements of paragraphs (1), (2), and (3) 


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1 shall be deemed to be a sponsor described in this sub2 section. 

3 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

4 PLANS. 

5 ‘‘(a) IN GENERAL.—The applicable authority shall 

6 prescribe by regulation a procedure under which, subject 

7 to subsection (b), the applicable authority shall certify as8 sociation health plans which apply for certification as 

9 meeting the requirements of this part. 

10 ‘‘(b) STANDARDS.—Under the procedure prescribed 

11 pursuant to subsection (a), in the case of an association 

12 health plan that provides at least one benefit option which 

13 does not consist of health insurance coverage, the applica14 ble authority shall certify such plan as meeting the re15 quirements of this part only if the applicable authority is 

16 satisfied that the applicable requirements of this part are 

17 met (or, upon the date on which the plan is to commence 

18 operations, will be met) with respect to the plan. 

19 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

20 PLANS.—An association health plan with respect to which 

21 certification under this part is in effect shall meet the ap22 plicable requirements of this part, effective on the date 

23 of certification (or, if later, on the date on which the plan 

24 is to commence operations). 


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1 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI2 CATION.—The applicable authority may provide by regula3 tion for continued certification of association health plans 

4 under this part. 

5 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

6 PLANS.—The applicable authority shall establish a class 

7 certification procedure for association health plans under 

8 which all benefits consist of health insurance coverage. 

9 Under such procedure, the applicable authority shall pro10 vide for the granting of certification under this part to 

11 the plans in each class of such association health plans 

12 upon appropriate filing under such procedure in connec13 tion with plans in such class and payment of the pre14 scribed fee under section 807(a). 

15 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION

16 HEALTH PLANS.—An association health plan which offers 

17 one or more benefit options which do not consist of health 

18 insurance coverage may be certified under this part only 

19 if such plan consists of any of the following: 

20 ‘‘(1) a plan which offered such coverage on the 

21 date of the enactment of this part, 

22 ‘‘(2) a plan under which the sponsor does not 

23 restrict membership to one or more trades and busi24 nesses or industries and whose eligible participating 


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1 employers represent a broad cross-section of trades 

2 and businesses or industries, or 

3 ‘‘(3) a plan whose eligible participating employ4 ers represent one or more trades or businesses, or 

5 one or more industries, consisting of any of the fol6 lowing: agriculture; equipment and automobile deal7 erships; barbering and cosmetology; certified public 

8 accounting practices; child care; construction; dance, 

9 theatrical and orchestra productions; disinfecting 

10 and pest control; financial services; fishing; food 

11 service establishments; hospitals; labor organiza12 tions; logging; manufacturing (metals); mining; med13 ical and dental practices; medical laboratories; pro14 fessional consulting services; sanitary services; trans15 portation (local and freight); warehousing; whole16 saling/distributing; or any other trade or business or 

17 industry which has been indicated as having average 

18 or above-average risk or health claims experience by 

19 reason of State rate filings, denials of coverage, pro20 posed premium rate levels, or other means dem21 onstrated by such plan in accordance with regula22 tions. 


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1 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 

2 BOARDS OF TRUSTEES. 

3 ‘‘(a) SPONSOR.—The requirements of this subsection 

4 are met with respect to an association health plan if the 

5 sponsor has met (or is deemed under this part to have 

6 met) the requirements of section 801(b) for a continuous 

7 period of not less than 3 years ending with the date of 

8 the application for certification under this part. 

9 ‘‘(b) BOARD OF TRUSTEES.—The requirements of 

10 this subsection are met with respect to an association 

11 health plan if the following requirements are met: 

12 ‘‘(1) FISCAL CONTROL.—The plan is operated, 

13 pursuant to a trust agreement, by a board of trust14 ees which has complete fiscal control over the plan 

15 and which is responsible for all operations of the 

16 plan. 

17 ‘‘(2) RULES OF OPERATION AND FINANCIAL

18 CONTROLS.—The board of trustees has in effect 

19 rules of operation and financial controls, based on a 

20 3-year plan of operation, adequate to carry out the 

21 terms of the plan and to meet all requirements of 

22 this title applicable to the plan. 

23 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

24 PARTICIPATING EMPLOYERS AND TO CONTRAC25 TORS.— 

26 ‘‘(A) BOARD MEMBERSHIP.— 


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1 ‘‘(i) IN GENERAL.—Except as pro2 vided in clauses (ii) and (iii), the members 

3 of the board of trustees are individuals se4 lected from individuals who are the owners, 

5 officers, directors, or employees of the par6 ticipating employers or who are partners in 

7 the participating employers and actively 

8 participate in the business. 

9 ‘‘(ii) LIMITATION.— 

10 ‘‘(I) GENERAL RULE.—Except as 

11 provided in subclauses (II) and (III), 

12 no such member is an owner, officer, 

13 director, or employee of, or partner in, 

14 a contract administrator or other 

15 service provider to the plan. 

16 ‘‘(II) LIMITED EXCEPTION FOR

17 PROVIDERS OF SERVICES SOLELY ON

18 BEHALF OF THE SPONSOR.—Officers 

19 or employees of a sponsor which is a 

20 service provider (other than a contract 

21 administrator) to the plan may be 

22 members of the board if they con23 stitute not more than 25 percent of 

24 the membership of the board and they 


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1 do not provide services to the plan 

2 other than on behalf of the sponsor. 

3 ‘‘(III) TREATMENT OF PRO4 VIDERS OF MEDICAL CARE.—In the 

5 case of a sponsor which is an associa6 tion whose membership consists pri7 marily of providers of medical care, 

8 subclause (I) shall not apply in the 

9 case of any service provider described 

10 in subclause (I) who is a provider of 

11 medical care under the plan. 

12 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

13 Clause (i) shall not apply to an association 

14 health plan which is in existence on the 

15 date of the enactment of this part. 

16 ‘‘(B) SOLE AUTHORITY.—The board has 

17 sole authority under the plan to approve appli18 cations for participation in the plan and to con19 tract with a service provider to administer the 

20 day-to-day affairs of the plan. 

21 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 

22 the case of a group health plan which is established and 

23 maintained by a franchiser for a franchise network con24 sisting of its franchisees— 


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1 ‘‘(1) the requirements of subsection (a) and sec2 tion 801(a) shall be deemed met if such require3 ments would otherwise be met if the franchiser were 

4 deemed to be the sponsor referred to in section 

5 801(b), such network were deemed to be an associa6 tion described in section 801(b), and each franchisee 

7 were deemed to be a member (of the association and 

8 the sponsor) referred to in section 801(b); and 

9 ‘‘(2) the requirements of section 804(a)(1) shall 

10 be deemed met. 

11 The Secretary may by regulation define for purposes of 

12 this subsection the terms ‘franchiser’, ‘franchise network’, 

13 and ‘franchisee’. 

14 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE15 MENTS. 

16 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 

17 requirements of this subsection are met with respect to 

18 an association health plan if, under the terms of the 

19 plan— 

20 ‘‘(1) each participating employer must be— 

21 ‘‘(A) a member of the sponsor, 

22 ‘‘(B) the sponsor, or 

23 ‘‘(C) an affiliated member of the sponsor 

24 with respect to which the requirements of sub25 section (b) are met, 


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1 except that, in the case of a sponsor which is a pro2 fessional association or other individual-based asso3 ciation, if at least one of the officers, directors, or 

4 employees of an employer, or at least one of the in5 dividuals who are partners in an employer and who 

6 actively participates in the business, is a member or 

7 such an affiliated member of the sponsor, partici8 pating employers may also include such employer; 

9 and 

10 ‘‘(2) all individuals commencing coverage under 

11 the plan after certification under this part must 

12 be— 

13 ‘‘(A) active or retired owners (including 

14 self-employed individuals), officers, directors, or 

15 employees of, or partners in, participating em16 ployers; or 

17 ‘‘(B) the beneficiaries of individuals de18 scribed in subparagraph (A). 

19 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM20 PLOYEES.—In the case of an association health plan in 

21 existence on the date of the enactment of this part, an 

22 affiliated member of the sponsor of the plan may be of23 fered coverage under the plan as a participating employer 

24 only if— 


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1 ‘‘(1) the affiliated member was an affiliated 

2 member on the date of certification under this part; 

3 or 

4 ‘‘(2) during the 12-month period preceding the 

5 date of the offering of such coverage, the affiliated 

6 member has not maintained or contributed to a 

7 group health plan with respect to any of its employ8 ees who would otherwise be eligible to participate in 

9 such association health plan. 

10 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re11 quirements of this subsection are met with respect to an 

12 association health plan if, under the terms of the plan, 

13 no participating employer may provide health insurance 

14 coverage in the individual market for any employee not 

15 covered under the plan which is similar to the coverage 

16 contemporaneously provided to employees of the employer 

17 under the plan, if such exclusion of the employee from cov18 erage under the plan is based on a health status-related 

19 factor with respect to the employee and such employee 

20 would, but for such exclusion on such basis, be eligible 

21 for coverage under the plan. 

22 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

23 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI24 PATE.—The requirements of this subsection are met with 

25 respect to an association health plan if— 


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1 ‘‘(1) under the terms of the plan, all employers 

2 meeting the preceding requirements of this section 

3 are eligible to qualify as participating employers for 

4 all geographically available coverage options, unless, 

5 in the case of any such employer, participation or 

6 contribution requirements of the type referred to in 

7 section 2711 of the Public Health Service Act are 

8 not met; 

9 ‘‘(2) upon request, any employer eligible to par10 ticipate is furnished information regarding all cov11 erage options available under the plan; and 

12 ‘‘(3) the applicable requirements of sections 

13 701, 702, and 703 are met with respect to the plan. 

14 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 

15 DOCUMENTS, CONTRIBUTION RATES, AND 

16 BENEFIT OPTIONS. 

17 ‘‘(a) IN GENERAL.—The requirements of this section 

18 are met with respect to an association health plan if the 

19 following requirements are met: 

20 ‘‘(1) CONTENTS OF GOVERNING INSTRU21 MENTS.—The instruments governing the plan in22 clude a written instrument, meeting the require23 ments of an instrument required under section 

24 402(a)(1), which— 


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1 ‘‘(A) provides that the board of trustees 

2 serves as the named fiduciary required for plans 

3 under section 402(a)(1) and serves in the ca4 pacity of a plan administrator (referred to in 

5 section 3(16)(A)); 

6 ‘‘(B) provides that the sponsor of the plan 

7 is to serve as plan sponsor (referred to in sec8 tion 3(16)(B)); and 

9 ‘‘(C) incorporates the requirements of sec10 tion 806. 

11 ‘‘(2) CONTRIBUTION RATES MUST BE NON12 DISCRIMINATORY.— 

13 ‘‘(A) The contribution rates for any par14 ticipating small employer do not vary on the 

15 basis of any health status-related factor in rela16 tion to employees of such employer or their 

17 beneficiaries and do not vary on the basis of the 

18 type of business or industry in which such em19 ployer is engaged. 

20 ‘‘(B) Nothing in this title or any other pro21 vision of law shall be construed to preclude an 

22 association health plan, or a health insurance 

23 issuer offering health insurance coverage in 

24 connection with an association health plan, 

25 from— 


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1 ‘‘(i) setting contribution rates based 

2 on the claims experience of the plan; or 

3 ‘‘(ii) varying contribution rates for 

4 small employers in a State to the extent 

5 that such rates could vary using the same 

6 methodology employed in such State for 

7 regulating premium rates in the small 

8 group market with respect to health insur9 ance coverage offered in connection with 

10 bona fide associations (within the meaning 

11 of section 2791(d)(3) of the Public Health 

12 Service Act), 

13 subject to the requirements of section 702(b) 

14 relating to contribution rates. 

15 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI16 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

17 any benefit option under the plan does not consist 

18 of health insurance coverage, the plan has as of the 

19 beginning of the plan year not fewer than 1,000 par20 ticipants and beneficiaries. 

21 ‘‘(4) MARKETING REQUIREMENTS.— 

22 ‘‘(A) IN GENERAL.—If a benefit option 

23 which consists of health insurance coverage is 

24 offered under the plan, State-licensed insurance 

25 agents shall be used to distribute to small emVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00110 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 ployers coverage which does not consist of 

2 health insurance coverage in a manner com3 parable to the manner in which such agents are 

4 used to distribute health insurance coverage. 

5 ‘‘(B) STATE-LICENSED INSURANCE

6 AGENTS.—For purposes of subparagraph (A), 

7 the term ‘State-licensed insurance agents’ 

8 means one or more agents who are licensed in 

9 a State and are subject to the laws of such 

10 State relating to licensure, qualification, test11 ing, examination, and continuing education of 

12 persons authorized to offer, sell, or solicit 

13 health insurance coverage in such State. 

14 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

15 other requirements as the applicable authority deter16 mines are necessary to carry out the purposes of this 

17 part, which shall be prescribed by the applicable au18 thority by regulation. 

19 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO

20 DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 

21 nothing in this part or any provision of State law (as de22 fined in section 514(c)(1)) shall be construed to preclude 

23 an association health plan, or a health insurance issuer 

24 offering health insurance coverage in connection with an 

25 association health plan, from exercising its sole discretion 


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1 in selecting the specific items and services consisting of 

2 medical care to be included as benefits under such plan 

3 or coverage, except (subject to section 514) in the case 

4 of (1) any law to the extent that it is not preempted under 

5 section 731(a)(1) with respect to matters governed by sec6 tion 711, 712, or 713, (2) any law of the State with which 

7 filing and approval of a policy type offered by the plan 

8 was initially obtained to the extent that such law prohibits 

9 an exclusion of a specific disease from such coverage, or 

10 (3) any law described in section 601(c) of the American 

11 Health Care Reform Act of 2013. 

12 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 

13 FOR SOLVENCY FOR PLANS PROVIDING 

14 HEALTH BENEFITS IN ADDITION TO HEALTH 

15 INSURANCE COVERAGE. 

16 ‘‘(a) IN GENERAL.—The requirements of this section 

17 are met with respect to an association health plan if— 

18 ‘‘(1) the benefits under the plan consist solely 

19 of health insurance coverage; or 

20 ‘‘(2) if the plan provides any additional benefit 

21 options which do not consist of health insurance cov22 erage, the plan— 

23 ‘‘(A) establishes and maintains reserves 

24 with respect to such additional benefit options, 


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1 in amounts recommended by the qualified actu2 ary, consisting of— 

3 ‘‘(i) a reserve sufficient for unearned 

4 contributions; 

5 ‘‘(ii) a reserve sufficient for benefit li6 abilities which have been incurred, which 

7 have not been satisfied, and for which risk 

8 of loss has not yet been transferred, and 

9 for expected administrative costs with re10 spect to such benefit liabilities; 

11 ‘‘(iii) a reserve sufficient for any other 

12 obligations of the plan; and 

13 ‘‘(iv) a reserve sufficient for a margin 

14 of error and other fluctuations, taking into 

15 account the specific circumstances of the 

16 plan; and 

17 ‘‘(B) establishes and maintains aggregate 

18 and specific excess/stop loss insurance and sol19 vency indemnification, with respect to such ad20 ditional benefit options for which risk of loss 

21 has not yet been transferred, as follows: 

22 ‘‘(i) The plan shall secure aggregate 

23 excess/stop loss insurance for the plan with 

24 an attachment point which is not greater 

25 than 125 percent of expected gross annual 


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1 claims. The applicable authority may by 

2 regulation provide for upward adjustments 

3 in the amount of such percentage in speci4 fied circumstances in which the plan spe5 cifically provides for and maintains re6 serves in excess of the amounts required 

7 under subparagraph (A). 

8 ‘‘(ii) The plan shall secure specific ex9 cess/stop loss insurance for the plan with 

10 an attachment point which is at least equal 

11 to an amount recommended by the plan’s 

12 qualified actuary. The applicable authority 

13 may by regulation provide for adjustments 

14 in the amount of such insurance in speci15 fied circumstances in which the plan spe16 cifically provides for and maintains re17 serves in excess of the amounts required 

18 under subparagraph (A). 

19 ‘‘(iii) The plan shall secure indem20 nification insurance for any claims which 

21 the plan is unable to satisfy by reason of 

22 a plan termination. 

23 Any person issuing to a plan insurance described in clause 

24 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec25 retary of any failure of premium payment meriting canVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 cellation of the policy prior to undertaking such a cancella2 tion. Any regulations prescribed by the applicable author3 ity pursuant to clause (i) or (ii) of subparagraph (B) may 

4 allow for such adjustments in the required levels of excess/ 

5 stop loss insurance as the qualified actuary may rec6 ommend, taking into account the specific circumstances 

7 of the plan. 

8 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS

9 RESERVES.—In the case of any association health plan de10 scribed in subsection (a)(2), the requirements of this sub11 section are met if the plan establishes and maintains sur12 plus in an amount at least equal to— 

13 ‘‘(1) $500,000, or 

14 ‘‘(2) such greater amount (but not greater than 

15 $2,000,000) as may be set forth in regulations pre16 scribed by the applicable authority, considering the 

17 level of aggregate and specific excess/stop loss insur18 ance provided with respect to such plan and other 

19 factors related to solvency risk, such as the plan’s 

20 projected levels of participation or claims, the nature 

21 of the plan’s liabilities, and the types of assets avail22 able to assure that such liabilities are met. 

23 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 

24 any association health plan described in subsection (a)(2), 

25 the applicable authority may provide such additional reVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00115 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 quirements relating to reserves, excess/stop loss insurance, 

2 and indemnification insurance as the applicable authority 

3 considers appropriate. Such requirements may be provided 

4 by regulation with respect to any such plan or any class 

5 of such plans. 

6 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR7 ANCE.—The applicable authority may provide for adjust8 ments to the levels of reserves otherwise required under 

9 subsections (a) and (b) with respect to any plan or class 

10 of plans to take into account excess/stop loss insurance 

11 provided with respect to such plan or plans. 

12 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 

13 applicable authority may permit an association health plan 

14 described in subsection (a)(2) to substitute, for all or part 

15 of the requirements of this section (except subsection 

16 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar17 rangement, or other financial arrangement as the applica18 ble authority determines to be adequate to enable the plan 

19 to fully meet all its financial obligations on a timely basis 

20 and is otherwise no less protective of the interests of par21 ticipants and beneficiaries than the requirements for 

22 which it is substituted. The applicable authority may take 

23 into account, for purposes of this subsection, evidence pro24 vided by the plan or sponsor which demonstrates an as25 sumption of liability with respect to the plan. Such eviVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00116 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 dence may be in the form of a contract of indemnification, 

2 lien, bonding, insurance, letter of credit, recourse under 

3 applicable terms of the plan in the form of assessments 

4 of participating employers, security, or other financial ar5 rangement. 

6 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

7 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

8 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO9 CIATION HEALTH PLAN FUND.— 

10 ‘‘(A) IN GENERAL.—In the case of an as11 sociation health plan described in subsection 

12 (a)(2), the requirements of this subsection are 

13 met if the plan makes payments into the Asso14 ciation Health Plan Fund under this subpara15 graph when they are due. Such payments shall 

16 consist of annual payments in the amount of 

17 $5,000, and, in addition to such annual pay18 ments, such supplemental payments as the Sec19 retary may determine to be necessary under 

20 paragraph (2). Payments under this paragraph 

21 are payable to the Fund at the time determined 

22 by the Secretary. Initial payments are due in 

23 advance of certification under this part. Pay24 ments shall continue to accrue until a plan’s asVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00117 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 sets are distributed pursuant to a termination 

2 procedure. 

3 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

4 PAYMENTS.—If any payment is not made by a 

5 plan when it is due, a late payment charge of 

6 not more than 100 percent of the payment 

7 which was not timely paid shall be payable by 

8 the plan to the Fund. 

9 ‘‘(C) CONTINUED DUTY OF THE SEC10 RETARY.—The Secretary shall not cease to 

11 carry out the provisions of paragraph (2) on ac12 count of the failure of a plan to pay any pay13 ment when due. 

14 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

15 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN16 DEMNIFICATION INSURANCE COVERAGE FOR CER17 TAIN PLANS.—In any case in which the applicable 

18 authority determines that there is, or that there is 

19 reason to believe that there will be: (A) a failure to 

20 take necessary corrective actions under section 

21 809(a) with respect to an association health plan de22 scribed in subsection (a)(2); or (B) a termination of 

23 such a plan under section 809(b) or 810(b)(8) (and, 

24 if the applicable authority is not the Secretary, cer25 tifies such determination to the Secretary), the SecVerDate Mar 15 2010 00:30 Sep 20, 2013 Jkt 029200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6201 E:\BILLS\H3121.IH H3121

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1 retary shall determine the amounts necessary to 

2 make payments to an insurer (designated by the 

3 Secretary) to maintain in force excess/stop loss in4 surance coverage or indemnification insurance cov5 erage for such plan, if the Secretary determines that 

6 there is a reasonable expectation that, without such 

7 payments, claims would not be satisfied by reason of 

8 termination of such coverage. The Secretary shall, to 

9 the extent provided in advance in appropriation 

10 Acts, pay such amounts so determined to the insurer 

11 designated by the Secretary. 

12 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 

13 ‘‘(A) IN GENERAL.—There is established 

14 on the books of the Treasury a fund to be 

15 known as the ‘Association Health Plan Fund’. 

16 The Fund shall be available for making pay17 ments pursuant to paragraph (2). The Fund 

18 shall be credited with payments received pursu19 ant to paragraph (1)(A), penalties received pur20 suant to paragraph (1)(B); and earnings on in21 vestments of amounts of the Fund under sub22 paragraph (B). 

23 ‘‘(B) INVESTMENT.—Whenever the Sec24 retary determines that the moneys of the fund 

25 are in excess of current needs, the Secretary 


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1 may request the investment of such amounts as 

2 the Secretary determines advisable by the Sec3 retary of the Treasury in obligations issued or 

4 guaranteed by the United States. 

5 ‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 

6 of this section— 

7 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR8 ANCE.—The term ‘aggregate excess/stop loss insur9 ance’ means, in connection with an association 

10 health plan, a contract— 

11 ‘‘(A) under which an insurer (meeting such 

12 minimum standards as the applicable authority 

13 may prescribe by regulation) provides for pay14 ment to the plan with respect to aggregate 

15 claims under the plan in excess of an amount 

16 or amounts specified in such contract; 

17 ‘‘(B) which is guaranteed renewable; and 

18 ‘‘(C) which allows for payment of pre19 miums by any third party on behalf of the in20 sured plan. 

21 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR22 ANCE.—The term ‘specific excess/stop loss insur23 ance’ means, in connection with an association 

24 health plan, a contract— 


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1 ‘‘(A) under which an insurer (meeting such 

2 minimum standards as the applicable authority 

3 may prescribe by regulation) provides for pay4 ment to the plan with respect to claims under 

5 the plan in connection with a covered individual 

6 in excess of an amount or amounts specified in 

7 such contract in connection with such covered 

8 individual; 

9 ‘‘(B) which is guaranteed renewable; and 

10 ‘‘(C) which allows for payment of pre11 miums by any third party on behalf of the in12 sured plan. 

13 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 

14 of this section, the term ‘indemnification insurance’ 

15 means, in connection with an association health plan, a 

16 contract— 

17 ‘‘(1) under which an insurer (meeting such min18 imum standards as the applicable authority may pre19 scribe by regulation) provides for payment to the 

20 plan with respect to claims under the plan which the 

21 plan is unable to satisfy by reason of a termination 

22 pursuant to section 809(b) (relating to mandatory 

23 termination); 


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1 ‘‘(2) which is guaranteed renewable and 

2 noncancellable for any reason (except as the applica3 ble authority may prescribe by regulation); and 

4 ‘‘(3) which allows for payment of premiums by 

5 any third party on behalf of the insured plan. 

6 ‘‘(i) RESERVES.—For purposes of this section, the 

7 term ‘reserves’ means, in connection with an association 

8 health plan, plan assets which meet the fiduciary stand9 ards under part 4 and such additional requirements re10 garding liquidity as the applicable authority may prescribe 

11 by regulation. 

12 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 

13 ‘‘(1) IN GENERAL.—Within 90 days after the 

14 date of the enactment of this part, the applicable au15 thority shall establish a Solvency Standards Working 

16 Group. In prescribing the initial regulations under 

17 this section, the applicable authority shall take into 

18 account the recommendations of such Working 

19 Group. 

20 ‘‘(2) MEMBERSHIP.—The Working Group shall 

21 consist of not more than 15 members appointed by 

22 the applicable authority. The applicable authority 

23 shall include among persons invited to membership 

24 on the Working Group at least one of each of the 

25 following: 


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1 ‘‘(A) a representative of the National Asso2 ciation of Insurance Commissioners; 

3 ‘‘(B) a representative of the American 

4 Academy of Actuaries; 

5 ‘‘(C) a representative of the State govern6 ments, or their interests; 

7 ‘‘(D) a representative of existing self-in8 sured arrangements, or their interests; 

9 ‘‘(E) a representative of associations of the 

10 type referred to in section 801(b)(1), or their 

11 interests; and 

12 ‘‘(F) a representative of multiemployer 

13 plans that are group health plans, or their in14 terests. 

15 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE16 LATED REQUIREMENTS. 

17 ‘‘(a) FILING FEE.—Under the procedure prescribed 

18 pursuant to section 802(a), an association health plan 

19 shall pay to the applicable authority at the time of filing 

20 an application for certification under this part a filing fee 

21 in the amount of $5,000, which shall be available in the 

22 case of the Secretary, to the extent provided in appropria23 tion Acts, for the sole purpose of administering the certifi24 cation procedures applicable with respect to association 

25 health plans. 


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1 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA2 TION FOR CERTIFICATION.—An application for certifi3 cation under this part meets the requirements of this sec4 tion only if it includes, in a manner and form which shall 

5 be prescribed by the applicable authority by regulation, at 

6 least the following information: 

7 ‘‘(1) IDENTIFYING INFORMATION.—The names 

8 and addresses of— 

9 ‘‘(A) the sponsor; and 

10 ‘‘(B) the members of the board of trustees 

11 of the plan. 

12 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO

13 BUSINESS.—The States in which participants and 

14 beneficiaries under the plan are to be located and 

15 the number of them expected to be located in each 

16 such State. 

17 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro18 vided by the board of trustees that the bonding re19 quirements of section 412 will be met as of the date 

20 of the application or (if later) commencement of op21 erations. 

22 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu23 ments governing the plan (including any bylaws and 

24 trust agreements), the summary plan description, 

25 and other material describing the benefits that will 


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1 be provided to participants and beneficiaries under 

2 the plan. 

3 ‘‘(5) AGREEMENTS WITH SERVICE PRO4 VIDERS.—A copy of any agreements between the 

5 plan and contract administrators and other service 

6 providers. 

7 ‘‘(6) FUNDING REPORT.—In the case of asso8 ciation health plans providing benefits options in ad9 dition to health insurance coverage, a report setting 

10 forth information with respect to such additional 

11 benefit options determined as of a date within the 

12 120-day period ending with the date of the applica13 tion, including the following: 

14 ‘‘(A) RESERVES.—A statement, certified 

15 by the board of trustees of the plan, and a 

16 statement of actuarial opinion, signed by a 

17 qualified actuary, that all applicable require18 ments of section 806 are or will be met in ac19 cordance with regulations which the applicable 

20 authority shall prescribe. 

21 ‘‘(B) ADEQUACY OF CONTRIBUTION

22 RATES.—A statement of actuarial opinion, 

23 signed by a qualified actuary, which sets forth 

24 a description of the extent to which contribution 

25 rates are adequate to provide for the payment 


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1 of all obligations and the maintenance of re2 quired reserves under the plan for the 12- 

3 month period beginning with such date within 

4 such 120-day period, taking into account the 

5 expected coverage and experience of the plan. If 

6 the contribution rates are not fully adequate, 

7 the statement of actuarial opinion shall indicate 

8 the extent to which the rates are inadequate 

9 and the changes needed to ensure adequacy. 

10 ‘‘(C) CURRENT AND PROJECTED VALUE OF

11 ASSETS AND LIABILITIES.—A statement of ac12 tuarial opinion signed by a qualified actuary, 

13 which sets forth the current value of the assets 

14 and liabilities accumulated under the plan and 

15 a projection of the assets, liabilities, income, 

16 and expenses of the plan for the 12-month pe17 riod referred to in subparagraph (B). The in18 come statement shall identify separately the 

19 plan’s administrative expenses and claims. 

20 ‘‘(D) COSTS OF COVERAGE TO BE

21 CHARGED AND OTHER EXPENSES.—A state22 ment of the costs of coverage to be charged, in23 cluding an itemization of amounts for adminis24 tration, reserves, and other expenses associated 

25 with the operation of the plan. 


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1 ‘‘(E) OTHER INFORMATION.—Any other 

2 information as may be determined by the appli3 cable authority, by regulation, as necessary to 

4 carry out the purposes of this part. 

5 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

6 STATES.—A certification granted under this part to an 

7 association health plan shall not be effective unless written 

8 notice of such certification is filed with the applicable 

9 State authority of each State in which at least 25 percent 

10 of the participants and beneficiaries under the plan are 

11 located. For purposes of this subsection, an individual 

12 shall be considered to be located in the State in which a 

13 known address of such individual is located or in which 

14 such individual is employed. 

15 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 

16 of any association health plan certified under this part, 

17 descriptions of material changes in any information which 

18 was required to be submitted with the application for the 

19 certification under this part shall be filed in such form 

20 and manner as shall be prescribed by the applicable au21 thority by regulation. The applicable authority may re22 quire by regulation prior notice of material changes with 

23 respect to specified matters which might serve as the basis 

24 for suspension or revocation of the certification. 


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1 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS2 SOCIATION HEALTH PLANS.—An association health plan 

3 certified under this part which provides benefit options in 

4 addition to health insurance coverage for such plan year 

5 shall meet the requirements of section 103 by filing an 

6 annual report under such section which shall include infor7 mation described in subsection (b)(6) with respect to the 

8 plan year and, notwithstanding section 104(a)(1)(A), shall 

9 be filed with the applicable authority not later than 90 

10 days after the close of the plan year (or on such later date 

11 as may be prescribed by the applicable authority). The ap12 plicable authority may require by regulation such interim 

13 reports as it considers appropriate. 

14 ‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The 

15 board of trustees of each association health plan which 

16 provides benefits options in addition to health insurance 

17 coverage and which is applying for certification under this 

18 part or is certified under this part shall engage, on behalf 

19 of all participants and beneficiaries, a qualified actuary 

20 who shall be responsible for the preparation of the mate21 rials comprising information necessary to be submitted by 

22 a qualified actuary under this part. The qualified actuary 

23 shall utilize such assumptions and techniques as are nec24 essary to enable such actuary to form an opinion as to 


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1 whether the contents of the matters reported under this 

2 part— 

3 ‘‘(1) are in the aggregate reasonably related to 

4 the experience of the plan and to reasonable expecta5 tions; and 

6 ‘‘(2) represent such actuary’s best estimate of 

7 anticipated experience under the plan. 

8 The opinion by the qualified actuary shall be made with 

9 respect to, and shall be made a part of, the annual report. 

10 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER11 MINATION. 

12 ‘‘Except as provided in section 809(b), an association 

13 health plan which is or has been certified under this part 

14 may terminate (upon or at any time after cessation of ac15 cruals in benefit liabilities) only if the board of trustees, 

16 not less than 60 days before the proposed termination 

17 date— 

18 ‘‘(1) provides to the participants and bene19 ficiaries a written notice of intent to terminate stat20 ing that such termination is intended and the pro21 posed termination date; 

22 ‘‘(2) develops a plan for winding up the affairs 

23 of the plan in connection with such termination in 

24 a manner which will result in timely payment of all 

25 benefits for which the plan is obligated; and 


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1 ‘‘(3) submits such plan in writing to the appli2 cable authority. 

3 Actions required under this section shall be taken in such 

4 form and manner as may be prescribed by the applicable 

5 authority by regulation. 

6 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI7 NATION. 

8 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE9 SERVES.—An association health plan which is certified 

10 under this part and which provides benefits other than 

11 health insurance coverage shall continue to meet the re12 quirements of section 806, irrespective of whether such 

13 certification continues in effect. The board of trustees of 

14 such plan shall determine quarterly whether the require15 ments of section 806 are met. In any case in which the 

16 board determines that there is reason to believe that there 

17 is or will be a failure to meet such requirements, or the 

18 applicable authority makes such a determination and so 

19 notifies the board, the board shall immediately notify the 

20 qualified actuary engaged by the plan, and such actuary 

21 shall, not later than the end of the next following month, 

22 make such recommendations to the board for corrective 

23 action as the actuary determines necessary to ensure com24 pliance with section 806. Not later than 30 days after re25 ceiving from the actuary recommendations for corrective 


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1 actions, the board shall notify the applicable authority (in 

2 such form and manner as the applicable authority may 

3 prescribe by regulation) of such recommendations of the 

4 actuary for corrective action, together with a description 

5 of the actions (if any) that the board has taken or plans 

6 to take in response to such recommendations. The board 

7 shall thereafter report to the applicable authority, in such 

8 form and frequency as the applicable authority may speci9 fy to the board, regarding corrective action taken by the 

10 board until the requirements of section 806 are met. 

11 ‘‘(b) MANDATORY TERMINATION.—In any case in 

12 which— 

13 ‘‘(1) the applicable authority has been notified 

14 under subsection (a) (or by an issuer of excess/stop 

15 loss insurance or indemnity insurance pursuant to 

16 section 806(a)) of a failure of an association health 

17 plan which is or has been certified under this part 

18 and is described in section 806(a)(2) to meet the re19 quirements of section 806 and has not been notified 

20 by the board of trustees of the plan that corrective 

21 action has restored compliance with such require22 ments; and 

23 ‘‘(2) the applicable authority determines that 

24 there is a reasonable expectation that the plan will 


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1 continue to fail to meet the requirements of section 

2 806, 

3 the board of trustees of the plan shall, at the direction 

4 of the applicable authority, terminate the plan and, in the 

5 course of the termination, take such actions as the appli6 cable authority may require, including satisfying any 

7 claims referred to in section 806(a)(2)(B)(iii) and recov8 ering for the plan any liability under subsection 

9 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 

10 that the affairs of the plan will be, to the maximum extent 

11 possible, wound up in a manner which will result in timely 

12 provision of all benefits for which the plan is obligated. 

13 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL14 VENT ASSOCIATION HEALTH PLANS PRO15 VIDING HEALTH BENEFITS IN ADDITION TO 

16 HEALTH INSURANCE COVERAGE. 

17 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

18 INSOLVENT PLANS.—Whenever the Secretary determines 

19 that an association health plan which is or has been cer20 tified under this part and which is described in section 

21 806(a)(2) will be unable to provide benefits when due or 

22 is otherwise in a financially hazardous condition, as shall 

23 be defined by the Secretary by regulation, the Secretary 

24 shall, upon notice to the plan, apply to the appropriate 

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1 retary as trustee to administer the plan for the duration 

2 of the insolvency. The plan may appear as a party and 

3 other interested persons may intervene in the proceedings 

4 at the discretion of the court. The court shall appoint such 

5 Secretary trustee if the court determines that the trustee6 ship is necessary to protect the interests of the partici7 pants and beneficiaries or providers of medical care or to 

8 avoid any unreasonable deterioration of the financial con9 dition of the plan. The trusteeship of such Secretary shall 

10 continue until the conditions described in the first sen11 tence of this subsection are remedied or the plan is termi12 nated. 

13 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

14 appointment as trustee under subsection (a), shall have 

15 the power— 

16 ‘‘(1) to do any act authorized by the plan, this 

17 title, or other applicable provisions of law to be done 

18 by the plan administrator or any trustee of the plan; 

19 ‘‘(2) to require the transfer of all (or any part) 

20 of the assets and records of the plan to the Sec21 retary as trustee; 

22 ‘‘(3) to invest any assets of the plan which the 

23 Secretary holds in accordance with the provisions of 

24 the plan, regulations prescribed by the Secretary, 

25 and applicable provisions of law; 


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1 ‘‘(4) to require the sponsor, the plan adminis2 trator, any participating employer, and any employee 

3 organization representing plan participants to fur4 nish any information with respect to the plan which 

5 the Secretary as trustee may reasonably need in 

6 order to administer the plan; 

7 ‘‘(5) to collect for the plan any amounts due the 

8 plan and to recover reasonable expenses of the trust9 eeship; 

10 ‘‘(6) to commence, prosecute, or defend on be11 half of the plan any suit or proceeding involving the 

12 plan; 

13 ‘‘(7) to issue, publish, or file such notices, state14 ments, and reports as may be required by the Sec15 retary by regulation or required by any order of the 

16 court; 

17 ‘‘(8) to terminate the plan (or provide for its 

18 termination in accordance with section 809(b)) and 

19 liquidate the plan assets, to restore the plan to the 

20 responsibility of the sponsor, or to continue the 

21 trusteeship; 

22 ‘‘(9) to provide for the enrollment of plan par23 ticipants and beneficiaries under appropriate cov24 erage options; and 


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1 ‘‘(10) to do such other acts as may be nec2 essary to comply with this title or any order of the 

3 court and to protect the interests of plan partici4 pants and beneficiaries and providers of medical 

5 care. 

6 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac7 ticable after the Secretary’s appointment as trustee, the 

8 Secretary shall give notice of such appointment to— 

9 ‘‘(1) the sponsor and plan administrator; 

10 ‘‘(2) each participant; 

11 ‘‘(3) each participating employer; and 

12 ‘‘(4) if applicable, each employee organization 

13 which, for purposes of collective bargaining, rep14 resents plan participants. 

15 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in16 consistent with the provisions of this title, or as may be 

17 otherwise ordered by the court, the Secretary, upon ap18 pointment as trustee under this section, shall be subject 

19 to the same duties as those of a trustee under section 704 

20 of title 11, United States Code, and shall have the duties 

21 of a fiduciary for purposes of this title. 

22 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

23 Secretary under this subsection may be filed notwith24 standing the pendency in the same or any other court of 

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1 ship proceeding, or any proceeding to reorganize, conserve, 

2 or liquidate such plan or its property, or any proceeding 

3 to enforce a lien against property of the plan. 

4 ‘‘(f) JURISDICTION OF COURT.— 

5 ‘‘(1) IN GENERAL.—Upon the filing of an appli6 cation for the appointment as trustee or the issuance 

7 of a decree under this section, the court to which the 

8 application is made shall have exclusive jurisdiction 

9 of the plan involved and its property wherever lo10 cated with the powers, to the extent consistent with 

11 the purposes of this section, of a court of the United 

12 States having jurisdiction over cases under chapter 

13 11 of title 11, United States Code. Pending an adju14 dication under this section such court shall stay, and 

15 upon appointment by it of the Secretary as trustee, 

16 such court shall continue the stay of, any pending 

17 mortgage foreclosure, equity receivership, or other 

18 proceeding to reorganize, conserve, or liquidate the 

19 plan, the sponsor, or property of such plan or spon20 sor, and any other suit against any receiver, conser21 vator, or trustee of the plan, the sponsor, or prop22 erty of the plan or sponsor. Pending such adjudica23 tion and upon the appointment by it of the Sec24 retary as trustee, the court may stay any proceeding 

25 to enforce a lien against property of the plan or the 


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1 sponsor or any other suit against the plan or the 

2 sponsor. 

3 ‘‘(2) VENUE.—An action under this section 

4 may be brought in the judicial district where the 

5 sponsor or the plan administrator resides or does 

6 business or where any asset of the plan is situated. 

7 A district court in which such action is brought may 

8 issue process with respect to such action in any 

9 other judicial district. 

10 ‘‘(g) PERSONNEL.—In accordance with regulations 

11 which shall be prescribed by the Secretary, the Secretary 

12 shall appoint, retain, and compensate accountants, actu13 aries, and other professional service personnel as may be 

14 necessary in connection with the Secretary’s service as 

15 trustee under this section. 

16 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

17 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

18 State may impose by law a contribution tax on an associa19 tion health plan described in section 806(a)(2), if the plan 

20 commenced operations in such State after the date of the 

21 enactment of this part. 

22 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec23 tion, the term ‘contribution tax’ imposed by a State on 

24 an association health plan means any tax imposed by such 

25 State if— 


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1 ‘‘(1) such tax is computed by applying a rate to 

2 the amount of premiums or contributions, with re3 spect to individuals covered under the plan who are 

4 residents of such State, which are received by the 

5 plan from participating employers located in such 

6 State or from such individuals; 

7 ‘‘(2) the rate of such tax does not exceed the 

8 rate of any tax imposed by such State on premiums 

9 or contributions received by insurers or health main10 tenance organizations for health insurance coverage 

11 offered in such State in connection with a group 

12 health plan; 

13 ‘‘(3) such tax is otherwise nondiscriminatory; 

14 and 

15 ‘‘(4) the amount of any such tax assessed on 

16 the plan is reduced by the amount of any tax or as17 sessment otherwise imposed by the State on pre18 miums, contributions, or both received by insurers or 

19 health maintenance organizations for health insur20 ance coverage, aggregate excess/stop loss insurance 

21 (as defined in section 806(g)(1)), specific excess/stop 

22 loss insurance (as defined in section 806(g)(2)), 

23 other insurance related to the provision of medical 

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1 vided by such insurers or health maintenance organi2 zations in such State in connection with such plan. 

3 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

4 ‘‘(a) DEFINITIONS.—For purposes of this part— 

5 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

6 health plan’ has the meaning provided in section 

7 733(a)(1) (after applying subsection (b) of this sec8 tion). 

9 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

10 has the meaning provided in section 733(a)(2). 

11 ‘‘(3) HEALTH INSURANCE COVERAGE.—The 

12 term ‘health insurance coverage’ has the meaning 

13 provided in section 733(b)(1). 

14 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

15 ‘health insurance issuer’ has the meaning provided 

16 in section 733(b)(2). 

17 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap18 plicable authority’ means the Secretary, except that, 

19 in connection with any exercise of the Secretary’s 

20 authority regarding which the Secretary is required 

21 under section 506(d) to consult with a State, such 

22 term means the Secretary, in consultation with such 

23 State. 


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1 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

2 term ‘health status-related factor’ has the meaning 

3 provided in section 733(d)(2). 

4 ‘‘(7) INDIVIDUAL MARKET.— 

5 ‘‘(A) IN GENERAL.—The term ‘individual 

6 market’ means the market for health insurance 

7 coverage offered to individuals other than in 

8 connection with a group health plan. 

9 ‘‘(B) TREATMENT OF VERY SMALL

10 GROUPS.— 

11 ‘‘(i) IN GENERAL.—Subject to clause 

12 (ii), such term includes coverage offered in 

13 connection with a group health plan that 

14 has fewer than 2 participants as current 

15 employees or participants described in sec16 tion 732(d)(3) on the first day of the plan 

17 year. 

18 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

19 shall not apply in the case of health insur20 ance coverage offered in a State if such 

21 State regulates the coverage described in 

22 such clause in the same manner and to the 

23 same extent as coverage in the small group 

24 market (as defined in section 2791(e)(5) of 


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1 the Public Health Service Act) is regulated 

2 by such State. 

3 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

4 ‘participating employer’ means, in connection with 

5 an association health plan, any employer, if any indi6 vidual who is an employee of such employer, a part7 ner in such employer, or a self-employed individual 

8 who is such employer (or any dependent, as defined 

9 under the terms of the plan, of such individual) is 

10 or was covered under such plan in connection with 

11 the status of such individual as such an employee, 

12 partner, or self-employed individual in relation to the 

13 plan. 

14 ‘‘(9) APPLICABLE STATE AUTHORITY.—The 

15 term ‘applicable State authority’ means, with respect 

16 to a health insurance issuer in a State, the State in17 surance commissioner or official or officials des18 ignated by the State to enforce the requirements of 

19 title XXVII of the Public Health Service Act for the 

20 State involved with respect to such issuer. 

21 ‘‘(10) QUALIFIED ACTUARY.—The term ‘quali22 fied actuary’ means an individual who is a member 

23 of the American Academy of Actuaries. 

24 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili25 ated member’ means, in connection with a sponsor— 


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1 ‘‘(A) a person who is otherwise eligible to 

2 be a member of the sponsor but who elects an 

3 affiliated status with the sponsor, 

4 ‘‘(B) in the case of a sponsor with mem5 bers which consist of associations, a person who 

6 is a member of any such association and elects 

7 an affiliated status with the sponsor, or 

8 ‘‘(C) in the case of an association health 

9 plan in existence on the date of the enactment 

10 of this part, a person eligible to be a member 

11 of the sponsor or one of its member associa12 tions. 

13 ‘‘(12) LARGE EMPLOYER.—The term ‘large em14 ployer’ means, in connection with a group health 

15 plan with respect to a plan year, an employer who 

16 employed an average of at least 51 employees on 

17 business days during the preceding calendar year 

18 and who employs at least 2 employees on the first 

19 day of the plan year. 

20 ‘‘(13) SMALL EMPLOYER.—The term ‘small em21 ployer’ means, in connection with a group health 

22 plan with respect to a plan year, an employer who 

23 is not a large employer. 

24 ‘‘(b) RULES OF CONSTRUCTION.— 


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1 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur2 poses of determining whether a plan, fund, or pro3 gram is an employee welfare benefit plan which is an 

4 association health plan, and for purposes of applying 

5 this title in connection with such plan, fund, or pro6 gram so determined to be such an employee welfare 

7 benefit plan— 

8 ‘‘(A) in the case of a partnership, the term 

9 ‘employer’ (as defined in section 3(5)) includes 

10 the partnership in relation to the partners, and 

11 the term ‘employee’ (as defined in section 3(6)) 

12 includes any partner in relation to the partner13 ship; and 

14 ‘‘(B) in the case of a self-employed indi15 vidual, the term ‘employer’ (as defined in sec16 tion 3(5)) and the term ‘employee’ (as defined 

17 in section 3(6)) shall include such individual. 

18 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

19 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

20 case of any plan, fund, or program which was estab21 lished or is maintained for the purpose of providing 

22 medical care (through the purchase of insurance or 

23 otherwise) for employees (or their dependents) cov24 ered thereunder and which demonstrates to the Sec25 retary that all requirements for certification under 


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1 this part would be met with respect to such plan, 

2 fund, or program if such plan, fund, or program 

3 were a group health plan, such plan, fund, or pro4 gram shall be treated for purposes of this title as an 

5 employee welfare benefit plan on and after the date 

6 of such demonstration.’’. 

7 (b) CONFORMING AMENDMENTS TO PREEMPTION

8 RULES.— 

9 (1) Section 514(b)(6) of such Act (29 U.S.C. 

10 1144(b)(6)) is amended by adding at the end the 

11 following new subparagraph: 

12 ‘‘(E) The preceding subparagraphs of this paragraph 

13 do not apply with respect to any State law in the case 

14 of an association health plan which is certified under part 

15 8.’’. 

16 (2) Section 514 of such Act (29 U.S.C. 1144) 

17 is amended— 

18 (A) in subsection (b)(4), by striking ‘‘Sub19 section (a)’’ and inserting ‘‘Subsections (a) and 

20 (f)’’; 

21 (B) in subsection (b)(5), by striking ‘‘sub22 section (a)’’ in subparagraph (A) and inserting 

23 ‘‘subsection (a) of this section and subsections 

24 (a)(2)(B) and (b) of section 805’’, and by strik25 ing ‘‘subsection (a)’’ in subparagraph (B) and 


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1 inserting ‘‘subsection (a) of this section or sub2 section (a)(2)(B) or (b) of section 805’’; and 

3 (C) by adding at the end the following new 

4 subsection: 

5 ‘‘(f)(1) Except as provided in subsection (b)(4), the 

6 provisions of this title shall supersede any and all State 

7 laws insofar as they may now or hereafter preclude, or 

8 have the effect of precluding, a health insurance issuer 

9 from offering health insurance coverage in connection with 

10 an association health plan which is certified under part 

11 8. 

12 ‘‘(2) Except as provided in paragraphs (4) and (5) 

13 of subsection (b) of this section— 

14 ‘‘(A) In any case in which health insurance cov15 erage of any policy type is offered under an associa16 tion health plan certified under part 8 to a partici17 pating employer operating in such State, the provi18 sions of this title shall supersede any and all laws 

19 of such State insofar as they may preclude a health 

20 insurance issuer from offering health insurance cov21 erage of the same policy type to other employers op22 erating in the State which are eligible for coverage 

23 under such association health plan, whether or not 

24 such other employers are participating employers in 

25 such plan. 


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1 ‘‘(B) In any case in which health insurance cov2 erage of any policy type is offered in a State under 

3 an association health plan certified under part 8 and 

4 the filing, with the applicable State authority (as de5 fined in section 812(a)(9)), of the policy form in 

6 connection with such policy type is approved by such 

7 State authority, the provisions of this title shall su8 persede any and all laws of any other State in which 

9 health insurance coverage of such type is offered, in10 sofar as they may preclude, upon the filing in the 

11 same form and manner of such policy form with the 

12 applicable State authority in such other State, the 

13 approval of the filing in such other State. 

14 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

15 provisions of this subsection shall be construed, with re16 spect to health insurance issuers or health insurance cov17 erage, to supersede or impair the law of any State— 

18 ‘‘(A) providing solvency standards or similar 

19 standards regarding the adequacy of insurer capital, 

20 surplus, reserves, or contributions, or 

21 ‘‘(B) relating to prompt payment of claims. 

22 ‘‘(4) For additional provisions relating to association 

23 health plans, see subsections (a)(2)(B) and (b) of section 

24 805. 


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1 ‘‘(5) For purposes of this subsection, the term ‘asso2 ciation health plan’ has the meaning provided in section 

3 801(a), and the terms ‘health insurance coverage’, ‘par4 ticipating employer’, and ‘health insurance issuer’ have 

5 the meanings provided such terms in section 812, respec6 tively.’’. 

7 (3) Section 514(b)(6)(A) of such Act (29 

8 U.S.C. 1144(b)(6)(A)) is amended— 

9 (A) in clause (i)(II), by striking ‘‘and’’ at 

10 the end; 

11 (B) in clause (ii), by inserting ‘‘and which 

12 does not provide medical care (within the mean13 ing of section 733(a)(2)),’’ after ‘‘arrange14 ment,’’, and by striking ‘‘title.’’ and inserting 

15 ‘‘title, and’’; and 

16 (C) by adding at the end the following new 

17 clause: 

18 ‘‘(iii) subject to subparagraph (E), in the case 

19 of any other employee welfare benefit plan which is 

20 a multiple employer welfare arrangement and which 

21 provides medical care (within the meaning of section 

22 733(a)(2)), any law of any State which regulates in23 surance may apply.’’. 

24 (4) Section 514(d) of such Act (29 U.S.C. 

25 1144(d)) is amended— 


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1 (A) by striking ‘‘Nothing’’ and inserting 

2 ‘‘(1) Except as provided in paragraph (2), noth3 ing’’; and 

4 (B) by adding at the end the following new 

5 paragraph: 

6 ‘‘(2) Nothing in any other provision of law enacted 

7 on or after the date of the enactment of this paragraph 

8 shall be construed to alter, amend, modify, invalidate, im9 pair, or supersede any provision of this title, except by 

10 specific cross-reference to the affected section.’’. 

11 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act 

12 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

13 the following new sentence: ‘‘Such term also includes a 

14 person serving as the sponsor of an association health plan 

15 under part 8.’’. 

16 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE17 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

18 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

19 of such Act (29 U.S.C. 102(b)) is amended by adding at 

20 the end the following: ‘‘An association health plan shall 

21 include in its summary plan description, in connection 

22 with each benefit option, a description of the form of sol23 vency or guarantee fund protection secured pursuant to 

24 this Act or applicable State law, if any.’’. 


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1 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

2 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

3 (f) REPORT TO THE CONGRESS REGARDING CERTIFI4 CATION OF SELF-INSURED ASSOCIATION HEALTH

5 PLANS.—Not later than January 1, 2014, the Secretary 

6 of Labor shall report to the Committee on Education and 

7 the Workforce of the House of Representatives and the 

8 Committee on Health, Education, Labor, and Pensions of 

9 the Senate the effect association health plans have had, 

10 if any, on reducing the number of uninsured individuals. 

11 (g) CLERICAL AMENDMENT.—The table of contents 

12 in section 1 of the Employee Retirement Income Security 

13 Act of 1974 is amended by inserting after the item relat14 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

‘‘803. Requirements relating to sponsors and boards of trustees. 

‘‘804. Participation and coverage requirements. 

‘‘805. Other requirements relating to plan documents, contribution rates, and 

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 

‘‘811. State assessment authority. 

‘‘812. Definitions and rules of construction.’’. 


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1 SEC. 452. CLARIFICATION OF TREATMENT OF SINGLE EM2 PLOYER ARRANGEMENTS. 

3 Section 3(40)(B) of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend5 ed— 

6 (1) in clause (i), by inserting after ‘‘control 

7 group,’’ the following: ‘‘except that, in any case in 

8 which the benefit referred to in subparagraph (A) 

9 consists of medical care (as defined in section 

10 812(a)(2)), two or more trades or businesses, wheth11 er or not incorporated, shall be deemed a single em12 ployer for any plan year of such plan, or any fiscal 

13 year of such other arrangement, if such trades or 

14 businesses are within the same control group during 

15 such year or at any time during the preceding 1-year 

16 period,’’; 

17 (2) in clause (iii), by striking ‘‘(iii) the deter18 mination’’ and inserting the following: 

19 ‘‘(iii)(I) in any case in which the benefit re20 ferred to in subparagraph (A) consists of medical 

21 care (as defined in section 812(a)(2)), the deter22 mination of whether a trade or business is under 

23 ‘common control’ with another trade or business 

24 shall be determined under regulations of the Sec25 retary applying principles consistent and coextensive 

26 with the principles applied in determining whether 


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1 employees of two or more trades or businesses are 

2 treated as employed by a single employer under sec3 tion 4001(b), except that, for purposes of this para4 graph, an interest of greater than 25 percent may 

5 not be required as the minimum interest necessary 

6 for common control, or 

7 ‘‘(II) in any other case, the determination’’; 

8 (3) by redesignating clauses (iv) and (v) as 

9 clauses (v) and (vi), respectively; and 

10 (4) by inserting after clause (iii) the following 

11 new clause: 

12 ‘‘(iv) in any case in which the benefit referred 

13 to in subparagraph (A) consists of medical care (as 

14 defined in section 812(a)(2)), in determining, after 

15 the application of clause (i), whether benefits are 

16 provided to employees of two or more employers, the 

17 arrangement shall be treated as having only one par18 ticipating employer if, after the application of clause 

19 (i), the number of individuals who are employees and 

20 former employees of any one participating employer 

21 and who are covered under the arrangement is 

22 greater than 75 percent of the aggregate number of 

23 all individuals who are employees or former employ24 ees of participating employers and who are covered 

25 under the arrangement,’’. 


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1 SEC. 453. ENFORCEMENT PROVISIONS RELATING TO ASSO2 CIATION HEALTH PLANS. 

3 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

4 MISREPRESENTATIONS.—Section 501 of the Employee 

5 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

6 is amended by adding at the end the following new sub7 section: 

8 ‘‘(c) Any person who willfully falsely represents, to 

9 any employee, any employee’s beneficiary, any employer, 

10 the Secretary, or any State, a plan or other arrangement 

11 established or maintained for the purpose of offering or 

12 providing any benefit described in section 3(1) to employ13 ees or their beneficiaries as— 

14 ‘‘(1) being an association health plan which has 

15 been certified under part 8; 

16 ‘‘(2) having been established or maintained 

17 under or pursuant to one or more collective bar18 gaining agreements which are reached pursuant to 

19 collective bargaining described in section 8(d) of the 

20 National Labor Relations Act (29 U.S.C. 158(d)) or 

21 paragraph Fourth of section 2 of the Railway Labor 

22 Act (45 U.S.C. 152, paragraph Fourth) or which are 

23 reached pursuant to labor-management negotiations 

24 under similar provisions of State public employee re25 lations laws; or 


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1 ‘‘(3) being a plan or arrangement described in 

2 section 3(40)(A)(i), 

3 shall, upon conviction, be imprisoned not more than 5 

4 years, be fined under title 18, United States Code, or 

5 both.’’. 

6 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

7 such Act (29 U.S.C. 1132) is amended by adding at the 

8 end the following new subsection: 

9 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE10 SIST ORDERS.— 

11 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

12 upon application by the Secretary showing the oper13 ation, promotion, or marketing of an association 

14 health plan (or similar arrangement providing bene15 fits consisting of medical care (as defined in section 

16 733(a)(2))) that— 

17 ‘‘(A) is not certified under part 8, is sub18 ject under section 514(b)(6) to the insurance 

19 laws of any State in which the plan or arrange20 ment offers or provides benefits, and is not li21 censed, registered, or otherwise approved under 

22 the insurance laws of such State; or 

23 ‘‘(B) is an association health plan certified 

24 under part 8 and is not operating in accordance 


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1 with the requirements under part 8 for such 

2 certification, 

3 a district court of the United States shall enter an 

4 order requiring that the plan or arrangement cease 

5 activities. 

6 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

7 apply in the case of an association health plan or 

8 other arrangement if the plan or arrangement shows 

9 that— 

10 ‘‘(A) all benefits under it referred to in 

11 paragraph (1) consist of health insurance cov12 erage; and 

13 ‘‘(B) with respect to each State in which 

14 the plan or arrangement offers or provides ben15 efits, the plan or arrangement is operating in 

16 accordance with applicable State laws that are 

17 not superseded under section 514. 

18 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

19 court may grant such additional equitable relief, in20 cluding any relief available under this title, as it 

21 deems necessary to protect the interests of the pub22 lic and of persons having claims for benefits against 

23 the plan.’’. 

24 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

25 Section 503 of such Act (29 U.S.C. 1133) is amended by 


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1 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 

2 and by adding at the end the following new subsection: 

3 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

4 each association health plan which is or has been certified 

5 under part 8 shall require the board of trustees or the 

6 named fiduciary (as applicable) to ensure that the require7 ments of this section are met in connection with claims 

8 filed under the plan.’’. 

9 SEC. 454. COOPERATION BETWEEN FEDERAL AND STATE 

10 AUTHORITIES. 

11 Section 506 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

13 at the end the following new subsection: 

14 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

15 TO ASSOCIATION HEALTH PLANS.— 

16 ‘‘(1) AGREEMENTS WITH STATES.—The Sec17 retary shall consult with the State recognized under 

18 paragraph (2) with respect to an association health 

19 plan regarding the exercise of— 

20 ‘‘(A) the Secretary’s authority under sec21 tions 502 and 504 to enforce the requirements 

22 for certification under part 8; and 

23 ‘‘(B) the Secretary’s authority to certify 

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1 ance with regulations of the Secretary applica2 ble to certification under part 8. 

3 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

4 STATE.—In carrying out paragraph (1), the Sec5 retary shall ensure that only one State will be recog6 nized, with respect to any particular association 

7 health plan, as the State with which consultation is 

8 required. In carrying out this paragraph— 

9 ‘‘(A) in the case of a plan which provides 

10 health insurance coverage (as defined in section 

11 812(a)(3)), such State shall be the State with 

12 which filing and approval of a policy type of13 fered by the plan was initially obtained, and 

14 ‘‘(B) in any other case, the Secretary shall 

15 take into account the places of residence of the 

16 participants and beneficiaries under the plan 

17 and the State in which the trust is main18 tained.’’. 

19 SEC. 455. EFFECTIVE DATE AND TRANSITIONAL AND 

20 OTHER RULES. 

21 (a) EFFECTIVE DATE.—The amendments made by 

22 this subtitle shall take effect 1 year after the date of the 

23 enactment of this Act. The Secretary of Labor shall first 

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1 ments made by this subtitle within 1 year after the date 

2 of the enactment of this Act. 

3 (b) TREATMENT OF CERTAIN EXISTING HEALTH

4 BENEFITS PROGRAMS.— 

5 (1) IN GENERAL.—In any case in which, as of 

6 the date of the enactment of this Act, an arrange7 ment is maintained in a State for the purpose of 

8 providing benefits consisting of medical care for the 

9 employees and beneficiaries of its participating em10 ployers, at least 200 participating employers make 

11 contributions to such arrangement, such arrange12 ment has been in existence for at least 10 years, and 

13 such arrangement is licensed under the laws of one 

14 or more States to provide such benefits to its par15 ticipating employers, upon the filing with the appli16 cable authority (as defined in section 812(a)(5) of 

17 the Employee Retirement Income Security Act of 

18 1974 (as amended by this subtitle)) by the arrange19 ment of an application for certification of the ar20 rangement under part 8 of subtitle B of title I of 

21 such Act— 

22 (A) such arrangement shall be deemed to 

23 be a group health plan for purposes of title I 

24 of such Act; 


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1 (B) the requirements of sections 801(a) 

2 and 803(a) of the Employee Retirement Income 

3 Security Act of 1974 shall be deemed met with 

4 respect to such arrangement; 

5 (C) the requirements of section 803(b) of 

6 such Act shall be deemed met, if the arrange7 ment is operated by a board of directors 

8 which— 

9 (i) is elected by the participating em10 ployers, with each employer having one 

11 vote; and 

12 (ii) has complete fiscal control over 

13 the arrangement and which is responsible 

14 for all operations of the arrangement; 

15 (D) the requirements of section 804(a) of 

16 such Act shall be deemed met with respect to 

17 such arrangement; and 

18 (E) the arrangement may be certified by 

19 any applicable authority with respect to its op20 erations in any State only if it operates in such 

21 State on the date of certification. 

22 The provisions of this subsection shall cease to apply 

23 with respect to any such arrangement at such time 

24 after the date of the enactment of this Act as the 


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1 applicable requirements of this subsection are not 

2 met with respect to such arrangement. 

3 (2) DEFINITIONS.—For purposes of this sub4 section, the terms ‘‘group health plan’’, ‘‘medical 

5 care’’, and ‘‘participating employer’’ shall have the 

6 meanings provided in section 812 of the Employee 

7 Retirement Income Security Act of 1974, except 

8 that the reference in paragraph (7) of such section 

9 to an ‘‘association health plan’’ shall be deemed a 

10 reference to an arrangement referred to in this sub11 section. 

12 TITLE V—REFORMING MEDICAL 

13 LIABILITY LAW 

14 SEC. 501. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

15 The time for the commencement of a health care law16 suit shall be 3 years after the date of manifestation of 

17 injury or 1 year after the claimant discovers, or through 

18 the use of reasonable diligence should have discovered, the 

19 injury, whichever occurs first. In no event shall the time 

20 for commencement of a health care lawsuit exceed 3 years 

21 after the date of manifestation of injury unless tolled for 

22 any of the following— 

23 (1) upon proof of fraud; 

24 (2) intentional concealment; or 


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1 (3) the presence of a foreign body, which has no 

2 therapeutic or diagnostic purpose or effect, in the 

3 person of the injured person. 

4 Actions by a minor shall be commenced within 3 years 

5 from the date of the alleged manifestation of injury except 

6 that actions by a minor under the full age of 6 years shall 

7 be commenced within 3 years of manifestation of injury 

8 or prior to the minor’s 8th birthday, whichever provides 

9 a longer period. Such time limitation shall be tolled for 

10 minors for any period during which a parent or guardian 

11 and a health care provider or health care organization 

12 have committed fraud or collusion in the failure to bring 

13 an action on behalf of the injured minor. 

14 SEC. 502. COMPENSATING PATIENT INJURY. 

15 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

16 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

17 health care lawsuit, nothing in this subtitle shall limit a 

18 claimant’s recovery of the full amount of the available eco19 nomic damages, notwithstanding the limitation in sub20 section (b). 

21 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

22 health care lawsuit, the amount of noneconomic damages, 

23 if available, may be as much as $250,000, regardless of 

24 the number of parties against whom the action is brought 


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1 or the number of separate claims or actions brought with 

2 respect to the same injury. 

3 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

4 DAMAGES.—For purposes of applying the limitation in 

5 subsection (b), future noneconomic damages shall not be 

6 discounted to present value. The jury shall not be in7 formed about the maximum award for noneconomic dam8 ages. An award for noneconomic damages in excess of 

9 $250,000 shall be reduced either before the entry of judg10 ment, or by amendment of the judgment after entry of 

11 judgment, and such reduction shall be made before ac12 counting for any other reduction in damages required by 

13 law. If separate awards are rendered for past and future 

14 noneconomic damages and the combined awards exceed 

15 $250,000, the future noneconomic damages shall be re16 duced first. 

17 (d) FAIR SHARE RULE.—In any health care lawsuit, 

18 each party shall be liable for that party’s several share 

19 of any damages only and not for the share of any other 

20 person. Each party shall be liable only for the amount of 

21 damages allocated to such party in direct proportion to 

22 such party’s percentage of responsibility. Whenever a 

23 judgment of liability is rendered as to any party, a sepa24 rate judgment shall be rendered against each such party 

25 for the amount allocated to such party. For purposes of 


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1 this section, the trier of fact shall determine the propor2 tion of responsibility of each party for the claimant’s 

3 harm. 

4 SEC. 503. MAXIMIZING PATIENT RECOVERY. 

5 (a) COURT SUPERVISION OF SHARE OF DAMAGES

6 ACTUALLY PAID TO CLAIMANTS.—In any health care law7 suit, the court shall supervise the arrangements for pay8 ment of damages to protect against conflicts of interest 

9 that may have the effect of reducing the amount of dam10 ages awarded that are actually paid to claimants. In par11 ticular, in any health care lawsuit in which the attorney 

12 for a party claims a financial stake in the outcome by vir13 tue of a contingent fee, the court shall have the power 

14 to restrict the payment of a claimant’s damage recovery 

15 to such attorney, and to redirect such damages to the 

16 claimant based upon the interests of justice and principles 

17 of equity. In no event shall the total of all contingent fees 

18 for representing all claimants in a health care lawsuit ex19 ceed the following limits: 

20 (1) Forty percent of the first $50,000 recovered 

21 by the claimant(s). 

22 (2) Thirty-three and one-third percent of the 

23 next $50,000 recovered by the claimant(s). 

24 (3) Twenty-five percent of the next $500,000 

25 recovered by the claimant(s). 


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1 (4) Fifteen percent of any amount by which the 

2 recovery by the claimant(s) is in excess of $600,000. 

3 (b) APPLICABILITY.—The limitations in this section 

4 shall apply whether the recovery is by judgment, settle5 ment, mediation, arbitration, or any other form of alter6 native dispute resolution. In a health care lawsuit involv7 ing a minor or incompetent person, a court retains the 

8 authority to authorize or approve a fee that is less than 

9 the maximum permitted under this section. The require10 ment for court supervision in the first two sentences of 

11 subsection (a) applies only in civil actions. 

12 SEC. 504. PUNITIVE DAMAGES. 

13 (a) IN GENERAL.—Punitive damages may, if other14 wise permitted by applicable State or Federal law, be 

15 awarded against any person in a health care lawsuit only 

16 if it is proven by clear and convincing evidence that such 

17 person acted with malicious intent to injure the claimant, 

18 or that such person deliberately failed to avoid unneces19 sary injury that such person knew the claimant was sub20 stantially certain to suffer. In any health care lawsuit 

21 where no judgment for compensatory damages is rendered 

22 against such person, no punitive damages may be awarded 

23 with respect to the claim in such lawsuit. No demand for 

24 punitive damages shall be included in a health care lawsuit 

25 as initially filed. A court may allow a claimant to file an 


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1 amended pleading for punitive damages only upon a mo2 tion by the claimant and after a finding by the court, upon 

3 review of supporting and opposing affidavits or after a 

4 hearing, after weighing the evidence, that the claimant has 

5 established by a substantial probability that the claimant 

6 will prevail on the claim for punitive damages. At the re7 quest of any party in a health care lawsuit, the trier of 

8 fact shall consider in a separate proceeding— 

9 (1) whether punitive damages are to be award10 ed and the amount of such award; and 

11 (2) the amount of punitive damages following a 

12 determination of punitive liability. 

13 If a separate proceeding is requested, evidence relevant 

14 only to the claim for punitive damages, as determined by 

15 applicable State law, shall be inadmissible in any pro16 ceeding to determine whether compensatory damages are 

17 to be awarded. 

18 (b) DETERMINING AMOUNT OF PUNITIVE DAM19 AGES.— 

20 (1) FACTORS CONSIDERED.—In determining 

21 the amount of punitive damages, if awarded, in a 

22 health care lawsuit, the trier of fact shall consider 

23 only the following— 

24 (A) the severity of the harm caused by the 

25 conduct of such party; 


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1 (B) the duration of the conduct or any 

2 concealment of it by such party; 

3 (C) the profitability of the conduct to such 

4 party; 

5 (D) the number of products sold or med6 ical procedures rendered for compensation, as 

7 the case may be, by such party, of the kind 

8 causing the harm complained of by the claim9 ant; 

10 (E) any criminal penalties imposed on such 

11 party, as a result of the conduct complained of 

12 by the claimant; and 

13 (F) the amount of any civil fines assessed 

14 against such party as a result of the conduct 

15 complained of by the claimant. 

16 (2) MAXIMUM AWARD.—The amount of punitive 

17 damages, if awarded, in a health care lawsuit may 

18 be as much as $250,000 or as much as two times 

19 the amount of economic damages awarded, which20 ever is greater. The jury shall not be informed of 

21 this limitation. 

22 (c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT

23 COMPLY WITH FDA STANDARDS.— 

24 (1) IN GENERAL.— 


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1 (A) No punitive damages may be awarded 

2 against the manufacturer or distributor of a 

3 medical product, or a supplier of any compo4 nent or raw material of such medical product, 

5 based on a claim that such product caused the 

6 claimant’s harm where— 

7 (i)(I) such medical product was sub8 ject to premarket approval, clearance, or li9 censure by the Food and Drug Administra10 tion with respect to the safety of the for11 mulation or performance of the aspect of 

12 such medical product which caused the 

13 claimant’s harm or the adequacy of the 

14 packaging or labeling of such medical 

15 product; and 

16 (II) such medical product was so ap17 proved, cleared, or licensed; or 

18 (ii) such medical product is generally 

19 recognized among qualified experts as safe 

20 and effective pursuant to conditions estab21 lished by the Food and Drug Administra22 tion and applicable Food and Drug Admin23 istration regulations, including without 

24 limitation those related to packaging and 

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1 istration has determined that such medical 

2 product was not manufactured or distrib3 uted in substantial compliance with appli4 cable Food and Drug Administration stat5 utes and regulations. 

6 (B) RULE OF CONSTRUCTION.—Subpara7 graph (A) may not be construed as establishing 

8 the obligation of the Food and Drug Adminis9 tration to demonstrate affirmatively that a 

10 manufacturer, distributor, or supplier referred 

11 to in such subparagraph meets any of the con12 ditions described in such subparagraph. 

13 (2) LIABILITY OF HEALTH CARE PROVIDERS.— 

14 A health care provider who prescribes, or who dis15 penses pursuant to a prescription, a medical product 

16 approved, licensed, or cleared by the Food and Drug 

17 Administration shall not be named as a party to a 

18 product liability lawsuit involving such product and 

19 shall not be liable to a claimant in a class action 

20 lawsuit against the manufacturer, distributor, or 

21 seller of such product. Nothing in this paragraph 

22 prevents a court from consolidating cases involving 

23 health care providers and cases involving products li24 ability claims against the manufacturer, distributor, 

25 or product seller of such medical product. 


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1 (3) PACKAGING.—In a health care lawsuit for 

2 harm which is alleged to relate to the adequacy of 

3 the packaging or labeling of a drug which is required 

4 to have tamper-resistant packaging under regula5 tions of the Secretary of Health and Human Serv6 ices (including labeling regulations related to such 

7 packaging), the manufacturer or product seller of 

8 the drug shall not be held liable for punitive dam9 ages unless such packaging or labeling is found by 

10 the trier of fact by clear and convincing evidence to 

11 be substantially out of compliance with such regula12 tions. 

13 (4) EXCEPTION.—Paragraph (1) shall not 

14 apply in any health care lawsuit in which— 

15 (A) a person, before or after premarket ap16 proval, clearance, or licensure of such medical 

17 product, knowingly misrepresented to or with18 held from the Food and Drug Administration 

19 information that is required to be submitted 

20 under the Federal Food, Drug, and Cosmetic 

21 Act (21 U.S.C. 301 et seq.) or section 351 of 

22 the Public Health Service Act (42 U.S.C. 262) 

23 that is material and is causally related to the 

24 harm which the claimant allegedly suffered; or 


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1 (B) a person made an illegal payment to 

2 an official of the Food and Drug Administra3 tion for the purpose of either securing or main4 taining approval, clearance, or licensure of such 

5 medical product. 

6 SEC. 505. AUTHORIZATION OF PAYMENT OF FUTURE DAM7 AGES TO CLAIMANTS IN HEALTH CARE LAW8 SUITS. 

9 (a) IN GENERAL.—In any health care lawsuit, if an 

10 award of future damages, without reduction to present 

11 value, equaling or exceeding $50,000 is made against a 

12 party with sufficient insurance or other assets to fund a 

13 periodic payment of such a judgment, the court shall, at 

14 the request of any party, enter a judgment ordering that 

15 the future damages be paid by periodic payments, in ac16 cordance with the Uniform Periodic Payment of Judg17 ments Act promulgated by the National Conference of 

18 Commissioners on Uniform State Laws. 

19 (b) APPLICABILITY.—This section applies to all ac20 tions which have not been first set for trial or retrial be21 fore the effective date of this Act. 

22 SEC. 506. DEFINITIONS. 

23 In this subtitle: 

24 (1) ALTERNATIVE DISPUTE RESOLUTION SYS25 TEM; ADR.—The term ‘‘alternative dispute resolution 


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1 system’’ or ‘‘ADR’’ means a system that provides 

2 for the resolution of health care lawsuits in a man3 ner other than through a civil action brought in a 

4 State or Federal court. 

5 (2) CLAIMANT.—The term ‘‘claimant’’ means 

6 any person who brings a health care lawsuit, includ7 ing a person who asserts or claims a right to legal 

8 or equitable contribution, indemnity, or subrogation, 

9 arising out of a health care liability claim or action, 

10 and any person on whose behalf such a claim is as11 serted or such an action is brought, whether de12 ceased, incompetent, or a minor. 

13 (3) COMPENSATORY DAMAGES.—The term 

14 ‘‘compensatory damages’’ means objectively 

15 verifiable monetary losses incurred as a result of the 

16 provision of, use of, or payment for (or failure to 

17 provide, use, or pay for) health care services or med18 ical products, such as past and future medical ex19 penses, loss of past and future earnings, cost of ob20 taining domestic services, loss of employment, and 

21 loss of business or employment opportunities, dam22 ages for physical and emotional pain, suffering, in23 convenience, physical impairment, mental anguish, 

24 disfigurement, loss of enjoyment of life, loss of soci25 ety and companionship, loss of consortium (other 


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1 than loss of domestic service), hedonic damages, in2 jury to reputation, and all other nonpecuniary losses 

3 of any kind or nature. The term ‘‘compensatory 

4 damages’’ includes economic damages and non5 economic damages, as such terms are defined in this 

6 section. 

7 (4) CONTINGENT FEE.—The term ‘‘contingent 

8 fee’’ includes all compensation to any person or per9 sons which is payable only if a recovery is effected 

10 on behalf of one or more claimants. 

11 (5) ECONOMIC DAMAGES.—The term ‘‘economic 

12 damages’’ means objectively verifiable monetary 

13 losses incurred as a result of the provision of, use 

14 of, or payment for (or failure to provide, use, or pay 

15 for) health care services or medical products, such as 

16 past and future medical expenses, loss of past and 

17 future earnings, cost of obtaining domestic services, 

18 loss of employment, and loss of business or employ19 ment opportunities. 

20 (6) HEALTH CARE LAWSUIT.—The term 

21 ‘‘health care lawsuit’’ means any health care liability 

22 claim concerning the provision of health care goods 

23 or services or any medical product affecting inter24 state commerce, or any health care liability action 

25 concerning the provision of health care goods or 


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1 services or any medical product affecting interstate 

2 commerce, brought in a State or Federal court or 

3 pursuant to an alternative dispute resolution system, 

4 against a health care provider, a health care organi5 zation, or the manufacturer, distributor, supplier, 

6 marketer, promoter, or seller of a medical product, 

7 regardless of the theory of liability on which the 

8 claim is based, or the number of claimants, plain9 tiffs, defendants, or other parties, or the number of 

10 claims or causes of action, in which the claimant al11 leges a health care liability claim. Such term does 

12 not include a claim or action which is based on 

13 criminal liability; which seeks civil fines or penalties 

14 paid to Federal, State, or local government; or which 

15 is grounded in antitrust. Except for the purposes of 

16 sections 501, 502(d), 503, and 505(a), such term 

17 does not include a claim or action which is based on 

18 intentional denial of medical treatment that a pa19 tient is otherwise qualified to receive with the intent 

20 of causing or hastening the patient’s death against 

21 the wishes of the patient, or, if the patient is incom22 petent, against the wishes of the individual or indi23 viduals authorized to make health care decisions on 

24 behalf of the patient. 


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1 (7) HEALTH CARE LIABILITY ACTION.—The 

2 term ‘‘health care liability action’’ means a civil ac3 tion brought in a State or Federal court or pursuant 

4 to an alternative dispute resolution system, against 

5 a health care provider, a health care organization, or 

6 the manufacturer, distributor, supplier, marketer, 

7 promoter, or seller of a medical product, regardless 

8 of the theory of liability on which the claim is based, 

9 or the number of plaintiffs, defendants, or other par10 ties, or the number of causes of action, in which the 

11 claimant alleges a health care liability claim. 

12 (8) HEALTH CARE LIABILITY CLAIM.—The 

13 term ‘‘health care liability claim’’ means a demand 

14 by any person, whether or not pursuant to ADR, 

15 against a health care provider, health care organiza16 tion, or the manufacturer, distributor, supplier, mar17 keter, promoter, or seller of a medical product, in18 cluding, but not limited to, third-party claims, cross19 claims, counter-claims, or contribution claims, which 

20 are based upon the provision of, use of, or payment 

21 for (or the failure to provide, use, or pay for) health 

22 care services or medical products, regardless of the 

23 theory of liability on which the claim is based, or the 

24 number of plaintiffs, defendants, or other parties, or 

25 the number of causes of action. 


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1 (9) HEALTH CARE ORGANIZATION.—The term 

2 ‘‘health care organization’’ means any person or en3 tity which is obligated to provide or pay for health 

4 benefits under any health plan, including any person 

5 or entity acting under a contract or arrangement 

6 with a health care organization to provide or admin7 ister any health benefit. 

8 (10) HEALTH CARE PROVIDER.—The term 

9 ‘‘health care provider’’ means any person or entity 

10 required by State or Federal laws or regulations to 

11 be licensed, registered, or certified to provide health 

12 care services, and being either so licensed, reg13 istered, or certified, or exempted from such require14 ment by other statute or regulation. 

15 (11) HEALTH CARE GOODS OR SERVICES.—The 

16 term ‘‘health care goods or services’’ means any 

17 goods or services provided by a health care organiza18 tion, provider, or by any individual working under 

19 the supervision of a health care provider, that relates 

20 to the diagnosis, prevention, or treatment of any 

21 human disease or impairment, or the assessment or 

22 care of the health of human beings. 

23 (12) MALICIOUS INTENT TO INJURE.—The 

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1 jury other than providing health care goods or serv2 ices. 

3 (13) MEDICAL PRODUCT.—The term ‘‘medical 

4 product’’ means a drug, device, or biological product 

5 intended for humans, and the terms ‘‘drug’’, ‘‘de6 vice’’, and ‘‘biological product’’ have the meanings 

7 given such terms in sections 201(g)(1) and 201(h) 

8 of the Federal Food, Drug and Cosmetic Act (21 

9 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

10 Public Health Service Act (42 U.S.C. 262(a)), re11 spectively, including any component or raw material 

12 used therein, but excluding health care services. 

13 (14) NONECONOMIC DAMAGES.—The term 

14 ‘‘noneconomic damages’’ means damages for phys15 ical and emotional pain, suffering, inconvenience, 

16 physical impairment, mental anguish, disfigurement, 

17 loss of enjoyment of life, loss of society and compan18 ionship, loss of consortium (other than loss of do19 mestic service), hedonic damages, injury to reputa20 tion, and all other nonpecuniary losses of any kind 

21 or nature. 

22 (15) PUNITIVE DAMAGES.—The term ‘‘punitive 

23 damages’’ means damages awarded, for the purpose 

24 of punishment or deterrence, and not solely for com25 pensatory purposes, against a health care provider, 


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1 health care organization, or a manufacturer, dis2 tributor, or supplier of a medical product. Punitive 

3 damages are neither economic nor noneconomic 

4 damages. 

5 (16) RECOVERY.—The term ‘‘recovery’’ means 

6 the net sum recovered after deducting any disburse7 ments or costs incurred in connection with prosecu8 tion or settlement of the claim, including all costs 

9 paid or advanced by any person. Costs of health care 

10 incurred by the plaintiff and the attorneys’ office 

11 overhead costs or charges for legal services are not 

12 deductible disbursements or costs for such purpose. 

13 (17) STATE.—The term ‘‘State’’ means each of 

14 the several States, the District of Columbia, the 

15 Commonwealth of Puerto Rico, the Virgin Islands, 

16 Guam, American Samoa, the Northern Mariana Is17 lands, the Trust Territory of the Pacific Islands, and 

18 any other territory or possession of the United 

19 States, or any political subdivision thereof. 

20 SEC. 507. EFFECT ON OTHER LAWS. 

21 (a) VACCINE INJURY.— 

22 (1) To the extent that title XXI of the Public 

23 Health Service Act establishes a Federal rule of law 

24 applicable to a civil action brought for a vaccine-re25 lated injury or death— 


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1 (A) this subtitle does not affect the appli2 cation of the rule of law to such an action; and 

3 (B) any rule of law prescribed by this sub4 title in conflict with a rule of law of such title 

5 XXI shall not apply to such action. 

6 (2) If there is an aspect of a civil action 

7 brought for a vaccine-related injury or death to 

8 which a Federal rule of law under title XXI of the 

9 Public Health Service Act does not apply, then this 

10 subtitle or otherwise applicable law (as determined 

11 under this subtitle) will apply to such aspect of such 

12 action. 

13 (b) OTHER FEDERAL LAW.—Except as provided in 

14 this section, nothing in this subtitle shall be deemed to 

15 affect any defense available to a defendant in a health care 

16 lawsuit or action under any other provision of Federal law. 

17 SEC. 508. STATE FLEXIBILITY AND PROTECTION OF 

18 STATES’ RIGHTS. 

19 (a) HEALTH CARE LAWSUITS.—The provisions gov20 erning health care lawsuits set forth in this subtitle pre21 empt, subject to subsections (b) and (c), State law to the 

22 extent that State law prevents the application of any pro23 visions of law established by or under this subtitle. The 

24 provisions governing health care lawsuits set forth in this 


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1 subtitle supersede chapter 171 of title 28, United States 

2 Code, to the extent that such chapter— 

3 (1) provides for a greater amount of damages 

4 or contingent fees, a longer period in which a health 

5 care lawsuit may be commenced, or a reduced appli6 cability or scope of periodic payment of future dam7 ages, than provided in this subtitle; or 

8 (2) prohibits the introduction of evidence re9 garding collateral source benefits, or mandates or 

10 permits subrogation or a lien on collateral source 

11 benefits. 

12 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

13 LAWS.—(1) Any issue that is not governed by any provi14 sion of law established by or under this subtitle (including 

15 State standards of negligence) shall be governed by other16 wise applicable State or Federal law. 

17 (2) This subtitle shall not preempt or supersede any 

18 State or Federal law that imposes greater procedural or 

19 substantive protections for health care providers and 

20 health care organizations from liability, loss, or damages 

21 than those provided by this subtitle or create a cause of 

22 action. 

23 (c) STATE FLEXIBILITY.—No provision of this sub24 title shall be construed to preempt— 


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1 (1) any State law (whether effective before, on, 

2 or after the date of the enactment of this Act) that 

3 specifies a particular monetary amount of compen4 satory or punitive damages (or the total amount of 

5 damages) that may be awarded in a health care law6 suit, regardless of whether such monetary amount is 

7 greater or lesser than is provided for under this sub8 title, notwithstanding section 4(a); or 

9 (2) any defense available to a party in a health 

10 care lawsuit under any other provision of State or 

11 Federal law. 

12 SEC. 509. APPLICABILITY; EFFECTIVE DATE. 

13 This subtitle shall apply to any health care lawsuit 

14 brought in a Federal or State court, or subject to an alter15 native dispute resolution system, that is initiated on or 

16 after the date of the enactment of this Act, except that 

17 any health care lawsuit arising from an injury occurring 

18 prior to the date of the enactment of this Act shall be 

19 governed by the applicable statute of limitations provisions 

20 in effect at the time the injury occurred. 

21 TITLE VI—RESPECTING HUMAN 

22 LIFE 

23 SEC. 601. SPECIAL RULES REGARDING ABORTION. 

24 (a) PROHIBITION ON ABORTION MANDATES.—Noth25 ing in this Act (or any amendment made by this Act) shall 


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1 be construed to require any health plan (including any 

2 high risk pool described in section 311) to provide cov3 erage of or access to abortion services or to allow the Sec4 retary of the Treasury, the Secretary of Labor, the Sec5 retary of Health and Human Services, or any other Fed6 eral or non-Federal person or entity in implementing this 

7 Act (or amendment) to require coverage of, or access to, 

8 abortion services. 

9 (b) LIMITATION ON ABORTION FUNDING.— 

10 (1) IN GENERAL.—No funds authorized or ap11 propriated by this Act (or an amendment made by 

12 this Act) may be used to pay for any abortion or to 

13 cover any part of the costs of any health plan that 

14 includes coverage of abortion (including a high risk 

15 pool described in section 311), except— 

16 (A) if the pregnancy is the result of an act 

17 of rape or incest; or 

18 (B) in the case where a pregnant female 

19 suffers from a physical disorder, physical in20 jury, or physical illness that would, as certified 

21 by a physician, place the female in danger of 

22 death unless an abortion is performed, includ23 ing a life-endangering physical condition caused 

24 by or arising from the pregnancy itself. 


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1 (2) OPTION TO PURCHASE SEPARATE COV2 ERAGE OR PLAN.—Nothing in this subsection shall 

3 be construed as prohibiting any non-Federal entity 

4 (including an individual or a State or local govern5 ment) from purchasing separate coverage for abor6 tions for which funding is prohibited under this sub7 section, or a health plan that includes such abor8 tions, so long as such coverage or plan is paid for 

9 entirely using only funds not authorized or appro10 priated by this Act. 

11 (3) OPTION TO OFFER COVERAGE OR PLAN.— 

12 Nothing in this subsection shall restrict any non13 Federal health insurance issuer offering a health 

14 plan from offering separate coverage for abortions 

15 for which funding is prohibited under this sub16 section, or a health plan that includes such abor17 tions, so long as— 

18 (A) premiums for such separate coverage 

19 or plan are paid for entirely with funds not au20 thorized or appropriated by this Act; and 

21 (B) administrative costs and all services 

22 offered through such coverage or plan are paid 

23 for using only premiums collected for such cov24 erage or plan. 


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1 (4) ADMINISTRATIVE EXPENSES.—No funds 

2 authorized or appropriated by this Act shall be avail3 able to pay for administrative expenses in connection 

4 with any health plan (including an Association 

5 Health Plan that has entered into trusteeship) which 

6 provides any benefits or coverage for abortions ex7 cept where the life of the mother would be endan8 gered if the fetus were carried to term, or the preg9 nancy is the result of an act of rape or incest. 

10 (c) NO PREEMPTION OF STATE LAWS.—Nothing in 

11 this Act (or an amendment made by this Act) shall be 

12 construed to preempt or otherwise have any effect on 

13 State laws protecting conscience rights, restricting or pro14 hibiting abortion or coverage or funding of abortion (in15 cluding State laws opting out of abortion coverage pursu16 ant to section 1303 of the Patient Protection and Afford17 able Care Act, Public Law 111–148), as in effect before 

18 the date of the enactment of this Act, or establishing pro19 cedural requirements on abortions, including parental no20 tification or consent for the performance of an abortion 

21 on a minor. 

Æ 


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