I 

109TH CONGRESS 

1ST SESSION H. R. 2203 

To amend the Internal Revenue Code of 1986 to allow individuals a refundable and advancable credit against income tax for health insurance costs, 

to allow employees who elect not to participate in employer subsidized 

health plans an exclusion from gross income for employer payments 

in lieu of such participation, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2005 

Mr. SHADEGG introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Ways and Means and Education and the Workforce, for a period to be 

subsequently determined by the Speaker, in each case for consideration 

of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to allow individuals a refundable and advancable credit against income tax for health insurance costs, to allow employees 

who elect not to participate in employer subsidized health 

plans an exclusion from gross income for employer payments in lieu of such participation, 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 ‘‘Patients’ Health Care Reform Act’’. 

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

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

Sec. 3. Purposes. 

TITLE I—HEALTHMARTS 

Sec. 101. Expansion of consumer choice through Healthmarts. 

TITLE II—HEALTH CARE ACCESS AND CHOICE THROUGH 

INDIVIDUAL MEMBERSHIP ASSOCIATIONS (IMAS) 

Sec. 201. Expansion of access and choice through individual membership associations (IMAs). 

TITLE III—FEDERAL MATCHING FUNDING FOR STATE 

INSURANCE EXPENDITURES 

Sec. 301. Federal matching funding for State insurance expenditures. 

TITLE IV—AFFORDABLE HEALTH COVERAGE FOR EMPLOYEES 

OF SMALL BUSINESSES 

Sec. 401. Short title of title. 

Sec. 402. Rules. 

Sec. 403. Clarification of treatment of single employer arrangements. 

Sec. 404. Clarification of treatment of certain collectively bargained arrangements. 

Sec. 405. Enforcement provisions. 

Sec. 406. Cooperation between Federal and State authorities. 

Sec. 407. Effective date and transitional and other rules. 

TITLE V—IMPROVEMENT TO ACCESS AND CHOICE OF HEALTH 

CARE 

Sec. 501. Refundable and advanceable credit for health insurance costs. 

Sec. 502. Exclusion for employer payments made to compensate employees who 

elect not to participate in employer-subsidized health plans. 

TITLE VI—PATIENT ACCESS TO INFORMATION 

Sec. 601. Patient access to information regarding plan coverage, managed care 

procedures, health care providers, and quality of medical care. 

Sec. 602. Effective date. 

6 (c) CONSTITUTIONAL AUTHORITY TO ENACT THIS

7 LEGISLATION.—The constitutional authority upon which 
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1 this Act rests is the power of Congress to regulate com2 merce with foreign nations and among the several States, 

3 set forth in article I, section 8 of the United States Con4 stitution. 

5 SEC. 2. FINDINGS. 

6 (a) NEED FOR STRUCTURAL REFORMS.—Congress 

7 finds that the majority of Americans are receiving health 

8 care of a quality unmatched elsewhere in the world but 

9 that the method by which health care currently is financed 

10 and delivered is inflationary and does not distribute qual11 ity care to all Americans. Congress further finds that the 

12 major structural reforms must be implemented in order 

13 to institute a competitive system based on individual 

14 choice, under which each American is permitted individual 

15 choice to select the method of health care delivery which 

16 he believes is most appropriate for himself and his family, 

17 with appropriate assistance from the United States Gov18 ernment. Such a system would introduce internal incen19 tives for the cost-effective delivery of quality health care 

20 to the American people. 

21 (b) SPECIFIC DEFICIENCIES.—Congress finds that 

22 the major deficiencies of the present method of delivering 

23 and financing health care as follows: 

24 (1) EMPLOYER OWNERSHIP OF HEALTH BENE25 FITS.—The biggest problem with health care today 
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1 is that the tax code has encouraged employers, not 

2 individuals, to become the purchaser of health insur3 ance. Employers have a tax incentive to offer health 

4 care benefits to their employees, which means that 

5 employers are truly the owner of the plan, not indi6 viduals. Therefore employees, who are the consumers 

7 of health care services are unconcerned with and not 

8 involved with issues of cost and overutilize health 

9 care services in the belief that such services are 

10 ‘‘free’’. 

11 (2) INSUFFICIENT ACCESS.—Numerous persons 

12 are not able to obtain sufficient health care either 

13 because the necessary personnel and facilities are 

14 not located in their communities or because they do 

15 not have adequate financial resources to obtain such 

16 services, or both. 

17 (3) EXCESSIVE GOVERNMENT REGULATION.— 

18 Continually increasing and complex Government reg19 ulation of the economic aspects of the health care 

20 delivery system has proven ineffective in restraining 

21 costs and is itself expensive and counterproductive in 

22 fulfilling its purposes and detrimental to the care of 

23 patients. 

24 (4) THIRD-PARTY PAYMENT SYSTEMS.—Pay25 ment by third-party payers (including commercial in-
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1 surance companies and various levels of government) 

2 for the preponderance of the health care delivered 

3 each year insulates patients, as well as physicians, 

4 hospitals, and other deliverers of health care, from 

5 the need to consider the cost of treatment in addi6 tion to the medical benefit expected from it. 

7 (5) REASONABLE COST REIMBURSEMENT.—Re8 imbursement of hospitals and other health care insti9 tutions by third-party payers on the basis of reason10 able costs of operation provides these institutions in11 sufficient incentives to introduce more efficient 

12 methods of delivering care and at the same time di13 minishes the extent to which these institutions and 

14 their patients are affected by the consequences of in15 efficiency and overexpansion. 

16 (6) GOVERNMENT AND THIRD-PARTY PAYER.— 

17 The present role of government as a third-party 

18 payer poses a conflict of interest whereby the Gov19 ernment purchases or finances health care services 

20 and unilaterally determines the amount the deliverer 

21 will be paid for those services. 

22 (7) LACK OF COMPETITION.—The present sys23 tem of financing and regulation prevents health care 

24 deliverers from competing with each other on the 

25 basis of efficiency and price as well as quality. 
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1 SEC. 3. PURPOSES. 

2 The purposes of Act are— 

3 (1) to make it possible for individuals, employ4 ees, and the self-employed to purchase and own their 

5 own health insurance without suffering any negative 

6 tax consequences; 

7 (2) to enable individuals to make their own in8 formed choice of the method by which their health 

9 care is provided, the persons who deliver it, and the 

10 price they wish to pay for it; 

11 (3) to assist individuals in obtaining and in 

12 paying for basic health care services; 

13 (4) to render patients and deliverers sensitive to 

14 the cost of health care, giving them both the incen15 tive and the ability to restrain undesired increases in 

16 health care costs; 

17 (5) to simplify and rationalize the payment 

18 mechanism for health care services; 

19 (6) to foster the development of numerous, var20 ied, and innovative systems of providing health care 

21 which will compete against each other in terms of 

22 price, service, and quality, and thus allow the Amer23 ican people to benefit from competitive forces which 

24 will reward efficient and effective deliverers and 

25 eliminate those which provide unsatisfactory quality 

26 of care or are inefficient; 
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1 (7) to replace governmental regulation of the 

2 economic aspects of health care delivery with indi3 vidual choice, private initiative, and marketplace in4 centives and disciplines; 

5 (8) to encourage the development of systems of 

6 delivering health care which are capable of supplying 

7 a broad range of health care services in a com8 prehensive and systematic manner, and 

9 (9) to preserve the independence of health care 

10 deliverers and encourage their close identification 

11 with and their accountability to the individuals they 

12 serve. 

13 TITLE I—HEALTHMARTS 

14 SEC. 101. EXPANSION OF CONSUMER CHOICE THROUGH 

15 HEALTHMARTS. 

16 The Public Health Service Act is amended by adding 

17 at the end the following new title: 

18 ‘‘TITLE XXIX—HEALTHMARTS 

19 ‘‘SEC. 2901. DEFINITION OF HEALTHMART. 

20 ‘‘(a) IN GENERAL.—For purposes of this title, the 

21 term ‘HealthMart’ means a legal entity that meets the fol22 lowing requirements: 

23 ‘‘(1) ORGANIZATION.—The HealthMart is an 

24 organization operated under the direction of a board 
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1 of directors which is composed of representatives of 

2 not fewer than 2 from each of the following: 

3 ‘‘(A) Employers. 

4 ‘‘(B) Employees. 

5 ‘‘(C) Individuals (other than those de6 scribed in subparagraph (B)) who are eligible to 

7 participate in the HealthMart. 

8 ‘‘(D) Health care providers, which may be 

9 physicians, other health care professionals, 

10 health care facilities, or any combination there11 of. 

12 ‘‘(E) Entities, such as insurance compa13 nies, health maintenance organizations, and li14 censed provider-sponsored organizations, that 

15 underwrite or administer health benefits cov16 erage. 

17 ‘‘(2) OFFERING HEALTH BENEFITS COV18 ERAGE.— 

19 ‘‘(A) DIFFERENT GROUPS.—The 

20 HealthMart, in conjunction with those health 

21 insurance issuers that offer health benefits cov22 erage through the HealthMart, makes available 

23 health benefits coverage in the manner de24 scribed in subsection (b) to all employers, eligi25 ble employees, and individuals in the manner 
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1 described in subsection (c)(2) at rates (includ2 ing employer’s and employee’s share, if applica3 ble) that are established by the health insurance 

4 issuer on a policy or product specific basis and 

5 that may vary only as permissible under State 

6 law. A HealthMart is deemed to be a group 

7 health plan for purposes of applying section 702 

8 of the Employee Retirement Income Security 

9 Act of 1974, section 2702 of this Act, and sec10 tion 9802(b) of the Internal Revenue Code of 

11 1986 (which limit variation among similarly sit12 uated individuals of required premiums for 

13 health benefits coverage on the basis of health 

14 status-related factors). 

15 ‘‘(B) NONDISCRIMINATION IN COVERAGE

16 OFFERED.— 

17 ‘‘(i) IN GENERAL.—Subject to clause 

18 (ii), the HealthMart may not offer health 

19 benefits coverage to an eligible employee or 

20 individual in a geographic area (as speci21 fied under paragraph (3)(A)) unless the 

22 same coverage is offered to all such em23 ployees or individuals in the same geo24 graphic area. Section 2711(a)(1)(B) of this 

25 Act limits denial of enrollment of certain 
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1 eligible individuals under health benefits 

2 coverage in the small group market. 

3 ‘‘(ii) CONSTRUCTION.—Nothing in 

4 this title shall be construed as requiring or 

5 permitting a health insurance issuer to 

6 provide coverage outside the service area of 

7 the issuer, as approved under State law. 

8 ‘‘(C) NO FINANCIAL UNDERWRITING.—The 

9 HealthMart provides health benefits coverage 

10 only through contracts with health insurance 

11 issuers and does not assume insurance risk with 

12 respect to such coverage. 

13 ‘‘(D) MINIMUM COVERAGE.—By the end of 

14 the first year of its operation and thereafter, 

15 the HealthMart maintains not fewer than 10 

16 purchasers and 100 members. 

17 ‘‘(3) GEOGRAPHIC AREAS.— 

18 ‘‘(A) SPECIFICATION OF GEOGRAPHIC

19 AREAS.—The HealthMart shall specify the geo20 graphic area (or areas) in which it makes avail21 able health benefits coverage offered by health 

22 insurance issuers to employers, or individuals, 

23 as the case may be. Any such area shall encom24 pass at least one entire county or equivalent 

25 area. 
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1 ‘‘(B) MULTISTATE AREAS.—In the case of 

2 a HealthMart that serves more than one State, 

3 such geographic areas may be areas that in4 clude portions of two or more contiguous 

5 States. 

6 ‘‘(C) MULTIPLE HEALTHMARTS PER7 MITTED IN SINGLE GEOGRAPHIC AREA.—Noth8 ing in this title shall be construed as preventing 

9 the establishment and operation of more than 

10 one HealthMart in a geographic area or as lim11 iting the number of HealthMarts that may op12 erate in any area. 

13 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

14 TO PURCHASERS.— 

15 ‘‘(A) IN GENERAL.—The HealthMart pro16 vides administrative services for purchasers. 

17 Such services may include accounting, billing, 

18 enrollment information, and employee coverage 

19 status reports. 

20 ‘‘(B) CONSTRUCTION.—Nothing in this 

21 subsection shall be construed as preventing a 

22 HealthMart from serving as an administrative 

23 service organization to any entity. 

24 ‘‘(5) DISSEMINATION OF INFORMATION.—The 

25 HealthMart collects and disseminates (or arranges 
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1 for the collection and dissemination of) consumer2 oriented information on the scope, cost, and enrollee 

3 satisfaction of all coverage options offered through 

4 the HealthMart to its members and eligible individ5 uals. Such information shall be defined by the 

6 HealthMart and shall be in a manner appropriate to 

7 the type of coverage offered. To the extent prac8 ticable, such information shall include information 

9 on provider performance, locations and hours of op10 eration of providers, outcomes, and similar matters. 

11 Nothing in this section shall be construed as pre12 venting the dissemination of such information or 

13 other information by the HealthMart or by health 

14 insurance issuers through electronic or other means. 

15 ‘‘(6) FILING INFORMATION.—The 

16 HealthMart— 

17 ‘‘(A) files with the applicable Federal au18 thority information that demonstrates the 

19 HealthMart’s compliance with the applicable re20 quirements of this title; or 

21 ‘‘(B) in accordance with rules established 

22 under section 2903(a), files with a State such 

23 information as the State may require to dem24 onstrate such compliance. 
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1 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE2 MENTS.— 

3 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC4 TION REQUIREMENTS.—Any health benefits coverage 

5 offered through a HealthMart shall— 

6 ‘‘(A) be underwritten by a health insurance 

7 issuer that— 

8 ‘‘(i) is licensed (or otherwise regu9 lated) under State law, 

10 ‘‘(ii) meets all applicable State stand11 ards relating to consumer protection, sub12 ject to section 2902(b), and 

13 ‘‘(iii) offers the coverage under a con14 tract with the HealthMart; 

15 ‘‘(B) subject to paragraph (2), be approved 

16 or otherwise permitted to be offered under 

17 State law; and 

18 ‘‘(C) provide full portability of creditable 

19 coverage for individuals who remain members of 

20 the same HealthMart notwithstanding that they 

21 change the employer through which they are 

22 members in accordance with the provisions of 

23 the parts 6 and 7 of subtitle B of title I of the 

24 Employee Retirement Income Security Act of 

25 1974 and titles XXII and XXVII of this Act, 
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1 so long as both employers are purchasers in the 

2 HealthMart, and notwithstanding that they ter3 minate such employment, if the HealthMart 

4 permits enrollment directly by eligible individ5 uals. 

6 ‘‘(2) ALTERNATIVE PROCESS FOR APPROVAL OF

7 HEALTH BENEFITS COVERAGE IN CASE OF DISCRIMI8 NATION OR DELAY.— 

9 ‘‘(A) IN GENERAL.—The requirement of 

10 paragraph (1)(B) shall not apply to a policy or 

11 product of health benefits coverage offered in a 

12 State if the health insurance issuer seeking to 

13 offer such policy or product files an application 

14 to waive such requirement with the applicable 

15 Federal authority, and the authority deter16 mines, based on the application and other evi17 dence presented to the authority, that— 

18 ‘‘(i) either (or both) of the grounds 

19 described in subparagraph (B) for approval 

20 of the application has been met; and 

21 ‘‘(ii) the coverage meets the applicable 

22 State standards (other than those that 

23 have been preempted under section 2902). 

24 ‘‘(B) GROUNDS.—The grounds described 

25 in this subparagraph with respect to a policy or 
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1 product of health benefits coverage are as fol2 lows: 

3 ‘‘(i) FAILURE TO ACT ON POLICY, 

4 PRODUCT, OR RATE APPLICATION ON A

5 TIMELY BASIS.—The State has failed to 

6 complete action on the policy or product 

7 (or rates for the policy or product) within 

8 90 days of the date of the State’s receipt 

9 of a substantially complete application. No 

10 period before the date of the enactment of 

11 this section shall be included in deter12 mining such 90-day period. 

13 ‘‘(ii) DENIAL OF APPLICATION BASED

14 ON DISCRIMINATORY TREATMENT.—The 

15 State has denied such an application 

16 and— 

17 ‘‘(I) the standards or review 

18 process imposed by the State as a 

19 condition of approval of the policy or 

20 product imposes either any material 

21 requirements, procedures, or stand22 ards to such policy or product that 

23 are not generally applicable to other 

24 policies and products offered or any 
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1 requirements that are preempted 

2 under section 2902; or 

3 ‘‘(II) the State requires the 

4 issuer, as a condition of approval of 

5 the policy or product, to offer any pol6 icy or product other than such policy 

7 or product. 

8 ‘‘(C) ENFORCEMENT.—In the case of a 

9 waiver granted under subparagraph (A) to an 

10 issuer with respect to a State, the Secretary 

11 may enter into an agreement with the State 

12 under which the State agrees to provide for 

13 monitoring and enforcement activities with re14 spect to compliance of such an issuer and its 

15 health insurance coverage with the applicable 

16 State standards described in subparagraph 

17 (A)(ii). Such monitoring and enforcement shall 

18 be conducted by the State in the same manner 

19 as the State enforces such standards with re20 spect to other health insurance issuers and 

21 plans, without discrimination based on the type 

22 of issuer to which the standards apply. Such an 

23 agreement shall specify or establish mechanisms 

24 by which compliance activities are undertaken, 

25 while not lengthening the time required to re-
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1 view and process applications for waivers under 

2 subparagraph (A). 

3 ‘‘(3) EXAMPLES OF TYPES OF COVERAGE.—The 

4 benefits coverage made available through a 

5 HealthMart may include, but is not limited to, any 

6 of the following if it meets the other applicable re7 quirements of this title: 

8 ‘‘(A) Coverage through a health mainte9 nance organization. 

10 ‘‘(B) Coverage in connection with a pre11 ferred provider organization. 

12 ‘‘(C) Coverage in connection with a li13 censed provider-sponsored organization. 

14 ‘‘(D) Indemnity coverage through an insur15 ance company. 

16 ‘‘(E) Coverage offered in connection with a 

17 contribution into a medical savings account or 

18 flexible spending account. 

19 ‘‘(F) Coverage that includes a point-of20 service option. 

21 ‘‘(G) Any combination of such types of 

22 coverage. 

23 ‘‘(4) WELLNESS BONUSES FOR HEALTH PRO24 MOTION.—Nothing in this title shall be construed as 

25 precluding a health insurance issuer offering health 
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1 benefits coverage through a HealthMart from estab2 lishing premium discounts or rebates for members or 

3 from modifying otherwise applicable copayments or 

4 deductibles in return for adherence to programs of 

5 health promotion and disease prevention so long as 

6 such programs are agreed to in advance by the 

7 HealthMart and comply with all other provisions of 

8 this title and do not discriminate among similarly 

9 situated members. 

10 ‘‘(c) PURCHASERS; MEMBERS; HEALTH INSURANCE

11 ISSUERS.— 

12 ‘‘(1) PURCHASERS.— 

13 ‘‘(A) IN GENERAL.—Subject to the provi14 sions of this title, a HealthMart shall permit 

15 any employer or any individual described in 

16 subsection (a)(1)(C) to contract with the 

17 HealthMart for the purchase of health benefits 

18 coverage for its employees and dependents of 

19 those employees or for the individual (and the 

20 individual’s dependents), respectively, and may 

21 not vary conditions of eligibility (including pre22 mium rates and membership fees) of an em23 ployer or individual to be a purchaser. 

24 ‘‘(B) ROLE OF ASSOCIATIONS, BROKERS, 

25 AND LICENSED HEALTH INSURANCE AGENTS.— 
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1 Nothing in this section shall be construed as 

2 preventing an association, broker, licensed 

3 health insurance agent, or other entity from as4 sisting or representing a HealthMart or employ5 ers or individuals from entering into appro6 priate arrangements to carry out this title. 

7 ‘‘(C) PERIOD OF CONTRACT.—The 

8 HealthMart may not require a contract under 

9 subparagraph (A) between a HealthMart and a 

10 purchaser to be effective for a period of longer 

11 than 24 months. The previous sentence shall 

12 not be construed as preventing such a contract 

13 from being extended for additional 24-month 

14 periods or preventing the purchaser from volun15 tarily electing a contract period of longer than 

16 24 months. 

17 ‘‘(D) EXCLUSIVE NATURE OF CON18 TRACT.— 

19 ‘‘(i) IN GENERAL.—Subject to clause 

20 (ii), such a contract shall provide that the 

21 purchaser agrees not to obtain or sponsor 

22 health benefits coverage, on behalf of any 

23 eligible employees (and their dependents), 

24 other than through the HealthMart. 
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1 ‘‘(ii) EXCEPTION IF NO COVERAGE OF2 FERED IN AREA OF RESIDENCES.—Clause 

3 (i) shall not apply to an eligible individual 

4 who resides in an area for which no cov5 erage is offered by any health insurance 

6 issuer through the HealthMart. 

7 ‘‘(iii) NOTHING PRECLUDING INDI8 VIDUAL EMPLOYEE OPT-OUT.—Nothing in 

9 this subparagraph shall be construed as re10 quiring an eligible employee of a large or 

11 small employer that is a purchaser to ob12 tain health benefits coverage through the 

13 HealthMart. 

14 ‘‘(2) MEMBERS.— 

15 ‘‘(A) IN GENERAL.— 

16 ‘‘(i) EMPLOYMENT BASED MEMBER17 SHIP.—Under rules established to carry 

18 out this title, with respect to an employer 

19 that has a purchaser contract with a 

20 HealthMart, individuals who are employees 

21 of the employer may enroll for health bene22 fits coverage (including coverage for de23 pendents of such enrolling employees) of24 fered by a health insurance issuer through 

25 the HealthMart. 
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1 ‘‘(ii) INDIVIDUALS.—Under rules es2 tablished to carry out this title, with re3 spect to an individual who has a purchaser 

4 contract with a HealthMart for himself or 

5 herself, the individual may enroll for health 

6 benefits coverage (including coverage for 

7 dependents of such individual) offered by a 

8 health insurance issuer through the 

9 HealthMart. 

10 ‘‘(B) NONDISCRIMINATION IN ENROLL11 MENT.—A HealthMart may not deny enroll12 ment as a member to an individual who is an 

13 employee or individual (or dependent of such an 

14 employee or individual) eligible to be so enrolled 

15 based on health status-related factors, except as 

16 may be permitted consistent with section 

17 2742(b). 

18 ‘‘(C) ANNUAL OPEN ENROLLMENT PE19 RIOD.—In the case of members enrolled in 

20 health benefits coverage offered by a health in21 surance issuer through a HealthMart, subject 

22 to subparagraph (D), the HealthMart shall pro23 vide for an annual open enrollment period of 30 

24 days during which such members may change 
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1 the coverage option in which the members are 

2 enrolled. 

3 ‘‘(D) RULES OF ELIGIBILITY.—Nothing in 

4 this paragraph shall preclude a HealthMart 

5 from establishing rules of employee or indi6 vidual eligibility for enrollment and reenroll7 ment of members during the annual open en8 rollment period under subparagraph (C). Such 

9 rules shall be applied consistently to all pur10 chasers and members within the HealthMart 

11 and shall not be based in any manner on health 

12 status-related factors and may not conflict with 

13 sections 2701 and 2702 of this Act. 

14 ‘‘(3) HEALTH INSURANCE ISSUERS.— 

15 ‘‘(A) PREMIUM COLLECTION.—The con16 tract between a HealthMart and a health insur17 ance issuer shall provide, with respect to a 

18 member enrolled with health benefits coverage 

19 offered by the issuer through the HealthMart, 

20 for the payment of the premiums collected by 

21 the HealthMart (or the issuer) for such cov22 erage (less a pre-determined administrative 

23 charge negotiated by the HealthMart and the 

24 issuer) to the issuer. 
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1 ‘‘(B) SCOPE OF SERVICE AREA.—Nothing 

2 in this title shall be construed as requiring the 

3 service area of a health insurance issuer with 

4 respect to health insurance coverage to cover 

5 the entire geographic area served by a 

6 HealthMart. 

7 ‘‘(C) AVAILABILITY OF COVERAGE OP8 TIONS.— 

9 ‘‘(i) IN GENERAL.—A HealthMart 

10 shall enter into contracts with one or more 

11 health insurance issuers in a manner that 

12 assures that at least 2 health insurance 

13 coverage options are made available. 

14 ‘‘(ii) REQUIREMENT OF NON-NET15 WORK OPTION.—At least one of the health 

16 insurance coverage options made available 

17 under clause (i) shall be a non-network 

18 coverage option under which enrollees may 

19 obtain benefits for health care items and 

20 services that are not provided under a con21 tract between the provider of the service 

22 and the issuer involved. 

23 ‘‘(d) PREVENTION OF CONFLICTS OF INTEREST.— 

24 ‘‘(1) FOR BOARDS OF DIRECTORS.—A member 

25 of a board of directors of a HealthMart may not 
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1 serve as an employee or paid consultant to the 

2 HealthMart, but may receive reasonable reimburse3 ment for travel expenses for purposes of attending 

4 meetings of the board or committees thereof. 

5 ‘‘(2) FOR BOARDS OF DIRECTORS OR EMPLOY6 EES.—An individual is not eligible to serve in a paid 

7 or unpaid capacity on the board of directors of a 

8 HealthMart or as an employee of the HealthMart, if 

9 the individual is employed by, represents in any ca10 pacity, owns, or controls any ownership interest in 

11 an organization from whom the HealthMart receives 

12 contributions, grants, or other funds not connected 

13 with a contract for coverage through the 

14 HealthMart. 

15 ‘‘(3) EMPLOYMENT AND EMPLOYEE REP16 RESENTATIVES.— 

17 ‘‘(A) IN GENERAL.—An individual who is 

18 serving on a board of directors of a HealthMart 

19 as a representative described in subparagraph 

20 (A) or (B) of section 2901(a)(1) shall not be 

21 employed by or affiliated with a health insur22 ance issuer or be licensed as or employed by or 

23 affiliated with a health care provider. 

24 ‘‘(B) CONSTRUCTION.—For purposes of 

25 subparagraph (A), the term ‘affiliated’ does not 
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1 include membership in a health benefits plan or 

2 the obtaining of health benefits coverage offered 

3 by a health insurance issuer. 

4 ‘‘(e) CONSTRUCTION.— 

5 ‘‘(1) NETWORK OF AFFILIATED

6 HEALTHMARTS.—Nothing in this section shall be 

7 construed as preventing one or more HealthMarts 

8 serving different areas (whether or not contiguous) 

9 from providing for some or all of the following 

10 (through a single administrative organization or oth11 erwise): 

12 ‘‘(A) Coordinating the offering of the same 

13 or similar health benefits coverage in different 

14 areas served by the different HealthMarts. 

15 ‘‘(B) Providing for crediting of deductibles 

16 and other cost-sharing for individuals who are 

17 provided health benefits coverage through the 

18 HealthMarts (or affiliated HealthMarts) 

19 after— 

20 ‘‘(i) a change of employers through 

21 which the coverage is provided, or 

22 ‘‘(ii) a change in place of employment 

23 to an area not served by the previous 

24 HealthMart. 
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1 ‘‘(2) PERMITTING HEALTHMARTS TO ADJUST

2 DISTRIBUTIONS AMONG ISSUERS TO REFLECT REL3 ATIVE RISK OF ENROLLEES.—Nothing in this sec4 tion shall be construed as precluding a HealthMart 

5 from providing for adjustments in amounts distrib6 uted among the health insurance issuers offering 

7 health benefits coverage through the HealthMart 

8 based on factors such as the relative health care risk 

9 of members enrolled under the coverage offered by 

10 the different issuers. 

11 ‘‘SEC. 2902. APPLICATION OF CERTAIN LAWS AND REQUIRE12 MENTS. 

13 ‘‘(a) AUTHORITY OF STATES.—Nothing in this sec14 tion shall be construed as preempting State laws relating 

15 to the following: 

16 ‘‘(1) The regulation of underwriters of health 

17 coverage, including licensure and solvency require18 ments. 

19 ‘‘(2) The application of premium taxes and re20 quired payments for guaranty funds or for contribu21 tions to high-risk pools. 

22 ‘‘(3) The application of fair marketing require23 ments and other consumer protections (other than 

24 those specifically relating to an item described in 

25 subsection (b)). 
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1 ‘‘(4) The application of requirements relating to 

2 the adjustment of rates for health insurance cov3 erage. 

4 ‘‘(b) TREATMENT OF BENEFIT AND GROUPING RE5 QUIREMENTS.—State laws insofar as they relate to any 

6 of the following are superseded and shall not apply to 

7 health benefits coverage made available through a 

8 HealthMart: 

9 ‘‘(1) Benefit requirements for health benefits 

10 coverage offered through a HealthMart, including 

11 (but not limited to) requirements relating to cov12 erage of specific providers, specific services or condi13 tions, or the amount, duration, or scope of benefits, 

14 but not including requirements to the extent re15 quired to implement title XXVII or other Federal 

16 law and to the extent the requirement prohibits an 

17 exclusion of a specific disease from such coverage. 

18 ‘‘(2) Requirements (commonly referred to as 

19 fictitious group laws) relating to grouping and simi20 lar requirements for such coverage to the extent 

21 such requirements impede the establishment and op22 eration of HealthMarts pursuant to this title. 

23 ‘‘(3) Any other requirements (including limita24 tions on compensation arrangements) that, directly 

25 or indirectly, preclude (or have the effect of pre-
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1 cluding) the offering of such coverage through a 

2 HealthMart, if the HealthMart meets the require3 ments of this title. 

4 Any State law or regulation relating to the composition 

5 or organization of a HealthMart is preempted to the ex6 tent the law or regulation is inconsistent with the provi7 sions of this title. 

8 ‘‘(c) APPLICATION OF ERISA FIDUCIARY AND DIS9 CLOSURE REQUIREMENTS.—The board of directors of a 

10 HealthMart is deemed to be a plan administrator of an 

11 employee welfare benefit plan which is a group health plan 

12 for purposes of applying parts 1 and 4 of subtitle B of 

13 title I of the Employee Retirement Income Security Act 

14 of 1974 and those provisions of part 5 of such subtitle 

15 which are applicable to enforcement of such parts 1 and 

16 4, and the HealthMart shall be treated as such a plan 

17 and the enrollees enrolled on the basis of employment shall 

18 be treated as participants and beneficiaries for purposes 

19 of applying such provisions pursuant to this subsection. 

20 ‘‘(d) APPLICATION OF ERISA RENEWABILITY PRO21 TECTION.—A HealthMart is deemed to be group health 

22 plan that is a multiple employer welfare arrangement for 

23 purposes of applying section 703 of the Employee Retire24 ment Income Security Act of 1974. 
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1 ‘‘(e) APPLICATION OF RULES FOR NETWORK PLANS

2 AND FINANCIAL CAPACITY.—The provisions of sub3 sections (c) and (d) of section 2711 apply to health bene4 fits coverage offered by a health insurance issuer through 

5 a HealthMart. 

6 ‘‘(f) CONSTRUCTION RELATING TO OFFERING RE7 QUIREMENT.—Nothing in section 2711(a) of this Act or 

8 703 of the Employee Retirement Income Security Act of 

9 1974 shall be construed as permitting the offering outside 

10 the HealthMart of health benefits coverage that is only 

11 made available through a HealthMart under this section 

12 because of the application of subsection (b). 

13 ‘‘(g) APPLICATION TO GUARANTEED RENEWABILITY

14 REQUIREMENTS IN CASE OF DISCONTINUATION OF AN

15 ISSUER.—For purposes of applying section 2712 in the 

16 case of health insurance coverage offered by a health in17 surance issuer through a HealthMart, if the contract be18 tween the HealthMart and the issuer is terminated and 

19 the HealthMart continues to make available any health in20 surance coverage after the date of such termination, the 

21 following rules apply: 

22 ‘‘(1) RENEWABILITY.—The HealthMart shall 

23 fulfill the obligation under such section of the issuer 

24 renewing and continuing in force coverage by offer25 ing purchasers (and members and their dependents) 
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1 all available health benefits coverage that would oth2 erwise be available to similarly-situated purchasers 

3 and members from the remaining participating 

4 health insurance issuers in the same manner as 

5 would be required of issuers under section 2712(c). 

6 ‘‘(2) APPLICATION OF ASSOCIATION RULES.— 

7 The HealthMart shall be considered an association 

8 for purposes of applying section 2712(e). 

9 ‘‘(h) CONSTRUCTION IN RELATION TO CERTAIN

10 OTHER LAWS.—Nothing in this title shall be construed 

11 as modifying or affecting the applicability to HealthMarts 

12 or health benefits coverage offered by a health insurance 

13 issuer through a HealthMart of parts 6 and 7 of subtitle 

14 B of title I of the Employee Retirement Income Security 

15 Act of 1974 or titles XXII and XXVII of this Act. 

16 ‘‘SEC. 2903. ADMINISTRATION. 

17 ‘‘(a) IN GENERAL.—The applicable Federal authority 

18 shall administer this title and is authorized to issue such 

19 regulations as may be required to carry out this title. Such 

20 regulations shall be subject to Congressional review under 

21 the provisions of chapter 8 of title 5, United States Code. 

22 The applicable Federal authority shall incorporate the 

23 process of ‘deemed file and use’ with respect to the infor24 mation filed under section 2901(a)(6)(A) and shall deter25 mine whether information filed by a HealthMart dem-
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1 onstrates compliance with the applicable requirements of 

2 this title. Such authority shall exercise its authority under 

3 this title in a manner that fosters and promotes the devel4 opment of HealthMarts in order to improve access to 

5 health care coverage and services. 

6 ‘‘(b) PERIODIC REPORTS.—The applicable Federal 

7 authority shall submit to Congress a report every 30 

8 months, during the 10-year period beginning on the effec9 tive date of the rules promulgated by the applicable Fed10 eral authority to carry out this title, on the effectiveness 

11 of this title in promoting coverage of uninsured individ12 uals. Such authority may provide for the production of 

13 such reports through one or more contracts with appro14 priate private entities. 

15 ‘‘SEC. 2904. DEFINITIONS. 

16 ‘‘For purposes of this title: 

17 ‘‘(1) APPLICABLE FEDERAL AUTHORITY.—The 

18 term ‘applicable Federal authority’ means the Sec19 retary of Health and Human Services . 

20 ‘‘(2) ELIGIBLE EMPLOYEE OR INDIVIDUAL.— 

21 The term ‘eligible’ means, with respect to an em22 ployee or other individual and a HealthMart, an em23 ployee or individual who is eligible under section 

24 2901(c)(2) to enroll or be enrolled in health benefits 

25 coverage offered through the HealthMart. 
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1 ‘‘(3) EMPLOYER; EMPLOYEE; DEPENDENT.— 

2 Except as the applicable Federal authority may oth3 erwise provide, the terms ‘employer’, ‘employee’, and 

4 ‘dependent’, as applied to health insurance coverage 

5 offered by a health insurance issuer licensed (or oth6 erwise regulated) in a State, shall have the meanings 

7 applied to such terms with respect to such coverage 

8 under the laws of the State relating to such coverage 

9 and such an issuer. The term ‘dependent’ may in10 clude the spouse and children of the individual in11 volved. 

12 ‘‘(4) HEALTH BENEFITS COVERAGE.—The term 

13 ‘health benefits coverage’ has the meaning given the 

14 term group health insurance coverage in section 

15 2791(b)(4). 

16 ‘‘(5) HEALTH INSURANCE ISSUER.—The term 

17 ‘health insurance issuer’ has the meaning given such 

18 term in section 2791(b)(2). 

19 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

20 term ‘health status-related factor’ has the meaning 

21 given such term in section 2791(d)(9). 

22 ‘‘(7) HEALTHMART.—The term ‘HealthMart’ is 

23 defined in section 2901(a). 

24 ‘‘(8) MEMBER.—The term ‘member‘‘ means, 

25 with respect to a HealthMart, an individual enrolled 
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1 for health benefits coverage through the HealthMart 

2 under section 2901(c)(2). 

3 ‘‘(9) PURCHASER.—The term ‘purchaser’ 

4 means, with respect to a HealthMart, an employer 

5 or individual that has contracted under section 

6 2901(c)(1)(A) with the HealthMart for the purchase 

7 of health benefits coverage.’’. 

8 TITLE II—HEALTH CARE ACCESS 

9 AND CHOICE THROUGH INDI10 VIDUAL MEMBERSHIP ASSO11 CIATIONS (IMAS) 

12 SEC. 201. EXPANSION OF ACCESS AND CHOICE THROUGH 

13 INDIVIDUAL MEMBERSHIP ASSOCIATIONS 

14 (IMAS). 

15 The Public Health Service Act, as amended by sec16 tion 101, is further amended by adding at the end the 

17 following new title: 

18 ‘‘TITLE XXX—INDIVIDUAL 

19 MEMBERSHIP ASSOCIATIONS 

20 ‘‘SEC. 3001. DEFINITION OF INDIVIDUAL MEMBERSHIP AS21 SOCIATION (IMA). 

22 ‘‘(a) IN GENERAL.—For purposes of this title, the 

23 terms ‘individual membership association’ and ‘IMA’ 

24 mean a legal entity that meets the following requirements: 
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1 ‘‘(1) ORGANIZATION.—The IMA is an organiza2 tion operated under the direction of an association 

3 (as defined in section 3004(1)). 

4 ‘‘(2) OFFERING HEALTH BENEFITS COV5 ERAGE.— 

6 ‘‘(A) DIFFERENT GROUPS.—The IMA, in 

7 conjunction with those health insurance issuers 

8 that offer health benefits coverage through the 

9 IMA, makes available health benefits coverage 

10 in the manner described in subsection (b) to all 

11 members of the IMA and the dependents of 

12 such members in the manner described in sub13 section (c)(2) at rates that are established by 

14 the health insurance issuer on a policy or prod15 uct specific basis and that may vary only as 

16 permissible under State law. 

17 ‘‘(B) NONDISCRIMINATION IN COVERAGE

18 OFFERED.— 

19 ‘‘(i) IN GENERAL.—Subject to clause 

20 (ii), the IMA may not offer health benefits 

21 coverage to a member of an IMA unless 

22 the same coverage is offered to all such 

23 members of the IMA. 

24 ‘‘(ii) CONSTRUCTION.—Nothing in 

25 this title shall be construed as requiring or 
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1 permitting a health insurance issuer to 

2 provide coverage outside the service area of 

3 the issuer, as approved under State law, or 

4 requiring a health insurance issuer from 

5 excluding or limiting the coverage on any 

6 individual, subject to the requirement of 

7 section 2741. 

8 ‘‘(C) NO FINANCIAL UNDERWRITING.—The 

9 IMA provides health benefits coverage only 

10 through contracts with health insurance issuers 

11 and does not assume insurance risk with re12 spect to such coverage. 

13 ‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 

14 shall be construed as preventing the establishment 

15 and operation of more than one IMA in a geographic 

16 area or as limiting the number of IMAs that may 

17 operate in any area. 

18 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

19 TO PURCHASERS.— 

20 ‘‘(A) IN GENERAL.—The IMA may provide 

21 administrative services for members. Such serv22 ices may include accounting, billing, and enroll23 ment information. 

24 ‘‘(B) CONSTRUCTION.—Nothing in this 

25 subsection shall be construed as preventing an 
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1 IMA from serving as an administrative service 

2 organization to any entity. 

3 ‘‘(5) FILING INFORMATION.—The IMA files 

4 with the Secretary information that demonstrates 

5 the IMA’s compliance with the applicable require6 ments of this title. 

7 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE8 MENTS.— 

9 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC10 TION REQUIREMENTS.—Any health benefits coverage 

11 offered through an IMA shall— 

12 ‘‘(A) be underwritten by a health insurance 

13 issuer that— 

14 ‘‘(i) is licensed (or otherwise regu15 lated) under State law, 

16 ‘‘(ii) meets all applicable State stand17 ards relating to consumer protection, sub18 ject to section 3002(b), and 

19 ‘‘(B) subject to paragraph (2), be approved 

20 or otherwise permitted to be offered under 

21 State law. 

22 ‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 

23 benefits coverage made available through an IMA 

24 may include, but is not limited to, any of the fol-
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1 lowing if it meets the other applicable requirements 

2 of this title: 

3 ‘‘(A) Coverage through a health mainte4 nance organization. 

5 ‘‘(B) Coverage in connection with a pre6 ferred provider organization. 

7 ‘‘(C) Coverage in connection with a li8 censed provider-sponsored organization. 

9 ‘‘(D) Indemnity coverage through an insur10 ance company. 

11 ‘‘(E) Coverage offered in connection with a 

12 contribution into a medical savings account or 

13 flexible spending account. 

14 ‘‘(F) Coverage that includes a point-of15 service option. 

16 ‘‘(G) Any combination of such types of 

17 coverage. 

18 ‘‘(3) WELLNESS BONUSES FOR HEALTH PRO19 MOTION.—Nothing in this title shall be construed as 

20 precluding a health insurance issuer offering health 

21 benefits coverage through an IMA from establishing 

22 premium discounts or rebates for members or from 

23 modifying otherwise applicable copayments or 

24 deductibles in return for adherence to programs of 

25 health promotion and disease prevention so long as 
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1 such programs are agreed to in advance by the IMA 

2 and comply with all other provisions of this title and 

3 do not discriminate among similarly situated mem4 bers. 

5 ‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.— 

6 ‘‘(1) MEMBERS.— 

7 ‘‘(A) IN GENERAL.—Under rules estab8 lished to carry out this title, with respect to an 

9 individual who is a member of an IMA, the in10 dividual may enroll for health benefits coverage 

11 (including coverage for dependents of such indi12 vidual) offered by a health insurance issuer 

13 through the IMA. 

14 ‘‘(B) RULES FOR ENROLLMENT.—Nothing 

15 in this paragraph shall preclude an IMA from 

16 establishing rules of enrollment and reenroll17 ment of members. Such rules shall be applied 

18 consistently to all members within the IMA and 

19 shall not be based in any manner on health sta20 tus-related factors. 

21 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con22 tract between an IMA and a health insurance issuer 

23 shall provide, with respect to a member enrolled with 

24 health benefits coverage offered by the issuer 
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1 through the IMA, for the payment of the premiums 

2 collected by the issuer. 

3 ‘‘SEC. 3002. APPLICATION OF CERTAIN LAWS AND REQUIRE4 MENTS. 

5 ‘‘State laws insofar as they relate to any of the fol6 lowing are superseded and shall not apply to health bene7 fits coverage made available through an IMA: 

8 ‘‘(1) Benefit requirements for health benefits 

9 coverage offered through an IMA, including (but not 

10 limited to) requirements relating to coverage of spe11 cific providers, specific services or conditions, or the 

12 amount, duration, or scope of benefits, but not in13 cluding requirements to the extent required to imple14 ment title XXVII or other Federal law and to the 

15 extent the requirement prohibits an exclusion of a 

16 specific disease from such coverage. 

17 ‘‘(2) Any other requirements (including limita18 tions on compensation arrangements) that, directly 

19 or indirectly, preclude (or have the effect of pre20 cluding) the offering of such coverage through an 

21 IMA, if the IMA meets the requirements of this 

22 title. 

23 Any State law or regulation relating to the composition 

24 or organization of an IMA is preempted to the extent the 
40 

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1 law or regulation is inconsistent with the provisions of this 

2 title. 

3 ‘‘SEC. 3003. ADMINISTRATION. 

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

5 this title and is authorized to issue such regulations as 

6 may be required to carry out this title. Such regulations 

7 shall be subject to Congressional review under the provi8 sions of chapter 8 of title 5, United States Code. The Sec9 retary shall incorporate the process of ‘deemed file and 

10 use’ with respect to the information filed under section 

11 3001(a)(5)(A) and shall determine whether information 

12 filed by an IMA demonstrates compliance with the applica13 ble requirements of this title. The Secretary shall exercise 

14 authority under this title in a manner that fosters and 

15 promotes the development of IMAs in order to improve 

16 access to health care coverage and services. 

17 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub18 mit to Congress a report every 30 months, during the 10- 

19 year period beginning on the effective date of the rules 

20 promulgated by the Secretary to carry out this title, on 

21 the effectiveness of this title in promoting coverage of un22 insured individuals. The Secretary may provide for the 

23 production of such reports through one or more contracts 

24 with appropriate private entities. 
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1 ‘‘SEC. 3004. DEFINITIONS. 

2 ‘‘For purposes of this title: 

3 ‘‘(1) ASSOCIATION.—The term ‘association’ 

4 means, with respect to health insurance coverage of5 fered in a State, an association which— 

6 ‘‘(A) has been actively in existence for at 

7 least 5 years; 

8 ‘‘(B) has been formed and maintained in 

9 good faith for purposes other than obtaining in10 surance; 

11 ‘‘(C) does not condition membership in the 

12 association on any health status-related factor 

13 relating to an individual (including an employee 

14 of an employer or a dependent of an employee); 

15 and 

16 ‘‘(D) does not make health insurance cov17 erage offered through the association available 

18 other than in connection with a member of the 

19 association. 

20 ‘‘(2) DEPENDENT.—The term ‘dependent’, as 

21 applied to health insurance coverage offered by a 

22 health insurance issuer licensed (or otherwise regu23 lated) in a State, shall have the meaning applied to 

24 such term with respect to such coverage under the 

25 laws of the State relating to such coverage and such 
42 

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1 an issuer. Such term may include the spouse and 

2 children of the individual involved. 

3 ‘‘(3) HEALTH BENEFITS COVERAGE.—The term 

4 ‘health benefits coverage’ has the meaning given the 

5 term health insurance coverage in section 

6 2791(b)(1). 

7 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

8 ‘health insurance issuer’ has the meaning given such 

9 term in section 2791(b)(2). 

10 ‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 

11 term ‘health status-related factor’ has the meaning 

12 given such term in section 2791(d)(9). 

13 ‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA14 TION.—The terms ‘IMA’ and ‘individual membership 

15 association’ are defined in section 3001(a). 

16 ‘‘(7) MEMBER.—The term ‘member’ means, 

17 with respect to an IMA, an individual who is a mem18 ber of the association to which the IMA is offering 

19 coverage.’’. 
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1 TITLE III—FEDERAL MATCHING 

2 FUNDING FOR STATE INSUR3 ANCE EXPENDITURES 

4 SEC. 301. FEDERAL MATCHING FUNDING FOR STATE IN5 SURANCE EXPENDITURES. 

6 (a) IN GENERAL.—Subject to the succeeding provi7 sions of this section, each State shall receive from the Sec8 retary of Health and Human Services an amount equal 

9 to 50 percent of the funds expended by the State in pro10 viding for the use, in connection with providing health ben11 efits coverage, of a high-risk pool, a reinsurance pool, or 

12 other risk-adjustment mechanism used for the purpose of 

13 subsidizing the purchase of private health insurance. 

14 (b) FUNDING LIMITATION.—A State shall not receive 

15 under this section for a fiscal year more than a total of 

16 50 cents multiplied by the average number of residents 

17 (as estimated by the Secretary) in the State in the fiscal 

18 year. 

19 (c) ADMINISTRATION.—The Secretary of Health and 

20 Human Services shall provide for the administration of 

21 this section and may establish such terms and conditions, 

22 including the requirement of an application, as may be ap23 propriate to carry out this section. 

24 (d) CONSTRUCTION.—Nothing in this section shall be 

25 construed as requiring a State to operate a reinsurance 
44 

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1 pool (or other risk-adjustment mechanism) under this sec2 tion or as preventing a State from operating such a pool 

3 or mechanism through one or more private entities. 

4 (e) HIGH-RISK POOL.—For purposes of this section, 

5 the term ‘‘high-risk pool’’ means any qualified high risk 

6 pool (as defined in section 2744(c)(2) of the Public Health 

7 Service Act). 

8 (f) REINSURANCE POOL OR OTHER RISK-ADJUST9 MENT MECHANISM DEFINED.—For purposes of this sec10 tion, the term ‘‘reinsurance pool or other risk-adjustment 

11 mechanism’’ means any State-based risk spreading mecha12 nism to subsidize the purchase of private health insurance 

13 for the high-risk population. 

14 (g) HIGH-RISK POPULATION.—For purposes of this 

15 section, the term ‘‘high-risk population’’ means— 

16 (1) individuals who, by reason of the existence 

17 or history of a medical condition, are able to acquire 

18 health coverage only at rates which are at least 150 

19 percent of the standard risk rates for such coverage, 

20 and 

21 (2) individuals who are provided health cov22 erage by a high-risk pool. 

23 (h) STATE DEFINED.—For purposes of this section, 

24 the term ‘‘State’’ includes the District of Columbia, Puer-
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1 to Rico, the Virgin Islands, Guam, American Samoa, and 

2 the Northern Mariana Islands. 

3 TITLE IV—AFFORDABLE HEALTH 

4 COVERAGE FOR EMPLOYEES 

5 OF SMALL BUSINESSES 

6 SEC. 401. SHORT TITLE OF TITLE. 

7 This title may be cited as the ‘‘Small Business Access 

8 and Choice for Entrepreneurs Act of 2005’’. 

9 SEC. 402. RULES. 

10 (a) IN GENERAL.—Subtitle B of title I of the Em11 ployee Retirement Income Security Act of 1974 is amend12 ed by adding after part 7 the following new part: 

13 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

14 HEALTH PLANS 

15 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

16 ‘‘(a) IN GENERAL.—For purposes of this part, the 

17 term ‘association health plan’ means a group health 

18 plan— 

19 ‘‘(1) whose sponsor is (or is deemed under this 

20 part to be) described in subsection (b); and 

21 ‘‘(2) under which at least one option of health 

22 insurance coverage offered by a health insurance 

23 issuer (which may include, among other options, 

24 managed care options, point of service options, and 

25 preferred provider options) is provided to partici-
46 

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1 pants and beneficiaries, unless, for any plan year, 

2 such coverage remains unavailable to the plan de3 spite good faith efforts exercised by the plan to se4 cure such coverage. 

5 ‘‘(b) SPONSORSHIP.—The sponsor of a group health 

6 plan is described in this subsection if such sponsor— 

7 ‘‘(1) is organized and maintained in good faith, 

8 with a constitution and bylaws specifically stating its 

9 purpose and providing for periodic meetings on at 

10 least an annual basis, as a bona fide trade associa11 tion, a bona fide industry association (including a 

12 rural electric cooperative association or a rural tele13 phone cooperative association), a bona fide profes14 sional association, or a bona fide chamber of com15 merce (or similar bona fide business association, in16 cluding a corporation or similar organization that 

17 operates on a cooperative basis (within the meaning 

18 of section 1381 of the Internal Revenue Code of 

19 1986)), for substantial purposes other than that of 

20 obtaining or providing medical care; 

21 ‘‘(2) is established as a permanent entity which 

22 receives the active support of its members and col23 lects from its members on a periodic basis dues or 

24 payments necessary to maintain eligibility for mem25 bership in the sponsor; and 
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1 ‘‘(3) does not condition membership, such dues 

2 or payments, or coverage under the plan on the 

3 basis of health status-related factors with respect to 

4 the employees of its members (or affiliated mem5 bers), or the dependents of such employees, and does 

6 not condition such dues or payments on the basis of 

7 group health plan participation. 

8 Any sponsor consisting of an association of entities which 

9 meet the requirements of paragraphs (1), (2), and (3) 

10 shall be deemed to be a sponsor described in this sub11 section. 

12 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

13 PLANS. 

14 ‘‘(a) IN GENERAL.—The applicable authority shall 

15 prescribe by regulation, through negotiated rulemaking, a 

16 procedure under which, subject to subsection (b), the ap17 plicable authority shall certify association health plans 

18 which apply for certification as meeting the requirements 

19 of this part. 

20 ‘‘(b) STANDARDS.—Under the procedure prescribed 

21 pursuant to subsection (a), in the case of an association 

22 health plan that provides at least one benefit option which 

23 does not consist of health insurance coverage, the applica24 ble authority shall certify such plan as meeting the re-
48 

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1 quirements of this part only if the applicable authority is 

2 satisfied that— 

3 ‘‘(1) such certification— 

4 ‘‘(A) is administratively feasible; 

5 ‘‘(B) is not adverse to the interests of the 

6 individuals covered under the plan; and 

7 ‘‘(C) is protective of the rights and benefits 

8 of the individuals covered under the plan; and 

9 ‘‘(2) the applicable requirements of this part 

10 are met (or, upon the date on which the plan is to 

11 commence operations, will be met) with respect to 

12 the plan. 

13 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

14 PLANS.—An association health plan with respect to which 

15 certification under this part is in effect shall meet the ap16 plicable requirements of this part, effective on the date 

17 of certification (or, if later, on the date on which the plan 

18 is to commence operations). 

19 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI20 CATION.—The applicable authority may provide by regula21 tion, through negotiated rulemaking, for continued certifi22 cation of association health plans under this part. 

23 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

24 PLANS.—The applicable authority shall establish a class 

25 certification procedure for association health plans under 
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1 which all benefits consist of health insurance coverage. 

2 Under such procedure, the applicable authority shall pro3 vide for the granting of certification under this part to 

4 the plans in each class of such association health plans 

5 upon appropriate filing under such procedure in connec6 tion with plans in such class and payment of the pre7 scribed fee under section 807(a). 

8 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION

9 HEALTH PLANS.—An association health plan which offers 

10 one or more benefit options which do not consist of health 

11 insurance coverage may be certified under this part only 

12 if such plan consists of any of the following: 

13 ‘‘(1) a plan which offered such coverage on the 

14 date of the enactment of the Small Business Access 

15 and Choice for Entrepreneurs Act of 2005, 

16 ‘‘(2) a plan under which the sponsor does not 

17 restrict membership to one or more trades and busi18 nesses or industries and whose eligible participating 

19 employers represent a broad cross-section of trades 

20 and businesses or industries, or 

21 ‘‘(3) a plan whose eligible participating employ22 ers represent one or more trades or businesses, or 

23 one or more industries, which have been indicated as 

24 having average or above-average health insurance 

25 risk or health claims experience by reason of State 
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1 rate filings, denials of coverage, proposed premium 

2 rate levels, and other means demonstrated by such 

3 plan in accordance with regulations which the Sec4 retary shall prescribe through negotiated rule5 making, including (but not limited to) the following: 

6 agriculture; automobile dealerships; barbering and 

7 cosmetology; child care; construction; dance, theat8 rical, and orchestra productions; disinfecting and 

9 pest control; eating and drinking establishments; 

10 fishing; hospitals; labor organizations; logging; man11 ufacturing (metals); mining; medical and dental 

12 practices; medical laboratories; sanitary services; 

13 transportation (local and freight); and warehousing. 

14 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 

15 BOARDS OF TRUSTEES. 

16 ‘‘(a) SPONSOR.—The requirements of this subsection 

17 are met with respect to an association health plan if the 

18 sponsor has met (or is deemed under this part to have 

19 met) the requirements of section 801(b) for a continuous 

20 period of not less than 3 years ending with the date of 

21 the application for certification under this part. 

22 ‘‘(b) BOARD OF TRUSTEES.—The requirements of 

23 this subsection are met with respect to an association 

24 health plan if the following requirements are met: 
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1 ‘‘(1) FISCAL CONTROL.—The plan is operated, 

2 pursuant to a trust agreement, by a board of trust3 ees which has complete fiscal control over the plan 

4 and which is responsible for all operations of the 

5 plan. 

6 ‘‘(2) RULES OF OPERATION AND FINANCIAL

7 CONTROLS.—The board of trustees has in effect 

8 rules of operation and financial controls, based on a 

9 3-year plan of operation, adequate to carry out the 

10 terms of the plan and to meet all requirements of 

11 this title applicable to the plan. 

12 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

13 PARTICIPATING EMPLOYERS AND TO CONTRAC14 TORS.— 

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 subparagraphs (B) and (C), the members of the 

17 board of trustees are individuals selected from 

18 individuals who are the owners, officers, direc19 tors, or employees of the participating employ20 ers or who are partners in the participating em21 ployers and actively participate in the business. 

22 ‘‘(B) LIMITATION.— 

23 ‘‘(i) GENERAL RULE.—Except as pro24 vided in clauses (ii) and (iii), no such 

25 member is an owner, officer, director, or 
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1 employee of, or partner in, a contract ad2 ministrator or other service provider to the 

3 plan. 

4 ‘‘(ii) LIMITED EXCEPTION FOR PRO5 VIDERS OF SERVICES SOLELY ON BEHALF

6 OF THE SPONSOR.—Officers or employees 

7 of a sponsor which is a service provider 

8 (other than a contract administrator) to 

9 the plan may be members of the board if 

10 they constitute not more than 25 percent 

11 of the membership of the board and they 

12 do not provide services to the plan other 

13 than on behalf of the sponsor. 

14 ‘‘(iii) TREATMENT OF PROVIDERS OF

15 MEDICAL CARE.—In the case of a sponsor 

16 which is an association whose membership 

17 consists primarily of providers of medical 

18 care, clause (i) shall not apply in the case 

19 of any service provider described in sub20 paragraph (A) who is a provider of medical 

21 care under the plan. 

22 ‘‘(C) CERTAIN PLANS EXCLUDED.—Sub23 paragraph (A) shall not apply to an association 

24 health plan which is in existence on the date of 
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1 the enactment of the Small Business Access 

2 and Choice for Entrepreneurs Act of 2005. 

3 ‘‘(D) SOLE AUTHORITY.—The board has 

4 sole authority under the plan to approve appli5 cations for participation in the plan and to con6 tract with a service provider to administer the 

7 day-to-day affairs of the plan. 

8 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 

9 the case of a group health plan which is established and 

10 maintained by a franchiser for a franchise network con11 sisting of its franchisees— 

12 ‘‘(1) the requirements of subsection (a) and sec13 tion 801(a)(1) shall be deemed met if such require14 ments would otherwise be met if the franchiser were 

15 deemed to be the sponsor referred to in section 

16 801(b), such network were deemed to be an associa17 tion described in section 801(b), and each franchisee 

18 were deemed to be a member (of the association and 

19 the sponsor) referred to in section 801(b); and 

20 ‘‘(2) the requirements of section 804(a)(1) shall 

21 be deemed met. 

22 The Secretary may by regulation, through negotiated rule23 making, define for purposes of this subsection the terms 

24 ‘franchiser’, ‘franchise network’, and ‘franchisee’. 

25 ‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.— 
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1 ‘‘(1) IN GENERAL.—In the case of a group 

2 health plan described in paragraph (2)— 

3 ‘‘(A) the requirements of subsection (a) 

4 and section 801(a)(1) shall be deemed met; 

5 ‘‘(B) the joint board of trustees shall be 

6 deemed a board of trustees with respect to 

7 which the requirements of subsection (b) are 

8 met; and 

9 ‘‘(C) the requirements of section 804 shall 

10 be deemed met. 

11 ‘‘(2) REQUIREMENTS.—A group health plan is 

12 described in this paragraph if— 

13 ‘‘(A) the plan is a multiemployer plan; or 

14 ‘‘(B) the plan is in existence on April 1, 

15 1997, and would be described in section 

16 3(40)(A)(i) but solely for the failure to meet 

17 the requirements of section 3(40)(C)(ii). 

18 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE19 MENTS. 

20 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 

21 requirements of this subsection are met with respect to 

22 an association health plan if, under the terms of the 

23 plan— 

24 ‘‘(1) each participating employer must be— 

25 ‘‘(A) a member of the sponsor; 
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•HR 2203 IH 

1 ‘‘(B) the sponsor; or 

2 ‘‘(C) an affiliated member of the sponsor 

3 with respect to which the requirements of sub4 section (b) are met; 

5 except that, in the case of a sponsor which is a pro6 fessional association or other individual-based asso7 ciation, if at least one of the officers, directors, or 

8 employees of an employer, or at least one of the in9 dividuals who are partners in an employer and who 

10 actively participates in the business, is a member or 

11 such an affiliated member of the sponsor, partici12 pating employers may also include such employer; 

13 and 

14 ‘‘(2) all individuals commencing coverage under 

15 the plan after certification under this part must 

16 be— 

17 ‘‘(A) active or retired owners (including 

18 self-employed individuals), officers, directors, or 

19 employees of, or partners in, participating em20 ployers; or 

21 ‘‘(B) the beneficiaries of individuals de22 scribed in subparagraph (A). 

23 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM24 PLOYEES.—In the case of an association health plan in 

25 existence on the date of the enactment of the Small Busi-
56 

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1 ness Access and Choice for Entrepreneurs Act of 2005, 

2 an affiliated member of the sponsor of the plan may be 

3 offered coverage under the plan as a participating em4 ployer only if— 

5 ‘‘(1) the affiliated member was an affiliated 

6 member on the date of certification under this part; 

7 or 

8 ‘‘(2) during the 12-month period preceding the 

9 date of the offering of such coverage, the affiliated 

10 member has not maintained or contributed to a 

11 group health plan with respect to any of its employ12 ees who would otherwise be eligible to participate in 

13 such association health plan. 

14 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re15 quirements of this subsection are met with respect to an 

16 association health plan if, under the terms of the plan, 

17 no participating employer may provide health insurance 

18 coverage in the individual market for any employee not 

19 covered under the plan which is similar to the coverage 

20 contemporaneously provided to employees of the employer 

21 under the plan, if such exclusion of the employee from cov22 erage under the plan is based on a health status-related 

23 factor with respect to the employee and such employee 

24 would, but for such exclusion on such basis, be eligible 

25 for coverage under the plan. 
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1 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

2 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI3 PATE.—The requirements of this subsection are met with 

4 respect to an association health plan if— 

5 ‘‘(1) under the terms of the plan, all employers 

6 meeting the preceding requirements of this section 

7 are eligible to qualify as participating employers for 

8 all geographically available coverage options, unless, 

9 in the case of any such employer, participation or 

10 contribution requirements of the type referred to in 

11 section 2711 of the Public Health Service Act are 

12 not met; 

13 ‘‘(2) upon request, any employer eligible to par14 ticipate is furnished information regarding all cov15 erage options available under the plan; and 

16 ‘‘(3) the applicable requirements of sections 

17 701, 702, and 703 are met with respect to the plan. 

18 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 

19 DOCUMENTS, CONTRIBUTION RATES, AND 

20 BENEFIT OPTIONS. 

21 ‘‘(a) IN GENERAL.—The requirements of this section 

22 are met with respect to an association health plan if the 

23 following requirements are met: 

24 ‘‘(1) CONTENTS OF GOVERNING INSTRU25 MENTS.—The instruments governing the plan in-
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1 clude a written instrument, meeting the require2 ments of an instrument required under section 

3 402(a)(1), which— 

4 ‘‘(A) provides that the board of trustees 

5 serves as the named fiduciary required for plans 

6 under section 402(a)(1) and serves in the ca7 pacity of a plan administrator (referred to in 

8 section 3(16)(A)); 

9 ‘‘(B) provides that the sponsor of the plan 

10 is to serve as plan sponsor (referred to in sec11 tion 3(16)(B)); and 

12 ‘‘(C) incorporates the requirements of sec13 tion 806. 

14 ‘‘(2) CONTRIBUTION RATES MUST BE NON15 DISCRIMINATORY.— 

16 ‘‘(A) The contribution rates for any par17 ticipating small employer do not vary on the 

18 basis of the claims experience of such employer 

19 and do not vary on the basis of the type of 

20 business or industry in which such employer is 

21 engaged. 

22 ‘‘(B) Nothing in this title or any other pro23 vision of law shall be construed to preclude an 

24 association health plan, or a health insurance 

25 issuer offering health insurance coverage in 
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1 connection with an association health plan, 

2 from— 

3 ‘‘(i) setting contribution rates based 

4 on the claims experience of the plan; or 

5 ‘‘(ii) varying contribution rates for 

6 small employers in a State to the extent 

7 that such rates could vary using the same 

8 methodology employed in such State for 

9 regulating premium rates in the small 

10 group market with respect to health insur11 ance coverage offered in connection with 

12 bona fide associations (within the meaning 

13 of section 2791(d)(3) of the Public Health 

14 Service Act), 

15 subject to the requirements of section 702(b) 

16 relating to contribution rates. 

17 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI18 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

19 any benefit option under the plan does not consist 

20 of health insurance coverage, the plan has as of the 

21 beginning of the plan year not fewer than 1,000 par22 ticipants and beneficiaries. 

23 ‘‘(4) MARKETING REQUIREMENTS.— 

24 ‘‘(A) IN GENERAL.—If a benefit option 

25 which consists of health insurance coverage is 
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1 offered under the plan, State-licensed insurance 

2 agents shall be used to distribute to small em3 ployers coverage which does not consist of 

4 health insurance coverage in a manner com5 parable to the manner in which such agents are 

6 used to distribute health insurance coverage. 

7 ‘‘(B) STATE-LICENSED INSURANCE

8 AGENTS.—For purposes of subparagraph (A), 

9 the term ‘State-licensed insurance agents’ 

10 means one or more agents who are licensed in 

11 a State and are subject to the laws of such 

12 State relating to licensure, qualification, test13 ing, examination, and continuing education of 

14 persons authorized to offer, sell, or solicit 

15 health insurance coverage in such State. 

16 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

17 other requirements as the applicable authority deter18 mines are necessary to carry out the purposes of this 

19 part, which shall be prescribed by the applicable au20 thority by regulation through negotiated rulemaking. 

21 ‘‘(b) HEALTH BENEFIT OPTIONS UNDER AN ASSO22 CIATION HEALTH PLAN.— 

23 ‘‘(1) EXAMPLES OF TYPES OF COVERAGE.—The 

24 health benefits coverage made available through an 

25 association health plan may include, but is not lim-
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1 ited to, any of the following if it meets the other ap2 plicable requirements of this title: 

3 ‘‘(A) Coverage through a health mainte4 nance organization. 

5 ‘‘(B) Coverage in connection with a pre6 ferred provider organization. 

7 ‘‘(C) Coverage in connection with a li8 censed provider-sponsored organization. 

9 ‘‘(D) Indemnity coverage through an insur10 ance company. 

11 ‘‘(E) Coverage offered in connection with a 

12 contribution into a medical savings account or 

13 flexible spending account. 

14 ‘‘(F) Coverage that includes a point-of15 service option. 

16 ‘‘(G) Any combination of such types of 

17 coverage. 

18 ‘‘(2) HEALTH INSURANCE COVERAGE OP19 TIONS.— 

20 ‘‘(A) IN GENERAL.—An association health 

21 plan shall include a minimum of 4 health insur22 ance coverage options. At least 1 option shall be 

23 a non network option. At least 2 options shall 

24 meet all applicable State benefit mandates. 
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1 ‘‘(B) MODEL BENEFITS PACKAGE.—The 

2 Secretary in consultation with the National As3 sociation of Insurance Commissioners shall de4 velop a model benefits package for health insur5 ance coverage not later than one year after the 

6 date of the enactment of the Consensus Health 

7 Care Access and Choice Act of 2003. 

8 ‘‘(C) EXCEPTION TO GENERAL RULE.—An 

9 association health plan may offer 2 options that 

10 meet the requirements of the model benefits 

11 package in lieu of the State benefit mandate of12 ferings required under subparagraph (A). 

13 ‘‘(3) PERMITTING ASSOCIATION HEALTH PLANS

14 TO ADJUST DISTRIBUTIONS AMONG ISSUERS TO RE15 FLECT RELATIVE RISK OF ENROLLEES.—Nothing in 

16 this section shall be construed as precluding an asso17 ciation health plan from providing for adjustments 

18 in amounts distributed among the health insurance 

19 issuers offering health benefits coverage through the 

20 association health plan based on factors such as the 

21 relative health care risk of members enrolled under 

22 the coverage offered by the different issuers. 

23 ‘‘(4) CONSTRUCTION.—Except as provided in 

24 subparagraph (2), nothing in this part or any provi25 sion of State law (as defined in section 514(c)(1)) 
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1 shall be construed to preclude an association health 

2 plan, or a health insurance issuer offering health in3 surance coverage in connection with an association 

4 health plan, from exercising its sole discretion in se5 lecting the specific items and services consisting of 

6 medical care to be included as benefits under such 

7 plan or coverage, except (subject to section 514) in 

8 the case of any law to the extent that it (1) prohibits 

9 an exclusion of a specific disease from such cov10 erage, or (2) is not preempted under section 

11 731(a)(1) with respect to matters governed by sec12 tion 711 or 712. 

13 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 

14 FOR SOLVENCY FOR PLANS PROVIDING 

15 HEALTH BENEFITS IN ADDITION TO HEALTH 

16 INSURANCE COVERAGE. 

17 ‘‘(a) IN GENERAL.—The requirements of this section 

18 are met with respect to an association health plan if— 

19 ‘‘(1) the benefits under the plan consist solely 

20 of health insurance coverage; or 

21 ‘‘(2) if the plan provides any additional benefit 

22 options which do not consist of health insurance cov23 erage, the plan— 

24 ‘‘(A) establishes and maintains reserves 

25 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 

24 with an attachment point which is not 

25 greater than 125 percent of expected gross 
65 

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1 annual claims. The applicable authority 

2 may by regulation, through negotiated 

3 rulemaking, provide for upward adjust4 ments in the amount of such percentage in 

5 specified circumstances in which the plan 

6 specifically provides for and maintains re7 serves in excess of the amounts required 

8 under subparagraph (A). 

9 ‘‘(ii) The plan shall secure specific ex10 cess /stop loss insurance for the plan with 

11 an attachment point which is at least equal 

12 to an amount recommended by the plan’s 

13 qualified actuary (but not more than 

14 $175,000). The applicable authority may 

15 by regulation, through negotiated rule16 making, provide for adjustments in the 

17 amount of such insurance in specified cir18 cumstances in which the plan specifically 

19 provides for and maintains reserves in ex20 cess of the amounts required under sub21 paragraph (A). 

22 ‘‘(iii) The plan shall secure indem23 nification insurance for any claims which 

24 the plan is unable to satisfy by reason of 

25 a plan termination. 
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1 Any regulations prescribed by the applicable authority 

2 pursuant to clause (i) or (ii) of subparagraph (B) may 

3 allow for such adjustments in the required levels of excess 

4 /stop loss insurance as the qualified actuary may rec5 ommend, taking into account the specific circumstances 

6 of the plan. 

7 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS

8 RESERVES.—In the case of any association health plan de9 scribed in subsection (a)(2), the requirements of this sub10 section are met if the plan establishes and maintains sur11 plus in an amount at least equal to— 

12 ‘‘(1) $500,000, or 

13 ‘‘(2) such greater amount (but not greater than 

14 $2,000,000) as may be set forth in regulations pre15 scribed by the applicable authority through nego16 tiated rulemaking, based on the level of aggregate 

17 and specific excess /stop loss insurance provided with 

18 respect to such plan. 

19 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 

20 any association health plan described in subsection (a)(2), 

21 the applicable authority may provide such additional re22 quirements relating to reserves and excess /stop loss insur23 ance as the applicable authority considers appropriate. 

24 Such requirements may be provided by regulation, through 
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1 negotiated rulemaking, with respect to any such plan or 

2 any class of such plans. 

3 ‘‘(d) ADJUSTMENTS FOR EXCESS /STOP LOSS INSUR4 ANCE.—The applicable authority may provide for adjust5 ments to the levels of reserves otherwise required under 

6 subsections (a) and (b) with respect to any plan or class 

7 of plans to take into account excess /stop loss insurance 

8 provided with respect to such plan or plans. 

9 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 

10 applicable authority may permit an association health plan 

11 described in subsection (a)(2) to substitute, for all or part 

12 of the requirements of this section (except subsection 

13 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar14 rangement, or other financial arrangement as the applica15 ble authority determines to be adequate to enable the plan 

16 to fully meet all its financial obligations on a timely basis 

17 and is otherwise no less protective of the interests of par18 ticipants and beneficiaries than the requirements for 

19 which it is substituted. The applicable authority may take 

20 into account, for purposes of this subsection, evidence pro21 vided by the plan or sponsor which demonstrates an as22 sumption of liability with respect to the plan. Such evi23 dence may be in the form of a contract of indemnification, 

24 lien, bonding, insurance, letter of credit, recourse under 

25 applicable terms of the plan in the form of assessments 
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1 of participating employers, security, or other financial ar2 rangement. 

3 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

4 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

5 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO6 CIATION HEALTH PLAN FUND.— 

7 ‘‘(A) IN GENERAL.—In the case of an as8 sociation health plan described in subsection 

9 (a)(2), the requirements of this subsection are 

10 met if the plan makes payments into the Asso11 ciation Health Plan Fund under this subpara12 graph when they are due. Such payments shall 

13 consist of annual payments in the amount of 

14 $5,000, and, in addition to such annual pay15 ments, such supplemental payments as the Sec16 retary may determine to be necessary under 

17 paragraph (2). Payments under this paragraph 

18 are payable to the Fund at the time determined 

19 by the Secretary. Initial payments are due in 

20 advance of certification under this part. Pay21 ments shall continue to accrue until a plan’s as22 sets are distributed pursuant to a termination 

23 procedure. 

24 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

25 PAYMENTS.—If any payment is not made by a 
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1 plan when it is due, a late payment charge of 

2 not more than 100 percent of the payment 

3 which was not timely paid shall be payable by 

4 the plan to the Fund. 

5 ‘‘(C) CONTINUED DUTY OF THE SEC6 RETARY.—The Secretary shall not cease to 

7 carry out the provisions of paragraph (2) on ac8 count of the failure of a plan to pay any pay9 ment when due. 

10 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

11 EXCESS /STOP LOSS INSURANCE COVERAGE AND IN12 DEMNIFICATION INSURANCE COVERAGE FOR CER13 TAIN PLANS.—In any case in which the applicable 

14 authority determines that there is, or that there is 

15 reason to believe that there will be: (A) a failure to 

16 take necessary corrective actions under section 

17 809(a) with respect to an association health plan de18 scribed in subsection (a)(2); or (B) a termination of 

19 such a plan under section 809(b) or 810(b)(8) (and, 

20 if the applicable authority is not the Secretary, cer21 tifies such determination to the Secretary), the Sec22 retary shall determine the amounts necessary to 

23 make payments to an insurer (designated by the 

24 Secretary) to maintain in force excess /stop loss in25 surance coverage or indemnification insurance cov-
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1 erage for such plan, if the Secretary determines that 

2 there is a reasonable expectation that, without such 

3 payments, claims would not be satisfied by reason of 

4 termination of such coverage. The Secretary shall, to 

5 the extent provided in advance in appropriation 

6 Acts, pay such amounts so determined to the insurer 

7 designated by the Secretary. 

8 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 

9 ‘‘(A) IN GENERAL.—There is established 

10 on the books of the Treasury a fund to be 

11 known as the ‘Association Health Plan Fund’. 

12 The Fund shall be available for making pay13 ments pursuant to paragraph (2). The Fund 

14 shall be credited with payments received pursu15 ant to paragraph (1)(A), penalties received pur16 suant to paragraph (1)(B); and earnings on in17 vestments of amounts of the Fund under sub18 paragraph (B). 

19 ‘‘(B) INVESTMENT.—Whenever the Sec20 retary determines that the moneys of the fund 

21 are in excess of current needs, the Secretary 

22 may request the investment of such amounts as 

23 the Secretary determines advisable by the Sec24 retary of the Treasury in obligations issued or 

25 guaranteed by the United States. 
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1 ‘‘(g) EXCESS /STOP LOSS INSURANCE.—For pur2 poses of this section— 

3 ‘‘(1) AGGREGATE EXCESS /STOP LOSS INSUR4 ANCE.—The term ‘aggregate excess /stop loss insur5 ance’ means, in connection with an association 

6 health plan, a contract— 

7 ‘‘(A) under which an insurer (meeting such 

8 minimum standards as the applicable authority 

9 may prescribe by regulation through negotiated 

10 rulemaking) provides for payment to the plan 

11 with respect to aggregate claims under the plan 

12 in excess of an amount or amounts specified in 

13 such contract; 

14 ‘‘(B) which is guaranteed renewable; and 

15 ‘‘(C) which allows for payment of pre16 miums by any third party on behalf of the in17 sured plan. 

18 ‘‘(2) SPECIFIC EXCESS /STOP LOSS INSUR19 ANCE.—The term ‘specific excess /stop loss insur20 ance’ means, in connection with an association 

21 health plan, a contract— 

22 ‘‘(A) under which an insurer (meeting such 

23 minimum standards as the applicable authority 

24 may prescribe by regulation through negotiated 

25 rulemaking) provides for payment to the plan 
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1 with respect to claims under the plan in connec2 tion with a covered individual in excess of an 

3 amount or amounts specified in such contract 

4 in connection with such covered individual; 

5 ‘‘(B) which is guaranteed renewable; and 

6 ‘‘(C) which allows for payment of pre7 miums by any third party on behalf of the in8 sured plan. 

9 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 

10 of this section, the term ‘indemnification insurance’ 

11 means, in connection with an association health plan, a 

12 contract— 

13 ‘‘(1) under which an insurer (meeting such min14 imum standards as the applicable authority may pre15 scribe through negotiated rulemaking) provides for 

16 payment to the plan with respect to claims under the 

17 plan which the plan is unable to satisfy by reason 

18 of a termination pursuant to section 809(b) (relating 

19 to mandatory termination); 

20 ‘‘(2) which is guaranteed renewable and 

21 noncancellable for any reason (except as the applica22 ble authority may prescribe by regulation through 

23 negotiated rulemaking); and 

24 ‘‘(3) which allows for payment of premiums by 

25 any third party on behalf of the insured plan. 
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1 ‘‘(i) RESERVES.—For purposes of this section, the 

2 term ‘reserves’ means, in connection with an association 

3 health plan, plan assets which meet the fiduciary stand4 ards under part 4 and such additional requirements re5 garding liquidity as the applicable authority may prescribe 

6 through negotiated rulemaking. 

7 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 

8 ‘‘(1) IN GENERAL.—Within 90 days after the 

9 date of the enactment of the Small Business Access 

10 and Choice for Entrepreneurs Act of 2005, the ap11 plicable authority shall establish a Solvency Stand12 ards Working Group. In prescribing the initial regu13 lations under this section, the applicable authority 

14 shall take into account the recommendations of such 

15 Working Group. 

16 ‘‘(2) MEMBERSHIP.—The Working Group shall 

17 consist of not more than 15 members appointed by 

18 the applicable authority. The applicable authority 

19 shall include among persons invited to membership 

20 on the Working Group at least one of each of the 

21 following: 

22 ‘‘(A) a representative of the National Asso23 ciation of Insurance Commissioners; 

24 ‘‘(B) a representative of the American 

25 Academy of Actuaries; 
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1 ‘‘(C) a representative of the State govern2 ments, or their interests; 

3 ‘‘(D) a representative of existing self-in4 sured arrangements, or their interests; 

5 ‘‘(E) a representative of associations of the 

6 type referred to in section 801(b)(1), or their 

7 interests; and 

8 ‘‘(F) a representative of multiemployer 

9 plans that are group health plans, or their in10 terests. 

11 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE12 LATED REQUIREMENTS. 

13 ‘‘(a) FILING FEE.—Under the procedure prescribed 

14 pursuant to section 802(a), an association health plan 

15 shall pay to the applicable authority at the time of filing 

16 an application for certification under this part a filing fee 

17 in the amount of $5,000, which shall be available in the 

18 case of the Secretary, to the extent provided in appropria19 tion Acts, for the sole purpose of administering the certifi20 cation procedures applicable with respect to association 

21 health plans. 

22 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA23 TION FOR CERTIFICATION.—An application for certifi24 cation under this part meets the requirements of this sec25 tion only if it includes, in a manner and form which shall 
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1 be prescribed by the applicable authority through nego2 tiated rulemaking, at least the following information: 

3 ‘‘(1) IDENTIFYING INFORMATION.—The names 

4 and addresses of— 

5 ‘‘(A) the sponsor; and 

6 ‘‘(B) the members of the board of trustees 

7 of the plan. 

8 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO

9 BUSINESS.—The States in which participants and 

10 beneficiaries under the plan are to be located and 

11 the number of them expected to be located in each 

12 such State. 

13 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro14 vided by the board of trustees that the bonding re15 quirements of section 412 will be met as of the date 

16 of the application or (if later) commencement of op17 erations. 

18 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu19 ments governing the plan (including any bylaws and 

20 trust agreements), the summary plan description, 

21 and other material describing the benefits that will 

22 be provided to participants and beneficiaries under 

23 the plan. 

24 ‘‘(5) AGREEMENTS WITH SERVICE PRO25 VIDERS.—A copy of any agreements between the 
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1 plan and contract administrators and other service 

2 providers. 

3 ‘‘(6) FUNDING REPORT.—In the case of asso4 ciation health plans providing benefits options in ad5 dition to health insurance coverage, a report setting 

6 forth information with respect to such additional 

7 benefit options determined as of a date within the 

8 120-day period ending with the date of the applica9 tion, including the following: 

10 ‘‘(A) RESERVES.—A statement, certified 

11 by the board of trustees of the plan, and a 

12 statement of actuarial opinion, signed by a 

13 qualified actuary, that all applicable require14 ments of section 806 are or will be met in ac15 cordance with regulations which the applicable 

16 authority shall prescribe through negotiated 

17 rulemaking. 

18 ‘‘(B) ADEQUACY OF CONTRIBUTION

19 RATES.—A statement of actuarial opinion, 

20 signed by a qualified actuary, which sets forth 

21 a description of the extent to which contribution 

22 rates are adequate to provide for the payment 

23 of all obligations and the maintenance of re24 quired reserves under the plan for the 12- 

25 month period beginning with such date within 
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1 such 120-day period, taking into account the 

2 expected coverage and experience of the plan. If 

3 the contribution rates are not fully adequate, 

4 the statement of actuarial opinion shall indicate 

5 the extent to which the rates are inadequate 

6 and the changes needed to ensure adequacy. 

7 ‘‘(C) CURRENT AND PROJECTED VALUE OF

8 ASSETS AND LIABILITIES.—A statement of ac9 tuarial opinion signed by a qualified actuary, 

10 which sets forth the current value of the assets 

11 and liabilities accumulated under the plan and 

12 a projection of the assets, liabilities, income, 

13 and expenses of the plan for the 12-month pe14 riod referred to in subparagraph (B). The in15 come statement shall identify separately the 

16 plan’s administrative expenses and claims. 

17 ‘‘(D) COSTS OF COVERAGE TO BE

18 CHARGED AND OTHER EXPENSES.—A state19 ment of the costs of coverage to be charged, in20 cluding an itemization of amounts for adminis21 tration, reserves, and other expenses associated 

22 with the operation of the plan. 

23 ‘‘(E) OTHER INFORMATION.—Any other 

24 information as may be determined by the appli25 cable authority, by regulation through nego-
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1 tiated rulemaking, as necessary to carry out the 

2 purposes of this part. 

3 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

4 STATES.—A certification granted under this part to an 

5 association health plan shall not be effective unless written 

6 notice of such certification is filed with the applicable 

7 State authority of each State in which at least 25 percent 

8 of the participants and beneficiaries under the plan are 

9 located. For purposes of this subsection, an individual 

10 shall be considered to be located in the State in which a 

11 known address of such individual is located or in which 

12 such individual is employed. 

13 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 

14 of any association health plan certified under this part, 

15 descriptions of material changes in any information which 

16 was required to be submitted with the application for the 

17 certification under this part shall be filed in such form 

18 and manner as shall be prescribed by the applicable au19 thority by regulation through negotiated rulemaking. The 

20 applicable authority may require by regulation, through 

21 negotiated rulemaking, prior notice of material changes 

22 with respect to specified matters which might serve as the 

23 basis for suspension or revocation of the certification. 

24 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS25 SOCIATION HEALTH PLANS.—An association health plan 
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1 certified under this part which provides benefit options in 

2 addition to health insurance coverage for such plan year 

3 shall meet the requirements of section 103 by filing an 

4 annual report under such section which shall include infor5 mation described in subsection (b)(6) with respect to the 

6 plan year and, notwithstanding section 104(a)(1)(A), shall 

7 be filed with the applicable authority not later than 90 

8 days after the close of the plan year (or on such later date 

9 as may be prescribed by the applicable authority). The ap10 plicable authority may require by regulation through nego11 tiated rulemaking such interim reports as it considers ap12 propriate. 

13 ‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The 

14 board of trustees of each association health plan which 

15 provides benefits options in addition to health insurance 

16 coverage and which is applying for certification under this 

17 part or is certified under this part shall engage, on behalf 

18 of all participants and beneficiaries, a qualified actuary 

19 who shall be responsible for the preparation of the mate20 rials comprising information necessary to be submitted by 

21 a qualified actuary under this part. The qualified actuary 

22 shall utilize such assumptions and techniques as are nec23 essary to enable such actuary to form an opinion as to 

24 whether the contents of the matters reported under this 

25 part— 
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1 ‘‘(1) are in the aggregate reasonably related to 

2 the experience of the plan and to reasonable expecta3 tions; and 

4 ‘‘(2) represent such actuary’s best estimate of 

5 anticipated experience under the plan. 

6 The opinion by the qualified actuary shall be made with 

7 respect to, and shall be made a part of, the annual report. 

8 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER9 MINATION. 

10 ‘‘Except as provided in section 809(b), an association 

11 health plan which is or has been certified under this part 

12 may terminate (upon or at any time after cessation of ac13 cruals in benefit liabilities) only if the board of trustees— 

14 ‘‘(1) not less than 60 days before the proposed 

15 termination date, provides to the participants and 

16 beneficiaries a written notice of intent to terminate 

17 stating that such termination is intended and the 

18 proposed termination date; 

19 ‘‘(2) develops a plan for winding up the affairs 

20 of the plan in connection with such termination in 

21 a manner which will result in timely payment of all 

22 benefits for which the plan is obligated; and 

23 ‘‘(3) submits such plan in writing to the appli24 cable authority. 
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1 Actions required under this section shall be taken in such 

2 form and manner as may be prescribed by the applicable 

3 authority by regulation through negotiated rulemaking. 

4 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI5 NATION. 

6 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE7 SERVES.—An association health plan which is certified 

8 under this part and which provides benefits other than 

9 health insurance coverage shall continue to meet the re10 quirements of section 806, irrespective of whether such 

11 certification continues in effect. The board of trustees of 

12 such plan shall determine quarterly whether the require13 ments of section 806 are met. In any case in which the 

14 board determines that there is reason to believe that there 

15 is or will be a failure to meet such requirements, or the 

16 applicable authority makes such a determination and so 

17 notifies the board, the board shall immediately notify the 

18 qualified actuary engaged by the plan, and such actuary 

19 shall, not later than the end of the next following month, 

20 make such recommendations to the board for corrective 

21 action as the actuary determines necessary to ensure com22 pliance with section 806. Not later than 30 days after re23 ceiving from the actuary recommendations for corrective 

24 actions, the board shall notify the applicable authority (in 

25 such form and manner as the applicable authority may 
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1 prescribe by regulation through negotiated rulemaking) of 

2 such recommendations of the actuary for corrective action, 

3 together with a description of the actions (if any) that the 

4 board has taken or plans to take in response to such rec5 ommendations. The board shall thereafter report to the 

6 applicable authority, in such form and frequency as the 

7 applicable authority may specify to the board, regarding 

8 corrective action taken by the board until the requirements 

9 of section 806 are met. 

10 ‘‘(b) MANDATORY TERMINATION.—In any case in 

11 which— 

12 ‘‘(1) the applicable authority has been notified 

13 under subsection (a) of a failure of an association 

14 health plan which is or has been certified under this 

15 part and is described in section 806(a)(2) to meet 

16 the requirements of section 806 and has not been 

17 notified by the board of trustees of the plan that 

18 corrective action has restored compliance with such 

19 requirements; and 

20 ‘‘(2) the applicable authority determines that 

21 there is a reasonable expectation that the plan will 

22 continue to fail to meet the requirements of section 

23 806, 

24 the board of trustees of the plan shall, at the direction 

25 of the applicable authority, terminate the plan and, in the 
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1 course of the termination, take such actions as the appli2 cable authority may require, including satisfying any 

3 claims referred to in section 806(a)(2)(B)(iii) and recov4 ering for the plan any liability under subsection 

5 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 

6 that the affairs of the plan will be, to the maximum extent 

7 possible, wound up in a manner which will result in timely 

8 provision of all benefits for which the plan is obligated. 

9 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL10 VENT ASSOCIATION HEALTH PLANS PRO11 VIDING HEALTH BENEFITS IN ADDITION TO 

12 HEALTH INSURANCE COVERAGE. 

13 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

14 INSOLVENT PLANS.—Whenever the Secretary determines 

15 that an association health plan which is or has been cer16 tified under this part and which is described in section 

17 806(a)(2) will be unable to provide benefits when due or 

18 is otherwise in a financially hazardous condition, as shall 

19 be defined by the Secretary by regulation through nego20 tiated rulemaking, the Secretary shall, upon notice to the 

21 plan, apply to the appropriate United States district court 

22 for appointment of the Secretary as trustee to administer 

23 the plan for the duration of the insolvency. The plan may 

24 appear as a party and other interested persons may inter25 vene in the proceedings at the discretion of the court. The 
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1 court shall appoint such Secretary trustee if the court de2 termines that the trusteeship is necessary to protect the 

3 interests of the participants and beneficiaries or providers 

4 of medical care or to avoid any unreasonable deterioration 

5 of the financial condition of the plan. The trusteeship of 

6 such Secretary shall continue until the conditions de7 scribed in the first sentence of this subsection are rem8 edied or the plan is terminated. 

9 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

10 appointment as trustee under subsection (a), shall have 

11 the power— 

12 ‘‘(1) to do any act authorized by the plan, this 

13 title, or other applicable provisions of law to be done 

14 by the plan administrator or any trustee of the plan; 

15 ‘‘(2) to require the transfer of all (or any part) 

16 of the assets and records of the plan to the Sec17 retary as trustee; 

18 ‘‘(3) to invest any assets of the plan which the 

19 Secretary holds in accordance with the provisions of 

20 the plan, regulations prescribed by the Secretary 

21 through negotiated rulemaking, and applicable provi22 sions of law; 

23 ‘‘(4) to require the sponsor, the plan adminis24 trator, any participating employer, and any employee 

25 organization representing plan participants to fur-
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1 nish any information with respect to the plan which 

2 the Secretary as trustee may reasonably need in 

3 order to administer the plan; 

4 ‘‘(5) to collect for the plan any amounts due the 

5 plan and to recover reasonable expenses of the trust6 eeship; 

7 ‘‘(6) to commence, prosecute, or defend on be8 half of the plan any suit or proceeding involving the 

9 plan; 

10 ‘‘(7) to issue, publish, or file such notices, state11 ments, and reports as may be required by the Sec12 retary by regulation through negotiated rulemaking 

13 or required by any order of the court; 

14 ‘‘(8) to terminate the plan (or provide for its 

15 termination accordance with section 809(b)) and liq16 uidate the plan assets, to restore the plan to the re17 sponsibility of the sponsor, or to continue the trust18 eeship; 

19 ‘‘(9) to provide for the enrollment of plan par20 ticipants and beneficiaries under appropriate cov21 erage options; and 

22 ‘‘(10) to do such other acts as may be nec23 essary to comply with this title or any order of the 

24 court and to protect the interests of plan partici-
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1 pants and beneficiaries and providers of medical 

2 care. 

3 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac4 ticable after the Secretary’s appointment as trustee, the 

5 Secretary shall give notice of such appointment to— 

6 ‘‘(1) the sponsor and plan administrator; 

7 ‘‘(2) each participant; 

8 ‘‘(3) each participating employer; and 

9 ‘‘(4) if applicable, each employee organization 

10 which, for purposes of collective bargaining, rep11 resents plan participants. 

12 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in13 consistent with the provisions of this title, or as may be 

14 otherwise ordered by the court, the Secretary, upon ap15 pointment as trustee under this section, shall be subject 

16 to the same duties as those of a trustee under section 704 

17 of title 11, United States Code, and shall have the duties 

18 of a fiduciary for purposes of this title. 

19 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

20 Secretary under this subsection may be filed notwith21 standing the pendency in the same or any other court of 

22 any bankruptcy, mortgage foreclosure, or equity receiver23 ship proceeding, or any proceeding to reorganize, conserve, 

24 or liquidate such plan or its property, or any proceeding 

25 to enforce a lien against property of the plan. 
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1 ‘‘(f) JURISDICTION OF COURT.— 

2 ‘‘(1) IN GENERAL.—Upon the filing of an appli3 cation for the appointment as trustee or the issuance 

4 of a decree under this section, the court to which the 

5 application is made shall have exclusive jurisdiction 

6 of the plan involved and its property wherever lo7 cated with the powers, to the extent consistent with 

8 the purposes of this section, of a court of the United 

9 States having jurisdiction over cases under chapter 

10 11 of title 11, United States Code. Pending an adju11 dication under this section such court shall stay, and 

12 upon appointment by it of the Secretary as trustee, 

13 such court shall continue the stay of, any pending 

14 mortgage foreclosure, equity receivership, or other 

15 proceeding to reorganize, conserve, or liquidate the 

16 plan, the sponsor, or property of such plan or spon17 sor, and any other suit against any receiver, conser18 vator, or trustee of the plan, the sponsor, or prop19 erty of the plan or sponsor. Pending such adjudica20 tion and upon the appointment by it of the Sec21 retary as trustee, the court may stay any proceeding 

22 to enforce a lien against property of the plan or the 

23 sponsor or any other suit against the plan or the 

24 sponsor. 
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1 ‘‘(2) VENUE.—An action under this section 

2 may be brought in the judicial district where the 

3 sponsor or the plan administrator resides or does 

4 business or where any asset of the plan is situated. 

5 A district court in which such action is brought may 

6 issue process with respect to such action in any 

7 other judicial district. 

8 ‘‘(g) PERSONNEL.—In accordance with regulations 

9 which shall be prescribed by the Secretary through nego10 tiated rulemaking, the Secretary shall appoint, retain, and 

11 compensate accountants, actuaries, and other professional 

12 service personnel as may be necessary in connection with 

13 the Secretary’s service as trustee under this section. 

14 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

15 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

16 State may impose by law a contribution tax on an associa17 tion health plan described in section 806(a)(2), if the plan 

18 commenced operations in such State after the date of the 

19 enactment of the Small Business Access and Choice for 

20 Entrepreneurs Act of 2005. 

21 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec22 tion, the term ‘contribution tax’ imposed by a State on 

23 an association health plan means any tax imposed by such 

24 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 

22 /stop loss insurance (as defined in section 

23 806(g)(2)), other insurance related to the provision 

24 of medical care under the plan, or any combination 

25 thereof provided by such insurers or health mainte-
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1 nance organizations in such State in connection with 

2 such plan. 

3 ‘‘SEC. 812. SPECIAL RULES FOR CHURCH PLANS. 

4 ‘‘(a) ELECTION FOR CHURCH PLANS.—Notwith5 standing section 4(b)(2), if a church, a convention or asso6 ciation of churches, or an organization described in section 

7 3(33)(C)(i) maintains a church plan which is a group 

8 health plan (as defined in section 733(a)(1)), and such 

9 church, convention, association, or organization makes an 

10 election with respect to such plan under this subsection 

11 (in such form and manner as the Secretary may by regula12 tion prescribe), then the provisions of this section shall 

13 apply to such plan, with respect to benefits provided under 

14 such plan consisting of medical care, as if section 4(b)(2) 

15 did not contain an exclusion for church plans. Nothing in 

16 this subsection shall be construed to render any other sec17 tion of this title applicable to church plans, except to the 

18 extent that such other section is incorporated by reference 

19 in this section. 

20 ‘‘(b) EFFECT OF ELECTION.— 

21 ‘‘(1) PREEMPTION OF STATE INSURANCE LAWS

22 REGULATING COVERED CHURCH PLANS.—Subject to 

23 paragraphs (2) and (3), this section shall supersede 

24 any and all State laws which regulate insurance in25 sofar as they may now or hereafter regulate church 
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1 plans to which this section applies or trusts estab2 lished under such church plans. 

3 ‘‘(2) GENERAL STATE INSURANCE REGULATION

4 UNAFFECTED.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B) and paragraph (3), nothing 

7 in this section shall be construed to exempt or 

8 relieve any person from any provision of State 

9 law which regulates insurance. 

10 ‘‘(B) CHURCH PLANS NOT TO BE DEEMED

11 INSURANCE COMPANIES OR INSURERS.—Neither 

12 a church plan to which this section applies, nor 

13 any trust established under such a church plan, 

14 shall be deemed to be an insurance company or 

15 other insurer or to be engaged in the business 

16 of insurance for purposes of any State law pur17 porting to regulate insurance companies or in18 surance contracts. 

19 ‘‘(3) PREEMPTION OF CERTAIN STATE LAWS

20 RELATING TO PREMIUM RATE REGULATION AND

21 BENEFIT MANDATES.—The provisions of subsections 

22 (a)(2)(B) and (b) of section 805 shall apply with re23 spect to a church plan to which this section applies 

24 in the same manner and to the same extent as such 
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1 provisions apply with respect to association health 

2 plans. 

3 ‘‘(4) DEFINITIONS.—For purposes of this sub4 section— 

5 ‘‘(A) STATE LAW.—The term ‘State law’ 

6 includes all laws, decisions, rules, regulations, 

7 or other State action having the effect of law, 

8 of any State. A law of the United States appli9 cable only to the District of Columbia shall be 

10 treated as a State law rather than a law of the 

11 United States. 

12 ‘‘(B) STATE.—The term ‘State’ includes a 

13 State, any political subdivision thereof, or any 

14 agency or instrumentality of either, which pur15 ports to regulate, directly or indirectly, the 

16 terms and conditions of church plans covered by 

17 this section. 

18 ‘‘(c) REQUIREMENTS FOR COVERED CHURCH

19 PLANS.— 

20 ‘‘(1) FIDUCIARY RULES AND EXCLUSIVE PUR21 POSE.—A fiduciary shall discharge his duties with 

22 respect to a church plan to which this section ap23 plies— 

24 ‘‘(A) for the exclusive purpose of: 
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1 ‘‘(i) providing benefits to participants 

2 and their beneficiaries; and 

3 ‘‘(ii) defraying reasonable expenses of 

4 administering the plan; 

5 ‘‘(B) with the care, skill, prudence and dili6 gence under the circumstances then prevailing 

7 that a prudent man acting in a like capacity 

8 and familiar with such matters would use in the 

9 conduct of an enterprise of a like character and 

10 with like aims; and 

11 ‘‘(C) in accordance with the documents 

12 and instruments governing the plan. 

13 The requirements of this paragraph shall not be 

14 treated as not satisfied solely because the plan as15 sets are commingled with other church assets, to the 

16 extent that such plan assets are separately ac17 counted for. 

18 ‘‘(2) CLAIMS PROCEDURE.—In accordance with 

19 regulations of the Secretary, every church plan to 

20 which this section applies shall— 

21 ‘‘(A) provide adequate notice in writing to 

22 any participant or beneficiary whose claim for 

23 benefits under the plan has been denied, setting 

24 forth the specific reasons for such denial, writ-
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1 ten in a manner calculated to be understood by 

2 the participant; 

3 ‘‘(B) afford a reasonable opportunity to 

4 any participant whose claim for benefits has 

5 been denied for a full and fair review by the ap6 propriate fiduciary of the decision denying the 

7 claim; and 

8 ‘‘(C) provide a written statement to each 

9 participant describing the procedures estab10 lished pursuant to this paragraph. 

11 ‘‘(3) ANNUAL STATEMENTS.—In accordance 

12 with regulations of the Secretary, every church plan 

13 to which this section applies shall file with the Sec14 retary an annual statement— 

15 ‘‘(A) stating the names and addresses of 

16 the plan and of the church, convention, or asso17 ciation maintaining the plan (and its principal 

18 place of business); 

19 ‘‘(B) certifying that it is a church plan to 

20 which this section applies and that it complies 

21 with the requirements of paragraphs (1) and 

22 (2); 

23 ‘‘(C) identifying the States in which par24 ticipants and beneficiaries under the plan are or 
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1 likely will be located during the 1-year period 

2 covered by the statement; and 

3 ‘‘(D) containing a copy of a statement of 

4 actuarial opinion signed by a qualified actuary 

5 that the plan maintains capital, reserves, insur6 ance, other financial arrangements, or any com7 bination thereof adequate to enable the plan to 

8 fully meet all of its financial obligations on a 

9 timely basis. 

10 ‘‘(4) DISCLOSURE.—At the time that the an11 nual statement is filed by a church plan with the 

12 Secretary pursuant to paragraph (3), a copy of such 

13 statement shall be made available by the Secretary 

14 to the State insurance commissioner (or similar offi15 cial) of any State. The name of each church plan 

16 and sponsoring organization filing an annual state17 ment in compliance with paragraph (3) shall be pub18 lished annually in the Federal Register. 

19 ‘‘(d) ENFORCEMENT.—The Secretary may enforce 

20 the provisions of this section in a manner consistent with 

21 section 502, to the extent applicable with respect to ac22 tions under section 502(a)(5), and with section 3(33)(D), 

23 except that, other than for the purpose of seeking a tem24 porary restraining order, a civil action may be brought 

25 with respect to the plan’s failure to meet any requirement 
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1 of this section only if the plan fails to correct its failure 

2 within the correction period described in section 3(33)(D). 

3 The other provisions of part 5 (except sections 501(a), 

4 503, 512, 514, and 515) shall apply with respect to the 

5 enforcement and administration of this section. 

6 ‘‘(e) DEFINITIONS AND OTHER RULES.—For pur7 poses of this section— 

8 ‘‘(1) IN GENERAL.—Except as otherwise pro9 vided in this section, any term used in this section 

10 which is defined in any provision of this title shall 

11 have the definition provided such term by such pro12 vision. 

13 ‘‘(2) SEMINARY STUDENTS.—Seminary students 

14 who are enrolled in an institution of higher learning 

15 described in section 3(33)(C)(iv) and who are treat16 ed as participants under the terms of a church plan 

17 to which this section applies shall be deemed to be 

18 employees as defined in section 3(6) if the number 

19 of such students constitutes an insignificant portion 

20 of the total number of individuals who are treated 

21 as participants under the terms of the plan. 

22 ‘‘SEC. 813. DEFINITIONS AND RULES OF CONSTRUCTION. 

23 ‘‘(a) DEFINITIONS.—For purposes of this part— 

24 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

25 health plan’ has the meaning provided in section 
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1 733(a)(1) (after applying subsection (b) of this sec2 tion). 

3 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

4 has the meaning provided in section 733(a)(2). 

5 ‘‘(3) HEALTH INSURANCE COVERAGE.—The 

6 term ‘health insurance coverage’ has the meaning 

7 provided in section 733(b)(1). 

8 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

9 ‘health insurance issuer’ has the meaning provided 

10 in section 733(b)(2). 

11 ‘‘(5) APPLICABLE AUTHORITY.— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), the term ‘applicable author14 ity’ means, in connection with an association 

15 health plan— 

16 ‘‘(i) the State recognized pursuant to 

17 subsection (c) of section 506 as the State 

18 to which authority has been delegated in 

19 connection with such plan; or 

20 ‘‘(ii) if there is no State referred to in 

21 clause (i), the Secretary. 

22 ‘‘(B) EXCEPTIONS.— 

23 ‘‘(i) JOINT AUTHORITIES.—Where 

24 such term appears in section 808(3), sec25 tion 807(e) (in the first instance), section 
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1 809(a) (in the second instance), section 

2 809(a) (in the fourth instance), and sec3 tion 809(b)(1), such term means, in con4 nection with an association health plan, the 

5 Secretary and the State referred to in sub6 paragraph (A)(i) (if any) in connection 

7 with such plan. 

8 ‘‘(ii) REGULATORY AUTHORITIES.— 

9 Where such term appears in section 802(a) 

10 (in the first instance), section 802(d), sec11 tion 802(e), section 803(d), section 

12 805(a)(5), section 806(a)(2), section 

13 806(b), section 806(c), section 806(d), 

14 paragraphs (1)(A) and (2)(A) of section 

15 806(g), section 806(h), section 806(i), sec16 tion 806(j), section 807(a) (in the second 

17 instance), section 807(b), section 807(d), 

18 section 807(e) (in the second instance), 

19 section 808 (in the matter after paragraph 

20 (3)), and section 809(a) (in the third in21 stance), such term means, in connection 

22 with an association health plan, the Sec23 retary. 
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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 or meets 

24 such reasonable standards and qualifications as the 
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1 Secretary may provide by regulation through nego2 tiated rulemaking. 

3 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili4 ated member’ means, in connection with a sponsor— 

5 ‘‘(A) a person who is otherwise eligible to 

6 be a member of the sponsor but who elects an 

7 affiliated status with the sponsor, 

8 ‘‘(B) in the case of a sponsor with mem9 bers which consist of associations, a person who 

10 is a member of any such association and elects 

11 an affiliated status with the sponsor, or 

12 ‘‘(C) in the case of an association health 

13 plan in existence on the date of the enactment 

14 of the Small Business Access and Choice for 

15 Entrepreneurs Act of 2005, a person eligible to 

16 be a member of the sponsor or one of its mem17 ber associations. 

18 ‘‘(12) LARGE EMPLOYER.—The term ‘large em19 ployer’ means, in connection with a group health 

20 plan with respect to a plan year, an employer who 

21 employed an average of at least 51 employees on 

22 business days during the preceding calendar year 

23 and who employs at least 2 employees on the first 

24 day of the plan year. 
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1 ‘‘(13) SMALL EMPLOYER.—The term ‘small em2 ployer’ means, in connection with a group health 

3 plan with respect to a plan year, an employer who 

4 is not a large employer. 

5 ‘‘(b) RULES OF CONSTRUCTION.— 

6 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur7 poses of determining whether a plan, fund, or pro8 gram is an employee welfare benefit plan which is an 

9 association health plan, and for purposes of applying 

10 this title in connection with such plan, fund, or pro11 gram so determined to be such an employee welfare 

12 benefit plan— 

13 ‘‘(A) in the case of a partnership, the term 

14 ‘employer’ (as defined in section (3)(5)) in15 cludes the partnership in relation to the part16 ners, and the term ‘employee’ (as defined in 

17 section (3)(6)) includes any partner in relation 

18 to the partnership; and 

19 ‘‘(B) in the case of a self-employed indi20 vidual, the term ‘employer’ (as defined in sec21 tion 3(5)) and the term ‘employee’ (as defined 

22 in section 3(6)) shall include such individual. 

23 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

24 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

25 case of any plan, fund, or program which was estab-
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1 lished or is maintained for the purpose of providing 

2 medical care (through the purchase of insurance or 

3 otherwise) for employees (or their dependents) cov4 ered thereunder and which demonstrates to the Sec5 retary that all requirements for certification under 

6 this part would be met with respect to such plan, 

7 fund, or program if such plan, fund, or program 

8 were a group health plan, such plan, fund, or pro9 gram shall be treated for purposes of this title as an 

10 employee welfare benefit plan on and after the date 

11 of such demonstration.’’. 

12 (b) CONFORMING AMENDMENTS TO PREEMPTION

13 RULES.— 

14 (1) Section 514(b)(6) of such Act (29 U.S.C. 

15 1144(b)(6)) is amended by adding at the end the 

16 following new subparagraph: 

17 ‘‘(E) The preceding subparagraphs of this paragraph 

18 do not apply with respect to any State law in the case 

19 of an association health plan which is certified under part 

20 8.’’. 

21 (2) Section 514 of such Act (29 U.S.C. 1144) 

22 is amended— 

23 (A) in subsection (b)(4), by striking ‘‘Sub24 section (a)’’ and inserting ‘‘Subsections (a) and 

25 (d)’’; 
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1 (B) in subsection (b)(5), by striking ‘‘sub2 section (a)’’ in subparagraph (A) and inserting 

3 ‘‘subsection (a) of this section and subsections 

4 (a)(2)(B) and (b) of section 805’’, and by strik5 ing ‘‘subsection (a)’’ in subparagraph (B) and 

6 inserting ‘‘subsection (a) of this section or sub7 section (a)(2)(B) or (b) of section 805’’; 

8 (C) by redesignating subsection (d) as sub9 section (e); and 

10 (D) by inserting after subsection (c) the 

11 following new subsection: 

12 ‘‘(d)(1) Except as provided in subsection (b)(4), the 

13 provisions of this title shall supersede any and all State 

14 laws insofar as they may now or hereafter preclude, or 

15 have the effect of precluding, a health insurance issuer 

16 from offering health insurance coverage in connection with 

17 an association health plan which is certified under part 

18 8. 

19 ‘‘(2) Except as provided in paragraphs (4) and (5) 

20 of subsection (b) of this section— 

21 ‘‘(A) In any case in which health insurance cov22 erage of any policy type is offered under an associa23 tion health plan certified under part 8 to a partici24 pating employer operating in such State, the provi25 sions of this title shall supersede any and all laws 
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1 of such State insofar as they may preclude a health 

2 insurance issuer from offering health insurance cov3 erage of the same policy type to other employers op4 erating in the State which are eligible for coverage 

5 under such association health plan, whether or not 

6 such other employers are participating employers in 

7 such plan. 

8 ‘‘(B) In any case in which health insurance cov9 erage of any policy type is offered under an associa10 tion health plan in a State and the filing, with the 

11 applicable State authority, of the policy form in con12 nection with such policy type is approved by such 

13 State authority, the provisions of this title shall su14 persede any and all laws of any other State in which 

15 health insurance coverage of such type is offered, in16 sofar as they may preclude, upon the filing in the 

17 same form and manner of such policy form with the 

18 applicable State authority in such other State, the 

19 approval of the filing in such other State. 

20 ‘‘(3) For additional provisions relating to association 

21 health plans, see subsections (a)(2)(B) and (b) of section 

22 805. 

23 ‘‘(4) For purposes of this subsection, the term ‘asso24 ciation health plan’ has the meaning provided in section 

25 801(a), and the terms ‘health insurance coverage’, ‘par-
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1 ticipating employer’, and ‘health insurance issuer’ have 

2 the meanings provided such terms in section 811, respec3 tively.’’. 

4 (3) Section 514(b)(6)(A) of such Act (29 

5 U.S.C. 1144(b)(6)(A)) is amended— 

6 (A) in clause (i)(II), by striking ‘‘and’’ at 

7 the end; 

8 (B) in clause (ii), by inserting ‘‘and which 

9 does not provide medical care (within the mean10 ing of section 733(a)(2)),’’ after ‘‘arrange11 ment,’’, and by striking ‘‘title.’’ and inserting 

12 ‘‘title, and’’; and 

13 (C) by adding at the end the following new 

14 clause: 

15 ‘‘(iii) subject to subparagraph (E), in the case 

16 of any other employee welfare benefit plan which is 

17 a multiple employer welfare arrangement and which 

18 provides medical care (within the meaning of section 

19 733(a)(2)), any law of any State which regulates in20 surance may apply.’’. 

21 (4) Section 514(e) of such Act (as redesignated 

22 by paragraph (2)(C)) is amended— 

23 (A) by striking ‘‘Nothing’’ and inserting 

24 ‘‘(1) Except as provided in paragraph (2), noth25 ing’’; and 
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1 (B) by adding at the end the following new 

2 paragraph: 

3 ‘‘(2) Nothing in any other provision of law enacted 

4 on or after the date of the enactment of the Small Busi5 ness Access and Choice for Entrepreneurs Act of 2005 

6 shall be construed to alter, amend, modify, invalidate, im7 pair, or supersede any provision of this title, except by 

8 specific cross-reference to the affected section.’’. 

9 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act 

10 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

11 the following new sentence: ‘‘Such term also includes a 

12 person serving as the sponsor of an association health plan 

13 under part 8.’’. 

14 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE15 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

16 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

17 of such Act (29 U.S.C. 102(b)) is amended by adding at 

18 the end the following: ‘‘An association health plan shall 

19 include in its summary plan description, in connection 

20 with each benefit option, a description of the form of sol21 vency or guarantee fund protection secured pursuant to 

22 this Act or applicable State law, if any.’’. 

23 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

24 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
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1 (f) REPORT TO THE CONGRESS REGARDING CERTIFI2 CATION OF SELF-INSURED ASSOCIATION HEALTH

3 PLANS.—Not later than January 1, 2010, the Secretary 

4 of Labor shall report to the Committee on Education and 

5 the Workforce of the House of Representatives and the 

6 Committee on Health, Education, Labor, and Pensions of 

7 the Senate the effect association health plans have had, 

8 if any, on reducing the number of uninsured individuals. 

9 (g) CLERICAL AMENDMENT.—The table of contents 

10 in section 1 of the Employee Retirement Income Security 

11 Act of 1974 is amended by inserting after the item relat12 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. Special rules for church plans. 

‘‘813. Definitions and rules of construction.’’. 

13 SEC. 403. CLARIFICATION OF TREATMENT OF SINGLE EM14 PLOYER ARRANGEMENTS. 

15 Section 3(40)(B) of the Employee Retirement Income 

16 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend17 ed— 
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1 (1) in clause (i), by inserting ‘‘for any plan year 

2 of any such plan, or any fiscal year of any such 

3 other arrangement,’’ after ‘‘single employer’’, and by 

4 inserting ‘‘during such year or at any time during 

5 the preceding 1-year period’’ after ‘‘control group’’; 

6 (2) in clause (iii)— 

7 (A) by striking ‘‘common control shall not 

8 be based on an interest of less than 25 percent’’ 

9 and inserting ‘‘an interest of greater than 25 

10 percent may not be required as the minimum 

11 interest necessary for common control’’; and 

12 (B) by striking ‘‘similar to’’ and inserting 

13 ‘‘consistent and coextensive with’’; 

14 (3) by redesignating clauses (iv) and (v) as 

15 clauses (v) and (vi), respectively; and 

16 (4) by inserting after clause (iii) the following 

17 new clause: 

18 ‘‘(iv) in determining, after the application of 

19 clause (i), whether benefits are provided to employ20 ees of two or more employers, the arrangement shall 

21 be treated as having only one participating employer 

22 if, after the application of clause (i), the number of 

23 individuals who are employees and former employees 

24 of any one participating employer and who are cov25 ered under the arrangement is greater than 75 per-
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1 cent of the aggregate number of all individuals who 

2 are employees or former employees of participating 

3 employers and who are covered under the arrange4 ment;’’. 

5 SEC. 404. CLARIFICATION OF TREATMENT OF CERTAIN 

6 COLLECTIVELY BARGAINED ARRANGE7 MENTS. 

8 (a) IN GENERAL.—Section 3(40)(A)(i) of the Em9 ployee Retirement Income Security Act of 1974 (29 

10 U.S.C. 1002(40)(A)(i)) is amended to read as follows: 

11 ‘‘(i)(I) under or pursuant to one or more collec12 tive bargaining agreements which are reached pursu13 ant to collective bargaining described in section 8(d) 

14 of the National Labor Relations Act (29 U.S.C. 

15 158(d)) or paragraph Fourth of section 2 of the 

16 Railway Labor Act (45 U.S.C. 152, paragraph 

17 Fourth) or which are reached pursuant to labor18 management negotiations under similar provisions of 

19 State public employee relations laws, and (II) in ac20 cordance with subparagraphs (C), (D), and (E);’’. 

21 (b) LIMITATIONS.—Section 3(40) of such Act (29 

22 U.S.C. 1002(40)) is amended by adding at the end the 

23 following new subparagraphs: 

24 ‘‘(C) For purposes of subparagraph (A)(i)(II), a plan 

25 or other arrangement shall be treated as established or 
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1 maintained in accordance with this subparagraph only if 

2 the following requirements are met: 

3 ‘‘(i) The plan or other arrangement, and the 

4 employee organization or any other entity sponsoring 

5 the plan or other arrangement, do not— 

6 ‘‘(I) utilize the services of any licensed in7 surance agent or broker for soliciting or enroll8 ing employers or individuals as participating 

9 employers or covered individuals under the plan 

10 or other arrangement; or 

11 ‘‘(II) pay any type of compensation to a 

12 person, other than a full time employee of the 

13 employee organization (or a member of the or14 ganization to the extent provided in regulations 

15 prescribed by the Secretary through negotiated 

16 rulemaking), that is related either to the volume 

17 or number of employers or individuals solicited 

18 or enrolled as participating employers or cov19 ered individuals under the plan or other ar20 rangement, or to the dollar amount or size of 

21 the contributions made by participating employ22 ers or covered individuals to the plan or other 

23 arrangement; 

24 except to the extent that the services used by the plan, 

25 arrangement, organization, or other entity consist solely 
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1 of preparation of documents necessary for compliance with 

2 the reporting and disclosure requirements of part 1 or ad3 ministrative, investment, or consulting services unrelated 

4 to solicitation or enrollment of covered individuals. 

5 ‘‘(ii) As of the end of the preceding plan year, 

6 the number of covered individuals under the plan or 

7 other arrangement who are neither— 

8 ‘‘(I) employed within a bargaining unit 

9 covered by any of the collective bargaining 

10 agreements with a participating employer (nor 

11 covered on the basis of an individual’s employ12 ment in such a bargaining unit); nor 

13 ‘‘(II) present employees (or former employ14 ees who were covered while employed) of the 

15 sponsoring employee organization, of an em16 ployer who is or was a party to any of the col17 lective bargaining agreements, or of the plan or 

18 other arrangement or a related plan or arrange19 ment (nor covered on the basis of such present 

20 or former employment); 

21 does not exceed 15 percent of the total number of 

22 individuals who are covered under the plan or ar23 rangement and who are present or former employees 

24 who are or were covered under the plan or arrange25 ment pursuant to a collective bargaining agreement 
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1 with a participating employer. The requirements of 

2 the preceding provisions of this clause shall be treat3 ed as satisfied if, as of the end of the preceding plan 

4 year, such covered individuals are comprised solely 

5 of individuals who were covered individuals under 

6 the plan or other arrangement as of the date of the 

7 enactment of the Small Business Access and Choice 

8 for Entrepreneurs Act of 2003 and, as of the end of 

9 the preceding plan year, the number of such covered 

10 individuals does not exceed 25 percent of the total 

11 number of present and former employees enrolled 

12 under the plan or other arrangement. 

13 ‘‘(iii) The employee organization or other entity 

14 sponsoring the plan or other arrangement certifies 

15 to the Secretary each year, in a form and manner 

16 which shall be prescribed by the Secretary through 

17 negotiated rulemaking that the plan or other ar18 rangement meets the requirements of clauses (i) and 

19 (ii). 

20 ‘‘(D) For purposes of subparagraph (A)(i)(II), a plan 

21 or arrangement shall be treated as established or main22 tained in accordance with this subparagraph only if— 

23 ‘‘(i) all of the benefits provided under the plan 

24 or arrangement consist of health insurance coverage; 

25 or 
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1 ‘‘(ii)(I) the plan or arrangement is a multiem2 ployer plan; and 

3 ‘‘(II) the requirements of clause (B) of the pro4 viso to clause (5) of section 302(c) of the Labor 

5 Management Relations Act, 1947 (29 U.S.C. 

6 186(c)) are met with respect to such plan or other 

7 arrangement. 

8 ‘‘(E) For purposes of subparagraph (A)(i)(II), a plan 

9 or arrangement shall be treated as established or main10 tained in accordance with this subparagraph only if— 

11 ‘‘(i) the plan or arrangement is in effect as of 

12 the date of the enactment of the Small Business Ac13 cess and Choice for Entrepreneurs Act of 2005; or 

14 ‘‘(ii) the employee organization or other entity 

15 sponsoring the plan or arrangement— 

16 ‘‘(I) has been in existence for at least 3 

17 years; or 

18 ‘‘(II) demonstrates to the satisfaction of 

19 the Secretary that the requirements of subpara20 graphs (C) and (D) are met with respect to the 

21 plan or other arrangement.’’. 

22 (c) CONFORMING AMENDMENTS TO DEFINITIONS OF

23 PARTICIPANT AND BENEFICIARY.—Section 3(7) of such 

24 Act (29 U.S.C. 1002(7)) is amended by adding at the end 

25 the following new sentence: ‘‘Such term includes an indi-
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1 vidual who is a covered individual described in paragraph 

2 (40)(C)(ii).’’. 

3 SEC. 405. ENFORCEMENT PROVISIONS. 

4 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

5 MISREPRESENTATIONS.—Section 501 of the Employee 

6 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

7 is amended— 

8 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(b) Any person who willfully falsely represents, to 

12 any employee, any employee’s beneficiary, any employer, 

13 the Secretary, or any State, a plan or other arrangement 

14 established or maintained for the purpose of offering or 

15 providing any benefit described in section 3(1) to employ16 ees or their beneficiaries as— 

17 ‘‘(1) being an association health plan which has 

18 been certified under part 8; 

19 ‘‘(2) having been established or maintained 

20 under or pursuant to one or more collective bar21 gaining agreements which are reached pursuant to 

22 collective bargaining described in section 8(d) of the 

23 National Labor Relations Act (29 U.S.C. 158(d)) or 

24 paragraph Fourth of section 2 of the Railway Labor 

25 Act (45 U.S.C. 152, paragraph Fourth) or which are 
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1 reached pursuant to labor-management negotiations 

2 under similar provisions of State public employee re3 lations laws; or 

4 ‘‘(3) being a plan or arrangement with respect 

5 to which the requirements of subparagraph (C), (D), 

6 or (E) of section 3(40) are met; 

7 shall, upon conviction, be imprisoned not more than 5 

8 years, be fined under title 18, United States Code, or 

9 both.’’. 

10 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

11 such Act (29 U.S.C. 1132) is amended by adding at the 

12 end the following new subsection: 

13 ‘‘(n)(1) Subject to paragraph (2), upon application 

14 by the Secretary showing the operation, promotion, or 

15 marketing of an association health plan (or similar ar16 rangement providing benefits consisting of medical care 

17 (as defined in section 733(a)(2))) that— 

18 ‘‘(A) is not certified under part 8, is subject 

19 under section 514(b)(6) to the insurance laws of any 

20 State in which the plan or arrangement offers or 

21 provides benefits, and is not licensed, registered, or 

22 otherwise approved under the insurance laws of such 

23 State; or 
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1 ‘‘(B) is an association health plan certified 

2 under part 8 and is not operating in accordance with 

3 the requirements under part 8 for such certification, 

4 a district court of the United States shall enter an order 

5 requiring that the plan or arrangement cease activities. 

6 ‘‘(2) Paragraph (1) shall not apply in the case of an 

7 association health plan or other arrangement if the plan 

8 or arrangement shows that— 

9 ‘‘(A) all benefits under it referred to in para10 graph (1) consist of health insurance coverage; and 

11 ‘‘(B) with respect to each State in which the 

12 plan or arrangement offers or provides benefits, the 

13 plan or arrangement is operating in accordance with 

14 applicable State laws that are not superseded under 

15 section 514. 

16 ‘‘(3) The court may grant such additional equitable 

17 relief, including any relief available under this title, as it 

18 deems necessary to protect the interests of the public and 

19 of persons having claims for benefits against the plan.’’. 

20 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

21 Section 503 of such Act (29 U.S.C. 1133) is amended— 

22 (1) by inserting ‘‘(a) In General.—’’ after ‘‘Sec. 

23 503.’’; and 

24 (2) by adding at the end the following new sub25 section: 
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1 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

2 each association health plan which is or has been certified 

3 under part 8 shall require the board of trustees or the 

4 named fiduciary (as applicable) to ensure that the require5 ments of this section are met in connection with claims 

6 filed under the plan.’’. 

7 SEC. 406. COOPERATION BETWEEN FEDERAL AND STATE 

8 AUTHORITIES. 

9 Section 506 of the Employee Retirement Income Se10 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(d) RESPONSIBILITY OF STATES WITH RESPECT TO

13 ASSOCIATION HEALTH PLANS.— 

14 ‘‘(1) AGREEMENTS WITH STATES.—A State 

15 may enter into an agreement with the Secretary for 

16 delegation to the State of some or all of— 

17 ‘‘(A) the Secretary’s authority under sec18 tions 502 and 504 to enforce the requirements 

19 for certification under part 8; 

20 ‘‘(B) the Secretary’s authority to certify 

21 association health plans under part 8 in accord22 ance with regulations of the Secretary applica23 ble to certification under part 8; or 
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1 ‘‘(C) any combination of the Secretary’s 

2 authority authorized to be delegated under sub3 paragraphs (A) and (B). 

4 ‘‘(2) DELEGATIONS.—Any department, agency, 

5 or instrumentality of a State to which authority is 

6 delegated pursuant to an agreement entered into 

7 under this paragraph may, if authorized under State 

8 law and to the extent consistent with such agree9 ment, exercise the powers of the Secretary under 

10 this title which relate to such authority. 

11 ‘‘(3) RECOGNITION OF PRIMARY DOMICILE

12 STATE.—In entering into any agreement with a 

13 State under subparagraph (A), the Secretary shall 

14 ensure that, as a result of such agreement and all 

15 other agreements entered into under subparagraph 

16 (A), only one State will be recognized, with respect 

17 to any particular association health plan, as the 

18 State to which all authority has been delegated pur19 suant to such agreements in connection with such 

20 plan. In carrying out this paragraph, the Secretary 

21 shall take into account the places of residence of the 

22 participants and beneficiaries under the plan and the 

23 State in which the trust is maintained.’’. 
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1 SEC. 407. EFFECTIVE DATE AND TRANSITIONAL AND 

2 OTHER RULES. 

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

4 sections 101, 104, and 105 shall take effect on January 

5 1, 2007. The amendments made by sections 102 and 103 

6 shall take effect on the date of the enactment of this Act. 

7 The Secretary of Labor shall first issue all regulations 

8 necessary to carry out the amendments made by this sub9 title before January 1, 2007. Such regulations shall be 

10 issued through negotiated rulemaking. 

11 (b) EXCEPTION.—Section 801(a)(2) of the Employee 

12 Retirement Income Security Act of 1974 (added by section 

13 101) does not apply in connection with an association 

14 health plan (certified under part 8 of subtitle B of title 

15 I of such Act) existing on the date of the enactment of 

16 this Act, if no benefits provided thereunder as of the date 

17 of the enactment of this Act consist of health insurance 

18 coverage (as defined in section 733(b)(1) of such Act). 

19 (c) TREATMENT OF CERTAIN EXISTING HEALTH

20 BENEFITS PROGRAMS.— 

21 (1) IN GENERAL.—In any case in which, as of 

22 the date of the enactment of this Act, an arrange23 ment is maintained in a State for the purpose of 

24 providing benefits consisting of medical care for the 

25 employees and beneficiaries of its participating em26 ployers, at least 200 participating employers make 
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1 contributions to such arrangement, such arrange2 ment has been in existence for at least 10 years, and 

3 such arrangement is licensed under the laws of one 

4 or more States to provide such benefits to its par5 ticipating employers, upon the filing with the appli6 cable authority (as defined in section 813(a)(5) of 

7 the Employee Retirement Income Security Act of 

8 1974 (as amended by this Act)) by the arrangement 

9 of an application for certification of the arrangement 

10 under part 8 of subtitle B of title I of such Act— 

11 (A) such arrangement shall be deemed to 

12 be a group health plan for purposes of title I 

13 of such Act; 

14 (B) the requirements of sections 801(a)(1) 

15 and 803(a)(1) of the Employee Retirement In16 come Security Act of 1974 shall be deemed met 

17 with respect to such arrangement; 

18 (C) the requirements of section 803(b) of 

19 such Act shall be deemed met, if the arrange20 ment is operated by a board of directors 

21 which— 

22 (i) is elected by the participating em23 ployers, with each employer having one 

24 vote; and 
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1 (ii) has complete fiscal control over 

2 the arrangement and which is responsible 

3 for all operations of the arrangement; 

4 (D) the requirements of section 804(a) of 

5 such Act shall be deemed met with respect to 

6 such arrangement; and 

7 (E) the arrangement may be certified by 

8 any applicable authority with respect to its op9 erations in any State only if it operates in such 

10 State on the date of certification. 

11 The provisions of this subsection shall cease to apply 

12 with respect to any such arrangement at such time 

13 after the date of the enactment of this Act as the 

14 applicable requirements of this subsection are not 

15 met with respect to such arrangement. 

16 (2) DEFINITIONS.—For purposes of this sub17 section, the terms ‘‘group health plan’’, ‘‘medical 

18 care’’, and ‘‘participating employer’’ shall have the 

19 meanings provided in section 813 of the Employee 

20 Retirement Income Security Act of 1974, except 

21 that the reference in paragraph (7) of such section 

22 to an ‘‘association health plan’’ shall be deemed a 

23 reference to an arrangement referred to in this sub24 section. 
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1 TITLE V—IMPROVEMENT TO AC2 CESS AND CHOICE OF 

3 HEALTH CARE 

4 SEC. 501. REFUNDABLE AND ADVANCEABLE CREDIT FOR 

5 HEALTH INSURANCE COSTS. 

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 (relating to refundable credits) is amended by redes9 ignating section 36 as section 37 and by inserting after 

10 section 35 the following new section: 

11 ‘‘SEC. 36. HEALTH INSURANCE COSTS. 

12 ‘‘(a) IN GENERAL.—In the case of an individual, 

13 there shall be allowed as a credit against the tax imposed 

14 by this subtitle an amount equal to the amount paid dur15 ing the taxable year for qualified health insurance for cov16 erage of the taxpayer, his spouse, and dependents. 

17 ‘‘(b) LIMITATIONS.— 

18 ‘‘(1) MAXIMUM CREDIT.— 

19 ‘‘(A) IN GENERAL.—The amount allowed 

20 as a credit under subsection (a) to the taxpayer 

21 for the taxable year shall not exceed the sum of 

22 the monthly limitations for months during such 

23 taxable year. 
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1 ‘‘(B) MONTHLY LIMITATION.—The month2 ly limitation for any month is the amount equal 

to 1 3 ⁄12 of the lesser of— 

4 ‘‘(i) the product of $1,000 multiplied 

5 by the number of individuals taken into ac6 count under subsection (a) who are covered 

7 under qualified health insurance as of the 

8 first day of such month, or 

9 ‘‘(ii) $3,000. 

10 ‘‘(2) EMPLOYER SUBSIDIZED COVERAGE.—Sub11 section (a) shall not apply to amounts paid for cov12 erage of any individual for any month for which 

13 such individual participates in any subsidized health 

14 plan maintained by any employer of the taxpayer or 

15 of the spouse of the taxpayer. The rule of the last 

16 sentence of section 162(l)(2)(B) shall apply for pur17 poses of the preceding sentence. 

18 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur19 poses of this section— 

20 ‘‘(1) IN GENERAL.—The term ‘qualified health 

21 insurance’ means insurance which constitutes med22 ical care if— 

23 ‘‘(A) such insurance meets the require24 ments of section 223(c)(2)(A)(ii), 
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1 ‘‘(B) there is no exclusion from, or limita2 tion on, coverage for any preexisting medical 

3 condition of any applicant who, on the date the 

4 application is made, has been continuously in5 sured during the 1-year period ending on the 

6 date of the application under— 

7 ‘‘(i) qualified health insurance (deter8 mined without regard to this subpara9 graph), or 

10 ‘‘(ii) a program described in— 

11 ‘‘(I) title XVIII or XIX of the 

12 Social Security Act, 

13 ‘‘(II) chapter 55 of title 10, 

14 United States Code, 

15 ‘‘(III) chapter 17 of title 38, 

16 United States Code, 

17 ‘‘(IV) chapter 89 of title 5, 

18 United States Code, or 

19 ‘‘(V) the Indian Health Care Im20 provement Act, and 

21 ‘‘(C) in the case of each applicant who has 

22 not been continuously so insured during the 1- 

23 year period ending on the date the application 

24 is made, the exclusion from, or limitation on, 

25 coverage for any preexisting medical condition 
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1 does not extend beyond the period after such 

2 date equal to the lesser of— 

3 ‘‘(i) the number of months imme4 diately prior to such date during which the 

5 individual was not so insured since the ill6 ness or condition in question was first di7 agnosed, or 

8 ‘‘(ii) 1 year. 

9 ‘‘(2) EXCLUSION OF CERTAIN PLANS.—Such 

10 term does not include— 

11 ‘‘(A) insurance if substantially all of its 

12 coverage is coverage described in section 

13 223(c)(1)(B), 

14 ‘‘(B) insurance under a program described 

15 in paragraph (1)(B)(ii). 

16 ‘‘(3) TRANSITION RULE FOR 2005.—In the case 

17 of applications made during 2005, the requirements 

18 of subparagraphs (C) and (D) of paragraph (1) are 

19 met only if the insurance does not exclude from cov20 erage, or limit coverage for, any preexisting medical 

21 condition of any applicant. 

22 ‘‘(d) SPECIAL RULES.— 

23 ‘‘(1) COORDINATION WITH MEDICAL DEDUC24 TION, ETC.—Any amount paid by a taxpayer for in25 surance to which subsection (a) applies shall not be 
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1 taken into account in computing the amount allow2 able to the taxpayer as a credit under section 35 or 

3 as a deduction under section 162(l) or 213(a). 

4 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No 

5 credit shall be allowed under this section to any indi6 vidual with respect to whom a deduction under sec7 tion 151 is allowable to another taxpayer for a tax8 able year beginning in the calendar year in which 

9 such individual’s taxable year begins. 

10 ‘‘(3) MARRIED COUPLES MUST FILE JOINT RE11 TURN.— 

12 ‘‘(A) IN GENERAL.—If the taxpayer is 

13 married at the close of the taxable year, the 

14 credit shall be allowed under subsection (a) only 

15 if the taxpayer and his spouse file a joint return 

16 for the taxable year. 

17 ‘‘(B) MARITAL STATUS; CERTAIN MARRIED

18 INDIVIDUALS LIVING APART.—Rules similar to 

19 the rules of paragraphs (3) and (4) of section 

20 21(e) shall apply for purposes of this para21 graph. 

22 ‘‘(4) VERIFICATION OF COVERAGE, ETC.—No 

23 credit shall be allowed under this section to any indi24 vidual unless such individual’s coverage under quali25 fied health insurance, and the amount paid for such 
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1 coverage, are verified in such manner as the Sec2 retary may prescribe. 

3 ‘‘(5) COORDINATION WITH ADVANCE PAYMENTS

4 OF CREDIT.—With respect to any taxable year, the 

5 amount which would (but for this subsection) be al6 lowed as a credit to the taxpayer under subsection 

7 (a) shall be reduced (but not below zero) by the ag8 gregate amount paid on behalf of such taxpayer 

9 under section 7527A for months beginning in such 

10 taxable year. 

11 ‘‘(6) COST-OF-LIVING ADJUSTMENT.—In the 

12 case of any taxable year beginning in a calendar 

13 year after 2005, each dollar amount contained in 

14 subsection (b)(1)(B) shall be increased by an 

15 amount equal to— 

16 ‘‘(A) such dollar amount, multiplied by 

17 ‘‘(B) the cost-of-living adjustment deter18 mined under section 1(f)(3) for the calendar 

19 year in which the taxable year begins by sub20 stituting ‘calendar year 2004’ for ‘calendar year 

21 1992’ in subparagraph (B) thereof. 

22 Any increase determined under the preceding sen23 tence shall be rounded to the nearest multiple of 

24 $10.’’. 
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1 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 of 

2 such Code (relating to miscellaneous provisions) is amend3 ed by inserting after section 7527 the following new sec4 tion: 

5 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR HEALTH 

6 INSURANCE COSTS. 

7 ‘‘(a) GENERAL RULE.—The Secretary shall establish 

8 a program for making payments on behalf of individuals 

9 to providers of qualified health insurance (as defined in 

10 section 36(c)) for such individuals. 

11 ‘‘(b) LIMITATION ON ADVANCE PAYMENTS DURING

12 ANY TAXABLE YEAR.—The Secretary may make pay13 ments under subsection (a) only to the extent that the 

14 total amount of such payments made on behalf of any indi15 vidual during the taxable year does not exceed the amount 

16 allowable as a credit to such individual for such year under 

17 section 36 (determined without regard to subsection (d)(5) 

18 thereof).’’. 

19 (c) CONFORMING AMENDMENTS.— 

20 (1) Paragraph (2) of section 1324(b) of title 

21 31, United States Code, is amended by inserting ‘‘or 

22 36’’ after ‘‘section 35’’. 

23 (2) The table of sections for subpart C of part 

24 IV of subchapter A of chapter 1 of the Internal Rev25 enue Code of 1986 is amended by striking the item 
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1 relating to section 36 and inserting the following 

2 new items: 

‘‘Sec. 36. Health insurance costs. 

‘‘Sec. 37. Overpayments of tax.’’. 

3 (3) The table of sections for chapter 77 of such 

4 Code is amended by inserting after the item relating 

5 to section 7527 the following new item: 

‘‘Sec. 7527A. Advance payment of credit for health insurance costs.’’. 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2004. 

9 SEC. 502. EXCLUSION FOR EMPLOYER PAYMENTS MADE TO 

10 COMPENSATE EMPLOYEES WHO ELECT NOT 

11 TO PARTICIPATE IN EMPLOYER-SUBSIDIZED 

12 HEALTH PLANS. 

13 (a) IN GENERAL.—Part III of subchapter B of chap14 ter 1 of the Internal Revenue Code of 1986 (relating to 

15 items specifically excluded from gross income) is amended 

16 by inserting after section 139A the following new section: 

17 ‘‘SEC. 139B. TREATMENT OF COMPENSATING PAYMENTS 

18 MADE FOR EMPLOYEES WHO ELECT NOT TO 

19 PARTICIPATE IN EMPLOYER-SUBSIDIZED 

20 HEALTH PLANS. 

21 ‘‘(a) IN GENERAL.—Gross income of an eligible em22 ployee shall not include the amount of any compensating 
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1 coverage payment made by an employer of such employee 

2 for such employee’s benefit. 

3 ‘‘(b) ELIGIBLE EMPLOYEE.—For purposes of this 

4 section, the term ‘eligible employee’ means any employee 

5 who is eligible to participate in any subsidized health plan 

6 of an employer for any period and who elects not to par7 ticipate in any subsidized health plan of such employer 

8 for such period. 

9 ‘‘(c) COMPENSATING COVERAGE PAYMENT.—For 

10 purposes of this section, the term ‘compensating coverage 

11 payment’ means— 

12 ‘‘(1) any payment made by the employer for 

13 qualified health insurance specified by the employee 

14 (for any period for which the employee is described 

15 in subsection (b)) which covers all of the individuals 

16 who, but for the election referred to in subsection 

17 (b), would be covered under the subsidized health 

18 plan of the employer, and 

19 ‘‘(2) any payment made by the employer to any 

20 Archer MSA or health savings account of such em21 ployee or spouse for a period for which the employee 

22 is covered by qualified health insurance. 

23 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur24 poses of this section, the term ‘qualified health insurance’ 

25 has the meaning given such term in section 36(c). 
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1 ‘‘(e) EMPLOYER PARTICIPATION.— 

2 ‘‘(1) IN GENERAL.—This section shall apply to 

3 a compensating coverage payment made by an em4 ployer for an employee’s benefit only if— 

5 ‘‘(A) the employer, and all other employers 

6 which are members of any controlled group 

7 which includes such employer, agree to make 

8 such payments to all their eligible employees, 

9 ‘‘(B) the amount of such payment is not 

10 less than the employer health plan contribution 

11 for such period with respect to the employee, 

12 and 

13 ‘‘(C) the employer permits the election re14 ferred to in subsection (b) to be made by em15 ployees— 

16 ‘‘(i) at the commencement of employ17 ment with the employer, and 

18 ‘‘(ii) during open enrollment periods 

19 (not less frequently than annually) of at 

20 least 30 days. 

21 ‘‘(2) EXCEPTION FOR CERTAIN EMPLOYEES.— 

22 Paragraph (1) shall not apply to— 

23 ‘‘(A) any employee who is covered under a 

24 subsidized health plan of another employer of 
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1 such employee or of an employer of such em2 ployee’s spouse, 

3 ‘‘(B) any employee who normally works 

4 less than 25 hours per week, 

5 ‘‘(C) any employee who normally works 

6 during not more than 6 months during any 

7 year, 

8 ‘‘(D) any employee who has not attained 

9 age 21, and 

10 ‘‘(E) except to the extent provided in regu11 lations, any employee who is included in a unit 

12 of employees covered by an agreement which 

13 the Secretary of Labor finds to be a collective 

14 bargaining agreement between employee rep15 resentatives and the employer. 

16 ‘‘(3) CONTROLLED GROUPS.—Rules similar to 

17 the rules of subclauses (II) and (III) of paragraph 

18 (4)(D)(iii) shall apply for purposes of paragraph 

19 (1)(A). 

20 ‘‘(4) EMPLOYER HEALTH PLAN CONTRIBU21 TION.—For purposes of this section— 

22 ‘‘(A) IN GENERAL.—The term ‘employer 

23 health plan contribution’ means the applicable 

24 premium for the employee reduced by the em25 ployee’s share of such premium. 
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1 ‘‘(B) APPLICABLE PREMIUM.—Except as 

2 provided in subparagraph (D), the term ‘appli3 cable premium’ means an amount which is not 

4 less than 98 percent of— 

5 ‘‘(i) the applicable premium (as de6 fined in section 4980B(f)(4)) for the em7 ployee, or 

8 ‘‘(ii) if an election under subpara9 graph (D) is in effect with respect to an 

10 employee, the applicable premium deter11 mined under subparagraph (D). 

12 ‘‘(C) EMPLOYEE’S SHARE.—The term ‘em13 ployee’s share’ means, with respect to the appli14 cable premium for any employee, the amount of 

15 the cost to the plan which is paid by the simi16 larly situated beneficiaries who are taken into 

17 account in determining such premium for such 

18 employee. 

19 ‘‘(D) AUTHORITY TO USE AGE, SEX, AND

20 GEOGRAPHY IN DETERMINING CONTRIBU21 TION.— 

22 ‘‘(i) IN GENERAL.—An employer may 

23 elect to determine the applicable premium 

24 for an employee on an actuarial basis tak25 ing into account age, sex, and geography of 
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1 the employee and similarly situated bene2 ficiaries. 

3 ‘‘(ii) DETERMINATION OF EMPLOY4 EE’S SHARE.—In the case of an employer 

5 who determines the applicable premium 

6 under clause (i), the employee’s share of 

7 such premium shall be the same percent8 age of such premium as the employee’s 

9 share of the applicable premium deter10 mined without regard to clause (i). 

11 ‘‘(iii) CONSISTENCY REQUIRED.— 

12 ‘‘(I) IN GENERAL.—Except as 

13 provided in subclause (III), an em14 ployer may determine the applicable 

15 premium under this subparagraph for 

16 any employee only if such employer, 

17 and all other employers which are 

18 members of any controlled group 

19 which includes such employer, elect to 

20 determine the applicable premium 

21 under this subparagraph for all their 

22 employees. 

23 ‘‘(II) CONTROLLED GROUP.—All 

24 persons treated as a single employer 

25 under subsection (a) or (b) of section 
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1 52 or subsection (m) or (o) of section 

2 414 shall be treated as members of a 

3 controlled group for purposes of sub4 clause (I). 

5 ‘‘(III) TREATMENT OF SEPARATE

6 LINES OF BUSINESS.—If an employer 

7 is treated under section 414(r) as op8 erating separate lines of business dur9 ing any taxable year, subclause (I) 

10 shall not apply to employees employed 

11 in such separate lines of business. 

12 ‘‘(f) SPECIAL RULE FOR ARCHER MSAS AND

13 HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.—Sections 

14 220(b)(5) and 223(b)(4) shall not apply to an employer 

15 contribution which is excludable from gross income under 

16 subsection (a). 

17 ‘‘(g) EXCLUSION APPLICABLE IN DETERMINING EM18 PLOYMENT TAX LIABILITY.—The exclusion under this 

19 section shall be treated for purposes of subtitle C in the 

20 same manner as the exclusion under section 106.’’ 

21 (b) EMPLOYER HEALTH PLAN CONTRIBUTION TO BE

22 REPORTED ON W–2.—Subsection (a) of section 6051 of 

23 such Code (relating to receipts to employees) is amended 

24 by striking ‘‘and’’ at the end of paragraph (12), by strik25 ing the period at the end of paragraph (13) and inserting 
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1 a comma, and by inserting after paragraph (13) the fol2 lowing new paragraphs: 

3 ‘‘(14) the amount of the employer health plan 

4 contribution (as defined in section 139(c)(3)), and 

5 ‘‘(15) the amount of compensating coverage 

6 payment (as defined in section 139(c)(1)).’’ 

7 (c) CLERICAL AMENDMENT.—The table of sections 

8 for such part III is amended by inserting after the item 

9 relating to section 139A the following new item: 

‘‘Sec. 139B. Treatment of compensating payments made for employees who elect 

not to participate in employer-subsidized health plans.’’. 

10 (d) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 December 31, 2005. 

13 TITLE VI—PATIENT ACCESS TO 

14 INFORMATION 

15 SEC. 601. PATIENT ACCESS TO INFORMATION REGARDING 

16 PLAN COVERAGE, MANAGED CARE PROCE17 DURES, HEALTH CARE PROVIDERS, AND 

18 QUALITY OF MEDICAL CARE. 

19 (a) IN GENERAL.—Subpart 2 of part A of title 

20 XXVII of the Public Health Service Act is amended by 

21 adding at the end the following new section: 
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1 ‘‘SEC. 2707. PATIENT ACCESS TO INFORMATION REGARD2 ING PLAN COVERAGE, MANAGED CARE PRO3 CEDURES, HEALTH CARE PROVIDERS, AND 

4 QUALITY OF MEDICAL CARE. 

5 ‘‘(a) DISCLOSURE REQUIREMENT.—Each health in6 surance issuer offering health insurance coverage in con7 nection with a group health plan shall provide the adminis8 trator of such plan on a timely basis with the information 

9 necessary to enable the administrator to include in the 

10 summary plan description of the plan required under sec11 tion 102 of the Employee Retirement Income Security Act 

12 of 1974 (or each summary plan description in any case 

13 in which different summary plan descriptions are appro14 priate under part 1 of subtitle B of title I of such Act 

15 for different options of coverage) the information required 

16 under subsections (b), (c), (d), and (e)(2)(A). To the ex17 tent that any such issuer provides such information on a 

18 timely basis to plan participants and beneficiaries, the re19 quirements of this subsection shall be deemed satisfied in 

20 the case of such plan with respect to such information. 

21 ‘‘(b) PLAN BENEFITS.—The information required 

22 under subsection (a) includes the following: 

23 ‘‘(1) COVERED ITEMS AND SERVICES.— 

24 ‘‘(A) CATEGORIZATION OF INCLUDED BEN25 EFITS.—A description of covered benefits, cat26 egorized by— 
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1 ‘‘(i) types of items and services (in2 cluding any special disease management 

3 program); and 

4 ‘‘(ii) types of health care professionals 

5 providing such items and services. 

6 ‘‘(B) EMERGENCY MEDICAL CARE.—A de7 scription of the extent to which the coverage in8 cludes emergency medical care (including the 

9 extent to which the coverage provides for access 

10 to urgent care centers), and any definitions pro11 vided under in connection with such coverage 

12 for the relevant coverage terminology referring 

13 to such care. 

14 ‘‘(C) PREVENTATIVE SERVICES.—A de15 scription of the extent to which the coverage in16 cludes benefits for preventative services. 

17 ‘‘(D) DRUG FORMULARIES.—A description 

18 of the extent to which covered benefits are de19 termined by the use or application of a drug 

20 formulary and a summary of the process for de21 termining what is included in such formulary. 

22 ‘‘(E) COBRA CONTINUATION COV23 ERAGE.—A description of the benefits available 

24 under the coverage provided pursuant to part 6 
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1 of subtitle B of title I of the Employee Retire2 ment Income Security Act of 1974. 

3 ‘‘(2) LIMITATIONS, EXCLUSIONS, AND RESTRIC4 TIONS ON COVERED BENEFITS.— 

5 ‘‘(A) CATEGORIZATION OF EXCLUDED

6 BENEFITS.—A description of benefits specifi7 cally excluded from coverage, categorized by 

8 types of items and services. 

9 ‘‘(B) UTILIZATION REVIEW AND

10 PREAUTHORIZATION REQUIREMENTS.—Whether 

11 coverage for medical care is limited or excluded 

12 on the basis of utilization review or 

13 preauthorization requirements. 

14 ‘‘(C) LIFETIME, ANNUAL, OR OTHER PE15 RIOD LIMITATIONS.—A description of the cir16 cumstances under which, and the extent to 

17 which, coverage is subject to lifetime, annual, or 

18 other period limitations, categorized by types of 

19 benefits. 

20 ‘‘(D) CUSTODIAL CARE.—A description of 

21 the circumstances under which, and the extent 

22 to which, the coverage of benefits for custodial 

23 care is limited or excluded, and a statement of 

24 the definition used in connection with such cov25 erage for custodial care. 
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1 ‘‘(E) EXPERIMENTAL TREATMENTS.— 

2 Whether coverage for any medical care is lim3 ited or excluded because it constitutes experi4 mental treatment or technology, and any defini5 tions provided in connection with such coverage 

6 for the relevant plan terminology referring to 

7 such limited or excluded care. 

8 ‘‘(F) MEDICAL APPROPRIATENESS OR NE9 CESSITY.—Whether coverage for medical care 

10 may be limited or excluded by reason of a fail11 ure to meet the plan’s requirements for medical 

12 appropriateness or necessity, and any defini13 tions provided in connection with such coverage 

14 for the relevant coverage terminology referring 

15 to such limited or excluded care. 

16 ‘‘(G) SECOND OR SUBSEQUENT OPIN17 IONS.—A description of the circumstances 

18 under which, and the extent to which, coverage 

19 for second or subsequent opinions is limited or 

20 excluded. 

21 ‘‘(H) SPECIALTY CARE.—A description of 

22 the circumstances under which, and the extent 

23 to which, coverage of benefits for specialty care 

24 is conditioned on referral from a primary care 

25 provider. 
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1 ‘‘(I) CONTINUITY OF CARE.—A description 

2 of the circumstances under which, and the ex3 tent to which, coverage of items and services 

4 provided by any health care professional is lim5 ited or excluded by reason of the departure by 

6 the professional from any defined set of pro7 viders. 

8 ‘‘(J) RESTRICTIONS ON COVERAGE OF

9 EMERGENCY SERVICES.—A description of the 

10 circumstances under which, and the extent to 

11 which, the coverage, in including emergency 

12 medical care furnished to a participant or bene13 ficiary of the plan imposes any financial respon14 sibility described in subsection (c) on partici15 pants or beneficiaries or limits or conditions 

16 benefits for such care subject to any other term 

17 or condition of such coverage. 

18 ‘‘(c) PARTICIPANT’S FINANCIAL RESPONSIBIL19 ITIES.—The information required under subsection (a) in20 cludes an explanation of— 

21 ‘‘(1) a participant’s financial responsibility for 

22 payment of premiums, coinsurance, copayments, 

23 deductibles, and any other charges; and 

24 ‘‘(2) the circumstances under which, and the 

25 extent to which, the participant’s financial responsi-
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1 bility described in paragraph (1) may vary, including 

2 any distinctions based on whether a health care pro3 vider from whom covered benefits are obtained is in4 cluded in a defined set of providers. 

5 ‘‘(d) ACCOUNTABILITY.—The information required 

6 under subsection (a) includes a description of the legal re7 course options available for participants and beneficiaries 

8 under the plan including— 

9 ‘‘(1) the preemption that applies under section 

10 514 of the Employee Retirement Income Security 

11 Act of 1974 (29 U.S.C. 1144) to certain actions 

12 arising out of the provision of health benefits; 

13 ‘‘(2) the ability of a participant or beneficiary 

14 (or the estate of the participant or beneficiary) 

15 under State law to recover damages resulting from 

16 personal injury or for wrongful death against any 

17 person in connection with the provision of insurance, 

18 administrative services, or medical services by such 

19 person to or for a group health plan; and 

20 ‘‘(3) the extent to which coverage decisions 

21 made by the plan are subject to internal review or 

22 any external review and the proper time frames 

23 under which such reviews may be requested and con24 ducted. 

25 ‘‘(e) INFORMATION AVAILABLE ON REQUEST.— 
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1 ‘‘(1) ACCESS TO PLAN BENEFIT INFORMATION

2 IN ELECTRONIC FORM.— 

3 ‘‘(A) IN GENERAL.—A group health plan 

4 (and a health insurance issuer offering health 

5 insurance coverage in connection with a group 

6 health plan) shall, upon written request (made 

7 not more frequently than annually), make avail8 able to participants and beneficiaries, in a gen9 erally recognized electronic format, the fol10 lowing information: 

11 ‘‘(i) the latest summary plan descrip12 tion, including the latest summary of ma13 terial modifications; and 

14 ‘‘(ii) the actual plan provisions setting 

15 forth the benefits available under the plan, 

16 to the extent such information relates to the 

17 coverage options under the plan available to the 

18 participant or beneficiary. A reasonable charge 

19 may be made to cover the cost of providing 

20 such information in such generally recognized 

21 electronic format. The Secretary may by regula22 tion prescribe a maximum amount which will 

23 constitute a reasonable charge under the pre24 ceding sentence. 
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1 ‘‘(B) ALTERNATIVE ACCESS.—The require2 ments of this paragraph may be met by making 

3 such information generally available (rather 

4 than upon request) on the Internet or on a pro5 prietary computer network in a format which is 

6 readily accessible to participants and bene7 ficiaries. 

8 ‘‘(2) ADDITIONAL INFORMATION TO BE PRO9 VIDED ON REQUEST.— 

10 ‘‘(A) INCLUSION IN SUMMARY PLAN DE11 SCRIPTION OF SUMMARY OF ADDITIONAL IN12 FORMATION.—The information required under 

13 subsection (a) includes a summary description 

14 of the types of information required by this 

15 subsection to be made available to participants 

16 and beneficiaries on request. 

17 ‘‘(B) INFORMATION REQUIRED FROM

18 PLANS AND ISSUERS ON REQUEST.—In addition 

19 to information required to be included in sum20 mary plan descriptions under this subsection, a 

21 group health plan (and a health insurance 

22 issuer offering health insurance coverage in 

23 connection with a group health plan) shall pro24 vide the following information to a participant 

25 or beneficiary on request: 
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1 ‘‘(i) NETWORK CHARACTERISTICS.—If 

2 the plan (or issuer) utilizes a defined set of 

3 providers under contract with the plan (or 

4 issuer), a detailed list of the names of such 

5 providers and their geographic location, set 

6 forth separately with respect to primary 

7 care providers and with respect to special8 ists. 

9 ‘‘(ii) CARE MANAGEMENT INFORMA10 TION.—A description of the circumstances 

11 under which, and the extent to which, the 

12 plan has special disease management pro13 grams or programs for persons with dis14 abilities, indicating whether these pro15 grams are voluntary or mandatory and 

16 whether a significant benefit differential 

17 results from participation in such pro18 grams. 

19 ‘‘(iii) INCLUSION OF DRUGS AND

20 BIOLOGICALS IN FORMULARIES.—A state21 ment of whether a specific drug or biologi22 cal is included in a formulary used to de23 termine benefits under the plan and a de24 scription of the procedures for considering 

25 requests for any patient-specific waivers. 
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1 ‘‘(iv) PROCEDURES FOR DETERMINING

2 EXCLUSIONS BASED ON MEDICAL NECES3 SITY OR EXPERIMENTAL TREATMENTS.— 

4 Upon receipt by the participant or bene5 ficiary of any notification of an adverse 

6 coverage decision based on a determination 

7 relating to medical necessity or an experi8 mental treatment or technology, a descrip9 tion of the procedures and medically-based 

10 criteria used in such decision. 

11 ‘‘(v) PREAUTHORIZATION AND UTILI12 ZATION REVIEW PROCEDURES.—Upon re13 ceipt by the participant or beneficiary of 

14 any notification of an adverse coverage de15 cision, a description of the basis on which 

16 any preauthorization requirement or any 

17 utilization review requirement has resulted 

18 in such decision. 

19 ‘‘(vi) ACCREDITATION STATUS OF

20 HEALTH INSURANCE ISSUERS AND SERV21 ICE PROVIDERS.—A description of the ac22 creditation and licensing status (if any) of 

23 each health insurance issuer offering 

24 health insurance coverage in connection 

25 with the plan and of any utilization review 
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1 organization utilized by the issuer or the 

2 plan, together with the name and address 

3 of the accrediting or licensing authority. 

4 ‘‘(vii) MEASURES OF ENROLLEE SAT5 ISFACTION.—The latest information (if 

6 any) maintained by the plan, or by any 

7 health insurance issuer offering health in8 surance coverage in connection with the 

9 plan, relating to enrollee satisfaction. 

10 ‘‘(viii) QUALITY PERFORMANCE MEAS11 URES.—The latest information (if any) 

12 maintained by the plan, or by any health 

13 insurance issuer offering health insurance 

14 coverage in connection with the plan, relat15 ing to quality of performance of the deliv16 ery of medical care with respect to cov17 erage options offered under the plan and 

18 of health care professionals and facilities 

19 providing medical care under the plan. 

20 ‘‘(C) INFORMATION REQUIRED FROM

21 HEALTH CARE PROFESSIONALS ON REQUEST.— 

22 Any health care professional treating a partici23 pant or beneficiary under a group health plan 

24 shall provide to the participant or beneficiary, 

25 on request, a description of his or her profes-
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1 sional qualifications (including board certifi2 cation status, licensing status, and accreditation 

3 status, if any), privileges, and experience and a 

4 general description by category (including sal5 ary, fee-for-service, capitation, and such other 

6 categories as may be specified in regulations of 

7 the Secretary) of the applicable method by 

8 which such professional is compensated in con9 nection with the provision of such medical care. 

10 ‘‘(D) INFORMATION REQUIRED FROM

11 HEALTH CARE FACILITIES ON REQUEST.—Any 

12 health care facility from which a participant or 

13 beneficiary has sought treatment under a group 

14 health plan shall provide to the participant or 

15 beneficiary, on request, a description of the fa16 cility’s corporate form or other organizational 

17 form and all forms of licensing and accredita18 tion status (if any) assigned to the facility by 

19 standard-setting organizations. 

20 ‘‘(f) ACCESS TO INFORMATION RELEVANT TO THE

21 COVERAGE OPTIONS UNDER WHICH THE PARTICIPANT

22 OR BENEFICIARY IS ELIGIBLE TO ENROLL.—In addition 

23 to information otherwise required to be made available 

24 under this section, a group health plan (and a health in25 surance issuer offering health insurance coverage in con-
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1 nection with a group health plan) shall, upon written re2 quest (made not more frequently than annually), make 

3 available to a participant (and an employee who, under 

4 the terms of the plan, is eligible for coverage but not en5 rolled) in connection with a period of enrollment the sum6 mary plan description for any coverage option under the 

7 plan under which the participant is eligible to enroll and 

8 any information described in clauses (i), (ii), (iii), (vi), 

9 (vii), and (viii) of subsection (e)(2)(B). 

10 ‘‘(g) ADVANCE NOTICE OF CHANGES IN DRUG

11 FORMULARIES.—Not later than 30 days before the effec12 tive date of any exclusion of a specific drug or biological 

13 from any drug formulary under the plan that is used in 

14 the treatment of a chronic illness or disease, the plan shall 

15 take such actions as are necessary to reasonably ensure 

16 that plan participants are informed of such exclusion. The 

17 requirements of this subsection may be satisfied— 

18 ‘‘(1) by inclusion of information in publications 

19 broadly distributed by plan sponsors, employers, or 

20 employee organizations; 

21 ‘‘(2) by electronic means of communication (in22 cluding the Internet or proprietary computer net23 works in a format which is readily accessible to par24 ticipants); 
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1 ‘‘(3) by timely informing participants who, 

2 under an ongoing program maintained under the 

3 plan, have submitted their names for such notifica4 tion; or 

5 ‘‘(4) by any other reasonable means of timely 

6 informing plan participants.’’. 

7 SEC. 602. EFFECTIVE DATE. 

8 (a) IN GENERAL.—The amendments made by section 

9 601 shall apply with respect to plan years beginning on 

10 or after January 1 of the second calendar year following 

11 the date of the enactment of this Act. The Secretary shall 

12 first issue all regulations necessary to carry out the 

13 amendments made by section 601 before such date. 

14 (b) LIMITATION ON ENFORCEMENT ACTIONS.—No 

15 enforcement action shall be taken, pursuant to the amend16 ments made by section 601, against a group health plan 

17 or health insurance issuer with respect to a violation of 

18 a requirement imposed by such amendments before the 

19 date of issuance of final regulations issued in connection 

20 with such requirement, if the plan or issuer has sought 

21 to comply in good faith with such requirement. 

Æ