I 

111TH CONGRESS 

2D SESSION H. R. 5421 

To repeal the Patient Protection and Affordable Care Act and the Health 

Care and Education Reconciliation Act of 2010, repeal the 7.5 percent 

threshold on the deduction for medical expenses, provide for increased 

funding for high-risk pools, allow acquiring health insurance across State 

lines, and allow for the creation of association health plans. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 27, 2010 

Mr. BROUN of Georgia (for himself and Mr. SHADEGG) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Appropriations, Ways and 

Means, Education and Labor, the Judiciary, Natural Resources, Rules, 

and House Administration, for a period to be subsequently determined by 

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

A BILL 

To repeal the Patient Protection and Affordable Care Act 

and the Health Care and Education Reconciliation Act 

of 2010, repeal the 7.5 percent threshold on the deduction for medical expenses, provide for increased funding 

for high-risk pools, allow acquiring health insurance 

across State lines, and allow for the creation of association health plans. 

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. TABLE OF CONTENTS. 

2 The table of contents for this Act is as follows: 

Sec. 1. Table of contents. 

TITLE I—REPEAL OF PPACA AND HCERA 

Sec. 101. Repeal of PPACA and HCERA. 

TITLE II—DEDUCTIBILITY OF MEDICAL EXPENSES 

Sec. 201. Repeal of 7.5 percent threshold on deduction for medical expenses. 

TITLE III—UNIVERSAL ACCESS 

Sec. 301. Increased funding for high risk pools. 

TITLE IV—INTERSTATE PURCHASING OF HEALTH INSURANCE 

Sec. 401. Interstate purchasing of health insurance. 

TITLE V—ASSOCIATION HEALTH PLANS 

Sec. 501. Rules governing association health plans. 

Sec. 502. Clarification of treatment of single employer arrangements. 

Sec. 503. Enforcement provisions relating to association health plans. 

Sec. 504. Cooperation between Federal and State authorities. 

Sec. 505. Effective date and transitional and other rules. 

3 TITLE I—REPEAL OF PPACA AND 

4 HCERA 

5 SEC. 101. REPEAL OF PPACA AND HCERA. 

6 The Patient Protection and Affordable Care Act and 

7 the Health Care and Education Reconciliation Act of 2010 

8 are each repealed, effective as of the respective date of 

9 enactment of each such Act, and the provisions of law 

10 amended or repealed by such Acts are restored or revived 

11 as if such Acts had not been enacted. 


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1 TITLE II—DEDUCTIBILITY OF 

2 MEDICAL EXPENSES 

3 SEC. 201. REPEAL OF 7.5 PERCENT THRESHOLD ON DEDUC4 TION FOR MEDICAL EXPENSES. 

5 (a) IN GENERAL.—Subsection (a) of section 213 of 

6 the Internal Revenue Code of 1986 (relating to deduction 

7 for medical expenses) is amended by striking ‘‘to the ex8 tent that such expenses exceed 7.5 percent of adjusted 

9 gross income’’. 

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

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 TITLE III—UNIVERSAL ACCESS 

14 SEC. 301. INCREASED FUNDING FOR HIGH RISK POOLS. 

15 (a) IN GENERAL.—Section 2745(d)(2) of the Public 

16 Health Service Act (42 U.S.C. 300gg–45(d)(2)) is amend17 ed— 

18 (1) in the heading, by striking ‘‘2010’’ and in19 serting ‘‘2015’’; and 

20 (2) by inserting after ‘‘2010,’’ the following: 

21 ‘‘and $5,000,000,000 in each of fiscal years 2011 

22 through 2015’’. 

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

24 subsection (a) shall take effect on January 1, 2011. 


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1 TITLE IV—INTERSTATE PUR2 CHASING OF HEALTH INSUR3 ANCE 

4 SEC. 401. INTERSTATE PURCHASING OF HEALTH INSUR5 ANCE. 

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

7 Service Act (42 U.S.C. 300gg et seq.) is amended by add8 ing at the end the following new part: 

9 ‘‘PART D—COOPERATIVE GOVERNING OF 

10 INDIVIDUAL HEALTH INSURANCE COVERAGE 

11 ‘‘SEC. 2795. DEFINITIONS. 

12 ‘‘In this part: 

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

14 State’ means, with respect to individual health insur15 ance coverage offered by a health insurance issuer, 

16 the State designated by the issuer as the State 

17 whose covered laws shall govern the health insurance 

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

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

20 only designate one such State as its primary State 

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

22 issuer may not change the designated primary State 

23 with respect to individual health insurance coverage 

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

25 may be made upon renewal of the policy. With reVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 spect to such designated State, the issuer is deemed 

2 to be doing business in that State. 

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

4 State’ means, with respect to individual health insur5 ance coverage offered by a health insurance issuer, 

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

7 of a health insurance issuer that is selling a policy 

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

9 is deemed to be doing business in that secondary 

10 State. 

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

12 ‘health insurance issuer’ has the meaning given such 

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

14 issuer must be licensed in the primary State and be 

15 qualified to sell individual health insurance coverage 

16 in that State. 

17 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV18 ERAGE.—The term ‘individual health insurance cov19 erage’ means health insurance coverage offered in 

20 the individual market, as defined in section 

21 2791(e)(1). 

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

23 term ‘applicable State authority’ means, with respect 

24 to a health insurance issuer in a State, the State in25 surance commissioner or official or officials desVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 ignated by the State to enforce the requirements of 

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

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

4 term ‘hazardous financial condition’ means that, 

5 based on its present or reasonably anticipated finan6 cial condition, a health insurance issuer is unlikely 

7 to be able— 

8 ‘‘(A) to meet obligations to policyholders 

9 with respect to known claims and reasonably 

10 anticipated claims; or 

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

12 course of business. 

13 ‘‘(7) COVERED LAWS.— 

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

15 laws’ means the laws, rules, regulations, agree16 ments, and orders governing the insurance busi17 ness pertaining to— 

18 ‘‘(i) individual health insurance cov19 erage issued by a health insurance issuer; 

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

21 medical underwriting), renewal, and 

22 issuance of individual health insurance cov23 erage to an individual; 

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

25 relation to individual health insurance covVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 erage of health care and insurance related 

2 services; 

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

4 relation to individual health insurance cov5 erage of management, operations, and in6 vestment activities of a health insurance 

7 issuer; and 

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

9 relation to individual health insurance cov10 erage of loss control and claims adminis11 tration for a health insurance issuer with 

12 respect to liability for which the issuer pro13 vides insurance. 

14 ‘‘(B) EXCEPTION.—Such term does not in15 clude any law, rule, regulation, agreement, or 

16 order governing the use of care or cost manage17 ment techniques, including any requirement re18 lated to provider contracting, network access or 

19 adequacy, health care data collection, or quality 

20 assurance. 

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

22 States and includes the District of Columbia, Puerto 

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

24 and the Northern Mariana Islands. 


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1 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC2 TICES.—The term ‘unfair claims settlement prac3 tices’ means only the following practices: 

4 ‘‘(A) Knowingly misrepresenting to claim5 ants and insured individuals relevant facts or 

6 policy provisions relating to coverage at issue. 

7 ‘‘(B) Failing to acknowledge with reason8 able promptness pertinent communications with 

9 respect to claims arising under policies. 

10 ‘‘(C) Failing to adopt and implement rea11 sonable standards for the prompt investigation 

12 and settlement of claims arising under policies. 

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

14 and equitable settlement of claims submitted in 

15 which liability has become reasonably clear. 

16 ‘‘(E) Refusing to pay claims without con17 ducting a reasonable investigation. 

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

19 claims within a reasonable period of time after 

20 having completed an investigation related to 

21 those claims. 

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

23 insured individuals or their beneficiaries to in24 stitute suits to recover amounts due under its 

25 policies by offering substantially less than the 


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1 amounts ultimately recovered in suits brought 

2 by them. 

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

4 to settle or settling claims for less than the 

5 amount that a reasonable person would believe 

6 the insured individual or his or her beneficiary 

7 was entitled by reference to written or printed 

8 advertising material accompanying or made 

9 part of an application. 

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

11 on the basis of an application that was materi12 ally altered without notice to, or knowledge or 

13 consent of, the insured. 

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

15 present claims within 15 calendar days of a re16 quests with reasonable explanations regarding 

17 their use. 

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

19 time than that prescribed in the policy or by the 

20 law of the primary State. 

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

22 and abuse’ means an act or omission committed by 

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

24 commits, or conceals any material information con25 cerning, one or more of the following: 


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

2 or preparing with knowledge or belief that it 

3 will be presented to or by an insurer, a rein4 surer, broker or its agent, false information as 

5 part of, in support of or concerning a fact ma6 terial to one or more of the following: 

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

8 renewal of an insurance policy or reinsur9 ance contract. 

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

11 or reinsurance contract. 

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

13 pursuant to an insurance policy or reinsur14 ance contract. 

15 ‘‘(iv) Premiums paid on an insurance 

16 policy or reinsurance contract. 

17 ‘‘(v) Payments made in accordance 

18 with the terms of an insurance policy or 

19 reinsurance contract. 

20 ‘‘(vi) A document filed with the com21 missioner or the chief insurance regulatory 

22 official of another jurisdiction. 

23 ‘‘(vii) The financial condition of an in24 surer or reinsurer. 


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1 ‘‘(viii) The formation, acquisition, 

2 merger, reconsolidation, dissolution or 

3 withdrawal from one or more lines of in4 surance or reinsurance in all or part of a 

5 State by an insurer or reinsurer. 

6 ‘‘(ix) The issuance of written evidence 

7 of insurance. 

8 ‘‘(x) The reinstatement of an insur9 ance policy. 

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

11 renewal insurance risks on behalf of an insurer 

12 reinsurer or other person engaged in the busi13 ness of insurance by a person who knows or 

14 should know that the insurer or other person 

15 responsible for the risk is insolvent at the time 

16 of the transaction. 

17 ‘‘(C) Transaction of the business of insur18 ance in violation of laws requiring a license, cer19 tificate of authority or other legal authority for 

20 the transaction of the business of insurance. 

21 ‘‘(D) Attempt to commit, aiding or abet22 ting in the commission of, or conspiracy to com23 mit the acts or omissions specified in this para24 graph. 


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1 ‘‘SEC. 2796. APPLICATION OF LAW. 

2 ‘‘(a) IN GENERAL.—The covered laws of the primary 

3 State shall apply to individual health insurance coverage 

4 offered by a health insurance issuer in the primary State 

5 and in any secondary State, but only if the coverage and 

6 issuer comply with the conditions of this section with re7 spect to the offering of coverage in any secondary State. 

8 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC9 ONDARY STATE.—Except as provided in this section, a 

10 health insurance issuer with respect to its offer, sale, rat11 ing (including medical underwriting), renewal, and 

12 issuance of individual health insurance coverage in any 

13 secondary State is exempt from any covered laws of the 

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

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

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

17 ‘‘(1) make unlawful, or regulate, directly or in18 directly, the operation of the health insurance issuer 

19 operating in the secondary State, except that any 

20 secondary State may require such an issuer— 

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

22 applicable premium and other taxes (including 

23 high risk pool assessments) which are levied on 

24 insurers and surplus lines insurers, brokers, or 

25 policyholders under the laws of the State; 


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

2 State insurance commissioner as its agent solely 

3 for the purpose of receiving service of legal doc4 uments or process; 

5 ‘‘(C) to submit to an examination of its fi6 nancial condition by the State insurance com7 missioner in any State in which the issuer is 

8 doing business to determine the issuer’s finan9 cial condition, if— 

10 ‘‘(i) the State insurance commissioner 

11 of the primary State has not done an ex12 amination within the period recommended 

13 by the National Association of Insurance 

14 Commissioners; and 

15 ‘‘(ii) any such examination is con16 ducted in accordance with the examiners’ 

17 handbook of the National Association of 

18 Insurance Commissioners and is coordi19 nated to avoid unjustified duplication and 

20 unjustified repetition; 

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

22 issued— 

23 ‘‘(i) in a delinquency proceeding com24 menced by the State insurance commis25 sioner if there has been a finding of finanVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 cial impairment under subparagraph (C); 

2 or 

3 ‘‘(ii) in a voluntary dissolution pro4 ceeding; 

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

6 by a court of competent jurisdiction, upon a pe7 tition by the State insurance commissioner al8 leging that the issuer is in hazardous financial 

9 condition; 

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

11 basis, in any insurance insolvency guaranty as12 sociation or similar association to which a 

13 health insurance issuer in the State is required 

14 to belong; 

15 ‘‘(G) to comply with any State law regard16 ing fraud and abuse (as defined in section 

17 2795(10)), except that if the State seeks an in18 junction regarding the conduct described in this 

19 subparagraph, such injunction must be obtained 

20 from a court of competent jurisdiction; 

21 ‘‘(H) to comply with any State law regard22 ing unfair claims settlement practices (as de23 fined in section 2795(9)); or 

24 ‘‘(I) to comply with the applicable require25 ments for independent review under section 


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1 2798 with respect to coverage offered in the 

2 State; 

3 ‘‘(2) require any individual health insurance 

4 coverage issued by the issuer to be countersigned by 

5 an insurance agent or broker residing in that Sec6 ondary State; or 

7 ‘‘(3) otherwise discriminate against the issuer 

8 issuing insurance in both the primary State and in 

9 any secondary State. 

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

11 health insurance issuer shall provide the following notice, 

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

13 in a secondary State under this part by such a health in14 surance issuer and at renewal of the policy, with the 5 

15 blank spaces therein being appropriately filled with the 

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

17 State, the name of the secondary State, the name of the 

18 secondary State, and the name of the secondary State, re19 spectively, for the coverage concerned: 

20 ‘This policy is issued by llll and is governed by the 

21 laws and regulations of the State of lllll, and it 

22 has met all the laws of that State as determined by that 

23 State’s Department of Insurance. This policy may be less 

24 expensive than others because it is not subject to all of 

25 the insurance laws and regulations of the State of 


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1 lllll, including coverage of some services or bene2 fits mandated by the law of the State of lllll. Ad3 ditionally, this policy is not subject to all of the consumer 

4 protection laws or restrictions on rate changes of the State 

5 of lllll. As with all insurance products, before pur6 chasing this policy, you should carefully review the policy 

7 and determine what health care services the policy covers 

8 and what benefits it provides, including any exclusions, 

9 limitations, or conditions for such services or benefits.’ 

10 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

11 AND PREMIUM INCREASES.— 

12 ‘‘(1) IN GENERAL.—For purposes of this sec13 tion, a health insurance issuer that provides indi14 vidual health insurance coverage to an individual 

15 under this part in a primary or secondary State may 

16 not upon renewal— 

17 ‘‘(A) move or reclassify the individual in18 sured under the health insurance coverage from 

19 the class such individual is in at the time of 

20 issue of the contract based on the health-status 

21 related factors of the individual; or 

22 ‘‘(B) increase the premiums assessed the 

23 individual for such coverage based on a health 

24 status-related factor or change of a health staVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 tus-related factor or the past or prospective 

2 claim experience of the insured individual. 

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

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

5 issuer— 

6 ‘‘(A) from terminating or discontinuing 

7 coverage or a class of coverage in accordance 

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

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

10 policy holders within a class based on claims ex11 perience; 

12 ‘‘(C) from changing premiums or offering 

13 discounted premiums to individuals who engage 

14 in wellness activities at intervals prescribed by 

15 the issuer, if such premium changes or incen16 tives— 

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

18 the insurance contract; 

19 ‘‘(ii) are based on specific wellness ac20 tivities that are not applicable to all indi21 viduals; and 

22 ‘‘(iii) are not obtainable by all individ23 uals to whom coverage is offered; 

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


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1 ‘‘(E) from retroactively adjusting the rates 

2 charged an insured individual if the initial rates 

3 were set based on material misrepresentation by 

4 the individual at the time of issue. 

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

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

7 individual health insurance coverage in a secondary State 

8 unless that coverage is currently offered for sale in the 

9 primary State. 

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

11 HEALTH INSURANCE ISSUERS.—Any State may require 

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

13 broker for a health insurance issuer with respect to the 

14 offering of individual health insurance coverage obtain a 

15 license from that State, with commissions or other com16 pensation subject to the provisions of the laws of that 

17 State, except that a State may not impose any qualifica18 tion or requirement which discriminates against a non19 resident agent or broker. 

20 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN21 SURANCE COMMISSIONER.—Each health insurance issuer 

22 issuing individual health insurance coverage in both pri23 mary and secondary States shall submit— 

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

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1 fore it may offer individual health insurance cov2 erage in such State— 

3 ‘‘(A) a copy of the plan of operation or fea4 sibility study or any similar statement of the 

5 policy being offered and its coverage (which 

6 shall include the name of its primary State and 

7 its principal place of business); 

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

9 designation of its primary State; and 

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

11 issuer’s compliance with all the laws of the pri12 mary State; and 

13 ‘‘(2) to the insurance commissioner of each sec14 ondary State in which it offers individual health in15 surance coverage, a copy of the issuer’s quarterly fi16 nancial statement submitted to the primary State, 

17 which statement shall be certified by an independent 

18 public accountant and contain a statement of opin19 ion on loss and loss adjustment expense reserves 

20 made by— 

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

22 of Actuaries; or 

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


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

2 Nothing in this section shall be construed to affect the 

3 authority of any Federal or State court to enjoin— 

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

5 insurance coverage by a health insurance issuer to 

6 any person or group who is not eligible for such in7 surance; or 

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

9 insurance coverage that violates the requirements of 

10 the law of a secondary State which are described in 

11 subparagraphs (A) through (H) of section 

12 2796(b)(1). 

13 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD14 MINISTRATIVE ACTION.—Nothing in this section shall be 

15 construed to affect the authority of any State to enjoin 

16 conduct in violation of that State’s laws described in sec17 tion 2796(b)(1). 

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

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

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

21 paragraph (2), nothing in this section shall be con22 strued to affect the authority of any State to make 

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

24 State with respect to which a health insurance issuer 

25 is not exempt under subsection (b). 


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

2 If a State seeks an injunction regarding the conduct 

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

4 (h), such injunction must be obtained from a Fed5 eral or State court of competent jurisdiction. 

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

7 section shall affect the authority of any State to bring ac8 tion in any Federal or State court. 

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

10 this section shall be construed to affect the applicability 

11 of State laws generally applicable to persons or corpora12 tions. 

13 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

14 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

15 health insurance issuer is offering coverage in a primary 

16 State that does not accommodate residents of secondary 

17 States or does not provide a working mechanism for resi18 dents of a secondary State, and the issuer is offering cov19 erage under this part in such secondary State which has 

20 not adopted a qualified high risk pool as its acceptable 

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

22 the issuer shall, with respect to any individual health in23 surance coverage offered in a secondary State under this 

24 part, comply with the guaranteed availability requirements 

25 for eligible individuals in section 2741. 


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

2 BEFORE ISSUER MAY SELL INTO SECONDARY 

3 STATES. 

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

5 issue individual health insurance coverage in a secondary 

6 State if the State insurance commissioner does not use 

7 a risk-based capital formula for the determination of cap8 ital and surplus requirements for all health insurance 

9 issuers. 

10 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE11 DURES. 

12 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur13 ance issuer may not offer, sell, or issue individual health 

14 insurance coverage in a secondary State under the provi15 sions of this title unless— 

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

17 State have legislation or regulations in place estab18 lishing an independent review process for individuals 

19 who are covered by individual health insurance cov20 erage, or 

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

22 subparagraph (A) are not met with respect to the ei23 ther of such States, the issuer provides an inde24 pendent review mechanism substantially identical (as 

25 determined by the applicable State authority of such 

26 State) to that prescribed in the ‘Health Carrier ExVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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1 ternal Review Model Act’ of the National Association 

2 of Insurance Commissioners for all individuals who 

3 purchase insurance coverage under the terms of this 

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

5 is conducted by an independent medical reviewer, or 

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

7 requirements of subsection (b) are met. 

8 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

9 REVIEWERS.—In the case of any independent review 

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

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

12 claim to an independent medical reviewer, or to any 

13 panel of such reviewers, to conduct independent 

14 medical review, the issuer shall ensure that— 

15 ‘‘(A) each independent medical reviewer 

16 meets the qualifications described in paragraphs 

17 (2) and (3); 

18 ‘‘(B) with respect to each review, each re19 viewer meets the requirements of paragraph (4) 

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

21 panel, meets the requirements described in 

22 paragraph (5); and 

23 ‘‘(C) compensation provided by the issuer 

24 to each reviewer is consistent with paragraph 

25 (6). 


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1 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde2 pendent medical reviewer shall be a physician 

3 (allopathic or osteopathic) or health care profes4 sional who— 

5 ‘‘(A) is appropriately credentialed or li6 censed in 1 or more States to deliver health 

7 care services; and 

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

9 the diagnosis, or provides the type of treatment 

10 under review. 

11 ‘‘(3) INDEPENDENCE.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), each independent medical reviewer 

14 in a case shall— 

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

16 in paragraph (7)); 

17 ‘‘(ii) not have a material familial, fi18 nancial, or professional relationship with 

19 such a party; and 

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

21 interest with such a party (as determined 

22 under regulations). 

23 ‘‘(B) EXCEPTION.—Nothing in subpara24 graph (A) shall be construed to— 


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

2 the basis of affiliation with the issuer, 

3 from serving as an independent medical re4 viewer if— 

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

6 not reasonably available; 

7 ‘‘(II) the affiliated individual is 

8 not involved in the provision of items 

9 or services in the case under review; 

10 ‘‘(III) the fact of such an affili11 ation is disclosed to the issuer and the 

12 enrollee (or authorized representative) 

13 and neither party objects; and 

14 ‘‘(IV) the affiliated individual is 

15 not an employee of the issuer and 

16 does not provide services exclusively or 

17 primarily to or on behalf of the issuer; 

18 ‘‘(ii) prohibit an individual who has 

19 staff privileges at the institution where the 

20 treatment involved takes place from serv21 ing as an independent medical reviewer 

22 merely on the basis of such affiliation if 

23 the affiliation is disclosed to the issuer and 

24 the enrollee (or authorized representative), 

25 and neither party objects; or 


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1 ‘‘(iii) prohibit receipt of compensation 

2 by an independent medical reviewer from 

3 an entity if the compensation is provided 

4 consistent with paragraph (6). 

5 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

6 IN SAME FIELD.— 

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

8 treatment, or the provision of items or serv9 ices— 

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

11 a practicing physician (allopathic or osteo12 pathic) of the same or similar specialty, as 

13 a physician who, acting within the appro14 priate scope of practice within the State in 

15 which the service is provided or rendered, 

16 typically treats the condition, makes the 

17 diagnosis, or provides the type of treat18 ment under review; or 

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

20 professional, the reviewer, or at least 1 

21 member of the review panel, shall be a 

22 practicing non-physician health care pro23 fessional of the same or similar specialty 

24 as the non-physician health care profes25 sional who, acting within the appropriate 


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1 scope of practice within the State in which 

2 the service is provided or rendered, typi3 cally treats the condition, makes the diag4 nosis, or provides the type of treatment 

5 under review. 

6 ‘‘(B) PRACTICING DEFINED.—For pur7 poses of this paragraph, the term ‘practicing’ 

8 means, with respect to an individual who is a 

9 physician or other health care professional, that 

10 the individual provides health care services to 

11 individual patients on average at least 2 days 

12 per week. 

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

14 external review relating to a child, a reviewer shall 

15 have expertise under paragraph (2) in pediatrics. 

16 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA17 TION.—Compensation provided by the issuer to an 

18 independent medical reviewer in connection with a 

19 review under this section shall— 

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

21 ‘‘(B) not be contingent on the decision ren22 dered by the reviewer. 

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

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


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1 respect to a denial of a claim under a coverage relat2 ing to an enrollee, any of the following: 

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

4 officer, director, or employee of the issuer. 

5 ‘‘(B) The enrollee (or authorized represent6 ative). 

7 ‘‘(C) The health care professional that pro8 vides the items or services involved in the de9 nial. 

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

11 services (or treatment) involved in the denial 

12 are provided. 

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

14 other item that is included in the items or serv15 ices involved in the denial. 

16 ‘‘(F) Any other party determined under 

17 any regulations to have a substantial interest in 

18 the denial involved. 

19 ‘‘(8) DEFINITIONS.—For purposes of this sub20 section: 

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

22 means, with respect to health insurance cov23 erage offered by a health insurance issuer, an 

24 individual enrolled with the issuer to receive 

25 such coverage. 


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

2 term ‘health care professional’ means an indi3 vidual who is licensed, accredited, or certified 

4 under State law to provide specified health care 

5 services and who is operating within the scope 

6 of such licensure, accreditation, or certification. 

7 ‘‘SEC. 2799. ENFORCEMENT. 

8 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

9 respect to specific individual health insurance coverage the 

10 primary State for such coverage has sole jurisdiction to 

11 enforce the primary State’s covered laws in the primary 

12 State and any secondary State. 

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

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

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

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

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

18 initiated by the applicable secondary State authority, the 

19 court of competent jurisdiction shall apply the covered 

20 laws of the primary State. 

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

22 of individual health insurance coverage offered in a sec23 ondary State that fails to comply with the covered laws 

24 of the primary State, the applicable State authority of the 


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1 secondary State may notify the applicable State authority 

2 of the primary State.’’. 

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

4 subsection (a) shall apply to individual health insurance 

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

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

7 (c) GAO ONGOING STUDY AND REPORTS.— 

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

9 United States shall conduct an ongoing study con10 cerning the effect of the amendment made by sub11 section (a) on— 

12 (A) the number of uninsured and under-in13 sured; 

14 (B) the availability and cost of health in15 surance policies for individuals with preexisting 

16 medical conditions; 

17 (C) the availability and cost of health in18 surance policies generally; 

19 (D) the elimination or reduction of dif20 ferent types of benefits under health insurance 

21 policies offered in different States; and 

22 (E) cases of fraud or abuse relating to 

23 health insurance coverage offered under such 

24 amendment and the resolution of such cases. 


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1 (2) ANNUAL REPORTS.—The Comptroller Gen2 eral shall submit to Congress an annual report, after 

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

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

5 the ongoing study conducted under paragraph (1). 

6 TITLE V—ASSOCIATION HEALTH 

7 PLANS 

8 SEC. 501. RULES GOVERNING ASSOCIATION HEALTH 

9 PLANS. 

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 plan 

18 whose sponsor is (or is deemed under this part to be) de19 scribed in subsection (b). 

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

21 plan is described in this subsection if such sponsor— 

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

23 with a constitution and bylaws specifically stating its 

24 purpose and providing for periodic meetings on at 

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1 tion, a bona fide industry association (including a 

2 rural electric cooperative association or a rural tele3 phone cooperative association), a bona fide profes4 sional association, or a bona fide chamber of com5 merce (or similar bona fide business association, in6 cluding a corporation or similar organization that 

7 operates on a cooperative basis (within the meaning 

8 of section 1381 of the Internal Revenue Code of 

9 1986)), for substantial purposes other than that of 

10 obtaining or providing medical care; 

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

12 receives the active support of its members and re13 quires for membership payment on a periodic basis 

14 of dues or payments necessary to maintain eligibility 

15 for membership in the sponsor; and 

16 ‘‘(3) does not condition membership, such dues 

17 or payments, or coverage under the plan on the 

18 basis of health status-related factors with respect to 

19 the employees of its members (or affiliated mem20 bers), or the dependents of such employees, and does 

21 not condition such dues or payments on the basis of 

22 group health plan participation. 

23 Any sponsor consisting of an association of entities which 

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


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1 shall be deemed to be a sponsor described in this sub2 section. 

3 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

4 PLANS. 

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

6 prescribe by regulation a procedure under which, subject 

7 to subsection (b), the applicable authority shall certify as8 sociation health plans which apply for certification as 

9 meeting the requirements of this part. 

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

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

12 health plan that provides at least one benefit option which 

13 does not consist of health insurance coverage, the applica14 ble authority shall certify such plan as meeting the re15 quirements of this part only if the applicable authority is 

16 satisfied that the applicable requirements of this part are 

17 met (or, upon the date on which the plan is to commence 

18 operations, will be met) with respect to the plan. 

19 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

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

21 certification under this part is in effect shall meet the ap22 plicable requirements of this part, effective on the date 

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

24 is to commence operations). 


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1 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI2 CATION.—The applicable authority may provide by regula3 tion for continued certification of association health plans 

4 under this part. 

5 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

6 PLANS.—The applicable authority shall establish a class 

7 certification procedure for association health plans under 

8 which all benefits consist of health insurance coverage. 

9 Under such procedure, the applicable authority shall pro10 vide for the granting of certification under this part to 

11 the plans in each class of such association health plans 

12 upon appropriate filing under such procedure in connec13 tion with plans in such class and payment of the pre14 scribed fee under section 807(a). 

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

16 HEALTH PLANS.—An association health plan which offers 

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

18 insurance coverage may be certified under this part only 

19 if such plan consists of any of the following: 

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

21 date of the enactment of this Act, 

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

23 restrict membership to one or more trades and busi24 nesses or industries and whose eligible participating 


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1 employers represent a broad cross-section of trades 

2 and businesses or industries, or 

3 ‘‘(3) a plan whose eligible participating employ4 ers represent one or more trades or businesses, or 

5 one or more industries, consisting of any of the fol6 lowing: agriculture; equipment and automobile deal7 erships; barbering and cosmetology; certified public 

8 accounting practices; child care; construction; dance, 

9 theatrical and orchestra productions; disinfecting 

10 and pest control; financial services; fishing; food 

11 service establishments; hospitals; labor organiza12 tions; logging; manufacturing (metals); mining; med13 ical and dental practices; medical laboratories; pro14 fessional consulting services; sanitary services; trans15 portation (local and freight); warehousing; whole16 saling/distributing; or any other trade or business or 

17 industry which has been indicated as having average 

18 or above-average risk or health claims experience by 

19 reason of State rate filings, denials of coverage, pro20 posed premium rate levels, or other means dem21 onstrated by such plan in accordance with regula22 tions. 


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

2 BOARDS OF TRUSTEES. 

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

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

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

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

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

8 the application for certification under this part. 

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

10 this subsection are met with respect to an association 

11 health plan if the following requirements are met: 

12 ‘‘(1) FISCAL CONTROL.—The plan is operated, 

13 pursuant to a trust agreement, by a board of trust14 ees which has complete fiscal control over the plan 

15 and which is responsible for all operations of the 

16 plan. 

17 ‘‘(2) RULES OF OPERATION AND FINANCIAL

18 CONTROLS.—The board of trustees has in effect 

19 rules of operation and financial controls, based on a 

20 3-year plan of operation, adequate to carry out the 

21 terms of the plan and to meet all requirements of 

22 this title applicable to the plan. 

23 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

24 PARTICIPATING EMPLOYERS AND TO CONTRAC25 TORS.— 

26 ‘‘(A) BOARD MEMBERSHIP.— 


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1 ‘‘(i) IN GENERAL.—Except as pro2 vided in clauses (ii) and (iii), the members 

3 of the board of trustees are individuals se4 lected from individuals who are the owners, 

5 officers, directors, or employees of the par6 ticipating employers or who are partners in 

7 the participating employers and actively 

8 participate in the business. 

9 ‘‘(ii) LIMITATION.— 

10 ‘‘(I) GENERAL RULE.—Except as 

11 provided in subclauses (II) and (III), 

12 no such member is an owner, officer, 

13 director, or employee of, or partner in, 

14 a contract administrator or other 

15 service provider to the plan. 

16 ‘‘(II) LIMITED EXCEPTION FOR

17 PROVIDERS OF SERVICES SOLELY ON

18 BEHALF OF THE SPONSOR.—Officers 

19 or employees of a sponsor which is a 

20 service provider (other than a contract 

21 administrator) to the plan may be 

22 members of the board if they con23 stitute not more than 25 percent of 

24 the membership of the board and they 


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1 do not provide services to the plan 

2 other than on behalf of the sponsor. 

3 ‘‘(III) TREATMENT OF PRO4 VIDERS OF MEDICAL CARE.—In the 

5 case of a sponsor which is an associa6 tion whose membership consists pri7 marily of providers of medical care, 

8 subclause (I) shall not apply in the 

9 case of any service provider described 

10 in subclause (I) who is a provider of 

11 medical care under the plan. 

12 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

13 Clause (i) shall not apply to an association 

14 health plan which is in existence on the 

15 date of the enactment of this Act. 

16 ‘‘(B) SOLE AUTHORITY.—The board has 

17 sole authority under the plan to approve appli18 cations for participation in the plan and to con19 tract with a service provider to administer the 

20 day-to-day affairs of the plan. 

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

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

23 maintained by a franchiser for a franchise network con24 sisting of its franchisees— 


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1 ‘‘(1) the requirements of subsection (a) and sec2 tion 801(a) shall be deemed met if such require3 ments would otherwise be met if the franchiser were 

4 deemed to be the sponsor referred to in section 

5 801(b), such network were deemed to be an associa6 tion described in section 801(b), and each franchisee 

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

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

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

10 be deemed met. 

11 The Secretary may by regulation define for purposes of 

12 this subsection the terms ‘franchiser’, ‘franchise network’, 

13 and ‘franchisee’. 

14 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE15 MENTS. 

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

17 requirements of this subsection are met with respect to 

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

19 plan— 

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

21 ‘‘(A) a member of the sponsor, 

22 ‘‘(B) the sponsor, or 

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

24 with respect to which the requirements of sub25 section (b) are met, 


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1 except that, in the case of a sponsor which is a pro2 fessional association or other individual-based asso3 ciation, if at least one of the officers, directors, or 

4 employees of an employer, or at least one of the in5 dividuals who are partners in an employer and who 

6 actively participates in the business, is a member or 

7 such an affiliated member of the sponsor, partici8 pating employers may also include such employer; 

9 and 

10 ‘‘(2) all individuals commencing coverage under 

11 the plan after certification under this part must 

12 be— 

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

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

15 employees of, or partners in, participating em16 ployers; or 

17 ‘‘(B) the beneficiaries of individuals de18 scribed in subparagraph (A). 

19 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM20 PLOYEES.—In the case of an association health plan in 

21 existence on the date of the enactment of this Act, an af22 filiated member of the sponsor of the plan may be offered 

23 coverage under the plan as a participating employer only 

24 if— 


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

2 member on the date of certification under this part; 

3 or 

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

5 date of the offering of such coverage, the affiliated 

6 member has not maintained or contributed to a 

7 group health plan with respect to any of its employ8 ees who would otherwise be eligible to participate in 

9 such association health plan. 

10 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re11 quirements of this subsection are met with respect to an 

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

13 no participating employer may provide health insurance 

14 coverage in the individual market for any employee not 

15 covered under the plan which is similar to the coverage 

16 contemporaneously provided to employees of the employer 

17 under the plan, if such exclusion of the employee from cov18 erage under the plan is based on a health status-related 

19 factor with respect to the employee and such employee 

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

21 for coverage under the plan. 

22 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

23 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI24 PATE.—The requirements of this subsection are met with 

25 respect to an association health plan if— 


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

2 meeting the preceding requirements of this section 

3 are eligible to qualify as participating employers for 

4 all geographically available coverage options, unless, 

5 in the case of any such employer, participation or 

6 contribution requirements of the type referred to in 

7 section 2711 of the Public Health Service Act are 

8 not met; 

9 ‘‘(2) upon request, any employer eligible to par10 ticipate is furnished information regarding all cov11 erage options available under the plan; and 

12 ‘‘(3) the applicable requirements of sections 

13 701, 702, and 703 are met with respect to the plan. 

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

15 DOCUMENTS, CONTRIBUTION RATES, AND 

16 BENEFIT OPTIONS. 

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

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

19 following requirements are met: 

20 ‘‘(1) CONTENTS OF GOVERNING INSTRU21 MENTS.—The instruments governing the plan in22 clude a written instrument, meeting the require23 ments of an instrument required under section 

24 402(a)(1), which— 


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

2 serves as the named fiduciary required for plans 

3 under section 402(a)(1) and serves in the ca4 pacity of a plan administrator (referred to in 

5 section 3(16)(A)); 

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

7 is to serve as plan sponsor (referred to in sec8 tion 3(16)(B)); and 

9 ‘‘(C) incorporates the requirements of sec10 tion 806. 

11 ‘‘(2) CONTRIBUTION RATES MUST BE NON12 DISCRIMINATORY.— 

13 ‘‘(A) The contribution rates for any par14 ticipating small employer do not vary on the 

15 basis of any health status-related factor in rela16 tion to employees of such employer or their 

17 beneficiaries and do not vary on the basis of the 

18 type of business or industry in which such em19 ployer is engaged. 

20 ‘‘(B) Nothing in this title or any other pro21 vision of law shall be construed to preclude an 

22 association health plan, or a health insurance 

23 issuer offering health insurance coverage in 

24 connection with an association health plan, 

25 from— 


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1 ‘‘(i) setting contribution rates based 

2 on the claims experience of the plan; or 

3 ‘‘(ii) varying contribution rates for 

4 small employers in a State to the extent 

5 that such rates could vary using the same 

6 methodology employed in such State for 

7 regulating premium rates in the small 

8 group market with respect to health insur9 ance coverage offered in connection with 

10 bona fide associations (within the meaning 

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

12 Service Act), 

13 subject to the requirements of section 702(b) 

14 relating to contribution rates. 

15 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI16 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

17 any benefit option under the plan does not consist 

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

19 beginning of the plan year not fewer than 1,000 par20 ticipants and beneficiaries. 

21 ‘‘(4) MARKETING REQUIREMENTS.— 

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

23 which consists of health insurance coverage is 

24 offered under the plan, State-licensed insurance 

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1 ployers coverage which does not consist of 

2 health insurance coverage in a manner com3 parable to the manner in which such agents are 

4 used to distribute health insurance coverage. 

5 ‘‘(B) STATE-LICENSED INSURANCE

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

7 the term ‘State-licensed insurance agents’ 

8 means one or more agents who are licensed in 

9 a State and are subject to the laws of such 

10 State relating to licensure, qualification, test11 ing, examination, and continuing education of 

12 persons authorized to offer, sell, or solicit 

13 health insurance coverage in such State. 

14 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

15 other requirements as the applicable authority deter16 mines are necessary to carry out the purposes of this 

17 part, which shall be prescribed by the applicable au18 thority by regulation. 

19 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO

20 DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 

21 nothing in this part or any provision of State law (as de22 fined in section 514(c)(1)) shall be construed to preclude 

23 an association health plan, or a health insurance issuer 

24 offering health insurance coverage in connection with an 

25 association health plan, from exercising its sole discretion 


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1 in selecting the specific items and services consisting of 

2 medical care to be included as benefits under such plan 

3 or coverage, except (subject to section 514) in the case 

4 of (1) any law to the extent that it is not preempted under 

5 section 731(a)(1) with respect to matters governed by sec6 tion 711, 712, or 713, or (2) any law of the State with 

7 which filing and approval of a policy type offered by the 

8 plan was initially obtained to the extent that such law pro9 hibits an exclusion of a specific disease from such cov10 erage. 

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

12 FOR SOLVENCY FOR PLANS PROVIDING 

13 HEALTH BENEFITS IN ADDITION TO HEALTH 

14 INSURANCE COVERAGE. 

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

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

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

18 of health insurance coverage; or 

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

20 options which do not consist of health insurance cov21 erage, the plan— 

22 ‘‘(A) establishes and maintains reserves 

23 with respect to such additional benefit options, 

24 in amounts recommended by the qualified actu25 ary, consisting of— 


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1 ‘‘(i) a reserve sufficient for unearned 

2 contributions; 

3 ‘‘(ii) a reserve sufficient for benefit li4 abilities which have been incurred, which 

5 have not been satisfied, and for which risk 

6 of loss has not yet been transferred, and 

7 for expected administrative costs with re8 spect to such benefit liabilities; 

9 ‘‘(iii) a reserve sufficient for any other 

10 obligations of the plan; and 

11 ‘‘(iv) a reserve sufficient for a margin 

12 of error and other fluctuations, taking into 

13 account the specific circumstances of the 

14 plan; and 

15 ‘‘(B) establishes and maintains aggregate 

16 and specific excess/stop loss insurance and sol17 vency indemnification, with respect to such ad18 ditional benefit options for which risk of loss 

19 has not yet been transferred, as follows: 

20 ‘‘(i) The plan shall secure aggregate 

21 excess/stop loss insurance for the plan with 

22 an attachment point which is not greater 

23 than 125 percent of expected gross annual 

24 claims. The applicable authority may by 

25 regulation provide for upward adjustments 


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1 in the amount of such percentage in speci2 fied circumstances in which the plan spe3 cifically provides for and maintains re4 serves in excess of the amounts required 

5 under subparagraph (A). 

6 ‘‘(ii) The plan shall secure specific ex7 cess/stop loss insurance for the plan with 

8 an attachment point which is at least equal 

9 to an amount recommended by the plan’s 

10 qualified actuary. The applicable authority 

11 may by regulation provide for adjustments 

12 in the amount of such insurance in speci13 fied circumstances in which the plan spe14 cifically provides for and maintains re15 serves in excess of the amounts required 

16 under subparagraph (A). 

17 ‘‘(iii) The plan shall secure indem18 nification insurance for any claims which 

19 the plan is unable to satisfy by reason of 

20 a plan termination. 

21 Any person issuing to a plan insurance described in clause 

22 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec23 retary of any failure of premium payment meriting can24 cellation of the policy prior to undertaking such a cancella25 tion. Any regulations prescribed by the applicable authorVerDate Mar 15 2010 02:49 Jun 02, 2010 Jkt 089200 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.IH H5421

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

2 allow for such adjustments in the required levels of excess/ 

3 stop loss insurance as the qualified actuary may rec4 ommend, taking into account the specific circumstances 

5 of the plan. 

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

7 RESERVES.—In the case of any association health plan de8 scribed in subsection (a)(2), the requirements of this sub9 section are met if the plan establishes and maintains sur10 plus in an amount at least equal to— 

11 ‘‘(1) $500,000, or 

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

13 $2,000,000) as may be set forth in regulations pre14 scribed by the applicable authority, considering the 

15 level of aggregate and specific excess/stop loss insur16 ance provided with respect to such plan and other 

17 factors related to solvency risk, such as the plan’s 

18 projected levels of participation or claims, the nature 

19 of the plan’s liabilities, and the types of assets avail20 able to assure that such liabilities are met. 

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

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

23 the applicable authority may provide such additional re24 quirements relating to reserves, excess/stop loss insurance, 

25 and indemnification insurance as the applicable authority 


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1 considers appropriate. Such requirements may be provided 

2 by regulation with respect to any such plan or any class 

3 of such plans. 

4 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR5 ANCE.—The applicable authority may provide for adjust6 ments to the levels of reserves otherwise required under 

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

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

9 provided with respect to such plan or plans. 

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

11 applicable authority may permit an association health plan 

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

13 of the requirements of this section (except subsection 

14 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar15 rangement, or other financial arrangement as the applica16 ble authority determines to be adequate to enable the plan 

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

18 and is otherwise no less protective of the interests of par19 ticipants and beneficiaries than the requirements for 

20 which it is substituted. The applicable authority may take 

21 into account, for purposes of this subsection, evidence pro22 vided by the plan or sponsor which demonstrates an as23 sumption of liability with respect to the plan. Such evi24 dence may be in the form of a contract of indemnification, 

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


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1 applicable terms of the plan in the form of assessments 

2 of participating employers, security, or other financial ar3 rangement. 

4 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

5 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

6 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO7 CIATION HEALTH PLAN FUND.— 

8 ‘‘(A) IN GENERAL.—In the case of an as9 sociation health plan described in subsection 

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

11 met if the plan makes payments into the Asso12 ciation Health Plan Fund under this subpara13 graph when they are due. Such payments shall 

14 consist of annual payments in the amount of 

15 $5,000, and, in addition to such annual pay16 ments, such supplemental payments as the Sec17 retary may determine to be necessary under 

18 paragraph (2). Payments under this paragraph 

19 are payable to the Fund at the time determined 

20 by the Secretary. Initial payments are due in 

21 advance of certification under this part. Pay22 ments shall continue to accrue until a plan’s as23 sets are distributed pursuant to a termination 

24 procedure. 


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1 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

2 PAYMENTS.—If any payment is not made by a 

3 plan when it is due, a late payment charge of 

4 not more than 100 percent of the payment 

5 which was not timely paid shall be payable by 

6 the plan to the Fund. 

7 ‘‘(C) CONTINUED DUTY OF THE SEC8 RETARY.—The Secretary shall not cease to 

9 carry out the provisions of paragraph (2) on ac10 count of the failure of a plan to pay any pay11 ment when due. 

12 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

13 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN14 DEMNIFICATION INSURANCE COVERAGE FOR CER15 TAIN PLANS.—In any case in which the applicable 

16 authority determines that there is, or that there is 

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

18 take necessary corrective actions under section 

19 809(a) with respect to an association health plan de20 scribed in subsection (a)(2); or (B) a termination of 

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

22 if the applicable authority is not the Secretary, cer23 tifies such determination to the Secretary), the Sec24 retary shall determine the amounts necessary to 

25 make payments to an insurer (designated by the 


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1 Secretary) to maintain in force excess/stop loss in2 surance coverage or indemnification insurance cov3 erage for such plan, if the Secretary determines that 

4 there is a reasonable expectation that, without such 

5 payments, claims would not be satisfied by reason of 

6 termination of such coverage. The Secretary shall, to 

7 the extent provided in advance in appropriation 

8 Acts, pay such amounts so determined to the insurer 

9 designated by the Secretary. 

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

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

12 on the books of the Treasury a fund to be 

13 known as the ‘Association Health Plan Fund’. 

14 The Fund shall be available for making pay15 ments pursuant to paragraph (2). The Fund 

16 shall be credited with payments received pursu17 ant to paragraph (1)(A), penalties received pur18 suant to paragraph (1)(B); and earnings on in19 vestments of amounts of the Fund under sub20 paragraph (B). 

21 ‘‘(B) INVESTMENT.—Whenever the Sec22 retary determines that the moneys of the fund 

23 are in excess of current needs, the Secretary 

24 may request the investment of such amounts as 

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1 retary of the Treasury in obligations issued or 

2 guaranteed by the United States. 

3 ‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 

4 of this section— 

5 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR6 ANCE.—The term ‘aggregate excess/stop loss insur7 ance’ means, in connection with an association 

8 health plan, a contract— 

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

10 minimum standards as the applicable authority 

11 may prescribe by regulation) provides for pay12 ment to the plan with respect to aggregate 

13 claims under the plan in excess of an amount 

14 or amounts specified in such contract; 

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

16 ‘‘(C) which allows for payment of pre17 miums by any third party on behalf of the in18 sured plan. 

19 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR20 ANCE.—The term ‘specific excess/stop loss insur21 ance’ means, in connection with an association 

22 health plan, a contract— 

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

24 minimum standards as the applicable authority 

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1 ment to the plan with respect to claims under 

2 the plan in connection with a covered individual 

3 in excess of an amount or amounts specified in 

4 such contract in connection with such covered 

5 individual; 

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

7 ‘‘(C) which allows for payment of pre8 miums by any third party on behalf of the in9 sured plan. 

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

11 of this section, the term ‘indemnification insurance’ 

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

13 contract— 

14 ‘‘(1) under which an insurer (meeting such min15 imum standards as the applicable authority may pre16 scribe by regulation) provides for payment to the 

17 plan with respect to claims under the plan which the 

18 plan is unable to satisfy by reason of a termination 

19 pursuant to section 809(b) (relating to mandatory 

20 termination); 

21 ‘‘(2) which is guaranteed renewable and 

22 noncancellable for any reason (except as the applica23 ble authority may prescribe by regulation); 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 by regulation. 

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

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

9 date of the enactment of this Act, the applicable au10 thority shall establish a Solvency Standards Working 

11 Group. In prescribing the initial regulations under 

12 this section, the applicable authority shall take into 

13 account the recommendations of such Working 

14 Group. 

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

16 consist of not more than 15 members appointed by 

17 the applicable authority. The applicable authority 

18 shall include among persons invited to membership 

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

20 following: 

21 ‘‘(A) a representative of the National Asso22 ciation of Insurance Commissioners; 

23 ‘‘(B) a representative of the American 

24 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 by regulation, at 

2 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. 

17 ‘‘(B) ADEQUACY OF CONTRIBUTION

18 RATES.—A statement of actuarial opinion, 

19 signed by a qualified actuary, which sets forth 

20 a description of the extent to which contribution 

21 rates are adequate to provide for the payment 

22 of all obligations and the maintenance of re23 quired reserves under the plan for the 12- 

24 month period beginning with such date within 

25 such 120-day period, taking into account the 


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1 expected coverage and experience of the plan. If 

2 the contribution rates are not fully adequate, 

3 the statement of actuarial opinion shall indicate 

4 the extent to which the rates are inadequate 

5 and the changes needed to ensure adequacy. 

6 ‘‘(C) CURRENT AND PROJECTED VALUE OF

7 ASSETS AND LIABILITIES.—A statement of ac8 tuarial opinion signed by a qualified actuary, 

9 which sets forth the current value of the assets 

10 and liabilities accumulated under the plan and 

11 a projection of the assets, liabilities, income, 

12 and expenses of the plan for the 12-month pe13 riod referred to in subparagraph (B). The in14 come statement shall identify separately the 

15 plan’s administrative expenses and claims. 

16 ‘‘(D) COSTS OF COVERAGE TO BE

17 CHARGED AND OTHER EXPENSES.—A state18 ment of the costs of coverage to be charged, in19 cluding an itemization of amounts for adminis20 tration, reserves, and other expenses associated 

21 with the operation of the plan. 

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

23 information as may be determined by the appli24 cable authority, by regulation, as necessary to 

25 carry out the purposes of this part. 


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1 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

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

3 association health plan shall not be effective unless written 

4 notice of such certification is filed with the applicable 

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

6 of the participants and beneficiaries under the plan are 

7 located. For purposes of this subsection, an individual 

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

9 known address of such individual is located or in which 

10 such individual is employed. 

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

12 of any association health plan certified under this part, 

13 descriptions of material changes in any information which 

14 was required to be submitted with the application for the 

15 certification under this part shall be filed in such form 

16 and manner as shall be prescribed by the applicable au17 thority by regulation. The applicable authority may re18 quire by regulation prior notice of material changes with 

19 respect to specified matters which might serve as the basis 

20 for suspension or revocation of the certification. 

21 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS22 SOCIATION HEALTH PLANS.—An association health plan 

23 certified under this part which provides benefit options in 

24 addition to health insurance coverage for such plan year 

25 shall meet the requirements of section 103 by filing an 


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1 annual report under such section which shall include infor2 mation described in subsection (b)(6) with respect to the 

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

4 be filed with the applicable authority not later than 90 

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

6 as may be prescribed by the applicable authority). The ap7 plicable authority may require by regulation such interim 

8 reports as it considers appropriate. 

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

10 board of trustees of each association health plan which 

11 provides benefits options in addition to health insurance 

12 coverage and which is applying for certification under this 

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

14 of all participants and beneficiaries, a qualified actuary 

15 who shall be responsible for the preparation of the mate16 rials comprising information necessary to be submitted by 

17 a qualified actuary under this part. The qualified actuary 

18 shall utilize such assumptions and techniques as are nec19 essary to enable such actuary to form an opinion as to 

20 whether the contents of the matters reported under this 

21 part— 

22 ‘‘(1) are in the aggregate reasonably related to 

23 the experience of the plan and to reasonable expecta24 tions; and 


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

2 anticipated experience under the plan. 

3 The opinion by the qualified actuary shall be made with 

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

5 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER6 MINATION. 

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

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

9 may terminate (upon or at any time after cessation of ac10 cruals in benefit liabilities) only if the board of trustees, 

11 not less than 60 days before the proposed termination 

12 date— 

13 ‘‘(1) provides to the participants and bene14 ficiaries a written notice of intent to terminate stat15 ing that such termination is intended and the pro16 posed termination date; 

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

18 of the plan in connection with such termination in 

19 a manner which will result in timely payment of all 

20 benefits for which the plan is obligated; and 

21 ‘‘(3) submits such plan in writing to the appli22 cable authority. 

23 Actions required under this section shall be taken in such 

24 form and manner as may be prescribed by the applicable 

25 authority by regulation. 


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1 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI2 NATION. 

3 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE4 SERVES.—An association health plan which is certified 

5 under this part and which provides benefits other than 

6 health insurance coverage shall continue to meet the re7 quirements of section 806, irrespective of whether such 

8 certification continues in effect. The board of trustees of 

9 such plan shall determine quarterly whether the require10 ments of section 806 are met. In any case in which the 

11 board determines that there is reason to believe that there 

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

13 applicable authority makes such a determination and so 

14 notifies the board, the board shall immediately notify the 

15 qualified actuary engaged by the plan, and such actuary 

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

17 make such recommendations to the board for corrective 

18 action as the actuary determines necessary to ensure com19 pliance with section 806. Not later than 30 days after re20 ceiving from the actuary recommendations for corrective 

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

22 such form and manner as the applicable authority may 

23 prescribe by regulation) of such recommendations of the 

24 actuary for corrective action, together with a description 

25 of the actions (if any) that the board has taken or plans 

26 to take in response to such recommendations. The board 


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1 shall thereafter report to the applicable authority, in such 

2 form and frequency as the applicable authority may speci3 fy to the board, regarding corrective action taken by the 

4 board until the requirements of section 806 are met. 

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

6 which— 

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

8 under subsection (a) (or by an issuer of excess/stop 

9 loss insurance or indemnity insurance pursuant to 

10 section 806(a)) of a failure of an association health 

11 plan which is or has been certified under this part 

12 and is described in section 806(a)(2) to meet the re13 quirements of section 806 and has not been notified 

14 by the board of trustees of the plan that corrective 

15 action has restored compliance with such require16 ments; and 

17 ‘‘(2) the applicable authority determines that 

18 there is a reasonable expectation that the plan will 

19 continue to fail to meet the requirements of section 

20 806, 

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

22 of the applicable authority, terminate the plan and, in the 

23 course of the termination, take such actions as the appli24 cable authority may require, including satisfying any 

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1 ering for the plan any liability under subsection 

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

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

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

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

6 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL7 VENT ASSOCIATION HEALTH PLANS PRO8 VIDING HEALTH BENEFITS IN ADDITION TO 

9 HEALTH INSURANCE COVERAGE. 

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

11 INSOLVENT PLANS.—Whenever the Secretary determines 

12 that an association health plan which is or has been cer13 tified under this part and which is described in section 

14 806(a)(2) will be unable to provide benefits when due or 

15 is otherwise in a financially hazardous condition, as shall 

16 be defined by the Secretary by regulation, the Secretary 

17 shall, upon notice to the plan, apply to the appropriate 

18 United States district court for appointment of the Sec19 retary as trustee to administer the plan for the duration 

20 of the insolvency. The plan may appear as a party and 

21 other interested persons may intervene in the proceedings 

22 at the discretion of the court. The court shall appoint such 

23 Secretary trustee if the court determines that the trustee24 ship is necessary to protect the interests of the partici25 pants and beneficiaries or providers of medical care or to 


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1 avoid any unreasonable deterioration of the financial con2 dition of the plan. The trusteeship of such Secretary shall 

3 continue until the conditions described in the first sen4 tence of this subsection are remedied or the plan is termi5 nated. 

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

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

8 the power— 

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

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

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

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

13 of the assets and records of the plan to the Sec14 retary as trustee; 

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

16 Secretary holds in accordance with the provisions of 

17 the plan, regulations prescribed by the Secretary, 

18 and applicable provisions of law; 

19 ‘‘(4) to require the sponsor, the plan adminis20 trator, any participating employer, and any employee 

21 organization representing plan participants to fur22 nish any information with respect to the plan which 

23 the Secretary as trustee may reasonably need in 

24 order to administer the plan; 


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

2 plan and to recover reasonable expenses of the trust3 eeship; 

4 ‘‘(6) to commence, prosecute, or defend on be5 half of the plan any suit or proceeding involving the 

6 plan; 

7 ‘‘(7) to issue, publish, or file such notices, state8 ments, and reports as may be required by the Sec9 retary by regulation or required by any order of the 

10 court; 

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

12 termination in accordance with section 809(b)) and 

13 liquidate the plan assets, to restore the plan to the 

14 responsibility of the sponsor, or to continue the 

15 trusteeship; 

16 ‘‘(9) to provide for the enrollment of plan par17 ticipants and beneficiaries under appropriate cov18 erage options; and 

19 ‘‘(10) to do such other acts as may be nec20 essary to comply with this title or any order of the 

21 court and to protect the interests of plan partici22 pants and beneficiaries and providers of medical 

23 care. 


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1 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac2 ticable after the Secretary’s appointment as trustee, the 

3 Secretary shall give notice of such appointment to— 

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

5 ‘‘(2) each participant; 

6 ‘‘(3) each participating employer; and 

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

8 which, for purposes of collective bargaining, rep9 resents plan participants. 

10 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in11 consistent with the provisions of this title, or as may be 

12 otherwise ordered by the court, the Secretary, upon ap13 pointment as trustee under this section, shall be subject 

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

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

16 of a fiduciary for purposes of this title. 

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

18 Secretary under this subsection may be filed notwith19 standing the pendency in the same or any other court of 

20 any bankruptcy, mortgage foreclosure, or equity receiver21 ship proceeding, or any proceeding to reorganize, conserve, 

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

23 to enforce a lien against property of the plan. 

24 ‘‘(f) JURISDICTION OF COURT.— 


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1 ‘‘(1) IN GENERAL.—Upon the filing of an appli2 cation for the appointment as trustee or the issuance 

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

4 application is made shall have exclusive jurisdiction 

5 of the plan involved and its property wherever lo6 cated with the powers, to the extent consistent with 

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

8 States having jurisdiction over cases under chapter 

9 11 of title 11, United States Code. Pending an adju10 dication under this section such court shall stay, and 

11 upon appointment by it of the Secretary as trustee, 

12 such court shall continue the stay of, any pending 

13 mortgage foreclosure, equity receivership, or other 

14 proceeding to reorganize, conserve, or liquidate the 

15 plan, the sponsor, or property of such plan or spon16 sor, and any other suit against any receiver, conser17 vator, or trustee of the plan, the sponsor, or prop18 erty of the plan or sponsor. Pending such adjudica19 tion and upon the appointment by it of the Sec20 retary as trustee, the court may stay any proceeding 

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

22 sponsor or any other suit against the plan or the 

23 sponsor. 

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

25 may be brought in the judicial district where the 


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1 sponsor or the plan administrator resides or does 

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

3 A district court in which such action is brought may 

4 issue process with respect to such action in any 

5 other judicial district. 

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

7 which shall be prescribed by the Secretary, the Secretary 

8 shall appoint, retain, and compensate accountants, actu9 aries, and other professional service personnel as may be 

10 necessary in connection with the Secretary’s service as 

11 trustee under this section. 

12 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

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

14 State may impose by law a contribution tax on an associa15 tion health plan described in section 806(a)(2), if the plan 

16 commenced operations in such State after the date of the 

17 enactment of this Act. 

18 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec19 tion, the term ‘contribution tax’ imposed by a State on 

20 an association health plan means any tax imposed by such 

21 State if— 

22 ‘‘(1) such tax is computed by applying a rate to 

23 the amount of premiums or contributions, with re24 spect to individuals covered under the plan who are 

25 residents of such State, which are received by the 


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1 plan from participating employers located in such 

2 State or from such individuals; 

3 ‘‘(2) the rate of such tax does not exceed the 

4 rate of any tax imposed by such State on premiums 

5 or contributions received by insurers or health main6 tenance organizations for health insurance coverage 

7 offered in such State in connection with a group 

8 health plan; 

9 ‘‘(3) such tax is otherwise nondiscriminatory; 

10 and 

11 ‘‘(4) the amount of any such tax assessed on 

12 the plan is reduced by the amount of any tax or as13 sessment otherwise imposed by the State on pre14 miums, contributions, or both received by insurers or 

15 health maintenance organizations for health insur16 ance coverage, aggregate excess/stop loss insurance 

17 (as defined in section 806(g)(1)), specific excess/stop 

18 loss insurance (as defined in section 806(g)(2)), 

19 other insurance related to the provision of medical 

20 care under the plan, or any combination thereof pro21 vided by such insurers or health maintenance organi22 zations in such State in connection with such plan. 

23 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

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


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

2 health plan’ has the meaning provided in section 

3 733(a)(1) (after applying subsection (b) of this sec4 tion). 

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

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

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

8 term ‘health insurance coverage’ has the meaning 

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

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

11 ‘health insurance issuer’ has the meaning provided 

12 in section 733(b)(2). 

13 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap14 plicable authority’ means the Secretary, except that, 

15 in connection with any exercise of the Secretary’s 

16 authority regarding which the Secretary is required 

17 under section 506(d) to consult with a State, such 

18 term means the Secretary, in consultation with such 

19 State. 

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

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

22 provided in section 733(d)(2). 

23 ‘‘(7) INDIVIDUAL MARKET.— 

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

25 market’ means the market for health insurance 


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1 coverage offered to individuals other than in 

2 connection with a group health plan. 

3 ‘‘(B) TREATMENT OF VERY SMALL

4 GROUPS.— 

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

6 (ii), such term includes coverage offered in 

7 connection with a group health plan that 

8 has fewer than 2 participants as current 

9 employees or participants described in sec10 tion 732(d)(3) on the first day of the plan 

11 year. 

12 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

13 shall not apply in the case of health insur14 ance coverage offered in a State if such 

15 State regulates the coverage described in 

16 such clause in the same manner and to the 

17 same extent as coverage in the small group 

18 market (as defined in section 2791(e)(5) of 

19 the Public Health Service Act) is regulated 

20 by such State. 

21 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

22 ‘participating employer’ means, in connection with 

23 an association health plan, any employer, if any indi24 vidual who is an employee of such employer, a part25 ner in such employer, or a self-employed individual 


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1 who is such employer (or any dependent, as defined 

2 under the terms of the plan, of such individual) is 

3 or was covered under such plan in connection with 

4 the status of such individual as such an employee, 

5 partner, or self-employed individual in relation to the 

6 plan. 

7 ‘‘(9) APPLICABLE STATE AUTHORITY.—The 

8 term ‘applicable State authority’ means, with respect 

9 to a health insurance issuer in a State, the State in10 surance commissioner or official or officials des11 ignated by the State to enforce the requirements of 

12 title XXVII of the Public Health Service Act for the 

13 State involved with respect to such issuer. 

14 ‘‘(10) QUALIFIED ACTUARY.—The term ‘quali15 fied actuary’ means an individual who is a member 

16 of the American Academy of Actuaries. 

17 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili18 ated member’ means, in connection with a sponsor— 

19 ‘‘(A) a person who is otherwise eligible to 

20 be a member of the sponsor but who elects an 

21 affiliated status with the sponsor, 

22 ‘‘(B) in the case of a sponsor with mem23 bers which consist of associations, a person who 

24 is a member of any such association and elects 

25 an affiliated status with the sponsor, or 


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1 ‘‘(C) in the case of an association health 

2 plan in existence on the date of the enactment 

3 of this Act, a person eligible to be a member of 

4 the sponsor or one of its member associations. 

5 ‘‘(12) LARGE EMPLOYER.—The term ‘large em6 ployer’ means, in connection with a group health 

7 plan with respect to a plan year, an employer who 

8 employed an average of at least 51 employees on 

9 business days during the preceding calendar year 

10 and who employs at least 2 employees on the first 

11 day of the plan year. 

12 ‘‘(13) SMALL EMPLOYER.—The term ‘small em13 ployer’ means, in connection with a group health 

14 plan with respect to a plan year, an employer who 

15 is not a large employer. 

16 ‘‘(b) RULES OF CONSTRUCTION.— 

17 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur18 poses of determining whether a plan, fund, or pro19 gram is an employee welfare benefit plan which is an 

20 association health plan, and for purposes of applying 

21 this title in connection with such plan, fund, or pro22 gram so determined to be such an employee welfare 

23 benefit plan— 

24 ‘‘(A) in the case of a partnership, the term 

25 ‘employer’ (as defined in section 3(5)) includes 


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1 the partnership in relation to the partners, and 

2 the term ‘employee’ (as defined in section 3(6)) 

3 includes any partner in relation to the partner4 ship; and 

5 ‘‘(B) in the case of a self-employed indi6 vidual, the term ‘employer’ (as defined in sec7 tion 3(5)) and the term ‘employee’ (as defined 

8 in section 3(6)) shall include such individual. 

9 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

10 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

11 case of any plan, fund, or program which was estab12 lished or is maintained for the purpose of providing 

13 medical care (through the purchase of insurance or 

14 otherwise) for employees (or their dependents) cov15 ered thereunder and which demonstrates to the Sec16 retary that all requirements for certification under 

17 this part would be met with respect to such plan, 

18 fund, or program if such plan, fund, or program 

19 were a group health plan, such plan, fund, or pro20 gram shall be treated for purposes of this title as an 

21 employee welfare benefit plan on and after the date 

22 of such demonstration.’’. 

23 (b) CONFORMING AMENDMENTS TO PREEMPTION

24 RULES.— 


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1 (1) Section 514(b)(6) of such Act (29 U.S.C. 

2 1144(b)(6)) is amended by adding at the end the 

3 following new subparagraph: 

4 ‘‘(E) The preceding subparagraphs of this paragraph 

5 do not apply with respect to any State law in the case 

6 of an association health plan which is certified under part 

7 8.’’. 

8 (2) Section 514 of such Act (29 U.S.C. 1144) 

9 is amended— 

10 (A) in subsection (b)(4), by striking ‘‘Sub11 section (a)’’ and inserting ‘‘Subsections (a) and 

12 (d)’’; 

13 (B) in subsection (b)(5), by striking ‘‘sub14 section (a)’’ in subparagraph (A) and inserting 

15 ‘‘subsection (a) of this section and subsections 

16 (a)(2)(B) and (b) of section 805’’, and by strik17 ing ‘‘subsection (a)’’ in subparagraph (B) and 

18 inserting ‘‘subsection (a) of this section or sub19 section (a)(2)(B) or (b) of section 805’’; 

20 (C) by redesignating subsection (d) as sub21 section (e); and 

22 (D) by inserting after subsection (c) the 

23 following new subsection: 

24 ‘‘(d)(1) Except as provided in subsection (b)(4), the 

25 provisions of this title shall supersede any and all State 


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1 laws insofar as they may now or hereafter preclude, or 

2 have the effect of precluding, a health insurance issuer 

3 from offering health insurance coverage in connection with 

4 an association health plan which is certified under part 

5 8. 

6 ‘‘(2) Except as provided in paragraphs (4) and (5) 

7 of subsection (b) of this section— 

8 ‘‘(A) In any case in which health insurance cov9 erage of any policy type is offered under an associa10 tion health plan certified under part 8 to a partici11 pating employer operating in such State, the provi12 sions of this title shall supersede any and all laws 

13 of such State insofar as they may preclude a health 

14 insurance issuer from offering health insurance cov15 erage of the same policy type to other employers op16 erating in the State which are eligible for coverage 

17 under such association health plan, whether or not 

18 such other employers are participating employers in 

19 such plan. 

20 ‘‘(B) In any case in which health insurance cov21 erage of any policy type is offered in a State under 

22 an association health plan certified under part 8 and 

23 the filing, with the applicable State authority (as de24 fined in section 812(a)(9)), of the policy form in 

25 connection with such policy type is approved by such 


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1 State authority, the provisions of this title shall su2 persede any and all laws of any other State in which 

3 health insurance coverage of such type is offered, in4 sofar as they may preclude, upon the filing in the 

5 same form and manner of such policy form with the 

6 applicable State authority in such other State, the 

7 approval of the filing in such other State. 

8 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

9 provisions of this subsection shall be construed, with re10 spect to health insurance issuers or health insurance cov11 erage, to supersede or impair the law of any State— 

12 ‘‘(A) providing solvency standards or similar 

13 standards regarding the adequacy of insurer capital, 

14 surplus, reserves, or contributions, or 

15 ‘‘(B) relating to prompt payment of claims. 

16 ‘‘(4) For additional provisions relating to association 

17 health plans, see subsections (a)(2)(B) and (b) of section 

18 805. 

19 ‘‘(5) For purposes of this subsection, the term ‘asso20 ciation health plan’ has the meaning provided in section 

21 801(a), and the terms ‘health insurance coverage’, ‘par22 ticipating employer’, and ‘health insurance issuer’ have 

23 the meanings provided such terms in section 812, respec24 tively.’’. 


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1 (3) Section 514(b)(6)(A) of such Act (29 

2 U.S.C. 1144(b)(6)(A)) is amended— 

3 (A) in clause (i)(II), by striking ‘‘and’’ at 

4 the end; 

5 (B) in clause (ii), by inserting ‘‘and which 

6 does not provide medical care (within the mean7 ing of section 733(a)(2)),’’ after ‘‘arrange8 ment,’’, and by striking ‘‘title.’’ and inserting 

9 ‘‘title, and’’; and 

10 (C) by adding at the end the following new 

11 clause: 

12 ‘‘(iii) subject to subparagraph (E), in the case 

13 of any other employee welfare benefit plan which is 

14 a multiple employer welfare arrangement and which 

15 provides medical care (within the meaning of section 

16 733(a)(2)), any law of any State which regulates in17 surance may apply.’’. 

18 (4) Section 514(e) of such Act (as redesignated 

19 by paragraph (2)(C)) is amended— 

20 (A) by striking ‘‘Nothing’’ and inserting 

21 ‘‘(1) Except as provided in paragraph (2), noth22 ing’’; and 

23 (B) by adding at the end the following new 

24 paragraph: 


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1 ‘‘(2) Nothing in any other provision of law enacted 

2 on or after the date of the enactment of this Act shall 

3 be construed to alter, amend, modify, invalidate, impair, 

4 or supersede any provision of this title, except by specific 

5 cross-reference to the affected section.’’. 

6 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act 

7 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

8 the following new sentence: ‘‘Such term also includes a 

9 person serving as the sponsor of an association health plan 

10 under part 8.’’. 

11 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE12 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

13 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

14 of such Act (29 U.S.C. 102(b)) is amended by adding at 

15 the end the following: ‘‘An association health plan shall 

16 include in its summary plan description, in connection 

17 with each benefit option, a description of the form of sol18 vency or guarantee fund protection secured pursuant to 

19 this Act or applicable State law, if any.’’. 

20 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

21 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

22 (f) REPORT TO THE CONGRESS REGARDING CERTIFI23 CATION OF SELF-INSURED ASSOCIATION HEALTH

24 PLANS.—Not later than January 1, 2012, the Secretary 

25 of Labor shall report to the Committee on Education and 


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1 the Workforce of the House of Representatives and the 

2 Committee on Health, Education, Labor, and Pensions of 

3 the Senate the effect association health plans have had, 

4 if any, on reducing the number of uninsured individuals. 

5 (g) CLERICAL AMENDMENT.—The table of contents 

6 in section 1 of the Employee Retirement Income Security 

7 Act of 1974 is amended by inserting after the item relat8 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

‘‘803. Requirements relating to sponsors and boards of trustees. 

‘‘804. Participation and coverage requirements. 

‘‘805. Other requirements relating to plan documents, contribution rates, and 

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 

‘‘811. State assessment authority. 

‘‘812. Definitions and rules of construction.’’. 

9 SEC. 502. CLARIFICATION OF TREATMENT OF SINGLE EM10 PLOYER ARRANGEMENTS. 

11 Section 3(40)(B) of the Employee Retirement Income 

12 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend13 ed— 

14 (1) in clause (i), by inserting after ‘‘control 

15 group,’’ the following: ‘‘except that, in any case in 

16 which the benefit referred to in subparagraph (A) 

17 consists of medical care (as defined in section 


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1 812(a)(2)), two or more trades or businesses, wheth2 er or not incorporated, shall be deemed a single em3 ployer for any plan year of such plan, or any fiscal 

4 year of such other arrangement, if such trades or 

5 businesses are within the same control group during 

6 such year or at any time during the preceding 1-year 

7 period,’’; 

8 (2) in clause (iii), by striking ‘‘(iii) the deter9 mination’’ and inserting the following: 

10 ‘‘(iii)(I) in any case in which the benefit re11 ferred to in subparagraph (A) consists of medical 

12 care (as defined in section 812(a)(2)), the deter13 mination of whether a trade or business is under 

14 ‘common control’ with another trade or business 

15 shall be determined under regulations of the Sec16 retary applying principles consistent and coextensive 

17 with the principles applied in determining whether 

18 employees of two or more trades or businesses are 

19 treated as employed by a single employer under sec20 tion 4001(b), except that, for purposes of this para21 graph, an interest of greater than 25 percent may 

22 not be required as the minimum interest necessary 

23 for common control, or 

24 ‘‘(II) in any other case, the determination’’; 


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1 (3) by redesignating clauses (iv) and (v) as 

2 clauses (v) and (vi), respectively; and 

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

4 new clause: 

5 ‘‘(iv) in any case in which the benefit referred 

6 to in subparagraph (A) consists of medical care (as 

7 defined in section 812(a)(2)), in determining, after 

8 the application of clause (i), whether benefits are 

9 provided to employees of two or more employers, the 

10 arrangement shall be treated as having only one par11 ticipating employer if, after the application of clause 

12 (i), the number of individuals who are employees and 

13 former employees of any one participating employer 

14 and who are covered under the arrangement is 

15 greater than 75 percent of the aggregate number of 

16 all individuals who are employees or former employ17 ees of participating employers and who are covered 

18 under the arrangement,’’. 

19 SEC. 503. ENFORCEMENT PROVISIONS RELATING TO ASSO20 CIATION HEALTH PLANS. 

21 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

22 MISREPRESENTATIONS.—Section 501 of the Employee 

23 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

24 is amended— 

25 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 


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1 (2) by adding at the end the following new sub2 section: 

3 ‘‘(b) Any person who willfully falsely represents, to 

4 any employee, any employee’s beneficiary, any employer, 

5 the Secretary, or any State, a plan or other arrangement 

6 established or maintained for the purpose of offering or 

7 providing any benefit described in section 3(1) to employ8 ees or their beneficiaries as— 

9 ‘‘(1) being an association health plan which has 

10 been certified under part 8; 

11 ‘‘(2) having been established or maintained 

12 under or pursuant to one or more collective bar13 gaining agreements which are reached pursuant to 

14 collective bargaining described in section 8(d) of the 

15 National Labor Relations Act (29 U.S.C. 158(d)) or 

16 paragraph Fourth of section 2 of the Railway Labor 

17 Act (45 U.S.C. 152, paragraph Fourth) or which are 

18 reached pursuant to labor-management negotiations 

19 under similar provisions of State public employee re20 lations laws; or 

21 ‘‘(3) being a plan or arrangement described in 

22 section 3(40)(A)(i), 

23 shall, upon conviction, be imprisoned not more than 5 

24 years, be fined under title 18, United States Code, or 

25 both.’’. 


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1 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

2 such Act (29 U.S.C. 1132) is amended by adding at the 

3 end the following new subsection: 

4 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE-AND-DE5 SIST ORDERS.— 

6 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

7 upon application by the Secretary showing the oper8 ation, promotion, or marketing of an association 

9 health plan (or similar arrangement providing bene10 fits consisting of medical care (as defined in section 

11 733(a)(2))) that— 

12 ‘‘(A) is not certified under part 8, is sub13 ject under section 514(b)(6) to the insurance 

14 laws of any State in which the plan or arrange15 ment offers or provides benefits, and is not li16 censed, registered, or otherwise approved under 

17 the insurance laws of such State; or 

18 ‘‘(B) is an association health plan certified 

19 under part 8 and is not operating in accordance 

20 with the requirements under part 8 for such 

21 certification, 

22 a district court of the United States shall enter an 

23 order requiring that the plan or arrangement cease 

24 activities. 


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1 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

2 apply in the case of an association health plan or 

3 other arrangement if the plan or arrangement shows 

4 that— 

5 ‘‘(A) all benefits under it referred to in 

6 paragraph (1) consist of health insurance cov7 erage; and 

8 ‘‘(B) with respect to each State in which 

9 the plan or arrangement offers or provides ben10 efits, the plan or arrangement is operating in 

11 accordance with applicable State laws that are 

12 not superseded under section 514. 

13 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

14 court may grant such additional equitable relief, in15 cluding any relief available under this title, as it 

16 deems necessary to protect the interests of the pub17 lic and of persons having claims for benefits against 

18 the plan.’’. 

19 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

20 Section 503 of such Act (29 U.S.C. 1133) is amended by 

21 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 

22 and by adding at the end the following new subsection: 

23 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

24 each association health plan which is or has been certified 

25 under part 8 shall require the board of trustees or the 


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1 named fiduciary (as applicable) to ensure that the require2 ments of this section are met in connection with claims 

3 filed under the plan.’’. 

4 SEC. 504. COOPERATION BETWEEN FEDERAL AND STATE 

5 AUTHORITIES. 

6 Section 506 of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

8 at the end the following new subsection: 

9 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

10 TO ASSOCIATION HEALTH PLANS.— 

11 ‘‘(1) AGREEMENTS WITH STATES.—The Sec12 retary shall consult with the State recognized under 

13 paragraph (2) with respect to an association health 

14 plan regarding the exercise of— 

15 ‘‘(A) the Secretary’s authority under sec16 tions 502 and 504 to enforce the requirements 

17 for certification under part 8; and 

18 ‘‘(B) the Secretary’s authority to certify 

19 association health plans under part 8 in accord20 ance with regulations of the Secretary applica21 ble to certification under part 8. 

22 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

23 STATE.—In carrying out paragraph (1), the Sec24 retary shall ensure that only one State will be recog25 nized, with respect to any particular association 


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1 health plan, as the State with which consultation is 

2 required. In carrying out this paragraph— 

3 ‘‘(A) in the case of a plan which provides 

4 health insurance coverage (as defined in section 

5 812(a)(3)), such State shall be the State with 

6 which filing and approval of a policy type of7 fered by the plan was initially obtained, and 

8 ‘‘(B) in any other case, the Secretary shall 

9 take into account the places of residence of the 

10 participants and beneficiaries under the plan 

11 and the State in which the trust is main12 tained.’’. 

13 SEC. 505. EFFECTIVE DATE AND TRANSITIONAL AND 

14 OTHER RULES. 

15 (a) EFFECTIVE DATE.—The amendments made by 

16 this title shall take effect 1 year after the date of the en17 actment of this Act. The Secretary of Labor shall first 

18 issue all regulations necessary to carry out the amend19 ments made by this title within 1 year after the date of 

20 the enactment of this Act. 

21 (b) TREATMENT OF CERTAIN EXISTING HEALTH

22 BENEFITS PROGRAMS.— 

23 (1) IN GENERAL.—In any case in which, as of 

24 the date of the enactment of this Act, an arrange25 ment is maintained in a State for the purpose of 


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1 providing benefits consisting of medical care for the 

2 employees and beneficiaries of its participating em3 ployers, at least 200 participating employers make 

4 contributions to such arrangement, such arrange5 ment has been in existence for at least 10 years, and 

6 such arrangement is licensed under the laws of one 

7 or more States to provide such benefits to its par8 ticipating employers, upon the filing with the appli9 cable authority (as defined in section 812(a)(5) of 

10 the Employee Retirement Income Security Act of 

11 1974 (as amended by this title)) by the arrangement 

12 of an application for certification of the arrangement 

13 under part 8 of subtitle B of title I of such Act— 

14 (A) such arrangement shall be deemed to 

15 be a group health plan for purposes of title I 

16 of such Act; 

17 (B) the requirements of sections 801(a) 

18 and 803(a) of the Employee Retirement Income 

19 Security Act of 1974 shall be deemed met with 

20 respect to such arrangement; 

21 (C) the requirements of section 803(b) of 

22 such Act shall be deemed met, if the arrange23 ment is operated by a board of directors 

24 which— 


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1 (i) is elected by the participating em2 ployers, with each employer having one 

3 vote; and 

4 (ii) has complete fiscal control over 

5 the arrangement and which is responsible 

6 for all operations of the arrangement; 

7 (D) the requirements of section 804(a) of 

8 such Act shall be deemed met with respect to 

9 such arrangement; and 

10 (E) the arrangement may be certified by 

11 any applicable authority with respect to its op12 erations in any State only if it operates in such 

13 State on the date of certification. 

14 The provisions of this subsection shall cease to apply 

15 with respect to any such arrangement at such time 

16 after the date of the enactment of this Act as the 

17 applicable requirements of this subsection are not 

18 met with respect to such arrangement. 

19 (2) DEFINITIONS.—For purposes of this sub20 section, the terms ‘‘group health plan’’, ‘‘medical 

21 care’’, and ‘‘participating employer’’ shall have the 

22 meanings provided in section 812 of the Employee 

23 Retirement Income Security Act of 1974, except 

24 that the reference in paragraph (7) of such section 

25 to an ‘‘association health plan’’ shall be deemed a 


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1 reference to an arrangement referred to in this sub2 section. 

Æ 


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