I

107TH CONGRESS

1ST SESSION H. R. 1331

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance, and to establish State health insurance safety-net programs.

IN THE HOUSE OF REPRESENTATIVES

APRIL 3, 2001

Mr. ARMEY (for himself, Mr. LIPINSKI, Mr. CANNON, Mr. FORD, Mr.

BONILLA, Mr. BLAGOJEVICH, Mr. BALLENGER, Mrs. BONO, Mr. BUYER,

Mr. CANTOR, Mrs. JO ANN DAVIS of Virginia, Mr. TOM DAVIS of Virginia, Mr. FOSSELLA, Mr. GILLMOR, Ms. HART, Mr. HOSTETTLER, Mr.

ISAKSON, Mr. KOLBE, Mr. MCHUGH, Ms. PRYCE of Ohio, Mr. REHBERG,

Mr. ROGERS of Michigan, Mr. SENSENBRENNER, Mr. SMITH of New Jersey, and Mr. TANCREDO) introduced the following bill; which was referred

to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined

by the Speaker, in each case for consideration of such provisions as fall

within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the

purchase of private health insurance, and to establish

State health insurance safety-net programs.

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

2 This Act may be cited as the ‘‘Fair Care for the Un3 insured Act of 2001’’.

4 TITLE I—REFUNDABLE CREDIT

5 FOR HEALTH INSURANCE

6 COVERAGE

7 SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE

8 COVERAGE.

9 (a) IN GENERAL.—Subpart C of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of

11 1986 (relating to refundable credits) is amended by redes12 ignating section 35 as section 36 and by inserting after

13 section 34 the following new section:

14 ‘‘SEC. 35. HEALTH INSURANCE COSTS.

15 ‘‘(a) IN GENERAL.—In the case of an individual,

16 there shall be allowed as a credit against the tax imposed

17 by this subtitle an amount equal to the amount paid dur18 ing the taxable year for qualified health insurance for the

19 taxpayer, his spouse, and dependents.

20 ‘‘(b) LIMITATIONS.—

21 ‘‘(1) IN GENERAL.—The amount allowed as a

22 credit under subsection (a) to the taxpayer for the

23 taxable year shall not exceed the sum of the monthly

24 limitations for coverage months during such taxable

25 year for each individual referred to in subsection (a)

26 for whom the taxpayer paid during the taxable year
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1 any amount for coverage under qualified health in2 surance.

3 ‘‘(2) MONTHLY LIMITATION.—

4 ‘‘(A) IN GENERAL.—The monthly limita5 tion for an individual for each coverage month

6 of such individual during the taxable year is the

7 amount equal to 1/12 of—

8 ‘‘(i) $1,000 if such individual is the

9 taxpayer,

10 ‘‘(ii) $1,000 if—

11 ‘‘(I) such individual is the spouse

12 of the taxpayer,

13 ‘‘(II) the taxpayer and such

14 spouse are married as of the first day

15 of such month, and

16 ‘‘(III) the taxpayer files a joint

17 return for the taxable year, and

18 ‘‘(iii) $500 if such individual is an in19 dividual for whom a deduction under sec20 tion 151(c) is allowable to the taxpayer for

21 such taxable year.

22 ‘‘(B) LIMITATION TO 2 DEPENDENTS.—

23 Not more than 2 individuals may be taken into

24 account by the taxpayer under subparagraph

25 (A)(iii).
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1 ‘‘(C) SPECIAL RULE FOR MARRIED INDI2 VIDUALS.—In the case of an individual—

3 ‘‘(i) who is married (within the mean4 ing of section 7703) as of the close of the

5 taxable year but does not file a joint return

6 for such year, and

7 ‘‘(ii) who does not live apart from

8 such individual’s spouse at all times during

9 the taxable year,

10 the limitation imposed by subparagraph (B)

11 shall be divided equally between the individual

12 and the individual’s spouse unless they agree on

13 a different division.

14 ‘‘(3) COVERAGE MONTH.—For purposes of this

15 subsection—

16 ‘‘(A) IN GENERAL.—The term ‘coverage

17 month’ means, with respect to an individual,

18 any month if—

19 ‘‘(i) as of the first day of such month

20 such individual is covered by qualified

21 health insurance, and

22 ‘‘(ii) the premium for coverage under

23 such insurance for such month is paid by

24 the taxpayer.
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1 ‘‘(B) EMPLOYER-SUBSIDIZED COV2 ERAGE.—

3 ‘‘(i) IN GENERAL.—Such term shall

4 not include any month for which such indi5 vidual is eligible to participate in any sub6 sidized health plan (within the meaning of

7 section 162(l)(2)) maintained by any em8 ployer of the taxpayer or of the spouse of

9 the taxpayer.

10 ‘‘(ii) PREMIUMS TO NONSUBSIDIZED

11 PLANS.—If an employer of the taxpayer or

12 the spouse of the taxpayer maintains a

13 health plan which is not a subsidized

14 health plan (as so defined) and which con15 stitutes qualified health insurance, em16 ployee contributions to the plan shall be

17 treated as amounts paid for qualified

18 health insurance.

19 ‘‘(C) CAFETERIA PLAN AND FLEXIBLE

20 SPENDING ACCOUNT BENEFICIARIES.—Such

21 term shall not include any month during a tax22 able year if any amount is not includible in the

23 gross income of the taxpayer for such year

24 under section 106 with respect to—
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1 ‘‘(i) a benefit chosen under a cafeteria

2 plan (as defined in section 125(d)), or

3 ‘‘(ii) a benefit provided under a flexi4 ble spending or similar arrangement.

5 ‘‘(D) MEDICARE AND MEDICAID.—Such

6 term shall not include any month with respect

7 to an individual if, as of the first day of such

8 month, such individual—

9 ‘‘(i) is entitled to any benefits under

10 title XVIII of the Social Security Act, or

11 ‘‘(ii) is a participant in the program

12 under title XIX or XXI of such Act.

13 ‘‘(E) CERTAIN OTHER COVERAGE.—Such

14 term shall not include any month during a tax15 able year with respect to an individual if, at any

16 time during such year, any benefit is provided

17 to such individual under—

18 ‘‘(i) chapter 89 of title 5, United

19 States Code,

20 ‘‘(ii) chapter 55 of title 10, United

21 States Code,

22 ‘‘(iii) chapter 17 of title 38, United

23 States Code, or

24 ‘‘(iv) any medical care program under

25 the Indian Health Care Improvement Act.
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1 ‘‘(F) PRISONERS.—Such term shall not in2 clude any month with respect to an individual

3 if, as of the first day of such month, such indi4 vidual is imprisoned under Federal, State, or

5 local authority.

6 ‘‘(G) INSUFFICIENT PRESENCE IN UNITED

7 STATES.—Such term shall not include any

8 month during a taxable year with respect to an

9 individual if such individual is present in the

10 United States on fewer than 183 days during

11 such year (determined in accordance with sec12 tion 7701(b)(7)).

13 ‘‘(4) COORDINATION WITH DEDUCTION FOR

14 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN15 DIVIDUALS.—In the case of a taxpayer who is eligi16 ble to deduct any amount under section 162(l) for

17 the taxable year, this section shall apply only if the

18 taxpayer elects not to claim any amount as a deduc19 tion under such section for such year.

20 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur21 poses of this section—

22 ‘‘(1) IN GENERAL.—The term ‘qualified health

23 insurance’ means insurance which constitutes med24 ical care as defined in section 213(d) without regard

25 to—
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1 ‘‘(A) paragraph (1)(C) thereof, and

2 ‘‘(B) so much of paragraph (1)(D) thereof

3 as relates to qualified long-term care insurance

4 contracts.

5 ‘‘(2) EXCLUSION OF CERTAIN OTHER CON6 TRACTS.—Such term shall not include insurance if a

7 substantial portion of its benefits are excepted bene8 fits (as defined in section 9832(c)).

9 ‘‘(d) MEDICAL SAVINGS ACCOUNT CONTRIBU10 TIONS.—

11 ‘‘(1) IN GENERAL.—If a deduction would (but

12 for paragraph (2)) be allowed under section 220 to

13 the taxpayer for a payment for the taxable year to

14 the medical savings account of an individual, sub15 section (a) shall be applied by treating such payment

16 as a payment for qualified health insurance for such

17 individual.

18 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc19 tion shall be allowed under section 220 for that por20 tion of the payments otherwise allowable as a deduc21 tion under section 220 for the taxable year which is

22 equal to the amount of credit allowed for such tax23 able year by reason of this subsection.

24 ‘‘(e) SPECIAL RULES.—
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1 ‘‘(1) COORDINATION WITH MEDICAL EXPENSE

2 DEDUCTION.—The amount which would (but for this

3 paragraph) be taken into account by the taxpayer

4 under section 213 for the taxable year shall be re5 duced by the credit (if any) allowed by this section

6 to the taxpayer for such year.

7 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No

8 credit shall be allowed under this section to any indi9 vidual with respect to whom a deduction under sec10 tion 151 is allowable to another taxpayer for a tax11 able year beginning in the calendar year in which

12 such individual’s taxable year begins.

13 ‘‘(3) INFLATION ADJUSTMENT.—In the case of

14 any taxable year beginning in a calendar year after

15 2002, each dollar amount contained in subsection

16 (b)(2)(A) shall be increased by an amount equal

17 to—

18 ‘‘(A) such dollar amount, multiplied by

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for the calendar

21 year in which the taxable year begins, deter22 mined by substituting ‘calendar year 2001’ for

23 ‘calendar year 1992’ in subparagraph (B)

24 thereof.
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1 Any increase determined under the preceding sen2 tence shall be rounded to the nearest multiple of $50

3 ($25 in the case of the dollar amount in subsection

4 (b)(2)(A)(iii)).’’

5 (b) MAINTENANCE OF EFFORT REQUIREMENT.—

6 Section 162 of such Code (relating to trade or business

7 expenses) is amended by redesignating subsection (p) as

8 subsection (q) and by inserting after subsection (o) the

9 following new subsection:

10 ‘‘(p) GROUP HEALTH PLAN MAINTENANCE OF EF11 FORT.—No deduction shall be allowed under this chapter

12 to an employer for any amount paid or incurred in connec13 tion with a group health plan (as defined in subsection

14 (n)(3)) for any taxable year in which occurs the date of

15 introduction of the Fair Care for the Uninsured Act of

16 2001 unless such plan remains in effect for at least 60

17 months after the date of the enactment of such Act.’’.

18 (c) INFORMATION REPORTING.—

19 (1) IN GENERAL.—Subpart B of part III of

20 subchapter A of chapter 61 of such Code (relating

21 to information concerning transactions with other

22 persons) is amended by inserting after section

23 6050S the following new section:
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1 ‘‘SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR

2 QUALIFIED HEALTH INSURANCE.

3 ‘‘(a) IN GENERAL.—Any person who, in connection

4 with a trade or business conducted by such person, re5 ceives payments during any calendar year from any indi6 vidual for coverage of such individual or any other indi7 vidual under creditable health insurance, shall make the

8 return described in subsection (b) (at such time as the

9 Secretary may by regulations prescribe) with respect to

10 each individual from whom such payments were received.

11 ‘‘(b) FORM AND MANNER OF RETURNS.—A return

12 is described in this subsection if such return—

13 ‘‘(1) is in such form as the Secretary may pre14 scribe, and

15 ‘‘(2) contains—

16 ‘‘(A) the name, address, and TIN of the

17 individual from whom payments described in

18 subsection (a) were received,

19 ‘‘(B) the name, address, and TIN of each

20 individual who was provided by such person

21 with coverage under creditable health insurance

22 by reason of such payments and the period of

23 such coverage, and

24 ‘‘(C) such other information as the Sec25 retary may reasonably prescribe.
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1 ‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur2 poses of this section, the term ‘creditable health insurance’

3 means qualified health insurance (as defined in section

4 35(c)) other than—

5 ‘‘(1) insurance under a subsidized group health

6 plan maintained by an employer, or

7 ‘‘(2) to the extent provided in regulations pre8 scribed by the Secretary, any other insurance cov9 ering an individual if no credit is allowable under

10 section 35 with respect to such coverage.

11 ‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID12 UALS WITH RESPECT TO WHOM INFORMATION IS RE13 QUIRED.—Every person required to make a return under

14 subsection (a) shall furnish to each individual whose name

15 is required under subsection (b)(2)(A) to be set forth in

16 such return a written statement showing—

17 ‘‘(1) the name and address of the person re18 quired to make such return and the phone number

19 of the information contact for such person,

20 ‘‘(2) the aggregate amount of payments de21 scribed in subsection (a) received by the person re22 quired to make such return from the individual to

23 whom the statement is required to be furnished, and

24 ‘‘(3) the information required under subsection

25 (b)(2)(B) with respect to such payments.
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1 The written statement required under the preceding sen2 tence shall be furnished on or before January 31 of the

3 year following the calendar year for which the return

4 under subsection (a) is required to be made.

5 ‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE

6 MADE BY 2 OR MORE PERSONS.—Except to the extent

7 provided in regulations prescribed by the Secretary, in the

8 case of any amount received by any person on behalf of

9 another person, only the person first receiving such

10 amount shall be required to make the return under sub11 section (a).’’.

12 (2) ASSESSABLE PENALTIES.—

13 (A) Subparagraph (B) of section

14 6724(d)(1) of such Code (relating to defini15 tions) is amended by redesignating clauses (xi)

16 through (xvii) as clauses (xii) through (xviii),

17 respectively, and by inserting after clause (x)

18 the following new clause:

19 ‘‘(xi) section 6050T (relating to re20 turns relating to payments for qualified

21 health insurance),’’.

22 (B) Paragraph (2) of section 6724(d) of

23 such Code is amended by striking ‘‘or’’ at the

24 end of the next to last subparagraph, by strik25 ing the period at the end of the last subpara-
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1 graph and inserting ‘‘, or’’, and by adding at

2 the end the following new subparagraph:

3 ‘‘(BB) section 6050T(d) (relating to re4 turns relating to payments for qualified health

5 insurance).’’.

6 (3) CLERICAL AMENDMENT.—The table of sec7 tions for subpart B of part III of subchapter A of

8 chapter 61 of such Code is amended by inserting

9 after the item relating to section 6050S the fol10 lowing new item:

‘‘Sec. 6050T. Returns relating to payments for qualified health

insurance.’’.

11 (d) CONFORMING AMENDMENTS.—

12 (1) Paragraph (2) of section 1324(b) of title

13 31, United States Code, is amended by inserting be14 fore the period ‘‘, or from section 35 of such Code’’.

15 (2) The table of sections for subpart C of part

16 IV of subchapter A of chapter 1 of such Code is

17 amended by striking the last item and inserting the

18 following new items:

‘‘Sec. 35. Health insurance costs.

‘‘Sec. 36. Overpayments of tax.’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2001.
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1 SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PUR2 CHASERS OF QUALIFIED HEALTH INSUR3 ANCE.

4 (a) IN GENERAL.—Chapter 77 of the Internal Rev5 enue Code of 1986 (relating to miscellaneous provisions)

6 is amended by adding at the end the following new section:

7 ‘‘SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE

8 CREDIT FOR PURCHASERS OF QUALIFIED

9 HEALTH INSURANCE.

10 ‘‘(a) GENERAL RULE.—In the case of an eligible indi11 vidual, the Secretary shall make payments to the provider

12 of such individual’s qualified health insurance equal to

13 such individual’s qualified health insurance credit advance

14 amount with respect to such provider.

15 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this

16 section, the term ‘eligible individual’ means any

17 individual—

18 ‘‘(1) who purchases qualified health insurance

19 (as defined in section 35(c)), and

20 ‘‘(2) for whom a qualified health insurance

21 credit eligibility certificate is in effect.

22 ‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI23 BILITY CERTIFICATE.—For purposes of this section, a

24 qualified health insurance credit eligibility certificate is a

25 statement furnished by an individual to the Secretary

26 which—
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1 ‘‘(1) certifies that the individual will be eligible

2 to receive the credit provided by section 35 for the

3 taxable year,

4 ‘‘(2) estimates the amount of such credit for

5 such taxable year, and

6 ‘‘(3) provides such other information as the

7 Secretary may require for purposes of this section.

8 ‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD9 VANCE AMOUNT.—For purposes of this section, the term

10 ‘qualified health insurance credit advance amount’ means,

11 with respect to any provider of qualified health insurance,

12 the Secretary’s estimate of the amount of credit allowable

13 under section 35 to the individual for the taxable year

14 which is attributable to the insurance provided to the indi15 vidual by such provider.

16 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be necessary to carry out the pur18 poses of this section.’’.

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for chapter 77 of such Code is amended by adding at the

21 end the following new item:

‘‘Sec. 7527. Advance payment of health insurance credit for purchasers of qualified health insurance.’’.

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

23 this section shall take effect on January 1, 2002.
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1 TITLE II—ASSURING HEALTH IN2 SURANCE COVERAGE FOR UN3 INSURABLE INDIVIDUALS

4 SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY

5 NETS.

6 (a) IN GENERAL.—

7 (1) REQUIREMENT.—For years beginning with

8 2002, each health insurer, health maintenance orga9 nization, and health service organization shall be a

10 participant in a health insurance safety net (in this

11 title referred to as a ‘‘safety net’’) established by the

12 State in which it operates.

13 (2) FUNCTIONS.—Any safety net shall assure,

14 in accordance with this title, the availability of quali15 fied health insurance coverage to uninsurable indi16 viduals.

17 (3) FUNDING.—Any safety net shall be funded

18 by an assessment against health insurers, health

19 service organizations, and health maintenance orga20 nizations on a pro rata basis of premiums collected

21 in the State in which the safety net operates. The

22 costs of the assessment may be added by a health

23 insurer, health service organization, or health main24 tenance organization to the costs of its health insur25 ance or health coverage provided in the State.
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1 (4) GUARANTEED RENEWABLE.—Coverage

2 under a safety net shall be guaranteed renewable ex3 cept for nonpayment of premiums, material mis4 representation, fraud, medicare eligibility under title

5 XVIII of the Social Security Act (42 U.S.C. 1395 et

6 seq.), loss of dependent status, or eligibility for other

7 health insurance coverage.

8 (5) COMPLIANCE WITH NAIC MODEL ACT.—In

9 the case of a State that has not established, as of

10 the date of the enactment of this Act, a high risk

11 pool or other comprehensive health insurance pro12 gram that assures the availability of qualified health

13 insurance coverage to all eligible individuals residing

14 in the State, a safety net shall be established in ac15 cordance with the requirements of the ‘‘Model

16 Health Plan For Uninsurable Individuals Act’’ (or

17 the successor model Act), as adopted by the Na18 tional Association of Insurance Commissioners and

19 as in effect on the date of the safety net’s establish20 ment.

21 (b) DEADLINE.—Safety nets required under sub22 section (a) shall be established not later than January 1,

23 2002.

24 (c) WAIVER.—This title shall not apply in the case

25 of insurers and organizations operating in a State if the
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1 State has established a similar comprehensive health in2 surance program that assures the availability of qualified

3 health insurance coverage to all eligible individuals resid4 ing in the State.

5 (d) RECOMMENDATION FOR COMPLIANCE REQUIRE6 MENT.—Not later than January 1, 2003, the Secretary

7 of Health and Human Services shall submit to Congress

8 a recommendation on appropriate sanctions for States

9 that fail to meet the requirement of subsection (a).

10 SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COV11 ERAGE.

12 (a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DE13 FINED.—In this title:

14 (1) UNINSURABLE INDIVIDUAL.—The term

15 ‘‘uninsurable individual’’ means, with respect to a

16 State, an eligible individual who presents proof of

17 uninsurability by a private insurer in accordance

18 with subsection (b) or proof of a condition previously

19 recognized as uninsurable by the State.

20 (2) ELIGIBLE INDIVIDUAL.—

21 (A) IN GENERAL.—The term ‘‘eligible indi22 vidual’’ means, with respect to a State, a citizen

23 or national of the United States (or an alien

24 lawfully admitted for permanent residence) who

25 is a resident of the State for at least 90 days
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1 and includes any dependent (as defined for pur2 poses of the Internal Revenue Code of 1986)

3 of such a citizen, national, or alien who also is

4 such a resident.

5 (B) EXCEPTION.—An individual is not an

6 ‘‘eligible individual’’ if the individual—

7 (i) is covered by or eligible for benefits

8 under a State medicaid plan approved

9 under title XIX of the Social Security Act

10 (42 U.S.C. 1396 et seq.),

11 (ii) has voluntarily terminated safety

12 net coverage within the past 6 months,

13 (iii) has received the maximum benefit

14 payable under the safety net,

15 (iv) is an inmate in a public institu16 tion, or

17 (v) is eligible for other public or pri18 vate health care programs (including pro19 grams that pay for directly, or reimburse,

20 otherwise eligible individuals with pre21 miums charged for safety net coverage).

22 (b) PROOF OF UNINSURABILITY.—

23 (1) IN GENERAL.—The proof of uninsurability

24 for an individual shall be in the form of—
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1 (A) a notice of rejection or refusal to issue

2 substantially similar health insurance for health

3 reasons by one insurer; or

4 (B) a notice of refusal by an insurer to

5 issue substantially similar health insurance ex6 cept at a rate in excess of the rate applicable

7 to the individual under the safety net plan.

8 For purposes of this paragraph, the term ‘‘health in9 surance’’ does not include insurance consisting only

10 of stoploss, excess of loss, or reinsurance coverage.

11 (2) EXCEPTION FOR INDIVIDUALS WITH UNIN12 SURABLE CONDITIONS.—The State shall promulgate

13 a list of medical or health conditions for which an

14 individual shall be eligible for safety net plan cov15 erage without applying for health insurance or estab16 lishing proof of uninsurability under paragraph (1).

17 Individuals who can demonstrate the existence or

18 history of any medical or health conditions on such

19 list shall not be required to provide the proof de20 scribed in paragraph (1). The list shall be effective

21 on the first day of the operation of the safety net

22 plan and may be amended from time to time as may

23 be appropriate.
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1 SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE

2 UNDER SAFETY NET.

3 In this title, the term ‘‘qualified health insurance cov4 erage’’ means, with respect to a State, health insurance

5 coverage that provides benefits typical of major medical

6 insurance available in the individual health insurance mar7 ket in such State.

8 SEC. 204. FUNDING OF SAFETY NET.

9 (a) LIMITATIONS ON PREMIUMS.—

10 (1) IN GENERAL.—The premium established

11 under a safety net may not exceed 125 percent of

12 the applicable standard risk rate, except as provided

13 in paragraph (2).

14 (2) SURCHARGE FOR AVOIDABLE HEALTH

15 RISKS.—A safety net may impose a surcharge on

16 premiums for individuals with avoidable high risks,

17 such as smoking.

18 (b) ADDITIONAL FUNDING.—A safety net shall pro19 vide for additional funding through an assessment on all

20 health insurers, health service organizations, and health

21 maintenance organizations in the State through a non22 profit association consisting of all such insurers and orga23 nizations doing business in the State on an equitable and

24 pro rata basis consistent with section 201.
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1 SEC. 205. ADMINISTRATION.

2 A safety net in a State shall be administered through

3 a contract with 1 or more insurers or third party adminis4 trators operating in the State.

5 SEC. 206. AUTHORIZATION OF APPROPRIATIONS.

6 There are authorized to be appropriated such sums

7 as may be necessary to reimburse States for their costs

8 in administering this title.

9 TITLE III—INDIVIDUAL

10 MEMBERSHIP ASSOCIATIONS

11 SEC. 301. EXPANSION OF ACCESS AND CHOICE THROUGH

12 INDIVIDUAL MEMBERSHIP ASSOCIATIONS

13 (IMAs).

14 The Public Health Service Act is amended by adding

15 at the end the following new title:

16 ‘‘TITLE XXVIII—INDIVIDUAL MEMBERSHIP

17 ASSOCIATIONS

18 ‘‘SEC. 2801. DEFINITION OF INDIVIDUAL MEMBERSHIP AS19 SOCIATION (IMA).

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

21 terms ‘individual membership association’ and ‘IMA’

22 mean a legal entity that meets the following requirements:

23 ‘‘(1) ORGANIZATION.—The IMA is an organiza24 tion operated under the direction of an association

25 (as defined in section 2804(1)).
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1 ‘‘(2) OFFERING HEALTH BENEFITS COV2 ERAGE.—

3 ‘‘(A) DIFFERENT GROUPS.—The IMA, in

4 conjunction with those health insurance issuers

5 that offer health benefits coverage through the

6 IMA, makes available health benefits coverage

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

8 members of the IMA and the dependents of

9 such members in the manner described in sub10 section (c)(2) at rates that are established by

11 the health insurance issuer on a policy or prod12 uct specific basis and that may vary only as

13 permissible under State law.

14 ‘‘(B) NONDISCRIMINATION IN COVERAGE

15 OFFERED.—

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

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

18 coverage to a member of an IMA unless

19 the same coverage is offered to all such

20 members of the IMA.

21 ‘‘(ii) CONSTRUCTION.—Nothing in

22 this title shall be construed as requiring or

23 permitting a health insurance issuer to

24 provide coverage outside the service area of

25 the issuer, as approved under State law, or
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1 preventing a health insurance issuer from

2 excluding or limiting the coverage on any

3 individual, subject to the requirement of

4 section 2741.

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

6 IMA provides health benefits coverage only

7 through contracts with health insurance issuers

8 and does not assume insurance risk with re9 spect to such coverage.

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

11 shall be construed as preventing the establishment

12 and operation of more than one IMA in a geographic

13 area or as limiting the number of IMAs that may

14 operate in any area.

15 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

16 TO PURCHASERS.—

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

18 administrative services for members. Such serv19 ices may include accounting, billing, and enroll20 ment information.

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

22 subsection shall be construed as preventing an

23 IMA from serving as an administrative service

24 organization to any entity.
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1 ‘‘(5) FILING INFORMATION.—The IMA files

2 with the Secretary information that demonstrates

3 the IMA’s compliance with the applicable require4 ments of this title.

5 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE6 MENTS.—

7 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC8 TION REQUIREMENTS.—Any health benefits coverage

9 offered through an IMA shall—

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

11 issuer that—

12 ‘‘(i) is licensed (or otherwise regu13 lated) under State law,

14 ‘‘(ii) meets all applicable State stand15 ards relating to consumer protection, sub16 ject to section 2802(2), and

17 ‘‘(iii) offers the coverage under a con18 tract with the IMA; and

19 ‘‘(B) subject to paragraph (2) and section

20 2902(2), be approved or otherwise permitted to

21 be offered under State law.

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

23 benefits coverage made available through an IMA

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

2 of this title:

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

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

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

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

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

12 contribution into a medical savings account or

13 flexible spending account.

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

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

17 coverage.

18 ‘‘(3) HEALTH INSURANCE COVERAGE OP19 TIONS.—An IMA shall include a minimum of 2

20 health insurance coverage options. At least 1 option

21 shall meet all applicable State benefit mandates.

22 ‘‘(4) WELLNESS BONUSES FOR HEALTH PRO23 MOTION.—Nothing in this title shall be construed as

24 precluding a health insurance issuer offering health

25 benefits coverage through an IMA from establishing
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1 premium discounts or rebates for members or from

2 modifying otherwise applicable copayments or

3 deductibles in return for adherence to programs of

4 health promotion and disease prevention so long as

5 such programs are agreed to in advance by the IMA

6 and comply with all other provisions of this title and

7 do not discriminate among similarly situated mem8 bers.

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

10 ‘‘(1) MEMBERS.—

11 ‘‘(A) IN GENERAL.—Under rules estab12 lished to carry out this title, with respect to an

13 individual who is a member of an IMA, the in14 dividual may apply for health benefits coverage

15 (including coverage for dependents of such indi16 vidual) offered by a health insurance issuer

17 through the IMA.

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

19 in this paragraph shall preclude an IMA from

20 establishing rules of enrollment and reenroll21 ment of members. Such rules shall be applied

22 consistently to all members within the IMA and

23 shall not be based in any manner on health sta24 tus-related factors.
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1 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con2 tract between an IMA and a health insurance issuer

3 shall provide, with respect to a member enrolled with

4 health benefits coverage offered by the issuer

5 through the IMA, for the payment of the premiums

6 collected by the issuer.

7 ‘‘SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIRE8 MENTS.

9 ‘‘State laws insofar as they relate to any of the fol10 lowing are superseded and shall not apply to health bene11 fits coverage made available through an IMA:

12 ‘‘(1) Benefit requirements for health benefits

13 coverage offered through an IMA, including (but not

14 limited to) requirements relating to coverage of spe15 cific providers, specific services or conditions, or the

16 amount, duration, or scope of benefits, but not in17 cluding requirements to the extent required to imple18 ment title XXVII or other Federal law and to the

19 extent the requirement prohibits an exclusion of a

20 specific disease from such coverage.

21 ‘‘(2) Any other requirements (including limita22 tions on compensation arrangements) that, directly

23 or indirectly, preclude (or have the effect of pre24 cluding) the offering of such coverage through an
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1 IMA, if the IMA meets the requirements of this

2 title.

3 Any State law or regulation relating to the composition

4 or organization of an IMA is preempted to the extent the

5 law or regulation is inconsistent with the provisions of this

6 title.

7 ‘‘SEC. 2803. ADMINISTRATION.

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

9 this title and is authorized to issue such regulations as

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

11 shall be subject to Congressional review under the provi12 sions of chapter 8 of title 5, United States Code. The Sec13 retary shall incorporate the process of ‘deemed file and

14 use’ with respect to the information filed under section

15 2801(a)(5)(A) and shall determine whether information

16 filed by an IMA demonstrates compliance with the applica17 ble requirements of this title. The Secretary shall exercise

18 authority under this title in a manner that fosters and

19 promotes the development of IMAs in order to improve

20 access to health care coverage and services.

21 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub22 mit to Congress a report every 30 months, during the 10-

23 year period beginning on the effective date of the rules

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

25 the effectiveness of this title in promoting coverage of un-
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1 insured individuals. The Secretary may provide for the

2 production of such reports through one or more contracts

3 with appropriate private entities.

4 ‘‘SEC. 2804. DEFINITIONS.

5 ‘‘For purposes of this title:

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

7 means, with respect to health insurance coverage of8 fered in a State, an association which—

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

10 least 5 years;

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

12 good faith for purposes other than obtaining in13 surance;

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

15 association on any health status-related factor

16 relating to an individual (including an employee

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

18 and

19 ‘‘(D) does not make health insurance cov20 erage offered through the association available

21 other than in connection with a member of the

22 association.

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

24 applied to health insurance coverage offered by a

25 health insurance issuer licensed (or otherwise regu-
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1 lated) in a State, shall have the meaning applied to

2 such term with respect to such coverage under the

3 laws of the State relating to such coverage and such

4 an issuer. Such term may include the spouse and

5 children of the individual involved.

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

7 ‘health benefits coverage’ has the meaning given the

8 term health insurance coverage in section

9 2791(b)(1).

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

11 ‘health insurance issuer’ has the meaning given such

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

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

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

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

16 ‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA17 TION.—The terms ‘IMA’ and ‘individual membership

18 association’ are defined in section 2801(a).

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

20 with respect to an IMA, an individual who is a mem21 ber of the association to which the IMA is offering

22 coverage.’’.

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