Sec. 708. Alternate spending reduction legislation in the House of Representa-
tives. 
Sec. 709. Alternate spending reduction legislation in the Senate. 
Sec. 710. General provisions. 
Sec. 711. Effective date. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds as follows: 
(1) The social insurance strategies of the past 
century, which sprang from the New Deal, expanded 
in the Great Society, and continue to dominate the 
terms of public debate, are headed toward collapse. 
(2) Although Americans remain committed to 
the missions of these initiatives, the goals can no 
longer be met on models created nearly 80 years 
ago—with large, centralized institutions, especially 
government, serving as sole providers for an increas-
ingly dependent population. 
(3) The failure of this approach will not occur 
immediately, it will unfold over the next several dec-
ades, becoming more intractable with each suc-
ceeding year; but it is inevitable, and policies in 
place right now, today, are leading inexorably toward 
it. 
(4) Among the inescapable signs are the fol-
lowing: an unsustainable path of Government spend-
ing; levels of projected debt that threaten to bank-
rupt the country; trillions of dollars of unfunded li-
abilities in the Government’s major benefit pro-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
grams; and the erosion of Americans’ security and 
confidence in health care and retirement. 
(5) These conditions pose significant potential 
burdens not only for the Government, but for the 
United States economy as well, threatening its abil-
ity to continue raising standards of living, and its 
leadership in an increasingly international market-
place. 
(6) A comprehensive plan is needed, and this 
legislation aims to energize the productive capacities 
of Americans to generate sustained economic 
growth. 
(b) PURPOSE.—The purpose of this Act is as follows: 
(1) HEALTH CARE REFORM.—To provide access 
to health care coverage to 47 million uninsured 
Americans by establishing a new tax credit; to re-
form health insurance markets, high-risk pools, and 
electronic health records; and to create a new agency 
to promote the dissemination of industry-defined 
health care price and quality data. 
(2) MEDICAID
AND
SCHIP
REFORM.—To im-
prove health care coverage for those who need it 
most by establishing a new option for States’ Med-
icaid and SCHIP programs. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
(3) MEDICARE REFORM.—To ensure the Medi-
care benefit continues to provide health care cov-
erage for seniors by establishing a new methodology 
to make the program solvent and fiscally sustain-
able. 
(4) SOCIAL SECURITY REFORM.—To reform so-
cial security to ensure retirement security for future 
generations and to make it solvent for the foresee-
able future; to address inequities in the system and 
provide millions of Americans with the opportunity 
to build a retirement nest egg that they can pass on 
to their heirs. 
(5) INDIVIDUAL
INCOME
TAX
REFORM.—To 
offer taxpayers a choice in paying their Federal in-
come taxes; to allow individuals to choose between 
the current tax code or a highly simplified tax sys-
tem with virtually no deductions or credits (apart 
from an individual health care credit), two low tax 
rates and a generous standard deduction and per-
sonal exemption; to fully repeal the alternative min-
imum tax (AMT), eliminate the tax on interest, cap-
ital gains and dividends in order to promote saving; 
and to repeal the estate tax. 
(6) BUSINESS TAX REFORM.—To eliminate the 
United States. corporate income tax and establishes 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
a border-adjustable business consumption tax in its 
place; to provide a new method of business taxation 
that will level the playing field for United States 
businesses to compete with foreign businesses and 
will promote sustained economic growth, investment 
and job creation in America. 
(7) BUDGET PROCESS.—To keep total spending 
of the Government under control, a limit on total 
outlays as a percentage of the gross domestic 
produce is established; and enforced by automatic 
spending controls if it is exceeded. 
TITLE I—HEALTH CARE REFORM 
Subtitle A—Tax Changes 
SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE 
COVERAGE. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by redes-
ignating section 36 as section 37 and by inserting after 
section 35 the following new section: 
‘‘SEC. 36. QUALIFIED HEALTH INSURANCE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year the sum of 
the monthly limitations determined under subsection (b) 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
for the taxpayer and the taxpayer’s spouse and depend-
ents. 
‘‘(b) MONTHLY LIMITATION.— 
‘‘(1) IN GENERAL.—The monthly limitation for 
each month during the taxable year for an eligible 
individual is 1⁄12th of— 
‘‘(A) the applicable adult amount, in the 
case that the eligible individual is the taxpayer 
or the taxpayer’s spouse, 
‘‘(B) the applicable adult amount, in the 
case that the eligible individual is an adult de-
pendent, and 
‘‘(C) the applicable child amount, in the 
case that the eligible individual is a child de-
pendent. 
‘‘(2) LIMITATION ON AGGREGATE AMOUNT.— 
Notwithstanding paragraph (1), the aggregate 
monthly limitations for the taxpayer and the tax-
payer’s spouse and dependents for any month shall 
not exceed 1⁄12th of the applicable aggregate amount. 
‘‘(3) NO CREDIT FOR INELIGIBLE MONTHS.— 
With respect to any individual, the monthly limita-
tion shall be zero for any month for which such indi-
vidual is not an eligible individual. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
vidual is not a participant or beneficiary in a 
group health plan or large group health plan 
that is a primary plan (as defined in section 
1862(b)(2)(A) of such Act), 
‘‘(B) in the case of a State that has not 
made 
the 
election 
described 
in 
section 
1939(a)(1)(B) of the Social Security Act, en-
rolled in the program under title XIX of such 
Act (other than under section 1928 of such 
Act), or 
‘‘(C) entitled to benefits under chapter 55 
of title 10, United States Code. 
‘‘(3) IDENTIFICATION
REQUIREMENTS.—The 
term ‘eligible individual’ shall not include any indi-
vidual for any month unless the policy number asso-
ciated with the qualified refund eligible health insur-
ance and the TIN of each eligible individual covered 
under such health insurance for such month are in-
cluded on the return of tax for the taxable year in 
which such month occurs. 
‘‘(4) PRISONERS.—The term ‘eligible individual’ 
shall not include any individual for a month if, as 
of the first day of such month, such individual is im-
prisoned under Federal, State, or local authority. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(5) ALIENS.—The term ‘eligible individual’ 
shall not include any alien individual for a month if, 
as of the first day of such month, such individual is 
not a lawful permanent resident of the United 
States. 
‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section, the term ‘qualified health insurance’ 
means any insurance constituting medical care which (as 
determined under regulations prescribed by the Secretary) 
provides coverage for inpatient and outpatient care, emer-
gency benefits, and physician care. Such term does not 
include any insurance substantially all of the coverage of 
which is coverage described in section 223(c)(1)(B). 
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) DEPENDENT.—The term ‘dependent’ has 
the meaning given such term by section 152 (deter-
mined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof). An individual who is a child 
to whom section 152(e) applies shall be treated as 
a dependent of the custodial parent for a coverage 
month unless the custodial and noncustodial parent 
agree otherwise. 
‘‘(2) ADULT.—The term ‘adult’ means an indi-
vidual who is not a child. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(3) CHILD.—The term ‘child’ means a quali-
fying child (as defined in section 152(c)). 
‘‘(g) SPECIAL RULES.— 
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be 
taken into account in computing the amount allow-
able to the taxpayer as a credit under section 35 or 
as a deduction under section 213(a). 
‘‘(2) MEDICAL
AND
HEALTH
SAVINGS
AC-
COUNTS.—The credit allowed under subsection (a) 
for any taxable year shall be reduced by the aggre-
gate amount distributed from Archer MSAs (as de-
fined in section 220(d)) and health savings accounts 
(as defined in section 223(d)) which are excludable 
from gross income for such taxable years by reason 
of being used to pay premiums for coverage of an 
eligible individual (as defined in section 25E(e)) 
under qualified health insurance (as defined in sec-
tion 25E(f)) for any month. 
‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
able year beginning in the calendar year in which 
such individual’s taxable year begins. 
‘‘(4) MARRIED COUPLES MUST FILE JOINT RE-
TURN.— 
‘‘(A) IN
GENERAL.—If the taxpayer is 
married at the close of the taxable year, the 
credit shall be allowed under subsection (a) only 
if the taxpayer and his spouse file a joint return 
for the taxable year. 
‘‘(B) MARITAL STATUS; CERTAIN MARRIED 
INDIVIDUALS LIVING APART.—Rules similar to 
the rules of paragraphs (3) and (4) of section 
21(e) shall apply for purposes of this para-
graph. 
‘‘(5) VERIFICATION
OF
COVERAGE, ETC.—No 
credit shall be allowed under this section with re-
spect to any individual unless such individual’s cov-
erage (and such related information as the Secretary 
may require) is verified in such manner as the Sec-
retary may prescribe. 
‘‘(6) INSURANCE WHICH COVERS OTHER INDI-
VIDUALS; TREATMENT OF PAYMENTS.—Rules similar 
to the rules of paragraphs (7) and (8) of section 
35(g) shall apply for purposes of this section. 
‘‘(h) COORDINATION WITH ADVANCE PAYMENTS.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) REDUCTION IN CREDIT FOR ADVANCE PAY-
MENTS.—With respect to any taxable year, the 
amount which would (but for this subsection) be al-
lowed as a credit to the taxpayer under subsection 
(a) shall be reduced (but not below zero) by the ag-
gregate amount paid on behalf of such taxpayer 
under section 7527A for months beginning in such 
taxable year. 
‘‘(2) RECAPTURE
OF
EXCESS
ADVANCE
PAY-
MENTS.—If the aggregate amount paid on behalf of 
the taxpayer under section 7527A for months begin-
ning in the taxable year exceeds the sum of the 
monthly limitations determined under subsection (b) 
for the taxpayer and the taxpayer’s spouse and de-
pendents for such months, then the tax imposed by 
this chapter for such taxable year shall be increased 
by the sum of— 
‘‘(A) such excess, plus 
‘‘(B) interest on such excess determined at 
the underpayment rate established under sec-
tion 6621 for the period from the date of the 
payment under section 7527A to the date such 
excess is paid. 
For purposes of subparagraph (B), an equal part of 
the aggregate amount of the excess shall be deemed 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
to be attributable to payments made under section 
7527A on the first day of each month beginning in 
such taxable year, unless the taxpayer establishes 
the date on which each such payment giving rise to 
such excess occurred, in which case subparagraph 
(B) shall be applied with respect to each date so es-
tablished. 
‘‘(i) ANNUAL INFLATION ADJUSTMENT.—In the case 
of any taxable year beginning in a calendar year after 
2009, each of the dollar amounts contained in subsection 
(c) shall be annually increased by the annual inflation ad-
justment determined under subparagraph (B) section 
1809(c)(2) of the Social Security Act for such calendar 
year. Any adjustment under the preceding sentence shall 
be rounded in the manner described in subparagraph (A) 
of such section.’’. 
(b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 
(relating to miscellaneous provisions) of such Code is 
amended by inserting after section 7527 the following new 
section: 
‘‘SEC. 7527A. ADVANCE PAYMENT OF QUALIFIED HEALTH 
INSURANCE CREDIT. 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
program for making payments on behalf of individuals to 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
providers of qualified health insurance (as defined in sec-
tion 36(f)) for such individuals. 
‘‘(b) LIMITATION.—The Secretary may make pay-
ments under subsection (a) only to the extent that the Sec-
retary determines that the amount of such payments made 
on behalf of any taxpayer for any month does not exceed 
the sum of the monthly limitations determined under sec-
tion 36 for the taxpayer and taxpayer’s spouse and de-
pendents for such month.’’. 
(c) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of such Code (relating 
to information concerning transactions with other 
persons) is amended by inserting after section 
6050V the following new section: 
‘‘SEC. 6050W. RETURNS RELATING TO QUALIFIED HEALTH 
INSURANCE CREDIT. 
‘‘(a) REQUIREMENT OF REPORTING.—Every person 
who is entitled to receive payments for any month of any 
calendar year under section 7527A (relating to advance 
payment of qualified health insurance credit) with respect 
to any individual shall, at such time as the Secretary may 
prescribe, make the return described in subsection (b) with 
respect to each such individual. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains, with respect to each individual 
referred to in subsection (a)— 
‘‘(A) the name, address, and TIN of each 
such individual, 
‘‘(B) the months for which amounts pay-
ments under section 7527A were received, 
‘‘(C) the amount of each such payment, 
‘‘(D) the type of insurance coverage pro-
vide by such person with respect to such indi-
vidual and the policy number associated with 
such coverage, 
‘‘(E) the name, address, and TIN of the 
spouse and each dependent covered under such 
coverage, and 
‘‘(F) such other information as the Sec-
retary may prescribe. 
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
is required to be set forth in such return a written state-
ment showing— 
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, and 
‘‘(2) the information required to be shown on 
the return with respect to such individual. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) is required to be made. 
‘‘(d) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of any amount received by any person on behalf of 
another person, only the person first receiving such 
amount shall be required to make the return under sub-
section (a).’’. 
(2) ASSESSABLE PENALTIES.— 
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) (relating to definitions) of such 
Code is amended by redesignating clauses (xv) 
through (xxi) as clauses (xvi) through (xxii), re-
spectively, and by inserting after clause (xiv) 
the following new clause: 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(xv) section 6050W (relating to re-
turns relating to qualified health insurance 
credit),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking the period at 
the end of subparagraph (CC) and inserting ‘‘, 
or’’ and by inserting after subparagraph (CC) 
the following new subparagraph: 
‘‘(DD) section 6050W (relating to returns 
relating to qualified health insurance credit).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘or 
36’’ after ‘‘section 35’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by redesignating the 
item relating to section 36 as an item relating to 
section 37 and by inserting after the item relating 
to section 35 the following new item: 
‘‘Sec. 36. Qualified health insurance credit.’’. 
(3) The table of sections for chapter 77 of such 
Code is amended by inserting after the item relating 
to section 7527 the following new item: 
‘‘Sec. 7527A. Advance payment of qualified health insurance credit.’’. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6211
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
(4) The table of sections for subpart B of part 
III of subchapter A of chapter 61 of such Code is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6050W. Returns relating to qualified health insurance credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 102. CHANGES TO EXISTING TAX PREFERENCES FOR 
MEDICAL COVERAGE, ETC., FOR INDIVIDUALS 
ELIGIBLE FOR QUALIFIED HEALTH INSUR-
ANCE CREDIT. 
(a) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER 
TO ACCIDENT AND HEALTH PLANS.— 
(1) IN GENERAL.—Section 106 of the Internal 
Revenue Code of 1986 (relating to contributions by 
employer to accident and health plans) is amended 
by adding at the end the following new subsection: 
‘‘(f) NO EXCLUSION
FOR INDIVIDUALS ELIGIBLE 
FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub-
section (a) shall not apply with respect to any employer- 
provided coverage under an accident or health plan for any 
individual for any month unless such individual is de-
scribed in paragraph (2) or (5) of section 36(e) for such 
month. The amount includible in gross income by reason 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
of this subsection shall be determined under rules similar 
to the rules of section 4980B(f)(4).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 106(b)(1) of such Code is 
amended— 
(i) by inserting ‘‘gross income does 
not include’’ before ‘‘amounts contrib-
uted’’, and 
(ii) by striking ‘‘shall be treated as 
employer-provided coverage for medical ex-
penses under an accident or health plan’’. 
(B) Section 106(d)(1) of such Code is 
amended— 
(i) by inserting ‘‘gross income does 
not include’’ before ‘‘amounts contrib-
uted’’, and 
(ii) by striking ‘‘shall be treated as 
employer-provided coverage for medical ex-
penses under an accident or health plan’’. 
(b) AMOUNTS RECEIVED UNDER ACCIDENT
AND 
HEALTH PLANS.— 
(1) IN GENERAL.—Section 105 of such Code 
(relating to amounts received under accident and 
health plans) is amended by adding at the end the 
following new subsection: 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(f) NO EXCLUSION
FOR INDIVIDUALS ELIGIBLE 
FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub-
section (b) shall not apply with respect to any employer- 
provided coverage under an accident or health plan for any 
individual for any month unless such individual is de-
scribed in paragraph (2) or (5) of section 36(e) for such 
month.’’. 
(c) SPECIAL RULES FOR HEALTH INSURANCE COSTS 
OF SELF-EMPLOYED INDIVIDUALS.—Subsection (l) of 
section 162 of such Code (relating to special rules for 
health insurance costs of self-employed individuals) is 
amended by adding at the end the following new para-
graph: 
‘‘(6) NO DEDUCTION TO INDIVIDUALS ELIGIBLE 
FOR
QUALIFIED
HEALTH
INSURANCE.—Paragraph 
(1) shall not apply for any individual for any month 
unless such individual is described in paragraph (2) 
or (5) of section 36(e) for such month.’’. 
(d) EARNED INCOME CREDIT UNAFFECTED BY RE-
PEALED
EXCLUSIONS.—Subparagraph (B) of section 
32(c)(2) of such Code is amended by redesignating clauses 
(v) and (vi) as clauses (vi) and (vii), respectively, and by 
inserting after clause (iv) the following new clause: 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(v) the earned income of an indi-
vidual shall be computed without regard to 
sections 105(f) and 106(f),’’. 
(e) MODIFICATION OF DEDUCTION FOR MEDICAL 
EXPENSES.—Subsection (d) of section 213 of such Code 
is amended by adding at the end the following new para-
graph: 
‘‘(12) PREMIUMS FOR QUALIFIED HEALTH IN-
SURANCE.—The term ‘medical care’ does not include 
any amount paid as a premium for coverage of an 
eligible individual (as defined in section 36(e)) under 
qualified health insurance (as defined in section 
36(f)) for any month.’’. 
(f) REPORTING REQUIREMENT.—Subsection (a) of 
section 6051 of such Code is amended by striking ‘‘and’’ 
at the end of paragraph (12), by striking the period at 
the end of paragraph (13) and inserting ‘‘and’’, and by 
inserting after paragraph (13) the following new para-
graph: 
‘‘(14) the total amount of employer-provided 
coverage under an accident or health plan which is 
includible in gross income by reason of sections 
105(f) and 106(f).’’. 
(g) RETIRED PUBLIC SAFETY OFFICERS.—Section 
402(l)(4)(D) of such Code is amended by adding at the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
end the following: ‘‘Such term shall not include any pre-
mium for coverage by an accident or health insurance plan 
for any month unless such individual is described in para-
graph (2) or (5) of section 36(e) for such month.’’. 
(h) EMPLOYER DEDUCTION AS TRADE OR BUSINESS 
EXPENSE UNAFFECTED.—For the allowance of a deduc-
tion for amounts paid or incurred by an employer for em-
ployee health benefits, see section 162 of the Internal Rev-
enue Code of 1986 (relating to trade or business ex-
penses). 
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Subtitle B—Health Plan Choice; 
Small Business Health Fairness 
SEC. 
111. 
COOPERATIVE 
GOVERNING 
OF 
INDIVIDUAL 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.) is amended by add-
ing at the end the following new part: 
‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means the 50 
States and includes the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
quests with reasonable explanations regarding 
their use. 
‘‘(K) Attempting to cancel a policy in less 
time than that prescribed in the policy or by the 
law of the primary State. 
‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 
and abuse’ means an act or omission committed by 
a person who, knowingly and with intent to defraud, 
commits, or conceals any material information con-
cerning, one or more of the following: 
‘‘(A) Presenting, causing to be presented 
or preparing with knowledge or belief that it 
will be presented to or by an insurer, a rein-
surer, broker or its agent, false information as 
part of, in support of or concerning a fact ma-
terial to one or more of the following: 
‘‘(i) An application for the issuance or 
renewal of an insurance policy or reinsur-
ance contract. 
‘‘(ii) The rating of an insurance policy 
or reinsurance contract. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(iii) A claim for payment or benefit 
pursuant to an insurance policy or reinsur-
ance contract. 
‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
‘‘(v) Payments made in accordance 
with the terms of an insurance policy or 
reinsurance contract. 
‘‘(vi) A document filed with the com-
missioner or the chief insurance regulatory 
official of another jurisdiction. 
‘‘(vii) The financial condition of an in-
surer or reinsurer. 
‘‘(viii) The formation, acquisition, 
merger, 
reconsolidation, 
dissolution 
or 
withdrawal from one or more lines of in-
surance or reinsurance in all or part of a 
State by an insurer or reinsurer. 
‘‘(ix) The issuance of written evidence 
of insurance. 
‘‘(x) The reinstatement of an insur-
ance policy. 
‘‘(B) Solicitation or acceptance of new or 
renewal insurance risks on behalf of an insurer 
reinsurer or other person engaged in the busi-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ness of insurance by a person who knows or 
should know that the insurer or other person 
responsible for the risk is insolvent at the time 
of the transaction. 
‘‘(C) Transaction of the business of insur-
ance in violation of laws requiring a license, cer-
tificate of authority or other legal authority for 
the transaction of the business of insurance. 
‘‘(D) Attempt to commit, aiding or abet-
ting in the commission of, or conspiracy to com-
mit the acts or omissions specified in this para-
graph. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by a health insurance issuer in the primary State 
and in any secondary State, but only if the coverage and 
issuer comply with the conditions of this section with re-
spect to the offering of coverage in any secondary State. 
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC-
ONDARY STATE.—Except as provided in this section, a 
health insurance issuer with respect to its offer, sale, rat-
ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
secondary State (and any rules, regulations, agreements, 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high risk pool assessments) which are levied on 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
by the National Association of Insurance 
Commissioners; and 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
health insurance issuer in the State is required 
to belong; 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
‘‘ ‘Notice 
‘‘ ‘This policy is issued by lllll and is 
governed by the laws and regulations of the 
State of lllll, and it has met all the laws 
of that State as determined by that State’s De-
partment of Insurance. This policy may be 
less expensive than others because it is not 
subject to all of the insurance laws and regu-
lations of the State of lllll, including 
coverage of some services or benefits man-
dated by the law of the State of lllll. Ad-
ditionally, this policy is not subject to all of 
the consumer protection laws or restrictions 
on rate changes of the State of lllll. As 
with all insurance products, before pur-
chasing this policy, you should carefully re-
view the policy and determine what health 
care services the policy covers and what bene-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
fits it provides, including any exclusions, limi-
tations, or conditions for such services or ben-
efits.’. 
‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
erage under this part in such secondary State which has 
not adopted a qualified high risk pool as its acceptable 
alternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
State if the State insurance commissioner does not use 
a risk-based capital formula for the determination of cap-
ital and surplus requirements for all health insurance 
issuers. 
‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES. 
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur-
ance issuer may not offer, sell, or issue individual health 
insurance coverage in a secondary State under the provi-
sions of this title unless— 
‘‘(1) both the secondary State and the primary 
State have legislation or regulations in place estab-
lishing an independent review process for individuals 
who are covered by individual health insurance cov-
erage, or 
‘‘(2) in any case in which the requirements of 
subparagraph (A) are not met with respect to the ei-
ther of such States, the issuer provides an inde-
pendent review mechanism substantially identical (as 
determined by the applicable State authority of such 
State) to that prescribed in the ‘Health Carrier Ex-
ternal Review Model Act’ of the National Association 
of Insurance Commissioners for all individuals who 
purchase insurance coverage under the terms of this 
part, except that, under such mechanism, the review 
VerDate Aug 31 2005 
20:34 May 24, 2008
Jkt 069200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
is conducted by an independent medical reviewer, or 
a panel of such reviewers, with respect to whom the 
requirements of subsection (b) are met. 
‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL 
REVIEWERS.—In the case of any independent review 
mechanism referred to in subsection (a)(2)— 
‘‘(1) IN GENERAL.—In referring a denial of a 
claim to an independent medical reviewer, or to any 
panel of such reviewers, to conduct independent 
medical review, the issuer shall ensure that— 
‘‘(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
‘‘(B) with respect to each review, each re-
viewer meets the requirements of paragraph (4) 
and the reviewer, or at least 1 reviewer on the 
panel, meets the requirements described in 
paragraph (5); and 
‘‘(C) compensation provided by the issuer 
to each reviewer is consistent with paragraph 
(6). 
‘‘(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician 
(allopathic or osteopathic) or health care profes-
sional who— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(A) is appropriately credentialed or li-
censed in 1 or more States to deliver health 
care services; and 
‘‘(B) typically treats the condition, makes 
the diagnosis, or provides the type of treatment 
under review. 
‘‘(3) INDEPENDENCE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each independent medical reviewer 
in a case shall— 
‘‘(i) not be a related party (as defined 
in paragraph (7)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party (as determined 
under regulations). 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to— 
‘‘(i) prohibit an individual, solely on 
the basis of affiliation with the issuer, 
from serving as an independent medical re-
viewer if— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(I) a non-affiliated individual is 
not reasonably available; 
‘‘(II) the affiliated individual is 
not involved in the provision of items 
or services in the case under review; 
‘‘(III) the fact of such an affili-
ation is disclosed to the issuer and the 
enrollee (or authorized representative) 
and neither party objects; and 
‘‘(IV) the affiliated individual is 
not an employee of the issuer and 
does not provide services exclusively or 
primarily to or on behalf of the issuer; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as an independent medical reviewer 
merely on the basis of such affiliation if 
the affiliation is disclosed to the issuer and 
the enrollee (or authorized representative), 
and neither party objects; or 
‘‘(iii) prohibit receipt of compensation 
by an independent medical reviewer from 
an entity if the compensation is provided 
consistent with paragraph (6). 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
nosis, or provides the type of treatment 
under review. 
‘‘(B) PRACTICING
DEFINED.—For pur-
poses of this paragraph, the term ‘practicing’ 
means, with respect to an individual who is a 
physician or other health care professional, that 
the individual provides health care services to 
individual patients on average at least 2 days 
per week. 
‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 
external review relating to a child, a reviewer shall 
have expertise under paragraph (2) in pediatrics. 
‘‘(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by the issuer to an 
independent medical reviewer in connection with a 
review under this section shall— 
‘‘(A) not exceed a reasonable level; and 
‘‘(B) not be contingent on the decision ren-
dered by the reviewer. 
‘‘(7) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with 
respect to a denial of a claim under a coverage relat-
ing to an enrollee, any of the following: 
‘‘(A) The issuer involved, or any fiduciary, 
officer, director, or employee of the issuer. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(B) The enrollee (or authorized represent-
ative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the denial 
are provided. 
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the denial. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the denial involved. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ENROLLEE.—The term ‘enrollee’ 
means, with respect to health insurance cov-
erage offered by a health insurance issuer, an 
individual enrolled with the issuer to receive 
such coverage. 
‘‘(B) HEALTH CARE PROFESSIONAL.—The 
term ‘health care professional’ means an indi-
vidual who is licensed, accredited, or certified 
under State law to provide specified health care 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
‘‘SEC. 2799. ENFORCEMENT. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
primary State for such coverage has sole jurisdiction to 
enforce the primary State’s covered laws in the primary 
State and any secondary State. 
‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 
subsection (a) shall be construed to affect the authority 
of a secondary State to enforce its laws as set forth in 
the exception specified in section 2796(b)(1). 
‘‘(c) COURT INTERPRETATION.—In reviewing action 
initiated by the applicable secondary State authority, the 
court of competent jurisdiction shall apply the covered 
laws of the primary State. 
‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 
of individual health insurance coverage offered in a sec-
ondary State that fails to comply with the covered laws 
of the primary State, the applicable State authority of the 
secondary State may notify the applicable State authority 
of the primary State.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individual health insurance 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
coverage offered, issued, or sold after the date that is one 
year after the date of the enactment of this Act. 
(c) GAO ONGOING STUDY AND REPORTS.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct an ongoing study con-
cerning the effect of the amendment made by sub-
section (a) on— 
(A) the number of uninsured and under-in-
sured; 
(B) the availability and cost of health in-
surance policies for individuals with pre-existing 
medical conditions; 
(C) the availability and cost of health in-
surance policies generally; 
(D) the elimination or reduction of dif-
ferent types of benefits under health insurance 
policies offered in different States; and 
(E) cases of fraud or abuse relating to 
health insurance coverage offered under such 
amendment and the resolution of such cases. 
(2) ANNUAL REPORTS.—The Comptroller Gen-
eral shall submit to Congress an annual report, after 
the end of each of the 5 years following the effective 
date of the amendment made by subsection (a), on 
the ongoing study conducted under paragraph (1). 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
(d) SEVERABILITY.—If any provision of this title or 
the application of such provision to any person or cir-
cumstance is held to be unconstitutional, the remainder 
of this title and the application of the provisions of such 
to any other person or circumstance shall not be affected. 
SEC. 112. SMALL BUSINESS HEALTH FAIRNESS. 
(a) RULES
GOVERNING
ASSOCIATION
HEALTH 
PLANS.— 
(1) IN GENERAL.—Subtitle B of title I of the 
Employee Retirement Income Security Act of 1974 
is amended by adding after part 7 the following new 
part: 
‘‘PART 8—RULES GOVERNING ASSOCIATION 
HEALTH PLANS 
‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 
‘‘(a) IN GENERAL.—For purposes of this part, the 
term ‘association health plan’ means a group health plan 
whose sponsor is (or is deemed under this part to be) de-
scribed in subsection (b). 
‘‘(b) SPONSORSHIP.—The sponsor of a group health 
plan is described in this subsection if such sponsor— 
‘‘(1) is organized and maintained in good faith, 
with a constitution and bylaws specifically stating its 
purpose and providing for periodic meetings on at 
least an annual basis, as a bona fide trade associa-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00052
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
tion, a bona fide industry association (including a 
rural electric cooperative association or a rural tele-
phone cooperative association), a bona fide profes-
sional association, or a bona fide chamber of com-
merce (or similar bona fide business association, in-
cluding a corporation or similar organization that 
operates on a cooperative basis (within the meaning 
of section 1381 of the Internal Revenue Code of 
1986)), for substantial purposes other than that of 
obtaining or providing medical care; 
‘‘(2) is established as a permanent entity which 
receives the active support of its members and re-
quires for membership payment on a periodic basis 
of dues or payments necessary to maintain eligibility 
for membership in the sponsor; and 
‘‘(3) does not condition membership, such dues 
or payments, or coverage under the plan on the 
basis of health status-related factors with respect to 
the employees of its members (or affiliated mem-
bers), or the dependents of such employees, and does 
not condition such dues or payments on the basis of 
group health plan participation. 
Any sponsor consisting of an association of entities which 
meet the requirements of paragraphs (1), (2), and (3) 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00053
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
shall be deemed to be a sponsor described in this sub-
section. 
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH 
PLANS. 
‘‘(a) IN GENERAL.—The applicable authority shall 
prescribe by regulation a procedure under which, subject 
to subsection (b), the applicable authority shall certify as-
sociation health plans which apply for certification as 
meeting the requirements of this part. 
‘‘(b) STANDARDS.—Under the procedure prescribed 
pursuant to subsection (a), in the case of an association 
health plan that provides at least one benefit option which 
does not consist of health insurance coverage, the applica-
ble authority shall certify such plan as meeting the re-
quirements of this part only if the applicable authority is 
satisfied that the applicable requirements of this part are 
met (or, upon the date on which the plan is to commence 
operations, will be met) with respect to the plan. 
‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED 
PLANS.—An association health plan with respect to which 
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date 
of certification (or, if later, on the date on which the plan 
is to commence operations). 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00054
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion for continued certification of association health plans 
under this part. 
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED 
PLANS.—The applicable authority shall establish a class 
certification procedure for association health plans under 
which all benefits consist of health insurance coverage. 
Under such procedure, the applicable authority shall pro-
vide for the granting of certification under this part to 
the plans in each class of such association health plans 
upon appropriate filing under such procedure in connec-
tion with plans in such class and payment of the pre-
scribed fee under section 807(a). 
‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION 
HEALTH PLANS.—An association health plan which offers 
one or more benefit options which do not consist of health 
insurance coverage may be certified under this part only 
if such plan consists of any of the following: 
‘‘(1) a plan which offered such coverage on the 
date of the enactment of this part, 
‘‘(2) a plan under which the sponsor does not 
restrict membership to one or more trades and busi-
nesses or industries and whose eligible participating 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00055
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
employers represent a broad cross-section of trades 
and businesses or industries, or 
‘‘(3) a plan whose eligible participating employ-
ers represent one or more trades or businesses, or 
one or more industries, consisting of any of the fol-
lowing: agriculture; equipment and automobile deal-
erships; barbering and cosmetology; certified public 
accounting practices; child care; construction; dance, 
theatrical and orchestra productions; disinfecting 
and pest control; financial services; fishing; food 
service establishments; hospitals; labor organiza-
tions; logging; manufacturing (metals); mining; med-
ical and dental practices; medical laboratories; pro-
fessional consulting services; sanitary services; trans-
portation (local and freight); warehousing; whole-
saling/distributing; or any other trade or business or 
industry which has been indicated as having average 
or above-average risk or health claims experience by 
reason of State rate filings, denials of coverage, pro-
posed premium rate levels, or other means dem-
onstrated by such plan in accordance with regula-
tions. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00056
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 
BOARDS OF TRUSTEES. 
‘‘(a) SPONSOR.—The requirements of this subsection 
are met with respect to an association health plan if the 
sponsor has met (or is deemed under this part to have 
met) the requirements of section 801(b) for a continuous 
period of not less than 3 years ending with the date of 
the application for certification under this part. 
‘‘(b) BOARD OF TRUSTEES.—The requirements of 
this subsection are met with respect to an association 
health plan if the following requirements are met: 
‘‘(1) FISCAL CONTROL.—The plan is operated, 
pursuant to a trust agreement, by a board of trust-
ees which has complete fiscal control over the plan 
and which is responsible for all operations of the 
plan. 
‘‘(2) RULES
OF
OPERATION
AND
FINANCIAL 
CONTROLS.—The board of trustees has in effect 
rules of operation and financial controls, based on a 
3-year plan of operation, adequate to carry out the 
terms of the plan and to meet all requirements of 
this title applicable to the plan. 
‘‘(3) RULES
GOVERNING
RELATIONSHIP
TO 
PARTICIPATING
EMPLOYERS
AND
TO
CONTRAC-
TORS.— 
‘‘(A) BOARD MEMBERSHIP.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00057
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (ii) and (iii), the members 
of the board of trustees are individuals se-
lected from individuals who are the owners, 
officers, directors, or employees of the par-
ticipating employers or who are partners in 
the participating employers and actively 
participate in the business. 
‘‘(ii) LIMITATION.— 
‘‘(I) GENERAL RULE.—Except as 
provided in subclauses (II) and (III), 
no such member is an owner, officer, 
director, or employee of, or partner in, 
a contract administrator or other 
service provider to the plan. 
‘‘(II) LIMITED
EXCEPTION
FOR 
PROVIDERS OF SERVICES SOLELY ON 
BEHALF OF THE SPONSOR.—Officers 
or employees of a sponsor which is a 
service provider (other than a contract 
administrator) to the plan may be 
members of the board if they con-
stitute not more than 25 percent of 
the membership of the board and they 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00058
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
do not provide services to the plan 
other than on behalf of the sponsor. 
‘‘(III) 
TREATMENT
OF
PRO-
VIDERS
OF
MEDICAL
CARE.—In the 
case of a sponsor which is an associa-
tion whose membership consists pri-
marily of providers of medical care, 
subclause (I) shall not apply in the 
case of any service provider described 
in subclause (I) who is a provider of 
medical care under the plan. 
‘‘(iii) CERTAIN
PLANS
EXCLUDED.— 
Clause (i) shall not apply to an association 
health plan which is in existence on the 
date of the enactment of this part. 
‘‘(B) SOLE
AUTHORITY.—The board has 
sole authority under the plan to approve appli-
cations for participation in the plan and to con-
tract with a service provider to administer the 
day-to-day affairs of the plan. 
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 
the case of a group health plan which is established and 
maintained by a franchiser for a franchise network con-
sisting of its franchisees— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00059
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) the affiliated member was an affiliated 
member on the date of certification under this part; 
or 
‘‘(2) during the 12-month period preceding the 
date of the offering of such coverage, the affiliated 
member has not maintained or contributed to a 
group health plan with respect to any of its employ-
ees who would otherwise be eligible to participate in 
such association health plan. 
‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to an 
association health plan if, under the terms of the plan, 
no participating employer may provide health insurance 
coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer 
under the plan, if such exclusion of the employee from cov-
erage under the plan is based on a health status-related 
factor with respect to the employee and such employee 
would, but for such exclusion on such basis, be eligible 
for coverage under the plan. 
‘‘(d) PROHIBITION
OF DISCRIMINATION AGAINST 
EMPLOYERS
AND EMPLOYEES ELIGIBLE TO PARTICI-
PATE.—The requirements of this subsection are met with 
respect to an association health plan if— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00062
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) under the terms of the plan, all employers 
meeting the preceding requirements of this section 
are eligible to qualify as participating employers for 
all geographically available coverage options, unless, 
in the case of any such employer, participation or 
contribution requirements of the type referred to in 
section 2711 of the Public Health Service Act are 
not met; 
‘‘(2) upon request, any employer eligible to par-
ticipate is furnished information regarding all cov-
erage options available under the plan; and 
‘‘(3) the applicable requirements of sections 
701, 702, and 703 are met with respect to the plan. 
‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 
DOCUMENTS, CONTRIBUTION RATES, AND 
BENEFIT OPTIONS. 
‘‘(a) IN GENERAL.—The requirements of this section 
are met with respect to an association health plan if the 
following requirements are met: 
‘‘(1) 
CONTENTS
OF
GOVERNING
INSTRU-
MENTS.—The instruments governing the plan in-
clude a written instrument, meeting the require-
ments of an instrument required under section 
402(a)(1), which— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00063
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(A) provides that the board of trustees 
serves as the named fiduciary required for plans 
under section 402(a)(1) and serves in the ca-
pacity of a plan administrator (referred to in 
section 3(16)(A)); 
‘‘(B) provides that the sponsor of the plan 
is to serve as plan sponsor (referred to in sec-
tion 3(16)(B)); and 
‘‘(C) incorporates the requirements of sec-
tion 806. 
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.— 
‘‘(A) The contribution rates for any par-
ticipating small employer do not vary on the 
basis of any health status-related factor in rela-
tion to employees of such employer or their 
beneficiaries and do not vary on the basis of the 
type of business or industry in which such em-
ployer is engaged. 
‘‘(B) Nothing in this title or any other pro-
vision of law shall be construed to preclude an 
association health plan, or a health insurance 
issuer offering health insurance coverage in 
connection with an association health plan, 
from— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00064
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(i) setting contribution rates based 
on the claims experience of the plan; or 
‘‘(ii) varying contribution rates for 
small employers in a State to the extent 
that such rates could vary using the same 
methodology employed in such State for 
regulating premium rates in the small 
group market with respect to health insur-
ance coverage offered in connection with 
bona fide associations (within the meaning 
of section 2791(d)(3) of the Public Health 
Service Act), 
subject to the requirements of section 702(b) 
relating to contribution rates. 
‘‘(3) FLOOR FOR NUMBER OF COVERED INDI-
VIDUALS
WITH
RESPECT
TO
CERTAIN
PLANS.—If 
any benefit option under the plan does not consist 
of health insurance coverage, the plan has as of the 
beginning of the plan year not fewer than 1,000 par-
ticipants and beneficiaries. 
‘‘(4) MARKETING REQUIREMENTS.— 
‘‘(A) IN
GENERAL.—If a benefit option 
which consists of health insurance coverage is 
offered under the plan, State-licensed insurance 
agents shall be used to distribute to small em-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00065
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ployers coverage which does not consist of 
health insurance coverage in a manner com-
parable to the manner in which such agents are 
used to distribute health insurance coverage. 
‘‘(B) 
STATE-LICENSED
INSURANCE 
AGENTS.—For purposes of subparagraph (A), 
the term ‘State-licensed insurance agents’ 
means one or more agents who are licensed in 
a State and are subject to the laws of such 
State relating to licensure, qualification, test-
ing, examination, and continuing education of 
persons authorized to offer, sell, or solicit 
health insurance coverage in such State. 
‘‘(5) 
REGULATORY
REQUIREMENTS.—Such 
other requirements as the applicable authority deter-
mines are necessary to carry out the purposes of this 
part, which shall be prescribed by the applicable au-
thority by regulation. 
‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO 
DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 
nothing in this part or any provision of State law (as de-
fined in section 514(c)(1)) shall be construed to preclude 
an association health plan, or a health insurance issuer 
offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00066
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
in selecting the specific items and services consisting of 
medical care to be included as benefits under such plan 
or coverage, except (subject to section 514) in the case 
of (1) any law to the extent that it is not preempted under 
section 731(a)(1) with respect to matters governed by sec-
tion 711, 712, or 713, or (2) any law of the State with 
which filing and approval of a policy type offered by the 
plan was initially obtained to the extent that such law pro-
hibits an exclusion of a specific disease from such cov-
erage. 
‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 
FOR 
SOLVENCY 
FOR 
PLANS 
PROVIDING 
HEALTH BENEFITS IN ADDITION TO HEALTH 
INSURANCE COVERAGE. 
‘‘(a) IN GENERAL.—The requirements of this section 
are met with respect to an association health plan if— 
‘‘(1) the benefits under the plan consist solely 
of health insurance coverage; or 
‘‘(2) if the plan provides any additional benefit 
options which do not consist of health insurance cov-
erage, the plan— 
‘‘(A) establishes and maintains reserves 
with respect to such additional benefit options, 
in amounts recommended by the qualified actu-
ary, consisting of— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00067
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(i) a reserve sufficient for unearned 
contributions; 
‘‘(ii) a reserve sufficient for benefit li-
abilities which have been incurred, which 
have not been satisfied, and for which risk 
of loss has not yet been transferred, and 
for expected administrative costs with re-
spect to such benefit liabilities; 
‘‘(iii) a reserve sufficient for any other 
obligations of the plan; and 
‘‘(iv) a reserve sufficient for a margin 
of error and other fluctuations, taking into 
account the specific circumstances of the 
plan; and 
‘‘(B) establishes and maintains aggregate 
and specific excess/stop loss insurance and sol-
vency indemnification, with respect to such ad-
ditional benefit options for which risk of loss 
has not yet been transferred, as follows: 
‘‘(i) The plan shall secure aggregate 
excess/stop loss insurance for the plan with 
an attachment point which is not greater 
than 125 percent of expected gross annual 
claims. The applicable authority may by 
regulation provide for upward adjustments 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00068
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
in the amount of such percentage in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
serves in excess of the amounts required 
under subparagraph (A). 
‘‘(ii) The plan shall secure specific ex-
cess/stop loss insurance for the plan with 
an attachment point which is at least equal 
to an amount recommended by the plan’s 
qualified actuary. The applicable authority 
may by regulation provide for adjustments 
in the amount of such insurance in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
serves in excess of the amounts required 
under subparagraph (A). 
‘‘(iii) The plan shall secure indem-
nification insurance for any claims which 
the plan is unable to satisfy by reason of 
a plan termination. 
Any person issuing to a plan insurance described in clause 
(i), (ii), or (iii) of subparagraph (B) shall notify the Sec-
retary of any failure of premium payment meriting can-
cellation of the policy prior to undertaking such a cancella-
tion. Any regulations prescribed by the applicable author-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00069
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ity pursuant to clause (i) or (ii) of subparagraph (B) may 
allow for such adjustments in the required levels of excess/ 
stop loss insurance as the qualified actuary may rec-
ommend, taking into account the specific circumstances 
of the plan. 
‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS 
RESERVES.—In the case of any association health plan de-
scribed in subsection (a)(2), the requirements of this sub-
section are met if the plan establishes and maintains sur-
plus in an amount at least equal to— 
‘‘(1) $500,000, or 
‘‘(2) such greater amount (but not greater than 
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority, considering the 
level of aggregate and specific excess/stop loss insur-
ance provided with respect to such plan and other 
factors related to solvency risk, such as the plan’s 
projected levels of participation or claims, the nature 
of the plan’s liabilities, and the types of assets avail-
able to assure that such liabilities are met. 
‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 
any association health plan described in subsection (a)(2), 
the applicable authority may provide such additional re-
quirements relating to reserves, excess/stop loss insurance, 
and indemnification insurance as the applicable authority 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00070
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
considers appropriate. Such requirements may be provided 
by regulation with respect to any such plan or any class 
of such plans. 
‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR-
ANCE.—The applicable authority may provide for adjust-
ments to the levels of reserves otherwise required under 
subsections (a) and (b) with respect to any plan or class 
of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans. 
‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 
applicable authority may permit an association health plan 
described in subsection (a)(2) to substitute, for all or part 
of the requirements of this section (except subsection 
(a)(2)(B)(iii)), such security, guarantee, hold-harmless ar-
rangement, or other financial arrangement as the applica-
ble authority determines to be adequate to enable the plan 
to fully meet all its financial obligations on a timely basis 
and is otherwise no less protective of the interests of par-
ticipants and beneficiaries than the requirements for 
which it is substituted. The applicable authority may take 
into account, for purposes of this subsection, evidence pro-
vided by the plan or sponsor which demonstrates an as-
sumption of liability with respect to the plan. Such evi-
dence may be in the form of a contract of indemnification, 
lien, bonding, insurance, letter of credit, recourse under 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00071
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
applicable terms of the plan in the form of assessments 
of participating employers, security, or other financial ar-
rangement. 
‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT 
OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 
‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO-
CIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—In the case of an as-
sociation health plan described in subsection 
(a)(2), the requirements of this subsection are 
met if the plan makes payments into the Asso-
ciation Health Plan Fund under this subpara-
graph when they are due. Such payments shall 
consist of annual payments in the amount of 
$5,000, and, in addition to such annual pay-
ments, such supplemental payments as the Sec-
retary may determine to be necessary under 
paragraph (2). Payments under this paragraph 
are payable to the Fund at the time determined 
by the Secretary. Initial payments are due in 
advance of certification under this part. Pay-
ments shall continue to accrue until a plan’s as-
sets are distributed pursuant to a termination 
procedure. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00072
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(B) PENALTIES FOR FAILURE TO MAKE 
PAYMENTS.—If any payment is not made by a 
plan when it is due, a late payment charge of 
not more than 100 percent of the payment 
which was not timely paid shall be payable by 
the plan to the Fund. 
‘‘(C) CONTINUED
DUTY
OF
THE
SEC-
RETARY.—The Secretary shall not cease to 
carry out the provisions of paragraph (2) on ac-
count of the failure of a plan to pay any pay-
ment when due. 
‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE 
EXCESS/STOP LOSS INSURANCE COVERAGE AND IN-
DEMNIFICATION
INSURANCE
COVERAGE
FOR
CER-
TAIN PLANS.—In any case in which the applicable 
authority determines that there is, or that there is 
reason to believe that there will be: (A) a failure to 
take necessary corrective actions under section 
809(a) with respect to an association health plan de-
scribed in subsection (a)(2); or (B) a termination of 
such a plan under section 809(b) or 810(b)(8) (and, 
if the applicable authority is not the Secretary, cer-
tifies such determination to the Secretary), the Sec-
retary shall determine the amounts necessary to 
make payments to an insurer (designated by the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00073
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
Secretary) to maintain in force excess/stop loss in-
surance coverage or indemnification insurance cov-
erage for such plan, if the Secretary determines that 
there is a reasonable expectation that, without such 
payments, claims would not be satisfied by reason of 
termination of such coverage. The Secretary shall, to 
the extent provided in advance in appropriation 
Acts, pay such amounts so determined to the insurer 
designated by the Secretary. 
‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—There is established 
on the books of the Treasury a fund to be 
known as the ‘Association Health Plan Fund’. 
The Fund shall be available for making pay-
ments pursuant to paragraph (2). The Fund 
shall be credited with payments received pursu-
ant to paragraph (1)(A), penalties received pur-
suant to paragraph (1)(B); and earnings on in-
vestments of amounts of the Fund under sub-
paragraph (B). 
‘‘(B) INVESTMENT.—Whenever the Sec-
retary determines that the moneys of the fund 
are in excess of current needs, the Secretary 
may request the investment of such amounts as 
the Secretary determines advisable by the Sec-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00074
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
retary of the Treasury in obligations issued or 
guaranteed by the United States. 
‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 
of this section— 
‘‘(1) AGGREGATE
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘aggregate excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
ment to the plan with respect to aggregate 
claims under the plan in excess of an amount 
or amounts specified in such contract; 
‘‘(B) which is guaranteed renewable; and 
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(2) SPECIFIC
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘specific excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00075
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ment to the plan with respect to claims under 
the plan in connection with a covered individual 
in excess of an amount or amounts specified in 
such contract in connection with such covered 
individual; 
‘‘(B) which is guaranteed renewable; and 
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 
of this section, the term ‘indemnification insurance’ 
means, in connection with an association health plan, a 
contract— 
‘‘(1) under which an insurer (meeting such min-
imum standards as the applicable authority may pre-
scribe by regulation) provides for payment to the 
plan with respect to claims under the plan which the 
plan is unable to satisfy by reason of a termination 
pursuant to section 809(b) (relating to mandatory 
termination); 
‘‘(2) which is guaranteed renewable and 
noncancellable for any reason (except as the applica-
ble authority may prescribe by regulation); and 
‘‘(3) which allows for payment of premiums by 
any third party on behalf of the insured plan. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00076
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(i) RESERVES.—For purposes of this section, the 
term ‘reserves’ means, in connection with an association 
health plan, plan assets which meet the fiduciary stand-
ards under part 4 and such additional requirements re-
garding liquidity as the applicable authority may prescribe 
by regulation. 
‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 
‘‘(1) IN GENERAL.—Within 90 days after the 
date of the enactment of this part, the applicable au-
thority shall establish a Solvency Standards Working 
Group. In prescribing the initial regulations under 
this section, the applicable authority shall take into 
account the recommendations of such Working 
Group. 
‘‘(2) MEMBERSHIP.—The Working Group shall 
consist of not more than 15 members appointed by 
the applicable authority. The applicable authority 
shall include among persons invited to membership 
on the Working Group at least one of each of the 
following: 
‘‘(A) a representative of the National Asso-
ciation of Insurance Commissioners; 
‘‘(B) a representative of the American 
Academy of Actuaries; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00077
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(C) a representative of the State govern-
ments, or their interests; 
‘‘(D) a representative of existing self-in-
sured arrangements, or their interests; 
‘‘(E) a representative of associations of the 
type referred to in section 801(b)(1), or their 
interests; and 
‘‘(F) a representative of multiemployer 
plans that are group health plans, or their in-
terests. 
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS. 
‘‘(a) FILING FEE.—Under the procedure prescribed 
pursuant to section 802(a), an association health plan 
shall pay to the applicable authority at the time of filing 
an application for certification under this part a filing fee 
in the amount of $5,000, which shall be available in the 
case of the Secretary, to the extent provided in appropria-
tion Acts, for the sole purpose of administering the certifi-
cation procedures applicable with respect to association 
health plans. 
‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA-
TION FOR CERTIFICATION.—An application for certifi-
cation under this part meets the requirements of this sec-
tion only if it includes, in a manner and form which shall 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00078
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
be prescribed by the applicable authority by regulation, at 
least the following information: 
‘‘(1) IDENTIFYING INFORMATION.—The names 
and addresses of— 
‘‘(A) the sponsor; and 
‘‘(B) the members of the board of trustees 
of the plan. 
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO 
BUSINESS.—The States in which participants and 
beneficiaries under the plan are to be located and 
the number of them expected to be located in each 
such State. 
‘‘(3) BONDING REQUIREMENTS.—Evidence pro-
vided by the board of trustees that the bonding re-
quirements of section 412 will be met as of the date 
of the application or (if later) commencement of op-
erations. 
‘‘(4) PLAN DOCUMENTS.—A copy of the docu-
ments governing the plan (including any bylaws and 
trust agreements), the summary plan description, 
and other material describing the benefits that will 
be provided to participants and beneficiaries under 
the plan. 
‘‘(5) 
AGREEMENTS
WITH
SERVICE
PRO-
VIDERS.—A copy of any agreements between the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00079
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
plan and contract administrators and other service 
providers. 
‘‘(6) FUNDING REPORT.—In the case of asso-
ciation health plans providing benefits options in ad-
dition to health insurance coverage, a report setting 
forth information with respect to such additional 
benefit options determined as of a date within the 
120-day period ending with the date of the applica-
tion, including the following: 
‘‘(A) RESERVES.—A statement, certified 
by the board of trustees of the plan, and a 
statement of actuarial opinion, signed by a 
qualified actuary, that all applicable require-
ments of section 806 are or will be met in ac-
cordance with regulations which the applicable 
authority shall prescribe. 
‘‘(B) 
ADEQUACY
OF
CONTRIBUTION 
RATES.—A statement of actuarial opinion, 
signed by a qualified actuary, which sets forth 
a description of the extent to which contribution 
rates are adequate to provide for the payment 
of all obligations and the maintenance of re-
quired reserves under the plan for the 12- 
month period beginning with such date within 
such 120-day period, taking into account the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00080
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
expected coverage and experience of the plan. If 
the contribution rates are not fully adequate, 
the statement of actuarial opinion shall indicate 
the extent to which the rates are inadequate 
and the changes needed to ensure adequacy. 
‘‘(C) CURRENT AND PROJECTED VALUE OF 
ASSETS AND LIABILITIES.—A statement of ac-
tuarial opinion signed by a qualified actuary, 
which sets forth the current value of the assets 
and liabilities accumulated under the plan and 
a projection of the assets, liabilities, income, 
and expenses of the plan for the 12-month pe-
riod referred to in subparagraph (B). The in-
come statement shall identify separately the 
plan’s administrative expenses and claims. 
‘‘(D) 
COSTS
OF
COVERAGE
TO
BE 
CHARGED
AND
OTHER
EXPENSES.—A state-
ment of the costs of coverage to be charged, in-
cluding an itemization of amounts for adminis-
tration, reserves, and other expenses associated 
with the operation of the plan. 
‘‘(E) OTHER
INFORMATION.—Any other 
information as may be determined by the appli-
cable authority, by regulation, as necessary to 
carry out the purposes of this part. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00081
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to an 
association health plan shall not be effective unless written 
notice of such certification is filed with the applicable 
State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are 
located. For purposes of this subsection, an individual 
shall be considered to be located in the State in which a 
known address of such individual is located or in which 
such individual is employed. 
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 
of any association health plan certified under this part, 
descriptions of material changes in any information which 
was required to be submitted with the application for the 
certification under this part shall be filed in such form 
and manner as shall be prescribed by the applicable au-
thority by regulation. The applicable authority may re-
quire by regulation prior notice of material changes with 
respect to specified matters which might serve as the basis 
for suspension or revocation of the certification. 
‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS-
SOCIATION HEALTH PLANS.—An association health plan 
certified under this part which provides benefit options in 
addition to health insurance coverage for such plan year 
shall meet the requirements of section 103 by filing an 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00082
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
annual report under such section which shall include infor-
mation described in subsection (b)(6) with respect to the 
plan year and, notwithstanding section 104(a)(1)(A), shall 
be filed with the applicable authority not later than 90 
days after the close of the plan year (or on such later date 
as may be prescribed by the applicable authority). The ap-
plicable authority may require by regulation such interim 
reports as it considers appropriate. 
‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The 
board of trustees of each association health plan which 
provides benefits options in addition to health insurance 
coverage and which is applying for certification under this 
part or is certified under this part shall engage, on behalf 
of all participants and beneficiaries, a qualified actuary 
who shall be responsible for the preparation of the mate-
rials comprising information necessary to be submitted by 
a qualified actuary under this part. The qualified actuary 
shall utilize such assumptions and techniques as are nec-
essary to enable such actuary to form an opinion as to 
whether the contents of the matters reported under this 
part— 
‘‘(1) are in the aggregate reasonably related to 
the experience of the plan and to reasonable expecta-
tions; and 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00083
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(2) represent such actuary’s best estimate of 
anticipated experience under the plan. 
The opinion by the qualified actuary shall be made with 
respect to, and shall be made a part of, the annual report. 
‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION. 
‘‘Except as provided in section 809(b), an association 
health plan which is or has been certified under this part 
may terminate (upon or at any time after cessation of ac-
cruals in benefit liabilities) only if the board of trustees, 
not less than 60 days before the proposed termination 
date— 
‘‘(1) provides to the participants and bene-
ficiaries a written notice of intent to terminate stat-
ing that such termination is intended and the pro-
posed termination date; 
‘‘(2) develops a plan for winding up the affairs 
of the plan in connection with such termination in 
a manner which will result in timely payment of all 
benefits for which the plan is obligated; and 
‘‘(3) submits such plan in writing to the appli-
cable authority. 
Actions required under this section shall be taken in such 
form and manner as may be prescribed by the applicable 
authority by regulation. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00084
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION. 
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified 
under this part and which provides benefits other than 
health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of 
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the 
board determines that there is reason to believe that there 
is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so 
notifies the board, the board shall immediately notify the 
qualified actuary engaged by the plan, and such actuary 
shall, not later than the end of the next following month, 
make such recommendations to the board for corrective 
action as the actuary determines necessary to ensure com-
pliance with section 806. Not later than 30 days after re-
ceiving from the actuary recommendations for corrective 
actions, the board shall notify the applicable authority (in 
such form and manner as the applicable authority may 
prescribe by regulation) of such recommendations of the 
actuary for corrective action, together with a description 
of the actions (if any) that the board has taken or plans 
to take in response to such recommendations. The board 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00085
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
shall thereafter report to the applicable authority, in such 
form and frequency as the applicable authority may speci-
fy to the board, regarding corrective action taken by the 
board until the requirements of section 806 are met. 
‘‘(b) MANDATORY TERMINATION.—In any case in 
which— 
‘‘(1) the applicable authority has been notified 
under subsection (a) (or by an issuer of excess/stop 
loss insurance or indemnity insurance pursuant to 
section 806(a)) of a failure of an association health 
plan which is or has been certified under this part 
and is described in section 806(a)(2) to meet the re-
quirements of section 806 and has not been notified 
by the board of trustees of the plan that corrective 
action has restored compliance with such require-
ments; and 
‘‘(2) the applicable authority determines that 
there is a reasonable expectation that the plan will 
continue to fail to meet the requirements of section 
806, 
the board of trustees of the plan shall, at the direction 
of the applicable authority, terminate the plan and, in the 
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any 
claims referred to in section 806(a)(2)(B)(iii) and recov-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00086
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
ering for the plan any liability under subsection 
(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent 
possible, wound up in a manner which will result in timely 
provision of all benefits for which the plan is obligated. 
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO 
HEALTH INSURANCE COVERAGE. 
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR 
INSOLVENT PLANS.—Whenever the Secretary determines 
that an association health plan which is or has been cer-
tified under this part and which is described in section 
806(a)(2) will be unable to provide benefits when due or 
is otherwise in a financially hazardous condition, as shall 
be defined by the Secretary by regulation, the Secretary 
shall, upon notice to the plan, apply to the appropriate 
United States district court for appointment of the Sec-
retary as trustee to administer the plan for the duration 
of the insolvency. The plan may appear as a party and 
other interested persons may intervene in the proceedings 
at the discretion of the court. The court shall appoint such 
Secretary trustee if the court determines that the trustee-
ship is necessary to protect the interests of the partici-
pants and beneficiaries or providers of medical care or to 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00087
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
avoid any unreasonable deterioration of the financial con-
dition of the plan. The trusteeship of such Secretary shall 
continue until the conditions described in the first sen-
tence of this subsection are remedied or the plan is termi-
nated. 
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 
appointment as trustee under subsection (a), shall have 
the power— 
‘‘(1) to do any act authorized by the plan, this 
title, or other applicable provisions of law to be done 
by the plan administrator or any trustee of the plan; 
‘‘(2) to require the transfer of all (or any part) 
of the assets and records of the plan to the Sec-
retary as trustee; 
‘‘(3) to invest any assets of the plan which the 
Secretary holds in accordance with the provisions of 
the plan, regulations prescribed by the Secretary, 
and applicable provisions of law; 
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee 
organization representing plan participants to fur-
nish any information with respect to the plan which 
the Secretary as trustee may reasonably need in 
order to administer the plan; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00088
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(5) to collect for the plan any amounts due the 
plan and to recover reasonable expenses of the trust-
eeship; 
‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the 
plan; 
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation or required by any order of the 
court; 
‘‘(8) to terminate the plan (or provide for its 
termination in accordance with section 809(b)) and 
liquidate the plan assets, to restore the plan to the 
responsibility of the sponsor, or to continue the 
trusteeship; 
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and 
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the 
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical 
care. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00089
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the 
Secretary shall give notice of such appointment to— 
‘‘(1) the sponsor and plan administrator; 
‘‘(2) each participant; 
‘‘(3) each participating employer; and 
‘‘(4) if applicable, each employee organization 
which, for purposes of collective bargaining, rep-
resents plan participants. 
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be 
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject 
to the same duties as those of a trustee under section 704 
of title 11, United States Code, and shall have the duties 
of a fiduciary for purposes of this title. 
‘‘(e) OTHER PROCEEDINGS.—An application by the 
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of 
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve, 
or liquidate such plan or its property, or any proceeding 
to enforce a lien against property of the plan. 
‘‘(f) JURISDICTION OF COURT.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00090
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance 
of a decree under this section, the court to which the 
application is made shall have exclusive jurisdiction 
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with 
the purposes of this section, of a court of the United 
States having jurisdiction over cases under chapter 
11 of title 11, United States Code. Pending an adju-
dication under this section such court shall stay, and 
upon appointment by it of the Secretary as trustee, 
such court shall continue the stay of, any pending 
mortgage foreclosure, equity receivership, or other 
proceeding to reorganize, conserve, or liquidate the 
plan, the sponsor, or property of such plan or spon-
sor, and any other suit against any receiver, conser-
vator, or trustee of the plan, the sponsor, or prop-
erty of the plan or sponsor. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary as trustee, the court may stay any proceeding 
to enforce a lien against property of the plan or the 
sponsor or any other suit against the plan or the 
sponsor. 
‘‘(2) VENUE.—An action under this section 
may be brought in the judicial district where the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00091
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
sponsor or the plan administrator resides or does 
business or where any asset of the plan is situated. 
A district court in which such action is brought may 
issue process with respect to such action in any 
other judicial district. 
‘‘(g) PERSONNEL.—In accordance with regulations 
which shall be prescribed by the Secretary, the Secretary 
shall appoint, retain, and compensate accountants, actu-
aries, and other professional service personnel as may be 
necessary in connection with the Secretary’s service as 
trustee under this section. 
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 
‘‘(a) IN GENERAL.—Notwithstanding section 514, a 
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan 
commenced operations in such State after the date of the 
enactment of this part. 
‘‘(b) CONTRIBUTION TAX.—For purposes of this sec-
tion, the term ‘contribution tax’ imposed by a State on 
an association health plan means any tax imposed by such 
State if— 
‘‘(1) such tax is computed by applying a rate to 
the amount of premiums or contributions, with re-
spect to individuals covered under the plan who are 
residents of such State, which are received by the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00092
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
plan from participating employers located in such 
State or from such individuals; 
‘‘(2) the rate of such tax does not exceed the 
rate of any tax imposed by such State on premiums 
or contributions received by insurers or health main-
tenance organizations for health insurance coverage 
offered in such State in connection with a group 
health plan; 
‘‘(3) such tax is otherwise nondiscriminatory; 
and 
‘‘(4) the amount of any such tax assessed on 
the plan is reduced by the amount of any tax or as-
sessment otherwise imposed by the State on pre-
miums, contributions, or both received by insurers or 
health maintenance organizations for health insur-
ance coverage, aggregate excess/stop loss insurance 
(as defined in section 806(g)(1)), specific excess/stop 
loss insurance (as defined in section 806(g)(2)), 
other insurance related to the provision of medical 
care under the plan, or any combination thereof pro-
vided by such insurers or health maintenance organi-
zations in such State in connection with such plan. 
‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 
‘‘(a) DEFINITIONS.—For purposes of this part— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00093
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(1) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning provided in section 
733(a)(1) (after applying subsection (b) of this sec-
tion). 
‘‘(2) MEDICAL CARE.—The term ‘medical care’ 
has the meaning provided in section 733(a)(2). 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap-
plicable authority’ means the Secretary, except that, 
in connection with any exercise of the Secretary’s 
authority regarding which the Secretary is required 
under section 506(d) to consult with a State, such 
term means the Secretary, in consultation with such 
State. 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
provided in section 733(d)(2). 
‘‘(7) INDIVIDUAL MARKET.— 
‘‘(A) IN GENERAL.—The term ‘individual 
market’ means the market for health insurance 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00094
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
coverage offered to individuals other than in 
connection with a group health plan. 
‘‘(B) 
TREATMENT
OF
VERY
SMALL 
GROUPS.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), such term includes coverage offered in 
connection with a group health plan that 
has fewer than 2 participants as current 
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan 
year. 
‘‘(ii) STATE
EXCEPTION.—Clause (i) 
shall not apply in the case of health insur-
ance coverage offered in a State if such 
State regulates the coverage described in 
such clause in the same manner and to the 
same extent as coverage in the small group 
market (as defined in section 2791(e)(5) of 
the Public Health Service Act) is regulated 
by such State. 
‘‘(8) PARTICIPATING
EMPLOYER.—The term 
‘participating employer’ means, in connection with 
an association health plan, any employer, if any indi-
vidual who is an employee of such employer, a part-
ner in such employer, or a self-employed individual 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00095
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
who is such employer (or any dependent, as defined 
under the terms of the plan, of such individual) is 
or was covered under such plan in connection with 
the status of such individual as such an employee, 
partner, or self-employed individual in relation to the 
plan. 
‘‘(9) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
title XXVII of the Public Health Service Act for the 
State involved with respect to such issuer. 
‘‘(10) QUALIFIED ACTUARY.—The term ‘quali-
fied actuary’ means an individual who is a member 
of the American Academy of Actuaries. 
‘‘(11) AFFILIATED MEMBER.—The term ‘affili-
ated member’ means, in connection with a sponsor— 
‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
is a member of any such association and elects 
an affiliated status with the sponsor, or 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00096
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of this part, a person eligible to be a member 
of the sponsor or one of its member associa-
tions. 
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
employed an average of at least 51 employees on 
business days during the preceding calendar year 
and who employs at least 2 employees on the first 
day of the plan year. 
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
is not a large employer. 
‘‘(b) RULES OF CONSTRUCTION.— 
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an 
association health plan, and for purposes of applying 
this title in connection with such plan, fund, or pro-
gram so determined to be such an employee welfare 
benefit plan— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00097
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
‘‘(A) in the case of a partnership, the term 
‘employer’ (as defined in section 3(5)) includes 
the partnership in relation to the partners, and 
the term ‘employee’ (as defined in section 3(6)) 
includes any partner in relation to the partner-
ship; and 
‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined 
in section 3(6)) shall include such individual. 
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED 
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 
case of any plan, fund, or program which was estab-
lished or is maintained for the purpose of providing 
medical care (through the purchase of insurance or 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under 
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
employee welfare benefit plan on and after the date 
of such demonstration.’’. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00098
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
(2) CONFORMING
AMENDMENTS
TO
PREEMP-
TION RULES.— 
(A) Section 514(b)(6) of such Act (29 
U.S.C. 1144(b)(6)) is amended by adding at 
the end the following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of an association health plan which is certified under part 
8.’’. 
(B) Section 514 of such Act (29 U.S.C. 
1144) is amended— 
(i) in subsection (b)(4), by striking 
‘‘Subsection (a)’’ and inserting ‘‘Sub-
sections (a) and (d)’’; 
(ii) in subsection (b)(5), by striking 
‘‘subsection (a)’’ in subparagraph (A) and 
inserting ‘‘subsection (a) of this section 
and subsections (a)(2)(B) and (b) of sec-
tion 805’’, and by striking ‘‘subsection (a)’’ 
in subparagraph (B) and inserting ‘‘sub-
section (a) of this section or subsection 
(a)(2)(B) or (b) of section 805’’; 
(iii) by redesignating subsection (d) as 
subsection (e); and 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00099
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
100 
(iv) by inserting after subsection (c) 
the following new subsection: 
‘‘(d)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State 
laws insofar as they may now or hereafter preclude, or 
have the effect of precluding, a health insurance issuer 
from offering health insurance coverage in connection with 
an association health plan which is certified under part 
8. 
‘‘(2) Except as provided in paragraphs (4) and (5) 
of subsection (b) of this section— 
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not 
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered in a State under 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00100
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
101 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
fined in section 812(a)(9)), of the policy form in 
connection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with re-
spect to health insurance issuers or health insurance cov-
erage, to supersede or impair the law of any State— 
‘‘(A) providing solvency standards or similar 
standards regarding the adequacy of insurer capital, 
surplus, reserves, or contributions, or 
‘‘(B) relating to prompt payment of claims. 
‘‘(4) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(5) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00101
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
102 
ticipating employer’, and ‘health insurance issuer’ have 
the meanings provided such terms in section 812, respec-
tively.’’. 
(C) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended— 
(i) in clause (i)(II), by striking ‘‘and’’ 
at the end; 
(ii) in clause (ii), by inserting ‘‘and 
which does not provide medical care (with-
in the meaning of section 733(a)(2)),’’ 
after ‘‘arrangement,’’, and by striking 
‘‘title.’’ and inserting ‘‘title, and’’; and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(iii) subject to subparagraph (E), in the case 
of any other employee welfare benefit plan which is 
a multiple employer welfare arrangement and which 
provides medical care (within the meaning of section 
733(a)(2)), any law of any State which regulates in-
surance may apply.’’. 
(D) Section 514(e) of such Act (as redesig-
nated by subparagraph (B)(iii)) is amended— 
(i) by striking ‘‘Nothing’’ and insert-
ing ‘‘(1) Except as provided in paragraph 
(2), nothing’’; and 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00102
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
103 
(ii) by adding at the end the following 
new paragraph: 
‘‘(2) Nothing in any other provision of law enacted 
on or after the date of the enactment of part 8 shall be 
construed to alter, amend, modify, invalidate, impair, or 
supersede any provision of this title, except by specific 
cross-reference to the affected section.’’. 
(3) PLAN SPONSOR.—Section 3(16)(B) of such 
Act (29 U.S.C. 102(16)(B)) is amended by adding 
at the end the following new sentence: ‘‘Such term 
also includes a person serving as the sponsor of an 
association health plan under part 8.’’. 
(4) DISCLOSURE OF SOLVENCY PROTECTIONS 
RELATED TO SELF-INSURED AND FULLY INSURED 
OPTIONS
UNDER
ASSOCIATION
HEALTH
PLANS.— 
Section 102(b) of such Act (29 U.S.C. 102(b)) is 
amended by adding at the end the following: ‘‘An as-
sociation health plan shall include in its summary 
plan description, in connection with each benefit op-
tion, a description of the form of solvency or guar-
antee fund protection secured pursuant to this Act 
or applicable State law, if any.’’. 
(5) SAVINGS CLAUSE.—Section 731(c) of such 
Act is amended by inserting ‘‘or part 8’’ after ‘‘this 
part’’. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00103
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
104 
(6) REPORT
TO
THE
CONGRESS
REGARDING 
CERTIFICATION
OF
SELF-INSURED
ASSOCIATION 
HEALTH PLANS.—Not later than January 1, 2012, 
the Secretary of Labor shall report to the Committee 
on Education and the Workforce of the House of 
Representatives and the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate the effect 
association health plans have had, if any, on reduc-
ing the number of uninsured individuals. 
(7) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following 
new items: 
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘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 pro-
viding health benefits in addition to health insurance coverage. 
‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
(b) CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS.—Section 3(40)(B) of the Em-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00104
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
105 
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1002(40)(B)) is amended— 
(1) in clause (i), by inserting after ‘‘control 
group,’’ the following: ‘‘except that, in any case in 
which the benefit referred to in subparagraph (A) 
consists of medical care (as defined in section 
812(a)(2)), two or more trades or businesses, wheth-
er or not incorporated, shall be deemed a single em-
ployer for any plan year of such plan, or any fiscal 
year of such other arrangement, if such trades or 
businesses are within the same control group during 
such year or at any time during the preceding 1-year 
period,’’; 
(2) in clause (iii), by striking ‘‘(iii) the deter-
mination’’ and inserting the following: 
‘‘(iii)(I) in any case in which the benefit re-
ferred to in subparagraph (A) consists of medical 
care (as defined in section 812(a)(2)), the deter-
mination of whether a trade or business is under 
‘common control’ with another trade or business 
shall be determined under regulations of the Sec-
retary applying principles consistent and coextensive 
with the principles applied in determining whether 
employees of two or more trades or businesses are 
treated as employed by a single employer under sec-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
106 
tion 4001(b), except that, for purposes of this para-
graph, an interest of greater than 25 percent may 
not be required as the minimum interest necessary 
for common control, or 
‘‘(II) in any other case, the determination’’; 
(3) by redesignating clauses (iv) and (v) as 
clauses (v) and (vi), respectively; and 
(4) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) in any case in which the benefit referred 
to in subparagraph (A) consists of medical care (as 
defined in section 812(a)(2)), in determining, after 
the application of clause (i), whether benefits are 
provided to employees of two or more employers, the 
arrangement shall be treated as having only one par-
ticipating employer if, after the application of clause 
(i), the number of individuals who are employees and 
former employees of any one participating employer 
and who are covered under the arrangement is 
greater than 75 percent of the aggregate number of 
all individuals who are employees or former employ-
ees of participating employers and who are covered 
under the arrangement,’’. 
(c) ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
107 
(1) CRIMINAL PENALTIES FOR CERTAIN WILL-
FUL
MISREPRESENTATIONS.—Section 501 of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1131) is amended— 
(A) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; 
and 
(B) by adding at the end the following new 
subsection: 
‘‘(b) Any person who willfully falsely represents, to 
any employee, any employee’s beneficiary, any employer, 
the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as— 
‘‘(1) being an association health plan which has 
been certified under part 8; 
‘‘(2) having been established or maintained 
under or pursuant to one or more collective bar-
gaining agreements which are reached pursuant to 
collective bargaining described in section 8(d) of the 
National Labor Relations Act (29 U.S.C. 158(d)) or 
paragraph Fourth of section 2 of the Railway Labor 
Act (45 U.S.C. 152, paragraph Fourth) or which are 
reached pursuant to labor-management negotiations 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
108 
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement described in 
section 3(40)(A)(i), 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(2) CEASE ACTIVITIES ORDERS.—Section 502 
of such Act (29 U.S.C. 1132) is amended by adding 
at the end the following new subsection: 
‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that— 
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
censed, registered, or otherwise approved under 
the insurance laws of such State; or 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
109 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that— 
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
lic and of persons having claims for benefits against 
the plan.’’. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
110 
(3) RESPONSIBILITY
FOR
CLAIMS
PROCE-
DURE.—Section 503 of such Act (29 U.S.C. 1133) 
is amended by inserting ‘‘(a) IN GENERAL.—’’ be-
fore ‘‘In accordance’’, and by adding at the end the 
following new subsection: 
‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
(d) COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES.—Section 506 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1136) is amended 
by adding at the end the following new subsection: 
‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of— 
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00110
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
111 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State with which consultation is 
required. In carrying out this paragraph— 
‘‘(A) in the case of a plan which provides 
health insurance coverage (as defined in section 
812(a)(3)), such State shall be the State with 
which filing and approval of a policy type of-
fered by the plan was initially obtained, and 
‘‘(B) in any other case, the Secretary shall 
take into account the places of residence of the 
participants and beneficiaries under the plan 
and the State in which the trust is main-
tained.’’. 
(e) EFFECTIVE
DATE
AND
TRANSITIONAL
AND 
OTHER RULES.— 
(1) EFFECTIVE DATE.—The amendments made 
by this section shall take effect 1 year after the date 
of the enactment of this Act. The Secretary of Labor 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00111
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
112 
shall first issue all regulations necessary to carry out 
such amendments within 1 year after the date of the 
enactment of this Act. 
(2) 
TREATMENT
OF
CERTAIN
EXISTING 
HEALTH BENEFITS PROGRAMS.— 
(A) IN GENERAL.—In any case in which, 
as of the date of the enactment of this Act, an 
arrangement is maintained in a State for the 
purpose of providing benefits consisting of med-
ical care for the employees and beneficiaries of 
its participating employers, at least 200 partici-
pating employers make contributions to such 
arrangement, such arrangement has been in ex-
istence for at least 10 years, and such arrange-
ment is licensed under the laws of one or more 
States to provide such benefits to its partici-
pating employers, upon the filing with the ap-
plicable 
authority 
(as 
defined 
in 
section 
812(a)(5) of the Employee Retirement Income 
Security Act of 1974 (as amended by this sub-
title)) by the arrangement of an application for 
certification of the arrangement under part 8 of 
subtitle B of title I of such Act— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00112
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
113 
(i) such arrangement shall be deemed 
to be a group health plan for purposes of 
title I of such Act; 
(ii) the requirements of sections 
801(a) and 803(a) of the Employee Retire-
ment Income Security Act of 1974 shall be 
deemed met with respect to such arrange-
ment; 
(iii) 
the 
requirements 
of 
section 
803(b) of such Act shall be deemed met, if 
the arrangement is operated by a board of 
directors which— 
(I) is elected by the participating 
employers, with each employer having 
one vote; and 
(II) has complete fiscal control 
over the arrangement and which is re-
sponsible for all operations of the ar-
rangement; 
(iv) 
the 
requirements 
of 
section 
804(a) of such Act shall be deemed met 
with respect to such arrangement; and 
(v) the arrangement may be certified 
by any applicable authority with respect to 
its operations in any State only if it oper-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00113
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
114 
ates in such State on the date of certifi-
cation. 
The provisions of this subparagraph shall cease 
to apply with respect to any such arrangement 
at such time after the date of the enactment of 
this Act as the applicable requirements of this 
subparagraph are not met with respect to such 
arrangement. 
(B) DEFINITIONS.—For purposes of this 
paragraph, the terms ‘‘group health plan’’, 
‘‘medical care’’, and ‘‘participating employer’’ 
shall have the meanings provided in section 812 
of the Employee Retirement Income Security 
Act of 1974, except that the reference in para-
graph (7) of such section to an ‘‘association 
health plan’’ shall be deemed a reference to an 
arrangement referred to in this paragraph. 
Subtitle C—Health Care Services 
Commission 
PART 1—ESTABLISHMENT AND GENERAL DUTIES 
SEC. 121. ESTABLISHMENT. 
(a) IN GENERAL.—There is hereby established a 
Health Care Services Commission (in this subtitle referred 
to as the ‘‘Commission’’) to be composed of five commis-
sioners (in this subtitle referred to as the ‘‘Commis-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00114
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
115 
sioners’’) to be appointed by the President by and with 
the advice and consent of the Senate. Not more than three 
of such commissioners shall be members of the same polit-
ical party, and in making appointments members of dif-
ferent political parties shall be appointed alternately as 
nearly as may be practicable. No commissioner shall en-
gage in any other business, vocation, or employment than 
that of serving as commissioner. Each commissioner shall 
hold office for a term of five years and until his successor 
is appointed and has qualified, except that he shall not 
so continue to serve beyond the expiration of the next ses-
sion of Congress subsequent to the expiration of said fixed 
term of office, and except (1) any commissioner appointed 
to fill a vacancy occurring prior to the expiration of the 
term for which his predecessor was appointed shall be ap-
pointed for the remainder of such term, and (2) the terms 
of office of the commissioners first taking office after the 
enactment of this subtitle shall expire as designated by 
the President at the time of nomination, one at the end 
of one year, one at the end of two years, one at the end 
of three years, one at the end of four years, and one at 
the end of five years, after the date of the enactment of 
this Act. 
(b) PURPOSE.—The purpose of the Commission is to 
enhance the quality, appropriateness, and effectiveness of 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00115
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
116 
health care services, and access to such services, through 
the establishment of a broad base of scientific research 
and through the promotion of improvements in clinical 
practice and in the organization, financing, and delivery 
of health care services. 
(c) APPOINTMENT
OF CHAIRMAN.—The President 
shall, from among the Commissioners appointed under 
subsection (a), designate an individual to serve as the 
Chairman of the Commission. 
SEC. 122. GENERAL AUTHORITIES AND DUTIES. 
(a) IN GENERAL.—In carrying out section 121(b), 
the Commissioners shall conduct and support research, 
demonstration projects, evaluations, training, guideline de-
velopment, and the dissemination of information, on 
health care services and on systems for the delivery of 
such services, including activities with respect to— 
(1) the effectiveness, efficiency, and quality of 
health care services; 
(2) subject to subsection (d), the outcomes of 
health care services and procedures; 
(3) clinical practice, including primary care and 
practice-oriented research; 
(4) health care technologies, facilities, and 
equipment; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00116
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
117 
(5) health care costs, productivity, and market 
forces; 
(6) health promotion and disease prevention; 
(7) health statistics and epidemiology; and 
(8) medical liability. 
(b) REQUIREMENTS
WITH
RESPECT
TO
RURAL 
AREAS AND UNDERSERVED POPULATIONS.—In carrying 
out subsection (a), the Commissioners shall undertake and 
support research, demonstration projects, and evaluations 
with respect to— 
(1) the delivery of health care services in rural 
areas (including frontier areas); and 
(2) the health of low-income groups, minority 
groups, and the elderly. 
SEC. 123. DISSEMINATION. 
(a) IN GENERAL.—The Commissioners shall— 
(1) promptly publish, make available, and oth-
erwise disseminate, in a form understandable and on 
as broad a basis as practicable so as to maximize its 
use, the results of research, demonstration projects, 
and evaluations conducted or supported under this 
subtitle and the guidelines, standards, and review 
criteria developed under this subtitle; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00117
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
118 
(2) promptly make available to the public data 
developed in such research, demonstration projects, 
and evaluations; and 
(3) as appropriate, provide technical assistance 
to State and local government and health agencies 
and conduct liaison activities to such agencies to fos-
ter dissemination. 
(b) PROHIBITION AGAINST RESTRICTIONS.—Except 
as provided in subsection (c), the Commissioners may not 
restrict the publication or dissemination of data from, or 
the results of, projects conducted or supported under this 
subtitle. 
(c) LIMITATION
ON USE
OF CERTAIN INFORMA-
TION.—No information, if an establishment or person sup-
plying the information or described in it is identifiable, 
obtained in the course of activities undertaken or sup-
ported under this subtitle may be used for any purpose 
other than the purpose for which it was supplied unless 
such establishment or person has consented (as deter-
mined under regulations of the Secretary) to its use for 
such other purpose. Such information may not be pub-
lished or released in other form if the person who supplied 
the information or who is described in it is identifiable 
unless such person has consented (as determined under 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00118
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
119 
regulations of the Secretary) to its publication or release 
in other form. 
(d) CERTAIN
INTERAGENCY
AGREEMENT.—The 
Commissioners and the Director of the National Library 
of Medicine shall enter into an agreement providing for 
the implementation of subsection (a)(1). 
PART 2—FORUM FOR QUALITY AND 
EFFECTIVENESS IN HEALTH CARE 
SEC. 131. ESTABLISHMENT OF OFFICE. 
There is established within the Commission an office 
to be known as the Office of the Forum for Quality and 
Effectiveness in Health Care. The office shall be headed 
by a director (referred to in this subtitle as the ‘‘Direc-
tor’’), who shall be appointed by the Commissioners. 
SEC. 132. MEMBERSHIP. 
(a) IN GENERAL.—The Office of the Forum for Qual-
ity and Effectiveness in Health Care shall be composed 
of 15 individuals nominated by private sector health care 
organizations and appointed by the Commission and shall 
include representation from at least the following: 
(1) Health insurance industry. 
(2) Health care provider groups. 
(3) Non-profit organizations. 
(4) Rural health organizations. 
(b) TERMS.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00119
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
120 
(1) IN GENERAL.—Except as provided in sub-
paragraph (B), members of the Office of the Forum 
for Quality and Effectiveness in Health Care shall 
serve for a term of 5 years. 
(2) STAGGERED ROTATION.—Of the members 
first appointed to the Office of the Forum for Qual-
ity and Effectiveness in Health Care, the Commis-
sion shall appoint 5 members to serve for a term of 
2 years, 5 members to serve for a term of 3 years, 
and 5 members to serve for a term of 4 years. 
(c) TREATMENT OF OTHER EMPLOYMENT.—Each 
member of the Office of the Forum for Quality and Effec-
tiveness in Health Care shall serve the Office independ-
ently from any other position of employment. 
SEC. 133. DUTIES. 
(a) ESTABLISHMENT
OF FORUM PROGRAM.—The 
Commissioners, acting through the Director, shall estab-
lish a program to be known as the Forum for Quality and 
Effectiveness in Health Care. For the purpose of pro-
moting transparency in price, quality, appropriateness, 
and effectiveness of health care, the Director, using the 
process set forth in section 134, shall arrange for the de-
velopment and periodic review and updating of standards 
of quality, performance measures, and medical review cri-
teria through which health care providers and other appro-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00120
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
121 
priate entities may assess or review the provision of health 
care and assure the quality of such care. 
(b) CERTAIN REQUIREMENTS.—Guidelines, stand-
ards, performance measures, and review criteria under 
subsection (a) shall— 
(1) be based on the best available research and 
professional judgment regarding the effectiveness 
and appropriateness of health care services and pro-
cedures; and 
(2) be presented in formats appropriate for use 
by physicians, health care practitioners, providers, 
medical educators, and medical review organizations 
and in formats appropriate for use by consumers of 
health care. 
(c) AUTHORITY FOR CONTRACTS.—In carrying out 
this part, the Director may enter into contracts with pub-
lic or nonprofit private entities. 
(d) PUBLIC DISCLOSURE OF RECOMMENDATIONS.— 
For each fiscal year beginning with 2010, the Director 
shall make publicly available the following: 
(1) quarterly reports for public comment that 
include proposed recommendations for guidelines, 
standards, performance measures, and review cri-
teria under subsection (a) and any updates to such 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00121
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
122 
guidelines, standards, performance measures, and 
review criteria; and 
(2) after consideration of such comments, a 
final report that contains final recommendations for 
such guidelines, standards, performance measures, 
review criteria, and updates. 
(e) DATE CERTAIN FOR INITIAL GUIDELINES AND 
STANDARDS.—The Commissioners, by not later than Jan-
uary 1, 2012, shall assure the development of an initial 
set of guidelines, standards, performance measures, and 
review criteria under subsection (a). 
SEC. 134. ADOPTION AND ENFORCEMENT OF GUIDELINES 
AND STANDARDS. 
(a) ADOPTION OF RECOMMENDATIONS OF FORUM 
FOR QUALITY AND EFFECTIVENESS IN HEALTH CARE.— 
For each fiscal year, the Commissioners shall adopt the 
recommendations made for such year in the final report 
under subsection (d)(2) of section 133 for guidelines, 
standards, performance measures, and review criteria de-
scribed in subsection (a) of such section. 
(b) ENFORCEMENT
AUTHORITY.—The Commis-
sioners , in consultation with the Secretary of Health and 
Human Services, have the authority to make recommenda-
tions to the Secretary to enforce compliance of health care 
providers with the guidelines, standards, performance 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00122
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
123 
measures, and review criteria adopted under subsection 
(a). Such recommendations may include the following, 
with respect to a health care provider who is not in compli-
ance with such guidelines, standards, measures, and cri-
teria: 
(1) Exclusion from participation in Federal 
health care programs (as defined in section 
1128B(f) of the Social Security Act). 
(2) Imposition of a civil money penalty on such 
provider. 
SEC. 135. ADDITIONAL REQUIREMENTS. 
(a) PROGRAM AGENDA.—The Commissioners shall 
provide for an agenda for the development of the guide-
lines, standards, performance measures, and review cri-
teria described in section 133(a), including with respect 
to the standards, performance measures, and review cri-
teria, identifying specific aspects of health care for which 
the standards, performance measures, and review criteria 
are to be developed and those that are to be given priority 
in the development of the standards, performance meas-
ures, and review criteria. 
PART 3—GENERAL PROVISIONS 
SEC. 141. CERTAIN ADMINISTRATIVE AUTHORITIES. 
The Commissioners, in carrying out this subtitle, may 
accept voluntary and uncompensated services. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00123
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
124 
SEC. 142. FUNDING. 
For the purpose of carrying out this subtitle, there 
are authorized to be appropriated such sums as may be 
necessary for fiscal years 2010 through 2014. 
SEC. 143. DEFINITIONS. 
For purposes of this subtitle: 
(1) The term ‘‘Commissioners’’ means the Com-
missioners of the Health Care Services Commission. 
(2) The term ‘‘Commission’’ means the Health 
Care Services Commission. 
(3) The term ‘‘Director’’ means the Director of 
the Office of the Forum for Quality and Effective-
ness in Health Care. 
(4) The term ‘‘Secretary’’ means the Secretary 
of Health and Human Services. 
PART 4—TERMINATIONS AND TRANSITION 
SEC. 151. TERMINATION OF AGENCY FOR HEALTHCARE RE-
SEARCH AND QUALITY. 
As of the date of the enactment of this Act, the Agen-
cy for Healthcare Research and Quality is terminated, and 
title IX of the Public Health Service Act is repealed. 
SEC. 152. TRANSITION. 
All orders, grants, contracts, privileges, and other de-
terminations or actions of the Agency for Healthcare Re-
search and Quality that are effective as of the date before 
the date of the enactment of this Act, shall be transferred 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00124
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
125 
to the Secretary and shall continue in effect according to 
their terms unless changed pursuant to law. 
PART 5—INDEPENDENT HEALTH RECORD TRUST 
SEC. 161. SHORT TITLE OF PART. 
This part may be cited as the ‘‘Independent Health 
Record Trust Act of 2008’’. 
SEC. 162. PURPOSE. 
It is the purpose of this part ct to provide for the 
establishment of a nationwide health information tech-
nology network that— 
(1) improves health care quality, reduces med-
ical errors, increases the efficiency of care, and ad-
vances the delivery of appropriate, evidence-based 
health care services; 
(2) promotes wellness, disease prevention, and 
the management of chronic illnesses by increasing 
the availability and transparency of information re-
lated to the health care needs of an individual; 
(3) ensures that appropriate information nec-
essary to make medical decisions is available in a us-
able form at the time and in the location that the 
medical service involved is provided; 
(4) produces greater value for health care ex-
penditures by reducing health care costs that result 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00125
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
126 
from inefficiency, medical errors, inappropriate care, 
and incomplete information; 
(5) promotes a more effective marketplace, 
greater competition, greater systems analysis, in-
creased choice, enhanced quality, and improved out-
comes in health care services; 
(6) improves the coordination of information 
and the provision of such services through an effec-
tive infrastructure for the secure and authorized ex-
change and use of health information; and 
(7) ensures that the health information privacy, 
security, and confidentiality of individually identifi-
able health information is protected. 
SEC. 163. DEFINITIONS. 
In this part: 
(1) ACCESS.—The term ‘‘access’’ means, with 
respect to an electronic health record, entering infor-
mation into such account as well as retrieving infor-
mation from such account. 
(2) ACCOUNT.—The term ‘‘account’’ means an 
electronic health record of an individual contained in 
an independent health record trust. 
(3) AFFIRMATIVE
CONSENT.—The term ‘‘af-
firmative consent’’ means, with respect to an elec-
tronic health record of an individual contained in an 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00126
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
127 
IHRT, express consent given by the individual for 
the use of such record in response to a clear and 
conspicuous request for such consent or at the indi-
vidual’s own initiative. 
(4) AUTHORIZED EHR DATA USER.—The term 
‘‘authorized EHR data user’’ means, with respect to 
an electronic health record of an IHRT participant 
contained as part of an IHRT, any entity (other 
than the participant) authorized (in the form of af-
firmative consent) by the participant to access the 
electronic health record. 
(5) CONFIDENTIALITY.—The term ‘‘confiden-
tiality’’ means, with respect to individually identifi-
able health information of an individual, the obliga-
tion of those who receive such information to respect 
the health information privacy of the individual. 
(6) ELECTRONIC HEALTH RECORD.—The term 
‘‘electronic health record’’ means a longitudinal col-
lection of information concerning a single individual, 
including medical records and personal health infor-
mation, that is stored electronically. 
(7) HEALTH
INFORMATION
PRIVACY.—The 
term ‘‘health information privacy’’ means, with re-
spect to individually identifiable health information 
of an individual, the right of such individual to con-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00127
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
128 
trol the acquisition, uses, or disclosures of such in-
formation. 
(8) HEALTH PLAN.—The term ‘‘health plan’’ 
means a group health plan (as defined in section 
2208(1) of the Public Health Service Act (42 U.S.C. 
300bb–8(1))) as well as a plan that offers health in-
surance coverage in the individual market. 
(9) HIPAA PRIVACY REGULATIONS.—The term 
‘‘HIPAA privacy regulations’’ means the regulations 
promulgated under section 264(c) of the Health In-
surance Portability and Accountability Act of 1996 
(42 U.S.C. 1320d–2 note). 
(10) INDEPENDENT HEALTH RECORD TRUST; 
IHRT.—The terms ‘‘independent health record trust’’ 
and ‘‘IHRT’’ mean a legal arrangement under the 
administration of an IHRT operator that meets the 
requirements of this part with respect to electronic 
health records of individuals participating in the 
trust or IHRT. 
(11) IHRT OPERATOR.—The term ‘‘IHRT op-
erator’’ means, with respect to an IHRT, the organi-
zation that is responsible for the administration and 
operation of the IHRT in accordance with this part. 
(12) IHRT PARTICIPANT.—The term ‘‘IHRT 
participant’’ means, with respect to an IHRT, an in-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00128
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
129 
dividual who has a participation agreement in effect 
with respect to the maintenance of the individual’s 
electronic health record by the IHRT. 
(13) INDIVIDUALLY IDENTIFIABLE HEALTH IN-
FORMATION.—The term ‘‘individually identifiable 
health information’’ has the meaning given such 
term in section 1171(6) of the Social Security Act 
(42 U.S.C. 1320d(6)). 
(14) SECURITY.—The term ‘‘security’’ means, 
with respect to individually identifiable health infor-
mation of an individual, the physical, technological, 
or administrative safeguards or tools used to protect 
such information from unwarranted access or disclo-
sure. 
SEC. 164. ESTABLISHMENT, CERTIFICATION, AND MEMBER-
SHIP OF INDEPENDENT HEALTH RECORD 
TRUSTS. 
(a) ESTABLISHMENT.—Not later than one year after 
the date of the enactment of this Act, the Federal Trade 
Commission, in consultation with the National Committee 
on Vital and Health Statistics, shall prescribe standards 
for the establishment, certification, operation, and inter-
operability of IHRTs to carry out the purposes described 
in section 162 in accordance with the provisions of this 
part. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00129
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
130 
(b) CERTIFICATION.— 
(1) CERTIFICATION
BY
FTC.—The Federal 
Trade Commission shall provide for the certification 
of IHRTs. No IHRT may be certified unless the 
IHRT is determined to meet the standards for cer-
tification established under subsection (a). 
(2) DECERTIFICATION.—The Federal Trade 
Commission shall establish a process for the revoca-
tion of certification of an IHRT under this section 
in the case that the IHRT violates the standards es-
tablished under subsection (a). 
(c) MEMBERSHIP.— 
(1) IN GENERAL.—To be eligible to be a partic-
ipant in an IHRT, an individual shall— 
(A) submit to the IHRT information as re-
quired by the IHRT to establish an electronic 
health record with the IHRT; and 
(B) enter into a privacy protection agree-
ment described in section 166(b)(1) with the 
IHRT. 
The process to determine eligibility of an individual 
under this subsection shall allow for the establish-
ment by such individual of an electronic health 
record as expeditiously as possible if such individual 
is determined so eligible. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00130
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
131 
(2) NO LIMITATION ON MEMBERSHIP.—Nothing 
in this subsection shall be construed to permit an 
IHRT to restrict membership, including on the basis 
of health condition. 
SEC. 165. DUTIES OF IHRT TO IHRT PARTICIPANTS. 
(a) FIDUCIARY DUTY OF IHRT; PENALTIES FOR 
VIOLATIONS OF FIDUCIARY DUTY.— 
(1) FIDUCIARY
DUTY.—With respect to the 
electronic health record of an IHRT participant 
maintained by an IHRT, the IHRT shall have a fi-
duciary duty to act for the benefit and in the inter-
ests of such participant and of the IHRT as a whole. 
Such duty shall include obtaining the affirmative 
consent of such participant prior to the release of in-
formation in such participant’s electronic health 
record in accordance with the requirements of this 
part. 
(2) PENALTIES.—If the IHRT knowingly or 
recklessly breaches the fiduciary duty described in 
paragraph (1), the IHRT shall be subject to the fol-
lowing penalties: 
(A) Loss of certification of the IHRT. 
(B) A fine that is not in excess of $50,000. 
(C) A term of imprisonment for the indi-
viduals involved of not more than 5 years. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00131
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
132 
(b) ELECTRONIC HEALTH RECORD DEEMED TO BE 
HELD IN TRUST BY IHRT.—With respect to an indi-
vidual, an electronic health record maintained by an IHRT 
shall be deemed to be held in trust by the IHRT for the 
benefit of the individual and the IHRT shall have no legal 
or equitable interest in such electronic health record. 
SEC. 166. AVAILABILITY AND USE OF INFORMATION FROM 
RECORDS IN IHRT CONSISTENT WITH PRI-
VACY PROTECTIONS AND AGREEMENTS. 
(a) PROTECTED ELECTRONIC HEALTH RECORDS 
USE AND ACCESS.— 
(1) GENERAL RIGHTS REGARDING USES OF IN-
FORMATION.— 
(A) IN
GENERAL.—With respect to the 
electronic health record of an IHRT participant 
maintained by an IHRT, subject to paragraph 
(2)(C), primary uses and secondary uses (de-
scribed in subparagraphs (B) and (C), respec-
tively) of information within such record (other 
than by such participant) shall be permitted 
only upon the authorization of such use, prior 
to such use, by such participant. 
(B) PRIMARY USES.—For purposes of sub-
paragraph (A) and with respect to an electronic 
health record of an individual, a primary use is 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00132
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
133 
a use for purposes of the individual’s self-care 
or care by health care professionals. 
(C) SECONDARY USES.—For purposes of 
subparagraph (B) and with respect to an elec-
tronic health record of an individual, a sec-
ondary use is any use not described in subpara-
graph (B) and includes a use for purposes of 
public health research or other related activi-
ties. Additional authorization is required for a 
secondary use extending beyond the original 
purpose of the secondary use authorized by the 
IHRT participant involved. Nothing in this 
paragraph shall be construed as requiring au-
thorization for every secondary use that is with-
in the authorized original purpose. 
(2) RULES FOR PRIMARY USE OF RECORDS FOR 
HEALTH CARE PURPOSES.—With respect to the elec-
tronic health record of an IHRT participant (or 
specified parts of such electronic health record) 
maintained by an IHRT standards for access to 
such record shall provide for the following: 
(A) ACCESS
BY
IHRT
PARTICIPANTS
TO 
THEIR ELECTRONIC HEALTH RECORDS.— 
(i) 
OWNERSHIP.—The 
participant 
maintains ownership over the entire elec-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00133
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
134 
tronic health record (and all portions of 
such record) and shall have the right to 
electronically access and review the con-
tents of the entire record (and any portion 
of such record) at any time, in accordance 
with this subparagraph. 
(ii) ADDITION OF PERSONAL INFOR-
MATION.—The participant may add per-
sonal health information to the health 
record of that participant, except that such 
participant shall not alter information that 
is entered into the electronic health record 
by any authorized EHR data user. Such 
participant shall have the right to propose 
an amendment to information that is en-
tered by an authorized EHR data user 
pursuant to standards prescribed by the 
Federal Trade Commission for purposes of 
amending such information. 
(iii) IDENTIFICATION
OF
INFORMA-
TION ENTERED BY PARTICIPANT.—Any ad-
ditions or amendments made by the partic-
ipant to the health record shall be identi-
fied and disclosed within such record as 
being made by such participant. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00134
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
135 
(B) ACCESS
BY
ENTITIES
OTHER
THAN 
IHRT PARTICIPANT.— 
(i) AUTHORIZED ACCESS ONLY.—Ex-
cept as provided under subparagraph (C) 
and paragraph (4), access to the electronic 
health record (or any portion of the 
record)— 
(I) may be made only by author-
ized EHR data users and only to such 
portions of the record as specified by 
the participant; and 
(II) may be limited by the partic-
ipant for purposes of entering infor-
mation into such record, retrieving in-
formation from such record, or both. 
(ii) IDENTIFICATION OF ENTITY THAT 
ENTERS
INFORMATION.—Any information 
that is added by an authorized EHR data 
user to the health record shall be identified 
and disclosed within such record as being 
made by such user. 
(iii) SATISFACTION OF HIPAA PRIVACY 
REGULATIONS.—In the case of a record of 
a covered entity (as defined for purposes of 
HIPAA privacy regulations), with respect 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00135
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
136 
to an individual, if such individual is an 
IHRT participant with an independent 
health record trust and such covered entity 
is an authorized EHR data user, the re-
quirement under the HIPAA privacy regu-
lations for such entity to provide the 
record to the participant shall be deemed 
met if such entity, without charge to the 
IHRT or the participant— 
(I) forwards to the trust an ap-
propriately formatted electronic copy 
of the record (and updates to such 
records) for inclusion in the electronic 
health record of the participant main-
tained by the trust; 
(II) enters such record into the 
electronic health record of the partici-
pant so maintained; or 
(III) 
otherwise 
makes 
such 
record available for electronic access 
by the IHRT or the individual in a 
manner that permits such record to 
be included in the account of the indi-
vidual contained in the IHRT. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00136
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
137 
(iv) NOTIFICATION OF SENSITIVE IN-
FORMATION.—Any information, with re-
spect to the participant, that is sensitive 
information, as specified by the Federal 
Trade Commission, shall not be forwarded 
or entered by an authorized EHR data 
user into the electronic health record of the 
participant maintained by the trust unless 
the user certifies that the participant has 
been notified of such information. 
(C) DEEMED AUTHORIZATION FOR ACCESS 
FOR EMERGENCY HEALTH CARE.— 
(i) FINDINGS.—Congress finds that— 
(I) given the size and nature of 
visits to emergency departments in 
the United States, readily available 
health information could make the dif-
ference between life and death; and 
(II) because of the case mix and 
volume of patients treated, emergency 
departments are well positioned to 
provide information for public health 
surveillance, community risk assess-
ment, research, education, training, 
quality improvement, and other uses. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00137
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
138 
(ii) USE OF INFORMATION.—With re-
spect to the electronic health record of an 
IHRT participant (or specified parts of 
such electronic health record) maintained 
by an IHRT, the participant shall be 
deemed as providing authorization (in the 
form of affirmative consent) for health 
care providers to access, in connection with 
providing emergency care services to the 
participant, a limited, authenticated infor-
mation set concerning the participant for 
emergency response purposes, unless the 
participant specifies that such information 
set (or any portion of such information 
set) may not be so accessed. Such limited 
information set may include information— 
(I) patient identification data, as 
determined appropriate by the partici-
pant; 
(II) provider identification that 
includes the use of unique provider 
identifiers; 
(III) payment information; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00138
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
139 
(IV) information related to the 
individual’s vitals, allergies, and medi-
cation history; 
(V) information related to exist-
ing chronic problems and active clin-
ical conditions of the participant; and 
(VI) 
information 
concerning 
physical examinations, procedures, re-
sults, and diagnosis data. 
(3) RULES FOR SECONDARY USES OF RECORDS 
FOR RESEARCH AND OTHER PURPOSES.— 
(A) IN
GENERAL.—With respect to the 
electronic health record of an IHRT participant 
(or specified parts of such electronic health 
record) maintained by an IHRT, the IHRT 
may sell such record (or specified parts of such 
record) only if— 
(i) the transfer is authorized by the 
participant pursuant to an agreement be-
tween the participant and the IHRT and is 
in accordance with the privacy protection 
agreement described in subsection (b)(1) 
entered into between such participant and 
such IHRT; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00139
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
140 
(ii) such agreement includes param-
eters with respect to the disclosure of in-
formation involved and a process for the 
authorization of the further disclosure of 
information in such record; 
(iii) the information involved is to be 
used for research or other activities only as 
provided for in the agreement; 
(iv) the recipient of the information 
provides assurances that the information 
will not be further transferred or reused in 
violation of such agreement; and 
(v) the transfer otherwise meets the 
requirements and standards prescribed by 
the Federal Trade Commission. 
(B) TREATMENT OF PUBLIC HEALTH RE-
PORTING.—Nothing in this paragraph shall be 
construed as prohibiting or limiting the use of 
health care information of an individual, includ-
ing an individual who is an IHRT participant, 
for public health reporting (or other research) 
purposes prior to the inclusion of such informa-
tion in an electronic health record maintained 
by an IHRT. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00140
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
141 
(4) LAW
ENFORCEMENT
CLARIFICATION.— 
Nothing in this part shall prevent an IHRT from 
disclosing information contained in an electronic 
health record maintained by the IHRT when re-
quired for purposes of a lawful investigation or offi-
cial proceeding inquiring into a violation of, or fail-
ure to comply with, any criminal or civil statute or 
any regulation, rule, or order issued pursuant to 
such a statute. 
(5) RULE OF CONSTRUCTION.—Nothing in this 
section shall be construed to require a health care 
provider that does not utilize electronic methods or 
appropriate levels of health information technology 
on the date of the enactment of this Act to adopt 
such electronic methods or technology as a require-
ment for participation or compliance under this part. 
(b) PRIVACY PROTECTION AGREEMENT; TREATMENT 
OF STATE PRIVACY AND SECURITY LAWS.— 
(1) PRIVACY PROTECTION AGREEMENT.—A pri-
vacy protection agreement described in this sub-
section is an agreement, with respect to an electronic 
health record of an IHRT participant to be main-
tained by an independent health record trust, be-
tween the participant and the trust— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00141
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
142 
(A) that is consistent with the standards 
described in subsection (a)(2); 
(B) under which the participant specifies 
the portions of the record that may be accessed, 
under what circumstances such portions may be 
accessed, any authorizations for indicated au-
thorized EHR data users to access information 
contained in the record, and the purposes for 
which the information (or portions of the infor-
mation) in the record may be used; 
(C) which provides a process for the au-
thorization of the transfer of information con-
tained in the record to a third party, including 
for the sale of such information for purposes of 
research, by an authorized EHR data user and 
reuse of such information by such third party, 
including a provision requiring that such trans-
fer and reuse is not in violation of any privacy 
or transfer restrictions placed by the partici-
pant on the independent health record of such 
participant; and 
(D) under which the trust provides assur-
ances that the trust will not transfer, disclose, 
or provide access to the record (or any portion 
of the record) in violation of the parameters es-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00142
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
143 
tablished in the agreement or to any person or 
entity who has not agreed to use and transfer 
such record (or portion of such record) in ac-
cordance with such agreement. 
(2) TREATMENT OF STATE LAWS.— 
(A) IN
GENERAL.—Except as provided 
under subparagraph (B), the provisions of a 
privacy protection agreement entered into be-
tween an IHRT and an IHRT participant shall 
preempt any provision of State law (or any 
State regulation) relating to the privacy and 
confidentiality of individually identifiable health 
information or to the security of such health in-
formation. 
(B) EXCEPTION FOR PRIVILEGED INFOR-
MATION.—The provisions of a privacy protec-
tion agreement shall not preempt any provision 
of State law (or any State regulation) that rec-
ognizes privileged communications between phy-
sicians, health care practitioners, and patients 
of such physicians or health care practitioners, 
respectively. 
(C) STATE
DEFINED.—For purposes of 
this section, the term ‘‘State’’ has the meaning 
given such term when used in title XI of the 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00143
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
144 
Social Security Act, as provided under section 
1101(a) of such Act (42 U.S.C. 1301(a)). 
SEC. 167. VOLUNTARY NATURE OF TRUST PARTICIPATION 
AND INFORMATION SHARING. 
(a) IN GENERAL.—Participation in an independent 
health record trust, or authorizing access to information 
from such a trust, is voluntary. No employer, health insur-
ance issuer, group health plan, health care provider, or 
other person may require, as a condition of employment, 
issuance of a health insurance policy, coverage under a 
group health plan, the provision of health care services, 
payment for such services, or otherwise, that an individual 
participate in, or authorize access to information from, an 
independent health record trust. 
(b) ENFORCEMENT.—The penalties provided for in 
subsection (a) of section 1177 of the Social Security Act 
(42 U.S.C. 1320d–6) shall apply to a violation of sub-
section (a) in the same manner as such penalties apply 
to a person in violation of subsection (a) of such section. 
SEC. 168. FINANCING OF ACTIVITIES. 
(a) IN GENERAL.—Except as provided in subsection 
(b), an IHRT may generate revenue to pay for the oper-
ations of the IHRT through— 
(1) charging IHRT participants account fees 
for use of the trust; 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00144
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
145 
(2) charging authorized EHR data users for ac-
cessing electronic health records maintained in the 
trust; 
(3) the sale of information contained in the 
trust (as provided for in section 166(a)(3)(A)); and 
(4) any other activity determined appropriate 
by the Federal Trade Commission. 
(b) PROHIBITION
AGAINST
ACCESS
FEES
FOR 
HEALTH CARE PROVIDERS.—For purposes of providing 
incentives to health care providers to access information 
maintained in an IHRT, as authorized by the IHRT par-
ticipants involved, the IHRT may not charge a fee for 
services specified by the IHRT. Such services shall include 
the transmittal of information from a health care provider 
to be included in an independent electronic health record 
maintained by the IHRT (or permitting such provider to 
input such information into the record), including the 
transmission of or access to information described in sec-
tion 166(a)(2)(C)(ii) by appropriate emergency respond-
ers. 
(c) REQUIRED
DISCLOSURES.—The sources and 
amounts of revenue derived under subsection (a) for the 
operations of an IHRT shall be fully disclosed to each 
IHRT participant of such IHRT and to the public. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00145
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
146 
(d) TREATMENT OF INCOME.—For purposes of the 
Internal Revenue Code of 1986, any revenue described in 
subsection (a) shall not be included in gross income of any 
IHRT, IHRT participant, or authorized EHR data user. 
SEC. 169. REGULATORY OVERSIGHT. 
(a) IN GENERAL.—In carrying out this part, the Fed-
eral Trade Commission shall promulgate regulations for 
independent health record trusts. 
(b) ESTABLISHMENT
OF INTERAGENCY STEERING 
COMMITTEE.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall establish an Interagency 
Steering Committee in accordance with this sub-
section. 
(2) CHAIRPERSON.—The Secretary of Health 
and Human Services shall serve as the chairperson 
of the Interagency Steering Committee. 
(3) MEMBERSHIP.—The members of the Inter-
agency Steering Committee shall consist of the At-
torney General, the Chairperson of the Federal 
Trade Commission, the Chairperson for the National 
Committee for Vital and Health Statistics, a rep-
resentative of the Federal Reserve, and other Fed-
eral officials determined appropriate by the Sec-
retary of Health and Human Services. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00146
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
147 
(4) DUTIES.—The Interagency Steering Com-
mittee shall coordinate the implementation of this 
part, including the implementation of policies de-
scribed in subsection (d) based upon the rec-
ommendations provided under such subsection, and 
regulations promulgated under this part. 
(c) FEDERAL ADVISORY COMMITTEE.— 
(1) IN GENERAL.—The National Committee for 
Vital and Health Statistics shall serve as an advisory 
committee for the IHRTs. The membership of such 
advisory committee shall include a representative 
from the Federal Trade Commission and the chair-
person of the Interagency Steering Committee. Not 
less than 60 percent of such membership shall con-
sist of representatives of nongovernment entities, at 
least one of whom shall be a representative from an 
organization representing health care consumers. 
(2) DUTIES.—The National Committee for 
Vital and Health Statistics shall issue periodic re-
ports and review policies concerning IHRTs based 
on each of the following factors: 
(A) Privacy and security policies. 
(B) Economic progress. 
(C) Interoperability standards. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00147
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
148 
(d) POLICIES RECOMMENDED BY FEDERAL TRADE 
COMMISSION.—The Federal Trade Commission, in con-
sultation with the National Committee for Vital and 
Health Statistics, shall recommend policies to— 
(1) provide assistance to encourage the growth 
of independent health record trusts; 
(2) track economic progress as it pertains to 
operators of independent health records trusts and 
individuals receiving nontaxable income with respect 
to accounts; 
(3) conduct public education activities regarding 
the creation and usage of the independent health 
records trusts; 
(4) establish standards for the interoperability 
of health information technology to ensure that in-
formation contained in such record may be shared 
between the trust involved, the participant, and au-
thorized EHR data users, including for the stand-
ardized collection and transmission of individual 
health records (or portions of such records) to au-
thorized EHR data users through a common inter-
face and for the portability of such records among 
independent health record trusts; and 
(5) carry out any other activities determined 
appropriate by the Federal Trade Commission. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00148
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
149 
(e) REGULATIONS
PROMULGATED
BY
FEDERAL 
TRADE COMMISSION.—The Federal Trade Commission 
shall promulgate regulations based on, at a minimum, the 
following factors: 
(1) Requiring that an IHRT participant, who 
has an electronic health record that is maintained by 
an IHRT, be notified of a security breech with re-
spect to such record, and any corrective action taken 
on behalf of the participant. 
(2) Requiring that information sent to, or re-
ceived from, an IHRT that has been designated as 
high-risk should be authenticated through the use of 
methods such as the periodic changing of passwords, 
the use of biometrics, the use of tokens or other 
technology as determined appropriate by the council. 
(3) Requiring a delay in releasing sensitive 
health care test results and other similar informa-
tion to patients directly in order to give physicians 
time to contact the patient. 
(4) Recommendations for entities operating 
IHRTs, including requiring analysis of the potential 
risk of health transaction security breeches based on 
set criteria. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00149
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
150 
(5) The conduct of audits of IHRTs to ensure 
that they are in compliance with the requirements 
and standards established under this part. 
(6) Disclosure to IHRT participants of the 
means by which such trusts are financed, including 
revenue from the sale of patient data. 
(7) Prevention of certification of an entity seek-
ing independent heath record trust certification 
based on— 
(A) the potential for conflicts between the 
interests of such entity and the security of the 
health information involved; and 
(B) the involvement of the entity in any 
activity that is contrary to the best interests of 
a patient. 
(8) Prevention of the use of revenue sources 
that are contrary to a patient’s interests. 
(9) Public disclosure of audits in a manner 
similar to financial audits required for publicly trad-
ed stock companies. 
(10) Requiring notification to a participating 
entity that the information contained in such record 
may not be representative of the complete or accu-
rate electronic health record of such account holder. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00150
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
151 
(f) COMPLIANCE REPORT.—Not later than 1 year 
after the date of the enactment of this Act, and annually 
thereafter, the Commission shall submit to the Committee 
on Health, Education, Labor, and Pensions and the Com-
mittee on Finance of the Senate and the Committee on 
Energy and Commerce and the Committee on Ways and 
Means of the House of Representatives, a report on com-
pliance by and progress of independent health record 
trusts with this part. Such report shall describe the fol-
lowing: 
(1) The number of complaints submitted about 
independent health record trusts, which shall be di-
vided by complaints related to security breaches, and 
complaints not related to security breaches, and may 
include other categories as the Interagency Steering 
Committee established under subsection (b) deter-
mines appropriate. 
(2) The number of enforcement actions under-
taken by the Commission against independent health 
record trusts in response to complaints under para-
graph (1), which shall be divided by enforcement ac-
tions related to security breaches and enforcement 
actions not related to security breaches and may in-
clude other categories as the Interagency Steering 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00151
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
152 
Committee established under subsection (b) deter-
mines appropriate. 
(3) The economic progress of the individual 
owner or institution operator as achieved through 
independent health record trust usage and existing 
barriers to such usage. 
(4) The progress in security auditing as pro-
vided for by the Interagency Steering Committee 
council under subsection (b). 
(5) The other core responsibilities of the Com-
mission as described in subsection (a). 
(g) 
INTERAGENCY
MEMORANDUM
OF
UNDER-
STANDING.—The Interagency Steering Committee shall 
ensure, through the execution of an interagency memo-
randum of understanding, that— 
(1) regulations, rulings, and interpretations 
issued by Federal officials relating to the same mat-
ter over which 2 or more such officials have respon-
sibility under this part are administered so as to 
have the same effect at all times; and 
(2) the memorandum provides for the coordina-
tion of policies related to enforcing the same require-
ments through such officials in order to have coordi-
nated enforcement strategy that avoids duplication 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00152
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
153 
of enforcement efforts and assigns priorities in en-
forcement. 
TITLE II—MEDICAID AND SCHIP 
REFORM 
SEC. 201. MEDICAID REFORM. 
(a) IN GENERAL.—Title XIX of the Social Security 
Act is amended— 
(1) by redesignating section 1939 as section 
1940; and 
(2) by inserting after section 1938 the following 
new section: 
‘‘REVISION OF MEDICAID PROGRAM 
‘‘SEC. 1939. (a) ELECTION OF BLOCK GRANT OR IM-
PLEMENTATION OF REFUNDABLE TAX CREDIT FOR MED-
ICAID POPULATION
FOR ACUTE CARE SERVICES
AND 
MAINTENANCE OF EFFORT SPENDING.— 
‘‘(1) IN GENERAL.—Each State shall elect— 
‘‘(A) to receive block grant funding under 
subsection (b); or 
‘‘(B) to have Medicaid-eligible individuals 
eligible to receive refundable tax credits under 
section 36 of the Internal Revenue Code of 
1986 and to provide for maintenance of effort 
described in subsection (c). 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00153
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
154 
If a State fails to make such an election, the State 
shall be treated as making the election described in 
subparagraph (A). 
‘‘(2) LIMITATIONS ON ELECTION.—If a State 
makes the election described in paragraph (1)(B), 
the State may not change such election. A State that 
makes the election described in paragraph (1)(A) 
may change such election with notice to the Sec-
retary. 
‘‘(3) EFFECTIVE
DATE; IMPLEMENTATION.— 
This subsection shall first take effect as of January 
1, 2010. For items and services furnished on or 
after such date, no payment shall be made under 
section 1903 to any State. 
‘‘(b) BLOCK GRANT PAYMENT FOR ACUTE CARE 
SERVICES.— 
‘‘(1) IN GENERAL.—The block grant payment 
amount under this subsection for a State— 
‘‘(A) for 2010 is equal to the total Federal 
payments under this title and title XXI to the 
State for calendar quarters in 2009 (other than 
payments for medical assistance for long-term 
care services, as defined for purposes of sub-
section (e))), increased by the inflation adjust-
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00154
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
155 
ment factor for the year (described in para-
graph (2)); or 
‘‘(B) for a subsequent year is, subject to 
subsection (d), equal to the block grant pay-
ment amount under this subsection for the 
State for the previous year increased by the in-
flation adjustment factor for the year (described 
in paragraph (2)) and a population growth fac-
tor (described in paragraph (3)). 
‘‘(2) INFLATION
ADJUSTMENT
FACTOR.—The 
inflation adjustment factor in this paragraph for a 
year is equal to the average of the projected annual 
rate of increase in the consumer price index for 
urban consumers (all items; U.S. city average) and 
the percentage increase in the MEI (as defined in 
section 1842(i)(3)) for the year. 
‘‘(3) POPULATION GROWTH FACTOR.—The Sec-
retary shall determine and apply a population 
growth factor based on the percentage increase in 
the population included in the computation of Na-
tional Health Expenditures from the calendar year 
in which the previous fiscal year ends to the cal-
endar year in which the fiscal year involved ends, as 
most recently published by the Secretary, but ad-
justed among the States so as to reflect differences 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00155
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
156 
in relative population growth rates among such 
States. 
‘‘(4) LIMITATION.—Payment under this sub-
section shall only be available to States for costs of 
health care and related administrative costs. 
‘‘(5) NO REQUIREMENT FOR STATE MATCHING 
PAYMENT.—Nothing in this subsection shall be con-
strued as requiring a State to make any matching 
payments as a condition of receiving payment under 
this subsection. 
‘‘(6) PERIODICITY
OF
PAYMENTS.—The Sec-
retary shall provide for making payments under this 
subsection on a quarterly or other appropriate basis. 
‘‘(c) MAINTENANCE OF EFFORT (MOE) REQUIRE-
MENT.— 
‘‘(1) IN GENERAL.—The maintenance of effort 
requirement under this subsection for a State for a 
year is to provide for payment in the MOE amount 
specified in paragraph (2) for the year for purposes 
described in, and in accordance with, paragraph (3). 
‘‘(2) MOE AMOUNT.—The MOE amount speci-
fied in this paragraph for a State— 
‘‘(A) for 2010 is equal to the amount of 
expenditures of the State under this title and 
title XXI for calendar quarters in 2008, not 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00156
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
157 
taking into account Federal payments made to 
the State under the respective title and not tak-
ing into account such payments that are attrib-
utable to medical assistance for long-term care 
services (as defined for purposes of subsection 
(e)), increased by the inflation adjustment fac-
tor described in subsection (b)(2) for 2009 and 
further increased by such factor for 2010; or 
‘‘(B) for a subsequent year is equal to the 
MOE amount specified in this paragraph for 
the State for the previous year increased by the 
inflation adjustment factor described in sub-
section (b)(2) for such subsequent year. 
‘‘(3) APPLICATION
TOWARD
SPENDING.—Pay-
ments by a State shall be used for the following pur-
poses, with priority given to such purposes in the 
following order: 
‘‘(A) To develop an auto-enrollment pro-
gram for previously eligible Medicaid recipients. 
‘‘(B) To assist individuals in low-income 
families (as defined by the State) and high-cost 
individuals and families (for those for whom in-
surance is unavailable or very expensive because 
of their health status) to purchase qualifying 
health insurance. Eligible expenses shall include 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00157
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
158 
direct assistance with premiums and cost-shar-
ing. 
‘‘(C) For purposes of funding qualified 
high risk pools (as defined in section 2744(c)(2) 
of the Public Health Service Act). 
‘‘(D) For establishment and funding of re-
insurance mechanisms. 
‘‘(E) For establishment and maintenance 
of networks designed to improve consumer in-
formation, transparency in price and quality 
data, and reduction in transaction costs associ-
ated with enrolling individuals in health insur-
ance coverage. 
‘‘(d) PHASE-OUT OF DSH PAYMENTS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the amount of DSH allotment oth-
erwise provided under section 1923(f) for each State 
for a fiscal year shall be reduced— 
‘‘(A) by 25 percent for fiscal year 2010; 
‘‘(B) by 50 percent for fiscal year 2011; 
‘‘(C) by 75 percent for fiscal year 2012; 
and 
‘‘(D) entirely for fiscal year 2013 and each 
succeeding fiscal year. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00158
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
159 
‘‘(2) ADJUSTMENT
IN
BLOCK
GRANT.—The 
amount of any block grant for a State under sub-
section (b) for a fiscal year shall be adjusted to re-
flect the amount of reductions in DSH allotment 
under paragraph (1) for the State and the fiscal 
year. 
‘‘(e) BLOCK GRANT FOR LONG-TERM CARE SERV-
ICES.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this title, instead of any payment under 
this title to a State for long-term care services (as 
defined by the Secretary), the Secretary shall pay to 
a State the long-term care block grant amount speci-
fied in paragraph (2). 
‘‘(2) 
LONG-TERM
CARE
BLOCK
GRANT 
AMOUNT.—The long-term block grant payment 
amount under this paragraph for a State— 
‘‘(A) for 2010 is equal to the total Federal 
payments under this title to the State for cal-
endar quarters in 2009 for long-term care serv-
ices, as defined for purposes of paragraph (1), 
increased by the inflation adjustment factor for 
the year (described in subsection (b)(2))); or 
‘‘(B) for a subsequent year is equal to the 
long-term care block grant payment amount 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00159
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
160 
under this paragraph for the State for the pre-
vious year increased by such inflation adjust-
ment factor for the year. 
‘‘(3) APPLICATION OF PROVISIONS.—The provi-
sions of paragraphs (3), (4), and (5) of subsection 
(b) shall apply to payments under this subsection. 
‘‘(4) EFFECTIVE
DATE; IMPLEMENTATION.— 
This subsection shall first take effect as of January 
1, 2010. For long-term care items and services fur-
nished on or after such date, no payment shall be 
made under section 1903 to any State.’’. 
SEC. 202. SCHIP REFORM. 
(a) IN GENERAL.—Effective for items and services 
furnished on or after January 1, 2010, title XXI of the 
Social Security Act is repealed. 
(b) CONSTRUCTION.—Subsection (a) shall not affect 
payment for items and services furnished before such date. 
TITLE III—MEDICARE REFORM 
Subtitle A—New Medicare Program 
SEC. 301. BENEFIT CHANGES. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1808 the following new section: 
‘‘PROGRAM FOR NEW MEDICARE BENEFICIARIES 
BEGINNING IN 2019 
‘‘SEC. 1809. (a) APPLICATION.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00160
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
161 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law (including sections 226 and 226A), 
the provisions of this section shall apply to individ-
uals (other than individuals entitled to benefits only 
because of the application of section 1881(d)) who 
first become entitled to benefits under part A, or 
whose coverage period under part B begins, on or 
after January 1, 2019. 
‘‘(2) NO
IMPACT
ON
FICA/SECA
TAX
REVE-
NUES.—Nothing in this section shall be construed as 
affecting revenues through the payment of hospital 
insurance taxes under sections 1401(b), 3101(b), 
and 3111(b) of the Internal Revenue Code of 1986. 
‘‘(3) NO IMPACT ON OTHER BENEFICIARIES.— 
‘‘(A) IN GENERAL.—This section shall not 
apply to individuals not described in paragraph 
(1). 
‘‘(B) NO
IMPACT
ON
COMPUTATION
OF 
MEDICARE
PREMIUMS
FOR
OLDER
MEDICARE 
BENEFICIARIES.—Premiums under parts A, B, 
and D shall be computed for individuals not de-
scribed in paragraph (1) based on the average 
costs that the Secretary estimates would have 
been applicable if this section did not apply. 
‘‘(b) ALTERNATIVE BENEFITS.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00161
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
162 
‘‘(1) IN GENERAL.—An individual described in 
subsection (a)(1) is only entitled to benefits under 
this title in accordance with this section. In the case 
of such an individual who has qualified health insur-
ance coverage, the individual is entitled under this 
section— 
‘‘(A) to an income-related payment under 
subsection (c); and 
‘‘(B) in the case of a low-income individual 
(as defined in paragraph (3) of subsection (d)), 
to a contribution to a medical savings account 
of the individual in the amount specified in 
such subsection. 
‘‘(2) ALTERNATIVE PREMIUM OBLIGATIONS.— 
An individual described in subsection (a)(1)— 
‘‘(A) is not responsible for payment of any 
premium otherwise applicable under part B or 
D; but 
‘‘(B) is responsible for payment of the pre-
mium for qualified health insurance coverage 
referred to in paragraph (1) and may apply the 
income-related payment under subsection (c) to-
ward such premium. 
‘‘(3) QUALIFIED
HEALTH
INSURANCE
COV-
ERAGE
DEFINED.—In this subsection, the term 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00162
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
163 
‘qualified health insurance coverage’ means health 
benefits coverage, whether under a group health 
plan, health insurance coverage or otherwise, but 
does not include coverage under a health plan if sub-
stantially all of its coverage is coverage described in 
section 223(c)(1)(B) of the Internal Revenue Code 
of 1986. 
‘‘(c) INCOME-RELATED PAYMENT.— 
‘‘(1) IN GENERAL.—The amount of the income- 
related payment under this subsection for an indi-
vidual for a year is equal to— 
‘‘(A) the annual amount specified for the 
year in paragraph (2); 
‘‘(B) subject to reduction under paragraph 
(3) (relating to higher income individuals); 
‘‘(C) further subject to adjustment under 
paragraph (4); and 
‘‘(D) subject to pro-ration under para-
graph (5). 
‘‘(2) ANNUAL AMOUNT.— 
‘‘(A) IN
GENERAL.—The annual amount 
specified in this paragraph— 
‘‘(i) for 2009 is $9,500; and 
‘‘(ii) for any subsequent year is the 
annual amount specified in this paragraph 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00163
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
164 
for the preceding year increased by the an-
nual inflation adjustment described in sub-
paragraph (B) for such subsequent year. 
Any amount computed under clause (ii) that is 
not a multiple of $12 shall be rounded to the 
nearest multiple of $12. 
‘‘(B) ANNUAL INFLATION ADJUSTMENT.— 
The annual inflation adjustment under this 
subparagraph for a year is equal to the average 
of— 
‘‘(i) the annual rate of increase in the 
consumer price index for urban consumers 
(all items; U.S. city average) for the year, 
as projected by the Secretary in consulta-
tion with the Bureau of Labor Statistics 
before the beginning of the year; and 
‘‘(ii) the annual rate of increase in the 
medical care component of the consumer 
price index for all urban consumers (U.S. 
city average) for the year, as projected by 
the Secretary in consultation with the Bu-
reau of Labor Statistics before the begin-
ning of the year. 
‘‘(3) REDUCTION FOR HIGHER-INCOME INDIVID-
UALS.— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00164
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
167 
‘‘(C) CERTAIN
PART
A
BUY-IN
INDIVID-
UALS.—Such payment amount for an individual 
who is not eligible for benefits under part A 
pursuant to section 226 or 226A shall be ad-
justed by such proportion or amount as the 
Secretary determines appropriate to take into 
account premiums that would otherwise be pay-
able under section 1818 or 1818A for benefits 
under part A. 
‘‘(5) PRO-RATIO FOR PARTIAL YEAR OF ELIGI-
BILITY.—In the case of an individual whose entitle-
ment under this section is for less than an entire 
year, the payment amount under this subsection 
shall be pro-rated to reflect the portion of the year 
included in such entitlement. 
‘‘(6) PAYMENT ON PERIODIC BASIS.—The Sec-
retary shall provide for the payment under this sub-
section on an appropriate monthly or other periodic 
basis. 
‘‘(d) CONTRIBUTION TO A MEDICAL SAVINGS AC-
COUNT (MSA) FOR LOW-INCOME INDIVIDUALS.— 
‘‘(1) IN GENERAL.—The amount of the con-
tribution under subsection (b)(1)(B) to a medical 
savings account of a low-income individual is 
equal— 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00167
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
168 
‘‘(A) in the case of an individual described 
in clause (i) or (ii) of paragraph (4)(A), to the 
full MSA contribution amount (as defined in 
paragraph (2)); or 
‘‘(B) in the case of any other individual, to 
75 percent of the full MSA contribution 
amount. 
‘‘(2) FULL MSA CONTRIBUTION AMOUNT.—For 
purposes of this subsection, the term ‘full MSA con-
tribution amount’ means, for a year for an indi-
vidual, an amount to be equivalent to the full 
amount of the average deductible of a high-deduct-
ible health plan (as defined in section 223(c)(2) of 
the Internal Revenue Code of 1986) as determined 
by the Secretary. 
‘‘(3) NO MEDICAID COVERAGE FOR MEDICARE- 
COVERED SERVICES.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is eligible to be provided a contribu-
tion to a medical savings account under this 
subsection, the individual is not entitled to any 
payment under a State plan under title XIX 
with respect to any benefits relating to items 
and services for which coverage is provided 
under this title. 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00168
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
169 
‘‘(B) CONSTRUCTION.—Subparagraph (A) 
shall not affect the continued provision of med-
ical assistance under title XIX for items and 
services, such as dental, vision, or long-term 
care facility services, for which benefits are not 
provided under this title regardless of medical 
necessity. 
‘‘(4) PERIODIC PAYMENT.—The Secretary shall 
provide for the contribution into medical savings ac-
counts of amounts under this subsection on an ap-
propriate monthly or other periodic basis. 
‘‘(5) LOW-INCOME INDIVIDUAL DEFINED.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘low-income individual’ means 
an individual described in subsection (a)(1)— 
‘‘(i) who meets the requirement of 
section 1936(c)(6)(A)(ii) (relating to a full- 
benefit dual eligible individual); 
‘‘(ii) whose income (as determined 
under section 1612 for purposes of the 
supplemental security income program, ex-
cept as provided in subparagraph (B)) 
does not exceed 100 percent of the official 
income poverty line (referred to in section 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00169
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS
170 
1905(p)(1)) applicable to a family of the 
size involved; or 
‘‘(iii) whose income (as so determined) 
exceeds 100 percent, but does not exceed 
150 percent, of such official income pov-
erty line applicable to a family of the size 
involved. 
‘‘(B) APPLICATION OF SPECIAL RULE RE-
GARDING APPLICATION OF SOCIAL SECURITY IN-
CREASES.—The provisions of subparagraph (D) 
of section 1905(p)(2) shall apply to determina-
tions of income under subparagraph (A) in the 
same manner they apply under such section. 
‘‘(C) 
DETERMINATION
PROCESS.—The 
Secretary shall specify a process for the deter-
mination of whether individuals are low-income 
individuals.’’. 
SEC. 302. INCREASE IN MEDICARE ELIGIBILITY AGE. 
Section 226 of the Social Security Act (42 U.S.C. 
426) is amended by adding at the end the following new 
subsection: 
‘‘(k) INCREASING MEDICARE QUALIFYING AGE.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, any reference in this section or title 
XVIII (or title XIX insofar as it refers to title 
VerDate Aug 31 2005 
00:24 May 24, 2008
Jkt 069200
PO 00000
Frm 00170
Fmt 6652
Sfmt 6201
E:\BILLS\H6110.IH
H6110
hsrobinson on PROD1PC76 with BILLS