I
107TH CONGRESS
1ST SESSION
H. R. 1331
To amend the Internal Revenue Code of 1986 to allow individuals a refund-
able credit against income tax for the purchase of private health insur-
ance, and to establish State health insurance safety-net programs.
IN THE HOUSE OF REPRESENTATIVES
APRIL 3, 2001
Mr. ARMEY (for himself, Mr. LIPINSKI, Mr. CANNON, Mr. FORD, Mr.
BONILLA, Mr. BLAGOJEVICH, Mr. BALLENGER, Mrs. BONO, Mr. BUYER,
Mr. CANTOR, Mrs. JO ANN DAVIS of Virginia, Mr. TOM DAVIS of Vir-
ginia, Mr. FOSSELLA, Mr. GILLMOR, Ms. HART, Mr. HOSTETTLER, Mr.
ISAKSON, Mr. KOLBE, Mr. MCHUGH, Ms. PRYCE of Ohio, Mr. REHBERG,
Mr. ROGERS of Michigan, Mr. SENSENBRENNER, Mr. SMITH of New Jer-
sey, and Mr. TANCREDO) introduced the following bill; which was referred
to the Committee on Energy and Commerce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to allow indi-
viduals a refundable credit against income tax for the
purchase of private health insurance, and to establish
State health insurance safety-net programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Fair Care for the Un-
insured Act of 2001’’.
TITLE I—REFUNDABLE CREDIT
FOR 
HEALTH 
INSURANCE
COVERAGE
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 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. HEALTH INSURANCE COSTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this subtitle an amount equal to the amount paid dur-
ing the taxable year for qualified health insurance for the
taxpayer, his spouse, and dependents.
‘‘(b) LIMITATIONS.—
‘‘(1) IN GENERAL.—The amount allowed as a
credit under subsection (a) to the taxpayer for the
taxable year shall not exceed the sum of the monthly
limitations for coverage months during such taxable
year for each individual referred to in subsection (a)
for whom the taxpayer paid during the taxable year
any amount for coverage under qualified health in-
surance.
‘‘(2) MONTHLY LIMITATION.—
‘‘(A) IN GENERAL.—The monthly limita-
tion for an individual for each coverage month
of such individual during the taxable year is the
amount equal to 1/12 of—
‘‘(i) $1,000 if such individual is the
taxpayer,
‘‘(ii) $1,000 if—
‘‘(I) such individual is the spouse
of the taxpayer,
‘‘(II) the taxpayer and such
spouse are married as of the first day
of such month, and
‘‘(III) the taxpayer files a joint
return for the taxable year, and
‘‘(iii) $500 if such individual is an in-
dividual for whom a deduction under sec-
tion 151(c) is allowable to the taxpayer for
such taxable year.
‘‘(B) LIMITATION
TO
DEPENDENTS.—
Not more than 2 individuals may be taken into
account by the taxpayer under subparagraph
(A)(iii).
‘‘(C) SPECIAL RULE FOR MARRIED INDI-
VIDUALS.—In the case of an individual—
‘‘(i) who is married (within the mean-
ing of section 7703) as of the close of the
taxable year but does not file a joint return
for such year, and
‘‘(ii) who does not live apart from
such individual’s spouse at all times during
the taxable year,
the limitation imposed by subparagraph (B)
shall be divided equally between the individual
and the individual’s spouse unless they agree on
a different division.
‘‘(3) COVERAGE MONTH.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘coverage
month’ means, with respect to an individual,
any month if—
‘‘(i) as of the first day of such month
such individual is covered by qualified
health insurance, and
‘‘(ii) the premium for coverage under
such insurance for such month is paid by
the taxpayer.
‘‘(B) 
EMPLOYER-SUBSIDIZED
COV-
ERAGE.—
‘‘(i) IN
GENERAL.—Such term shall
not include any month for which such indi-
vidual is eligible to participate in any sub-
sidized health plan (within the meaning of
section 162(l)(2)) maintained by any em-
ployer of the taxpayer or of the spouse of
the taxpayer.
‘‘(ii) PREMIUMS
TO
NONSUBSIDIZED
PLANS.—If an employer of the taxpayer or
the spouse of the taxpayer maintains a
health plan which is not a subsidized
health plan (as so defined) and which con-
stitutes qualified health insurance, em-
ployee contributions to the plan shall be
treated as amounts paid for qualified
health insurance.
‘‘(C) CAFETERIA
PLAN
AND
FLEXIBLE
SPENDING
ACCOUNT
BENEFICIARIES.—Such
term shall not include any month during a tax-
able year if any amount is not includible in the
gross income of the taxpayer for such year
under section 106 with respect to—
‘‘(i) a benefit chosen under a cafeteria
plan (as defined in section 125(d)), or
‘‘(ii) a benefit provided under a flexi-
ble spending or similar arrangement.
‘‘(D) MEDICARE
AND
MEDICAID.—Such
term shall not include any month with respect
to an individual if, as of the first day of such
month, such individual—
‘‘(i) is entitled to any benefits under
title XVIII of the Social Security Act, or
‘‘(ii) is a participant in the program
under title XIX or XXI of such Act.
‘‘(E) CERTAIN
OTHER
COVERAGE.—Such
term shall not include any month during a tax-
able year with respect to an individual if, at any
time during such year, any benefit is provided
to such individual under—
‘‘(i) chapter 89 of title 5, United
States Code,
‘‘(ii) chapter 55 of title 10, United
States Code,
‘‘(iii) chapter 17 of title 38, United
States Code, or
‘‘(iv) any medical care program under
the Indian Health Care Improvement Act.
‘‘(F) PRISONERS.—Such term shall not in-
clude any month with respect to an individual
if, as of the first day of such month, such indi-
vidual is imprisoned under Federal, State, or
local authority.
‘‘(G) INSUFFICIENT PRESENCE IN UNITED
STATES.—Such term shall not include any
month during a taxable year with respect to an
individual if such individual is present in the
United States on fewer than 183 days during
such year (determined in accordance with sec-
tion 7701(b)(7)).
‘‘(4) COORDINATION
WITH
DEDUCTION
FOR
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—In the case of a taxpayer who is eligi-
ble to deduct any amount under section 162(l) for
the taxable year, this section shall apply only if the
taxpayer elects not to claim any amount as a deduc-
tion under such section for such year.
‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified health
insurance’ means insurance which constitutes med-
ical care as defined in section 213(d) without regard
to—
‘‘(A) paragraph (1)(C) thereof, and
‘‘(B) so much of paragraph (1)(D) thereof
as relates to qualified long-term care insurance
contracts.
‘‘(2) EXCLUSION
OF
CERTAIN
OTHER
CON-
TRACTS.—Such term shall not include insurance if a
substantial portion of its benefits are excepted bene-
fits (as defined in section 9832(c)).
‘‘(d) 
MEDICAL
SAVINGS
ACCOUNT
CONTRIBU-
TIONS.—
‘‘(1) IN GENERAL.—If a deduction would (but
for paragraph (2)) be allowed under section 220 to
the taxpayer for a payment for the taxable year to
the medical savings account of an individual, sub-
section (a) shall be applied by treating such payment
as a payment for qualified health insurance for such
individual.
‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc-
tion shall be allowed under section 220 for that por-
tion of the payments otherwise allowable as a deduc-
tion under section 220 for the taxable year which is
equal to the amount of credit allowed for such tax-
able year by reason of this subsection.
‘‘(e) SPECIAL RULES.—
‘‘(1) COORDINATION WITH MEDICAL EXPENSE
DEDUCTION.—The amount which would (but for this
paragraph) be taken into account by the taxpayer
under section 213 for the taxable year shall be re-
duced by the credit (if any) allowed by this section
to the taxpayer for such year.
‘‘(2) 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-
able year beginning in the calendar year in which
such individual’s taxable year begins.
‘‘(3) INFLATION ADJUSTMENT.—In the case of
any taxable year beginning in a calendar year after
2002, each dollar amount contained in subsection
(b)(2)(A) shall be increased by an amount equal
to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2001’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of $50
($25 in the case of the dollar amount in subsection
(b)(2)(A)(iii)).’’
(b) MAINTENANCE
OF EFFORT REQUIREMENT.—
Section 162 of such Code (relating to trade or business
expenses) is amended by redesignating subsection (p) as
subsection (q) and by inserting after subsection (o) the
following new subsection:
‘‘(p) GROUP HEALTH PLAN MAINTENANCE OF EF-
FORT.—No deduction shall be allowed under this chapter
to an employer for any amount paid or incurred in connec-
tion with a group health plan (as defined in subsection
(n)(3)) for any taxable year in which occurs the date of
introduction of the Fair Care for the Uninsured Act of
2001 unless such plan remains in effect for at least 60
months after the date of the enactment of such Act.’’.
(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
6050S the following new section:
‘‘SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR
QUALIFIED HEALTH INSURANCE.
‘‘(a) IN GENERAL.—Any person who, in connection
with a trade or business conducted by such person, re-
ceives payments during any calendar year from any indi-
vidual for coverage of such individual or any other indi-
vidual under creditable health insurance, shall make the
return described in subsection (b) (at such time as the
Secretary may by regulations prescribe) with respect to
each individual from whom such payments were received.
‘‘(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—
‘‘(A) the name, address, and TIN of the
individual from whom payments described in
subsection (a) were received,
‘‘(B) the name, address, and TIN of each
individual who was provided by such person
with coverage under creditable health insurance
by reason of such payments and the period of
such coverage, and
‘‘(C) such other information as the Sec-
retary may reasonably prescribe.
‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’
means qualified health insurance (as defined in section
35(c)) other than—
‘‘(1) insurance under a subsidized group health
plan maintained by an employer, or
‘‘(2) to the extent provided in regulations pre-
scribed by the Secretary, any other insurance cov-
ering an individual if no credit is allowable under
section 35 with respect to such coverage.
‘‘(d) 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
is required under subsection (b)(2)(A) to be set forth in
such return a written statement 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,
‘‘(2) the aggregate amount of payments de-
scribed in subsection (a) received by the person re-
quired to make such return from the individual to
whom the statement is required to be furnished, and
‘‘(3) the information required under subsection
(b)(2)(B) with respect to such payments.
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.
‘‘(e) 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) of such Code (relating to defini-
tions) is amended by redesignating clauses (xi)
through (xvii) as clauses (xii) through (xviii),
respectively, and by inserting after clause (x)
the following new clause:
‘‘(xi) section 6050T (relating to re-
turns relating to payments for qualified
health insurance),’’.
(B) Paragraph (2) of section 6724(d) of
such Code is amended by striking ‘‘or’’ at the
end of the next to last subparagraph, by strik-
ing the period at the end of the last subpara-
graph and inserting ‘‘, or’’, and by adding at
the end the following new subparagraph:
‘‘(BB) section 6050T(d) (relating to re-
turns relating to payments for qualified health
insurance).’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61 of such Code is amended by inserting
after the item relating to section 6050S the fol-
lowing new item:
‘‘Sec. 6050T. Returns relating to payments for qualified health
insurance.’’.
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 35 of such Code’’.
(2) The table of sections for subpart C of part
IV of subchapter A of chapter 1 of such Code is
amended by striking the last item and inserting the
following new items:
‘‘Sec. 35. Health insurance costs.
‘‘Sec. 36. Overpayments of tax.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 102. ADVANCE PAYMENT OF CREDIT FOR PUR-
CHASERS OF QUALIFIED HEALTH INSUR-
ANCE.
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 (relating to miscellaneous provisions)
is amended by adding at the end the following new section:
‘‘SEC. 7527. ADVANCE PAYMENT OF HEALTH INSURANCE
CREDIT FOR PURCHASERS OF QUALIFIED
HEALTH INSURANCE.
‘‘(a) GENERAL RULE.—In the case of an eligible indi-
vidual, the Secretary shall make payments to the provider
of such individual’s qualified health insurance equal to
such individual’s qualified health insurance credit advance
amount with respect to such provider.
‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this
section, the term ‘eligible individual’ means any
individual—
‘‘(1) who purchases qualified health insurance
(as defined in section 35(c)), and
‘‘(2) for whom a qualified health insurance
credit eligibility certificate is in effect.
‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI-
BILITY CERTIFICATE.—For purposes of this section, a
qualified health insurance credit eligibility certificate is a
statement furnished by an individual to the Secretary
which—
‘‘(1) certifies that the individual will be eligible
to receive the credit provided by section 35 for the
taxable year,
‘‘(2) estimates the amount of such credit for
such taxable year, and
‘‘(3) provides such other information as the
Secretary may require for purposes of this section.
‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD-
VANCE AMOUNT.—For purposes of this section, the term
‘qualified health insurance credit advance amount’ means,
with respect to any provider of qualified health insurance,
the Secretary’s estimate of the amount of credit allowable
under section 35 to the individual for the taxable year
which is attributable to the insurance provided to the indi-
vidual by such provider.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 of such Code is amended by adding at the
end the following new item:
‘‘Sec. 7527. Advance payment of health insurance credit for pur-
chasers of qualified health insurance.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2002.
TITLE II—ASSURING HEALTH IN-
SURANCE COVERAGE FOR UN-
INSURABLE INDIVIDUALS
SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY
NETS.
(a) IN GENERAL.—
(1) REQUIREMENT.—For years beginning with
2002, each health insurer, health maintenance orga-
nization, and health service organization shall be a
participant in a health insurance safety net (in this
title referred to as a ‘‘safety net’’) established by the
State in which it operates.
(2) FUNCTIONS.—Any safety net shall assure,
in accordance with this title, the availability of quali-
fied health insurance coverage to uninsurable indi-
viduals.
(3) FUNDING.—Any safety net shall be funded
by an assessment against health insurers, health
service organizations, and health maintenance orga-
nizations on a pro rata basis of premiums collected
in the State in which the safety net operates. The
costs of the assessment may be added by a health
insurer, health service organization, or health main-
tenance organization to the costs of its health insur-
ance or health coverage provided in the State.
(4) 
GUARANTEED
RENEWABLE.—Coverage
under a safety net shall be guaranteed renewable ex-
cept for nonpayment of premiums, material mis-
representation, fraud, medicare eligibility under title
XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.), loss of dependent status, or eligibility for other
health insurance coverage.
(5) COMPLIANCE WITH NAIC MODEL ACT.—In
the case of a State that has not established, as of
the date of the enactment of this Act, a high risk
pool or other comprehensive health insurance pro-
gram that assures the availability of qualified health
insurance coverage to all eligible individuals residing
in the State, a safety net shall be established in ac-
cordance with the requirements of the ‘‘Model
Health Plan For Uninsurable Individuals Act’’ (or
the successor model Act), as adopted by the Na-
tional Association of Insurance Commissioners and
as in effect on the date of the safety net’s establish-
ment.
(b) DEADLINE.—Safety nets required under sub-
section (a) shall be established not later than January 1,
2002.
(c) WAIVER.—This title shall not apply in the case
of insurers and organizations operating in a State if the
State has established a similar comprehensive health in-
surance program that assures the availability of qualified
health insurance coverage to all eligible individuals resid-
ing in the State.
(d) RECOMMENDATION FOR COMPLIANCE REQUIRE-
MENT.—Not later than January 1, 2003, the Secretary
of Health and Human Services shall submit to Congress
a recommendation on appropriate sanctions for States
that fail to meet the requirement of subsection (a).
SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COV-
ERAGE.
(a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DE-
FINED.—In this title:
(1) UNINSURABLE
INDIVIDUAL.—The term
‘‘uninsurable individual’’ means, with respect to a
State, an eligible individual who presents proof of
uninsurability by a private insurer in accordance
with subsection (b) or proof of a condition previously
recognized as uninsurable by the State.
(2) ELIGIBLE INDIVIDUAL.—
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means, with respect to a State, a citizen
or national of the United States (or an alien
lawfully admitted for permanent residence) who
is a resident of the State for at least 90 days
and includes any dependent (as defined for pur-
poses of the Internal Revenue Code of 1986)
of such a citizen, national, or alien who also is
such a resident.
(B) EXCEPTION.—An individual is not an
‘‘eligible individual’’ if the individual—
(i) is covered by or eligible for benefits
under a State medicaid plan approved
under title XIX of the Social Security Act
(42 U.S.C. 1396 et seq.),
(ii) has voluntarily terminated safety
net coverage within the past 6 months,
(iii) has received the maximum benefit
payable under the safety net,
(iv) is an inmate in a public institu-
tion, or
(v) is eligible for other public or pri-
vate health care programs (including pro-
grams that pay for directly, or reimburse,
otherwise eligible individuals with pre-
miums charged for safety net coverage).
(b) PROOF OF UNINSURABILITY.—
(1) IN GENERAL.—The proof of uninsurability
for an individual shall be in the form of—
(A) a notice of rejection or refusal to issue
substantially similar health insurance for health
reasons by one insurer; or
(B) a notice of refusal by an insurer to
issue substantially similar health insurance ex-
cept at a rate in excess of the rate applicable
to the individual under the safety net plan.
For purposes of this paragraph, the term ‘‘health in-
surance’’ does not include insurance consisting only
of stoploss, excess of loss, or reinsurance coverage.
(2) EXCEPTION FOR INDIVIDUALS WITH UNIN-
SURABLE CONDITIONS.—The State shall promulgate
a list of medical or health conditions for which an
individual shall be eligible for safety net plan cov-
erage without applying for health insurance or estab-
lishing proof of uninsurability under paragraph (1).
Individuals who can demonstrate the existence or
history of any medical or health conditions on such
list shall not be required to provide the proof de-
scribed in paragraph (1). The list shall be effective
on the first day of the operation of the safety net
plan and may be amended from time to time as may
be appropriate.
SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE
UNDER SAFETY NET.
In this title, the term ‘‘qualified health insurance cov-
erage’’ means, with respect to a State, health insurance
coverage that provides benefits typical of major medical
insurance available in the individual health insurance mar-
ket in such State.
SEC. 204. FUNDING OF SAFETY NET.
(a) LIMITATIONS ON PREMIUMS.—
(1) IN
GENERAL.—The premium established
under a safety net may not exceed 125 percent of
the applicable standard risk rate, except as provided
in paragraph (2).
(2) SURCHARGE
FOR
AVOIDABLE
HEALTH
RISKS.—A safety net may impose a surcharge on
premiums for individuals with avoidable high risks,
such as smoking.
(b) ADDITIONAL FUNDING.—A safety net shall pro-
vide for additional funding through an assessment on all
health insurers, health service organizations, and health
maintenance organizations in the State through a non-
profit association consisting of all such insurers and orga-
nizations doing business in the State on an equitable and
pro rata basis consistent with section 201.
SEC. 205. ADMINISTRATION.
A safety net in a State shall be administered through
a contract with 1 or more insurers or third party adminis-
trators operating in the State.
SEC. 206. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums
as may be necessary to reimburse States for their costs
in administering this title.
TITLE III—INDIVIDUAL
MEMBERSHIP ASSOCIATIONS
SEC. 301. EXPANSION OF ACCESS AND CHOICE THROUGH
INDIVIDUAL 
MEMBERSHIP 
ASSOCIATIONS
(IMAs).
The Public Health Service Act is amended by adding
at the end the following new title:
‘‘TITLE XXVIII—INDIVIDUAL MEMBERSHIP
ASSOCIATIONS
‘‘SEC. 2801. DEFINITION OF INDIVIDUAL MEMBERSHIP AS-
SOCIATION (IMA).
‘‘(a) IN GENERAL.—For purposes of this title, the
terms ‘individual membership association’ and ‘IMA’
mean a legal entity that meets the following requirements:
‘‘(1) ORGANIZATION.—The IMA is an organiza-
tion operated under the direction of an association
(as defined in section 2804(1)).
‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.—
‘‘(A) DIFFERENT GROUPS.—The IMA, in
conjunction with those health insurance issuers
that offer health benefits coverage through the
IMA, makes available health benefits coverage
in the manner described in subsection (b) to all
members of the IMA and the dependents of
such members in the manner described in sub-
section (c)(2) at rates that are established by
the health insurance issuer on a policy or prod-
uct specific basis and that may vary only as
permissible under State law.
‘‘(B) NONDISCRIMINATION
IN
COVERAGE
OFFERED.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the IMA may not offer health benefits
coverage to a member of an IMA unless
the same coverage is offered to all such
members of the IMA.
‘‘(ii) 
CONSTRUCTION.—Nothing 
in
this title shall be construed as requiring or
permitting a health insurance issuer to
provide coverage outside the service area of
the issuer, as approved under State law, or
preventing a health insurance issuer from
excluding or limiting the coverage on any
individual, subject to the requirement of
section 2741.
‘‘(C) NO FINANCIAL UNDERWRITING.—The
IMA provides health benefits coverage only
through contracts with health insurance issuers
and does not assume insurance risk with re-
spect to such coverage.
‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title
shall be construed as preventing the establishment
and operation of more than one IMA in a geographic
area or as limiting the number of IMAs that may
operate in any area.
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES
TO PURCHASERS.—
‘‘(A) IN GENERAL.—The IMA may provide
administrative services for members. Such serv-
ices may include accounting, billing, and enroll-
ment information.
‘‘(B) CONSTRUCTION.—Nothing in this
subsection shall be construed as preventing an
IMA from serving as an administrative service
organization to any entity.
‘‘(5) FILING
INFORMATION.—The IMA files
with the Secretary information that demonstrates
the IMA’s compliance with the applicable require-
ments of this title.
‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.—
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage
offered through an IMA shall—
‘‘(A) be underwritten by a health insurance
issuer that—
‘‘(i) is licensed (or otherwise regu-
lated) under State law,
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 2802(2), and
‘‘(iii) offers the coverage under a con-
tract with the IMA; and
‘‘(B) subject to paragraph (2) and section
2902(2), be approved or otherwise permitted to
be offered under State law.
‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The
benefits coverage made available through an IMA
may include, but is not limited to, any of the fol-
lowing if it meets the other applicable requirements
of this title:
‘‘(A) Coverage through a health mainte-
nance organization.
‘‘(B) Coverage in connection with a pre-
ferred provider organization.
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization.
‘‘(D) Indemnity coverage through an insur-
ance company.
‘‘(E) Coverage offered in connection with a
contribution into a medical savings account or
flexible spending account.
‘‘(F) Coverage that includes a point-of-
service option.
‘‘(G) Any combination of such types of
coverage.
‘‘(3) 
HEALTH
INSURANCE
COVERAGE
OP-
TIONS.—An IMA shall include a minimum of 2
health insurance coverage options. At least 1 option
shall meet all applicable State benefit mandates.
‘‘(4) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as
precluding a health insurance issuer offering health
benefits coverage through an IMA from establishing
premium discounts or rebates for members or from
modifying 
otherwise 
applicable 
copayments 
or
deductibles in return for adherence to programs of
health promotion and disease prevention so long as
such programs are agreed to in advance by the IMA
and comply with all other provisions of this title and
do not discriminate among similarly situated mem-
bers.
‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.—
‘‘(1) MEMBERS.—
‘‘(A) IN
GENERAL.—Under rules estab-
lished to carry out this title, with respect to an
individual who is a member of an IMA, the in-
dividual may apply for health benefits coverage
(including coverage for dependents of such indi-
vidual) offered by a health insurance issuer
through the IMA.
‘‘(B) RULES FOR ENROLLMENT.—Nothing
in this paragraph shall preclude an IMA from
establishing rules of enrollment and reenroll-
ment of members. Such rules shall be applied
consistently to all members within the IMA and
shall not be based in any manner on health sta-
tus-related factors.
‘‘(2) HEALTH INSURANCE ISSUERS.—The con-
tract between an IMA and a health insurance issuer
shall provide, with respect to a member enrolled with
health benefits coverage offered by the issuer
through the IMA, for the payment of the premiums
collected by the issuer.
‘‘SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS.
‘‘State laws insofar as they relate to any of the fol-
lowing are superseded and shall not apply to health bene-
fits coverage made available through an IMA:
‘‘(1) Benefit requirements for health benefits
coverage offered through an IMA, including (but not
limited to) requirements relating to coverage of spe-
cific providers, specific services or conditions, or the
amount, duration, or scope of benefits, but not in-
cluding requirements to the extent required to imple-
ment title XXVII or other Federal law and to the
extent the requirement prohibits an exclusion of a
specific disease from such coverage.
‘‘(2) Any other requirements (including limita-
tions on compensation arrangements) that, directly
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through an
IMA, if the IMA meets the requirements of this
title.
Any State law or regulation relating to the composition
or organization of an IMA is preempted to the extent the
law or regulation is inconsistent with the provisions of this
title.
‘‘SEC. 2803. ADMINISTRATION.
‘‘(a) IN GENERAL.—The Secretary shall administer
this title and is authorized to issue such regulations as
may be required to carry out this title. Such regulations
shall be subject to Congressional review under the provi-
sions of chapter 8 of title 5, United States Code. The Sec-
retary shall incorporate the process of ‘deemed file and
use’ with respect to the information filed under section
2801(a)(5)(A) and shall determine whether information
filed by an IMA demonstrates compliance with the applica-
ble requirements of this title. The Secretary shall exercise
authority under this title in a manner that fosters and
promotes the development of IMAs in order to improve
access to health care coverage and services.
‘‘(b) PERIODIC REPORTS.—The Secretary shall sub-
mit to Congress a report every 30 months, during the 10-
year period beginning on the effective date of the rules
promulgated by the Secretary to carry out this title, on
the effectiveness of this title in promoting coverage of un-
insured individuals. The Secretary may provide for the
production of such reports through one or more contracts
with appropriate private entities.
‘‘SEC. 2804. DEFINITIONS.
‘‘For purposes of this title:
‘‘(1) ASSOCIATION.—The term ‘association’
means, with respect to health insurance coverage of-
fered in a State, an association which—
‘‘(A) has been actively in existence for at
least 5 years;
‘‘(B) has been formed and maintained in
good faith for purposes other than obtaining in-
surance;
‘‘(C) does not condition membership in the
association on any health status-related factor
relating to an individual (including an employee
of an employer or a dependent of an employee);
and
‘‘(D) does not make health insurance cov-
erage offered through the association available
other than in connection with a member of the
association.
‘‘(2) DEPENDENT.—The term ‘dependent’, as
applied to health insurance coverage offered by a
health insurance issuer licensed (or otherwise regu-
lated) in a State, shall have the meaning applied to
such term with respect to such coverage under the
laws of the State relating to such coverage and such
an issuer. Such term may include the spouse and
children of the individual involved.
‘‘(3) HEALTH BENEFITS COVERAGE.—The term
‘health benefits coverage’ has the meaning given the
term 
health 
insurance 
coverage 
in 
section
2791(b)(1).
‘‘(4) HEALTH INSURANCE ISSUER.—The term
‘health insurance issuer’ has the meaning given such
term in section 2791(b)(2).
‘‘(5) HEALTH STATUS-RELATED FACTOR.—The
term ‘health status-related factor’ has the meaning
given such term in section 2791(d)(9).
‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA-
TION.—The terms ‘IMA’ and ‘individual membership
association’ are defined in section 2801(a).
‘‘(7) MEMBER.—The term ‘member’ means,
with respect to an IMA, an individual who is a mem-
ber of the association to which the IMA is offering
coverage.’’.
Æ