I 
110TH CONGRESS 
2D SESSION 
H. R. 5955 
To provide for comprehensive health reform. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 1, 2008 
Mr. WALBERG (for himself, Mr. FRANKS of Arizona, Mr. FEENEY, Mr. KLINE 
of Minnesota, Mr. TIAHRT, Mr. CHABOT, and Mr. BARTLETT of Mary-
land) introduced the following bill; which was referred to the Committee 
on Energy and Commerce, and in addition to the Committees on Edu-
cation and Labor, Judiciary, and 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 con-
cerned 
A BILL 
To provide for comprehensive health reform. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Making Health Care More Affordable Act of 2008’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—HEALTH INSURANCE TAX CREDIT 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6211
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
Sec. 101. Refundable credit for health insurance coverage. 
Sec. 102. Advance payment of credit for purchasers of qualified health insur-
ance. 
TITLE II—SMALL BUSINESS HEALTH PLANS 
Sec. 201. Rules governing association health plans. 
Sec. 202. Clarification of treatment of single employer arrangements. 
Sec. 203. Enforcement provisions relating to association health plans. 
Sec. 204. Cooperation between Federal and State authorities. 
Sec. 205. Effective date and transitional and other rules. 
TITLE III—PURCHASE HEALTH INSURANCE ACROSS STATE 
LINES 
Sec. 301. Cooperative governing of individual health insurance coverage. 
Sec. 302. Severability. 
TITLE IV—EXPANSION OF HEALTH SAVINGS ACCOUNTS 
Subtitle A—Promoting Health for Future Generations 
Sec. 401. Short title. 
Sec. 402. Increase in HSA contribution limitation. 
Sec. 403. Medicare and VA healthcare enrollees eligible to contribute to HSA. 
Sec. 404. Expanding additional contributions limitation. 
Sec. 405. Eligibility to contribute to HSA. 
Sec. 406. Deduction of premiums for high deductible health plans. 
Sec. 407. MSA plan deductible exception for preventive care. 
Sec. 408. Permitting individual contributions to Medicare Advantage MSA. 
Sec. 409. Allowing MSA and HSA rollover to adult child of account holder. 
Sec. 410. Permitting Medicare Advantage MSA funds to be used for wellness 
and fitness programs. 
Sec. 411. Health reimbursement arrangements and spending arrangements in 
combination with health savings accounts. 
Sec. 412. Special rule for certain medical expenses incurred before establish-
ment of account. 
Sec. 413. Allow both spouses to make catch-up contributions to the same HSA 
account. 
Sec. 414. FSA and HRA Termination to fund HSAs. 
Subtitle B—Increased Access to Health Insurance Through HSAs 
Sec. 421. Short title. 
Sec. 422. Purchase of health insurance from health savings accounts. 
TITLE V—HEALTH CARE TORT REFORM 
Sec. 501. Findings and purpose. 
Sec. 502. Encouraging speedy resolution of claims. 
Sec. 503. Compensating patient injury. 
Sec. 504. Maximizing patient recovery. 
Sec. 505. Additional health tort reform benefits. 
Sec. 506. Punitive damages. 
Sec. 507. Authorization of payment of future damages to claimants in health 
care lawsuits. 
Sec. 508. Definitions. 
Sec. 509. Effect on other laws. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6211
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
Sec. 510. State flexibility and protection of states’ rights. 
Sec. 511. Applicability; effective date. 
Sec. 512. Sense of Congress. 
TITLE VI—HEALTH INFORMATION TECHNOLOGY 
Subtitle A—Assisting the Development of Health Information Technology 
Sec. 601. Purpose. 
Sec. 602. Health record banking. 
Sec. 603. Application of Federal and State security and confidentiality stand-
ards. 
Subtitle B—Promoting the Use of Health Information Technology to Better 
Coordinate Health Care 
Sec. 611. Safe harbors to antikickback civil penalties and criminal penalties for 
provision of health information technology and training serv-
ices. 
Sec. 612. Exception to limitation on certain physician referrals (under stark) 
for provision of health information technology and training 
services to health care professionals. 
Sec. 613. Rules of construction regarding use of consortia. 
TITLE I—HEALTH INSURANCE 
TAX CREDIT 
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 TAX CREDIT. 
‘‘(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 and the taxpayer’s spouse or dependent. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 the 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 the qualified health in-
surance amount. 
‘‘(B) 
QUALIFIED
HEALTH
INSURANCE 
AMOUNT.—For purposes of this paragraph, the 
qualified health insurance amount is— 
‘‘(i) $2,500 if such individual is the 
taxpayer, 
‘‘(ii) $2,500 if such individual is the 
spouse of the taxpayer, the taxpayer and 
such spouse are married as of the first day 
of such month, and the taxpayer files a 
joint return for the taxable year, or 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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. 
‘‘(C) LIMITATION ON DEPENDENTS.—Not 
more than 2 individuals may be taken into ac-
count by the taxpayer under subparagraph 
(B)(iii). 
‘‘(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) MEDICARE.—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 has not made an election to establish and 
maintain a Medical Retirement Account under 
section 252(a)(2) of the Social Security Act and 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
is entitled to benefits under title XVIII of the 
Social Security Act. 
‘‘(C) 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 55 of title 10, United 
States Code, 
‘‘(ii) chapter 17 of title 38, United 
States Code, or 
‘‘(iii) any medical care program under 
the Indian Health Care Improvement Act. 
‘‘(D) 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. 
‘‘(E) 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)). 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified health 
insurance’ means any health plan (within the mean-
ing of section 223(c)(2)) determined without regard 
to any annual deductible requirement. 
‘‘(2) ANNUAL
WELLNESS
EXAM.—Such term 
shall include an annual wellness exam fee not to ex-
ceed $150 ($100 in the case of an annual child 
wellness exam) if such exam is not covered by the 
insurance. 
‘‘(d) ARCHER MSA AND HEALTH SAVINGS ACCOUNT 
CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—If a deduction would (but 
for paragraph (2)) be allowed under section 220 or 
223 to the taxpayer for a payment for the taxable 
year to the Archer MSA or health savings account 
of an individual, subsection (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 or 223 for 
that portion of the payments otherwise allowable as 
a deduction under section 220 or 223 for the taxable 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
year which is equal to the amount of credit allowed 
for such taxable year by reason of this subsection. 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) MARRIED COUPLES MUST FILE JOINT RE-
TURN.—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 the tax-
payer’s spouse file a joint return for the taxable 
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) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under subsection (a) if the credit 
under section 35 is allowed and no credit shall be al-
lowed under 35 if a credit is allowed under this sec-
tion. 
‘‘(4) COORDINATION
WITH
DEDUCTION
FOR 
HEALTH INSURANCE COSTS.—In the case of a tax-
payer who is eligible to deduct any amount under 
section 162(l) or 213 for the taxable year, this sec-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(C) GDP FOR ANY CALENDAR YEAR.— 
For purposes of subparagraph (B), the GDP 
for any calendar year is the average of the 
chain-weighted price index for the gross domes-
tic product as of the close of the 12-month pe-
riod ending on March 31 of such calendar year. 
‘‘(D) CHAIN-WEIGHTED PRICE INDEX FOR 
THE
GROSS
DOMESTIC
PRODUCT.—For pur-
poses of subparagraph (C), the term ‘chain- 
weighted price index for the gross domestic 
product’ means the last chain-weighted price 
index for the gross domestic product published 
by the Department of Commerce. 
‘‘(E) ROUNDING.—Any increase deter-
mined under subparagraph (A) shall be rounded 
to the nearest multiple of $50.’’. 
(b) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 (relating to information concerning 
transactions with other persons) is amended by in-
serting after section 6050V the following new sec-
tion: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘SEC. 6050W. 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. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’ 
means qualified health insurance (as defined in section 
36(c)) other than, to the extent provided in regulations 
prescribed by the Secretary, any insurance covering an in-
dividual if no credit is allowable under section 36 with re-
spect 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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 (xv) 
through (xx) as clauses (xvi) through (xxi), re-
spectively, and by inserting after clause (xi) the 
following new clause: 
‘‘(xv) section 6050W (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 the period at 
the end of subparagraph (CC) and inserting ‘‘, 
or’’ and by adding at the end the following new 
subparagraph: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(DD) section 6050W(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 6050V the fol-
lowing new item: 
‘‘Sec. 6050W. Returns relating to payments for qualified health insurance.’’. 
(c) 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 36 of such Code’’. 
(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 striking the last 
item and inserting the following new items: 
‘‘Sec. 36. Qualified health insurance tax credit. 
‘‘Sec. 37. Overpayments of tax.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 7529. ADVANCE PAYMENT OF QUALIFIED HEALTH IN-
SURANCE TAX CREDIT. 
‘‘(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 indi-
vidual— 
‘‘(1) who purchases qualified health insurance 
(as defined in section 36(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— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(1) certifies that the individual will be eligible 
to receive the credit provided by section 36 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 36 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 the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item: 
‘‘Sec. 7529. Advance payment of qualified health insurance tax credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
TITLE II—SMALL BUSINESS 
HEALTH PLANS 
SEC. 
201. 
RULES 
GOVERNING 
ASSOCIATION 
HEALTH 
PLANS. 
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed 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-
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-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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) 
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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). 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 the Making Health Care 
More Affordable Act of 2008, 
‘‘(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 
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 
‘‘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. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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.— 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
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, 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 the Making 
Health Care More Affordable Act of 2008. 
‘‘(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— 
‘‘(1) the requirements of subsection (a) and sec-
tion 801(a) shall be deemed met if such require-
ments would otherwise be met if the franchiser were 
deemed to be the sponsor referred to in section 
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
were deemed to be a member (of the association and 
the sponsor) referred to in section 801(b); and 
‘‘(2) the requirements of section 804(a)(1) shall 
be deemed met. 
The Secretary may by regulation define for purposes of 
this subsection the terms ‘franchiser’, ‘franchise network’, 
and ‘franchisee’. 
‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE-
MENTS. 
‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 
requirements of this subsection are met with respect to 
an association health plan if, under the terms of the 
plan— 
‘‘(1) each participating employer must be— 
‘‘(A) a member of the sponsor, 
‘‘(B) the sponsor, or 
‘‘(C) an affiliated member of the sponsor 
with respect to which the requirements of sub-
section (b) are met, 
except that, in the case of a sponsor which is a pro-
fessional association or other individual-based asso-
ciation, if at least one of the officers, directors, or 
employees of an employer, or at least one of the in-
dividuals who are partners in an employer and who 
actively participates in the business, is a member or 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
such an affiliated member of the sponsor, partici-
pating employers may also include such employer; 
and 
‘‘(2) all individuals commencing coverage under 
the plan after certification under this part must 
be— 
‘‘(A) active or retired owners (including 
self-employed individuals), officers, directors, or 
employees of, or partners in, participating em-
ployers; or 
‘‘(B) the beneficiaries of individuals de-
scribed in subparagraph (A). 
‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM-
PLOYEES.—In the case of an association health plan in 
existence on the date of the enactment of the Making 
Health Care More Affordable Act of 2008, an affiliated 
member of the sponsor of the plan may be offered coverage 
under the plan as a participating employer only if— 
‘‘(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-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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— 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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— 
‘‘(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)); 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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— 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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-
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. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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— 
‘‘(i) a reserve sufficient for unearned 
contributions; 
‘‘(ii) a reserve sufficient for benefit li-
abilities which have been incurred, which 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
in the amount of such percentage in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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-
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-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
considers appropriate. Such requirements may be provided 
by regulation with respect to any such plan or any class 
of such plans. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
applicable terms of the plan in the form of assessments 
of participating employers, security, or other financial ar-
rangement. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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. 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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-
retary of the Treasury in obligations issued or 
guaranteed by the United States. 
‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 
of this section— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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-
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 the Making Health Care 
More Affordable Act of 2008, the applicable author-
ity 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; 
‘‘(C) a representative of the State govern-
ments, or their interests; 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
be prescribed by the applicable authority by regulation, at 
least the following information: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
plan and contract administrators and other service 
providers. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
expected coverage and experience of the plan. If 
the contribution rates are not fully adequate, 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to an 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
annual report under such section which shall include infor-
mation described in subsection (b)(6) with respect to the 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
‘‘(2) represent such actuary’s best estimate of 
anticipated experience under the plan. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00052
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00053
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00054
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00055
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00056
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 the Making Health Care More Affordable 
Act of 2008. 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00057
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
residents of such State, which are received by the 
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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00058
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00059
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00060
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00061
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of the Making Health Care More Affordable 
Act of 2008, 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00062
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00063
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.— 
(1) 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.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144) 
is amended— 
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and 
(d)’’; 
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting 
‘‘subsection (a) of this section and subsections 
(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and 
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’; 
(C) by redesignating subsection (d) as sub-
section (e); and 
(D) by inserting after subsection (c) the 
following new subsection: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00064
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00065
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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-
ticipating employer’, and ‘health insurance issuer’ have 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00066
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(B) 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 the Making 
Health Care More Affordable Act of 2008 shall be con-
strued to alter, amend, modify, invalidate, impair, or su-
persede any provision of this title, except by specific cross- 
reference to the affected section.’’. 
(c) 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.’’. 
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED 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 association health plan shall 
include in its summary plan description, in connection 
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to 
this Act or applicable State law, if any.’’. 
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is 
amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00068
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
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, Education, Labor, and Pensions of 
the Senate the effect association health plans have had, 
if any, on reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items: 
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘801. Association health plans. 
‘‘802. Certification of association health plans. 
‘‘803. Requirements relating to sponsors and boards of trustees. 
‘‘804. Participation and coverage requirements. 
‘‘805. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘806. Maintenance of reserves and provisions for solvency for plans providing 
health benefits in addition to health insurance coverage. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Corrective actions and mandatory termination. 
‘‘810. Trusteeship by the Secretary of insolvent association health plans pro-
viding health benefits in addition to health insurance coverage. 
‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
SEC. 202. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00069
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(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-
tion 4001(b), except that, for purposes of this para-
graph, an interest of greater than 25 percent may 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00070
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 em-
ployer and who are covered under the arrangement 
is greater than 75 percent of the aggregate number 
of all individuals who are employees or former em-
ployees of participating employers and who are cov-
ered under the arrangement,’’. 
SEC. 203. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS. 
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL 
MISREPRESENTATIONS.—Section 501 of the Employee 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00071
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
Retirement Income Security Act of 1974 (29 U.S.C. 1131) 
is amended— 
(1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(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 
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement described in 
section 3(40)(A)(I), 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00072
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) 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 
‘‘(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, 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00073
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.— 
Section 503 of such Act (29 U.S.C. 1133) is amended by 
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 
and by adding at the end the following new subsection: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00074
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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.’’. 
SEC. 204. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity 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 
‘‘(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. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00075
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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.’’. 
SEC. 205. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this title shall take effect 1 year after the date of the en-
actment of this Act. The Secretary of Labor shall first 
issue all regulations necessary to carry out the amend-
ments made by this title within 1 year after the date of 
the enactment of this Act. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00076
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00077
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which— 
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection 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 subsection are not 
met with respect to such arrangement. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00078
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
(2) DEFINITIONS.—For purposes of this sub-
section, 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 paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section. 
TITLE III—PURCHASE HEALTH 
INSURANCE 
ACROSS 
STATE 
LINES 
SEC. 
301. 
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 
‘‘DEFINITIONS 
‘‘SEC. 2795. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00079
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00080
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 
‘‘(7) COVERED LAWS.— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00081
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00082
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00083
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00084
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00085
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00086
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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. 
‘‘APPLICATION OF LAW 
‘‘SEC. 2796. 
‘‘(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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00087
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00088
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00089
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00090
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 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 llllllllllll and is governed 
by 
the 
laws 
and 
regulations 
of 
the 
State 
of 
llllllllllll, and it has met all the laws 
of that State as determined by that State’s Department 
of Insurance. This policy may be less expensive than oth-
ers because it is not subject to all of the insurance laws 
and 
regulations 
of 
the 
State 
of 
llllllllllll, including coverage of some 
services or benefits mandated by the law of the State of 
llllllllllll. Additionally, this policy is 
not subject to all of the consumer protection laws or re-
strictions 
on 
rate 
changes 
of 
the 
State 
of 
llllllllllll. As with all insurance prod-
ucts, before purchasing this policy, you should carefully 
review the policy and determine what health care services 
the policy covers and what benefits it provides, including 
any exclusions, limitations, or conditions for such services 
or benefits.’ 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00091
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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— 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00092
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00093
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00094
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00095
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00096
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
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. 
‘‘PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE 
ISSUER MAY SELL INTO SECONDARY STATES 
‘‘SEC. 2797. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
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. 
‘‘INDEPENDENT EXTERNAL APPEALS PROCEDURES 
‘‘SEC. 2798. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00097
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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 
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)— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00098
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
‘‘(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— 
‘‘(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. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00099
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
100 
‘‘(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— 
‘‘(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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00100
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
101 
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). 
‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL 
IN SAME FIELD.— 
‘‘(A) IN
GENERAL.—In a case involving 
treatment, or the provision of items or serv-
ices— 
‘‘(i) by a physician, a reviewer shall be 
a practicing physician (allopathic or osteo-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00101
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
102 
pathic) of the same or similar specialty, as 
a physician who, acting within the appro-
priate scope of practice within the State in 
which the service is provided or rendered, 
typically treats the condition, makes the 
diagnosis, or provides the type of treat-
ment under review; or 
‘‘(ii) by a non-physician health care 
professional, the reviewer, or at least 1 
member of the review panel, shall be a 
practicing non-physician health care pro-
fessional of the same or similar specialty 
as the non-physician health care profes-
sional who, acting within the appropriate 
scope of practice within the State in which 
the service is provided or rendered, typi-
cally treats the condition, makes the diag-
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 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00102
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
103 
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. 
‘‘(B) The enrollee (or authorized represent-
ative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00103
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
104 
‘‘(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 
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
‘‘ENFORCEMENT 
‘‘SEC. 2799. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00104
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
105 
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 
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-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
106 
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). 
SEC. 302. SEVERABILITY. 
If any provision of the Act or the application of such 
provision to any person or circumstance is held to be un-
constitutional, the remainder of this Act and the applica-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
107 
tion of the provisions of such to any other person or cir-
cumstance shall not be affected. 
TITLE IV—EXPANSION OF 
HEALTH SAVINGS ACCOUNTS 
Subtitle A—Promoting Health for 
Future Generations 
SEC. 401. SHORT TITLE. 
This subtitle may be cited as the ‘‘Promoting Health 
for Future Generations Act of 2008’’. 
SEC. 402. INCREASE IN HSA CONTRIBUTION LIMITATION. 
(a) IN GENERAL.—Subsection (b) of section 223 of 
the Internal Revenue Code of 1986 (relating to monthly 
limitation) is amended— 
(1) by striking ‘‘$2,250’’ in paragraph (2)(A) 
and inserting ‘‘the amount in effect under subsection 
(c)(2)(A)(ii)(I)’’, and 
(2) by striking ‘‘$4,500’’ in paragraph (2)(B) 
and inserting ‘‘the amount in effect under subsection 
(c)(2)(A)(ii)(II)’’. 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 223(g) of such Code is amended by striking ‘‘sub-
sections (b)(2)’’ and inserting ‘‘subsection’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions in taxable years 
beginning after December 31, 2008. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
108 
SEC. 403. MEDICARE AND VA HEALTHCARE ENROLLEES EL-
IGIBLE TO CONTRIBUTE TO HSA. 
(a) IN GENERAL.—(1) Subsection (b) of section 223 
of the Internal Revenue Code of 1986 is amended by strik-
ing paragraph (7). 
(2) Subsection (c) of section 223 of such Code (relat-
ing to definitions and special rules) is amended by adding 
at the end to following new paragraph: 
‘‘(6) SPECIAL
RULE
FOR
INDIVIDUALS
ENTI-
TLED
TO
BENEFITS
UNDER
MEDICARE
OR
EN-
ROLLED FOR HEALTH BENEFITS FROM VA.—In the 
case of an individual— 
‘‘(A)(i) who is entitled to benefits under 
title XVIII of the Social Security Act, and 
‘‘(ii) with respect to whom a health savings 
account is established in a month before the 
first month such individual is entitled to such 
benefits, or 
‘‘(B)(i) who is enrolled in the patient en-
rollment system established by the Secretary of 
Veterans Affairs pursuant to section 1705 of 
title 38, United States Code, and 
‘‘(ii) with respect to whom a health savings 
account is established in a month before the 
first month such individual is enrolled in such 
system, 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
109 
such individual shall be deemed to be an eligible in-
dividual.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 404. EXPANDING ADDITIONAL CONTRIBUTIONS LIMI-
TATION. 
(a) IN GENERAL.— 
(1) AGE
LIMITATION.—Subparagraph (A) of 
section 223(b)(3) of the Internal Revenue Code of 
1986 (relating to additional contributions for indi-
viduals 55 or older) is amended by striking ‘‘age 55’’ 
and inserting ‘‘age 50’’. 
(2) CONTRIBUTION
LIMITATION.—The table 
contained in section 223(b)(3) of such Code is 
amended by striking ‘‘$1,000’’ and inserting 
‘‘$2,000’’. 
(3) CONFORMING AMENDMENT.—Paragraph (3) 
of section 223(b) of such Code is amended in the 
heading by striking ‘‘55’’ and inserting ‘‘50’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
110 
SEC. 405. ELIGIBILITY TO CONTRIBUTE TO HSA. 
(a) INDIVIDUALS ELIGIBLE FOR REIMBURSEMENT 
UNDER
SPOUSE’S
FLEXIBLE
SPENDING
ARRANGE-
MENT.—Section 223(c)(1) of the Internal Revenue Code 
of 1986 (defining eligible individual) is amended by adding 
at the end the following new subparagraph: 
‘‘(C) SPECIAL RULE FOR CERTAIN FLEXI-
BLE SPENDING ARRANGEMENTS.—For purposes 
of subparagraph (A)(ii), an individual shall not 
be treated as covered under a health plan de-
scribed in such subparagraph merely because 
the individual is covered under a flexible spend-
ing arrangement (within the meaning of section 
106(c)(2)) which is maintained by an employer 
of the spouse of the individual, but only if— 
‘‘(i) the employer is not also the em-
ployer of the individual, and 
‘‘(ii) the individual certifies to the em-
ployer and to the Secretary (in such form 
and manner as the Secretary may pre-
scribe) that the individual and the individ-
ual’s spouse will not accept reimbursement 
under the arrangement for any expenses 
for medical care provided to the indi-
vidual.’’. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00110
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
111 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 406. DEDUCTION OF PREMIUMS FOR HIGH DEDUCT-
IBLE HEALTH PLANS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions for individuals) is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
‘‘SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 
PLANS. 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual, there shall be allowed as a deduction for the tax-
able year the aggregate amount paid by the taxpayer as 
premiums under a high deductible health plan with respect 
to months during such year for which such individual is 
an eligible individual with respect to such health plan. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means an individual who— 
‘‘(A) is described in section 223(c)(1), and 
‘‘(B) is the taxpayer or the taxpayer’s 
spouse and dependents. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00111
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
112 
‘‘(2) HIGH DEDUCTIBLE HEALTH PLAN.—The 
term ‘high deductible health plan’ has the meaning 
given such term by section 223(c)(2). 
‘‘(c) SPECIAL RULES.— 
‘‘(1) DEDUCTION LIMITS.— 
‘‘(A) DEDUCTION ALLOWABLE FOR ONLY 1 
PLAN.—For purposes of this section, in the 
case of an individual covered by more than 1 
high deductible health plan for any month, the 
individual may only take into account amounts 
paid for such month for the plan with the low-
est premium. 
‘‘(B) PLANS COVERING INELIGIBLE INDI-
VIDUALS.—If 2 or more individuals are covered 
by a high deductible health plan for any month 
but only 1 of such individuals is an eligible indi-
vidual for such month, only 50 percent of the 
aggregate amount paid by such eligible indi-
vidual as premiums under the plan with respect 
to such month shall be taken into account for 
purposes of this section. 
‘‘(2) GROUP HEALTH PLAN COVERAGE.— 
‘‘(A) IN GENERAL.—No deduction shall be 
allowed for an individual under subsection (a) 
for any amount paid for coverage under a high 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00112
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
113 
deductible health plan for a month if that indi-
vidual participates in any coverage under a 
group health plan (within the meaning of sec-
tion 5000 without regard to section 5000(d)). 
For purposes of the preceding sentence, an ar-
rangement which constitutes individual health 
insurance shall not be treated as a group health 
plan if such arrangement is a high deductible 
health plan (as defined in section 223(c)(2)), or 
is a payment by an employer or employee orga-
nization with respect to such high deductible 
health plan, notwithstanding that an employer 
or employee organization negotiates the cost or 
benefits of such arrangement. 
‘‘(B) EXCEPTION FOR PLANS ONLY PRO-
VIDING
CONTRIBUTIONS
TO
HEALTH
SAVINGS 
ACCOUNTS.—Subparagraph (A) shall not apply 
to an individual if the individual’s only coverage 
under a group health plan for a month consists 
of contributions by an employer to a health sav-
ings account with respect to which the indi-
vidual is the account beneficiary. 
‘‘(C) EXCEPTION
FOR
CERTAIN
PER-
MITTED
COVERAGE.—Subparagraph (A) shall 
not apply to an individual if the individual’s 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00113
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
114 
only coverage under a group health plan for a 
month is coverage described in clause (i) or (ii) 
of section 223(c)(1)(B). 
‘‘(3) MEDICAL
AND
HEALTH
SAVINGS
AC-
COUNTS.—Subsection (a) shall not apply with re-
spect to any amount which is paid or distributed out 
of an Archer MSA or a health savings account which 
is not included in gross income under section 220(f) 
or 223(f), as the case may be. 
‘‘(4) COORDINATION
WITH
DEDUCTION
FOR 
HEALTH INSURANCE OF SELF-EMPLOYED INDIVID-
UALS.—Any amount taken into account by the tax-
payer in computing the deduction under section 
162(l) shall not be taken into account under this 
section. 
‘‘(5) COORDINATION WITH MEDICAL EXPENSE 
DEDUCTION.—Any amount taken into account by 
the taxpayer in computing the deduction under this 
section shall not be taken into account under section 
213.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting before 
the last sentence at the end the following new paragraph: 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00114
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
115 
‘‘(22) PREMIUMS
FOR
HIGH
DEDUCTIBLE 
HEALTH PLANS.—The deduction allowed by section 
224.’’. 
(c) COORDINATION WITH SECTION 35 HEALTH IN-
SURANCE COSTS CREDIT.—Section 35(g)(2) of such Code 
(relating to coordination with other deductions) is amend-
ed by striking ‘‘or 213’’ and inserting ‘‘, 213, or 224’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by redesignating the item relating to section 
224 as an item relating to section 225 and by inserting 
before such item the following new item: 
‘‘Sec. 224. Premiums for high deductible health plans.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 407. MSA PLAN DEDUCTIBLE EXCEPTION FOR PRE-
VENTIVE CARE. 
(a) IN GENERAL.—Paragraph (3) of section 1859(b) 
of the Social Security Act (42 U.S.C. 1359w–28(b)) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) EXCEPTION FOR ABSENCE OF PRE-
VENTIVE CARE DEDUCTIBLE.—A plan shall not 
fail to be treated as a MSA plan by reason of 
failing to have a deductible for preventive care 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00115
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
116 
(within the meaning of such term as applied for 
purposes of section 223(c)(2)(C) of the Internal 
Revenue Code of 1986).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on January 1, 2009. 
SEC. 408. PERMITTING INDIVIDUAL CONTRIBUTIONS TO 
MEDICARE ADVANTAGE MSA. 
(a) IN GENERAL.—Paragraph (2) of section 138(b) 
of the Internal Revenue Code of 1986 (defining Medicare 
Advantage MSA) is amended by striking ‘‘or’’ at the end 
of subparagraph (A), by inserting ‘‘or’’ at the end of sub-
paragraph (B), and by adding at the end the following 
new subparagraph: 
‘‘(C) any contributions by or for the ben-
efit of the account holder (other than a con-
tribution described in subparagraph (A)) for 
the taxable year, the sum of which do not ex-
ceed the difference of— 
‘‘(i) the amount of the annual deduct-
ible (described in section 1859(b)(3)(B) of 
the Social Security Act) for the MSA plan 
in which the individual is enrolled, over 
‘‘(ii) the amount of contributions de-
scribed in subparagraph (A) for the tax-
able year,’’. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00116
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
117 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 409. ALLOWING MSA AND HSA ROLLOVER TO ADULT 
CHILD OF ACCOUNT HOLDER. 
(a) MSAS.—(1) Subparagraph (A) of section 
220(f)(8) of the Internal Revenue Code of 1986 (relating 
to treatment after death of account holder) is amended— 
(A) by inserting ‘‘or adult child’’ after ‘‘sur-
viving spouse’’, 
(B) by inserting ‘‘or adult child, as the case 
may be,’’ after ‘‘the spouse’’, and 
(C) by inserting ‘‘OR
ADULT
CHILD’’ after 
‘‘SPOUSE’’ in the heading thereof. 
(2) Paragraph (8) of section 220(f) of such Code is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) ADULT CHILD.—For purposes of this 
paragraph, the term ‘adult child’ means an in-
dividual— 
‘‘(i) who is a child of the deceased in-
dividual, and 
‘‘(ii) with respect to whom a deduc-
tion under section 151 would not be allow-
able to another taxpayer for a taxable year 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00117
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
118 
beginning in the calendar year in which 
such individual’s taxable year begins.’’. 
(b) HSAS.—(1) Subparagraph (A) of section 
223(f)(8) of such Code (relating to treatment after death 
of account beneficiary) is amended— 
(A) by inserting ‘‘or adult child’’ after ‘‘sur-
viving spouse’’, 
(B) by inserting ‘‘or adult child, as the case 
may be,’’ after ‘‘the spouse’’, and 
(C) by inserting ‘‘OR
ADULT
CHILD’’ after 
‘‘SPOUSE’’ in the heading thereof. 
(2) Paragraph (8) of section 223(f) of such Code is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) ADULT CHILD.—For purposes of this 
paragraph, the term ‘adult child’ has the mean-
ing 
given 
to 
such 
term 
by 
section 
220(f)(8)(C).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00118
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
119 
SEC. 410. PERMITTING MEDICARE ADVANTAGE MSA FUNDS 
TO BE USED FOR WELLNESS AND FITNESS 
PROGRAMS. 
(a) IN GENERAL.—Paragraph (1) of section 138(c) 
of the Internal Revenue Code of 1986 (relating to special 
rules for distributions) is amended by striking ‘‘and’’ at 
the end of subparagraph (A), by striking the period at 
the end of subparagraph (B) and inserting ‘‘, and’’, and 
by adding at the end the following new subparagraph: 
‘‘(C) qualified medical expenses shall in-
clude amounts paid to a gym for enrollment in 
a wellness or fitness program.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 411. HEALTH REIMBURSEMENT ARRANGEMENTS AND 
SPENDING ARRANGEMENTS IN COMBINATION 
WITH HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Subparagraph (B) of section 
223(c)(1) of the Internal Revenue Code of 1986 (relating 
to certain coverage disregarded) is amended by striking 
‘‘and’’ at the end of clause (ii), by striking the period at 
the end of clause (iii) and inserting ‘‘, and’’, and by insert-
ing after clause (iii) the following new clause: 
‘‘(iv) coverage under a flexible spend-
ing arrangement or a health reimburse-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00119
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
120 
ment arrangement, or both, which meets 
the requirements of paragraph (7).’’. 
(b) COMBINATION HEALTH REIMBURSEMENT, SAV-
INGS, AND SPENDING ARRANGEMENTS.—Subsection (c) of 
section 223 of such Code (relating to definitions and spe-
cial rules), as amended by this Act, is amended by adding 
at the end the following new paragraph: 
‘‘(7) COMBINED LIMIT FOR CONTRIBUTIONS OR 
CREDITS TO HEALTH REIMBURSEMENT, ARRANGE-
MENTS AND SPENDING ARRANGEMENTS.— 
‘‘(A) IN GENERAL.—In the case of cov-
erage under a flexible spending arrangement or 
a health reimbursement arrangement, or both, 
such coverage meets the requirements of this 
paragraph if, with respect to an individual— 
‘‘(i) the sum of— 
‘‘(I) the amount allowable as a 
deduction under subsection (a), 
‘‘(II) 
the 
salary 
reduction 
amount elected by the individual and, 
if applicable, the employer contribu-
tion or credit allocated to the indi-
vidual for the taxable year under the 
flexible spending arrangement (as de-
fined in section 106(c)(2)), plus 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00120
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
121 
‘‘(III) the amounts that the indi-
vidual is permitted, under the terms 
of the plan, to receive in reimburse-
ments for the taxable year under the 
health reimbursement arrangement, 
does not exceed 
‘‘(ii) the sum of the annual deductible 
and the other annual out-of-pocket ex-
penses (other than for premiums) required 
to be paid under the plan by the eligible 
individual for covered benefits. 
‘‘(B) EXCEPTIONS FOR DISREGARDED COV-
ERAGE.—For purposes of subparagraph (A)— 
‘‘(i) CERTAIN
FLEXIBLE
SPENDING 
ARRANGEMENTS.—Any flexible spending 
arrangement salary reduction amounts or 
employer contributions or credits that are 
restricted by the employer to use for cov-
erage described in paragraph (1)(B) shall 
not be taken into account under subpara-
graph (A)(i)(II). 
‘‘(ii) CERTAIN
HEALTH
REIMBURSE-
MENT
ARRANGEMENTS.—Any reimburse-
ments from a health reimbursement ar-
rangement for coverage described in para-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00121
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
122 
graph (1)(B) shall not be taken into ac-
count under subparagraph (A)(i)(III). 
‘‘(iii) QUALIFIED HSA DISTRIBUTIONS 
FROM FSA AND HRA TERMINATIONS.—Any 
qualified HSA distribution (as defined in 
section 106(e)) shall not be taken into ac-
count under subparagraph (A)(i). 
‘‘(C) TERMINATION.—Coverage shall not 
be treated as meeting the requirements of this 
paragraph for any taxable year beginning after 
December 31, 2012.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 412. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 
INCURRED BEFORE ESTABLISHMENT OF AC-
COUNT. 
(a) IN GENERAL.—Subsection (d) of section 223 of 
the Internal Revenue Code of 1986 is amended by redesig-
nating paragraph (4) as paragraph (5) and by inserting 
after paragraph (3) the following new paragraph: 
‘‘(4) CERTAIN MEDICAL EXPENSES INCURRED 
BEFORE ESTABLISHMENT OF ACCOUNT TREATED AS 
QUALIFIED.— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00122
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
123 
‘‘(A) IN GENERAL.—For purposes of para-
graph (2), an expense shall not fail to be treat-
ed as a qualified medical expense solely because 
such expense was incurred before the establish-
ment of the health savings account if such ex-
pense was incurred during the 60-day period 
beginning on the date on which the high de-
ductible health plan is first effective. 
‘‘(B) SPECIAL
RULES.—For purposes of 
subparagraph (A)— 
‘‘(i) an individual shall be treated as 
an eligible individual for any portion of a 
month for which the individual is described 
in subsection (c)(1), determined without 
regard to whether the individual is covered 
under a high deductible health plan on the 
1st day of such month, and 
‘‘(ii) the effective date of the health 
savings account is deemed to be the date 
on which the high deductible health plan is 
first effective after the date of the enact-
ment of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to insurance pur-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00123
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
124 
chased after December 31, 2008, in taxable years begin-
ning after such date. 
SEC. 413. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON-
TRIBUTIONS TO THE SAME HSA ACCOUNT. 
(a) IN GENERAL.—Paragraph (3) of section 223(b) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new subparagraph: 
‘‘(C) 
SPECIAL
RULE
WHERE
BOTH 
SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1 
ACCOUNT.—If— 
‘‘(i) an individual and the individual’s 
spouse have both attained age 55 before 
the close of the taxable year, and 
‘‘(ii) the spouse is not an account ben-
eficiary of a health savings account as of 
the close of such year, 
the additional contribution amount shall be 200 
percent of the amount otherwise determined 
under subparagraph (B).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 414. FSA AND HRA TERMINATION TO FUND HSAS. 
(a) 
GRACE
PERIOD
NOT
REQUIRED.—Section 
106(e)(2) of the Internal Revenue Code of 1986 is amend-
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00124
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
125 
ed by adding at the end the following new sentence: ‘‘A 
distribution shall not fail to be treated as a qualified HSA 
distribution merely because the balance in such arrange-
ment is determined without regard to the requirement that 
unused amounts remaining at the end of a plan year must 
be forfeited in the absence of a grace period.’’. 
(b) DEPOSIT IN LIMITED FSA OR HRA OF FUNDS 
IN EXCESS FSA OR HRA TERMINATION DISTRIBU-
TION.—Paragraph (1) of section 106(e) of such Code is 
amended by inserting before the period at the end thereof 
the following: ‘‘and the deposit of funds in excess of a 
qualified HSA distribution amount into a health flexible 
spending account or health reimbursement arrangement 
which is compatible with a health savings account and 
which, on the date of such distribution, is a part of the 
employer’s plan’’. 
(c) DISCLAIMER OF DISQUALIFYING COVERAGE.— 
Subparagraph (B) of section 223(c)(1) of such Code, as 
amended by this Act, is amended by striking ‘‘and’’ at the 
end of clause (iii), by striking the period at the end of 
clause (iv) and inserting ‘‘, and’’, and by inserting after 
clause (iv) the following new clause: 
‘‘(v) any coverage (whether actual or 
prospective) otherwise described in sub-
paragraph (A)(ii) which is disclaimed at 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00125
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
126 
the time of the creation or organization of 
the health savings account.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
Subtitle B—Increased Access to 
Health Insurance Through HSAs 
SEC. 421. SHORT TITLE. 
This subtitle may be cited as the ‘‘Increased Access 
to Health Insurance Act of 2008’’. 
SEC. 
422. 
PURCHASE 
OF 
HEALTH 
INSURANCE 
FROM 
HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Paragraph (2) of section 223(d) 
of the Internal Revenue Code of 1986 (defining qualified 
medical expenses) is amended to read as follows: 
‘‘(2) QUALIFIED
MEDICAL
EXPENSES.—The 
term ‘qualified medical expenses’ means, with re-
spect to an account beneficiary, amounts paid by 
such beneficiary for medical care (as defined in sec-
tion 213(d)) for such individual, the spouse of such 
individual, and any dependent (as defined in section 
152, determined without regard to subsections 
(b)(1), (b)(2), and (d)(1)(B) thereof) of such indi-
vidual, but only to the extent such amounts are not 
compensated for by insurance or otherwise.’’. 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00126
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
127 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to insurance pur-
chased after the date of the enactment of this Act in tax-
able years beginning after such date. 
TITLE V—HEALTH CARE TORT 
REFORM 
SEC. 501. FINDINGS AND PURPOSE. 
(a) FINDINGS.— 
(1) EFFECT
ON
HEALTH
CARE
ACCESS
AND 
COSTS.—Congress finds that our current civil justice 
system is adversely affecting patient access to health 
care services, better patient care, and cost-efficient 
health care, in that the health care liability system 
is a costly and ineffective mechanism for resolving 
claims of health care liability and compensating in-
jured patients, and is a deterrent to the sharing of 
information among health care professionals which 
impedes efforts to improve patient safety and quality 
of care. 
(2) EFFECT
ON
INTERSTATE
COMMERCE.— 
Congress finds that the health care and insurance 
industries are industries affecting interstate com-
merce and the health care liability litigation systems 
existing throughout the United States are activities 
that affect interstate commerce by contributing to 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00127
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
128 
the high costs of health care and premiums for 
health care liability insurance purchased by health 
care system providers. 
(3) EFFECT
ON
FEDERAL
SPENDING.—Con-
gress finds that the health care liability litigation 
systems existing throughout the United States have 
a significant effect on the amount, distribution, and 
use of Federal funds because of— 
(A) the large number of individuals who 
receive health care benefits under programs op-
erated or financed by the Federal Government; 
(B) the large number of individuals who 
benefit because of the exclusion from Federal 
taxes of the amounts spent to provide them 
with health insurance benefits; and 
(C) the large number of health care pro-
viders who provide items or services for which 
the Federal Government makes payments. 
(b) PURPOSE.—It is the purpose of this title to imple-
ment reasonable, comprehensive, and effective health care 
liability reforms designed to— 
(1) improve the availability of health care serv-
ices in cases in which health care liability actions 
have been shown to be a factor in the decreased 
availability of services; 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00128
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
129 
(2) reduce the incidence of ‘‘defensive medi-
cine’’ and lower the cost of health care liability in-
surance, all of which contribute to the escalation of 
health care costs; 
(3) ensure that persons with meritorious health 
care injury claims receive fair and adequate com-
pensation, including reasonable noneconomic dam-
ages; 
(4) improve the fairness and cost-effectiveness 
of our current health care liability system to resolve 
disputes over, and provide compensation for, health 
care liability by reducing uncertainty in the amount 
of compensation provided to injured individuals; and 
(5) provide an increased sharing of information 
in the health care system which will reduce unin-
tended injury and improve patient care. 
SEC. 502. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00129
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
130 
(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 503. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this title shall limit a claim-
ant’s recovery of the full amount of the available economic 
damages, notwithstanding the limitation in subsection (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00130
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
131 
or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00131
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS
160 
‘‘(I) limits or restricts the use of 
the health information technology to 
services provided by the physician to 
individuals receiving services at the 
specified entity; 
‘‘(II) limits or restricts the use of 
the health information technology in 
conjunction with other health informa-
tion technology; or 
‘‘(III) conditions the provision of 
such remuneration on the referral of 
patients or business to the specified 
entity; 
‘‘(ii) such remuneration is arranged 
for in a written agreement that is signed 
by the parties involved (or their represent-
atives) and that specifies the remuneration 
made and states that the provision of such 
remuneration is made for the primary pur-
pose of better coordination of care or im-
provement of health quality, efficiency, or 
research; and 
‘‘(iii) the specified entity (or a rep-
resentative of such entity) has not taken 
any action to disable any basic feature of 
VerDate Aug 31 2005 
03:39 May 03, 2008
Jkt 069200
PO 00000
Frm 00160
Fmt 6652
Sfmt 6201
E:\BILLS\H5955.IH
H5955
erowe on PRODPC61 with BILLS