tive costs related only to one or more of the follow-
ing:
(A) The insurer’s use of more than one
type of system for the marketing and sale of
health benefit plans to small employers.
(B) The insurer’s acquisition of a class of
business from another insurer.
(C) The insurer providing coverage to one
or more association groups.
(7) ELIGIBLE EMPLOYEE.—The term ‘‘eligible
employee’’ means a permanent employee who has a
normal work week of 30 hours or more. Such term
includes a sole proprietor or a general partner of a
partnership.
(8) 
DEPENDENT.—The 
term 
‘‘dependent’’
means, in relation to an individual—
(A) the spouse of the individual,
(B) an unmarried child of the individual if
the child (i) is under 19 years of age or (ii) is
a full-time student, under 23 years of age, and
financially dependent upon the individual, and
(C) an unmarried child of the individual of
age if the child is medically certified as disabled
and the child is financially dependent upon the
individual.
SEC. 205. EFFECTIVE DATE.
This title shall take effect on January 1, 1996.
Subtitle 
B—Guaranteeing 
Port-
ability of Health Insurance for
Individuals
SEC. 211. COVERAGE OF INDIVIDUAL HEALTH BENEFIT
PLANS.
(a) IN GENERAL.—This subtitle applies only to
health benefit plans delivered or issued for delivery to indi-
viduals in a State and does not apply to—
(1) any employer-based health benefit plan, or
(2) any eligible individual whose prior similar
health benefit plan was provided by—
(A) a State high risk pool (as defined by
the Secretary of Health and Human Services),
(B) under title XVIII or XIX of the Social
Security Act, or
(C) under another State or Federal pro-
gram, unless the eligible individual was pre-
viously covered as an employee of the State or
Federal Government.
(b) INDIVIDUAL HEALTH BENEFIT PLAN.—In this
subtitle, the term ‘‘individual health benefit plan’’ means
a health benefit plan described in subsection (a).
SEC. 212. PORTABILITY PROTECTIONS.
(a) CONSIDERATION OF APPLICATIONS.—If an eligi-
ble individual or eligible family applies for an individual
health benefit plan, the insurer offering the plan must ei-
ther—
(1) offer coverage to all eligible individuals ap-
plying on the same application, or
(2) deny coverage to all eligible individuals ap-
plying on the application.
(b) LIMITATIONS ON USE OF PREEXISTING CONDI-
TIONS.—
(1) IN GENERAL.—No policy provision of an in-
dividual health benefit plan shall exclude or limit
coverage for a preexisting condition for a covered in-
dividual for a period beyond 12 months following the
effective date of the individual’s coverage.
(2) RESTRICTIONS
ON
DEFINITION
OF
PRE-
EXISTING CONDITION.—For purposes of paragraph
(1), such a plan shall not define a preexisting condi-
tion more restrictively than the following:
(A) A condition that would have caused an
ordinarily prudent person to seek medical ad-
vice, diagnosis, care, or treatment during the 6
months immediately preceding the effective date
of coverage.
(B) A condition for which medical advice,
diagnosis, care, or treatment was recommended
or received during the 6 months immediately
preceding the effective date of coverage.
(C) A pregnancy existing on the effective
date of coverage.
(c) PORTABILITY OF COVERAGE.—The preexisting
condition limitation period under any individual health
benefit plan with respect to particular services shall be re-
duced by one month for each month of continuous cov-
erage the eligible individual had under prior similar cov-
erage.
(d) LIMITATION ON RIDERS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), an insurer issuing an individual health
benefit plan may not modify the plan with respect
to an eligible individual or eligible family member.
(2) RELATION TO PREEXISTING CONDITION EX-
CLUSION PERIOD.—
(A) IN GENERAL.—To the extent that a
preexisting condition limitation applies, an in-
surer may restrict or exclude coverage or bene-
fits for a specific condition for a maximum pe-
riod of 12 months from the effective date of
coverage of an eligible individual or eligible
family member by way of rider or endorsement.
(B) NO ADDITION RIDERS.—No other rider
or endorsement may be placed on the health
benefit plan to restrict further coverage.
(C) COMBINATION.—If both a rider and a
preexisting condition exclusion period are used,
the combined limitation period may not exceed
12 months.
(e) NO DISCLOSURE OF CONDITION REQUIRED.—A
preexisting condition limitation period may be applied
whether or not the specific condition has been disclosed
on the application for coverage under the individual health
benefit plan.
(f) OFFER OF CONTINUED COVERAGE FOR CERTAIN
DEPENDENTS.—An insurer shall offer to a person who
was covered as a dependent under an individual health
benefit plan who would otherwise lose eligibility for such
coverage because the person is a child and has attained
the termination age under the policy, because of the death
of the primary insured, or because of the divorce from the
primary insured, identical coverage to that which was pre-
viously issued the individual by that insurer. The insurer
may not apply additional underwriting, waiting periods,
or preexisting condition limitations to such coverage if the
person requests such coverage not later than 31 days after
the date of loss of coverage.
SEC. 213. LIMITATIONS ON NONRENEWAL AND PREMIUM
INCREASES.
(a) IN GENERAL.—An insurer issuing an individual
health benefit plan may not—
(1) cancel or nonrenew an individual health
benefit plan except for a reason specified in sub-
section (b),
(2) single out and cancel an individual health
benefit plan of an individual because of claims expe-
rience relating to the individual, and
(3) single out an individual for a rate increase
upon renewal because of claims experience relating
to the individual.
(b) PERMISSIBLE NONRENEWAL.—An insurer may
cancel or nonrenew an individual health benefit plan for
any of the following:
(1) Nonpayment of required premium.
(2) Fraud or misrepresentation on the part of
the individual.
(3) Noncompliance with provisions of the plan.
(4) Nonrenewal upon 90 days written notice
with respect to all individuals insured under the in-
dividual health benefit plans in a State.
An insurer may not cancel or nonrenew
(c) LIMITATION ON MARKET REENTRY.—An insurer
that exercises its right of nonrenewal as provided under
subsection (b)(4) may not accept any new health business
of the type it nonrenewed for a period of 5 years, after
the date it provides notice of such nonrenewal.
SEC. 214. DEFINITIONS.
In this subtitle:
(1) ELIGIBLE
FAMILY.—The term ‘‘eligible
family’’ means an applicant, an applicant’s spouse,
and any eligible individual who is a dependent child
of the applicant.
(2) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible
individual’’ means an individual who was insured
under a prior similar health benefit plan which was
continuous to a date not more than 30 days prior
to the effective date of the new health benefit plan
for that individual.
(3) HEALTH BENEFIT PLAN.—
(A) IN GENERAL.—The term ‘‘health bene-
fit plan’’ means any hospital or medical expense
insured policy or certificate, hospital or medical
service plan contract, or health maintenance or-
ganization subscriber contract.
(B) EXCLUSION.—Such term does not in-
clude any of the following:
(i) short-term limited duration insur-
ance,
(ii) accident-only, credit-only, dental-
only, vision-only insurance,
(iii) medicare supplement insurance,
(iv) hospital indemnity insurance,
(v) long-term care or disability income
insurance,
(vi) coverage issued as a supplement
to liability insurance,
(vii) workmen’s compensation or simi-
lar insurance, or
(viii) automobile medical-payment in-
surance.
(4) PRIOR SIMILAR HEALTH BENEFIT PLAN.—
The term ‘‘prior similar health benefit plan’’ means
a health benefit plan under which an eligible individ-
ual was previously covered and which provides bene-
fits who do not materially differ from the new health
benefit plan in any of the following respects:
(A) The type of medical benefits provided.
(B) The level of medical benefits available
based 
on 
deductibles, 
coinsurance, 
or
copayments, or any combination thereof.
(C) The maximum benefits available for
specific services.
(D) Cost containment provisions.
SEC. 215. EFFECTIVE DATE.
This subtitle shall apply to each health benefit plan
that is delivered or issued for delivery to an individual on
or after January 1, 1996.
Subtitle C—Assuring Health Insur-
ance Coverage for Uninsurable
Individuals
SEC. 221. ESTABLISHMENT OF HIGH RISK HEALTH INSUR-
ANCE POOLS.
(a) IN GENERAL.—
(1) REQUIREMENT.—For years beginning with
1997, each health insurer, health service organiza-
tion, and health maintenance organization shall be a
participant in a high risk health insurance pool (in
this subtitle referred to as a ‘‘high risk pool’’) in
each State in which it operates. Such a pool may be
established by the State or, if not so established,
shall be established by such insurers and organiza-
tions.
(2) FUNCTIONS.—Any such pool shall assure,
in accordance with this subtitle, the availability of
qualified health insurance coverage to uninsurable
individuals.
(3) FUNDING.—Any such pool shall be funded
by an assessment against health insurers, health
service organizations, and health maintenance orga-
nizations on a pro rata basis of ‘‘lives covered’’ in
the State. The costs of the assessment may be added
by a health insurer, health service organization, or
health maintenance organization to the costs of its
health insurance or health coverage provided in the
State.
(b) DEADLINE.—Pools required under subsection (a)
shall be established by not later than January 1, 1997.
(c) WAIVER.—Subsection (a) shall not apply in the
case of insurers and organizations operating in a State
if the State has established a comprehensive health insur-
ance program that assures the availability of qualified
health insurance coverage to all eligible individuals resid-
ing in the State.
(d) RECOMMENDATION FOR COMPLIANCE REQUIRE-
MENT.—Not later than January 1, 1996, the Secretary
of Health and Human Services shall submit to Congress
a recommendation on appropriate sanctions for insurers
and organizations that fail to meet the requirement of sub-
section (a).
SEC. 222. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COV-
ERAGE.
(a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DE-
FINED.—In this subtitle:
(1) UNINSURABLE
INDIVIDUAL.—The term
‘‘uninsurable individual’’ means, with respect to a
State, an eligible individual who presents proof of
uninsurability by a private insurer in accordance
with subsection (b) or proof of a condition previously
recognized as uninsurable by the State.
(2) ELIGIBLE INDIVIDUAL.—
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means, with respect to a State, a citizen
or national of the United States (or an alien
lawfully admitted for permanent residence) who
is a resident of the State for at least 90 days.
(B) EXCEPTION.—An individual is not an
‘‘eligible individual’’ if the individual—
(i) is covered by or eligible for benefits
under a State medicaid plan approved
under title XIX of the Social Security Act,
(ii) has voluntarily terminated plan
coverage,
(iii) has received the maximum benefit
payable under the plan, or
(iv) is an inmate in a public institu-
tion or is eligible for other public programs
or has the individual’s premium paid for or
reimbursed under any government-spon-
sored program or by any government agen-
cy or health care provider.
(b) PROOF OF UNINSURABILITY.—
(1) IN GENERAL.—The proof of uninsurability
for an individual shall be in the form of—
(A) a notice of rejection or refusal to issue
substantially similar insurance for health rea-
sons,
(B) a notice of refusal to insure except at
a rate in excess of the plan rate, or
(C) an offer to insure but only subject to
a reduction or an exclusion of coverage for a
preexisting condition for a period exceeding 12
months.
(2) EXCEPTION.—A State may waive the re-
quirement of proof described in paragraph (1) in the
case of an individual who demonstrates a provable
medical or health condition.
SEC. 223. QUALIFIED HEALTH INSURANCE COVERAGE
UNDER POOL.
In this subtitle, the term ‘‘qualified health insurance
coverage’’ means health insurance coverage that provides
benefits typical of major medical insurance available in the
individual health insurance market.
SEC. 224. FUNDING OF POOL.
(a) LIMITATIONS ON PREMIUMS.—
(1) IN GENERAL.—The applicable premium es-
tablished under a high risk pool may not exceed 135
percent of the applicable standard risk rate, except
as provided in paragraph (2).
(2) SURCHARGE
FOR
AVOIDABLE
HEALTH
RISKS.—A high risk pool may impose a surcharge on
premiums for individuals with avoidable high risks,
such as smoking.
(b) ADDITIONAL FUNDING.—A high risk pool shall
provide for additional funding through an assessment on
all health insurers, health service organizations, and
health maintenance organizations in the State through a
nonprofit association consisting of all such insurers and
organizations doing business in the State on an equitable
and pro rata basis consistent with section 221.