‘‘SEC. 802. CONTRACTS WITH QUALIFYING INSURERS. 
‘‘(a) IN GENERAL.—The Secretary shall enter into 
contracts with health insurance issuers for the offering of 
qualifying health insurance coverage under this part in the 
States in such manner as to offer coverage to employees 
of employers that elect to offer coverage under this part. 
Nothing in this part shall be construed as requiring the 
Secretary to enter into arrangements with all such issuers 
seeking to offer qualifying health insurance coverage in 
a State. 
‘‘(b) CONTINUED REGULATION.—Nothing in this 
part shall be construed as preempting State laws applica-
ble to health insurance issuers that offer coverage under 
this part in such State. 
‘‘(c) COORDINATION WITH STATE INSURANCE COM-
MISSIONERS.—The Secretary shall coordinate with the in-
surance commissioners for the various States in estab-
lishing a process for handling and resolving any com-
plaints relating to health insurance coverage offered under 
this part, to the extent necessary to augment processes 
otherwise available under State law. 
‘‘SEC. 803. ADDITIONAL CONDITIONS. 
‘‘(a) LIMITATION ON ENROLLMENT PERIODS.—The 
Secretary may limit the periods of times during which em-
ployees may elect coverage offered under this part, but 
such election shall be consistent with the elections per-
mitted for employees under FEHBP and shall provide for 
at least annual open enrollment periods and enrollment 
at the time of initial eligibility to enroll and upon appro-
priate changes in family circumstances. 
‘‘(b) AUTHORIZING USE OF STATES IN MAKING AR-
RANGEMENTS FOR COVERAGE.—In lieu of the coverage 
otherwise arranged by the Secretary under this part, the 
Secretary may enter an arrangement with a State under 
which a State arranges for the provision of qualifying 
health insurance coverage to qualifying small employers 
in such manner as the Secretary would otherwise arrange 
for such coverage. 
‘‘(c) USE OF FEHBP MODEL.—The Secretary shall 
carry out the SEHBP using the model of the FEHBP 
to the extent practicable and consistent with the provisions 
of this part, and, in carrying out such model, the Secretary 
shall, to the maximum extent practicable, negotiate the 
most affordable and substantial coverage possible for 
small employers. 
‘‘SEC. 804. DISSEMINATION OF INFORMATION. 
‘‘The Secretary shall widely disseminate information 
about SEHBP through the media, the Internet, public 
service announcements, and other employer and employee 
directed communications.
‘‘SEC. 805. SUBSIDIES. 
‘‘(a) EMPLOYER SUBSIDIES.—
‘‘(1) ENROLLMENT DISCOUNT.—
‘‘(A) IN GENERAL.—In the case of a quali-
fying small employer who is eligible under sub-
paragraph (B), the portion of the total pre-
mium for coverage otherwise payable by such 
employer under this part shall be reduced by 5 
percent. Such reduction shall not cause an in-
crease in the portion of the total premium pay-
able by employees. 
‘‘(B) EMPLOYERS
ELIGIBLE
FOR
DIS-
COUNTS.—A qualifying small employer is eligi-
ble under this subparagraph if such employer 
employed an average of fewer than 25 employ-
ees on business days during the preceding cal-
endar year. 
‘‘(2) EMPLOYER PREMIUM SUBSIDY.—
‘‘(A) IN
GENERAL.—The Secretary shall 
provide to qualifying small employers who are 
eligible under subparagraph (C) and who elect 
to offer health insurance coverage under this 
part a subsidy for premiums paid by the em-
ployer for coverage of employees whose indi-
vidual income (as determined by the Secretary) 
is at or below 200 percent of the poverty line
(as defined in section 673(2) of the Community 
Services Block Grant Act (42 U.S.C. 9902(2)), 
including any revision required by such section) 
for an individual. 
‘‘(B) SUBSIDY
SCALED
ACCORDING
TO 
SIZE
OF
EMPLOYER.—The subsidy provided 
under subparagraph (A) shall be designed so 
that the subsidy equals, for any calendar year—
‘‘(i) 50 percent of the portion of the 
premium payable by the employer for the 
coverage, in the case of eligible qualifying 
small employers who employ an average of 
fewer than 11 employees on business days 
during the preceding calendar year; 
‘‘(ii) 35 percent of the portion of the 
premium payable by the employer for the 
coverage, in the case of eligible qualifying 
small employers who employ an average of 
more than 10 employees but fewer than 26 
employees on business days during the pre-
ceding calendar year; and 
‘‘(iii) 25 percent of the portion of the 
premium payable by the employer for the 
coverage, in the case of eligible qualifying 
small employers who employ an average of
more than 25 employees but fewer than 51 
employees on business days during the pre-
ceding calendar year. 
‘‘(C) EMPLOYERS ELIGIBLE FOR PREMIUM 
SUBSIDY.—A qualifying small employer is eligi-
ble under this subparagraph if such employer 
employed an average of fewer than 50 employ-
ees on business days during the preceding cal-
endar year. 
‘‘(b) EMPLOYEE SUBSIDIES.—
‘‘(1) IN GENERAL.—The Secretary shall provide 
subsidies to employees whose family income (as de-
termined by the Secretary) is at or below 200 per-
cent of the poverty line (as defined in section 673(2) 
of the Community Services Block Grant Act (42 
U.S.C. 9902(2)), including any revision required by 
such section) for a family of the size involved. 
‘‘(2) AMOUNT
OF
SUBSIDY.—Such subsidies 
shall be in an amount equal to the excess of the por-
tion of the total premium for coverage otherwise 
payable by the employee under this part for any pe-
riod, over 5 percent of the family income (as deter-
mined under paragraph (1)(A)) of the employee for 
such period.
‘‘(3) COORDINATION OF SUBSIDIES.—Notwith-
standing paragraph (1), under regulations of the 
Secretary, an employee may be entitled to subsidies 
under this subsection for any period only if such em-
ployee is not eligible for subsidies for such period 
under any Federal or State health insurance subsidy 
program (including a program under title V, XIX, or 
XXI of the Social Security Act). For purposes of 
this paragraph, an employee is ‘eligible’ for a sub-
sidy under a program if such employee is entitled to 
such subsidy or would, upon filing application there-
fore, be entitled to such subsidy. 
‘‘(4) AUTHORITY
TO
EXPAND
ELIGIBILITY.—
The Secretary may, to the extent of available fund-
ing, provide for expansion of the subsidy program 
under this subsection to employees whose family in-
come (as defined by the Secretary) is at or below 
300 percent of the poverty line (as determined under 
paragraph (1)). 
‘‘(c) PROCEDURES.—The Secretary shall establish by 
regulation applications, methods, and procedures for car-
rying out this section, including measures to ascertain or 
confirm levels of income.