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Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of $50 
($25 in the case of the dollar amount in subsection 
(b)(2)(A)(iii)).’’. 
(b) MAINTENANCE
OF EFFORT REQUIREMENT.—
Section 162 of such Code (relating to trade or business 
expenses) is amended by redesignating subsection (p) as 
subsection (q) and by inserting after subsection (o) the 
following new subsection: 
‘‘(p) GROUP HEALTH PLAN MAINTENANCE OF EF-
FORT.—No deduction shall be allowed under this chapter 
to an employer for any amount paid or incurred in connec-
tion with a group health plan (as defined in subsection 
(n)(3)) for any taxable year in which occurs the date of 
introduction of the Fair Care for the Uninsured Act of 
2003 unless such plan remains in effect for at least 60 
months after the date of the enactment of such Act.’’.
(c) INFORMATION REPORTING.—
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of such Code (relating 
to information concerning transactions with other 
persons) is amended by inserting after section 
6050S the following new section:
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‘‘SEC. 6050T. RETURNS RELATING TO PAYMENTS FOR 
QUALIFIED HEALTH INSURANCE. 
‘‘(a) IN GENERAL.—Any person who, in connection 
with a trade or business conducted by such person, re-
ceives payments during any calendar year from any indi-
vidual for coverage of such individual or any other indi-
vidual under creditable health insurance, shall make the 
return described in subsection (b) (at such time as the 
Secretary may by regulations prescribe) with respect to 
each individual from whom such payments were received. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return—
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains—
‘‘(A) the name, address, and TIN of the 
individual from whom payments described in 
subsection (a) were received, 
‘‘(B) the name, address, and TIN of each 
individual who was provided by such person 
with coverage under creditable health insurance 
by reason of such payments and the period of 
such coverage, and 
‘‘(C) such other information as the Sec-
retary may reasonably prescribe.
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‘‘(c) CREDITABLE HEALTH INSURANCE.—For pur-
poses of this section, the term ‘creditable health insurance’ 
means qualified health insurance (as defined in section 
35(c)) other than—
‘‘(1) insurance under a subsidized group health 
plan maintained by an employer, or 
‘‘(2) to the extent provided in regulations pre-
scribed by the Secretary, any other insurance cov-
ering an individual if no credit is allowable under 
section 35 with respect to such coverage. 
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required under subsection (b)(2)(A) to be set forth in 
such return a written statement showing—
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, 
‘‘(2) the aggregate amount of payments de-
scribed in subsection (a) received by the person re-
quired to make such return from the individual to 
whom the statement is required to be furnished, and 
‘‘(3) the information required under subsection 
(b)(2)(B) with respect to such payments.
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The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) is required to be made. 
‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of any amount received by any person on behalf of 
another person, only the person first receiving such 
amount shall be required to make the return under sub-
section (a).’’. 
(2) ASSESSABLE PENALTIES.—
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code (relating to defini-
tions) is amended by redesignating clauses (xi) 
through (xvii) as clauses (xii) through (xviii), 
respectively, and by inserting after clause (x) 
the following new clause: 
‘‘(xi) section 6050T (relating to re-
turns relating to payments for qualified 
health insurance),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of the next to last subparagraph, by strik-
ing the period at the end of the last subpara-
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graph and inserting ‘‘, or’’, and by adding at 
the end the following new subparagraph: 
‘‘(BB) section 6050T(d) (relating to re-
turns relating to payments for qualified health 
insurance).’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by inserting 
after the item relating to section 6050S the fol-
lowing new item:
‘‘Sec. 6050T. Returns relating to payments for qualified health 
insurance.’’.
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 35 of such Code’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of such Code is 
amended by striking the last item and inserting the 
following new items:
‘‘Sec. 35. Health insurance costs. 
‘‘Sec. 36. Overpayments of tax.’’.
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2003.
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‘‘(1) certifies that the individual will be eligible 
to receive the credit provided by section 35 for the 
taxable year, 
‘‘(2) estimates the amount of such credit for 
such taxable year, and 
‘‘(3) provides such other information as the 
Secretary may require for purposes of this section. 
‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD-
VANCE AMOUNT.—For purposes of this section, the term 
‘qualified health insurance credit advance amount’ means, 
with respect to any provider of qualified health insurance, 
the Secretary’s estimate of the amount of credit allowable 
under section 35 to the individual for the taxable year 
which is attributable to the insurance provided to the indi-
vidual by such provider. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to carry out the pur-
poses of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 of such Code is amended by adding at the 
end the following new item:
‘‘Sec. 7527. Advance payment of health insurance credit for pur-
chasers of qualified health insurance.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2004.
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TITLE II—ASSURING HEALTH IN-
SURANCE COVERAGE FOR UN-
INSURABLE INDIVIDUALS 
SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE SAFETY 
NETS. 
(a) IN GENERAL.—
(1) REQUIREMENT.—For years beginning with 
2004, each health insurer, health maintenance orga-
nization, and health service organization shall be a 
participant in a health insurance safety net (in this 
title referred to as a ‘‘safety net’’) established by the 
State in which it operates. 
(2) FUNCTIONS.—Any safety net shall assure, 
in accordance with this title, the availability of quali-
fied health insurance coverage to uninsurable indi-
viduals. 
(3) FUNDING.—Any safety net shall be funded 
by an assessment against health insurers, health 
service organizations, and health maintenance orga-
nizations on a pro rata basis of premiums collected 
in the State in which the safety net operates. The 
costs of the assessment may be added by a health 
insurer, health service organization, or health main-
tenance organization to the costs of its health insur-
ance or health coverage provided in the State.
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(4) 
GUARANTEED
RENEWABLE.—Coverage 
under a safety net shall be guaranteed renewable ex-
cept for nonpayment of premiums, material mis-
representation, fraud, medicare eligibility under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.), loss of dependent status, or eligibility for other 
health insurance coverage. 
(5) COMPLIANCE WITH NAIC MODEL ACT.—In 
the case of a State that has not established, as of 
the date of the enactment of this Act, a high risk 
pool or other comprehensive health insurance pro-
gram that assures the availability of qualified health 
insurance coverage to all eligible individuals residing 
in the State, a safety net shall be established in ac-
cordance with the requirements of the ‘‘Model 
Health Plan For Uninsurable Individuals Act’’ (or 
the successor model Act), as adopted by the Na-
tional Association of Insurance Commissioners and 
as in effect on the date of the safety net’s establish-
ment. 
(b) DEADLINE.—Safety nets required under sub-
section (a) shall be established not later than January 1, 
2004. 
(c) WAIVER.—This title shall not apply in the case 
of insurers and organizations operating in a State if the
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State has established a similar comprehensive health in-
surance program that assures the availability of qualified 
health insurance coverage to all eligible individuals resid-
ing in the State. 
(d) RECOMMENDATION FOR COMPLIANCE REQUIRE-
MENT.—Not later than January 1, 2005, the Secretary 
of Health and Human Services shall submit to Congress 
a recommendation on appropriate sanctions for States 
that fail to meet the requirement of subsection (a). 
SEC. 202. UNINSURABLE INDIVIDUALS ELIGIBLE FOR COV-
ERAGE. 
(a) UNINSURABLE AND ELIGIBLE INDIVIDUAL DE-
FINED.—In this title: 
(1) UNINSURABLE
INDIVIDUAL.—The term 
‘‘uninsurable individual’’ means, with respect to a 
State, an eligible individual who presents proof of 
uninsurability by a private insurer in accordance 
with subsection (b) or proof of a condition previously 
recognized as uninsurable by the State. 
(2) ELIGIBLE INDIVIDUAL.—
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means, with respect to a State, a citizen 
or national of the United States (or an alien 
lawfully admitted for permanent residence) who 
is a resident of the State for at least 90 days
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and includes any dependent (as defined for pur-
poses of the Internal Revenue Code of 1986) of 
such a citizen, national, or alien who also is 
such a resident. 
(B) EXCEPTION.—An individual is not an 
‘‘eligible individual’’ if the individual—
(i) is covered by or eligible for benefits 
under a State medicaid plan approved 
under title XIX of the Social Security Act 
(42 U.S.C. 1396 et seq.), 
(ii) has voluntarily terminated safety 
net coverage within the past 6 months, 
(iii) has received the maximum benefit 
payable under the safety net, 
(iv) is an inmate in a public institu-
tion, or 
(v) is eligible for other public or pri-
vate health care programs (including pro-
grams that pay for directly, or reimburse, 
otherwise eligible individuals with pre-
miums charged for safety net coverage). 
(b) PROOF OF UNINSURABILITY.—
(1) IN GENERAL.—The proof of uninsurability 
for an individual shall be in the form of—
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(A) a notice of rejection or refusal to issue 
substantially similar health insurance for health 
reasons by one insurer; or 
(B) a notice of refusal by an insurer to 
issue substantially similar health insurance ex-
cept at a rate in excess of the rate applicable 
to the individual under the safety net plan. 
For purposes of this paragraph, the term ‘‘health in-
surance’’ does not include insurance consisting only 
of stoploss, excess of loss, or reinsurance coverage. 
(2) EXCEPTION FOR INDIVIDUALS WITH UNIN-
SURABLE CONDITIONS.—The State shall promulgate 
a list of medical or health conditions for which an 
individual shall be eligible for safety net plan cov-
erage without applying for health insurance or estab-
lishing proof of uninsurability under paragraph (1). 
Individuals who can demonstrate the existence or 
history of any medical or health conditions on such 
list shall not be required to provide the proof de-
scribed in paragraph (1). The list shall be effective 
on the first day of the operation of the safety net 
plan and may be amended from time to time as may 
be appropriate.
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SEC. 203. QUALIFIED HEALTH INSURANCE COVERAGE 
UNDER SAFETY NET. 
In this title, the term ‘‘qualified health insurance cov-
erage’’ means, with respect to a State, health insurance 
coverage that provides benefits typical of major medical 
insurance available in the individual health insurance mar-
ket in such State. 
SEC. 204. FUNDING OF SAFETY NET. 
(a) LIMITATIONS ON PREMIUMS.—
(1) IN
GENERAL.—The premium established 
under a safety net may not exceed 125 percent of 
the applicable standard risk rate, except as provided 
in paragraph (2). 
(2) SURCHARGE
FOR
AVOIDABLE
HEALTH 
RISKS.—A safety net may impose a surcharge on 
premiums for individuals with avoidable high risks, 
such as smoking. 
(b) ADDITIONAL FUNDING.—A safety net shall pro-
vide for additional funding through an assessment on all 
health insurers, health service organizations, and health 
maintenance organizations in the State through a non-
profit association consisting of all such insurers and orga-
nizations doing business in the State on an equitable and 
pro rata basis consistent with section 201.
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SEC. 205. ADMINISTRATION. 
A safety net in a State shall be administered through 
a contract with 1 or more insurers or third party adminis-
trators operating in the State. 
SEC. 206. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums 
as may be necessary to reimburse States for their costs 
in administering this title. 
TITLE III—INDIVIDUAL 
MEMBERSHIP ASSOCIATIONS 
SEC. 301. EXPANSION OF ACCESS AND CHOICE THROUGH 
INDIVIDUAL 
MEMBERSHIP 
ASSOCIATIONS 
(IMAs). 
The Public Health Service Act is amended by adding 
at the end the following new title: 
‘‘TITLE XXVIII—INDIVIDUAL 
MEMBERSHIP ASSOCIATIONS 
‘‘SEC. 2801. DEFINITION OF INDIVIDUAL MEMBERSHIP AS-
SOCIATION (IMA). 
‘‘(a) IN GENERAL.—For purposes of this title, the 
terms ‘individual membership association’ and ‘IMA’ 
mean a legal entity that meets the following requirements: 
‘‘(1) ORGANIZATION.—The IMA is an organiza-
tion operated under the direction of an association 
(as defined in section 2804(1)).
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‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.—
‘‘(A) DIFFERENT GROUPS.—The IMA, in 
conjunction with those health insurance issuers 
that offer health benefits coverage through the 
IMA, makes available health benefits coverage 
in the manner described in subsection (b) to all 
members of the IMA and the dependents of 
such members in the manner described in sub-
section (c)(2) at rates that are established by 
the health insurance issuer or a policy or prod-
uct specific basis and that may vary only as 
permissible under State law. 
‘‘(B) NONDISCRIMINATION
IN
COVERAGE 
OFFERED.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the IMA may not offer health benefits 
coverage to a member of an IMA unless 
the same coverage is offered to all such 
members of the IMA. 
‘‘(ii) 
CONSTRUCTION.—Nothing 
in 
this title shall be construed as requiring or 
permitting a health insurance issuer to 
provide coverage outside the service area of 
the issuer, as approved under State law, or
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preventing a health insurance issuer from 
excluding or limiting the coverage on any 
individual, subject to the requirement of 
section 2741. 
‘‘(C) NO FINANCIAL UNDERWRITING.—The 
IMA provides health benefits coverage only 
through contracts with health insurance issuers 
and does not assume insurance risk with re-
spect to such coverage. 
‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 
shall be construed as preventing the establishment 
and operation of more than one IMA in a geographic 
area or as limiting the number of IMAs that may 
operate in any area. 
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES 
TO PURCHASERS.—
‘‘(A) IN GENERAL.—The IMA may provide 
administrative services for members. Such serv-
ices may include accounting, billing, and enroll-
ment information. 
‘‘(B) CONSTRUCTION.—Nothing in this 
subsection shall be construed as preventing an 
IMA from serving as an administrative service 
organization to any entity
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‘‘(5) FILING
INFORMATION.—The IMA files 
with the Secretary information that demonstrates 
the IMA’s compliance with the applicable require-
ments of this title. 
‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.—
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage 
offered through an IMA shall—
‘‘(A) be underwritten by a health insurance 
issuer that—
‘‘(i) is licensed (or otherwise regu-
lated) under State law, 
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 2802(2), and 
‘‘(iii) offers the coverage under a con-
tract with the IMA; and 
‘‘(B) subject to paragraph (2) and section 
2902(2), be approved or otherwise permitted to 
be offered under State law. 
‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 
benefits coverage made available through an IMA 
may include, but is not limited to, any of the fol-
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lowing if it meets the other applicable requirements 
of this title: 
‘‘(A) Coverage through a health mainte-
nance organization. 
‘‘(B) Coverage in connection with a pre-
ferred provider organization. 
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization. 
‘‘(D) Indemnity coverage through an insur-
ance company. 
‘‘(E) Coverage offered in connection with a 
contribution into a medical savings account or 
flexible spending account. 
‘‘(F) Coverage that includes a point-of-
service option. 
‘‘(G) Any combination of such types of 
coverage. 
‘‘(3) 
HEALTH
INSURANCE
COVERAGE
OP-
TIONS.—An IMA shall include a minimum of 2 
health insurance coverage options. At least 1 option 
shall meet all applicable State benefit mandates. 
‘‘(4) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as 
precluding a health insurance issuer offering health 
benefits coverage through an IMA from establishing
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premium discounts or rebates for members or from 
modifying 
otherwise 
applicable 
copayments 
or 
deductibles in return for adherence to programs of 
health promotion and disease prevention so long as 
such programs are agreed to in advance by the IMA 
and comply with all other provisions of this title and 
do not discriminate among similarly situated mem-
bers. 
‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.—
‘‘(1) MEMBERS.—
‘‘(A) IN
GENERAL.—Under rules estab-
lished to carry out this title, with respect to an 
individual who is a member of an IMA, the in-
dividual may apply for health benefits coverage 
(including coverage for dependents of such indi-
vidual) offered by a health insurance issuer 
through the IMA. 
‘‘(B) RULES FOR ENROLLMENT.—Nothing 
in this paragraph shall preclude an IMA from 
establishing rules of enrollment and reenroll-
ment of members. Such rules shall be applied 
consistently to all members within the IMA and 
shall not be based in any manner on health sta-
tus-related factors.
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‘‘(2) HEALTH INSURANCE ISSUERS.—The con-
tract between an IMA and a health insurance issuer 
shall provide, with respect to a member enrolled with 
health benefits coverage offered by the issuer 
through the IMA, for the payment of the premiums 
collected by the issuer. 
‘‘SEC. 2802. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS. 
‘‘State laws insofar as they relate to any of the fol-
lowing are superseded and shall not apply to health bene-
fits coverage made available through an IMA: 
‘‘(1) Benefit requirements for health benefits 
coverage offered through an IMA, including (but not 
limited to) requirements relating to coverage of spe-
cific providers, specific services or conditions, or the 
amount, duration, or scope of benefits, but not in-
cluding requirements to the extent required to imple-
ment title XXVII or other Federal law and to the 
extent the requirement prohibits an exclusion of a 
specific disease from such coverage. 
‘‘(2) Any other requirement (including limita-
tions on compensation arrangements) that, directly 
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through an
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IMA, if the IMA meets the requirements of this 
title. 
Any State law or regulation relating to the composition 
or organization of an IMA is preempted to the extent the 
law or regulation is inconsistent with the provisions of this 
title. 
‘‘SEC. 2803. ADMINISTRATION. 
‘‘(a) IN GENERAL.—The Secretary shall administer 
this title and is authorized to issue such regulations as 
may be required to carry out this title. Such regulations 
shall be subject to Congressional review under the provi-
sions of chapter 8 of title 5, United States Code. The Sec-
retary shall incorporate the process of ‘deemed file and 
use’ with respect to the information filed under section 
2801(a)(5)(A) and shall determine whether information 
filed by an IMA demonstrates compliance with the applica-
ble requirements of this title. The Secretary shall exercise 
authority under this title in a manner that fosters and 
promotes the development of IMAs in order to improve 
access to health care coverage and services. 
‘‘(b) PERIODIC REPORTS.—The Secretary shall sub-
mit to Congress a report every 30 months, during the 10-
year period beginning on the effective date of the rules 
promulgated by the Secretary to carry out this title, on 
the effectiveness of this title in promoting coverage of un-
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insured individuals. The Secretary may provide for the 
production of such reports through one or more contracts 
with appropriate private entities. 
‘‘SEC. 2804. DEFINITIONS. 
‘‘For purposes of this title: 
‘‘(1) ASSOCIATION.—The term ‘association’ 
means, with respect to health insurance coverage of-
fered in a State, an association which—
‘‘(A) has been actively in existence for at 
least 5 years; 
‘‘(B) has been formed and maintained in 
good faith for purposes other than obtaining in-
surance; 
‘‘(C) does not condition membership in the 
association on any health status-related factor 
relating to an individual (including an employee 
of an employer or a dependent of an employee); 
and 
‘‘(D) does not make health insurance cov-
erage offered through the association available 
other than in connection with a member of the 
association. 
‘‘(2) DEPENDENT.—The term ‘dependent’, as 
applied to health insurance coverage offered by a 
health insurance issuer licensed (or otherwise regu-
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lated) in a State, shall have the meaning applied to 
such term with respect to such coverage under the 
laws of the State relating to such coverage and such 
an issuer. Such term may include the spouse and 
children of the individual involved. 
‘‘(3) HEALTH BENEFITS COVERAGE.—The term 
‘health benefits coverage’ has the meaning given the 
term 
health 
insurance 
coverage 
in 
section 
2791(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2). 
‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
given such term in section 2791(d)(9). 
‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA-
TION.—The terms ‘IMA’ and ‘individual membership 
association’ are defined in section 2801(a). 
‘‘(7) MEMBER.—The term ‘member’ means, 
with respect to the IMA, an individual who is a 
member of the association to which the IMA is offer-
ing coverage.’’.
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