I 
108TH CONGRESS 
1ST SESSION H. R. 2850
To amend title I of the Employee Retirement Income Security Act of 1974 
to provide for the establishment in the Department of Labor of a Small 
Employer Health Benefits Program. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 24, 2003
Mr. KIND (for himself, Mr. ANDREWS, Mr. HINCHEY, Mr. FROST, Mr. KIL-
DEE, Mr. ABERCROMBIE, Mr. PAYNE, Ms. WOOLSEY, Mr. VAN HOLLEN, 
Mr. HOLT, Ms. MCCOLLUM, Mr. SERRANO, Mr. OBERSTAR, Mr. EMAN-
UEL, Mr. FORD, Mr. PASTOR, Mr. GEORGE MILLER of California, and 
Mr. HINOJOSA) introduced the following bill; which was referred to the 
Committee on Education and the Workforce 
A BILL 
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 to provide for the establishment in 
the Department of Labor of a Small Employer Health 
Benefits Program.
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 
‘‘Small Employer Health Benefits Program Act of 2003’’.
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title. 
Sec. 2. Establishment of Small Employer Health Benefits Program (SEHBP). 
PART 8—SMALL EMPLOYER HEALTH BENEFITS PROGRAM 
Sec. 801. Establishment of program. 
Sec. 802. Contracts with qualifying insurers. 
Sec. 803. Additional conditions. 
Sec. 804. Dissemination of information. 
Sec. 805. Subsidies. 
Sec. 806. Authorization of appropriations.
SEC. 2. ESTABLISHMENT OF SMALL EMPLOYER HEALTH 
BENEFITS PROGRAM (SEHBP). 
(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—SMALL EMPLOYER HEALTH BENEFITS 
PROGRAM (SEHBP) 
‘‘SEC. 801. ESTABLISHMENT OF PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary shall establish, in 
accordance with this part, a program under which—
‘‘(1) qualifying small employers (as defined in 
subsection (b)) are provided access to qualifying 
health insurance coverage (as defined in subsection 
(c)) for their employees, and 
‘‘(2) such employees may elect alternative forms 
of coverage offered by various health insurance 
issuers.
‘‘(b) QUALIFYING
SMALL
EMPLOYER
DEFINED; 
OTHER DEFINITIONS.—For purposes of this part: 
‘‘(1) QUALIFYING SMALL EMPLOYER.—
‘‘(A) IN GENERAL.—The term ‘qualifying 
small employer’ means a small employer (as de-
fined in paragraph (2)) that—
‘‘(i) elects to offer health insurance 
coverage provided under this part to each 
employee who has been employed by that 
employer for 3 months or longer; and 
‘‘(ii) elects, with respect to an em-
ployee electing coverage under qualified 
health insurance coverage, to pay at least 
50 percent of the total premium for quali-
fying health insurance coverage provided 
under this part. 
‘‘(B) ELECTIONS.—Elections under sub-
paragraph (A) may be filed with the Secretary 
during the 180-day period beginning with the 
first enrollment period occurring under section 
803 and during open enrollment periods occur-
ring thereafter under such section. Such elec-
tions shall be filed in such form and manner as 
shall be prescribed by the Secretary.
‘‘(C) PART-TIME
EMPLOYMENT.—Under 
regulations of the Secretary, in the case of an 
employee serving in a position in which service 
is customarily less than 1,500 hours per year, 
the reference in subparagraph (A)(ii) to ‘50 
percent’ shall be deemed a percentage reduced 
to a percentage that bears the same ratio to 50 
percent as the number of hours of service per 
year customarily in such position bears to 
1,500. 
‘‘(2) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, with respect to a year, an employer 
who employed an average of fewer than 100 employ-
ees on business days during the preceding calendar 
year and who employs at least 1 employee on the 
first day of the year. 
‘‘(3) SEHBP.—The term ‘SEHBP’ means the 
small employer health benefits program provided 
under this part. 
‘‘(c) QUALIFYING HEALTH INSURANCE COVERAGE.—
For purposes of this part, the term ‘qualifying health in-
surance coverage’ means health insurance coverage that 
meets the following requirements: 
‘‘(1) The coverage is offered by a health insur-
ance issuer.
‘‘(2) The benefits under such coverage are 
equivalent to or greater than the lower level of bene-
fits provided under the service benefit plan described 
in section 8903(1) of title 5, United States Code. 
‘‘(3) The coverage includes, with respect to an 
eligible individual that elects coverage, coverage of 
the same dependents that would be covered if the 
coverage were offered under FEHBP. 
‘‘(4)(A) Subject to subparagraph (B), there is 
no underwriting, through a preexisting condition 
limitation, differential benefits, or different premium 
levels, or otherwise, with respect to such coverage for 
covered individuals or their dependents. 
‘‘(B) The premiums charged for such coverage 
are community-rated for individuals within any 
State and may vary only—
‘‘(i) by individual or family enrollment, and 
‘‘(ii) to the extent permitted under the 
laws of such State relating to health insurance 
coverage offered in the small group market, on 
the basis of geography. 
‘‘(d) OTHER TERMS.—
‘‘(1) HEALTH INSURANCE COVERAGE; HEALTH 
INSURANCE ISSUER; HEALTH STATUS-RELATED FAC-
TOR.—The terms ‘health insurance coverage’, ‘health
insurance issuer’, ‘health status-related factor’ have 
the meanings provided such terms in section 733. 
‘‘(2) SMALL GROUP MARKET.—The term ‘small 
group market’ has the meaning provided such term 
in section 2791(e)(5) of the Public Health Service 
Act (42 U.S.C. 300gg–91(e)(5)). 
‘‘(3) FEHBP.—The term ‘FEHBP’ means the 
Federal Employees Health Benefits Program under 
chapter 89 of title 5, United States Code. 
‘‘(e) TREATMENT OF PARTNERSHIPS AND SELF-EM-
PLOYED INDIVIDUALS.—For purposes of this part, and for 
purposes of applying section 3 to this part and to part 
5 as it applies to this part, in any case in which qualifying 
health insurance coverage is, or is to be, provided under 
a plan, fund, or program to individuals covered there-
under—
‘‘(1) if such plan, fund, or program is main-
tained by a partnership, the term ‘employer’ (as de-
fined in section 3(5)) includes the partnership in re-
lation to the partners, and the term ‘employee’ (as 
defined in section 3(6)) includes any partner in rela-
tion to the partnership; and 
‘‘(2) if such plan, fund, or program is main-
tained by a self-employed individual, the term ‘em-
ployer’ (as defined in section 3(5)) and the term
‘employee’ (as defined in section 3(6)) shall include 
such individual. 
‘‘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. 
‘‘SEC. 806. AUTHORIZATION OF APPROPRIATIONS. 
‘‘There are authorized to be appropriated, for the pe-
riod beginning with fiscal year 2004 and ending with fiscal 
year 2013, $50,000,000,000 to carry out this part, includ-
ing the establishment of subsidies under section 805.’’. 
(b) REPORT
ON
OFFERING
NATIONAL
HEALTH 
PLANS.—Not later than 18 months after the date of the 
enactment of this Act, the Secretary of Labor shall report 
to Congress the Secretary’s recommendations regarding 
the feasibility of offering national health plans under part 
8 of subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, as added by subsection (a). 
(c) 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—SMALL EMPLOYER HEALTH BENEFITS PROGRAM (SEHBP) 
‘‘801. Establishment of program. 
‘‘802. Contracts with qualifying insurers. 
‘‘803. Additional conditions. 
‘‘804. Dissemination of information. 
‘‘805. Subsidies. 
‘‘806. Authorization of appropriations.’’.
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