Title I, Subtitle B
(b) REQUIRED CATEGORIES
OF COVERED BENE-
FITS.—
(1) IN
GENERAL.—The categories of covered
benefits described in this paragraph are the types of
benefits specified in each of subparagraphs (A), (B),
(C), (D), (E), and (F) of paragraph (1), and sub-
paragraphs (E) and (F) of paragraph (2), of section
8904(a) of title 5, United States Code (relating to
types of benefits required to be in health insurance
offered to Federal employees).
(2) COVERAGE OF TREATMENTS IN APPROVED
RESEARCH TRIALS.—
(A) IN GENERAL.—Coverage of the routine
medical costs (as defined in subparagraph (B))
associated with the delivery of treatments shall
be considered to be medically appropriate if the
treatment is part of an approved research trial
(as defined in subparagraph (C)).
(B) ROUTINE MEDICAL COSTS DEFINED.—
In subparagraph (A), the term ‘‘routine medical
costs’’ means the cost of health services re-
quired to provide treatment according to the de-
sign of the trial, except those costs normally
paid for by other funding sources (as defined by
the Secretary). Such costs do not include the
Title I, Subtitle B
cost of the investigational agent, devices or pro-
cedures themselves, the costs of any nonhealth
services that might be required for a person to
receive the treatment, or the costs of managing
the research.
(C) APPROVED
RESEARCH
TRIAL
DE-
FINED.—In subparagraph (A), the term ‘‘ap-
proved research trial’’ means a trial—
(i) conducted for the primary purpose
of determining the safety, effectiveness, ef-
ficacy, or health outcomes of a treatment,
compared with the best available alter-
native treatment, and
(ii) approved by the Secretary.
A trial is deemed to be approved under clause
(ii) if it is approved by the National Institutes
of Health, the Food and Drug Administration
(through an investigational new drug exemp-
tion), the Department of Veterans Affairs, or
by a qualified nongovernmental research entity
(as identified in guidelines issued by one or
more of the National Institutes of Health).
(3) COVERAGE
OF
OFF-LABEL
USE.—An off-
label use for a drug that has been found to be safe
and effective under section 505 of the Federal Food,
Title I, Subtitle B
Drug, and Cosmetic Act shall be covered if the medi-
cal indication for which it is used is listed in one of
the following 3 compendia: the American Hospital
Formulary Service-Drug Information, the American
Medical Association Drug Evaluations, and the
United States Pharmacopeia-Drug Information.
(4) PREVENTIVE BENEFITS.—The following are
preventive benefits that shall be covered without any
deductibles, copayment, coinsurance, or other cost-
sharing:
(A) NEWBORN, WELL-BABY
AND
WELL-
CHILD
CARE.—Newborn care, well-baby care,
and well-child care for individuals under 19
years of age, including routine physical exami-
nations, routine immunizations, and routine
tests, as specified by the Secretary based on the
schedule recommended by the American Acad-
emy of Pediatricians.
(B) 
MAMMOGRAMS.—Routine 
screening
mammograms (including their interpretation),
limited to 1 mammogram for a woman who is
at least 35 (but less than 40) years of age, 1
mammogram every 2 years for a woman who is
at least 40 (but less than 50) years of age, and
Title I, Subtitle B
1 mammogram every year for a woman who is
at least 50 years of age.
(C) SCREENING PAP SMEARS AND PELVIC
EXAMS.—Screening pap smears and pelvic
exams for women over 17 years of age, limited
to 1 each year.
(D) COLORECTAL SCREENING.—Colorectal
screening for individuals over 18 years of age at
high risk, consisting of 1 fecal occult blood
screening 
test 
every 
year, 
screening
sigmoidoscopy every 5 years, and 1 screening
colonoscopy every 4 years.
(E) SCREENING
TUBERCULIN
TESTS.—
Screening tuberculin tests annually for individ-
uals at risk of contracting tuberculosis.
(F) PRENATAL CARE.—Prenatal care.
(G) ADULT IMMUNIZATIONS.—Routine im-
munizations for an individual over 17 years of
age (including booster immunizations against
tetanus and diphtheria, but limited to 1 such
immunization every 10 years).
(H) PROSTATE
CANCER
SCREENING.—
Routine cancer screening for a man who is at
least 40 years of age through a prostate specific
antigen test, limited to 1 test each year.
Title I, Subtitle B
(c) STANDARD ACTUARIAL VALUE.—
(1) IN GENERAL.—The actuarial value of the
benefits under standard coverage in a fair rating
area meets the requirements of this subsection if
such value is equivalent to the standard actuarial
value described in paragraph (2) for the area. The
actuarial value of benefits under standard coverage
shall be determined using the adjustment under
paragraph (3) for a standardized population and set
of standardized utilization and cost factors.
(2) 
STANDARD
ACTUARIAL
VALUE
DE-
SCRIBED.—The standard actuarial value described
in this paragraph for coverage in a geographic area
is the actuarial value of benchmark coverage during
1994 in such area. Such actuarial value shall be de-
termined using the adjustment under paragraph (3)
for a standardized population and set of standard-
ized utilization and cost factors and updated annu-
ally in accordance with section 1104(a).
(3) ADJUSTMENTS FOR STANDARDIZED POPU-
LATION, STANDARDIZED
UTILIZATION
AND
COST
FACTORS, AND GEOGRAPHIC AREA.—The adjustment
under this paragraph—
(A) for a standardized population shall be
made by not taking into account individuals 65
Title I, Subtitle B
years of age or older, employees of the United
States Postal Service, retirees, and annuitants;
and
(B)(i) except as provided in clause (ii), for
a geographic area shall be made in a manner
that reflects the ratio of the actuarial value of
benchmark coverage in such geographic area
(as adjusted under subparagraph (A)) to such
actuarial value for such benchmark coverage for
the United States as a whole, taking into ac-
count standardized actuarial utilization and
cost factors, and
(ii) in the case of a group health plan oper-
ating in more than one geographic area, the
ratio described in clause (i) shall be determined
in accordance with regulations promulgated by
the Secretary.
At the election of a group health plan under sub-
paragraph (B)(ii), the ratio under such subpara-
graph shall be 1.
(d) MINIMUM
REQUIREMENTS
WITHIN
A
CAT-
EGORY.—Benefits offered in any standard coverage within
any category of benefits shall be not less than the narrow-
est scope and shortest duration of benefits within that cat-
egory in any of the approved health benefits plans offered
Title I, Subtitle B
under chapter 89 of title 5, United States Code (relating
to Federal Employees Health Benefits Program) in 1994.
Benefits offered in the standard plan within the category
of preventive services shall not require payment of cost-
sharing for covered items and services.
(e) NO COVERAGE OF SPECIFIC TREATMENT, PRO-
CEDURES, OR CLASSES REQUIRED.—Nothing in this sec-
tion (or section 1103) may be construed to require the
coverage of any specific procedure or treatment or class
of service in health coverage under this Act or through
regulation.
(f) CONSTRUCTION.—Nothing in this section (or sec-
tion 1103) shall be construed as requiring coverage to in-
clude benefits for items and services that are not medically
necessary or appropriate.
SEC. 1103. HIGH-DEDUCTIBLE COVERAGE.
Health insurance coverage is considered to provide
high-deductible coverage consistent with this section if—
(1) benefits under such coverage comply with—
(A) the requirements described in section
1102(b) (relating to required categories of cov-
ered benefits), and
(B) the requirements described in section
1102(d) (relating to minimum requirements
within a category);
Title I, Subtitle B
(2) the deductible amount is the amount estab-
lished under section 1104(b)(1);
(3) benefits under the coverage in any year
(other than preventive benefits described in section
1102(b)(4)) are covered only to the extent expenses
incurred for items and services included in the cov-
erage for the year exceed the deductible amount
specified in paragraph (2); and
(4) the actuarial value of the coverage (as de-
termined 
under 
rules 
consistent 
with 
section
1102(c)) is equivalent to 80 percent of the actuarial
value established under such section for standard
coverage.
SEC. 1104. ACTUARIAL VALUATION OF BENEFITS.
(a) IN GENERAL.—The Secretary, in consultation
with the NAIC and the American Academy of Actuaries,
shall establish (and may from time to time modify) proce-
dures by which health insurance benefits are valued for
purposes of this subtitle.
(b) DEDUCTIBLE; MODEL BENEFIT PACKAGES.—
The Secretary, in consultation with the NAIC and the
American Academy of Actuaries, shall establish—
(1) the deductible amount for high-deductible
coverage for the purposes of section 1103(2) such
that the actuarial value of high-deductible coverage
Title I, Subtitle B
described in section 1103 is 20 percent less than the
actuarial value of standard coverage described in
section 1102(a); and
(2) model benefit packages that may be treated,
for purposes of this title, as meeting the require-
ments for standard or high-deductible coverage
under sections 1102(a) and 1103, respectively, and
which shall include model cost sharing arrangements
for fee-for-service options, managed care options,
and point-of-service options.
SEC. 1105. LIMITATION ON OFFERING SUPPLEMENTAL BEN-
EFITS.
A carrier or group health plan offering qualified
health coverage may offer coverage of items and services
only in addition to the qualified standard coverage offered
(whether in the form of coverage of additional items and
services or a reduction in cost sharing) and only if—
(1) such supplemental coverage is offered and
priced separately from the standard coverage offered
and is only made available to individuals who obtain
qualified standard coverage through the carrier or
plan;
(2) the purchase of the qualified health cov-
erage is not conditioned upon the purchase of such
supplemental coverage; and
Title I, Subtitle B
(3) in the case of supplemental coverage that
consists of a reduction in the cost-sharing otherwise
applicable, the premium for the supplemental cov-
erage takes into account any expected increase in
utilization of items and services included in the
qualified health coverage resulting from obtaining
the supplemental coverage.
SEC. 1106. FAMILY COVERAGE OPTION; SUPPLEMENTAL
COVERAGE.
(a) FAMILY COVERAGE OPTION.—Each carrier and
group health plan that offers health insurance coverage
shall provide for an option under which children under 26
years of age (without regard to whether they are full-time
students or disabled) will be treated (with respect to fam-
ily coverage) as family members. The carrier or plan may
impose an additional premium for such option.
(b) CONSTRUCTION.—Nothing in this title shall be
construed as limiting the benefits that may be offered as
part of a group health plan or health insurance coverage.
SEC. 1107. LEVEL PLAYING FIELD FOR PROVIDERS.
(a) IN GENERAL.—Nothing in this subtitle may be
construed to require or prohibit the use of a particular
class of provider, among the providers that are legally au-
thorized to provide such treatment.
(b) COVERAGE OF CERTAIN OTHER PROVIDERS.—
Title I, Subtitle C
(1) IN GENERAL.—For purposes of this sub-
title, benefits under standard coverage shall include
the following:
(A) Coverage provided at an individual’s
home by a Christian Science practitioner or
Christian Science nurse.
(B) Coverage provided in a Christian
Science Sanitorium (as defined in section
1861(y) of the Social Security Act), including
coverage provided by a Christian Science practi-
tioner.
(2) QUALIFICATIONS OF PROVIDERS.—A Chris-
tian Science practitioner or Christian Science nurse
is qualified for purposes of paragraph (1) if the
practitioner or nurse is listed as such a practitioner
or nurse by the First Church of Christ, Scientist, in
Boston, Massachusetts.
Subtitle C—Employer
Responsibilities
SEC. 1201. REQUIRING EMPLOYERS TO OFFER OPTION OF
COVERAGE.
(a) IN GENERAL.—Subject to subsections (c) and (d),
each employer shall make available with respect to each
qualifying employee qualified health coverage under a
group health plan (whether fully-insured or self-insured)
Title I, Subtitle C
which meets the following requirements (and the applica-
ble requirements of subtitle A):
(1) ANNUAL
OFFERING.—The employee may
elect health coverage for the employee and family
members on an annual basis for each plan year and
at such other times as may be specified by the Sec-
retary of Labor, in a manner consistent with the
standards established to carry out section 1105.
(2) CHOICE OF COVERAGE.—
(A) IN GENERAL.—Subject to subsection
(c) and subparagraph (G), such coverage is pro-
vided for at least—
(i) a competing choice of qualified
standard coverage (consistent with section
1102(a)), including at least one option (ei-
ther a fee-for-service option or a point-of-
service option) that permits covered indi-
viduals to obtain benefits through an unre-
stricted choice of the lawful providers for
which benefits are made available; and
(ii) high-deductible coverage (consist-
ent with section 1103).
(B) COVERAGE FLOOR.—With respect to
any health coverage (other than coverage for
Title I, Subtitle C
supplemental benefits or qualified standard cov-
erage) offered under the group health plan—
(i) the coverage shall meet the re-
quirements specified in paragraphs (1) and
(3) of section 1102(a), and
(ii) the actuarial value of such cov-
erage shall not be less than the actuarial
value of high-deductible coverage.
(C) 
DISCLOSURE
FOR
CERTAIN
COV-
ERAGE.—If an employer offers, in addition to
the coverage required to be offered under sub-
paragraph (A), coverage the actuarial value of
which is more than the actuarial value for high-
deductible coverage but less than such value for
standard coverage, the employer must disclose
to the employees detailed information on how
the coverage offered compares to the standard
and high-deductible coverage offered by the em-
ployer.
(D) USE OF STANDARDIZED FACTORS.—
For purposes of this paragraph, the actuarial
value of coverage shall be determined using the
standardized population and standardized utili-
zation and cost factors described in section
1102(c)(3).
Title I, Subtitle C
(E) FAMILY
COVERAGE
OPTION.—The
offer of coverage under this section with respect
to a qualifying employee shall include the option
of coverage of family members of the employee.
(F) ANNUAL
ENROLLMENT
PERIOD
FOR
CHOICE OF COVERAGE.—The group health plan
provides, with respect to any qualifying em-
ployee, a single annual open enrollment period
(of not less than 30 days) in which the em-
ployee may choose among the coverage options
required under this paragraph.
(G) LIMITATION ON OFFER OF HIGH-DE-
DUCTIBLE
COVERAGE.—Qualified high-deduct-
ible coverage may not be made available under
a group health plan with respect to an employee
unless the employee demonstrates to the plan
administrator that the employee has available
assets (as defined by the Secretary) equal to at
least the deductible amount established under
section 1104(b)(1) applicable to the high-de-
ductible coverage.
(3) PAYROLL
WITHHOLDING.—The employee
electing such coverage may elect to have any pre-
miums owed by the employee collected through pay-
roll deduction.
Title I, Subtitle C
(4) NONDISCRIMINATION
IN
CONTRIBUTIONS
BASED ON PRICE OF COVERAGE SELECTED WITH RE-
SPECT TO INDIVIDUAL EMPLOYEES.—
(A) IN GENERAL.—The employer may not
vary the dollar amount of any employer con-
tribution, within a class of family coverage, with
respect to such coverage for an individual em-
ployee, solely on the basis of the total premium
price of the coverage selected by the employee.
(B) SPECIAL
RULES.—In applying sub-
paragraph (A)—
(i) the ‘‘total premium price’’ shall in-
clude, in the case of high-deductible cov-
erage, amounts paid by an employer into a
medical savings account (established under
section 7705 of the Internal Revenue Code
of 1986); and
(ii) if the employee selects health cov-
erage the premium for which is less than
the amount of the employer contribution,
the employer shall pay the amount of such
difference to the employee (or, at the em-
ployee’s option in the case of an employee
who has high-deductible coverage, to such
a medical savings account).
Title I, Subtitle C
(b) NO EMPLOYER MANDATE.—Subject to subsection
(a)(4) (relating to equal contribution rule), an employer
is not required under this section to make any contribution
to the cost of health coverage.
(c) GRANDFATHER FOR EXISTING COLLECTIVE BAR-
GAINING AGREEMENTS.—
(1) IN
GENERAL.—The requirement of sub-
section (a)(2) shall not apply to a group health plan
for a plan year if—
(A) the group health plan is in effect in
the plan year in which July 1, 1994, occurs,
and
(B) the employer makes (or offers to
make), in such plan year and the plan year in-
volved, a contribution to the plan on behalf of
each employee who is eligible to participate in
the plan under a collective bargaining agree-
ment or similar contract.
(2) SUNSET.—Paragraph (1) shall only apply to
a group health plan until the expiration of the collec-
tive bargaining agreement or similar contract in ef-
fect on the date of the enactment of this Act or, if
earlier, January 1, 2000.
(d) SPECIAL RULES.—
Title I, Subtitle C
(1) EMPLOYERS CONTRACTING WITH HEALTH
PLAN PURCHASING ORGANIZATIONS, ETC.—An em-
ployer is deemed to have satisfied the requirements
of subsection (a) with respect to an employee if the
employer enters into a contract with a health plan
purchasing organization (established under subtitle
A of title VI), a small employer pooling arrangement
(described in section 711 of the Employee Retire-
ment Income Security Act of 1974), a multiemployer
plan providing health benefits, or a certified multiple
employer health plan (as defined in section 701(9)
of the Employee Retirement Income Security Act of
1974) to offer coverage with respect to the employee.
(2) EXCLUSION OF NEW EMPLOYERS AND CER-
TAIN SMALL EMPLOYERS.—Subsection (a) shall not
apply to any small employer for any plan year if, as
of the beginning of such plan year—
(A) such employer (including any prede-
cessor thereof) has been an employer for less
than 1 year,
(B) such employer has no more than 2
qualifying employees, or
(C) no more than 2 qualifying employees
of the employer are not covered under any
group health plan.
Title I, Subtitle C
(3) EXCLUSION OF FAMILY MEMBERS.—Under
such procedures as the Secretary may prescribe, any
relative of an employer may be, at the election of the
employer, excluded from consideration as a qualify-
ing employee for purposes of applying the require-
ments of subsection (a). In the case of an employer
that is not an individual, an employee who is a rel-
ative of a key employee (as defined in section
416(i)(1) of the Internal Revenue Code of 1986) of
the employer may, at the election of the key em-
ployee, be considered a relative excludable under this
paragraph.
(e) CONSTRUCTION ON RANGE OF COVERAGE OF-
FERINGS.—Nothing in this section shall be construed—
(1) as limiting the number of standard and
high-deductible coverage options that an employer
may offer to an employee,
(2) as preventing employers from offering sup-
plemental coverage described in section 1105, or
(3) as preventing an employer from providing
for contributions to a medical savings account in
connection with the offering of high-deductible cov-
erage, subject to subsection (a)(4) and the require-
ments of section 7705 of the Internal Revenue Code
of 1986.
Title I, Subtitle C
SEC. 1202. NONDISCRIMINATION UNDER GROUP HEALTH
PLANS.
(a) APPLICATION OF RULES SIMILAR TO MEDICARE
NONDISCRIMINATION RULES.—The provisions of para-
graphs (1)(A), (1)(D), (1)(E), (3)(A), and (3)(C) of sec-
tion 1862(b) of the Social Security Act shall apply to a
premium or cost-sharing assistance eligible individual
under part A of title XXI of such Act in relation to an
employer in the same manner as such provisions apply to
an individual age 65 or over who is entitled to benefits
under title XVIII of such Act under section 226(a) of such
Act in relation to such employer.
(b) RULES OF APPLICATION.—In applying subsection
(a)—
(1) in applying clauses (ii) and (iii) of section
1862(b)(1)(A) of the Social Security Act, any ref-
erence to ‘‘20 or more employees’’ is deemed a ref-
erence to ‘‘5 or more employees’’;
(2) clause (iv) of section 1862(b)(1)(A) of such
Act shall not apply; and
(3) any reference to title XVIII of such Act is
deemed a reference to assistance under part A of
title XXI of such Act (as added by subtitle A of title
II of this Act).
(c) ENFORCEMENT.—
Title I, Subtitle C
(1) IN GENERAL.—Chapter 47 of the Internal
Revenue Code of 1986 (relating to excise taxes on
qualified pension, etc. plans) is amended by inserting
after section 5000 the following new section:
‘‘SEC. 5000A. EMPLOYER REQUIREMENTS.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on the failure of any employer to comply with the re-
quirements of section 1201 and section 1202 of the Bipar-
tisan Health Care Reform Act of 1994.
‘‘(b) AMOUNT OF TAX.—The amount of tax imposed
by subsection (a) shall be equal to $100 for each day for
each individual for which such a failure occurs.
‘‘(c) LIMITATION ON TAX.—
‘‘(1) TAX
NOT
TO
APPLY
WHERE
FAILURES
CORRECTED WITHIN 30 DAYS.—No tax shall be im-
posed by subsection (a) with respect to any failure
if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
30-day period (or such period as the Secretary
may determine appropriate) beginning on the
1st date any of the individuals on whom the tax
is imposed knew, or exercising reasonable dili-
Title I, Subtitle D
gence would have known, that such failure ex-
isted.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive rel-
ative to the failure involved.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for such chapter 47 is amended by adding at
the end the following new item:
‘‘Sec. 5000A. Employer requirements.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on January 1,
1997.
SEC. 1203. EFFECTIVE DATES.
Except as otherwise provided, the requirements of
sections 1201 and 1202 shall apply to plan years begin-
ning after December 31, 1996.
Subtitle D—Standards and Certifi-
cation; Enforcement; Preemp-
tion; General Provisions
SEC. 1301. ESTABLISHMENT OF STANDARDS.
(a) ROLE OF NAIC.—
Title I, Subtitle D
(1) IN GENERAL.—The Secretary shall request
the NAIC to develop, within 9 months after the date
of the enactment of this Act, model regulations that
specify standards with respect to the requirements of
this subtitle as applicable to carriers and health in-
surance coverage.
(2) REVIEW OF STANDARDS.—If the NAIC de-
velops recommended regulations specifying such
standards within such period, the Secretary shall re-
view the standards. Such review shall be completed
within 60 days after the date the regulations are de-
veloped. Unless the Secretary determines within
such period that the standards do not meet the re-
quirements, such standards shall serve as the stand-
ards under this subtitle, with such amendments as
the Secretary deems necessary.
(b) CONTINGENCY.—If the NAIC does not develop
such model regulations within such period or the Secretary
determines that such regulations do not specify standards
that meet the requirements described in subsection (a),
the Secretary shall specify, within 15 months after the
date of the enactment of this Act, standards to carry out
those requirements.
Title I, Subtitle D
SEC. 1302. APPLICATION OF STANDARDS TO CARRIERS
THROUGH STATES.
(a) APPLICATION OF STANDARDS.—
(1) IN GENERAL.—Each State shall submit to
the Secretary, by the deadline specified in paragraph
(2), a report on steps the State is taking to imple-
ment and enforce the standards established under
section 1301 with respect to carriers and health in-
surance coverage offered or renewed not later than
such deadline.
(2) DEADLINE
FOR
REPORT.—The deadline
under this paragraph is 1 year after the date the
standards are established under section 1301.
(b) FEDERAL ROLE.—
(1) NOTICE OF DEFICIENCY.—If the Secretary
determines that a State has failed to submit a report
by the deadline specified under subsection (a)(2) or
finds that the State has not implemented and pro-
vided adequate enforcement of the standards estab-
lished under section 1301, the Secretary shall notify
the State and provide the State a period of 60 days
in which to submit such report or to implement and
enforce such standards.
(2) IMPLEMENTATION OF ALTERNATIVE.—
(A) IN GENERAL.—If, after such 60-day
period, the Secretary finds that such a failure
Title I, Subtitle D
has not been corrected, the Secretary shall pro-
vide for such mechanism for the implementation
and enforcement of such standards in the State
as the Secretary determines to be appropriate.
(B) EFFECTIVE PERIOD.—Such implemen-
tation and enforcement shall take effect with
respect to carriers, and health insurance cov-
erage offered or renewed, on or after 3 months
after the date of the Secretary’s finding under
subparagraph (A), and until the date the Sec-
retary finds that such a failure has been cor-
rected.
SEC. 1303. APPLICATION TO GROUP HEALTH PLANS.
(a) IN GENERAL.—Subject to subsection (b), sections
1301 and 1302 shall apply to group health plans providing
health coverage in the same manner as they apply to car-
riers providing health insurance coverage.
(b) SUBSTITUTION OF REFERENCES.—For purposes
of subsection (a), any reference in section 1301 or 1302
to—
(1) a State or the Secretary of Health and
Human Services is deemed a reference to the Sec-
retary of Labor, and
Title I, Subtitle D
(2) a carrier or health insurance coverage is
deemed a reference to a group health plan and
health coverage, respectively.
SEC. 1304. ENFORCEMENT.
(a) ENFORCEMENT BY DEPARTMENT OF LABOR FOR
EMPLOYERS AND GROUP HEALTH PLANS.—
(1) IN GENERAL.—For purposes of part 5 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the provisions of this
title insofar as they relate to group health plans or
employers shall be deemed to be provisions of title
I of such Act irrespective of exclusions under section
4(b) of such Act.
(2) REGULATORY AUTHORITY.—With respect to
the regulatory authority of the Secretary of Labor
under this subtitle pursuant to paragraph (1), sec-
tion 505 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1135) shall apply.
(b) ENFORCEMENT
BY
EXCISE
TAX
FOR
CAR-
RIERS.—
(1) IN GENERAL.—Chapter 43 of the Internal
Revenue Code of 1986 (relating to qualified pension
plans, etc.) is amended by adding at the end thereof
the following new section:
Title I, Subtitle D
‘‘SEC. 4980C. FAILURE OF CARRIER TO COMPLY WITH
HEALTH INSURANCE STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of a carrier to comply with the re-
quirements applicable to the carrier under parts 1
through 4 of subtitle A and subtitle B of title I of
the Bipartisan Health Care Reform Act of 1994.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by a carrier in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
mechanism that provides adequate sanctions with re-
spect to such a failure by such a carrier.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the amount of the tax imposed by subsection (a)
shall be $100 for each day during which such failure
persists for each individual to which such failure re-
lates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
‘‘(2) LIMITATION.—The amount of the tax im-
posed by subsection (a) for a carrier with respect to
health insurance coverage shall not exceed 25 per-
cent of the amounts received for such coverage dur-
ing the period such failure persists.
Title I, Subtitle D
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the carrier.
‘‘(d) EXCEPTIONS.—
‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax
shall be imposed by subsection (a) by reason of any
failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected within the
30-day period beginning on the earliest date the
carrier knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘health insurance coverage’ and ‘carrier’ have the
respective meanings given such terms in section 1903 of
the Bipartisan Health Care Reform Act of 1994.’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 43 of such Code is amended by
adding at the end thereof the following new item:
Title I, Subtitle E
‘‘Sec. 4980C. Failure of carrier to comply with health insurance
standards.’’
SEC. 1305. LIMITATION ON SELF INSURANCE FOR SMALL
EMPLOYERS.
A single employer plan (as defined in section
3(40)(B) of the Employee Retirement Income Security
Act of 1974) may not offer health coverage other than
through a carrier unless the plan has at least 100 eligible
employees.
Subtitle 
E—Multiple 
Employer
Health Benefits Protections and
Related Provisions
PART 1—MULTIPLE EMPLOYER HEALTH
BENEFITS PROTECTIONS
SEC. 1401. LIMITED EXEMPTION FROM CERTAIN RESTRIC-
TIONS ON ERISA PREEMPTION OF STATE LAW
FOR HEALTH PLANS MAINTAINED BY MUL-
TIPLE EMPLOYERS SUBJECT TO CERTAIN
FEDERAL STANDARDS.
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding at the end the following new part:
‘‘PART 7—MULTIPLE EMPLOYER HEALTH PLANS
‘‘SEC. 701. DEFINITIONS.
‘‘For purposes of this part—
Title I, Subtitle E
‘‘(1) INSURER.—The term ‘insurer’ means an
insurance company, insurance service, or insurance
organization, licensed to engage in the business of
insurance by a State.
‘‘(2) PARTICIPATING
EMPLOYER.—The term
‘participating employer’ means, in connection with a
multiple employer welfare arrangement, any em-
ployer if any of its employees, or any of the depend-
ents of its employees, are or were covered under
such arrangement in connection with the employ-
ment of the employees.
‘‘(3) EXCESS/STOP LOSS COVERAGE.—The term
‘excess/stop loss coverage’ means, in connection with
a multiple employer welfare arrangement, a contract
under which an insurer provides for payment with
respect to claims under the arrangement, relating to
participants or beneficiaries individually or other-
wise, in excess of an amount or amounts specified in
such contract.
‘‘(4) QUALIFIED
ACTUARY.—The term ‘quali-
fied actuary’ means an individual who is a member
of the American Academy of Actuaries or meets
such reasonable standards and qualifications as the
Secretary may provide by regulation.
Title I, Subtitle E
‘‘(5) SPONSOR.—The term ‘sponsor’ means, in
connection with a multiple employer welfare arrange-
ment, the association or other entity which estab-
lishes or maintains the arrangement.
‘‘(6) STATE INSURANCE COMMISSIONER.—The
term ‘State insurance commissioner’ means the in-
surance commissioner (or similar official) of a State.
‘‘(7) DOMICILE
STATE.—The term ‘domicile
State’ means, in connection with a multiple employer
welfare arrangement, the State in which, according
to the application for a certification under this part,
most individuals to be covered under the arrange-
ment are located, except that, in any case in which
information contained in the latest annual report of
the arrangement filed under this part indicates that
most individuals covered under the arrangement are
located in a different State, such term means such
different State.
‘‘(8) FULLY INSURED.—Coverage under a mul-
tiple employer welfare arrangement is ‘fully insured’
if one or more insurers, health maintenance organi-
zations, similar organizations regulated under State
law for solvency, or any combination thereof are lia-
ble under one or more insurance policies or contracts
for all benefits under the arrangement (irrespective
Title I, Subtitle E
of any recourse they may have against other par-
ties).
‘‘(9) CERTIFIED MULTIPLE EMPLOYER HEALTH
PLAN.—The term ‘certified multiple employer health
plan’ means a multiple employer welfare arrange-
ment treated as an employee welfare benefit plan by
reason of certification under this part.
‘‘SEC. 702. CERTIFIED MULTIPLE EMPLOYER HEALTH
PLANS 
RELIEVED 
OF 
CERTAIN 
RESTRIC-
TIONS ON PREEMPTION OF STATE LAW AND
TREATED AS EMPLOYEE WELFARE BENEFIT
PLANS.
‘‘(a) IN GENERAL.—Subject to subsection (b), a mul-
tiple employer welfare arrangement under which coverage
is not fully insured and with respect to which there is in
effect a certification granted by the Secretary under this
part (or with respect to which there is pending a complete
application for such a certification and the Secretary de-
termines that provisional protection under this part is ap-
propriate)—
‘‘(1) shall be treated for purposes of subtitle A
and the preceding parts of this subtitle as an em-
ployee welfare benefit plan, irrespective of whether
such arrangement is an employee welfare benefit
plan, and
Title I, Subtitle E
‘‘(2) 
shall 
be 
exempt 
from 
section
514(b)(6)(A)(ii).
‘‘(b) BENEFITS
MUST
CONSIST
OF
MEDICAL
CARE.—Subsection (a) shall apply to a multiple employer
welfare arrangement only if the benefits provided there-
under consist solely of medical care described in section
607(1) (disregarding such incidental benefits as the
Secretary shall specify by regulation).
‘‘SEC. 703. CERTIFICATION PROCEDURE.
‘‘(a) IN GENERAL.—The Secretary shall grant a cer-
tification described in section 702(a) to a multiple em-
ployer welfare arrangement if—
‘‘(1) an application for such certification with
respect to such arrangement, identified individually
or by class, has been duly filed in complete form
with the Secretary in accordance with this part,
‘‘(2) such application demonstrates compliance
with the requirements of section 704 with respect to
such arrangement, and
‘‘(3) the Secretary finds that such certification
is—
‘‘(A) administratively feasible,
‘‘(B) not adverse to the interests of the in-
dividuals covered under the arrangement, and
Title I, Subtitle E
‘‘(C) protective of the rights and benefits
of the individuals covered under the arrange-
ment.
‘‘(b) NOTICE AND HEARING.—Before granting a cer-
tification under this section, the Secretary shall publish
notice in the Federal Register of the pendency of the cer-
tification, shall require that adequate notice be given to
interested persons, including the State insurance commis-
sioner of each State in which covered individuals under
the arrangement are, or are expected to be, located, and
shall afford interested persons opportunity to present
views. The Secretary may not grant a certification under
this section unless the Secretary affords an opportunity
for a hearing and makes a determination on the record
with respect to the findings required under subsection
(a)(3). The Secretary shall, to the maximum extent prac-
ticable, make a final determination with respect to any ap-
plication filed under this section in the case of a newly
established arrangement within 90 days after the date
which the Secretary determines is the date on which such
application is filed in complete form.
‘‘SEC. 704. ELIGIBILITY REQUIREMENTS.
‘‘(a) APPLICATION FOR CERTIFICATION.—
‘‘(1) IN
GENERAL.—A certification may be
granted by the Secretary under this part only on the
Title I, Subtitle E
basis of an application filed with the Secretary in
such form and manner as shall be prescribed in reg-
ulations of the Secretary. Any such application shall
be signed by the operating committee and the spon-
sor of the arrangement.
‘‘(2) FILING FEE.—The arrangement shall pay
to the Secretary at the time of filing an application
under this section a filing fee in the amount of
$5,000, which shall be available, to the extent pro-
vided in appropriation Acts, to the Secretary for the
sole purpose of administering the certification proce-
dures under this part.
‘‘(3) INFORMATION INCLUDED.—An application
filed under this section shall include, in a manner
and form prescribed in regulations of the Secretary,
at least the following information:
‘‘(A) IDENTIFYING
INFORMATION.—The
names and addresses of—
‘‘(i) the sponsor, and
‘‘(ii) the members of the operating
committee of the arrangement.
‘‘(B) STATES IN WHICH ARRANGEMENT IN-
TENDS TO DO BUSINESS.—The States in which
individuals covered under the arrangement are
Title I, Subtitle E
to be located and the number of such individ-
uals expected to be located in each such State.
‘‘(C) BONDING REQUIREMENTS.—Evidence
provided by the operating committee that the
bonding requirements of section 412 will be met
as of the date of the application.
‘‘(D) PLAN DOCUMENTS.—A copy of the
documents governing the arrangement (includ-
ing any bylaws and trust agreements), the sum-
mary plan description, and other material de-
scribing the benefits and coverage that will be
provided to individuals covered under the ar-
rangement.
‘‘(E) AGREEMENTS WITH SERVICE PROVID-
ERS.—A copy of any agreements between the
arrangement and contract administrators and
other service providers.
‘‘(F) FUNDING REPORT.—A report setting
forth information determined as of a date with-
in the 120-day period ending with the date of
the application, including the following:
‘‘(i) RESERVES.—A statement, cer-
tified by the operating committee of the ar-
rangement, and a statement of actuarial
opinion, signed by a qualified actuary, that
Title I, Subtitle E
all applicable requirements of section 707
are or will be met in accordance with regu-
lations which the Secretary shall prescribe.
‘‘(ii) 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 required reserves under the
arrangement for the 12-month period be-
ginning with such date within such 120-
day period, taking into account the ex-
pected coverage and experience of the ar-
rangement. If the contribution rates are
not fully adequate, the statement of actu-
arial opinion shall indicate the extent to
which the rates are inadequate and the
changes needed to ensure adequacy.
‘‘(iii) 
CURRENT
AND
PROJECTED
VALUE
OF
ASSETS
AND
LIABILITIES.—A
statement of actuarial opinion signed by a
qualified actuary, which sets forth the cur-
rent value of the assets and liabilities accu-
mulated under the arrangement and a pro-
Title I, Subtitle E
jection of the assets, liabilities, income,
and expenses of the arrangement for the
12-month period referred to in clause (ii).
The income statement shall identify sepa-
rately the arrangement’s administrative ex-
penses and claims.
‘‘(iv) COSTS
OF
COVERAGE
TO
BE
CHARGED
AND
OTHER
EXPENSES.—A
statement of the costs of coverage to be
charged, 
including 
an 
itemization 
of
amounts for administration, reserves, and
other expenses associated with the oper-
ation of the arrangement.
‘‘(v) 
OTHER
INFORMATION.—Any
other information which may be prescribed
in regulations of the Secretary as nec-
essary to carry out the purposes of this
part.
‘‘(b) OTHER REQUIREMENTS.—A complete applica-
tion for a certification under this part shall include infor-
mation which the Secretary determines to be complete and
accurate and sufficient to demonstrate that the following
requirements are met with respect to the arrangement:
‘‘(1) SPONSOR.—
Title I, Subtitle E
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the sponsor is, and has been (to-
gether with its immediate predecessor, if any)
for a continuous period of not less than 3 years
before the date of the application, organized
and maintained in good faith, with a constitu-
tion and bylaws specifically stating its purpose,
as a trade association, an industry association,
a professional association, or a chamber of com-
merce (or similar business group), for substan-
tial purposes other than that of obtaining or
providing medical care described in section
607(1), and the applicant demonstrates to the
satisfaction of the Secretary that the sponsor is
established as a permanent entity which re-
ceives the active support of its members.
‘‘(B) SPECIAL RULE FOR EMPLOYERS IN
THE SAME TRADE OR BUSINESS.—In the case
of an arrangement under which all participating
employers are engaged in a common type of
trade or business, the sponsor is the operating
committee of the arrangement.
‘‘(2) OPERATING
COMMITTEE.—The arrange-
ment is operated, pursuant to a trust agreement, by
an operating committee which has complete fiscal
100
Title I, Subtitle E
control over the arrangement and which is respon-
sible for all operations of the arrangement, and the
operating committee has in effect rules of operation
and financial controls, based on a 3-year plan of op-
eration, adequate to carry out the terms of the ar-
rangement and to meet all requirements of this title
applicable to the arrangement. The members of the
committee are individuals selected from individuals
who are the owners, officers, directors, or employees
of the participating employers or who are partners
in the participating employers and actively partici-
pate in the business. No such member is an owner,
officer, director, or employee of, or partner in, a con-
tract administrator or other service provider to the
arrangement, except that officers or employees of a
sponsor which is a service provider (other than a
contract administrator) to the arrangement may be
members of the committee if they constitute not
more than 25 percent of the membership of the com-
mittee and they do not provide services to the ar-
rangement other than on behalf of the sponsor. The
committee has sole authority to approve applications
for participation in the arrangement and to contract
with a service provider to administer the day-to-day
affairs of the arrangement.
101
Title I, Subtitle E
‘‘(3) 
CONTENTS
OF
GOVERNING
INSTRU-
MENTS.—The instruments governing the arrange-
ment include a written instrument, meeting the re-
quirements of an instrument required under section
402(a)(1), which—
‘‘(A) provides that the committee serves as
the named fiduciary required for plans under
such section and serves in the capacity of a
plan administrator (referred to in section
3(16)(A)),
‘‘(B) provides that the sponsor is to serve
as plan sponsor (referred to in section
3(16)(B)),
‘‘(C) incorporates the requirements of sec-
tion 707, and
‘‘(D) provides that, effective upon the
granting of a certification under this part—
‘‘(i) all participating employers must
be members or affiliated members of the
sponsor, except that, in the case of a spon-
sor which is a professional association or
other individual-based association, if at
least one of the officers, directors, or em-
ployees of an employer, or at least one of
the individuals who are partners in an em-
102
Title I, Subtitle E
ployer and who actively participates in the
business, is a member or affiliated member
of the sponsor, participating employers
may also include such employer, and
‘‘(ii) all individuals thereafter com-
mencing coverage under the arrangement
must be—
‘‘(I) active or retired owners, offi-
cers, directors, or employees of, or
partners in, participating employers,
or
‘‘(II) the beneficiaries of individ-
uals described in subclause (I).
‘‘(4) CONTRIBUTION RATES.—The contribution
rates referred to in subsection (a)(3)(F)(ii) are
adequate.
‘‘(5) OPTION OF FAMILY COVERAGE.—If the ar-
rangement provides for coverage with respect to an
employee, the arrangement shall make available the
option of coverage of family members of the individ-
ual (as defined in section 1901(2) of the Bipartisan
Health Care Reform Act of 1994).
‘‘(6) MISCELLANEOUS
REQUIREMENTS.—(A)
The requirements of the title I of the Bipartisan
103
Title I, Subtitle E
Health Care Reform Act of 1994 (insofar as they
apply to group health plans), including the following:
‘‘(i) Section 1003(c) (relating to guaran-
teed renewal).
‘‘(ii) Section 1004 (relating to restricting
preexisting condition exclusions).
‘‘(iii) Section 1005 (relating to choice of
coverage through open enrollment).
‘‘(iv) Section 1011 (relating to standards
for managed care arrangements).
‘‘(v) Section 1012 (relating to utilization
review).
‘‘(vi) Section 1013 (relating to standards
for essential community providers).
‘‘(vii) Section 1021(d) (relating to use of
fair rating practices).
‘‘(viii) Section 1022 (relating to coordina-
tion with premium assistance certificate pro-
gram).
‘‘(B) The requirements of section 1023 of the
Bipartisan Health Care Reform Act of 1994 (relat-
ing to establishment of risk adjustment mechanisms)
insofar as such requirements apply to carriers but
only with respect to covered individuals in the indi-
vidual/small group market.
104
Title I, Subtitle E
‘‘(7) 
REGULATORY
REQUIREMENTS.—Such
other requirements as the Secretary may prescribe
by regulation as necessary to carry out the purposes
of this part.
‘‘(c) TREATMENT
OF PARTY SEEKING CERTIFI-
CATION WHERE PARTY IS SUBJECT TO DISQUALIFICA-
TION.—
‘‘(1) IN GENERAL.—In the case of any applica-
tion for a certification under this part with respect
to a multiple employer welfare arrangement, if the
Secretary determines that the sponsor of the ar-
rangement or any other person associated with the
arrangement is subject to disqualification under
paragraph (2), the Secretary may deny the certifi-
cation with respect to such arrangement.
‘‘(2) DISQUALIFICATION.—A person is subject
to disqualification under this paragraph if such
person—
‘‘(A) has intentionally made a material
misstatement in the application for certifi-
cation;
‘‘(B) has obtained or attempted to obtain
a certification under this part through mis-
representation or fraud;
105
Title I, Subtitle E
‘‘(C) has misappropriated or converted to
such person’s own use, or improperly withheld,
money held under a plan or any multiple
employer welfare arrangement;
‘‘(D) is prohibited (or would be prohibited
if the arrangement were a plan) from serving in
any capacity in connection with the arrange-
ment under section 411;
‘‘(E) has failed to appear without reason-
able cause or excuse in response to a subpoena,
examination, warrant, or any other order law-
fully issued by the Secretary compelling such
response;
‘‘(F) has previously been subject to a de-
termination under this part resulting in the de-
nial, suspension, or revocation of a certification
under this part on similar grounds; or
‘‘(G) has otherwise violated any provision
of this title with respect to a matter which the
Secretary determines of sufficient consequence
to merit disqualification for purposes of this
part.
‘‘(d) FRANCHISE NETWORKS.—In the case of a mul-
tiple employer welfare arrangement established and main-
tained by a franchisor for a franchise network consisting
106
Title I, Subtitle E
of its franchisees, such franchisor shall be treated as the
sponsor referred to in the preceding provisions of this sec-
tion, such network shall be treated as an association re-
ferred to in such provisions, and each franchisee shall be
treated as a member (of the association and the sponsor)
referred to in such provisions, if all participating employ-
ers are such franchisees and the requirements of sub-
section (b)(1) with respect to a sponsor are met with
respect to the network.
‘‘(e) CERTAIN COLLECTIVELY BARGAINED ARRANGE-
MENTS.—In applying the preceding provisions of this sec-
tion in the case of a multiple employer welfare arrange-
ment which would be described in section 3(40)(A)(i) but
for the failure to meet any requirement of section
3(40)(C)—
‘‘(1) paragraphs (1) and (2) of subsection (b)
and subparagraphs (A), (B), and (D) of paragraph
(3) of subsection (b) shall be disregarded, and
‘‘(2) the joint board of trustees shall be consid-
ered the operating committee of the arrangement.
‘‘(f) CERTAIN ARRANGEMENTS NOT MEETING SIN-
GLE EMPLOYER REQUIREMENT.—
‘‘(1) IN GENERAL.—In any case in which the
majority of the employees covered under a multiple
employer welfare arrangement are employees of a
107
Title I, Subtitle E
single employer (within the meaning of clauses (i)
and (ii) of section 3(40)(B)), if all other employees
covered under the arrangement are employed by em-
ployers who are related to such single employer, sub-
section (b)(3)(D) shall be disregarded.
‘‘(2) RELATED EMPLOYERS.—For purposes of
paragraph (1), employers are ‘related’ if there is
among all such employers a common ownership in-
terest or a substantial commonality of business oper-
ations based on common suppliers or customers.
‘‘SEC. 705. ADDITIONAL REQUIREMENTS APPLICABLE TO
CERTIFIED MULTIPLE EMPLOYER HEALTH
PLANS.
‘‘(a) NOTICE OF MATERIAL CHANGES.—In the case
of any certified multiple employer health plan, descriptions
of material changes in any information which was required
to be submitted with the application for the certification
granted under this part shall be filed in such form and
manner as shall be prescribed in regulations of the Sec-
retary. The Secretary may require by regulation prior no-
tice of material changes with respect to specified matters
which might serve as the basis for suspension or revoca-
tion of the certification.
‘‘(b) REPORTING REQUIREMENTS.—Under regula-
tions of the Secretary, the requirements of sections 102,
108
Title I, Subtitle E
103, and 104 shall apply with respect to any multiple em-
ployer welfare arrangement which is or has been a cer-
tified multiple employer health plan in the same manner
and to the same extent as such requirements apply to em-
ployee welfare benefit plans, irrespective of whether such
certification continues in effect. The annual report re-
quired under section 103 for any plan year in the case
of any such multiple employer welfare arrangement shall
also include information described in section 704(a)(3)(F)
with respect to the plan year and, notwithstanding section
104(a)(1)(A), shall be filed not later than 90 days after
the close of the plan year.
‘‘(c) ENGAGEMENT OF QUALIFIED ACTUARY.—The
operating committee of each multiple employer welfare ar-
rangement which is or has been a certified multiple em-
ployer health plan shall engage, on behalf of all covered
individuals, a qualified actuary who shall be responsible
for the preparation of the materials comprising informa-
tion necessary to be submitted by a qualified actuary
under this part. The qualified actuary shall utilize such
assumptions and techniques as are necessary to enable
such actuary to form an opinion as to whether the con-
tents of the matters reported under this part—
109
Title I, Subtitle E
‘‘(1) are in the aggregate reasonably related to
the experience of the arrangement and to reasonable
expectations, and
‘‘(2) represent such actuary’s best estimate of
anticipated experience under the arrangement.
The opinion by the qualified actuary shall be made with
respect to, and shall be made a part of, the annual report.
‘‘(d) FILING
NOTICE
OF
CERTIFICATION
WITH
STATES.—A certification granted to a multiple employer
welfare arrangement under this part shall not be effective
unless written notice of such certification is filed with the
State insurance commissioner of each State in which at
least 5 percent of the individuals covered under the ar-
rangement 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. The Secretary may
by regulation provide in specified cases for the application
of the preceding sentence with lesser percentages in lieu
of such 5 percent amount.
‘‘SEC. 706. DISCLOSURE TO PARTICIPATING EMPLOYERS BY
ARRANGEMENTS PROVIDING MEDICAL CARE.
‘‘(a) IN GENERAL.—A multiple employer welfare ar-
rangement providing benefits consisting of medical care
110
Title I, Subtitle E
described in section 607(1) shall issue to each participat-
ing employer—
‘‘(1) a document equivalent to the summary
plan description required of plans under part 1,
‘‘(2) information describing the contribution
rates applicable to participating employers, and
‘‘(3) a statement indicating—
‘‘(A) that the arrangement is not a li-
censed insurer under the laws of any State,
‘‘(B) whether coverage under the arrange-
ment is fully insured, and
‘‘(C) if coverage under the arrangement if
not fully insured, (i) whether the arrangement
is (or has ceased to be) a certified multiple em-
ployer health plan, and (ii) if such an arrange-
ment is a certified multiple employer health
plan, that such arrangement is treated as an
employee welfare benefit plan under this title.
‘‘(b) TIME
FOR DISCLOSURE.—Such information
shall be issued to employers within such reasonable period
of time before becoming participating employers as may
be prescribed in regulations of the Secretary.
‘‘SEC. 707. MAINTENANCE OF RESERVES.
‘‘(a) IN GENERAL.—Each multiple employer welfare
arrangement which is or has been a certified multiple em-
111
Title I, Subtitle E
ployer health plan and under which coverage is not fully
insured shall establish and maintain such excess/stop loss
coverage as the Secretary considers appropriate and shall
establish and maintain reserves, consisting of—
‘‘(1) a reserve for unearned contributions,
‘‘(2) a reserve for payment of claims reported
and not yet paid and claims incurred but not yet re-
ported, and for expected administrative costs with
respect to such claims, and
‘‘(3) a reserve, in an amount recommended by
the qualified actuary, for any other obligations of
the arrangement.
‘‘(b) MINIMUM AMOUNT FOR CERTAIN RESERVES.—
The total of the reserves described in subsection (a)(2)
shall not be less than an amount equal to 25 percent of
expected incurred claims and expenses for the plan year.
‘‘(c) REQUIRED
MARGIN.—In determining the
amounts of reserves required under this section in connec-
tion with any multiple employer welfare arrangement, the
qualified actuary shall include a margin for error and
other fluctuations taking into account the specific
circumstances of such arrangement.
‘‘(d) ADDITIONAL REQUIREMENTS.—The Secretary
may provide such additional requirements relating to re-
serves and excess/stop loss coverage as the Secretary con-
112
Title I, Subtitle E
siders appropriate. Such requirements may be provided,
by regulation or otherwise, with respect to any arrange-
ment or any class of arrangements.
‘‘(e) ADJUSTMENTS FOR EXCESS/STOP LOSS COV-
ERAGE.—The Secretary may provide for adjustments to
the levels of reserves otherwise required under subsections
(a) and (b) with respect to any arrangement or class of
arrangements to take into account excess/stop loss cov-
erage provided with respect to such arrangement or ar-
rangements.
‘‘(f) ALTERNATIVE MEANS OF COMPLIANCE.—The
Secretary may permit an arrangement to substitute, for
all or part of the reserves required under subsection (a),
such security, guarantee, or other financial arrangement
as the Secretary determines to be adequate to enable the
arrangement to fully meet all its financial obligations on
a timely basis.
‘‘SEC. 708. CORRECTIVE ACTIONS.
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—A multiple employer welfare arrangement with
respect to which there is or has been in effect a certifi-
cation granted under this part shall continue to meet the
requirements of section 707, irrespective of whether such
certification continues in effect. The operating committee
of such arrangement shall determine semiannually wheth-
113
Title I, Subtitle E
er the requirements of section 707 are met. In any case
in which the committee determines that there is reason
to believe that there is or will be a failure to meet such
requirements, or the Secretary makes such a determina-
tion and so notifies the committee, the committee shall
immediately notify the qualified actuary engaged by the
arrangement, and such actuary shall, not later than the
end of the next following month, make such recommenda-
tions to the committee for corrective action as the actuary
determines necessary to ensure compliance with section
707. Not later than 10 days after receiving from the actu-
ary recommendations for corrective actions, the committee
shall notify the Secretary (in such form and manner as
the Secretary may prescribe by regulation) of such rec-
ommendations of the actuary for corrective action, to-
gether with a description of the actions (if any) that the
committee has taken or plans to take in response to such
recommendations. The committee shall thereafter report
to the Secretary, in such form and frequency as the Sec-
retary may specify to the committee, regarding corrective
action taken by the committee until the requirements of
section 707 are met.
‘‘(b) TERMINATION.—
‘‘(1) NOTICE OF TERMINATION.—In any case in
which the operating committee of a multiple em-
114
Title I, Subtitle E
ployer welfare arrangement which is or has been a
certified multiple employer health plan determines
that there is reason to believe that the arrangement
will terminate, the committee shall so inform the
Secretary, shall develop a plan for winding up the
affairs of the arrangement in connection with such
termination in a manner which will result in timely
payment of all benefits for which the arrangement is
obligated, and shall submit such plan in writing to
the Secretary. Actions required under this paragraph
shall be taken in such form and manner as may be
prescribed in regulations of the Secretary.
‘‘(2) ACTIONS REQUIRED IN CONNECTION WITH
TERMINATION.—In any case in which—
‘‘(A) the Secretary has been notified under
subsection (a) of a failure of a multiple em-
ployer welfare arrangement which is or has
been a certified multiple employer health plan
to meet the requirements of section 707 and
has not been notified by the operating commit-
tee of the arrangement that corrective action
has restored compliance with such require-
ments, and
‘‘(B) the Secretary determines that the
continuing failure to meet the requirements of
115
Title I, Subtitle E
section 707 can be reasonably expected to result
in a continuing failure to pay benefits for which
the arrangement is obligated,
the operating committee of the arrangement shall, at
the direction of the Secretary, terminate the ar-
rangement and, in the course of the termination,
take such actions as the Secretary may require as
necessary to ensure that the affairs of the arrange-
ment will be, to the maximum extent possible, wound
up in a manner which will result in timely payment
of all benefits for which the arrangement is
obligated.
‘‘SEC. 709. EXPIRATION, SUSPENSION, OR REVOCATION OF
CERTIFICATION.
‘‘(a) EXPIRATION
AND
RENEWAL
OF
CERTIFI-
CATION.—A certification granted to a multiple employer
welfare arrangement under this part shall expire 3 years
after the date on which the certification is granted. A cer-
tification which has expired may be renewed by means of
application for a certification in accordance with section
704.
‘‘(b) SUSPENSION
OR REVOCATION
OF CERTIFI-
CATION BY SECRETARY.—The Secretary may suspend or
revoke a certification granted to a multiple employer wel-
fare arrangement under this part—
116
Title I, Subtitle E
‘‘(1) for any cause that may serve as the basis
for the denial of an initial application for such a cer-
tification under section 704, or
‘‘(2) if the Secretary finds that—
‘‘(A) the arrangement, or the sponsor
thereof, in the transaction of business while
under the certification, has used fraudulent, co-
ercive, or dishonest practices, or has dem-
onstrated incompetence, untrustworthiness, or
financial irresponsibility,
‘‘(B) the arrangement, or the sponsor
thereof, is using such methods or practices in
the conduct of its operations, so as to render its
further transaction of operations hazardous or
injurious to participating employers, or covered
individuals,
‘‘(C) the arrangement, or the sponsor
thereof, has refused to be examined in accord-
ance with this part or to produce its accounts,
records, and files for examination in accordance
with this part, or
‘‘(D) any of the officers of the arrange-
ment, or the sponsor thereof, has refused to
give information with respect to the affairs of
the arrangement or the sponsor or to perform
117
Title I, Subtitle E
any other legal obligation relating to such an
examination when required by the Secretary in
accordance with this part.
Any such suspension or revocation under this subsection
shall be effective only upon a final decision of the Sec-
retary made after notice and opportunity for a hearing
is provided in accordance with section 710.
‘‘(c) SUSPENSION
OR REVOCATION
OF CERTIFI-
CATION UNDER COURT PROCEEDINGS.—A certification
granted to a multiple employer welfare arrangement under
this part may be suspended or revoked by a court of com-
petent jurisdiction in an action by the Secretary brought
under paragraph (2), (5), or (6) of section 502(a), except
that the suspension or revocation under this subsection
shall be effective only upon notification of the Secretary
of such suspension or revocation.
‘‘(d) NOTIFICATION
OF PARTICIPATING EMPLOY-
ERS.—All participating employers in a multiple employer
welfare arrangement shall be notified of the expiration,
suspension, or revocation of a certification granted to such
arrangement under this part, by such persons and in such
form and manner as shall be prescribed in regulations of
the Secretary, not later than 20 days after such expiration
or after receipt of notice of a final decision requiring such
suspension or revocation.
118
Title I, Subtitle E
‘‘(e) PUBLICATION OF EXPIRATIONS, SUSPENSIONS,
AND REVOCATIONS.—The Secretary shall publish all expi-
rations of, and all final decisions to suspend or revoke,
certifications granted under this part.
‘‘SEC. 710. REVIEW OF ACTIONS OF THE SECRETARY.
‘‘(a) IN GENERAL.—Any decision by the Secretary
which involves the denial of an application by a multiple
employer welfare arrangement for a certification under
this part or the suspension or revocation of such a certifi-
cation shall contain a statement of the specific reason or
reasons supporting the Secretary’s action, including ref-
erence to the specific terms of the certification and the
statutory provision or provisions relevant to the deter-
mination.
‘‘(b) DENIALS OF APPLICATIONS.—In the case of the
denial of an application for a certification under this part,
the Secretary shall send a copy of the decision to the appli-
cant by certified or registered mail at the address specified
in the records of the Secretary. Such decision shall con-
stitute the final decision of the Secretary unless the ar-
rangement, or any party that would be prejudiced by the
decision, files a written appeal of the denial within 30 days
after the mailing of such decision. The Secretary may af-
firm, modify, or reverse the initial decision. The decision
on appeal shall become final upon the mailing of a copy
119
Title I, Subtitle E
by certified or registered mail to the arrangement or party
that filed the appeal.
‘‘(c) SUSPENSIONS OR REVOCATIONS OF CERTIFI-
CATION.—In the case of the suspension or revocation of
a certification granted under this part, the Secretary shall
send a copy of the decision to the arrangement by certified
or registered mail at its address, as specified in the
records of the Secretary. Upon the request of the arrange-
ment, or any party that would be prejudiced by the sus-
pension or revocation, filed within 15 days of the mailing
of the Secretary’s decision, the Secretary shall schedule
a hearing on such decision by written notice, sent by cer-
tified or registered mail to the arrangement or party
requesting such hearing. Such notice shall set forth—
‘‘(1) a specific date and time for the hearing,
which shall be within the 10-day period commencing
20 days after the date of the mailing of the notice,
and
‘‘(2) a specific place for the hearing, which shall
be in the District of Columbia or in the State and
county thereof (or parish or other similar political
subdivision thereof) in which is located the arrange-
ment’s principal place of business.
120
Title I, Subtitle E
The decision as affirmed or modified in such hearing shall
constitute the final decision of the Secretary, unless such
decision is reversed in such hearing.
‘‘SEC. 711. SMALL EMPLOYER POOLING ARRANGEMENTS.
‘‘(a) REQUIREMENTS
FOR
SEPAS
APPLICABLE
WHERE SIGNIFICANT NUMBER OF SMALL EMPLOYERS
PARTICIPATE.—In any case in which coverage is provided
for the current plan year under a multiple employer health
plan and more than 10 percent of the participating em-
ployers in the arrangement are small employers (as de-
fined in section 1902 of the Bipartisan Health Care Re-
form Act of 1994), the entity sponsoring such arrange-
ment shall ensure that such arrangement is maintained
for such year in the form of a small employer pooling ar-
rangement.
‘‘(b) REQUIREMENTS FOR SMALL EMPLOYER POOL-
ING ARRANGEMENTS.—For purposes of this part, an ar-
rangement is maintained in the form of a small employer
pooling arrangement for any applicable fiscal year, if—
‘‘(1) the benefits under the arrangement consist
solely of medical care described in section 607(1)
(disregarding such incidental benefits as the Sec-
retary of Labor shall specify by regulations),
‘‘(2) the general requirements of subsection (c)
are met with respect to the arrangement, and
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Title I, Subtitle E
‘‘(3) the arrangement constitutes a certified
multiple employer health plan under this part and
the requirements of subsection (c) are met with re-
spect to the arrangement.
‘‘(c) REQUIREMENTS FOR ARRANGEMENTS PROVID-
ING SELF-INSURED COVERAGE.—
‘‘(1) IN GENERAL.—The requirements of this
subsection with respect to a small employer purchas-
ing arrangement are as follows:
‘‘(A) The arrangement meets the guaran-
teed issue requirements specified in paragraph
(2).
‘‘(B) The arrangement participates in any
risk adjustment mechanisms established under
section 1023 of the Bipartisan Health Care Re-
form Act of 1994.
‘‘(C) Under the arrangement, with respect
to all participating employers as of the begin-
ning of each plan year, the total number of eli-
gible employees is not less than 100.
‘‘(2) REQUIRED
SCOPE
OF
ELIGIBILITY
FOR
PARTICIPATING EMPLOYERS.—
‘‘(A) IN GENERAL.—Under the terms of
the written instruments governing the arrange-
ment, all restrictions on the eligibility of em-
122
Title I, Subtitle E
ployers to be participating employers in the ar-
rangement are specifically set forth and consist
solely of criteria described in subparagraph (B),
and all employers with respect to whom such
criteria are met may be participating employers.
No such restrictions under the arrangement
shall be considered enforceable unless they are
so specified.
‘‘(B) CRITERIA
FOR
RESTRICTIONS
ON
PARTICIPATING EMPLOYERS.—The terms of the
arrangement shall define restrictions on eligi-
bility of employers to be participating employers
only by reference to one or more of the follow-
ing criteria:
‘‘(i) Participating employers are re-
stricted to those located in one or more
specified geographic locations.
‘‘(ii) Participating employers are re-
stricted to those who are (or whose owners,
officers, or employees are) members of one
or more trade associations, industry asso-
ciations, 
professional 
associations, 
or
chambers of commerce (or similar business
groups).
123
Title I, Subtitle E
‘‘(iii) Participating employers are re-
stricted to those who are otherwise related
by specified supply contracts, franchise ar-
rangements, or common ownership inter-
ests.
‘‘(iv) Participating employers are re-
stricted to employers whose employees are
covered under one or more specified collec-
tive bargaining agreements.
‘‘(d) REFERENCE TO LIMITATION ON SELF-INSUR-
ANCE BY SMALL EMPLOYERS.—For restriction on self-in-
surance by small employers, see section 1305 of the Bipar-
tisan Health Care Reform Act of 1994.’’.
(b) CONFORMING AMENDMENT TO DEFINITION OF
PLAN SPONSOR.—Section 3(16)(B) of such Act (29
U.S.C. 1002(16)(B)) is amended by adding at the end the
following new sentence: ‘‘Such term also includes the spon-
sor (as defined in section 701(5)) of a multiple employer
welfare arrangement which is or has been a certified mul-
tiple employer health plan (as defined in section 701(9)).’’.
(c) ALTERNATIVE MEANS
OF DISTRIBUTION
OF
SUMMARY PLAN DESCRIPTIONS.—Section 110 of such
Act (29 U.S.C. 1030) is amended by adding at the end
the following new subsection:
124
Title I, Subtitle E
‘‘(c) The Secretary shall prescribe, as an alternative
method for distributing summary plan descriptions in
order to meet the requirements of section 104(b)(1) in the
case of multiple employer welfare arrangements providing
benefits consisting of medical care described in section
607(1), a means of distribution of such descriptions by
participating employers.’’.
(d) 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 608 the following new items:
‘‘PART 7—MULTIPLE EMPLOYER HEALTH PLANS
‘‘Sec. 701. Definitions.
‘‘Sec. 702. Certified multiple employer health plans relieved of certain restric-
tions on preemption of State law and treated as employee wel-
fare benefit plans.
‘‘Sec. 703. Certification procedure.
‘‘Sec. 704. Eligibility requirements.
‘‘Sec. 705. Additional requirements applicable to certified multiple employer
health plans.
‘‘Sec. 706. Disclosure to participating employers by arrangements providing
medical care.
‘‘Sec. 707. Maintenance of reserves.
‘‘Sec. 708. Corrective actions.
‘‘Sec. 709. Expiration, suspension, or revocation of certification.
‘‘Sec. 710. Review of actions of the Secretary.
‘‘Sec. 711. Small employer pooling arrangement.’’.
SEC. 1402. CLARIFICATION OF SCOPE OF PREEMPTION
RULES.
(a) IN GENERAL.—Section 514(b)(6)(A)(ii) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144(b)(6)(A)(ii)) is amended by inserting ‘‘, but
only, in the case of an arrangement which provides medi-
125
Title I, Subtitle E
cal care described in section 607(1) and with respect to
which a certification under part 7 is not in effect,’’ before
‘‘to the extent not inconsistent with the preceding sections
of this title’’.
(b) CROSS-REFERENCE.—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) For additional rules relating to exemption from
subparagraph (A)(ii) of multiple employer welfare ar-
rangements providing medical care, see part 7.’’.
SEC. 1403. 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
amended—
(1) in clause (i), by inserting ‘‘for any plan year
of any such plan, or any fiscal year of any such
other arrangement,’’ after ‘‘single employer’’, and by
inserting ‘‘during such year or at any time during
the preceding 1-year period’’ after ‘‘common con-
trol’’;
(2) in clause (iii), by striking ‘‘common control
shall not be based on an interest of less than 25 per-
cent’’ and inserting ‘‘an interest of greater than 25
percent may not be required as the minimum inter-
126
Title I, Subtitle E
est necessary for common control’’, and by striking
‘‘and’’ at the end;
(3) by redesignating clauses (iv) and (v) as
clauses (v) and (vi); and
(4) by inserting after clause (iii) the following
new clause:
‘‘(iv) in determining, after the application of
clause (i), whether benefits are provided to employ-
ees of two or more employers, the arrangement shall
be treated as having only 1 participating employer
if, at the time the determination under clause (i) is
made, 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 95 percent of the aggregate number
of all individuals who are employees or former em-
ployees of participating employers and who are
covered under the arrangement,’’.
SEC. 1404. CLARIFICATION OF TREATMENT OF CERTAIN
COLLECTIVELY 
BARGAINED 
ARRANGE-
MENTS.
(a) IN GENERAL.—Section 3(40)(A)(i) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1002(40)(A)(i)) is amended to read as follows:
127
Title I, Subtitle E
‘‘(i) under or pursuant to one or more collective
bargaining agreements,’’.
(b) LIMITATIONS.—Section 3(40) of such Act (29
U.S.C. 1002(40)) is amended by adding at the end the
following new subparagraphs:
‘‘(C) Clause (i) of subparagraph (A) shall apply only
if—
‘‘(i) the plan or other arrangement, and the em-
ployee organization or any other entity sponsoring
the plan or other arrangement, do not—
‘‘(I) utilize the services of any licensed in-
surance agent or broker for soliciting or enroll-
ing employers or individuals as participating
employers or covered individuals under the plan
or other arrangement, or
‘‘(II) pay a commission or any other type
of compensation to a person that is related ei-
ther to the volume or number of employers or
individuals solicited or enrolled as participating
employers or covered individuals under the plan
or other arrangement, or to the dollar amount
or size of the contributions made by participat-
ing employers or covered individuals to the plan
or other arrangement,
128
Title I, Subtitle E
‘‘(ii) not less than 85 percent of the covered in-
dividuals under the plan or other arrangement are
individuals who—
‘‘(I) are employed within a bargaining unit
covered by at least one of the collective bargain-
ing agreements with a participating employer
(or are covered on the basis of an individual’s
employment in such a bargaining unit), or
‘‘(II) are present or former employees of
the sponsoring employee organization, of an
employer who is or was a party to at least one
of the collective bargaining agreements, or of
the plan or other arrangement or a related plan
or arrangement (or are covered on the basis of
such present or former employment),
‘‘(iii) the plan or other arrangement does not
provide benefits to individuals (other than individ-
uals described in clause (ii)(II)) who work outside
the standard metropolitan statistical area in which
the sponsoring employee organization represents em-
ployees (or to individuals (other than individuals de-
scribed in clause (ii)(II)) on the basis of such work
by others), except that in the case of a sponsoring
employee organization that represents employees
who work outside of any standard metropolitan sta-
129
Title I, Subtitle E
tistical area, this clause shall be applied by reference
to the State in which the sponsoring organization
represents employees, and
‘‘(iv) the employee organization or other entity
sponsoring the plan or other arrangement certifies
to the Secretary each year, in a form and manner
which shall be prescribed in regulations of the Sec-
retary—
‘‘(I) that the plan or other arrangement
meets the requirements of clauses (i), (ii), and
(iii), and
‘‘(II) if, for any year, 10 percent or more
of the covered individuals under the plan are in-
dividuals not described in subclause (I) or (II)
of clause (ii), the total number of covered indi-
viduals and the total number of covered individ-
uals not so described.
‘‘(D)(i) Clause (i) of subparagraph (A) shall not
apply to a plan or other arrangement that is established
or maintained pursuant to one or more collective bargain-
ing agreements which the National Labor Relations Board
determines to have been negotiated or otherwise agreed
to in a manner or through conduct which violates section
8(a)(2) of the National Labor Relations Act (29 U.S.C.
158(a)(2)).
130
Title I, Subtitle E
‘‘(ii)(I) Whenever a State insurance commissioner
has reason to believe that this subparagraph is applicable
to part or all of a plan or other arrangement, the State
insurance commissioner may file a petition with the Na-
tional Labor Relations Board for a determination under
clause (i), along with sworn written testimony supporting
the petition.
‘‘(II) The Board shall give any such petition priority
over all other petitions and cases, other than other peti-
tions under subclause (I) or cases given priority under sec-
tion 10 of the National Labor Relations Act (29 U.S.C.
160).
‘‘(III) The Board shall determine, upon the petition
and any response, whether, on the facts before it, the plan
or other arrangement was negotiated, created, or other-
wise agreed to in a manner or through conduct which vio-
lates section 8(a)(2) of the National Labor Relations Act
(29 U.S.C. 158(a)(2)). Such determination shall con-
stitute a final determination for purposes of this subpara-
graph and shall be binding in all Federal or State actions
with respect to the status of the plan or other arrangement
under this subparagraph.
‘‘(IV) A person aggrieved by the determination of the
Board under subclause (III) may obtain review of the de-
termination in any United States court of appeals in the
131
Title I, Subtitle E
circuit in which the collective bargaining at issue occurred.
Commencement of proceedings under this subclause shall
not, unless specifically ordered by the court, operate as
a stay of any State administrative or judicial action or
proceeding related to the status of the plan or other ar-
rangement, except that in no case may the court stay, be-
fore the completion of the review, an order which prohibits
the enrollment of new individuals into coverage under a
plan or arrangement.’’.
SEC. 1405. EMPLOYEE LEASING HEALTH CARE ARRANGE-
MENTS.
(a) EMPLOYEE LEASING HEALTH CARE ARRANGE-
MENT DEFINED.—Section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002) is amended
by adding at the end the following new paragraph:
‘‘(43)(A) Subject to subparagraph (B), the term ‘em-
ployee leasing health care arrangement’ means any labor
leasing arrangement, staff leasing arrangement, extended
employee staffing or supply arrangement, or other ar-
rangement under which—
‘‘(i) one business or other entity (hereinafter in
this paragraph referred to as the ‘lessee’), under a
lease or other arrangement entered into with any
other business or other entity (hereinafter in this
paragraph referred to as the ‘lessor’), receives from
132
Title I, Subtitle E
the lessor the services of individuals to be performed
under such lease or other arrangement, and
‘‘(ii) benefits consisting of medical care de-
scribed in section 607(1) are provided to such indi-
viduals or such individuals and their dependents as
participants and beneficiaries.
‘‘(B) Such term does not include an arrangement de-
scribed in subparagraph (A) if, under such arrangement,
the lessor retains, both legally and in fact, a complete
right of direction and control within the scope of employ-
ment over the individuals whose services are supplied
under such lease or other arrangement, and such individ-
uals perform a specified function for the lessee which is
separate and divisible from the primary business or oper-
ations of the lessee.’’.
(b) TREATMENT OF EMPLOYEE LEASING HEALTH
CARE ARRANGEMENTS AS MULTIPLE EMPLOYER WEL-
FARE ARRANGEMENTS.—Section 3(40) of such Act (29
U.S.C. 1002(40)) (as amended by section 1404(b)) is fur-
ther amended by adding at the end the following new sub-
paragraph:
‘‘(E) The term ‘multiple employer welfare arrange-
ment’ includes any employee leasing health care arrange-
ment.’’.
133
Title I, Subtitle E
(c) SPECIAL
RULES
FOR
EMPLOYEE
LEASING
HEALTH CARE ARRANGEMENTS.—
(1) IN GENERAL.—Part 7 of subtitle B of title
I of such Act (as added by section 1401(a)) is
amended by adding at the end the following new sec-
tion:
‘‘SEC. 712. SPECIAL RULES FOR EMPLOYEE LEASING
HEALTH CARE ARRANGEMENTS.
‘‘(a) IN GENERAL.—The requirements of paragraphs
(1), (2), and (3) of section 704(b) shall be treated as satis-
fied in the case of a multiple employer welfare arrange-
ment that is an employee leasing health care arrangement
if the application for certification includes information
which the Secretary determines to be complete and accu-
rate and sufficient to demonstrate that the following
requirements are met with respect to the arrangement:
‘‘(1) 3-YEAR TENURE.—The lessor has been in
operation for not less than 3 years.
‘‘(2) SOLICITATION
RESTRICTIONS.—Employee
leasing services provided under the arrangement are
not solicited, advertised, or marketed through li-
censed insurance agents or brokers acting in such
capacity.
‘‘(3) CREATION
OF
EMPLOYMENT
RELATION-
SHIP.—
134
Title I, Subtitle E
‘‘(A) DISCLOSURE
STATEMENT.—Written
notice is provided to each applicant for employ-
ment subject to coverage under the arrange-
ment, at the time of application for employment
and before commencing coverage under the ar-
rangement, stating that the employer is the les-
sor under the arrangement.
‘‘(B) INFORMED
CONSENT.—Each such
applicant signs a written statement consenting
to the employment relationship with the lessor.
‘‘(C) INFORMED
RECRUITMENT
OF
LES-
SEE’S EMPLOYEES.—In any case in which the
lessor offers employment to an employee of a
lessee under the arrangement, the lessor in-
forms each employee in writing that his or her
acceptance of employment with the lessor is vol-
untary and that refusal of such offer will not be
deemed to be resignation from or abandonment
of current employment.
‘‘(4) REQUISITE
EMPLOYER-EMPLOYEE
RELA-
TIONSHIP UNDER ARRANGEMENT.—Under the em-
ployer-employee relationship with the employees of
the lessor—
135
Title I, Subtitle E
‘‘(A) the lessor retains the ultimate author-
ity to hire, terminate, and reassign such em-
ployees,
‘‘(B) the lessor is responsible for the pay-
ment of wages, payroll-related taxes, and em-
ployee benefits, without regard to payment by
the lessee to the lessor for its services,
‘‘(C) the lessor maintains the right of di-
rection and control over its employees, except to
the extent that the lessee is responsible for su-
pervision of the work performed consistent with
the lessee’s responsibility for its product or
service, and
‘‘(D) in accordance with section 301(a) of
the Labor Management Relations Act, 1947 (29
U.S.C. 185(a)), the lessor retains in the ab-
sence of an applicable collective bargaining
agreement, the right to enter into arbitration
and to decide employee grievances, and
‘‘(E) no owner, officer, or director of, or
partner in, a lessee is an employee of the lessor,
and not more than 10 percent of the individuals
covered under the arrangement consist of own-
ers, officers, or directors of, or partners in,
such a lessee (or any combination thereof).
136
Title I, Subtitle E
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) LESSOR.—The term ‘lessor’ means the
business or other entity from which services of indi-
viduals are obtained under an employee leasing
health care arrangement.
‘‘(2) LESSEE.—The term ‘lessee’ means a busi-
ness or other entity which receives the services of in-
dividuals provided under an employee leasing health
care arrangement.’’.
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by sec-
tion 1401(d)) is further amended by inserting after
the item relating to section 711 the following new
item:
‘‘Sec. 712. Employee leasing health care arrangements.’’.
SEC. 1406. ENFORCEMENT PROVISIONS RELATING TO MUL-
TIPLE EMPLOYER WELFARE ARRANGEMENTS
AND EMPLOYEE LEASING HEALTH CARE AR-
RANGEMENTS.
(a) ENFORCEMENT
OF FILING REQUIREMENTS.—
Section 502 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132) is amended—
(1) in subsection (a)(6), by striking ‘‘subsection
(c)(2) or (i) or (l)’’ and inserting ‘‘paragraph (2) or
(4) of subsection (c) or subsection (i) or (l)’’; and
137
Title I, Subtitle E
(2) by adding at the end of subsection (c) the
following new paragraph:
‘‘(4) The Secretary may assess a civil penalty against
any person of up to $1,000 a day from the date of such
person’s failure or refusal to file the information required
to be filed with the Secretary under section 101(g).’’.
(b) ACTIONS BY STATES IN FEDERAL COURT.—Sec-
tion 502(a) of such Act (29 U.S.C. 1132(a)) is amended—
(1) in paragraph (5), by striking ‘‘or’’ at the
end;
(2) in paragraph (6), by striking the period and
inserting ‘‘, or’’; and
(3) by adding at the end the following:
‘‘(7) by a State official having authority under
the law of such State to enforce the laws of such
State regulating insurance, to enjoin any act or
practice which violates any provision of part 7 which
such State has the power to enforce under part 7.’’.
(c) CRIMINAL PENALTIES FOR CERTAIN WILLFUL
MISREPRESENTATIONS.—Section 501 of such Act (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:
138
Title I, Subtitle E
‘‘(b) Any person who, either willfully or with willful
blindness, falsely represents, to any employee, any employ-
ee’s beneficiary, any employer, the Secretary, or any State,
an arrangement established or maintained for the purpose
of offering or providing any benefit described in section
3(1) to employees or their beneficiaries as—
‘‘(1) being a certified multiple employer health
plan (as defined in section 701(9)),
‘‘(2) being an employee leasing health care ar-
rangement under a certification granted under part
7, or
‘‘(3) having been established or maintained
under or pursuant to a collective bargaining agree-
ment,
shall, upon conviction, be imprisoned not more than five
years, be fined under title 18, United States Code, or
both.’’.
(d) CEASE ACTIVITIES ORDERS.—Section 502 of
such Act (29 U.S.C. 1132) is amended by adding at the
end the following new subsection:
‘‘(m)(1) Subject to paragraph (2), upon application
by the Secretary showing the operation, promotion, or
marketing of a multiple employer welfare arrangement
providing benefits consisting of medical care described in
section 607(1) that—
139
Title I, Subtitle E
‘‘(A) is not licensed, registered, or otherwise ap-
proved under the insurance laws of the States in
which the arrangement offers or provides benefits, or
‘‘(B) is not operating in accordance with the
terms of a certification granted by the Secretary
under part 7,
a district court of the United States shall enter an order
requiring that the arrangement cease activities.
‘‘(2) Paragraph (1) shall not apply in the case of a
multiple employer welfare arrangement if the arrangement
shows that—
‘‘(A) coverage under it is fully insured, within
the meaning of section 701(8),
‘‘(B) it is licensed, registered, or otherwise ap-
proved in each State in which it offers or provides
benefits, except to the extent that such State does
not require licensing, registration, or approval of
multiple employer welfare arrangements under which
all coverage is fully insured, and
‘‘(C) with respect to each such State, it is oper-
ating in accordance with applicable State insurance
laws that are not superseded under section 514.
‘‘(3) The court may grant such additional equitable
or remedial relief, including any relief available under this
title, as it deems necessary to protect the interests of the
140
Title I, Subtitle E
public and of persons having claims for benefits against
the arrangement.’’.
(e) RESPONSIBILITY
FOR CLAIMS PROCEDURE.—
Section 503 of such Act (29 U.S.C. 1133) is amended by
adding at the end (after and below paragraph (2)) the fol-
lowing new sentence: ‘‘The terms of each multiple em-
ployer welfare arrangement to which this section applies
and which provides benefits consisting of medical care de-
scribed in section 607(1) shall require the operating com-
mittee or the named fiduciary (as applicable) to ensure
that the requirements of this section are met in connection
with claims filed under the arrangement.’’.
SEC. 1407. FILING REQUIREMENTS FOR MULTIPLE EM-
PLOYER WELFARE ARRANGEMENTS PROVID-
ING HEALTH BENEFITS.
Section 101 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1021) is amended—
(1) by redesignating subsection (g) as sub-
section (h); and
(2) by inserting after subsection (f) the follow-
ing new subsection:
‘‘(g)(1) Each multiple employer welfare arrangement
shall file with the Secretary a registration statement de-
scribed in paragraph (2) within 60 days before commenc-
ing operations (in the case of an arrangement commencing
141
Title I, Subtitle E
operations on or after January 1, 1997) and no later than
February 15 of each year (in the case of an arrangement
in operation since the beginning of such year), unless, as
of the date by which such filing otherwise must be made,
such arrangement provides no benefits consisting of medi-
cal care described in section 607(1).
‘‘(2) Each registration statement—
‘‘(A) shall be filed in such form, and contain
such information concerning the multiple employer
welfare arrangement and any persons involved in its
operation (including whether coverage under the ar-
rangement is fully insured), as shall be provided in
regulations which shall be prescribed by the Sec-
retary, and
‘‘(B) if coverage under the arrangement is not
fully insured, shall contain a certification that copies
of such registration statement have been transmitted
by certified mail to—
‘‘(i) in the case of an arrangement which
is a certified multiple employer health plan (as
defined in section 701(9)), the State insurance
commissioner of the domicile State of such ar-
rangement, or
‘‘(ii) in the case of an arrangement which
is not a certified multiple employer health plan,
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Title I, Subtitle E
the State insurance commissioner of each State
in which the arrangement is located.
‘‘(3) The person or persons responsible for filing the
annual registration statement are—
‘‘(A) the trustee or trustees so designated by
the terms of the instrument under which the mul-
tiple employer welfare arrangement is established or
maintained, or
‘‘(B) in the case of a multiple employer welfare
arrangement for which the trustee or trustees can-
not be identified, or upon the failure of the trustee
or trustees of an arrangement to file, the person or
persons actually responsible for the acquisition, dis-
position, control, or management of the cash or
property of the arrangement, irrespective of whether
such acquisition, disposition, control, or management
is exercised directly by such person or persons or
through an agent designated by such person or
persons.
‘‘(4) Any agreement entered into under section
506(c) with a State as the primary domicile State with
respect to any multiple employer welfare arrangement
shall provide for simultaneous filings of reports required
under this subsection with the Secretary and with the
State insurance commissioner of such State.’’.
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Title I, Subtitle E
SEC. 1408. 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:
‘‘(c) RESPONSIBILITY WITH RESPECT TO MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS.—
‘‘(1) STATE ENFORCEMENT.—
‘‘(A) 
AGREEMENTS
WITH
STATES.—A
State may enter into an agreement with the
Secretary for delegation to the State of some or
all of the Secretary’s authority under sections
502 and 504 to enforce the provisions of this
title applicable to multiple employer welfare ar-
rangements which are or have been certified
multiple employer health plans (as defined in
section 701(9)). The Secretary shall enter into
the agreement if the Secretary determines that
the delegation provided for therein would not
result in a lower level or quality of enforcement
of the provisions of this title.
‘‘(B) 
DELEGATIONS.—Any 
department,
agency, or instrumentality of a State to which
authority is delegated pursuant to an agree-
ment entered into under this paragraph may, if
authorized under State law and to the extent
144
Title I, Subtitle E
consistent with such agreement, exercise the
powers of the Secretary under this title which
relate to such authority.
‘‘(C) CONCURRENT
AUTHORITY
OF
THE
SECRETARY.—If the Secretary delegates author-
ity to a State in an agreement entered into
under subparagraph (A), the Secretary may
continue to exercise such authority concurrently
with the State.
‘‘(D) RECOGNITION OF PRIMARY DOMICILE
STATE.—In entering into any agreement with a
State under subparagraph (A), the Secretary
shall ensure that, as a result of such agreement
and all other agreements entered into under
subparagraph (A), only one State will be recog-
nized, with respect to any particular multiple
employer welfare arrangement, as the primary
domicile State to which authority has been dele-
gated pursuant to such agreements.
‘‘(2) ASSISTANCE TO STATES.—The Secretary
shall—
‘‘(A) provide enforcement assistance to the
States with respect to multiple employer welfare
arrangements, including, but not limited to, co-
ordinating Federal and State efforts through
145
Title I, Subtitle E
the establishment of cooperative agreements
with appropriate State agencies under which
the Pension and Welfare Benefits Administra-
tion keeps the States informed of the status of
its cases and makes available to the States in-
formation obtained by it,
‘‘(B) provide continuing technical assist-
ance to the States with respect to issues involv-
ing multiple employer welfare arrangements
and this Act,
‘‘(C) assist the States in obtaining from
the Office of Regulations and Interpretations
timely and complete responses to requests for
advisory opinions on issues described in sub-
paragraph (B), and
‘‘(D) distribute copies of all advisory opin-
ions described in subparagraph (C) to the State
insurance commissioner of each State.’’.
SEC. 1409. EFFECTIVE DATE; TRANSITIONAL RULES.
(a) EFFECTIVE DATE.—The amendments made by
this part shall take effect January 1, 1997, except that
the Secretary of Labor shall first issue regulations to carry
out such amendments by not later than January 1, 1996.
The Secretary shall issue all regulations necessary to carry
out such amendments before the effective date thereof.
146
Title I, Subtitle E
(b) TRANSITIONAL RULES.—If the sponsor of a mul-
tiple employer welfare arrangement which, as of January
1, 1996, provides benefits consisting of medical care de-
scribed in section 607(1) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1167(1)) files with
the Secretary of Labor an application for a certification
under part 7 of subtitle B of title I of such Act within
180 days after such date and the Secretary has not, as
of 90 days after receipt of such application, found such
application to be materially deficient, section 514(b)(6)(A)
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply
with respect to such arrangement during the 18-month pe-
riod following such date. If the Secretary determines, at
any time after the date of enactment of this Act, that any
such exclusion from coverage under the provisions of such
section 514(b)(6)(A) of such Act of a multiple employer
welfare arrangement would be detrimental to the interests
of individuals covered under such arrangement, such ex-
clusion shall cease as of the date of the determination.
Any determination made by the Secretary under this sub-
section shall be in the Secretary’s sole discretion.
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Title I, Subtitle E
PART 2—SIMPLIFYING FILING OF REPORTS FOR
EMPLOYERS COVERED UNDER MULTIPLE
EMPLOYER WELFARE ARRANGEMENTS PRO-
VIDING FULLY INSURED COVERAGE CON-
SISTING OF MEDICAL CARE
SEC. 1411. SINGLE ANNUAL FILING FOR ALL PARTICIPAT-
ING EMPLOYERS.
(a) IN GENERAL.—Section 110 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1030),
as amended by section 1401(c) of this subtitle, is amended
by adding at the end the following new subsection:
‘‘(d) The Secretary shall prescribe by regulation or
otherwise an alternative method providing for the filing
of a single annual report (as referred to in section
104(a)(1)(A)) with respect to all employers who are par-
ticipating employers under a multiple employer welfare ar-
rangement under which all coverage consists of medical
care (described in section 607(1)) and is fully insured (as
defined in section 701(8)).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act. The Secretary of Labor shall prescribe
the alternative method referred to in section 110(d) of the
Employee Retirement Income Security Act of 1974, as
added by such amendment, within 90 days after the date
of the enactment of this Act.
148
Title I, Subtitle F
Subtitle F—Definitions; General
Provisions
PART 1—DEFINITIONS
SEC. 1901. GENERAL DEFINITIONS.
For purposes of this Act:
(1) APPLICABLE
REGULATORY
AUTHORITY.—
The term ‘‘applicable regulatory authority’’ means,
with respect to a carrier operating in a State—
(A) the State insurance commissioner, or
(B) the Secretary, in the case described in
section 1302(b)(2).
(2) FAMILY MEMBER.—
(A) IN GENERAL.—Individuals are consid-
ered to be members of a family if—
(i) they are married, or
(ii) they have a legal parent-to-child
relationship (whether by natural birth or
adoption), if the child is—
(I) under 19 years of age,
(II) is under 25 years of age and
a full-time student, or
(III) an unmarried dependent re-
gardless of age who is incapable of
self-support because of mental or
149
Title I, Subtitle F
physical disability which existed before
age 22.
(B) SPECIAL RULES.—Family members—
(i) include an adopted child and a rec-
ognized natural child;
(ii) include a stepchild or foster child
with respect to an individual but only if
the child lives with the individual in a reg-
ular parent-child relationship; and
(iii) include such other children as the
Secretary may specify, but shall not in-
clude an emancipated minor.
(3) PRISONER.—The term ‘‘prisoner’’ means,
as specified by the Secretary, an individual during a
period of imprisonment under Federal, State, or
local authority after conviction as an adult.
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(5) STATE.—The term ‘‘State’’ means the 50
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
SEC. 1902. DEFINITIONS RELATING TO EMPLOYMENT.
(a) APPLICATION OF ERISA DEFINITIONS.—Except
as otherwise provided in this Act, terms used in this Act
150
Title I, Subtitle F
shall have the meanings applicable to such terms under
section 3 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002).
(b) ADDITIONAL DEFINITIONS.—For purposes of this
title:
(1) COUNTABLE EMPLOYEE.—The term ‘‘count-
able employee’’ means, with respect to an employer
for a month, any employee other than an employee
whose normal work week is less than 10 hours.
(2) LARGE EMPLOYER.—The term ‘‘large em-
ployer’’ means an employer that is not a small em-
ployer (as defined in paragraph (4)).
(3) QUALIFYING EMPLOYEE.—
(A) IN GENERAL.—The term ‘‘qualifying
employee’’ means, with respect to an employer
for a month, any employee other than—
(i) a part-time, seasonal, or temporary
employee (as defined in subparagraph
(B)); or
(ii) an employee who is a child de-
scribed in section 1901(2)(A)(ii).
(B) PART-TIME, 
SEASONAL, 
OR
TEM-
PORARY EMPLOYEE DEFINED.—For purposes of
subparagraph (A), the term ‘‘part-time, sea-
sonal, or temporary employee’’ means any of
151
Title I, Subtitle F
the following employees with respect to a
month:
(i) CERTAIN
PART-TIME
EMPLOY-
EES.—Any employee whose normal work
week is reasonably expected as of the first
day of such month to be less than 20
hours.
(ii) SEASONAL
OR
TEMPORARY
EM-
PLOYEES.—Any employee who is not rea-
sonably expected as of the first day of such
month to be employed by the employer for
a period of 120 consecutive days during
any 365-day period that includes such first
day.
(iii) DELAY FOR CERTAIN PART-TIME
EMPLOYEES.—Any employee whose normal
work week is reasonably expected as of the
first day of such month to be at least 20
hours, but less than 35 hours, and the nor-
mal work week of the employee during the
preceding 3 months was less than 20
hours.
(4) SMALL EMPLOYER.—The term ‘‘small em-
ployer’’ means, with respect to a calendar year, an
employer that normally employs more than 1 but
152
Title I, Subtitle F
less than 100 countable employees on a typical busi-
ness day. For the purposes of this paragraph, the
term ‘‘employee’’ includes a self-employed individual.
For purposes of determining if an employer is a
small employer, rules similar to the rules of sub-
section (b) and (c) of section 414 of the Internal
Revenue Code of 1986 shall apply.
SEC. 1903. DEFINITIONS RELATING TO HEALTH COVERAGE,
PLANS, AND CARRIERS.
Except as otherwise provided, for purposes of this
Act:
(1) 
BENCHMARK
COVERAGE.—The 
term
‘‘benchmark coverage’’ means the standard option of
the Blue Cross-Blue Shield plan offered under the
Federal Employees Health Benefits Program under
chapter 89 of title 5, United States Code, as in ef-
fect during 1994.
(2) CARRIER.—The term ‘‘carrier’’ means a li-
censed insurance company, an entity offering pre-
paid hospital or medical services, and a health main-
tenance organization, and includes a similar organi-
zation regulated under State law for solvency.
(3) CERTIFIED MULTIPLE EMPLOYER HEALTH
PLAN.—The term ‘‘certified multiple employer health
plan’’ means a multiple employer welfare arrange-
153
Title I, Subtitle F
ment treated as an employee welfare benefit plan by
reason of a certification under part 7 of subtitle B
of title I of the Employee Retirement Income Secu-
rity Act of 1974 (as added by section 1401(a)).
(4) CLASS OF FAMILY COVERAGE.—The term
‘‘class of family coverage’’ means the 4 classes de-
scribed in section 1021(a)(3).
(5) FAIR RATING AREA.—The term ‘‘fair rating
area’’ means a geographic area identified by a State
for purposes of section 1021(a)(2).
(6) GROUP HEALTH PLAN.—The term ‘‘group
health plan’’ means an employee welfare benefit plan
providing medical care (as defined in section 213(d)
of the Internal Revenue Code of 1986) to partici-
pants or beneficiaries directly or through insurance,
reimbursement, or otherwise, but does not include
any type of coverage excluded from the definition of
a health insurance coverage under paragraph (8)(B).
(7) HEALTH
COVERAGE.—The term ‘‘health
coverage’’ means health insurance coverage provided
by a carrier or medical care provided under a group
health plan.
(8) HEALTH INSURANCE COVERAGE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
154
Title I, Subtitle F
coverage’’ means any hospital or medical service
policy or certificate, hospital or medical service
plan contract, or health maintenance organiza-
tion group contract offered by a carrier.
(B) EXCEPTION.—Such term does not in-
clude any of the following (or any combination
of the following):
(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
(ii) Medicare supplemental health in-
surance.
(iii) Coverage issued as a supplement
to liability insurance.
(iv) Liability insurance, including gen-
eral liability insurance and automobile li-
ability insurance.
(v) Workers’ compensation or similar
insurance.
(vi) Automobile medical-payment in-
surance.
(vii) Coverage for a specified disease
or illness.
(viii) A hospital or fixed indemnity
policy.
155
Title I, Subtitle F
(ix) Coverage provided exclusively to
individuals who are not eligible individuals.
(9) HEALTH
MAINTENANCE
ORGANIZATION.—
The term ‘‘health maintenance organization’’ in-
cludes, as defined in standards established under
section 1103, an organization that provides health
insurance coverage which meets specified standards
and under which health services are offered to be
provided on a prepaid, at-risk basis primarily
through a defined set of providers.
(10) HEALTH
PLAN
PURCHASING
ORGANIZA-
TION.—The term ‘‘health plan purchasing organiza-
tion’’ means an organization established under sub-
title A of title VI.
(11) INDIVIDUAL/SMALL GROUP MARKET.—The
term ‘‘individual/small group market’’ means the in-
surance market offered—
(A) to individuals seeking health insurance
coverage on behalf of themselves (and their de-
pendents) insofar as no employer is seeking
such coverage on behalf of the individual, and
(B) to small employers seeking health in-
surance coverage on behalf of their employees
(and their dependents),
156
Title I, Subtitle F
regardless of whether or not such coverage is made
available directly or through a multiple employer
welfare arrangement, association, or otherwise.
(12) MANAGED CARE ARRANGEMENTS.—
(A) MANAGED CARE ARRANGEMENT.—The
term ‘‘managed care arrangement’’ means, with
respect to a group health plan or under health
insurance coverage, an arrangement under such
plan or coverage under which providers agree to
provide items and services covered under the ar-
rangement to individuals covered under the
plan or who have such coverage.
(B) 
PROVIDER
NETWORK.—The 
term
‘‘provider network’’ means, with respect to a
group health plan or health insurance coverage,
providers who have entered into an agreement
described in subparagraph (A).
(13) MULTIPLE
EMPLOYER
WELFARE
AR-
RANGEMENT.—The term ‘‘multiple employer welfare
arrangement’’ shall have the meaning applicable
under section 3(40) of the Employee Retirement In-
come Security Act of 1974.
(14) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
186
Title II, Subtitle B
premium assistance for an individual, the
difference shall not be paid to the individ-
ual or the carrier or plan but shall revert
to the Federal Government.
‘‘(2) COST-SHARING ASSISTANCE.
‘‘(A) IN GENERAL.—The State issuing a
cost-sharing assistance certificate shall, upon
presentation to the State of evidence of such
certificate by the carrier or group health plan
providing coverage and evidence of cost-sharing
amounts otherwise incurred for which a reduc-
tion in cost-sharing is available under the cer-
tificate, pay the carrier or plan the amount of
the reduction in cost-sharing in relation to
standard coverage.
‘‘(B) TIMING
OF
PAYMENTS.—Payments
under this paragraph shall be provided at the
time an individual has obtained qualified stand-
ard health coverage, is determined under sec-
tion 2104 to be a cost-sharing assistance eligi-
ble individual, and has incurred health care ex-
penses of the type for which a cost-sharing re-
duction is available under subparagraph (A).
‘‘(3) ADMINISTRATIVE ERRORS.—A State is fi-
nancially responsible for premium or cost-sharing as-