I 
113TH CONGRESS 
1ST SESSION H. R. 3165 
To repeal the Patient Protection and Affordable Care Act and to take mean-
ingful steps to lower health care costs and increase access to health 
insurance coverage without raising taxes, cutting Medicare benefits for 
seniors, adding to the national deficit, intervening in the doctor-patient 
relationship, or instituting a government takeover of health care. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 20, 2013 
Mr. LATHAM introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, Education and the Workforce, Natural Resources, the 
Judiciary, House Administration, Rules, and Appropriations, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To repeal the Patient Protection and Affordable Care Act 
and to take meaningful steps to lower health care costs 
and increase access to health insurance coverage without 
raising taxes, cutting Medicare benefits for seniors, add-
ing to the national deficit, intervening in the doctor- 
patient relationship, or instituting a government takeover 
of health care. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; PURPOSE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Common Sense Health Reform Americans Actually Want 
Act’’. 
(b) PURPOSE.—The purpose of this Act is to take 
meaningful steps to lower health care costs and increase 
access to health insurance coverage (especially for individ-
uals with preexisting conditions) without— 
(1) raising taxes; 
(2) cutting Medicare benefits for seniors; 
(3) adding to the national deficit; 
(4) intervening in the doctor-patient relation-
ship; or 
(5) instituting a government takeover of health 
care. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; purpose; table of contents. 
Sec. 2. Repeal of the Patient Protection and Affordable Care Act and the 
Health Care and Education Reconciliation Act of 2010. 
DIVISION A—ENSURING COVERAGE FOR INDIVIDUALS WITH PRE-
EXISTING CONDITIONS AND MULTIPLE HEALTH CARE NEEDS 
Sec. 101. Establish universal access programs to improve high risk pools and 
reinsurance markets. 
Sec. 102. No annual or lifetime spending caps. 
Sec. 103. Preventing unjust cancellation of insurance coverage. 
DIVISION B—REDUCING HEALTH CARE PREMIUMS AND THE 
NUMBER OF UNINSURED AMERICANS 
TITLE I—EXPANDING ACCESS AND LOWERING COSTS FOR SMALL 
BUSINESSES 
Subtitle A—Enhanced Marketplace Pools 
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Sec. 201. Rules governing enhanced marketplace pools. 
Sec. 202. Cooperation between Federal and State authorities. 
Sec. 203. Effective date and transitional and other rules. 
Subtitle B—Market Relief 
Sec. 204. Market relief. 
TITLE II—TARGETED EFFORTS TO EXPAND ACCESS 
Sec. 211. Extending coverage of dependents. 
Sec. 212. Prohibiting preexisting condition exclusions for enrollees under age 
19. 
Sec. 213. Health plan finders. 
TITLE III—EXPANDING CHOICES BY ALLOWING AMERICANS TO 
BUY HEALTH CARE COVERAGE ACROSS STATE LINES 
Sec. 221. Interstate purchasing of health insurance. 
TITLE IV—IMPROVING HEALTH SAVINGS ACCOUNTS 
Sec. 231. HSA funds for premiums for high deductible health plans. 
Sec. 232. Requiring greater coordination between HDHP administrators and 
HSA account administrators so that enrollees can enroll in 
both at the same time. 
Sec. 233. Special rule for certain medical expenses incurred before establish-
ment of account. 
TITLE V—TAX–RELATED HEALTH INCENTIVES 
Sec. 241. SECA tax deduction for health insurance costs. 
Sec. 242. Deduction for qualified health insurance costs of individuals. 
DIVISION C—ENACTING REAL MEDICAL LIABILITY REFORM 
Sec. 301. Cap on non-economic damages against health care practitioners. 
Sec. 302. Cap on non-economic damages against health care institutions. 
Sec. 303. Cap, in wrongful death cases, on total damages against any single 
health care practitioner. 
Sec. 304. Limitation of insurer liability when insurer rejects certain settlement 
offers. 
Sec. 305. Mandatory jury instruction on cap on damages. 
Sec. 306. Determination of negligence; mandatory jury instruction. 
Sec. 307. Expert reports required to be served in civil actions. 
Sec. 308. Expert opinions relating to physicians may be provided only by ac-
tively practicing physicians. 
Sec. 309. Payment of future damages on periodic or accrual basis. 
Sec. 310. Unanimous jury required for punitive or exemplary damages. 
Sec. 311. Proportionate liability. 
Sec. 312. Defense-initiated settlement process. 
Sec. 313. Statute of limitations; statute of repose. 
Sec. 314. Limitation on liability for Good Samaritans providing emergency 
health care. 
Sec. 315. Definitions. 
DIVISION D—PROTECTING THE DOCTOR-PATIENT RELATIONSHIP 
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Sec. 401. Rule of construction. 
Sec. 402. Repeal of Federal Coordinating Council for Comparative Effective-
ness Research. 
DIVISION E—INCENTIVIZING WELLNESS AND QUALITY 
IMPROVEMENTS 
Sec. 501. Incentives for prevention and wellness programs. 
DIVISION F—PROTECTING TAXPAYERS 
Sec. 601. Permanently prohibiting taxpayer funded abortions and ensuring con-
science protections. 
Sec. 602. Improved enforcement of the Medicare and Medicaid secondary payer 
provisions. 
Sec. 603. Strengthen Medicare provider enrollment standards and safeguards. 
Sec. 604. Tracking banned providers across State lines. 
SEC. 2. REPEAL OF THE PATIENT PROTECTION AND AF-
FORDABLE CARE ACT AND THE HEALTH 
CARE AND EDUCATION RECONCILIATION ACT 
OF 2010. 
(a) PATIENT PROTECTION AND AFFORDABLE CARE 
ACT.—The Patient Protection and Affordable Care Act 
(Public Law 111–148) is repealed and the provisions of 
law amended or repealed by such Act are restored or re-
vived as if such Act had not been enacted. 
(b) HEALTH CARE
AND EDUCATION RECONCILI-
ATION ACT OF 2010.—The Health Care and Education 
Reconciliation Act of 2010 (Public Law 111–152) is re-
pealed and the provisions of law amended or repealed by 
such Act are restored or revived as if such Act had not 
been enacted. 
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DIVISION 
A—ENSURING 
COV-
ERAGE 
FOR 
INDIVIDUALS 
WITH 
PREEXISTING 
CONDI-
TIONS 
AND 
MULTIPLE 
HEALTH CARE NEEDS 
SEC. 101. ESTABLISH UNIVERSAL ACCESS PROGRAMS TO 
IMPROVE HIGH RISK POOLS AND REINSUR-
ANCE MARKETS. 
(a) STATE REQUIREMENT.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this Act, each State 
shall— 
(A) subject to paragraph (3), operate a 
qualifying State high risk pool described in sub-
section (b)(1); and 
(B) subject to paragraph (3), apply to the 
operation of such a program from State funds 
an amount equivalent to the portion of State 
funds derived from State premium assessments 
(as defined by the Secretary) that are not oth-
erwise used on State health care programs. 
(2) RELATION TO CURRENT QUALIFIED HIGH 
RISK POOL PROGRAM.— 
(A) STATES NOT OPERATING A QUALIFIED 
HIGH RISK POOL.—In the case of a State that 
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is not operating a current section 2745 quali-
fied high risk pool as of the date of the enact-
ment of this Act, the State’s operation of a 
qualifying State high risk pool described in sub-
section (b)(1) shall be treated, for purposes of 
section 2745 of the Public Health Service Act, 
as the operation of a qualified high risk pool de-
scribed in such section. 
(B) STATE OPERATING A QUALIFIED HIGH 
RISK POOL.—In the case of a State that is op-
erating a current section 2745 qualified high 
risk pool as of the date of the enactment of this 
Act, as of the date that is 90 days after the 
date of the enactment of this Act, such a pool 
shall not be treated as a qualified high risk pool 
under section 2745 of the Public Health Service 
Act unless the pool is a qualifying State high 
risk pool described in subsection (b)(1). 
(3) APPLICATION OF FUNDS.—If the pool oper-
ated under paragraph (1)(A) is in strong fiscal 
health, as determined in accordance with standards 
established by the National Association of Insurance 
Commissioners and as approved by the State Insur-
ance Commissioner involved, the requirement of 
paragraph (1)(B) shall be deemed to be met. 
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(b) QUALIFYING STATE HIGH RISK POOL.— 
(1) IN GENERAL.—A qualifying State high risk 
pool described in this subsection means a current 
section 2745 qualified high risk pool that meets the 
following requirements: 
(A) The pool must be funded with a stable 
funding source. 
(B) The pool must eliminate any waiting 
lists so that all eligible residents who are seek-
ing coverage through the pool should be allowed 
to receive coverage through the pool. 
(C) The pool must allow for coverage of in-
dividuals who, but for the 24-month disability 
waiting period under section 226(b) of the So-
cial Security Act, would be eligible for Medicare 
during the period of such waiting period. 
(D) The pool must limit the pool premiums 
to no more than 150 percent of the average 
premium for applicable standard risk rates in 
that State. 
(E) The pool must conduct education and 
outreach initiatives so that residents and bro-
kers understand that the pool is available to eli-
gible residents. 
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(F) The pool must provide coverage for 
preventive services and disease management for 
chronic diseases. 
(G) Subject to subparagraph (C), an indi-
vidual may only be eligible for coverage through 
the pool if the individual has a pre-existing con-
dition, as determined in a manner consistent 
with guidance ussed by the Secretary of Health 
and Human Services and— 
(i) was denied health insurance cov-
erage in the individual market because of 
a pre-existing condition or health status; or 
(ii) was offered such coverage— 
(I) under terms that limit the 
coverage for such a pre-existing condi-
tion; or 
(II) at a premium rate that is 
above the premium rate for coverage 
through the pool pursuant to this sec-
tion. 
(H) No pre-existing condition exclusion pe-
riod may be imposed on coverage through the 
pool. 
(I) The pool shall not require an individual 
to be uninsured for any period as a condition 
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of eligibility to receive coverage through the 
pool. 
(2) VERIFICATION OF CITIZENSHIP OR ALIEN 
QUALIFICATION.— 
(A) IN
GENERAL.—Notwithstanding any 
other provision of law, only citizens and nation-
als of the United States shall be eligible to par-
ticipate in a qualifying State high risk pool that 
receives funds under section 2745 of the Public 
Health Service Act or this section. 
(B) CONDITION OF PARTICIPATION.—As a 
condition of a State receiving such funds, the 
Secretary shall require the State to certify, to 
the satisfaction of the Secretary, that such 
State requires all applicants for coverage in the 
qualifying State high risk pool to provide satis-
factory documentation of citizenship or nation-
ality in a manner consistent with section 
1903(x) of the Social Security Act. 
(C) RECORDS.—The Secretary shall keep 
sufficient records such that a determination of 
citizenship or nationality only has to be made 
once for any individual under this paragraph. 
(3) RELATION TO SECTION 2745.—As of Janu-
ary 1, 2012, a pool shall not qualify as qualified 
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high risk pool under section 2745 of the Public 
Health Service Act unless the pool is a qualifying 
State high risk pool described in paragraph (1). 
(c) WAIVERS.—In order to accommodate new and in-
novative programs, the Secretary may waive such require-
ments of this section for qualifying State high risk pools 
as the Secretary deems appropriate. 
(d) FUNDING.—In addition to any other amounts ap-
propriated, there is appropriated to carry out section 2745 
of the Public Health Service Act (including through a pool 
described in subsection (a)(1))— 
(1) $15,000,000,000 for the period of fiscal 
years 2011 through 2021; and 
(2) an additional $10,000,000,000 for the pe-
riod of fiscal years 2017 through 2021. 
(e) DEFINITIONS.—In this section: 
(1) HEALTH INSURANCE COVERAGE; HEALTH 
INSURANCE ISSUER.—The terms ‘‘health insurance 
coverage’’ and ‘‘health insurance issuer’’ have the 
meanings given such terms in section 2791 of the 
Public Health Service Act. 
(2) CURRENT SECTION 2745 QUALIFIED HIGH 
RISK POOL.—The term ‘‘current section 2745 quali-
fied high risk pool’’ has the meaning given the term 
‘‘qualified high risk pool’’ under section 2745(g) of 
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the Public Health Service Act as in effect as of the 
date of the enactment of this Act. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
Secretary of Health and Human Services. 
(4) STANDARD RISK RATE.—The term ‘‘stand-
ard risk rate’’ means a rate that— 
(A) is determined under the State high 
risk pool by considering the premium rates 
charged by other health insurance issuers offer-
ing health insurance coverage to individuals in 
the insurance market served; 
(B) is established using reasonable actu-
arial techniques; and 
(C) reflects anticipated claims experience 
and expenses for the coverage involved. 
(5) STATE.—The term ‘‘State’’ means any of 
the 50 States or the District of Columbia. 
SEC. 102. NO ANNUAL OR LIFETIME SPENDING CAPS. 
Notwithstanding any other provision of law, a health 
insurance issuer (including an entity licensed to sell insur-
ance with respect to a State or group health plan) may 
not apply an annual or lifetime aggregate spending cap 
on any health insurance coverage or plan offered by such 
issuer. 
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SEC. 103. PREVENTING UNJUST CANCELLATION OF INSUR-
ANCE COVERAGE. 
(a) CLARIFICATION REGARDING APPLICATION
OF 
GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH 
INSURANCE COVERAGE.—Section 2742 of the Public 
Health Service Act (42 U.S.C. 300gg–42), as restored by 
section 2, is amended— 
(1) in its heading, by inserting ‘‘, CONTINU-
ATION IN FORCE, INCLUDING PROHIBITION OF 
RESCISSION,’’ 
after 
‘‘GUARANTEED
RENEW-
ABILITY’’; 
(2) in subsection (a), by inserting ‘‘, including 
without rescission,’’ after ‘‘continue in force’’; and 
(3) in subsection (b)(2), by inserting before the 
period at the end the following: ‘‘, including inten-
tional concealment of material facts regarding a 
health condition related to the condition for which 
coverage is being claimed’’. 
(b) OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD PARTY REVIEW IN CERTAIN CASES.—Subpart 1 
of part B of title XXVII of the Public Health Service Act, 
as restored by section 2, is amended by adding at the end 
the following new section: 
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‘‘SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD PARTY REVIEW IN CERTAIN CASES. 
‘‘(a) NOTICE AND REVIEW RIGHT.—If a health in-
surance issuer determines to nonrenew or not continue in 
force, including rescind, health insurance coverage for an 
individual in the individual market on the basis described 
in section 2742(b)(2) before such nonrenewal, discontinu-
ation, or rescission, may take effect the issuer shall pro-
vide the individual with notice of such proposed non-
renewal, discontinuation, or rescission and an opportunity 
for a review of such determination by an independent, ex-
ternal third party under procedures specified by the Sec-
retary. 
‘‘(b) INDEPENDENT DETERMINATION.—If the indi-
vidual requests such review by an independent, external 
third party of a nonrenewal, discontinuation, or rescission 
of health insurance coverage, the coverage shall remain in 
effect until such third party determines that the coverage 
may be nonrenewed, discontinued, or rescinded under sec-
tion 2742(b)(2).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply after the date of the enactment 
of this Act with respect to health insurance coverage 
issued before, on, or after such date. 
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DIVISION B—REDUCING HEALTH 
CARE PREMIUMS AND THE 
NUMBER 
OF 
UNINSURED 
AMERICANS 
TITLE 
I—EXPANDING 
ACCESS 
AND LOWERING COSTS FOR 
SMALL BUSINESSES 
Subtitle A—Enhanced Marketplace 
Pools 
SEC. 201. RULES GOVERNING ENHANCED MARKETPLACE 
POOLS. 
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974, as re-
stored by section 2, is amended by adding after part 7 
the following new part: 
‘‘PART 8—RULES GOVERNING ENHANCED 
MARKETPLACE POOLS 
‘‘SEC. 801. SMALL BUSINESS HEALTH PLANS. 
‘‘(a) IN GENERAL.—For purposes of this part, the 
term ‘small business health plan’ means a fully insured 
group health plan whose sponsor is (or is deemed under 
this part to be) described in subsection (b). 
‘‘(b) SPONSORSHIP.—The sponsor of a group health 
plan is described in this subsection if such sponsor— 
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‘‘(1) is organized and maintained in good faith, 
with a constitution and bylaws specifically stating its 
purpose and providing for periodic meetings on at 
least an annual basis, as a bona fide trade associa-
tion, a bona fide industry association (including a 
rural electric cooperative association or a rural tele-
phone cooperative association), a bona fide profes-
sional association, or a bona fide chamber of com-
merce (or similar bona fide business association, in-
cluding a corporation or similar organization that 
operates on a cooperative basis (within the meaning 
of section 1381 of the Internal Revenue Code of 
1986)), for substantial purposes other than that of 
obtaining medical care; 
‘‘(2) is established as a permanent entity which 
receives the active support of its members and re-
quires for membership payment on a periodic basis 
of dues or payments necessary to maintain eligibility 
for membership; 
‘‘(3) does not condition membership, such dues 
or payments, or coverage under the plan on the 
basis of health status-related factors with respect to 
the employees of its members (or affiliated mem-
bers), or the dependents of such employees, and does 
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not condition such dues or payments on the basis of 
group health plan participation; and 
‘‘(4) does not condition membership on the 
basis of a minimum group size. 
Any sponsor consisting of an association of entities which 
meet the requirements of paragraphs (1), (2), (3), and (4) 
shall be deemed to be a sponsor described in this sub-
section. 
‘‘SEC. 802. ALTERNATIVE MARKET POOLING ORGANIZA-
TIONS. 
‘‘(a) IN GENERAL.—The Secretary, not later than 1 
year after the date of enactment of this part, shall promul-
gate regulations that apply the rules and standards of this 
part, as necessary, to circumstances in which a pooling 
entity other (hereinafter ‘Alternative Market Pooling Or-
ganizations’) is not made up principally of employers and 
their employees, or not a professional organization or such 
small business health plan entity identified in section 801. 
‘‘(b) ADAPTION OF STANDARDS.—In developing and 
promulgating regulations pursuant to subsection (a), the 
Secretary, in consultation with the Secretary of Health 
and Human Services, small business health plans, small 
and large employers, large and small insurance issuers, 
consumer representatives, and state insurance commis-
sioners, shall— 
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‘‘(1) adapt the standards of this part, to the 
maximum degree practicable, to assure balanced and 
comparable oversight standards for both small busi-
ness health plans and alternative market pooling or-
ganizations; 
‘‘(2) permit the participation as alternative 
market pooling organizations unions, churches and 
other faith-based organizations, or other organiza-
tions composed of individuals and groups which may 
have little or no association with employment, pro-
vided however, that such alternative market pooling 
organizations meet, and continue meeting on an on-
going basis, to satisfy standards, rules, and require-
ments materially equivalent to those set forth in this 
part with respect to small business health plans; 
‘‘(3) conduct periodic verification of such com-
pliance by alternative market pooling organizations, 
in consultation with the Secretary of Health and 
Human Services and the National Association of In-
surance Commissioners, except that such periodic 
verification shall not materially impede market entry 
or participation as pooling entities comparable to 
that of small business health plans; 
‘‘(4) assure that consistent, clear, and regularly 
monitored standards are applied with respect to al-
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ternative market pooling organizations to avert ma-
terial risk-selection within or among the composition 
of such organizations; 
‘‘(5) the expedited and deemed certification pro-
cedures provided in section 805(d) shall not apply to 
alternative market pooling organizations until sooner 
of the promulgation of regulations under this sub-
section or the expiration of one year following enact-
ment of this Act; and 
‘‘(6) make such other appropriate adjustments 
to the requirements of this part as the Secretary 
may reasonably deem appropriate to fit the cir-
cumstances of an individual alternative market pool-
ing organization or category of such organization, 
including but not limited to the application of the 
membership 
payment 
requirements 
of 
section 
801(b)(2) to alternative market pooling organiza-
tions composed primarily of church- or faith-based 
membership. 
‘‘SEC. 803. CERTIFICATION OF SMALL BUSINESS HEALTH 
PLANS. 
‘‘(a) IN GENERAL.—Not later than 6 months after 
the date of enactment of this part, the applicable authority 
shall prescribe by interim final rule a procedure under 
which the applicable authority shall certify small business 
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health plans which apply for certification as meeting the 
requirements of this part. 
‘‘(b) REQUIREMENTS APPLICABLE
TO CERTIFIED 
PLANS.—A small business health plan with respect to 
which certification under this part is in effect shall meet 
the applicable requirements of this part, effective on the 
date of certification (or, if later, on the date on which the 
plan is to commence operations). 
‘‘(c) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion for continued certification of small business health 
plans under this part. Such regulation shall provide for 
the revocation of a certification if the applicable authority 
finds that the small business health plan involved is failing 
to comply with the requirements of this part. 
‘‘(d) EXPEDITED AND DEEMED CERTIFICATION.— 
‘‘(1) IN GENERAL.—If the Secretary fails to act 
on an application for certification under this section 
within 90 days of receipt of such application, the ap-
plying small business health plan shall be deemed 
certified until such time as the Secretary may deny 
for cause the application for certification. 
‘‘(2) CIVIL PENALTY.—The Secretary may as-
sess a civil penalty against the board of trustees and 
plan sponsor (jointly and severally) of a small busi-
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ness health plan that is deemed certified under para-
graph (1) of up to $500,000 in the event the Sec-
retary determines that the application for certifi-
cation of such small business health plan was will-
fully or with gross negligence incomplete or inac-
curate. 
‘‘SEC. 804. REQUIREMENTS RELATING TO SPONSORS AND 
BOARDS OF TRUSTEES. 
‘‘(a) SPONSOR.—The requirements of this subsection 
are met with respect to a small business health plan if 
the sponsor has met (or is deemed under this part to have 
met) the requirements of section 801(b) for a continuous 
period of not less than 3 years ending with the date of 
the application for certification under this part. 
‘‘(b) BOARD OF TRUSTEES.—The requirements of 
this subsection are met with respect to a small business 
health plan if the following requirements are met: 
‘‘(1) FISCAL CONTROL.—The plan is operated, 
pursuant to a plan document, by a board of trustees 
which pursuant to a trust agreement has complete 
fiscal control over the plan and which is responsible 
for all operations of the plan. 
‘‘(2) RULES
OF
OPERATION
AND
FINANCIAL 
CONTROLS.—The board of trustees has in effect 
rules of operation and financial controls, based on a 
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3-year plan of operation, adequate to carry out the 
terms of the plan and to meet all requirements of 
this title applicable to the plan. 
‘‘(3) RULES
GOVERNING
RELATIONSHIP
TO 
PARTICIPATING
EMPLOYERS
AND
TO
CONTRAC-
TORS.— 
‘‘(A) BOARD MEMBERSHIP.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (ii) and (iii), the members 
of the board of trustees are individuals se-
lected from individuals who are the owners, 
officers, directors, or employees of the par-
ticipating employers or who are partners in 
the participating employers and actively 
participate in the business. 
‘‘(ii) LIMITATION.— 
‘‘(I) GENERAL RULE.—Except as 
provided in subclauses (II) and (III), 
no such member is an owner, officer, 
director, or employee of, or partner in, 
a contract administrator or other 
service provider to the plan. 
‘‘(II) LIMITED
EXCEPTION
FOR 
PROVIDERS OF SERVICES SOLELY ON 
BEHALF OF THE SPONSOR.—Officers 
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or employees of a sponsor which is a 
service provider (other than a contract 
administrator) to the plan may be 
members of the board if they con-
stitute not more than 25 percent of 
the membership of the board and they 
do not provide services to the plan 
other than on behalf of the sponsor. 
‘‘(III) 
TREATMENT
OF
PRO-
VIDERS
OF
MEDICAL
CARE.—In the 
case of a sponsor which is an associa-
tion whose membership consists pri-
marily of providers of medical care, 
subclause (I) shall not apply in the 
case of any service provider described 
in subclause (I) who is a provider of 
medical care under the plan. 
‘‘(iii) CERTAIN
PLANS
EXCLUDED.— 
Clause (i) shall not apply to a small busi-
ness health plan which is in existence on 
the date of the enactment of this part. 
‘‘(B) SOLE
AUTHORITY.—The board has 
sole authority under the plan to approve appli-
cations for participation in the plan and to con-
tract with insurers. 
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‘‘(c) TREATMENT OF FRANCHISES.—In the case of 
a group health plan which is established and maintained 
by a franchiser for a franchisor or for its franchisees— 
‘‘(1) the requirements of subsection (a) and sec-
tion 801(a) shall be deemed met if such require-
ments would otherwise be met if the franchisor were 
deemed to be the sponsor referred to in section 
801(b) and each franchisee were deemed to be a 
member (of the sponsor) referred to in section 
801(b); and 
‘‘(2) the requirements of section 804(a)(1) shall 
be deemed met. 
For purposes of this subsection the terms ‘franchisor’ and 
‘franchisee’ shall have the meanings given such terms for 
purposes of sections 436.2(a) through 436.2(c) of title 16, 
Code of Federal Regulations (including any such amend-
ments to such regulation after the date of enactment of 
this part). 
‘‘SEC. 805. PARTICIPATION AND COVERAGE REQUIRE-
MENTS. 
‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 
requirements of this subsection are met with respect to 
a small business health plan if, under the terms of the 
plan— 
‘‘(1) each participating employer must be— 
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‘‘(A) a member of the sponsor; 
‘‘(B) the sponsor; or 
‘‘(C) an affiliated member of the sponsor, 
except that, in the case of a sponsor which is 
a professional association or other individual- 
based association, if at least one of the officers, 
directors, or employees of an employer, or at 
least one of the individuals who are partners in 
an employer and who actively participates in 
the business, is a member or such an affiliated 
member of the sponsor, participating employers 
may also include such employer; and 
‘‘(2) all individuals commencing coverage under 
the plan after certification under this part must 
be— 
‘‘(A) active or retired owners (including 
self-employed individuals), officers, directors, or 
employees of, or partners in, participating em-
ployers; or 
‘‘(B) the dependents of individuals de-
scribed in subparagraph (A). 
‘‘(b) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to a 
small business health plan if, under the terms of the plan, 
no participating employer may provide health insurance 
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coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer 
under the plan, if such exclusion of the employee from cov-
erage under the plan is based on a health status-related 
factor with respect to the employee and such employee 
would, but for such exclusion on such basis, be eligible 
for coverage under the plan. 
‘‘(c) PROHIBITION OF DISCRIMINATION AGAINST EM-
PLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.— 
The requirements of this subsection are met with respect 
to a small business health plan if— 
‘‘(1) under the terms of the plan, all employers 
meeting the preceding requirements of this section 
are eligible to qualify as participating employers for 
all geographically available coverage options, unless, 
in the case of any such employer, participation or 
contribution requirements of the type referred to in 
section 2711 of the Public Health Service Act are 
not met; 
‘‘(2) information regarding all coverage options 
available under the plan is made readily available to 
any employer eligible to participate; and 
‘‘(3) the applicable requirements of sections 
701, 702, and 703 are met with respect to the plan. 
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‘‘SEC. 806. OTHER REQUIREMENTS RELATING TO PLAN 
DOCUMENTS, CONTRIBUTION RATES, AND 
BENEFIT OPTIONS. 
‘‘(a) IN GENERAL.—The requirements of this section 
are met with respect to a small business health plan if 
the following requirements are met: 
‘‘(1) 
CONTENTS
OF
GOVERNING
INSTRU-
MENTS.— 
‘‘(A) IN GENERAL.—The instruments gov-
erning the plan include a written instrument, 
meeting the requirements of an instrument re-
quired under section 402(a)(1), which— 
‘‘(i) provides that the board of trust-
ees serves as the named fiduciary required 
for plans under section 402(a)(1) and 
serves in the capacity of a plan adminis-
trator (referred to in section 3(16)(A)); 
and 
‘‘(ii) provides that the sponsor of the 
plan is to serve as plan sponsor (referred 
to in section 3(16)(B)). 
‘‘(B) DESCRIPTION OF MATERIAL PROVI-
SIONS.—The terms of the health insurance cov-
erage (including the terms of any individual 
certificates that may be offered to individuals in 
connection with such coverage) describe the ma-
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terial benefit and rating, and other provisions 
set forth in this section and such material pro-
visions are included in the summary plan de-
scription. 
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.— 
‘‘(A) IN GENERAL.—The contribution rates 
for any participating small employer shall not 
vary on the basis of any health status-related 
factor in relation to employees of such employer 
or their beneficiaries and shall not vary on the 
basis of the type of business or industry in 
which such employer is engaged, subject to sub-
paragraph (B) and the terms of this title. 
‘‘(B) EFFECT OF TITLE.—Nothing in this 
title or any other provision of law shall be con-
strued to preclude a health insurance issuer of-
fering health insurance coverage in connection 
with a small business health plan that meets 
the requirements of this part, and at the re-
quest of such small business health plan, 
from— 
‘‘(i) setting contribution rates for the 
small business health plan based on the 
claims experience of the small business 
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health plan so long as any variation in 
such rates for participating small employ-
ers complies with the requirements of 
clause (ii), except that small business 
health plans shall not be subject, in non- 
adopting states, to subparagraphs (A)(ii) 
and (C) of section 2912(a)(2) of the Public 
Health Service Act, and in adopting states, 
to any State law that would have the effect 
of imposing requirements as outlined in 
such subparagraphs (A)(ii) and (C); or 
‘‘(ii) varying contribution rates for 
participating small employers in a small 
business health plan in a State to the ex-
tent that such rates could vary using the 
same methodology employed in such State 
for regulating small group premium rates, 
subject to the terms of part I of subtitle A 
of title XXXI of the Public Health Service 
Act (relating to rating requirements), as 
added by subtitle B of title II of the 
Health Security for All Americans Act of 
2010. 
‘‘(3) EXCEPTIONS REGARDING SELF-EMPLOYED 
AND LARGE EMPLOYERS.— 
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‘‘(A) SELF-EMPLOYED.— 
‘‘(i) IN
GENERAL.—Small business 
health plans with participating employers 
who are self-employed individuals (and 
their dependents) shall enroll such self-em-
ployed participating employers in accord-
ance with rating rules that do not violate 
the rating rules for self-employed individ-
uals in the State in which such self-em-
ployed participating employers are located. 
‘‘(ii) GUARANTEE ISSUE.—Small busi-
ness health plans with participating em-
ployers who are self-employed individuals 
(and their dependents) may decline to 
guarantee issue to such participating em-
ployers in States in which guarantee issue 
is not otherwise required for the self-em-
ployed in that State. 
‘‘(B) LARGE EMPLOYERS.—Small business 
health plans with participating employers that 
are larger than small employers (as defined in 
section 808(a)(10)) shall enroll such large par-
ticipating employers in accordance with rating 
rules that do not violate the rating rules for 
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large employers in the State in which such large 
participating employers are located. 
‘‘(4) 
REGULATORY
REQUIREMENTS.—Such 
other requirements as the applicable authority deter-
mines are necessary to carry out the purposes of this 
part, which shall be prescribed by the applicable au-
thority by regulation. 
‘‘(b) ABILITY OF SMALL BUSINESS HEALTH PLANS 
TO DESIGN BENEFIT OPTIONS.—Nothing in this part or 
any provision of State law (as defined in section 
514(c)(1)) shall be construed to preclude a small business 
health plan or a health insurance issuer offering health 
insurance coverage in connection with a small business 
health plan from exercising its sole discretion in selecting 
the specific benefits and services consisting of medical care 
to be included as benefits under such plan or coverage, 
except that such benefits and services must meet the terms 
and specifications of part II of subtitle A of title XXXI 
of the Public Health Service Act (relating to lower cost 
plans), as added by subtitle B of title II of the Health 
Security for All Americans Act of 2010. 
‘‘(c) DOMICILE AND NON-DOMICILE STATES.— 
‘‘(1) DOMICILE
STATE.—Coverage shall be 
issued to a small business health plan in the State 
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in which the sponsor’s principal place of business is 
located. 
‘‘(2) NON-DOMICILE STATES.—With respect to 
a State (other than the domicile State) in which par-
ticipating employers of a small business health plan 
are located but in which the insurer of the small 
business health plan in the domicile State is not yet 
licensed, the following shall apply: 
‘‘(A) TEMPORARY PREEMPTION.—If, upon 
the expiration of the 90-day period following 
the submission of a licensure application by 
such insurer (that includes a certified copy of 
an approved licensure application as submitted 
by such insurer in the domicile State) to such 
State, such State has not approved or denied 
such application, such State’s health insurance 
licensure laws shall be temporarily preempted 
and the insurer shall be permitted to operate in 
such State, subject to the following terms: 
‘‘(i) APPLICATION OF NON-DOMICILE 
STATE LAW.—Except with respect to licen-
sure and with respect to the terms of sub-
title A of title XXXI of the Public Health 
Service Act (relating to rating and benefits 
as added by subtitle B of title II of the 
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Health Security for All Americans Act of 
2010), the laws and authority of the non- 
domicile State shall remain in full force 
and effect. 
‘‘(ii) REVOCATION OF PREEMPTION.— 
The preemption of a non-domicile State’s 
health insurance licensure laws pursuant to 
this subparagraph, shall be terminated 
upon the occurrence of either of the fol-
lowing: 
‘‘(I) APPROVAL
OR
DENIAL
OF 
APPLICATION.—The approval of denial 
of an insurer’s licensure application, 
following the laws and regulations of 
the non-domicile State with respect to 
licensure. 
‘‘(II) DETERMINATION OF MATE-
RIAL VIOLATION.—A determination by 
a non-domicile State that an insurer 
operating in a non-domicile State pur-
suant to the preemption provided for 
in this subparagraph is in material 
violation of the insurance laws (other 
than licensure and with respect to the 
terms of subtitle A of title XXXI of 
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the Public Health Service Act (relat-
ing to rating and benefits added by 
subtitle B of title II of the Health Se-
curity for All Americans Act of 2010)) 
of such State. 
‘‘(B) NO PROHIBITION ON PROMOTION.— 
Nothing in this paragraph shall be construed to 
prohibit a small business health plan or an in-
surer from promoting coverage prior to the ex-
piration of the 90-day period provided for in 
subparagraph (A), except that no enrollment or 
collection of contributions shall occur before the 
expiration of such 90-day period. 
‘‘(C) LICENSURE.—Except with respect to 
the application of the temporary preemption 
provision of this paragraph, nothing in this part 
shall be construed to limit the requirement that 
insurers issuing coverage to small business 
health plans shall be licensed in each State in 
which the small business health plans operate. 
‘‘(D) SERVICING
BY
LICENSED
INSUR-
ERS.—Notwithstanding subparagraph (C), the 
requirements of this subsection may also be sat-
isfied if the participating employers of a small 
business health plan are serviced by a licensed 
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insurer in that State, even where such insurer 
is not the insurer of such small business health 
plan in the State in which such small business 
health plan is domiciled. 
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS. 
‘‘(a) FILING FEE.—Under the procedure prescribed 
pursuant to section 802(a), a small business health plan 
shall pay to the applicable authority at the time of filing 
an application for certification under this part a filing fee 
in the amount of $5,000, which shall be available in the 
case of the Secretary, to the extent provided in appropria-
tion Acts, for the sole purpose of administering the certifi-
cation procedures applicable with respect to small business 
health plans. 
‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA-
TION FOR CERTIFICATION.—An application for certifi-
cation under this part meets the requirements of this sec-
tion only if it includes, in a manner and form which shall 
be prescribed by the applicable authority by regulation, at 
least the following information: 
‘‘(1) IDENTIFYING INFORMATION.—The names 
and addresses of— 
‘‘(A) the sponsor; and 
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‘‘(B) the members of the board of trustees 
of the plan. 
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO 
BUSINESS.—The States in which participants and 
beneficiaries under the plan are to be located and 
the number of them expected to be located in each 
such State. 
‘‘(3) BONDING REQUIREMENTS.—Evidence pro-
vided by the board of trustees that the bonding re-
quirements of section 412 will be met as of the date 
of the application or (if later) commencement of op-
erations. 
‘‘(4) PLAN DOCUMENTS.—A copy of the docu-
ments governing the plan (including any bylaws and 
trust agreements), the summary plan description, 
and other material describing the benefits that will 
be provided to participants and beneficiaries under 
the plan. 
‘‘(5) 
AGREEMENTS
WITH
SERVICE
PRO-
VIDERS.—A copy of any agreements between the 
plan, health insurance issuer, and contract adminis-
trators and other service providers. 
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to a 
small business health plan shall not be effective unless 
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written notice of such certification is filed with the appli-
cable State authority of each State in which the small 
business health plans operate. 
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 
of any small business health plan certified under this part, 
descriptions of material changes in any information which 
was required to be submitted with the application for the 
certification under this part shall be filed in such form 
and manner as shall be prescribed by the applicable au-
thority by regulation. The applicable authority may re-
quire by regulation prior notice of material changes with 
respect to specified matters which might serve as the basis 
for suspension or revocation of the certification. 
‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION. 
‘‘A small business health plan which is or has been 
certified under this part may terminate (upon or at any 
time after cessation of accruals in benefit liabilities) only 
if the board of trustees, not less than 60 days before the 
proposed termination date— 
‘‘(1) provides to the participants and bene-
ficiaries a written notice of intent to terminate stat-
ing that such termination is intended and the pro-
posed termination date; 
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‘‘(2) develops a plan for winding up the affairs 
of the plan in connection with such termination in 
a manner which will result in timely payment of all 
benefits for which the plan is obligated; and 
‘‘(3) submits such plan in writing to the appli-
cable authority. 
Actions required under this section shall be taken in such 
form and manner as may be prescribed by the applicable 
authority by regulation. 
‘‘SEC. 809. IMPLEMENTATION AND APPLICATION AUTHOR-
ITY BY SECRETARY. 
‘‘The Secretary shall, through promulgation and im-
plementation of such regulations as the Secretary may 
reasonably determine necessary or appropriate, and in 
consultation with a balanced spectrum of effected entities 
and persons, modify the implementation and application 
of this part to accommodate with minimum disruption 
such changes to State or Federal law provided in this part 
and the (and the amendments made by such Act) or in 
regulations issued thereto. 
‘‘SEC. 810. DEFINITIONS AND RULES OF CONSTRUCTION. 
‘‘(a) DEFINITIONS.—For purposes of this part— 
‘‘(1) AFFILIATED MEMBER.—The term ‘affili-
ated member’ means, in connection with a sponsor— 
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‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, or 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
is a member or employee of any such associa-
tion and elects an affiliated status with the 
sponsor. 
‘‘(2) APPLICABLE AUTHORITY.—The term ‘ap-
plicable authority’ means the Secretary of Labor, ex-
cept that, in connection with any exercise of the Sec-
retary’s authority with respect to which the Sec-
retary is required under section 506(d) to consult 
with a State, such term means the Secretary, in con-
sultation with such State. 
‘‘(3) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
title XXVII of the Public Health Service Act for the 
State involved with respect to such issuer. 
‘‘(4) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning provided in section 
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733(a)(1) (after applying subsection (b) of this sec-
tion). 
‘‘(5) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1), except that such term 
shall not include excepted benefits (as defined in sec-
tion 733(c)). 
‘‘(6) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(7) INDIVIDUAL MARKET.— 
‘‘(A) IN GENERAL.—The term ‘individual 
market’ means the market for health insurance 
coverage offered to individuals other than in 
connection with a group health plan. 
‘‘(B) 
TREATMENT
OF
VERY
SMALL 
GROUPS.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), such term includes coverage offered in 
connection with a group health plan that 
has fewer than 2 participants as current 
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan 
year. 
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‘‘(ii) STATE
EXCEPTION.—Clause (i) 
shall not apply in the case of health insur-
ance coverage offered in a State if such 
State regulates the coverage described in 
such clause in the same manner and to the 
same extent as coverage in the small group 
market (as defined in section 2791(e)(5) of 
the Public Health Service Act) is regulated 
by such State. 
‘‘(8) MEDICAL CARE.—The term ‘medical care’ 
has the meaning provided in section 733(a)(2). 
‘‘(9) PARTICIPATING
EMPLOYER.—The term 
‘participating employer’ means, in connection with a 
small business health plan, any employer, if any in-
dividual who is an employee of such employer, a 
partner in such employer, or a self-employed indi-
vidual who is such employer (or any dependent, as 
defined under the terms of the plan, of such indi-
vidual) is or was covered under such plan in connec-
tion with the status of such individual as such an 
employee, partner, or self-employed individual in re-
lation to the plan. 
‘‘(10) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health 
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plan with respect to a plan year, a small employer 
as defined in section 2791(e)(4). 
‘‘(11) TRADE ASSOCIATION AND PROFESSIONAL 
ASSOCIATION.—The terms ‘trade association’ and 
‘professional association’ mean an entity that meets 
the requirements of section 1.501(c)(6)–1 of title 26, 
Code of Federal Regulations (as in effect on the 
date of enactment of this Act). 
‘‘(b) RULE OF CONSTRUCTION.—For purposes of de-
termining whether a plan, fund, or program is an em-
ployee welfare benefit plan which is a small business 
health plan, and for purposes of applying this title in con-
nection with such plan, fund, or program so determined 
to be such an employee welfare benefit plan— 
‘‘(1) in the case of a partnership, the term ‘em-
ployer’ (as defined in section 3(5)) includes the part-
nership in relation to the partners, and the term 
‘employee’ (as defined in section 3(6)) includes any 
partner in relation to the partnership; and 
‘‘(2) in the case of a self-employed individual, 
the term ‘employer’ (as defined in section 3(5)) and 
the term ‘employee’ (as defined in section 3(6)) shall 
include such individual. 
‘‘(c) RENEWAL.—Notwithstanding any provision of 
law to the contrary, a participating employer in a small 
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business health plan shall not be deemed to be a plan 
sponsor in applying requirements relating to coverage re-
newal. 
‘‘(d) HEALTH SAVINGS ACCOUNTS.—Nothing in this 
part shall be construed to create any mandates for cov-
erage of benefits for HSA-qualified health plans that 
would require reimbursements in violation of section 
223(c)(2) of the Internal Revenue Code of 1986.’’. 
(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.— 
(1) Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)), as restored by section 2, is amended by 
adding at the end the following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of a small business health plan which is certified under 
part 8.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144), 
as restored by section 2, is amended— 
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and 
(d)’’; 
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting 
‘‘subsection (a) of this section and subsections 
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(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and 
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’; 
(C) by redesignating subsection (d) as sub-
section (e); and 
(D) by inserting after subsection (c) the 
following new subsection: 
‘‘(d)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State 
laws insofar as they may now or hereafter preclude a 
health insurance issuer from offering health insurance cov-
erage in connection with a small business health plan 
which is certified under part 8. 
‘‘(2) In any case in which health insurance coverage 
of any policy type is offered under a small business health 
plan certified under part 8 to a participating employer op-
erating in such State, the provisions of this title shall su-
persede any and all laws of such State insofar as they may 
establish rating and benefit requirements that would oth-
erwise apply to such coverage, provided the requirements 
of subtitle A of title XXXI of the Public Health Service 
Act (as added by title II of the Health Security for All 
Americans Act of 2010) (concerning health plan rating 
and benefits) are met.’’. 
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(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)), as restored by section 2, is 
amended by adding at the end the following new sentence: 
‘‘Such term also includes a person serving as the sponsor 
of a small business health plan under part 8.’’. 
(d) SAVINGS CLAUSE.—Section 731(c) of such Act, 
as restored by section 2, is amended by inserting ‘‘or part 
8’’ after ‘‘this part’’. 
(e) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974, as restored by section 2, is amended by in-
serting after the item relating to section 734 the following 
new items: 
‘‘PART 8—RULES GOVERNING SMALL BUSINESS HEALTH PLANS 
‘‘801. Small business health plans. 
‘‘802. Alternative market pooling organizations. 
‘‘803. Certification of small business health plans. 
‘‘804. Requirements relating to sponsors and boards of trustees. 
‘‘805. Participation and coverage requirements. 
‘‘806. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Implementation and application authority by Secretary. 
‘‘810. Definitions and rules of construction.’’. 
SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136), as restored by sec-
tion 2, is amended by adding at the end the following new 
subsection: 
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‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO SMALL BUSINESS HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to a small business 
health plan regarding the exercise of— 
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
small business health plans under part 8 in ac-
cordance with regulations of the Secretary ap-
plicable to certification under part 8. 
‘‘(2) RECOGNITION
OF
DOMICILE
STATE.—In 
carrying out paragraph (1), the Secretary shall en-
sure that only one State will be recognized, with re-
spect to any particular small business health plan, 
as the State with which consultation is required. In 
carrying out this paragraph such State shall be the 
domicile State, as defined in section 805(c).’’. 
SEC. 203. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this subtitle shall take effect 12 months after the date of 
the enactment of this Act. The Secretary of Labor shall 
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first issue all regulations necessary to carry out the 
amendments made by this subtitle within 6 months after 
the date of the enactment of this Act. 
(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 808(a)(2) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
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(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of trustees which 
has control over the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement or at such 
time that the arrangement provides coverage to par-
ticipants and beneficiaries in any State other than 
the States in which coverage is provided on such 
date of enactment. 
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(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 808 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘small business health plan’’ shall be deemed 
a reference to an arrangement referred to in this 
subsection. 
Subtitle B—Market Relief 
SEC. 204. MARKET RELIEF. 
The Public Health Service Act (42 U.S.C. 201 et 
seq.), as restored by section 2, is amended by inserting 
after title XXX the following: 
‘‘TITLE XXXI—HEALTH CARE IN-
SURANCE 
MARKETPLACE 
MODERNIZATION 
‘‘SEC. 3101. GENERAL INSURANCE DEFINITIONS. 
‘‘In this title, the terms ‘health insurance coverage’, 
‘health insurance issuer’, ‘group health plan’, and ‘indi-
vidual health insurance’ shall have the meanings given 
such terms in section 2791. 
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‘‘SEC. 3102. IMPLEMENTATION AND APPLICATION AUTHOR-
ITY BY SECRETARY. 
‘‘The Secretary shall, through promulgation and im-
plementation of such regulations as the Secretary may 
reasonably determine necessary or appropriate, and in 
consultation with a balanced spectrum of effected entities 
and persons, modify the implementation and application 
of this title to accommodate with minimum disruption 
such changes to State or Federal law provided in this title 
and the (and the amendments made by such Act) or in 
regulations issued thereto. 
‘‘Subtitle A—Market Relief 
‘‘PART I—RATING REQUIREMENTS 
‘‘SEC. 3111. DEFINITIONS. 
‘‘In this part: 
‘‘(1) ADOPTING
STATE.—The term ‘adopting 
State’ means a State that, with respect to the small 
group market, has enacted small group rating rules 
that meet the minimum standards set forth in sec-
tion 3112(a)(1) or, as applicable, transitional small 
group rating rules set forth in section 3112(b). 
‘‘(2) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
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ignated by the State to enforce the insurance laws 
of such State. 
‘‘(3) BASE
PREMIUM
RATE.—The term ‘base 
premium rate’ means, for each class of business with 
respect to a rating period, the lowest premium rate 
charged or that could have been charged under a 
rating system for that class of business by the small 
employer carrier to small employers with similar 
case characteristics for health benefit plans with the 
same or similar coverage. 
‘‘(4) ELIGIBLE
INSURER.—The term ‘eligible 
insurer’ means a health insurance issuer that is li-
censed in a State and that— 
‘‘(A) notifies the Secretary, not later than 
30 days prior to the offering of coverage de-
scribed in this subparagraph, that the issuer in-
tends to offer health insurance coverage con-
sistent with the Model Small Group Rating 
Rules or, as applicable, transitional small group 
rating rules in a State; 
‘‘(B) notifies the insurance department of 
a nonadopting State (or other State agency), 
not later than 30 days prior to the offering of 
coverage described in this subparagraph, that 
the issuer intends to offer small group health 
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insurance coverage in that State consistent with 
the Model Small Group Rating Rules, and pro-
vides with such notice a copy of any insurance 
policy that it intends to offer in the State, its 
most recent annual and quarterly financial re-
ports, and any other information required to be 
filed with the insurance department of the State 
(or other State agency); and 
‘‘(C) includes in the terms of the health in-
surance coverage offered in nonadopting States 
(including in the terms of any individual certifi-
cates that may be offered to individuals in con-
nection with such group health coverage) and 
filed with the State pursuant to subparagraph 
(B), a description in the insurer’s contract of 
the Model Small Group Rating Rules and an af-
firmation that such Rules are included in the 
terms of such contract. 
‘‘(5) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ means any coverage 
issued in the small group health insurance market, 
except that such term shall not include excepted 
benefits (as defined in section 2791(c)). 
‘‘(6) INDEX
RATE.—The term ‘index rate’ 
means for each class of business with respect to the 
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rating period for small employers with similar case 
characteristics, the arithmetic average of the appli-
cable base premium rate and the corresponding 
highest premium rate. 
‘‘(7) MODEL SMALL GROUP RATING RULES.— 
The term ‘Model Small Group Rating Rules’ means 
the rules set forth in section 3112(a)(2). 
‘‘(8) NONADOPTING
STATE.—The term ‘non-
adopting State’ means a State that is not an adopt-
ing State. 
‘‘(9) SMALL GROUP INSURANCE MARKET.—The 
term ‘small group insurance market’ shall have the 
meaning given the term ‘small group market’ in sec-
tion 2791(e)(5). 
‘‘(10) STATE
LAW.—The term ‘State law’ 
means all laws, decisions, rules, regulations, or other 
State actions (including actions by a State agency) 
having the effect of law, of any State. 
‘‘(11) VARIATION LIMITS.— 
‘‘(A) COMPOSITE VARIATION LIMIT.— 
‘‘(i) IN
GENERAL.—The term ‘com-
posite variation limit’ means the total vari-
ation in premium rates charged by a 
health insurance issuer in the small group 
market as permitted under applicable State 
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law based on the following factors or case 
characteristics: 
‘‘(I) Age. 
‘‘(II) Duration of coverage. 
‘‘(III) Claims experience. 
‘‘(IV) Health status. 
‘‘(ii) USE OF FACTORS.—With respect 
to the use of the factors described in 
clause (i) in setting premium rates, a 
health insurance issuer shall use one or 
both of the factors described in subclauses 
(I) or (IV) of such clause and may use the 
factors described in subclauses (II) or (III) 
of such clause. 
‘‘(B) TOTAL VARIATION LIMIT.—The term 
‘total variation limit’ means the total variation 
in premium rates charged by a health insurance 
issuer in the small group market as permitted 
under applicable State law based on all factors 
and case characteristics (as described in section 
3112(a)(1)). 
‘‘SEC. 3112. RATING RULES. 
‘‘(a) ESTABLISHMENT OF MINIMUM STANDARDS FOR 
PREMIUM VARIATIONS AND MODEL SMALL GROUP RAT-
ING RULES.—Not later than 6 months after the date of 
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enactment of this title, the Secretary shall promulgate reg-
ulations establishing the following Minimum Standards 
and Model Small Group Rating Rules: 
‘‘(1) MINIMUM STANDARDS FOR PREMIUM VARI-
ATIONS.— 
‘‘(A) COMPOSITE VARIATION LIMIT.—The 
composite variation limit shall not be less than 
3:1. 
‘‘(B) TOTAL VARIATION LIMIT.—The total 
variation limit shall not be less than 5:1. 
‘‘(C) PROHIBITION
ON
USE
OF
CERTAIN 
CASE CHARACTERISTICS.—For purposes of this 
paragraph, in calculating the total variation 
limit, the State shall not use case characteris-
tics other than those used in calculating the 
composite variation limit and industry, geo-
graphic area, group size, participation rate, 
class of business, and participation in wellness 
programs. 
‘‘(2) MODEL SMALL GROUP RATING RULES.— 
The following apply to an eligible insurer in a non- 
adopting State: 
‘‘(A) PREMIUM
RATES.—Premium rates 
for small group health benefit plans to which 
this title applies shall comply with the following 
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provisions relating to premiums, except as pro-
vided for under subsection (b): 
‘‘(i) 
VARIATION
IN
PREMIUM 
RATES.—The plan may not vary premium 
rates by more than the minimum stand-
ards provided for under paragraph (1). 
‘‘(ii) INDEX
RATE.—The index rate 
for a rating period for any class of busi-
ness shall not exceed the index rate for any 
other class of business by more than 20 
percent, excluding those classes of business 
related to association groups under this 
title. 
‘‘(iii) CLASS
OF
BUSINESSES.—With 
respect to a class of business, the premium 
rates charged during a rating period to 
small employers with similar case charac-
teristics for the same or similar coverage 
or the rates that could be charged to such 
employers under the rating system for that 
class of business, shall not vary from the 
index rate by more than 25 percent of the 
index rate under clause (ii). 
‘‘(iv) INCREASES
FOR
NEW
RATING 
PERIODS.—The percentage increase in the 
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premium rate charged to a small employer 
for a new rating period may not exceed the 
sum of the following: 
‘‘(I) The percentage change in 
the new business premium rate meas-
ured from the first day of the prior 
rating period to the first day of the 
new rating period. In the case of a 
health benefit plan into which the 
small employer carrier is no longer en-
rolling new small employers, the small 
employer carrier shall use the percent-
age change in the base premium rate, 
except that such change shall not ex-
ceed, on a percentage basis, the 
change in the new business premium 
rate for the most similar health ben-
efit plan into which the small em-
ployer carrier is actively enrolling new 
small employers. 
‘‘(II) Any adjustment, not to ex-
ceed 15 percent annually and adjusted 
pro rata for rating periods of less 
then 1 year, due to the claim experi-
ence, health status or duration of cov-
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erage of the employees or dependents 
of the small employer as determined 
from the small employer carrier’s rate 
manual for the class of business in-
volved. 
‘‘(III) Any adjustment due to 
change in coverage or change in the 
case characteristics of the small em-
ployer as determined from the small 
employer carrier’s rate manual for the 
class of business. 
‘‘(v) UNIFORM APPLICATION OF AD-
JUSTMENTS.—Adjustments 
in 
premium 
rates for claim experience, health status, or 
duration of coverage shall not be charged 
to individual employees or dependents. Any 
such adjustment shall be applied uniformly 
to the rates charged for all employees and 
dependents of the small employer. 
‘‘(vi) PROHIBITION ON USE OF CER-
TAIN CASE CHARACTERISTIC.—A small em-
ployer carrier shall not utilize case charac-
teristics, other than those permitted under 
paragraph (1)(C), without the prior ap-
proval of the applicable State authority. 
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‘‘(vii) CONSISTENT
APPLICATION
OF 
FACTORS.—Small employer carriers shall 
apply rating factors, including case charac-
teristics, consistently with respect to all 
small employers in a class of business. 
Rating factors shall produce premiums for 
identical groups which differ only by the 
amounts attributable to plan design and do 
not reflect differences due to the nature of 
the groups assumed to select particular 
health benefit plans. 
‘‘(viii) TREATMENT OF PLANS AS HAV-
ING SAME RATING PERIOD.—A small em-
ployer carrier shall treat all health benefit 
plans issued or renewed in the same cal-
endar month as having the same rating pe-
riod. 
‘‘(ix) REQUIRE
COMPLIANCE.—Pre-
mium rates for small business health ben-
efit plans shall comply with the require-
ments of this subsection notwithstanding 
any assessments paid or payable by a small 
employer carrier as required by a State’s 
small employer carrier reinsurance pro-
gram. 
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‘‘(B) 
ESTABLISHMENT
OF
SEPARATE 
CLASS OF BUSINESS.—Subject to subparagraph 
(C), a small employer carrier may establish a 
separate class of business only to reflect sub-
stantial differences in expected claims experi-
ence or administrative costs related to the fol-
lowing: 
‘‘(i) The small employer carrier uses 
more than one type of system for the mar-
keting and sale of health benefit plans to 
small employers. 
‘‘(ii) The small employer carrier has 
acquired a class of business from another 
small employer carrier. 
‘‘(iii) The small employer carrier pro-
vides coverage to one or more association 
groups that meet the requirements of this 
title. 
‘‘(C) LIMITATION.—A small employer car-
rier may establish up to 9 separate classes of 
business under subparagraph (B), excluding 
those classes of business related to association 
groups under this title. 
‘‘(D) 
LIMITATION
ON
TRANSFERS.—A 
small employer carrier shall not transfer a 
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small employer involuntarily into or out of a 
class of business. A small employer carrier shall 
not offer to transfer a small employer into or 
out of a class of business unless such offer is 
made to transfer all small employers in the 
class of business without regard to case charac-
teristics, claim experience, health status or du-
ration of coverage since issue. 
‘‘(b) TRANSITIONAL MODEL SMALL GROUP RATING 
RULES.— 
‘‘(1) IN GENERAL.—Not later than 6 months 
after the date of enactment of this title and to the 
extent necessary to provide for a graduated transi-
tion to the minimum standards for premium vari-
ation as provided for in subsection (a)(1), the Sec-
retary, in consultation with the National Association 
of Insurance Commissioners (NAIC), shall promul-
gate State-specific transitional small group rating 
rules in accordance with this subsection, which shall 
be applicable with respect to non-adopting States 
and eligible insurers operating in such States for a 
period of not to exceed 3 years from the date of the 
promulgation of the minimum standards for pre-
mium variation pursuant to subsection (a). 
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‘‘(2) COMPLIANCE WITH TRANSITIONAL MODEL 
SMALL GROUP RATING RULES.—During the transi-
tion period described in paragraph (1), a State that, 
on the date of enactment of this title, has in effect 
a small group rating rules methodology that allows 
for a variation that is less than the variation pro-
vided for under subsection (a)(1) (concerning min-
imum standards for premium variation), shall be 
deemed to be an adopting State if the State complies 
with the transitional small group rating rules as pro-
mulgated by the Secretary pursuant to paragraph 
(1). 
‘‘(3) TRANSITIONING OF OLD BUSINESS.— 
‘‘(A) IN
GENERAL.—In developing the 
transitional small group rating rules under 
paragraph (1), the Secretary shall, after con-
sultation with the National Association of In-
surance Commissioners and representatives of 
insurers operating in the small group health in-
surance market in non-adopting States, promul-
gate special transition standards with respect to 
independent rating classes for old and new busi-
ness, to the extent reasonably necessary to pro-
tect health insurance consumers and to ensure 
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a stable and fair transition for old and new 
market entrants. 
‘‘(B) PERIOD FOR OPERATION OF INDE-
PENDENT RATING CLASSES.—In developing the 
special transition standards pursuant to sub-
paragraph (A), the Secretary shall permit a 
carrier in a non-adopting State, at its option, to 
maintain independent rating classes for old and 
new business for a period of up to 5 years, with 
the commencement of such 5-year period to 
begin at such time, but not later than the date 
that is 3 years after the date of enactment of 
this title, as the carrier offers a book of busi-
ness meeting the minimum standards for pre-
mium variation provided for in subsection 
(a)(1) or the transitional small group rating 
rules under paragraph (1). 
‘‘(4) OTHER
TRANSITIONAL
AUTHORITY.—In 
developing the transitional small group rating rules 
under paragraph (1), the Secretary shall provide for 
the application of the transitional small group rating 
rules in transition States as the Secretary may de-
termine necessary for a an effective transition. 
‘‘(c) MARKET RE-ENTRY.— 
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‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, a health insurance issuer that has 
voluntarily withdrawn from providing coverage in the 
small group market prior to the date of enactment 
of this title shall not be excluded from re-entering 
such market on a date that is more than 180 days 
after such date of enactment. 
‘‘(2) TERMINATION.—The provision of this sub-
section shall terminate on the date that is 24 
months after the date of enactment of this title. 
‘‘SEC. 3113. APPLICATION AND PREEMPTION. 
‘‘(a) SUPERSEDING OF STATE LAW.— 
‘‘(1) IN GENERAL.—This part shall supersede 
any and all State laws of a non-adopting State inso-
far as such State laws (whether enacted prior to or 
after the date of enactment of this subtitle) relate to 
rating in the small group insurance market as ap-
plied to an eligible insurer, or small group health in-
surance coverage issued by an eligible insurer, in-
cluding with respect to coverage issued to a small 
employer through a small business health plan, in a 
State. 
‘‘(2) NONADOPTING STATES.—This part shall 
supersede any and all State laws of a nonadopting 
State insofar as such State laws (whether enacted 
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prior to or after the date of enactment of this sub-
title)— 
‘‘(A) prohibit an eligible insurer from of-
fering, marketing, or implementing small group 
health insurance coverage consistent with the 
Model Small Group Rating Rules or transitional 
model small group rating rules; or 
‘‘(B) have the effect of retaliating against 
or otherwise punishing in any respect an eligible 
insurer for offering, marketing, or imple-
menting small group health insurance coverage 
consistent with the Model Small Group Rating 
Rules or transitional model small group rating 
rules. 
‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 
‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 
Subsection (a) shall not apply with respect to adopt-
ing states. 
‘‘(2) NONAPPLICATION
TO
CERTAIN
INSUR-
ERS.—Subsection (a) shall not apply with respect to 
insurers that do not qualify as eligible insurers that 
offer small group health insurance coverage in a 
nonadopting State. 
‘‘(3) NONAPPLICATION WHERE OBTAINING RE-
LIEF UNDER STATE LAW.—Subsection (a)(1) shall 
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not supercede any State law in a nonadopting State 
to the extent necessary to permit individuals or the 
insurance department of the State (or other State 
agency) to obtain relief under State law to require 
an eligible insurer to comply with the Model Small 
Group Rating Rules or transitional model small 
group rating rules. 
‘‘(4) NO EFFECT ON PREEMPTION.—In no case 
shall this part be construed to limit or affect in any 
manner the preemptive scope of sections 502 and 
514 of the Employee Retirement Income Security 
Act of 1974. In no case shall this part be construed 
to create any cause of action under Federal or State 
law or enlarge or affect any remedy available under 
the Employee Retirement Income Security Act of 
1974. 
‘‘(5) PREEMPTION LIMITED TO RATING.—Sub-
section (a) shall not preempt any State law that 
does not have a reference to or a connection with 
State rating rules that would otherwise apply to eli-
gible insurers. 
‘‘(c) EFFECTIVE DATE.—This section shall apply, at 
the election of the eligible insurer, beginning in the first 
plan year or the first calendar year following the issuance 
of the final rules by the Secretary under the Model Small 
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Group Rating Rules or, as applicable, the Transitional 
Model Small Group Rating Rules, but in no event earlier 
than the date that is 12 months after the date of enact-
ment of this title. 
‘‘SEC. 3114. CIVIL ACTIONS AND JURISDICTION. 
‘‘(a) IN GENERAL.—The courts of the United States 
shall have exclusive jurisdiction over civil actions involving 
the interpretation of this part. 
‘‘(b) ACTIONS.—An eligible insurer may bring an ac-
tion in the district courts of the United States for injunc-
tive or other equitable relief against any officials or agents 
of a nonadopting State in connection with any conduct or 
action, or proposed conduct or action, by such officials or 
agents which violates, or which would if undertaken vio-
late, section 3113. 
‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 
election of the eligible insurer, an action may be brought 
under subsection (b) directly in the United States Court 
of Appeals for the circuit in which the nonadopting State 
is located by the filing of a petition for review in such 
Court. 
‘‘(d) EXPEDITED REVIEW.— 
‘‘(1) DISTRICT COURT.—In the case of an ac-
tion brought in a district court of the United States 
under subsection (b), such court shall complete such 
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action, including the issuance of a judgment, prior 
to the end of the 120-day period beginning on the 
date on which such action is filed, unless all parties 
to such proceeding agree to an extension of such pe-
riod. 
‘‘(2) COURT OF APPEALS.—In the case of an 
action brought directly in a United States Court of 
Appeal under subsection (c), or in the case of an ap-
peal of an action brought in a district court under 
subsection (b), such Court shall complete all action 
on the petition, including the issuance of a judg-
ment, prior to the end of the 60-day period begin-
ning on the date on which such petition is filed with 
the Court, unless all parties to such proceeding 
agree to an extension of such period. 
‘‘(e) STANDARD OF REVIEW.—A court in an action 
filed under this section, shall render a judgment based on 
a review of the merits of all questions presented in such 
action and shall not defer to any conduct or action, or 
proposed conduct or action, of a nonadopting State. 
‘‘SEC. 3115. ONGOING REVIEW. 
‘‘Not later than 5 years after the date on which the 
Model Small Group Rating Rules are issued under this 
part, and every 5 years thereafter, the Secretary, in con-
sultation with the National Association of Insurance Com-
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missioners, shall prepare and submit to the appropriate 
committees of Congress a report that assesses the effect 
of the Model Small Group Rating Rules on access, cost, 
and market functioning in the small group market. Such 
report may, if the Secretary, in consultation with the Na-
tional Association of Insurance Commissioners, deter-
mines such is appropriate for improving access, costs, and 
market functioning, contain legislative proposals for rec-
ommended modification to such Model Small Group Rat-
ing Rules. 
‘‘PART II—AFFORDABLE PLANS 
‘‘SEC. 3121. DEFINITIONS. 
‘‘In this part: 
‘‘(1) ADOPTING
STATE.—The term ‘adopting 
State’ means a State that has enacted a law pro-
viding that small group, individual, and large group 
health insurers in such State may offer and sell 
products in accordance with the List of Required 
Benefits and the Terms of Application as provided 
for in section 3122(b). 
‘‘(2) ELIGIBLE
INSURER.—The term ‘eligible 
insurer’ means a health insurance issuer that is li-
censed in a nonadopting State and that— 
‘‘(A) notifies the Secretary, not later than 
30 days prior to the offering of coverage de-
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scribed in this subparagraph, that the issuer in-
tends to offer health insurance coverage con-
sistent with the List of Required Benefits and 
Terms of Application in a nonadopting State; 
‘‘(B) notifies the insurance department of 
a nonadopting State (or other applicable State 
agency), not later than 30 days prior to the of-
fering of coverage described in this subpara-
graph, that the issuer intends to offer health in-
surance coverage in that State consistent with 
the List of Required Benefits and Terms of Ap-
plication, and provides with such notice a copy 
of any insurance policy that it intends to offer 
in the State, its most recent annual and quar-
terly financial reports, and any other informa-
tion required to be filed with the insurance de-
partment of the State (or other State agency) 
by the Secretary in regulations; and 
‘‘(C) includes in the terms of the health in-
surance coverage offered in nonadopting States 
(including in the terms of any individual certifi-
cates that may be offered to individuals in con-
nection with such group health coverage) and 
filed with the State pursuant to subparagraph 
(B), a description in the insurer’s contract of 
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the List of Required Benefits and a description 
of the Terms of Application, including a de-
scription of the benefits to be provided, and 
that adherence to such standards is included as 
a term of such contract. 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ means any coverage 
issued in the small group, individual, or large group 
health insurance markets, including with respect to 
small business health plans, except that such term 
shall not include excepted benefits (as defined in sec-
tion 2791(c)). 
‘‘(4) LIST OF REQUIRED BENEFITS.—The term 
‘List of Required Benefits’ means the List issued 
under section 3122(a). 
‘‘(5) NONADOPTING
STATE.—The term ‘non-
adopting State’ means a State that is not an adopt-
ing State. 
‘‘(6) STATE LAW.—The term ‘State law’ means 
all laws, decisions, rules, regulations, or other State 
actions (including actions by a State agency) having 
the effect of law, of any State. 
‘‘(7) STATE
PROVIDER
FREEDOM
OF
CHOICE 
LAW.—The term ‘State Provider Freedom of Choice 
Law’ means a State law requiring that a health in-
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surance issuer, with respect to health insurance cov-
erage, not discriminate with respect to participation, 
reimbursement, or indemnification as to any pro-
vider who is acting within the scope of the provider’s 
license or certification under applicable State law. 
‘‘(8) TERMS
OF
APPLICATION.—The term 
‘Terms of Application’ means terms provided under 
section 3122(a). 
‘‘SEC. 3122. OFFERING AFFORDABLE PLANS. 
‘‘(a) LIST OF REQUIRED BENEFITS.—Not later than 
3 months after the date of enactment of this title, the Sec-
retary, in consultation with the National Association of In-
surance Commissioners, shall issue by interim final rule 
a list (to be known as the ‘List of Required Benefits’) of 
covered benefits, services, or categories of providers that 
are required to be provided by health insurance issuers, 
in each of the small group, individual, and large group 
markets, in at least 26 States as a result of the application 
of State covered benefit, service, and category of provider 
mandate laws. With respect to plans sold to or through 
small business health plans, the List of Required Benefits 
applicable to the small group market shall apply. 
‘‘(b) TERMS OF APPLICATION.— 
‘‘(1) STATE WITH MANDATES.—With respect to 
a State that has a covered benefit, service, or cat-
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egory of provider mandate in effect that is covered 
under the List of Required Benefits under sub-
section (a), such State mandate shall, subject to 
paragraph (3) (concerning uniform application), 
apply to a coverage plan or plan in, as applicable, 
the small group, individual, or large group market or 
through a small business health plan in such State. 
‘‘(2) STATES WITHOUT MANDATES.—With re-
spect to a State that does not have a covered ben-
efit, service, or category of provider mandate in ef-
fect that is covered under the List of Required Ben-
efits under subsection (a), such mandate shall not 
apply, as applicable, to a coverage plan or plan in 
the small group, individual, or large group market or 
through a small business health plan in such State. 
‘‘(3) UNIFORM APPLICATION OF LAWS.— 
‘‘(A) IN
GENERAL.—With respect to a 
State described in paragraph (1), in applying a 
covered benefit, service, or category of provider 
mandate that is on the List of Required Bene-
fits under subsection (a) the State shall permit 
a coverage plan or plan offered in the small 
group, individual, or large group market or 
through a small business health plan in such 
State to apply such benefit, service, or category 
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of provider coverage in a manner consistent 
with the manner in which such coverage is ap-
plied under one of the three most heavily sub-
scribed national health plans offered under the 
Federal Employee Health Benefits Program 
under chapter 89 of title 5, United States Code 
(as determined by the Secretary in consultation 
with the Director of the Office of Personnel 
Management), and consistent with the Publica-
tion of Benefit Applications under subsection 
(c). In the event a covered benefit, service, or 
category of provider appearing in the List of 
Required Benefits is not offered in one of the 
three most heavily subscribed national health 
plans offered under the Federal Employees 
Health Benefits Program, such covered benefit, 
service, or category of provider requirement 
shall be applied in a manner consistent with the 
manner in which such coverage is offered in the 
remaining most heavily subscribed plan of the 
remaining Federal Employees Health Benefits 
Program plans, as determined by the Secretary, 
in consultation with the Director of the Office 
of Personnel Management. 
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‘‘(B) EXCEPTION REGARDING STATE PRO-
VIDER FREEDOM OF CHOICE LAWS.—Notwith-
standing subparagraph (A), in the event a cat-
egory of provider mandate is included in the 
List of Covered Benefits, any State Provider 
Freedom of Choice Law (as defined in section 
3121(7)) that is in effect in any State in which 
such category of provider mandate is in effect 
shall not be preempted, with respect to that cat-
egory of provider, by this part. 
‘‘(c) PUBLICATION
OF BENEFIT APPLICATIONS.— 
Not later than 3 months after the date of enactment of 
this title, and on the first day of every calendar year there-
after, the Secretary, in consultation with the Director of 
the Office of Personnel Management, shall publish in the 
Federal Register a description of such covered benefits, 
services, and categories of providers covered in that cal-
endar year by each of the three most heavily subscribed 
nationally available Federal Employee Health Benefits 
Plan options which are also included on the List of Re-
quired Benefits. 
‘‘(d) EFFECTIVE DATES.— 
‘‘(1) SMALL BUSINESS HEALTH PLANS.—With 
respect to health insurance provided to participating 
employers of small business health plans, the re-
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quirements of this part (concerning lower cost plans) 
shall apply beginning on the date that is 12 months 
after the date of enactment of this title. 
‘‘(2) NON-ASSOCIATION
COVERAGE.—With re-
spect to health insurance provided to groups or indi-
viduals other than participating employers of small 
business health plans, the requirements of this part 
shall apply beginning on the date that is 15 months 
after the date of enactment of this title. 
‘‘(e) UPDATING OF LIST OF REQUIRED BENEFITS.— 
Not later than 2 years after the date on which the list 
of required benefits is issued under subsection (a), and 
every 2 years thereafter, the Secretary, in consultation 
with the National Association of Insurance Commis-
sioners, shall update the list based on changes in the laws 
and regulations of the States. The Secretary shall issue 
the updated list by regulation, and such updated list shall 
be effective upon the first plan year following the issuance 
of such regulation. 
‘‘SEC. 3123. APPLICATION AND PREEMPTION. 
‘‘(a) SUPERCEDING OF STATE LAW.— 
‘‘(1) IN GENERAL.—This part shall supersede 
any and all State laws insofar as such laws relate to 
mandates relating to covered benefits, services, or 
categories of provider in the health insurance market 
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as applied to an eligible insurer, or health insurance 
coverage issued by an eligible insurer, including with 
respect to coverage issued to a small business health 
plan, in a nonadopting State. 
‘‘(2) NONADOPTING STATES.—This part shall 
supersede any and all State laws of a nonadopting 
State (whether enacted prior to or after the date of 
enactment of this title) insofar as such laws— 
‘‘(A) prohibit an eligible insurer from of-
fering, marketing, or implementing health in-
surance coverage consistent with the Benefit 
Choice Standards, as provided for in section 
3122(a); or 
‘‘(B) have the effect of retaliating against 
or otherwise punishing in any respect an eligible 
insurer for offering, marketing, or imple-
menting health insurance coverage consistent 
with the Benefit Choice Standards. 
‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 
‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 
Subsection (a) shall not apply with respect to adopt-
ing States. 
‘‘(2) NONAPPLICATION
TO
CERTAIN
INSUR-
ERS.—Subsection (a) shall not apply with respect to 
insurers that do not qualify as eligible insurers who 
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offer health insurance coverage in a nonadopting 
State. 
‘‘(3) NONAPPLICATION WHERE OBTAINING RE-
LIEF UNDER STATE LAW.—Subsection (a)(1) shall 
not supercede any State law of a nonadopting State 
to the extent necessary to permit individuals or the 
insurance department of the State (or other State 
agency) to obtain relief under State law to require 
an eligible insurer to comply with the Benefit Choice 
Standards. 
‘‘(4) NO EFFECT ON PREEMPTION.—In no case 
shall this part be construed to limit or affect in any 
manner the preemptive scope of sections 502 and 
514 of the Employee Retirement Income Security 
Act of 1974. In no case shall this part be construed 
to create any cause of action under Federal or State 
law or enlarge or affect any remedy available under 
the Employee Retirement Income Security Act of 
1974. 
‘‘(5) PREEMPTION
LIMITED
TO
BENEFITS.— 
Subsection (a) shall not preempt any State law that 
does not have a reference to or a connection with 
State mandates regarding covered benefits, services, 
or categories of providers that would otherwise apply 
to eligible insurers. 
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‘‘SEC. 3124. CIVIL ACTIONS AND JURISDICTION. 
‘‘(a) IN GENERAL.—The courts of the United States 
shall have exclusive jurisdiction over civil actions involving 
the interpretation of this part. 
‘‘(b) ACTIONS.—An eligible insurer may bring an ac-
tion in the district courts of the United States for injunc-
tive or other equitable relief against any officials or agents 
of a nonadopting State in connection with any conduct or 
action, or proposed conduct or action, by such officials or 
agents which violates, or which would if undertaken vio-
late, section 3123. 
‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 
election of the eligible insurer, an action may be brought 
under subsection (b) directly in the United States Court 
of Appeals for the circuit in which the nonadopting State 
is located by the filing of a petition for review in such 
Court. 
‘‘(d) EXPEDITED REVIEW.— 
‘‘(1) DISTRICT COURT.—In the case of an ac-
tion brought in a district court of the United States 
under subsection (b), such court shall complete such 
action, including the issuance of a judgment, prior 
to the end of the 120-day period beginning on the 
date on which such action is filed, unless all parties 
to such proceeding agree to an extension of such pe-
riod. 
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‘‘(2) COURT OF APPEALS.—In the case of an 
action brought directly in a United States Court of 
Appeal under subsection (c), or in the case of an ap-
peal of an action brought in a district court under 
subsection (b), such Court shall complete all action 
on the petition, including the issuance of a judg-
ment, prior to the end of the 60-day period begin-
ning on the date on which such petition is filed with 
the Court, unless all parties to such proceeding 
agree to an extension of such period. 
‘‘(e) STANDARD OF REVIEW.—A court in an action 
filed under this section, shall render a judgment based on 
a review of the merits of all questions presented in such 
action and shall not defer to any conduct or action, or 
proposed conduct or action, of a nonadopting State. 
‘‘SEC. 3125. RULES OF CONSTRUCTION. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of Federal or State law, a health insurance issuer 
in an adopting State or an eligible insurer in a non-adopt-
ing State may amend its existing policies to be consistent 
with the terms of this subtitle (concerning rating and ben-
efits). 
‘‘(b) HEALTH SAVINGS ACCOUNTS.—Nothing in this 
subtitle shall be construed to create any mandates for cov-
erage of benefits for HSA-qualified health plans that 
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would require reimbursements in violation of section 
223(c)(2) of the Internal Revenue Code of 1986.’’. 
TITLE II—TARGETED EFFORTS 
TO EXPAND ACCESS 
SEC. 211. EXTENDING COVERAGE OF DEPENDENTS. 
(a) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974.— 
(1) IN GENERAL.—Part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act 
of 1974 is amended by inserting after section 714 
the following new section: 
‘‘SEC. 715. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan, or health insurance coverage offered in connection 
with a group health plan, that treats as a beneficiary 
under the plan an individual who is a dependent child of 
a participant or beneficiary under the plan, the plan or 
coverage shall continue to treat the individual as a depend-
ent child without regard to the individual’s age until the 
individual turns 26 years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
benefits for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
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(2) CLERICAL AMENDMENT.—The table of con-
tents of such Act is amended by inserting after the 
item relating to section 714 the following new item: 
‘‘Sec. 715. Extending coverage of dependents.’’. 
(b) PHSA.—Title XXVII of the Public Health Serv-
ice Act, as restored by section 2, is amended by inserting 
after section 2707 the following new section: 
‘‘SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan, or health insurance coverage offered in connection 
with a group health plan, that treats as a beneficiary 
under the plan an individual who is a dependent child of 
a participant or beneficiary under the plan, the plan or 
coverage shall continue to treat the individual as a depend-
ent child without regard to the individual’s age until the 
individual turns 26 years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
benefits for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
(c) IRC.— 
(1) IN
GENERAL.—Subchapter B of chapter 
100 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new section: 
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‘‘SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan that treats as a beneficiary under the plan an indi-
vidual who is a dependent child of a participant or bene-
ficiary under the plan, the plan shall continue to treat the 
individual as a dependent child without regard to the indi-
vidual’s age until the individual turns 26 years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
coverage for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions in such subchapter is amended by adding at 
the end the following new item: 
‘‘Sec. 9814. Extending coverage of dependents.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
subsections (a), (b), and (c) shall apply to group health 
plans for plan years beginning more than 3 months after 
the date of the enactment of this Act and shall apply to 
individuals who are dependent children under a group 
health plan, or health insurance coverage offered in con-
nection with such a plan, on or after such date. 
(e) ADULT DEPENDENTS.— 
(1) EXCLUSION OF AMOUNTS EXPENDED FOR 
MEDICAL
CARE.—The first sentence of section 
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105(b) of the Internal Revenue Code of 1986 (relat-
ing to amounts expended for medical care) is amend-
ed— 
(A) by striking ‘‘and his dependents’’ and 
inserting ‘‘his dependents’’; and 
(B) by inserting before the period the fol-
lowing: ‘‘, and any child (as defined in section 
152(f)(1)) of the taxpayer who as of the end of 
the taxable year has not attained age 27’’. 
(2) SELF-EMPLOYED HEALTH INSURANCE DE-
DUCTION.—Section 162(l)(1) of such Code is 
amended to read as follows: 
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case 
of a taxpayer who is an employee within the mean-
ing of section 401(c)(1), there shall be allowed as a 
deduction under this section an amount equal to the 
amount paid during the taxable year for insurance 
which constitutes medical care for 
‘‘(A) the taxpayer, 
‘‘(B) the taxpayer’s spouse, 
‘‘(C) the taxpayer’s dependents, and 
‘‘(D) any child (as defined in section 
152(f)(1)) of the taxpayer who as of the end of 
the taxable year has not attained age 27.’’. 
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(3) COVERAGE UNDER SELF-EMPLOYED DEDUC-
TION.—Section 162(l)(2)(B) of such Code is amend-
ed by inserting ‘‘, or any dependent, or individual 
described in subparagraph (D) of paragraph (1) 
with respect to,’’ after ‘‘spouse of’’. 
(4) SICK AND ACCIDENT BENEFITS PROVIDED 
TO MEMBERS OF A VOLUNTARY EMPLOYEES’ BENE-
FICIARY ASSOCIATION AND THEIR DEPENDENTS.— 
Section 501(c)(9) of such Code is amended by add-
ing at the end the following new sentence: ‘‘For pur-
poses of providing for the payment of sick and acci-
dent benefits to members of such an association and 
their dependents, the term ‘dependent’ shall include 
any individual who is a child (as defined in section 
152(f)(1)) of a member who as of the end of the cal-
endar year has not attained age 27.’’. 
(5) MEDICAL AND OTHER BENEFITS FOR RE-
TIRED EMPLOYEES.—Section 401(h) of such Code is 
amended by adding at the end the following: ‘‘For 
purposes of this subsection, the term ‘dependent’ 
shall include any individual who is a child (as de-
fined in section 152(f)(1)) of a retired employee who 
as of the end of the calendar year has not attained 
age 27.’’. 
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SEC. 212. PROHIBITING PREEXISTING CONDITION EXCLU-
SIONS FOR ENROLLEES UNDER AGE 19. 
(a) PHSA.—Section 2701(a) of the Public Health 
Service Act (42 U.S.C. 300gg(a)), as restored by section 
2, is amended— 
(1) in the matter preceding paragraph (1), by 
inserting ‘‘and the last sentence of this subsection’’ 
after ‘‘subsection (d)’’; and 
(2) by adding at the end the following new sen-
tence: 
‘‘In the case of a participant or beneficiary who is under 
19 years of age, a group health plan and a health insur-
ance issuer offering group or individual health insurance 
coverage may not impose any preexisting condition exclu-
sion with respect to such plan or coverage.’’. 
(b) ERISA.—Section 701(a) of the Employee Retire-
ment Income Security Act of 1974, as restored by section 
2, is amended— 
(1) in the matter preceding paragraph (1), by 
inserting ‘‘and the last sentence of this subsection’’ 
after ‘‘subsection (d)’’; and 
(2) by adding at the end the following new sen-
tence: 
‘‘In the case of a participant or beneficiary who is under 
19 years of age, a group health plan and a health insur-
ance issuer offering group or individual health insurance 
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coverage may not impose any preexisting condition exclu-
sion with respect to such plan or coverage.’’. 
(c) IRC.—Section 9801 of the Internal Revenue Code 
of 1986, as restored by section 2, is amended— 
(1) in the matter preceding paragraph (1), by 
inserting ‘‘and the last sentence of this subsection’’ 
after ‘‘subsection (d)’’; and 
(2) by adding at the end the following new sen-
tence: 
‘‘In the case of a participant or beneficiary who is under 
19 years of age, a group health plan may not impose any 
preexisting condition exclusion with respect to such plan.’’. 
SEC. 213. HEALTH PLAN FINDERS. 
(a) STATE PLAN FINDERS.—Not later than 12 
months after the date of the enactment of this Act, each 
State may contract with a private entity to develop and 
operate a plan finder website (referred to in this section 
as a ‘‘State plan finder’’) which shall provide information 
to individuals in such State on plans of health insurance 
coverage that are available to individuals in such State (in 
this section referred to as a ‘‘health insurance plan’’) . 
Such State may not operate a plan finder itself. 
(b) MULTI-STATE PLAN FINDERS.— 
(1) IN GENERAL.—A private entity may operate 
a multi-State finder that operates under this section 
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in the States involved in the same manner as a State 
plan finder would operate in a single State. 
(2) SHARING OF INFORMATION.—States shall 
regulate the manner in which data is shared between 
plan finders to ensure consistency and accuracy in 
the information about health insurance plans con-
tained in such finders. 
(c) REQUIREMENTS FOR PLAN FINDERS.—Each plan 
finder shall meet the following requirements: 
(1) The plan finder shall ensure that each 
health insurance plan in the plan finder meets the 
requirements for such plans under subsection (d). 
(2) The plan finder shall present complete in-
formation on the costs and benefits of health insur-
ance plans (including information on monthly pre-
mium, copayments, and deductibles) in a uniform 
manner that— 
(A) uses the standard definitions developed 
under paragraph (3); and 
(B) is designed to allow consumers to eas-
ily compare such plans. 
(3) The plan finder shall be available on the 
Internet and accessible to all individuals in the State 
or, in the case of a multi-State plan finder, in all 
States covered by the multi-State plan finder. 
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(4) The plan finder shall allow consumers to 
search and sort data on the health insurance plans 
in the plan finder on criteria such as coverage of 
specific benefits (such as coverage of disease man-
agement services or pediatric care services), as well 
as data available on quality. 
(5) The plan finder shall meet all relevant State 
laws and regulations, including laws and regulations 
related to the marketing of insurance products. In 
the case of a multi-State plan finder, the finder shall 
meet such laws and regulations for all of the States 
involved. 
(6) The plan finder shall meet solvency, finan-
cial, and privacy requirements established by the 
State or States in which the plan finder operates or 
the Secretary for multi-State finders. 
(7) The plan finder and the employees of the 
plan finder shall be appropriately licensed in the 
State or States in which the plan finder operates, if 
such licensure is required by such State or States. 
(8) Notwithstanding subsection (f)(1), the plan 
finder shall assist individuals who are eligible for the 
Medicaid program under title XIX of the Social Se-
curity Act or State Children’s Health Insurance Pro-
gram under title XXI of such Act by including infor-
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mation on Medicaid options, eligibility, and how to 
enroll. 
(d) REQUIREMENTS FOR PLANS PARTICIPATING IN 
A PLAN FINDER.— 
(1) IN GENERAL.—Each State shall ensure that 
health insurance plans participating in the State 
plan finder or in a multi-State plan finder meet the 
requirements of paragraph (2) (relating to adequacy 
of insurance coverage, consumer protection, and fi-
nancial strength). 
(2) SPECIFIC
REQUIREMENTS.—In order to 
participate in a plan finder, a health insurance plan 
must meet all of the following requirements, as de-
termined by each State in which such plan operates: 
(A) The health insurance plan shall be ac-
tuarially sound. 
(B) The health insurance plan may not 
have a history of abusive policy rescissions. 
(C) The health insurance plan shall meet 
financial and solvency requirements. 
(D) The health insurance plan shall dis-
close— 
(i) all financial arrangements involv-
ing the sale and purchase of health insur-
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ance, such as the payment of fees and 
commissions; and 
(ii) such arrangements may not be 
abusive. 
(E) The health insurance plan shall main-
tain electronic health records that comply with 
the requirements of the American Recovery and 
Reinvestment Act of 2009 (Public Law 111–5) 
related to electronic health records. 
(F) The health insurance plan shall make 
available to plan enrollees via the finder, wheth-
er by information provided to the finder or by 
a website link directing the enrollee from the 
finder to the health insurance plan website, 
data that includes the price and cost to the in-
dividual of services offered by a provider ac-
cording to the terms and conditions of the 
health plan. Data described in this paragraph is 
not made public by the finder, only made avail-
able to the individual once enrolled in the 
health plan. 
(e) PROHIBITIONS.— 
(1) DIRECT
ENROLLMENT.—The State plan 
finder may not directly enroll individuals in health 
insurance plans. 
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(2) CONFLICTS OF INTEREST.— 
(A) 
COMPANIES.—A 
health 
insurance 
issuer offering a health insurance plan through 
a plan finder may not— 
(i) be the private entity developing 
and maintaining a plan finder under sub-
sections (a) and (b); or 
(ii) have an ownership interest in such 
private entity or in the plan finder. 
(B) 
INDIVIDUALS.—An 
individual 
em-
ployed by a health insurance issuer offering a 
health insurance plan through a plan finder 
may not serve as a director or officer for— 
(i) the private entity developing and 
maintaining a plan finder under sub-
sections (a) and (b); or 
(ii) the plan finder. 
(f) CONSTRUCTION.—Nothing in this section shall be 
construed to allow the Secretary authority to regulate ben-
efit packages or to prohibit health insurance brokers and 
agents from— 
(1) utilizing the plan finder for any purpose; or 
(2) marketing or offering health insurance 
products. 
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(g) PLAN FINDER DEFINED.—For purposes of this 
section, the term ‘‘plan finder’’ means a State plan finder 
under subsection (a) or a multi-State plan finder under 
subsection (b). 
(h) STATE DEFINED.—In this section, the term 
‘‘State’’ has the meaning given such term for purposes of 
title XIX of the Social Security Act. 
TITLE III—EXPANDING CHOICES 
BY ALLOWING AMERICANS TO 
BUY 
HEALTH 
CARE 
COV-
ERAGE ACROSS STATE LINES 
SEC. 221. INTERSTATE PURCHASING OF HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.), as restored by sec-
tion 2, is amended by adding at the end the following new 
part: 
‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
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whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
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‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
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ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
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order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means the 50 
States and includes the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
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‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
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quests with reasonable explanations regarding 
their use. 
‘‘(K) Attempting to cancel a policy in less 
time than that prescribed in the policy or by the 
law of the primary State. 
‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 
and abuse’ means an act or omission committed by 
a person who, knowingly and with intent to defraud, 
commits, or conceals any material information con-
cerning, one or more of the following: 
‘‘(A) Presenting, causing to be presented 
or preparing with knowledge or belief that it 
will be presented to or by an insurer, a rein-
surer, broker or its agent, false information as 
part of, in support of or concerning a fact ma-
terial to one or more of the following: 
‘‘(i) An application for the issuance or 
renewal of an insurance policy or reinsur-
ance contract. 
‘‘(ii) The rating of an insurance policy 
or reinsurance contract. 
‘‘(iii) A claim for payment or benefit 
pursuant to an insurance policy or reinsur-
ance contract. 
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‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
‘‘(v) Payments made in accordance 
with the terms of an insurance policy or 
reinsurance contract. 
‘‘(vi) A document filed with the com-
missioner or the chief insurance regulatory 
official of another jurisdiction. 
‘‘(vii) The financial condition of an in-
surer or reinsurer. 
‘‘(viii) The formation, acquisition, 
merger, 
reconsolidation, 
dissolution 
or 
withdrawal from one or more lines of in-
surance or reinsurance in all or part of a 
State by an insurer or reinsurer. 
‘‘(ix) The issuance of written evidence 
of insurance. 
‘‘(x) The reinstatement of an insur-
ance policy. 
‘‘(B) Solicitation or acceptance of new or 
renewal insurance risks on behalf of an insurer 
reinsurer or other person engaged in the busi-
ness of insurance by a person who knows or 
should know that the insurer or other person 
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100 
responsible for the risk is insolvent at the time 
of the transaction. 
‘‘(C) Transaction of the business of insur-
ance in violation of laws requiring a license, cer-
tificate of authority or other legal authority for 
the transaction of the business of insurance. 
‘‘(D) Attempt to commit, aiding or abet-
ting in the commission of, or conspiracy to com-
mit the acts or omissions specified in this para-
graph. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by a health insurance issuer in the primary State 
and in any secondary State, but only if the coverage and 
issuer comply with the conditions of this section with re-
spect to the offering of coverage in any secondary State. 
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC-
ONDARY STATE.—Except as provided in this section, a 
health insurance issuer with respect to its offer, sale, rat-
ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, 
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101 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high risk pool assessments) which are levied on 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
by the National Association of Insurance 
Commissioners; and 
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102 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
health insurance issuer in the State is required 
to belong; 
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103 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
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104 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
THIS POLICY IS ISSUED BY lllll AND 
IS GOVERNED BY THE LAWS AND REGULA-
TIONS OF THE STATE OF lllll, AND IT 
HAS MET ALL THE LAWS OF THAT STATE 
AS DETERMINED BY THAT STATE’S DE-
PARTMENT OF INSURANCE. THIS POLICY 
MAY BE LESS EXPENSIVE THAN OTHERS 
BECAUSE IT IS NOT SUBJECT TO ALL OF 
THE INSURANCE LAWS AND REGULATIONS 
OF THE STATE OF lllll, INCLUDING 
COVERAGE OF SOME SERVICES OR BENE-
FITS MANDATED BY THE LAW OF THE 
STATE OF lllll. ADDITIONALLY, THIS 
POLICY IS NOT SUBJECT TO ALL OF THE 
CONSUMER PROTECTION LAWS OR RE-
STRICTIONS ON RATE CHANGES OF THE 
STATE OF lllll. AS WITH ALL INSUR-
ANCE PRODUCTS, BEFORE PURCHASING 
THIS POLICY, YOU SHOULD CAREFULLY 
REVIEW THE POLICY AND DETERMINE 
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105 
WHAT HEALTH CARE SERVICES THE POL-
ICY COVERS AND WHAT BENEFITS IT PRO-
VIDES, INCLUDING ANY EXCLUSIONS, LIM-
ITATIONS, OR CONDITIONS FOR SUCH 
SERVICES OR BENEFITS.’’. 
‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
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106 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
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107 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
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108 
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
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109 
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
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110 
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
erage under this part in such secondary State which has 
not adopted a qualified high risk pool as its acceptable 
alternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
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123 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to insurance pur-
chased after the date of the enactment of this Act in tax-
able years beginning after such date. 
TITLE V—TAX–RELATED HEALTH 
INCENTIVES 
SEC. 241. SECA TAX DEDUCTION FOR HEALTH INSURANCE 
COSTS. 
(a) IN GENERAL.—Subsection (l) of section 162 of 
the Internal Revenue Code of 1986 (relating to special 
rules for health insurance costs of self-employed individ-
uals) is amended by striking paragraph (4) and by redes-
ignating paragraph (5) as paragraph (4). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2010. 
SEC. 242. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 
COSTS OF INDIVIDUALS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions for individuals) is amended 
by redesignating section 224 as section 225 and by insert-
ing after section 223 the following new section: 
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136 
SEC. 313. STATUTE OF LIMITATIONS; STATUTE OF REPOSE. 
(a) STATUTE OF LIMITATIONS.—When an individual 
is injured or dies as the result of health care, the statute 
of limitations shall be as follows: 
(1) INDIVIDUALS OF AGE 12 AND OVER.—If the 
individual has attained the age of 12 years, the 
claim must be brought either— 
(A) within 2 years after the negligence oc-
curred; or 
(B) within 2 years after the health care on 
which the claim is based is completed. 
(2) INDIVIDUALS UNDER AGE 12.—If the indi-
vidual has not attained the age of 12 years, the 
claim must be brought before the individual attains 
the age of 14 years. 
(b) STATUTE OF REPOSE.—When an individual is in-
jured or dies as the result of health care, the statute of 
repose shall be as follows: The claim must be brought 
within 10 years after the act or omission on which the 
claim is based is completed. 
(c) TOLLING.— 
(1) STATUTE OF LIMITATIONS.—The statute of 
limitations required by subsection (a) may be tolled 
if applicable law so provides, except that it may not 
be tolled on the basis of minority. 
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144 
that would, as certified by a physician, place the 
woman in danger of death unless an abortion is per-
formed, including a life-endangering physical condi-
tion caused by or arising from the pregnancy itself. 
‘‘SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL 
COVERAGE. 
‘‘Nothing in this chapter shall be construed as pro-
hibiting any individual, entity, or State or locality from 
purchasing separate supplemental abortion plan or cov-
erage that includes abortion so long as such plan or cov-
erage is paid for entirely using only funds not authorized 
or appropriated by federal law and such plan or coverage 
shall not be purchased using matching funds required for 
a federally subsidized program, including a State’s or lo-
cality’s contribution of Medicaid matching funds. 
‘‘SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON- 
FEDERAL FUNDS FOR HEALTH COVERAGE. 
‘‘Nothing in this chapter shall be construed as re-
stricting the ability of any managed care provider or other 
organization from offering abortion coverage or the ability 
of a State to contract separately with such a provider or 
organization for such coverage with funds not authorized 
or appropriated by federal law and such plan or coverage 
shall not be purchased using matching funds required for 
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