I 
112TH CONGRESS 
1ST SESSION H. R. 3000 
To provide for incentives to encourage health insurance coverage, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 21, 2011 
Mr. PRICE of Georgia (for himself, Mr. BURTON of Indiana, Mr. WILSON of 
South Carolina, Mr. SESSIONS, and Mr. FLEMING) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Education and the Work-
force, Ways and Means, the Judiciary, Natural Resources, Rules, House 
Administration, Appropriations, Oversight and Government Reform, and 
the Budget, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To provide for incentives to encourage health insurance 
coverage, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Empowering Patients First Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
Sec. 2. Repeal of PPACA and health care-related HCERA provisions. 
TITLE I—TAX INCENTIVES FOR MAINTAINING HEALTH 
INSURANCE COVERAGE 
Sec. 101. Refundable tax credit for health insurance costs of low-income indi-
viduals. 
Sec. 102. Advance payment of credit as premium payment for qualified health 
insurance. 
Sec. 103. Election of tax credit instead of alternative government or group plan 
benefits. 
Sec. 104. Deduction for qualified health insurance costs of individuals. 
Sec. 105. Limitation on abortion funding. 
Sec. 106. No government discrimination against certain health care entities. 
Sec. 107. Equal employer contribution rule to promote choice. 
Sec. 108. Limitations on State restrictions on employer auto-enrollment. 
Sec. 109. Credit for small employers adopting auto-enrollment and defined con-
tribution options. 
Sec. 110. HSA modifications and clarifications. 
TITLE II—HEALTH INSURANCE POOLING MECHANISMS FOR 
INDIVIDUALS 
Subtitle A—Safety Net for Individuals With Pre-Existing Conditions 
Sec. 201. Requiring operation of high-risk pool or other mechanism as condi-
tion for availability of tax credit. 
Subtitle B—Federal Block Grants for State Insurance Expenditures 
Sec. 211. Federal block grants for State insurance expenditures. 
Subtitle C—Health Care Access and Availability 
Sec. 221. Expansion of access and choice through individual membership asso-
ciations (IMAs). 
Subtitle D—Small Business Health Fairness 
Sec. 231. Short title. 
Sec. 232. Rules governing association health plans. 
Sec. 233. Clarification of treatment of single employer arrangements. 
Sec. 234. Enforcement provisions relating to association health plans. 
Sec. 235. Cooperation between Federal and State authorities. 
Sec. 236. Effective date and transitional and other rules. 
TITLE III—INTERSTATE MARKET FOR HEALTH INSURANCE 
Sec. 301. Cooperative governing of individual health insurance coverage. 
TITLE IV—SAFETY NET REFORMS 
Sec. 401. Requiring outreach and coverage before expansion of eligibility. 
Sec. 402. Easing administrative barriers to State cooperation with employer- 
sponsored insurance coverage. 
Sec. 403. Improving beneficiary choice in SCHIP. 
TITLE V—MEDICAL LIABILITY REFORMS 
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Sec. 501. Short title. 
Sec. 502. Findings and purpose. 
Sec. 503. Encouraging speedy resolution of claims. 
Sec. 504. Compensating patient injury. 
Sec. 505. Maximizing patient recovery. 
Sec. 506. Additional health benefits. 
Sec. 507. Punitive damages. 
Sec. 508. Limitation on recovery in a health care lawsuit based on compliance 
with best practice guidelines. 
Sec. 509. State grants to create administrative health care tribunals. 
Sec. 510. Authorization of payment of future damages to claimants in health 
care lawsuits. 
Sec. 511. Definitions. 
Sec. 512. Effect on other laws. 
Sec. 513. State flexibility and protection of States’ rights. 
Sec. 514. Applicability; effective date. 
TITLE VI—WELLNESS AND PREVENTION 
Sec. 601. Providing financial incentives for treatment compliance. 
TITLE VII—TRANSPARENCY AND INSURANCE REFORM MEASURES 
Sec. 701. Receipt and response to requests for claim information. 
TITLE VIII—QUALITY 
Sec. 801. Prohibition on certain uses of data obtained from comparative effec-
tiveness research; accounting for personalized medicine and dif-
ferences in patient treatment response. 
Sec. 802. Establishment of performance-based quality measures. 
TITLE IX—STATE TRANSPARENCY PLAN PORTAL 
Sec. 901. Providing information on health coverage options and health care 
providers. 
TITLE X—PATIENT FREEDOM OF CHOICE 
Sec. 1001. Guaranteeing freedom of choice and contracting for patients under 
Medicare. 
Sec. 1002. Preemption of State laws limiting charges for eligible professional 
services. 
Sec. 1003. Health care provider licensure cannot be conditioned on participa-
tion in a health plan. 
Sec. 1004. Bad debt deduction for doctors to partially offset the cost of pro-
viding uncompensated care required to be provided under 
amendments made by the Emergency Medical Treatment and 
Labor Act. 
Sec. 1005. Right of contract with health care providers. 
TITLE XI—INCENTIVES TO REDUCE PHYSICIAN SHORTAGES 
Subtitle A—Federally Supported Student Loan Funds for Medical Students 
Sec. 1101. Federally supported student loan funds for medical students. 
Subtitle B—Loan Forgiveness for Primary Care Providers 
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Sec. 1111. Loan forgiveness for primary care providers. 
TITLE XII—QUALITY HEALTH CARE COALITION 
Sec. 1201. Quality Health Care Coalition. 
TITLE XIII—OFFSETS 
Subtitle A—Discretionary Spending Limits 
Sec. 1301. Discretionary spending limits. 
Subtitle B—Savings From Health Care Efficiencies 
Sec. 1311. Medicare DSH report and payment adjustments in response to cov-
erage expansion. 
Sec. 1312. Reduction in Medicaid DSH. 
Subtitle C—Fraud, Waste, and Abuse 
Sec. 1321. Provide adequate funding to HHS OIG and HCFAC. 
Sec. 1322. Improved enforcement of the Medicare secondary payor provisions. 
Sec. 1323. Strengthen Medicare provider enrollment standards and safeguards. 
Sec. 1324. Tracking banned providers across State lines. 
SEC. 2. REPEAL OF PPACA AND HEALTH CARE-RELATED 
HCERA PROVISIONS. 
(a) PPACA.—Effective as of the enactment of the 
Patient Protection and Affordable Care Act (Public Law 
111–148), such Act is repealed, and the provisions of law 
amended or repealed by such Act are restored or revived 
as if such Act had not been enacted. 
(b) HEALTH CARE-RELATED PROVISIONS IN THE 
HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 
2010.—Effective as of the enactment of the Health Care 
and Education Reconciliation Act of 2010 (Public Law 
111–152), title I and subtitle B of title II of such Act 
are repealed, and the provisions of law amended or re-
pealed by such title or subtitle, respectively, are restored 
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or revived as if such title and subtitle had not been en-
acted. 
TITLE I—TAX INCENTIVES FOR 
MAINTAINING 
HEALTH 
IN-
SURANCE COVERAGE 
SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSUR-
ANCE COSTS OF LOW-INCOME INDIVIDUALS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by insert-
ing after section 36A the following new section: 
‘‘SEC. 36B. HEALTH INSURANCE COSTS OF LOW-INCOME IN-
DIVIDUALS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by subtitle A the aggregate amount paid by the taxpayer 
for coverage of the taxpayer and the taxpayer’s qualifying 
family members under qualified health insurance for eligi-
ble coverage months beginning in the taxable year. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) for the taxable year shall 
not exceed the lesser of— 
‘‘(A) the sum of the monthly limitations 
for months during such taxable year that the 
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taxpayer or the taxpayer’s qualifying family 
members is an eligible individual, and 
‘‘(B) the aggregate premiums paid by the 
taxpayer for the taxable year for coverage de-
scribed in subsection (a). 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the credit percentage of 1⁄12 
of the sum of— 
‘‘(A) $2,000 for coverage of the taxpayer 
($4,000 in the case of a joint return for cov-
erage of the taxpayer and the taxpayer’s 
spouse), and 
‘‘(B) $500 for coverage of each dependent 
of the taxpayer. 
‘‘(3) CREDIT PERCENTAGE.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘credit percentage’ means 100 
percent reduced by 1 percentage point for each 
$1,000 (or fraction thereof) by which the tax-
payer’s adjusted gross income for the taxable 
year exceeds the threshold amount. 
‘‘(B) THRESHOLD AMOUNT.—For purposes 
of this paragraph, the term ‘threshold amount’ 
means, with respect to any taxpayer for any 
taxable year, 200 percent of the Federal pov-
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erty guideline (as determined by the Secretary 
of Health and Human Service for the taxable 
year) applicable to the taxpayer. 
‘‘(4) ONLY
DEPENDENTS
TAKEN
INTO
AC-
COUNT.—Not more than 2 dependents of the tax-
payer may be taken into account under paragraphs 
(2)(C) and (3)(B). 
‘‘(5) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 
2011, each dollar amount contained in paragraph 
(2) shall be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2010’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
Any increase determined under the preceding sen-
tence shall be rounded to the nearest multiple of 
$50. 
‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of 
this section, the term ‘eligible coverage month’ means, 
with respect to any individual, any month if, as of the first 
day of such month, the individual— 
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‘‘(B) is enrolled in the program under title 
XIX or XXI of such Act (other than under sec-
tion 1928 of such Act). 
‘‘(2) CERTAIN OTHER COVERAGE.—Such indi-
vidual— 
‘‘(A) is enrolled in a health benefits plan 
under chapter 89 of title 5, United States Code, 
‘‘(B) is entitled to receive benefits under 
chapter 55 of title 10, United States Code, 
‘‘(C) in entitled to receive benefits under 
chapter 17 of title 38, United States Code, or 
‘‘(D) is enrolled in a group health plan 
(within the meaning of section 5000(b)(1)) 
which is subsidized by the employer. 
‘‘(g) SPECIAL RULES.— 
‘‘(1) COORDINATION WITH ADVANCE PAYMENTS 
OF CREDIT; RECAPTURE OF EXCESS ADVANCE PAY-
MENTS.—With respect to any taxable year— 
‘‘(A) the amount which would (but for this 
subsection) be allowed as a credit to the tax-
payer under subsection (a) shall be reduced 
(but not below zero) by the aggregate amount 
paid on behalf of such taxpayer under section 
7529 for months beginning in such taxable 
year, and 
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‘‘(B) the tax imposed by section 1 for such 
taxable year shall be increased by the excess (if 
any) of— 
‘‘(i) the aggregate amount paid on be-
half of such taxpayer under section 7529 
for months beginning in such taxable year, 
over 
‘‘(ii) the amount which would (but for 
this subsection) be allowed as a credit to 
the taxpayer under subsection (a). 
‘‘(2) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—Amounts taken into account under sub-
section (a) shall not be taken into account in deter-
mining— 
‘‘(A) any deduction allowed under section 
162(l), 213, or 224, or 
‘‘(B) any credit allowed under section 35. 
‘‘(3) MEDICAL
AND
HEALTH
SAVINGS
AC-
COUNTS.—Amounts distributed from an Archer 
MSA (as defined in section 220(d)) or from a health 
savings account (as defined in section 223(d)) shall 
not be taken into account under subsection (a). 
‘‘(4) DENIAL OF CREDIT TO DEPENDENTS AND 
NONPERMANENT RESIDENT ALIEN INDIVIDUALS.— 
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No credit shall be allowed under this section to any 
individual who is— 
‘‘(A) not a citizen or lawful permanent 
resident of the United States for the calendar 
year in which the taxable year begins, or 
‘‘(B) a dependent with respect to another 
taxpayer for a taxable year beginning in the 
calendar year in which such individual’s taxable 
year begins. 
‘‘(5) INSURANCE WHICH COVERS OTHER INDI-
VIDUALS.—For purposes of this section, rules simi-
lar to the rules of section 213(d)(6) shall apply with 
respect to any contract for qualified health insurance 
under which amounts are payable for coverage of an 
individual other than the taxpayer and qualifying 
family members. 
‘‘(6) TREATMENT
OF
PAYMENTS.—For pur-
poses of this section— 
‘‘(A) PAYMENTS
BY
SECRETARY.—Pay-
ments made by the Secretary on behalf of any 
individual under section 7529 (relating to ad-
vance payment of credit for health insurance 
costs of low-income individuals) shall be treated 
as having been made by the taxpayer on the 
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first day of the month for which such payment 
was made. 
‘‘(B) PAYMENTS
BY
TAXPAYER.—Pay-
ments made by the taxpayer for eligible cov-
erage months shall be treated as having been 
made by the taxpayer on the first day of the 
month for which such payment was made. 
‘‘(7) REGULATIONS.—The Secretary may pre-
scribe such regulations and other guidance as may 
be necessary or appropriate to carry out this section, 
section 6050W, and section 7529.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting 
‘‘36B,’’ after ‘‘36A,’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 36A the following new item: 
‘‘Sec. 36B. Health insurance costs of low-income individuals.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
(d) SENSE OF CONGRESS.—It is the sense of Con-
gress that the cost of the advanceable refundable credit 
under sections 36B and 7529 of the Internal Revenue 
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Code of 1986, as added by this title, will be offset by sav-
ings derived from the provisions of title XIII. 
SEC. 102. ADVANCE PAYMENT OF CREDIT AS PREMIUM 
PAYMENT FOR QUALIFIED HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 (relating to miscellaneous provisions) 
is amended by adding at the end the following: 
‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT AS PREMIUM 
PAYMENT FOR QUALIFIED HEALTH INSUR-
ANCE. 
‘‘(a) GENERAL RULE.—Not later than January 1, 
2012, the Secretary shall establish a program for making 
payments to providers of qualified health insurance (as de-
fined in section 36B(e)) on behalf of taxpayers eligible for 
the credit under section 36B. Except as otherwise pro-
vided by the Secretary, such payments shall be made on 
the basis of the adjusted gross income of the taxpayer for 
the preceding taxable year. 
‘‘(b) CERTIFICATION PROCESS AND PROOF OF COV-
ERAGE.—For purposes of this section, payments may be 
made pursuant to subsection (a) only with respect to indi-
viduals for whom a qualified health insurance costs credit 
eligibility certificate is in effect.’’. 
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(b) DISCLOSURE
OF RETURN INFORMATION
FOR 
PURPOSES OF ADVANCE PAYMENT OF CREDIT AS PRE-
MIUMS FOR QUALIFIED HEALTH INSURANCE.— 
(1) IN
GENERAL.—Subsection (l) of section 
6103 of such Code is amended by adding at the end 
the following new paragraph: 
‘‘(21) DISCLOSURE OF RETURN INFORMATION 
FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT 
AS
PREMIUMS
FOR
QUALIFIED
HEALTH
INSUR-
ANCE.—The Secretary may, on behalf of taxpayers 
eligible for the credit under section 36B, disclose to 
a provider of qualified health insurance (as defined 
in section 36(e)), and persons acting on behalf of 
such provider, return information with respect to 
any such taxpayer only to the extent necessary (as 
prescribed by regulations issued by the Secretary) to 
carry out the program established by section 7529 
(relating to advance payment of credit as premium 
payment for qualified health insurance).’’. 
(2) CONFIDENTIALITY
OF
INFORMATION.— 
Paragraph (3) of section 6103(a) of such Code is 
amended by striking ‘‘or (20)’’ and inserting ‘‘(20), 
or (21)’’. 
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(3) UNAUTHORIZED
DISCLOSURE.—Paragraph 
(2) of section 7213(a) of such Code is amended by 
striking ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’. 
(c) INFORMATION REPORTING.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of such Code (relating 
to information concerning transactions with other 
persons) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR HEALTH 
INSURANCE COSTS OF LOW-INCOME INDIVID-
UALS. 
‘‘(a) REQUIREMENT OF REPORTING.—Every person 
who is entitled to receive payments for any month of any 
calendar year under section 7529 (relating to advance pay-
ment of credit as premium payment for qualified health 
insurance) with respect to any individual shall, at such 
time as the Secretary may prescribe, make the return de-
scribed in subsection (b) with respect to each such indi-
vidual. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, and 
‘‘(2) contains— 
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‘‘(A) the name, address, and TIN of each 
individual referred to in subsection (a), 
‘‘(B) the number of months for which 
amounts were entitled to be received with re-
spect to such individual under section 7529 (re-
lating to advance payment of credit as premium 
payment for qualified health insurance), 
‘‘(C) the amount entitled to be received for 
each such month, and 
‘‘(D) such other information as the Sec-
retary may prescribe. 
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required to be set forth in such return a written state-
ment showing— 
‘‘(1) the name and address of the person re-
quired to make such return and the phone number 
of the information contact for such person, and 
‘‘(2) the information required to be shown on 
the return with respect to such individual. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
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year following the calendar year for which the return 
under subsection (a) is required to be made.’’. 
(2) ASSESSABLE PENALTIES.— 
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code (relating to defini-
tions) is amended by striking ‘‘or’’ at the end 
of clause (xxii), by striking ‘‘and’’ at the end of 
clause (xxiii) and inserting ‘‘or’’, and by insert-
ing after clause (xxiii) the following new clause: 
‘‘(xxiv) section 6050X (relating to re-
turns relating to credit for health insur-
ance costs of low-income individuals), 
and’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code is amended by striking ‘‘or’’ at the 
end of subparagraph (EE), by striking the pe-
riod at the end of subparagraph (FF) and in-
serting ‘‘, or’’, and by adding after subpara-
graph (FF) the following new subparagraph: 
‘‘(GG) section 6050X (relating to returns 
relating to credit for health insurance costs of 
low-income individuals).’’. 
(d) CLERICAL AMENDMENTS.— 
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(1) The table of sections for chapter 77 of such 
Code is amended by adding at the end the following 
new item: 
‘‘Sec. 7529. Advance payment of credit as premium payment for qualified 
health insurance.’’. 
(2) The table of sections for subpart B of part 
III of subchapter A of chapter 61 of such Code is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6050X. Returns relating to credit for health insurance costs of low-in-
come individuals.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 103. ELECTION OF TAX CREDIT INSTEAD OF ALTER-
NATIVE GOVERNMENT OR GROUP PLAN BEN-
EFITS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, an individual who is otherwise eligible for ben-
efits under a health program (as defined in subsection (c)) 
may elect, in a form and manner specified by the Sec-
retary of Health and Human Services in consultation with 
the Secretary of the Treasury, to receive a tax credit de-
scribed in section 36B of the Internal Revenue Code of 
1986 (which may be used for the purpose of health insur-
ance coverage) in lieu of receiving any benefits under such 
program. 
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(b) EFFECTIVE DATE.—An election under subsection 
(a) may first be made for calendar year 2012 and any 
such election shall be effective for such period (not less 
than one calendar year) as the Secretary of Health and 
Human Services shall specify, in consultation with the 
Secretary of the Treasury. 
(c) HEALTH PROGRAM DEFINED.—For purposes of 
this section, the term ‘‘health program’’ means any of the 
following: 
(1) MEDICARE.—The Medicare program under 
part A of title XVIII of the Social Security Act. 
(2) MEDICAID.—The Medicaid program under 
title XIX of such Act (including such a program op-
erating under a Statewide waiver under section 1115 
of such Act). 
(3) SCHIP.—The State children’s health insur-
ance program under title XXI of such Act. 
(4) 
TRICARE.—The 
TRICARE 
program 
under chapter 55 of title 10, United States Code. 
(5) VETERANS BENEFITS.—Coverage for bene-
fits under chapter 17 of title 38, United States 
Code. 
(6) FEHBP.—Coverage under chapter 89 of 
title 5, United States Code. 
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(7) SUBSIDIZED GROUP HEALTH PLANS.—Cov-
erage under a group health plan (within the meaning 
of section 5000(b)(1)) which is subsidized by the 
employer. 
(d) OTHER
SOCIAL
SECURITY
BENEFITS
NOT 
WAIVED.—An election to waive the benefits described in 
subsection (c)(1) shall not result in the waiver of any other 
benefits under the Social Security Act. 
SEC. 104. 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) is amended by redesig-
nating section 224 as section 225 and by inserting after 
section 223 the following new section: 
‘‘SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a deduction an amount equal to 
the amount paid during the taxable year for coverage for 
the taxpayer, his spouse, and dependents under qualified 
health insurance. 
‘‘(b) LIMITATION.—In the case of any taxpayer for 
any taxable year, the deduction under subsection (a) shall 
not exceed an amount that would cause the taxpayer’s 
Federal income tax liability to be reduced by more than 
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the average value of the national health exclusion for em-
ployer sponsored insurance as determined by calculating 
the value of the exclusion for each household followed by 
calculating the average of those values. 
‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section, the term ‘qualified health insurance’ 
has the meaning given such term by section 36B(e). 
‘‘(d) SPECIAL RULES.— 
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION, ETC.—Any amount paid by a taxpayer for in-
surance to which subsection (a) applies shall not be 
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section 
162(l) or 213(a). Any amount taken into account in 
determining the credit allowed under section 35 or 
36B shall not be taken into account for purposes of 
this section. 
‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-
PLOYMENT
TAX
PURPOSES.—The deduction allow-
able by reason of this section shall not be taken into 
account in determining an individual’s net earnings 
from self-employment (within the meaning of section 
1402(a)) for purposes of chapter 2.’’. 
(b) DEDUCTION
ALLOWED
IN
COMPUTING
AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of 
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such Code is amended by inserting before the last sentence 
the following new paragraph: 
‘‘(22) COSTS
OF
QUALIFIED
HEALTH
INSUR-
ANCE.—The deduction allowed by section 224.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by redesignating the item relating to section 
224 as an item relating to section 225 and inserting before 
such item the following new item: 
‘‘Sec. 224. Costs of qualified health insurance.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 105. LIMITATION ON ABORTION FUNDING. 
No funds authorized under, or credits or deductions 
allowed under the Internal Revenue Code of 1986 by rea-
son of, this Act (or any amendment made by this Act) 
may be used to pay for any abortion or to cover any part 
of the costs of any health plan that includes coverage of 
abortion, except in the case where a woman suffers from 
a physical disorder, physical injury, or physical illness that 
would, as certified by a physician, place the woman in dan-
ger of death unless an abortion is performed, including 
a life-endangering physical condition caused by or arising 
from the pregnancy itself, or unless the pregnancy is the 
result of an act of rape or incest. 
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SEC. 106. NO GOVERNMENT DISCRIMINATION AGAINST 
CERTAIN HEALTH CARE ENTITIES. 
(a) NON-DISCRIMINATION.—A Federal agency or 
program, and any State or local government that receives 
Federal financial assistance under this Act or any amend-
ment made by this Act (either directly or indirectly), may 
not subject any individual or institutional health care enti-
ty to discrimination on the basis that the health care enti-
ty does not provide, pay for, provide coverage of, or refer 
for abortions. 
(b) HEALTH CARE ENTITY DEFINED.—For purposes 
of this section, the term ‘‘health care entity’’ includes an 
individual physician or other health care professional, a 
hospital, a provider-sponsored organization, a health 
maintenance organization, a health insurance plan, or any 
other kind of health care facility, organization, or plan. 
(c) REMEDIES.— 
(1) IN GENERAL.—The courts of the United 
States shall have jurisdiction to prevent and redress 
actual or threatened violations of this section by 
issuing any form of legal or equitable relief, includ-
ing— 
(A) injunctions prohibiting conduct that 
violates this section; and 
(B) orders preventing the disbursement of 
all or a portion of Federal financial assistance 
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to a State or local government, or to a specific 
offending agency or program of a State or local 
government, until such time as the conduct pro-
hibited by this section has ceased. 
(2) COMMENCEMENT
OF
ACTION.—An action 
under this subsection may be instituted by— 
(A) any health care entity that has stand-
ing to complain of an actual or threatened vio-
lation of this section; or 
(B) the Attorney General of the United 
States. 
(d) ADMINISTRATION.—The Secretary of Health and 
Human Services shall designate the Director of the Office 
for Civil Rights of the Department of Health and Human 
Services— 
(1) to receive complaints alleging a violation of 
this section; 
(2) subject to paragraph (3), to pursue the in-
vestigation of such complaints in coordination with 
the Attorney General; and 
(3) in the case of a complaint related to a Fed-
eral agency (other than with respect to the Depart-
ment of Health and Human Services) or program 
administered through such other agency or any 
State or local government receiving Federal financial 
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assistance through such other agency, to refer the 
complaint to the appropriate office of such other 
agency. 
SEC. 107. EQUAL EMPLOYER CONTRIBUTION RULE TO PRO-
MOTE CHOICE. 
(a) EXCISE TAX FOR FAILURE TO PROVIDE CON-
TRIBUTION ELECTION.—Section 5000 of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subsection: 
‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply in the case of a group health plan with respect 
to which the requirements of paragraphs (2) and (3) 
are met. 
‘‘(2) CONTRIBUTION ELECTION.—The require-
ment of this paragraph is met with respect to a 
group health plan if any employee of an employer 
(who but for this paragraph would be covered by 
such plan) may elect to have the employer or em-
ployee organization pay an amount which is not less 
than the contribution amount to any provider of 
health insurance coverage (other than excepted bene-
fits as defined in section 9832(c)) which constitutes 
medical care of the individual or individual’s spouse 
or dependents in lieu of such group health plan cov-
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erage otherwise provided or contributed to by the 
employer with respect to such employee. 
‘‘(3) PRE-EXISTING CONDITIONS.— 
‘‘(A) IN
GENERAL.—The requirement of 
this paragraph is met with respect to health in-
surance coverage provided to a participant or 
beneficiary by any health insurance issuer if, 
under such plan the requirements of section 
9801 are met with respect to the participant or 
beneficiary. 
‘‘(B) ENFORCEMENT
WITH
RESPECT
TO 
INDIVIDUAL ELECTION.—For purposes of sub-
paragraph (A), any health insurance coverage 
with respect to the participant or beneficiary 
shall be treated as health insurance coverage 
under a group health plan to which section 
9801 applies. 
‘‘(4) CONTRIBUTION
AMOUNT.—For purposes 
of this section, the term ‘contribution amount’ 
means, with respect to an individual under a group 
health plan, the portion of the applicable premium of 
such individual under such plan (as determined 
under section 4980B(f)(4)) which is not paid by the 
individual. In the case that the employer offers more 
than one group health plan, the contribution amount 
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shall be the average amount of the applicable pre-
miums under such plans. 
‘‘(5) GROUP HEALTH PLAN.—For purpose of 
this subsection, subsection (d) shall not apply. 
‘‘(6) 
APPLICATION
TO
FEHBP.—Notwith-
standing any other provision of law, the Office of 
Personnel Management shall carry out the health 
benefits program under chapter 89 of title 5, United 
States Code, consistent with the requirements of this 
subsection.’’. 
(b) REQUIREMENT OF EQUAL CONTRIBUTIONS TO 
ALL FEHBP PLANS.—Section 8906 of title 5, United 
States Code, is amended by adding at the end the fol-
lowing new subsection: 
‘‘(j) Notwithstanding the previous provisions of this 
section the Office of Personnel Management shall revise 
the amount of the Government contribution made under 
this section in a manner so that— 
‘‘(1) the amount of such contribution does not 
change based on the health benefits plan in which 
the individual is enrolled; and 
‘‘(2) the aggregate amount of such contribu-
tions is estimated to be equal to the aggregate 
amount of such contributions if this subsection did 
not apply.’’. 
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(c) ERISA CONFORMING AMENDMENTS.— 
(1) EXCEPTION
FROM
HIPAA
REQUIREMENTS 
FOR
BENEFITS
PROVIDED
UNDER
HEALTH
CARE 
CONTRIBUTION ELECTION.—Section 732 of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1191a) is amended by adding at the end the 
following new subsection: 
‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 
‘‘(1) IN GENERAL.—The requirements of this 
part shall not apply in the case of health insurance 
coverage (other than excepted benefits as defined in 
section 9832(c) of the Internal Revenue Code of 
1986)— 
‘‘(A) which is provided to a participant or 
beneficiary by a health insurance issuer under 
a group health plan, and 
‘‘(B) with respect to which the require-
ments of paragraphs (2) and (3) are met. 
‘‘(2) CONTRIBUTION ELECTION.—The require-
ment of this paragraph is met with respect to health 
insurance coverage provided to a participant or ben-
eficiary by any health insurance issuer under a 
group health plan if, under such plan— 
‘‘(A) the participant may elect such cov-
erage for any period of coverage in lieu of 
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health insurance coverage otherwise provided 
under such plan for such period, and 
‘‘(B) in the case of such an election, the 
plan sponsor is required to pay to such issuer 
for the elected coverage for such period an 
amount which is not less than the contribution 
amount for such health insurance coverage oth-
erwise provided under such plan for such pe-
riod. 
‘‘(3) PRE-EXISTING CONDITIONS.— 
‘‘(A) IN
GENERAL.—The requirement of 
this paragraph is met with respect to health in-
surance coverage provided to a participant or 
beneficiary by any health insurance issuer if, 
under such plan the requirements of section 
701 are met with respect to the participant or 
beneficiary. 
‘‘(B) ENFORCEMENT
WITH
RESPECT
TO 
INDIVIDUAL ELECTION.—For purposes of sub-
paragraph (A), any health insurance coverage 
with respect to the participant or beneficiary 
shall be treated as health insurance coverage 
under a group health plan to which section 701 
applies. 
‘‘(4) CONTRIBUTION AMOUNT.— 
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‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘contribution amount’ means, 
with respect to any period of health insurance 
coverage offered to a participant or beneficiary, 
the portion of the applicable premium of such 
participant or beneficiary under such plan 
which is not paid by such participant or bene-
ficiary. In the case that the employer offers 
more than one group health plan, the contribu-
tion amount shall be the average amount of the 
applicable premiums under such plans. 
‘‘(B) APPLICABLE
PREMIUM.—For pur-
poses of subparagraph (A), the term ‘applicable 
premium’ means, with respect to any period of 
health insurance coverage of a participant or 
beneficiary under a group health plan, the cost 
to the plan for such period of such coverage for 
similarly situated beneficiaries (without regard 
to whether such cost is paid by the plan spon-
sor or the participant or beneficiary).’’. 
(2) EXEMPTION FROM FIDUCIARY LIABILITY.— 
Section 404 of such Act (29 U.S.C. 1104) is amend-
ed by adding at the end the following new sub-
section: 
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‘‘(e) The plan sponsor of a group health plan (as de-
fined in section 733(a)) shall not be treated as breaching 
any of the responsibilities, obligations, or duties imposed 
upon fiduciaries by this title in the case of any individual 
who is a participant or beneficiary under such plan solely 
because of the extent to which the plan sponsor provides, 
in the case of such individual, some or all of such benefits 
by means of payment of contribution amounts pursuant 
to a contribution election under section 732(e), irrespec-
tive of the amount or type of benefits that would otherwise 
be provided to such individual under such plan.’’. 
(d) EXCEPTION
FROM
HIPAA REQUIREMENTS 
UNDER IRC FOR BENEFITS PROVIDED UNDER HEALTH 
CARE CONTRIBUTION ELECTION.—Section 9831 of the 
Internal Revenue Code of 1986 (relating to general excep-
tions) is amended by adding at the end the following new 
subsection: 
‘‘(d) HEALTH CARE CONTRIBUTION ELECTION.— 
‘‘(1) IN GENERAL.—The requirements of this 
chapter shall not apply in the case of health insur-
ance coverage (other than excepted benefits as de-
fined in section 9832(c))— 
‘‘(A) which is provided to a participant or 
beneficiary by a health insurance issuer under 
a group health plan, and 
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‘‘(B) with respect to which the require-
ments of paragraphs (2) and (3) are met. 
‘‘(2) CONTRIBUTION ELECTION.—The require-
ment of this paragraph is met with respect to health 
insurance coverage provided to a participant or ben-
eficiary by any health insurance issuer under a 
group health plan if, under such plan— 
‘‘(A) the participant may elect such cov-
erage for any period of coverage in lieu of 
health insurance coverage otherwise provided 
under such plan for such period, and 
‘‘(B) in the case of such an election, the 
plan sponsor is required to pay to such issuer 
for the elected coverage for such period an 
amount which is not less than the contribution 
amount for such health insurance coverage oth-
erwise provided under such plan for such pe-
riod. 
‘‘(3) PRE-EXISTING CONDITIONS.— 
‘‘(A) IN
GENERAL.—The requirement of 
this paragraph is met with respect to health in-
surance coverage provided to a participant or 
beneficiary by any health insurance issuer if, 
under such plan the requirements of section 
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9801 are met with respect to the participant or 
beneficiary. 
‘‘(B) ENFORCEMENT
WITH
RESPECT
TO 
INDIVIDUAL ELECTION.—For purposes of sub-
paragraph (A), any health insurance coverage 
with respect to the participant or beneficiary 
shall be treated as health insurance coverage 
under a group health plan to which section 
9801 applies. 
‘‘(4) CONTRIBUTION AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘contribution amount’ 
means, with respect to any period of health in-
surance coverage offered to a participant or 
beneficiary, the portion of the applicable pre-
mium of such participant or beneficiary under 
such plan which is not paid by such participant 
or beneficiary. In the case that the employer of-
fers more than one group health plan, the con-
tribution amount shall be the average amount 
of the applicable premiums under such plans. 
‘‘(B) APPLICABLE
PREMIUM.—For pur-
poses of subparagraph (A), the term ‘applicable 
premium’ means, with respect to any period of 
health insurance coverage of a participant or 
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beneficiary under a group health plan, the cost 
to the plan for such period of such coverage for 
similarly situated beneficiaries (without regard 
to whether such cost is paid by the plan spon-
sor or the participant or beneficiary).’’. 
(e) EXCEPTION
FROM
HIPAA REQUIREMENTS 
UNDER THE PHSA FOR BENEFITS PROVIDED UNDER 
HEALTH CARE CONTRIBUTION ELECTION.—Section 2721 
of the Public Health Service Act (42 U.S.C. 300gg–21) 
is amended— 
(1) by redesignating subsection (e) as sub-
section (f); and 
(2) by inserting after subsection (d) the fol-
lowing new subsection: 
‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 
‘‘(1) IN GENERAL.—The requirements of sub-
parts 1 through 3 shall not apply in the case of 
health insurance coverage (other than excepted bene-
fits as defined in section 9832(c) of the Internal 
Revenue Code of 1986)— 
‘‘(A) which is provided to a participant or 
beneficiary by a health insurance issuer under 
a group health plan, and 
‘‘(B) with respect to which the require-
ments of paragraphs (2) and (3) are met. 
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‘‘(2) CONTRIBUTION ELECTION.—The require-
ment of this paragraph is met with respect to health 
insurance coverage provided to a participant or ben-
eficiary by any health insurance issuer under a 
group health plan if, under such plan— 
‘‘(A) the participant may elect such cov-
erage for any period of coverage in lieu of 
health insurance coverage otherwise provided 
under such plan for such period, and 
‘‘(B) in the case of such an election, the 
plan sponsor is required to pay to such issuer 
for the elected coverage for such period an 
amount which is not less than the contribution 
amount for such health insurance coverage oth-
erwise provided under such plan for such pe-
riod. 
‘‘(3) PRE-EXISTING CONDITIONS.— 
‘‘(A) IN
GENERAL.—The requirement of 
this paragraph is met with respect to health in-
surance coverage provided to a participant or 
beneficiary by any health insurance issuer if, 
under such plan the requirements of section 
2701 are met with respect to the participant or 
beneficiary. 
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‘‘(B) ENFORCEMENT
WITH
RESPECT
TO 
INDIVIDUAL ELECTION.—For purposes of sub-
paragraph (A), any health insurance coverage 
with respect to the participant or beneficiary 
shall be treated as health insurance coverage 
under a group health plan to which section 
2701 applies. 
‘‘(4) CONTRIBUTION AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘contribution amount’ means, 
with respect to any period of health insurance 
coverage offered to a participant or beneficiary, 
the portion of the applicable premium of such 
participant or beneficiary under such plan 
which is not paid by such participant or bene-
ficiary. In the case that the employer offers 
more than one group health plan, the contribu-
tion amount shall be the average amount of the 
applicable premiums under such plans. 
‘‘(B) APPLICABLE
PREMIUM.—For pur-
poses of subparagraph (A), the term ‘applicable 
premium’ means, with respect to any period of 
health insurance coverage of a participant or 
beneficiary under a group health plan, the cost 
to the plan for such period of such coverage for 
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similarly situated beneficiaries (without regard 
to whether such cost is paid by the plan spon-
sor or the participant or beneficiary).’’. 
SEC. 108. LIMITATIONS ON STATE RESTRICTIONS ON EM-
PLOYER AUTO-ENROLLMENT. 
(a) IN GENERAL.—No State shall establish a law 
that prevents an employer from instituting auto-enroll-
ment which meets the requirements of subsection (b) for 
coverage of a participant or beneficiary under a group 
health plan, or health insurance coverage offered in con-
nection with such a plan, so long as the participant or 
beneficiary has the option of declining such coverage. 
(b) AUTOMATIC
ENROLLMENT
FOR
EMPLOYER 
SPONSORED HEALTH BENEFITS.— 
(1) IN GENERAL.—The requirement of this sub-
section with respect to an employer and an employee 
is that the employer automatically enroll such em-
ployee into the employment-based health benefits 
plan for individual coverage under the plan option 
with the lowest applicable employee premium. 
(2) OPT-OUT.—In no case may an employer 
automatically enroll an employee in a plan under 
paragraph (1) if such employee makes an affirmative 
election to opt-out of such plan or to elect coverage 
under an employment-based health benefits plan of-
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fered by such employer. An employer shall provide 
an employee with a 30-day period to make such an 
affirmative election before the employer may auto-
matically enroll the employee in such a plan. 
(3) NOTICE REQUIREMENTS.— 
(A) IN
GENERAL.—Each employer de-
scribed in paragraph (1) who automatically en-
rolls an employee into a plan as described in 
such paragraph shall provide the employees, 
within a reasonable period before the beginning 
of each plan year (or, in the case of new em-
ployees, within a reasonable period before the 
end of the enrollment period for such a new em-
ployee), written notice of the employees’ rights 
and obligations relating to the automatic enroll-
ment requirement under such paragraph. Such 
notice must be comprehensive and understood 
by the average employee to whom the automatic 
enrollment requirement applies. 
(B) INCLUSION
OF
SPECIFIC
INFORMA-
TION.—The written notice under subparagraph 
(A) must explain an employee’s right to opt out 
of being automatically enrolled in a plan and in 
the case that more than one level of benefits or 
employee premium level is offered by the em-
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ployer involved, the notice must explain which 
level of benefits and employee premium level the 
employee will be automatically enrolled in the 
absence of an affirmative election by the em-
ployee. 
(c) CONSTRUCTION.—Nothing in this section shall be 
construed to supersede State law which establishes, imple-
ments, or continues in effect any standard or requirement 
relating to employers in connection with payroll or the 
sponsoring of employer sponsored health insurance cov-
erage except to the extent that such standard or require-
ment prevents an employer from instituting the auto-en-
rollment described in subsection (a). 
(d) NON-APPLICATION TO EXCEPTED BENEFITS.— 
For purposes of this section, the term ‘‘group health plan’’ 
does not include excepted benefits (as defined in section 
2781(c) of the Public Health Service Act (42 U.S.C. 
300gg–91(c)). 
SEC. 109. CREDIT FOR SMALL EMPLOYERS ADOPTING 
AUTO-ENROLLMENT 
AND 
DEFINED 
CON-
TRIBUTION OPTIONS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business-related credits) is amended by 
adding at the end the following new section: 
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‘‘SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBU-
TION OPTION FOR HEALTH BENEFITS PLANS 
OF SMALL EMPLOYERS. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of a small employer, the health benefits plan im-
plementation credit determined under this section for the 
taxable year is an amount equal to 100 percent of the 
amount paid or incurred by the taxpayer during the tax-
able year for qualified health benefits expenses. 
‘‘(b) LIMITATION.—The credit determined under sub-
section (a) with respect to any taxpayer for any taxable 
year shall not exceed the excess of— 
‘‘(1) $1,500, over 
‘‘(2) sum of the credits determined under sub-
section (a) with respect to such taxpayer for all pre-
ceding taxable years. 
‘‘(c) QUALIFIED HEALTH BENEFITS EXPENSES.— 
For purposes of this section, the term ‘qualified health 
benefits auto-enrollment expenses’ means, with respect to 
any taxable year, amounts paid or incurred by the tax-
payer during such taxable year for— 
‘‘(1) establishing auto-enrollment which meets 
the requirements of section 107 of the Empowering 
Patients First Act for coverage of a participant or 
beneficiary under a group health plan, or health in-
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surance coverage offered in connection with such a 
plan, and 
‘‘(2) implementing the employer contribution 
option for health insurance coverage pursuant to 
section 5000(e)(2). 
‘‘(d) QUALIFIED SMALL EMPLOYER.—For purposes 
of this section, the term ‘qualified small employer’ means 
any employer for any taxable year if the number of em-
ployees employed by such employer during such taxable 
year does not exceed 50. All employers treated as a single 
employer under section (a) or (b) of section 52 shall be 
treated as a single employer for purposes of this section. 
‘‘(e) NO DOUBLE BENEFIT.—No deduction or credit 
shall be allowed under any other provision of this chapter 
with respect to the amount of the credit determined under 
this section. 
‘‘(f) TERMINATION.—Subsection (a) shall not apply 
to any taxable year beginning after the date which is 2 
years after the date of the enactment of this section.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to general business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (34), by striking the period 
at the end of paragraph (35) and inserting ‘‘, plus’’ , and 
by adding at the end the following new paragraph: 
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‘‘(36) in the case of a small employer (as de-
fined in section 45R(d)), the health benefits plan im-
plementation 
credit 
determined 
under 
section 
45R(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 45Q the following new item: 
‘‘Sec. 45R. Auto-enrollment and defined contribution option for health benefits 
plans of small employers.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 110. HSA MODIFICATIONS AND CLARIFICATIONS. 
(a) CLARIFICATION OF TREATMENT OF CAPITATED 
PRIMARY CARE PAYMENTS AS AMOUNTS PAID FOR MED-
ICAL CARE.—Section 213(d) of the Internal Revenue Code 
of 1986 (relating to definitions) is amended by adding at 
the end the following new paragraph: 
‘‘(12) TREATMENT
OF
CAPITATED
PRIMARY 
CARE PAYMENTS.—Capitated primary care payments 
shall be treated as amounts paid for medical care.’’. 
(b) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR 
VETERANS
OR
INDIAN
HEALTH
BENEFITS.—Section 
223(c)(1) of such Code (defining eligible individual) is 
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amended by adding at the end the following new subpara-
graph: 
‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI-
GIBLE FOR VETERANS OR INDIAN HEALTH BEN-
EFITS.—For purposes of subparagraph (A)(ii), 
an individual shall not be treated as covered 
under a health plan described in such subpara-
graph merely because the individual receives 
periodic hospital care or medical services under 
any law administered by the Secretary of Vet-
erans Affairs or the Bureau of Indian Affairs.’’. 
(c) CERTAIN PHYSICIAN FEES TO BE TREATED AS 
MEDICAL CARE.—Section 213(d) of such Code is amend-
ed by adding at the end the following new paragraph: 
‘‘(13) PRE-PAID PHYSICIAN FEES.—The term 
‘medical care’ shall include amounts paid by patients 
to their primary physician in advance for the right 
to receive medical services on an as-needed basis.’’. 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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TITLE II—HEALTH INSURANCE 
POOLING MECHANISMS FOR 
INDIVIDUALS 
Subtitle A—Safety Net for Individ-
uals With Pre-Existing Condi-
tions 
SEC. 201. REQUIRING OPERATION OF HIGH-RISK POOL OR 
OTHER 
MECHANISM 
AS 
CONDITION 
FOR 
AVAILABILITY OF TAX CREDIT. 
No credit shall be allowed under section 36B of the 
Internal Revenue Code of 1986 (relating to health insur-
ance costs of low-income individuals) to the residents of 
any State unless such State meets the following require-
ments: 
(1) The State must implement a high-risk pool 
or a reinsurance pool or other risk-adjustment mech-
anism (as defined in section 211(h)). 
(2) Assessments levied by the State for pur-
poses of funding such a pool or mechanism must 
only be used for funding and administering such 
pool or mechanism. 
(3) Such pool or mechanism must incorporate 
the application of such tax credit into such pool or 
mechanism. 
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Subtitle B—Federal Block Grants 
for State Insurance Expenditures 
SEC. 211. FEDERAL BLOCK GRANTS FOR STATE INSURANCE 
EXPENDITURES. 
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, each State shall receive from the Sec-
retary of Health and Human Services (in this subtitle re-
ferred to as the ‘‘Secretary’’) a block grant for the State’s 
providing for the use, in connection with providing health 
benefits coverage, of a qualifying high-risk pool or a rein-
surance pool or other risk-adjustment mechanism used for 
the purpose of subsidizing the purchase of private health 
insurance. 
(b) FUNDING AMOUNT.— 
(1) IN
GENERAL.—There are hereby appro-
priated, out of any funds in the Treasury not other-
wise appropriated, $300,000,000 for fiscal year 
2012 and each subsequent fiscal year for block 
grants under this section. Such amount shall be di-
vided among the States as determined by the Sec-
retary. 
(2) CONSTRUCTION.—Nothing in this section 
shall be construed as preventing a State from using 
funding under section 2745 of the Public Health 
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Service Act for purposes of funding reinsurance or 
other risk mechanisms. 
(c) LIMITATION.—Funding under subsection (a) may 
only be used for the following: 
(1) QUALIFYING HIGH-RISK POOLS.— 
(A) CURRENT POOLS.—A qualifying high- 
risk pool created before the date of the enact-
ment of this Act that only cover high-risk popu-
lations and individuals (and their spouse and 
dependents) receiving a health care tax credit 
under section 35 of the Internal Revenue Code 
of 1986 for a limited period of time as deter-
mined by the Secretary or under section 2741 
of Public Health Service Act. 
(B) NEW POOLS.—A qualifying high-risk 
pool created on or after such date that only cov-
ers populations and individuals described in 
subparagraph (A) if the pool— 
(i) offers at least the option of one or 
more high-deductible plan options, in com-
bination with a contribution into a health 
savings account; 
(ii) offers multiple competing health 
plan options; and 
(iii) covers only high-risk populations. 
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(2) RISK INSURANCE POOL OR OTHER RISK-AD-
JUSTMENT MECHANISMS.— 
(A) CURRENT REINSURANCE.—A reinsur-
ance pool, or other risk-adjustment mechanism, 
created before the date of the enactment of this 
Act that only covers populations and individuals 
described in paragraph (1)(A). 
(B) NEW POOLS.—A reinsurance pool or 
other risk-adjustment mechanism created on or 
after such date that provides reinsurance only 
covers populations and individuals described in 
paragraph (1)(A) and only on a prospective 
basis under which a health insurance issuer 
cedes covered lives to the pool in exchange for 
payment of a reinsurance premium. 
(3) TRANSITION.—Nothing in this section shall 
be construed as preventing a State from using funds 
available to transition from an existing high-risk 
pool to a reinsurance pool. 
(d) BONUS
PAYMENTS.—With respect to any 
amounts made available to the States under this section, 
the Secretary shall set aside a portion of such amounts 
that shall only be available for the following activities by 
such States: 
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(1) Providing guaranteed availability of indi-
vidual health insurance coverage to certain individ-
uals with prior group coverage under part B of title 
XXVII of the Public Health Service Act. 
(2) A reduction in premium trends, actual pre-
miums, or other cost-sharing requirements. 
(3) An expansion or broadening of the pool of 
high-risk individuals eligible for coverage. 
(4) States that adopt the Model Health Plan 
for Uninsurable Individuals Act of the National As-
sociation of Insurance Commissioners (if and when 
updated by such Association). 
The Secretary may request such Association to update 
such Model Health Plan as needed by 2013. 
(e) ADMINISTRATION.—The Secretary shall provide 
for the administration of this section and may establish 
such terms and conditions, including the requirement of 
an application, as may be appropriate to carry out this 
section. 
(f) CONSTRUCTION.—Nothing in this section shall be 
construed as requiring a State to operate a reinsurance 
pool (or other risk-adjustment mechanism) under this sec-
tion or as preventing a State from operating such a pool 
or mechanism through one or more private entities. 
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(g) QUALIFYING HIGH-RISK POOL.—For purposes of 
this section, the term ‘‘qualifying high-risk pool’’ means 
any qualified high-risk pool (as defined in subsection 
(g)(1)(A) of section 2745) of the Public Health Service 
Act) that meets the conditions to receive a grant under 
section (b)(1) of such section. 
(h) REINSURANCE POOL OR OTHER RISK-ADJUST-
MENT MECHANISM DEFINED.—For purposes of this sec-
tion, the term ‘‘reinsurance pool or other risk-adjustment 
mechanism’’ means any State-based risk spreading mecha-
nism to subsidize the purchase of private health insurance 
for the high-risk population. 
(i) HIGH-RISK POPULATION.—For purposes of this 
section, the term ‘‘high-risk population’’ means— 
(1) individuals who, by reason of the existence 
or history of a medical condition, are able to acquire 
health coverage only at rates which are at least 150 
percent of the standard risk rates for such coverage 
(in a non-community-rated non-guaranteed issue 
State), and 
(2) individuals who are provided health cov-
erage by a high-risk pool. 
(j) STATE DEFINED.—For purposes of this section, 
the term ‘‘State’’ includes the District of Columbia, Puer-
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to Rico, the Virgin Islands, Guam, American Samoa, and 
the Northern Mariana Islands. 
(k) EXTENDING FUNDING.—Section 2745(d)(2) of 
the Public Health Service Act (42 U.S.C. 300gg–45(d)(2)) 
is amended by striking ‘‘2010’’ and inserting ‘‘2014’’ each 
place it appears. 
Subtitle C—Health Care Access and 
Availability 
SEC. 221. EXPANSION OF ACCESS AND CHOICE THROUGH 
INDIVIDUAL 
MEMBERSHIP 
ASSOCIATIONS 
(IMAS). 
The Public Health Service Act, as amended by sec-
tion 2, is further amended by inserting after title XXX 
the following new title: 
‘‘TITLE XXXI—INDIVIDUAL 
MEMBERSHIP ASSOCIATIONS 
‘‘SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP AS-
SOCIATION (IMA). 
‘‘(a) IN GENERAL.—For purposes of this title, the 
terms ‘individual membership association’ and ‘IMA’ 
mean a legal entity that meets the following requirements: 
‘‘(1) ORGANIZATION.—The IMA is an organiza-
tion operated under the direction of an association 
(as defined in section 3104(1)). 
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‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.— 
‘‘(A) DIFFERENT GROUPS.—The IMA, in 
conjunction with those health insurance issuers 
that offer health benefits coverage through the 
IMA, makes available health benefits coverage 
in the manner described in subsection (b) to all 
members of the IMA and the dependents of 
such members in the manner described in sub-
section (c)(2) at rates that are established by 
the health insurance issuer on a policy or prod-
uct specific basis and that may vary only as 
permissible under State law. 
‘‘(B) NONDISCRIMINATION
IN
COVERAGE 
OFFERED.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the IMA may not offer health benefits 
coverage to a member of an IMA unless 
the same coverage is offered to all such 
members of the IMA. 
‘‘(ii) 
CONSTRUCTION.—Nothing 
in 
this title shall be construed as requiring or 
permitting a health insurance issuer to 
provide coverage outside the service area of 
the issuer, as approved under State law, or 
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requiring a health insurance issuer from 
excluding or limiting the coverage on any 
individual, subject to the requirement of 
section 2741. 
‘‘(C) NO FINANCIAL UNDERWRITING.—The 
IMA provides health benefits coverage only 
through contracts with health insurance issuers 
and does not assume insurance risk with re-
spect to such coverage. 
‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 
shall be construed as preventing the establishment 
and operation of more than one IMA in a geographic 
area or as limiting the number of IMAs that may 
operate in any area. 
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES 
TO PURCHASERS.— 
‘‘(A) IN GENERAL.—The IMA may provide 
administrative services for members. Such serv-
ices may include accounting, billing, and enroll-
ment information. 
‘‘(B) CONSTRUCTION.—Nothing in this 
subsection shall be construed as preventing an 
IMA from serving as an administrative service 
organization to any entity. 
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‘‘(5) FILING
INFORMATION.—The IMA files 
with the Secretary information that demonstrates 
the IMA’s compliance with the applicable require-
ments of this title. 
‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.— 
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage 
offered through an IMA shall— 
‘‘(A) be underwritten by a health insurance 
issuer that— 
‘‘(i) is licensed (or otherwise regu-
lated) under State law, 
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 3002(b), and 
‘‘(B) subject to paragraph (2), be approved 
or otherwise permitted to be offered under 
State law. 
‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 
benefits coverage made available through an IMA 
may include, but is not limited to, any of the fol-
lowing if it meets the other applicable requirements 
of this title: 
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‘‘(A) Coverage through a health mainte-
nance organization. 
‘‘(B) Coverage in connection with a pre-
ferred provider organization. 
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization. 
‘‘(D) Indemnity coverage through an insur-
ance company. 
‘‘(E) Coverage offered in connection with a 
contribution into a medical savings account or 
flexible spending account. 
‘‘(F) Coverage that includes a point-of- 
service option. 
‘‘(G) Any combination of such types of 
coverage. 
‘‘(3) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as 
precluding a health insurance issuer offering health 
benefits coverage through an IMA from establishing 
premium discounts or rebates for members or from 
modifying 
otherwise 
applicable 
copayments 
or 
deductibles in return for adherence to programs of 
health promotion and disease prevention so long as 
such programs are agreed to in advance by the IMA 
and comply with all other provisions of this title and 
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do not discriminate among similarly situated mem-
bers. 
‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.— 
‘‘(1) MEMBERS.— 
‘‘(A) IN
GENERAL.—Under rules estab-
lished to carry out this title, with respect to an 
individual who is a member of an IMA, the in-
dividual may enroll for health benefits coverage 
(including coverage for dependents of such indi-
vidual) offered by a health insurance issuer 
through the IMA. 
‘‘(B) RULES FOR ENROLLMENT.—Nothing 
in this paragraph shall preclude an IMA from 
establishing rules of enrollment and reenroll-
ment of members. Such rules shall be applied 
consistently to all members within the IMA and 
shall not be based in any manner on health sta-
tus-related factors. 
‘‘(2) HEALTH INSURANCE ISSUERS.—The con-
tract between an IMA and a health insurance issuer 
shall provide, with respect to a member enrolled with 
health benefits coverage offered by the issuer 
through the IMA, for the payment of the premiums 
collected by the issuer. 
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‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS. 
‘‘State laws insofar as they relate to any of the fol-
lowing are superseded and shall not apply to health bene-
fits coverage made available through an IMA: 
‘‘(1) Benefit requirements for health benefits 
coverage offered through an IMA, including (but not 
limited to) requirements relating to coverage of spe-
cific providers, specific services or conditions, or the 
amount, duration, or scope of benefits, but not in-
cluding requirements to the extent required to imple-
ment title XXVII or other Federal law and to the 
extent the requirement prohibits an exclusion of a 
specific disease from such coverage. 
‘‘(2) Any other requirements (including limita-
tions on compensation arrangements) that, directly 
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through an 
IMA, if the IMA meets the requirements of this 
title. 
Any State law or regulation relating to the composition 
or organization of an IMA is preempted to the extent the 
law or regulation is inconsistent with the provisions of this 
title. 
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‘‘SEC. 3103. ADMINISTRATION. 
‘‘(a) IN GENERAL.—The Secretary shall administer 
this title and is authorized to issue such regulations as 
may be required to carry out this title. Such regulations 
shall be subject to Congressional review under the provi-
sions of chapter 8 of title 5, United States Code. The Sec-
retary shall incorporate the process of ‘deemed file and 
use’ with respect to the information filed under section 
3001(a)(5)(A) and shall determine whether information 
filed by an IMA demonstrates compliance with the applica-
ble requirements of this title. The Secretary shall exercise 
authority under this title in a manner that fosters and 
promotes the development of IMAs in order to improve 
access to health care coverage and services. 
‘‘(b) PERIODIC REPORTS.—The Secretary shall sub-
mit to Congress a report every 30 months, during the 10- 
year period beginning on the effective date of the rules 
promulgated by the Secretary to carry out this title, on 
the effectiveness of this title in promoting coverage of un-
insured individuals. The Secretary may provide for the 
production of such reports through one or more contracts 
with appropriate private entities. 
‘‘SEC. 3104. DEFINITIONS. 
‘‘For purposes of this title: 
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‘‘(1) ASSOCIATION.—The term ‘association’ 
means, with respect to health insurance coverage of-
fered in a State, a legal entity which— 
‘‘(A) has been actively in existence for at 
least 5 years; 
‘‘(B) has been formed and maintained in 
good faith for purposes other than obtaining in-
surance; 
‘‘(C) does not condition membership in the 
association on any health status-related factor 
relating to an individual (including an employee 
of an employer or a dependent of an employee); 
and 
‘‘(D) does not make health insurance cov-
erage offered through the association available 
other than in connection with a member of the 
association. 
‘‘(2) DEPENDENT.—The term ‘dependent’, as 
applied to health insurance coverage offered by a 
health insurance issuer licensed (or otherwise regu-
lated) in a State, shall have the meaning applied to 
such term with respect to such coverage under the 
laws of the State relating to such coverage and such 
an issuer. Such term may include the spouse and 
children of the individual involved. 
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‘‘(3) HEALTH BENEFITS COVERAGE.—The term 
‘health benefits coverage’ has the meaning given the 
term 
health 
insurance 
coverage 
in 
section 
2791(b)(1), and does not include excepted benefits 
(as defined in section 2791(c)). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2). 
‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
given such term in section 2791(d)(9). 
‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA-
TION.—The terms ‘IMA’ and ‘individual membership 
association’ are defined in section 3101(a). 
‘‘(7) MEMBER.—The term ‘member’ means, 
with respect to an IMA, an individual who is a mem-
ber of the association to which the IMA is offering 
coverage.’’. 
Subtitle D—Small Business Health 
Fairness 
SEC. 231. SHORT TITLE. 
This subtitle may be cited as the ‘‘Small Business 
Health Fairness Act of 2011’’. 
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SEC. 
232. 
RULES 
GOVERNING 
ASSOCIATION 
HEALTH 
PLANS. 
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding after part 7 the following new part: 
‘‘PART 8—RULES GOVERNING ASSOCIATION 
HEALTH PLANS 
‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 
‘‘(a) IN GENERAL.—For purposes of this part, the 
term ‘association health plan’ means a group health plan 
whose sponsor is (or is deemed under this part to be) de-
scribed in subsection (b). 
‘‘(b) SPONSORSHIP.—The sponsor of a group health 
plan is described in this subsection if such sponsor— 
‘‘(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 
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1986)), for substantial purposes other than that of 
obtaining or providing 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 in the sponsor; and 
‘‘(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 
not condition such dues or payments on the basis of 
group health plan participation. 
Any sponsor consisting of an association of entities which 
meet the requirements of paragraphs (1), (2), and (3) 
shall be deemed to be a sponsor described in this sub-
section. 
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH 
PLANS. 
‘‘(a) IN GENERAL.—The applicable authority shall 
prescribe by regulation a procedure under which, subject 
to subsection (b), the applicable authority shall certify as-
sociation health plans which apply for certification as 
meeting the requirements of this part. 
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‘‘(b) STANDARDS.—Under the procedure prescribed 
pursuant to subsection (a), in the case of an association 
health plan that provides at least one benefit option which 
does not consist of health insurance coverage, the applica-
ble authority shall certify such plan as meeting the re-
quirements of this part only if the applicable authority is 
satisfied that the applicable requirements of this part are 
met (or, upon the date on which the plan is to commence 
operations, will be met) with respect to the plan. 
‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED 
PLANS.—An association health plan with respect to which 
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date 
of certification (or, if later, on the date on which the plan 
is to commence operations). 
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion for continued certification of association health plans 
under this part. 
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED 
PLANS.—The applicable authority shall establish a class 
certification procedure for association health plans under 
which all benefits consist of health insurance coverage. 
Under such procedure, the applicable authority shall pro-
vide for the granting of certification under this part to 
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the plans in each class of such association health plans 
upon appropriate filing under such procedure in connec-
tion with plans in such class and payment of the pre-
scribed fee under section 807(a). 
‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION 
HEALTH PLANS.—An association health plan which offers 
one or more benefit options which do not consist of health 
insurance coverage may be certified under this part only 
if such plan consists of any of the following: 
‘‘(1) a plan which offered such coverage on the 
date of the enactment of the Small Business Health 
Fairness Act of 2011, 
‘‘(2) a plan under which the sponsor does not 
restrict membership to one or more trades and busi-
nesses or industries and whose eligible participating 
employers represent a broad cross-section of trades 
and businesses or industries, or 
‘‘(3) a plan whose eligible participating employ-
ers represent one or more trades or businesses, or 
one or more industries, consisting of any of the fol-
lowing: agriculture; equipment and automobile deal-
erships; barbering and cosmetology; certified public 
accounting practices; child care; construction; dance, 
theatrical and orchestra productions; disinfecting 
and pest control; financial services; fishing; food 
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service establishments; hospitals; labor organiza-
tions; logging; manufacturing (metals); mining; med-
ical and dental practices; medical laboratories; pro-
fessional consulting services; sanitary services; trans-
portation (local and freight); warehousing; whole-
saling/distributing; or any other trade or business or 
industry which has been indicated as having average 
or above-average risk or health claims experience by 
reason of State rate filings, denials of coverage, pro-
posed premium rate levels, or other means dem-
onstrated by such plan in accordance with regula-
tions. 
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 
BOARDS OF TRUSTEES. 
‘‘(a) SPONSOR.—The requirements of this subsection 
are met with respect to an association 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 an association 
health plan if the following requirements are met: 
‘‘(1) FISCAL CONTROL.—The plan is operated, 
pursuant to a trust agreement, by a board of trust-
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ees which 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 
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, 
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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 
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 an association 
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health plan which is in existence on the 
date of the enactment of the Small Busi-
ness Health Fairness Act of 2011. 
‘‘(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 a service provider to administer the 
day-to-day affairs of the plan. 
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 
the case of a group health plan which is established and 
maintained by a franchiser for a franchise network con-
sisting of 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 franchiser were 
deemed to be the sponsor referred to in section 
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee 
were deemed to be a member (of the association and 
the sponsor) referred to in section 801(b); and 
‘‘(2) the requirements of section 804(a)(1) shall 
be deemed met. 
The Secretary may by regulation define for purposes of 
this subsection the terms ‘franchiser’, ‘franchise network’, 
and ‘franchisee’. 
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‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE-
MENTS. 
‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 
requirements of this subsection are met with respect to 
an association health plan if, under the terms of the 
plan— 
‘‘(1) each participating employer must be— 
‘‘(A) a member of the sponsor, 
‘‘(B) the sponsor, or 
‘‘(C) an affiliated member of the sponsor 
with respect to which the requirements of sub-
section (b) are met, 
except that, in the case of a sponsor which is a pro-
fessional association or other individual-based asso-
ciation, if at least one of the officers, directors, or 
employees of an employer, or at least one of the in-
dividuals who are partners in an employer and who 
actively participates in the business, is a member or 
such an affiliated member of the sponsor, partici-
pating 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 
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employees of, or partners in, participating em-
ployers; or 
‘‘(B) the beneficiaries of individuals de-
scribed in subparagraph (A). 
‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM-
PLOYEES.—In the case of an association health plan in 
existence on the date of the enactment of the Small Busi-
ness Health Fairness Act of 2011, an affiliated member 
of the sponsor of the plan may be offered coverage under 
the plan as a participating employer only if— 
‘‘(1) the affiliated member was an affiliated 
member on the date of certification under this part; 
or 
‘‘(2) during the 12-month period preceding the 
date of the offering of such coverage, the affiliated 
member has not maintained or contributed to a 
group health plan with respect to any of its employ-
ees who would otherwise be eligible to participate in 
such association health plan. 
‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to an 
association health plan if, under the terms of the plan, 
no participating employer may provide health insurance 
coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
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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. 
‘‘(d) PROHIBITION
OF DISCRIMINATION AGAINST 
EMPLOYERS
AND EMPLOYEES ELIGIBLE TO PARTICI-
PATE.—The requirements of this subsection are met with 
respect to an association 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) upon request, any employer eligible to par-
ticipate is furnished information regarding all cov-
erage options available under the plan; and 
‘‘(3) the applicable requirements of sections 
701, 702, and 703 are met with respect to the plan. 
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‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 
DOCUMENTS, CONTRIBUTION RATES, AND 
BENEFIT OPTIONS. 
‘‘(a) IN GENERAL.—The requirements of this section 
are met with respect to an association health plan if the 
following requirements are met: 
‘‘(1) 
CONTENTS
OF
GOVERNING
INSTRU-
MENTS.—The instruments governing the plan in-
clude a written instrument, meeting the require-
ments of an instrument required under section 
402(a)(1), which— 
‘‘(A) provides that the board of trustees 
serves as the named fiduciary required for plans 
under section 402(a)(1) and serves in the ca-
pacity of a plan administrator (referred to in 
section 3(16)(A)); 
‘‘(B) provides that the sponsor of the plan 
is to serve as plan sponsor (referred to in sec-
tion 3(16)(B)); and 
‘‘(C) incorporates the requirements of sec-
tion 806. 
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.— 
‘‘(A) The contribution rates for any par-
ticipating small employer do not vary on the 
basis of any health status-related factor in rela-
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tion to employees of such employer or their 
beneficiaries and do not vary on the basis of the 
type of business or industry in which such em-
ployer is engaged. 
‘‘(B) Nothing in this title or any other pro-
vision of law shall be construed to preclude an 
association health plan, or a health insurance 
issuer offering health insurance coverage in 
connection with an association health plan, 
from— 
‘‘(i) setting contribution rates based 
on the claims experience of the plan; or 
‘‘(ii) varying contribution rates for 
small employers in a State to the extent 
that such rates could vary using the same 
methodology employed in such State for 
regulating premium rates in the small 
group market with respect to health insur-
ance coverage offered in connection with 
bona fide associations (within the meaning 
of section 2791(d)(3) of the Public Health 
Service Act), 
subject to the requirements of section 702(b) 
relating to contribution rates. 
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‘‘(3) FLOOR FOR NUMBER OF COVERED INDI-
VIDUALS
WITH
RESPECT
TO
CERTAIN
PLANS.—If 
any benefit option under the plan does not consist 
of health insurance coverage, the plan has as of the 
beginning of the plan year not fewer than 1,000 par-
ticipants and beneficiaries. 
‘‘(4) MARKETING REQUIREMENTS.— 
‘‘(A) IN
GENERAL.—If a benefit option 
which consists of health insurance coverage is 
offered under the plan, State-licensed insurance 
agents shall be used to distribute to small em-
ployers coverage which does not consist of 
health insurance coverage in a manner com-
parable to the manner in which such agents are 
used to distribute health insurance coverage. 
‘‘(B) 
STATE-LICENSED
INSURANCE 
AGENTS.—For purposes of subparagraph (A), 
the term ‘State-licensed insurance agents’ 
means one or more agents who are licensed in 
a State and are subject to the laws of such 
State relating to licensure, qualification, test-
ing, examination, and continuing education of 
persons authorized to offer, sell, or solicit 
health insurance coverage in such State. 
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‘‘(5) 
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 ASSOCIATION HEALTH PLANS TO 
DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 
nothing in this part or any provision of State law (as de-
fined in section 514(c)(1)) shall be construed to preclude 
an association health plan, or a health insurance issuer 
offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion 
in selecting the specific items and services consisting of 
medical care to be included as benefits under such plan 
or coverage, except (subject to section 514) in the case 
of (1) any law to the extent that it is not preempted under 
section 731(a)(1) with respect to matters governed by sec-
tion 711, 712, or 713, or (2) any law of the State with 
which filing and approval of a policy type offered by the 
plan was initially obtained to the extent that such law pro-
hibits an exclusion of a specific disease from such cov-
erage. 
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‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 
FOR 
SOLVENCY 
FOR 
PLANS 
PROVIDING 
HEALTH BENEFITS IN ADDITION TO HEALTH 
INSURANCE COVERAGE. 
‘‘(a) IN GENERAL.—The requirements of this section 
are met with respect to an association health plan if— 
‘‘(1) the benefits under the plan consist solely 
of health insurance coverage; or 
‘‘(2) if the plan provides any additional benefit 
options which do not consist of health insurance cov-
erage, the plan— 
‘‘(A) establishes and maintains reserves 
with respect to such additional benefit options, 
in amounts recommended by the qualified 
health actuary, consisting of— 
‘‘(i) a reserve sufficient for unearned 
contributions; 
‘‘(ii) a reserve sufficient for benefit li-
abilities which have been incurred, which 
have not been satisfied, and for which risk 
of loss has not yet been transferred, and 
for expected administrative costs with re-
spect to such benefit liabilities; 
‘‘(iii) a reserve sufficient for any other 
obligations of the plan; and 
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‘‘(iv) a reserve sufficient for a margin 
of error and other fluctuations, taking into 
account the specific circumstances of the 
plan; and 
‘‘(B) establishes and maintains aggregate 
and specific excess/stop loss insurance and sol-
vency indemnification, with respect to such ad-
ditional benefit options for which risk of loss 
has not yet been transferred, as follows: 
‘‘(i) The plan shall secure aggregate 
excess/stop loss insurance for the plan with 
an attachment point which is not greater 
than 125 percent of expected gross annual 
claims. The applicable authority may by 
regulation provide for upward adjustments 
in the amount of such percentage in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
serves in excess of the amounts required 
under subparagraph (A). 
‘‘(ii) The plan shall secure specific ex-
cess/stop loss insurance for the plan with 
an attachment point which is at least equal 
to an amount recommended by the plan’s 
qualified health actuary. The applicable 
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authority may by regulation provide for ad-
justments in the amount of such insurance 
in specified circumstances in which the 
plan specifically provides for and maintains 
reserves in excess of the amounts required 
under subparagraph (A). 
‘‘(iii) The plan shall secure indem-
nification insurance for any claims which 
the plan is unable to satisfy by reason of 
a plan termination. 
Any person issuing to a plan insurance described in clause 
(i), (ii), or (iii) of subparagraph (B) shall notify the Sec-
retary of any failure of premium payment meriting can-
cellation of the policy prior to undertaking such a cancella-
tion. Any regulations prescribed by the applicable author-
ity pursuant to clause (i) or (ii) of subparagraph (B) may 
allow for such adjustments in the required levels of excess/ 
stop loss insurance as the qualified health actuary may 
recommend, taking into account the specific circumstances 
of the plan. 
‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS 
RESERVES.—In the case of any association health plan de-
scribed in subsection (a)(2), the requirements of this sub-
section are met if the plan establishes and maintains sur-
plus in an amount at least equal to— 
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‘‘(1) $500,000, or 
‘‘(2) such greater amount (but not greater than 
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority, considering the 
level of aggregate and specific excess/stop loss insur-
ance provided with respect to such plan and other 
factors related to solvency risk, such as the plan’s 
projected levels of participation or claims, the nature 
of the plan’s liabilities, and the types of assets avail-
able to assure that such liabilities are met. 
‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 
any association health plan described in subsection (a)(2), 
the applicable authority may provide such additional re-
quirements relating to reserves, excess/stop loss insurance, 
and indemnification insurance as the applicable authority 
considers appropriate. Such requirements may be provided 
by regulation with respect to any such plan or any class 
of such plans. 
‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR-
ANCE.—The applicable authority may provide for adjust-
ments to the levels of reserves otherwise required under 
subsections (a) and (b) with respect to any plan or class 
of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans. 
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‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 
applicable authority may permit an association health plan 
described in subsection (a)(2) to substitute, for all or part 
of the requirements of this section (except subsection 
(a)(2)(B)(iii)), such security, guarantee, hold-harmless ar-
rangement, or other financial arrangement as the applica-
ble authority determines to be adequate to enable the plan 
to fully meet all its financial obligations on a timely basis 
and is otherwise no less protective of the interests of par-
ticipants and beneficiaries than the requirements for 
which it is substituted. The applicable authority may take 
into account, for purposes of this subsection, evidence pro-
vided by the plan or sponsor which demonstrates an as-
sumption of liability with respect to the plan. Such evi-
dence may be in the form of a contract of indemnification, 
lien, bonding, insurance, letter of credit, recourse under 
applicable terms of the plan in the form of assessments 
of participating employers, security, or other financial ar-
rangement. 
‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT 
OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 
‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO-
CIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—In the case of an as-
sociation health plan described in subsection 
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(a)(2), the requirements of this subsection are 
met if the plan makes payments into the Asso-
ciation Health Plan Fund under this subpara-
graph when they are due. Such payments shall 
consist of annual payments in the amount of 
$5,000, and, in addition to such annual pay-
ments, such supplemental payments as the Sec-
retary may determine to be necessary under 
paragraph (2). Payments under this paragraph 
are payable to the Fund at the time determined 
by the Secretary. Initial payments are due in 
advance of certification under this part. Pay-
ments shall continue to accrue until a plan’s as-
sets are distributed pursuant to a termination 
procedure. 
‘‘(B) PENALTIES FOR FAILURE TO MAKE 
PAYMENTS.—If any payment is not made by a 
plan when it is due, a late payment charge of 
not more than 100 percent of the payment 
which was not timely paid shall be payable by 
the plan to the Fund. 
‘‘(C) CONTINUED
DUTY
OF
THE
SEC-
RETARY.—The Secretary shall not cease to 
carry out the provisions of paragraph (2) on ac-
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count of the failure of a plan to pay any pay-
ment when due. 
‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE 
EXCESS/STOP LOSS INSURANCE COVERAGE AND IN-
DEMNIFICATION
INSURANCE
COVERAGE
FOR
CER-
TAIN PLANS.—In any case in which the applicable 
authority determines that there is, or that there is 
reason to believe that there will be: (A) a failure to 
take necessary corrective actions under section 
809(a) with respect to an association health plan de-
scribed in subsection (a)(2); or (B) a termination of 
such a plan under section 809(b) or 810(b)(8) (and, 
if the applicable authority is not the Secretary, cer-
tifies such determination to the Secretary), the Sec-
retary shall determine the amounts necessary to 
make payments to an insurer (designated by the 
Secretary) to maintain in force excess/stop loss in-
surance coverage or indemnification insurance cov-
erage for such plan, if the Secretary determines that 
there is a reasonable expectation that, without such 
payments, claims would not be satisfied by reason of 
termination of such coverage. The Secretary shall, to 
the extent provided in advance in appropriation 
Acts, pay such amounts so determined to the insurer 
designated by the Secretary. 
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‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—There is established 
on the books of the Treasury a fund to be 
known as the ‘Association Health Plan Fund’. 
The Fund shall be available for making pay-
ments pursuant to paragraph (2). The Fund 
shall be credited with payments received pursu-
ant to paragraph (1)(A), penalties received pur-
suant to paragraph (1)(B), and earnings on in-
vestments of amounts of the Fund under sub-
paragraph (B). 
‘‘(B) INVESTMENT.—Whenever the Sec-
retary determines that the moneys of the fund 
are in excess of current needs, the Secretary 
may request the investment of such amounts as 
the Secretary determines advisable by the Sec-
retary of the Treasury in obligations issued or 
guaranteed by the United States. 
‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 
of this section— 
‘‘(1) AGGREGATE
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘aggregate excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
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‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
ment to the plan with respect to aggregate 
claims under the plan in excess of an amount 
or amounts specified in such contract; 
‘‘(B) which is guaranteed renewable; and 
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(2) SPECIFIC
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘specific excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
ment to the plan with respect to claims under 
the plan in connection with a covered individual 
in excess of an amount or amounts specified in 
such contract in connection with such covered 
individual; 
‘‘(B) which is guaranteed renewable; and 
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‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 
of this section, the term ‘indemnification insurance’ 
means, in connection with an association health plan, a 
contract— 
‘‘(1) under which an insurer (meeting such min-
imum standards as the applicable authority may pre-
scribe by regulation) provides for payment to the 
plan with respect to claims under the plan which the 
plan is unable to satisfy by reason of a termination 
pursuant to section 809(b) (relating to mandatory 
termination); 
‘‘(2) which is guaranteed renewable and 
noncancellable for any reason (except as the applica-
ble authority may prescribe by regulation); and 
‘‘(3) which allows for payment of premiums by 
any third party on behalf of the insured plan. 
‘‘(i) RESERVES.—For purposes of this section, the 
term ‘reserves’ means, in connection with an association 
health plan, plan assets which meet the fiduciary stand-
ards under part 4 and such additional requirements re-
garding liquidity as the applicable authority may prescribe 
by regulation. 
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‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 
‘‘(1) IN GENERAL.—Within 90 days after the 
date of the enactment of the Small Business Health 
Fairness Act of 2011, the applicable authority shall 
establish a Solvency Standards Working Group. In 
prescribing the initial regulations under this section, 
the applicable authority shall take into account the 
recommendations of such Working Group. 
‘‘(2) MEMBERSHIP.—The Working Group shall 
consist of not more than 15 members appointed by 
the applicable authority. The applicable authority 
shall include among persons invited to membership 
on the Working Group at least one of each of the 
following: 
‘‘(A) A representative of the National As-
sociation of Insurance Commissioners. 
‘‘(B) A representative of the American 
Academy of Actuaries. 
‘‘(C) A representative of the State govern-
ments, or their interests. 
‘‘(D) A representative of existing self-in-
sured arrangements, or their interests. 
‘‘(E) A representative of associations of 
the type referred to in section 801(b)(1), or 
their interests. 
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‘‘(F) A representative of multiemployer 
plans that are group health plans, or their in-
terests. 
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS. 
‘‘(a) FILING FEE.—Under the procedure prescribed 
pursuant to section 802(a), an association 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 association 
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 
‘‘(B) the members of the board of trustees 
of the plan. 
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‘‘(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 and contract administrators and other service 
providers. 
‘‘(6) FUNDING REPORT.—In the case of asso-
ciation health plans providing benefits options in ad-
dition to health insurance coverage, a report setting 
forth information with respect to such additional 
benefit options determined as of a date within the 
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120-day period ending with the date of the applica-
tion, including the following: 
‘‘(A) RESERVES.—A statement, certified 
by the board of trustees of the plan, and a 
statement of actuarial opinion, signed by a 
qualified health actuary, that all applicable re-
quirements of section 806 are or will be met in 
accordance with regulations which the applica-
ble authority shall prescribe. 
‘‘(B) 
ADEQUACY
OF
CONTRIBUTION 
RATES.—A statement of actuarial opinion, 
signed by a qualified health actuary, which sets 
forth a description of the extent to which con-
tribution rates are adequate to provide for the 
payment of all obligations and the maintenance 
of required reserves under the plan for the 12- 
month period beginning with such date within 
such 120-day period, taking into account the 
expected coverage and experience of the plan. If 
the contribution rates are not fully adequate, 
the statement of actuarial opinion shall indicate 
the extent to which the rates are inadequate 
and the changes needed to ensure adequacy. 
‘‘(C) CURRENT AND PROJECTED VALUE OF 
ASSETS AND LIABILITIES.—A statement of ac-
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tuarial opinion signed by a qualified health ac-
tuary, which sets forth the current value of the 
assets and liabilities accumulated under the 
plan and a projection of the assets, liabilities, 
income, and expenses of the plan for the 12- 
month period referred to in subparagraph (B). 
The income statement shall identify separately 
the plan’s administrative expenses and claims. 
‘‘(D) 
COSTS
OF
COVERAGE
TO
BE 
CHARGED
AND
OTHER
EXPENSES.—A state-
ment of the costs of coverage to be charged, in-
cluding an itemization of amounts for adminis-
tration, reserves, and other expenses associated 
with the operation of the plan. 
‘‘(E) OTHER
INFORMATION.—Any other 
information as may be determined by the appli-
cable authority, by regulation, as necessary to 
carry out the purposes of this part. 
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to an 
association health plan shall not be effective unless written 
notice of such certification is filed with the applicable 
State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are 
located. For purposes of this subsection, an individual 
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shall be considered to be located in the State in which a 
known address of such individual is located or in which 
such individual is employed. 
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 
of any association 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. 
‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS-
SOCIATION HEALTH PLANS.—An association health plan 
certified under this part which provides benefit options in 
addition to health insurance coverage for such plan year 
shall meet the requirements of section 103 by filing an 
annual report under such section which shall include infor-
mation described in subsection (b)(6) with respect to the 
plan year and, notwithstanding section 104(a)(1)(A), shall 
be filed with the applicable authority not later than 90 
days after the close of the plan year (or on such later date 
as may be prescribed by the applicable authority). The ap-
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plicable authority may require by regulation such interim 
reports as it considers appropriate. 
‘‘(f) ENGAGEMENT OF QUALIFIED HEALTH ACTU-
ARY.—The board of trustees of each association health 
plan which provides benefits options in addition to health 
insurance coverage and which is applying for certification 
under this part or is certified under this part shall engage, 
on behalf of all participants and beneficiaries, a qualified 
health actuary who shall be responsible for the preparation 
of the materials comprising information necessary to be 
submitted by a qualified health actuary under this part. 
The qualified health actuary shall utilize such assumptions 
and techniques as are necessary to enable such actuary 
to form an opinion as to whether the contents of the mat-
ters reported under this part— 
‘‘(1) are in the aggregate reasonably related to 
the experience of the plan and to reasonable expecta-
tions; and 
‘‘(2) represent such actuary’s best estimate of 
anticipated experience under the plan. 
The opinion by the qualified health actuary shall be made 
with respect to, and shall be made a part of, the annual 
report. 
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‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION. 
‘‘Except as provided in section 809(b), an association 
health plan which is or has been certified under this part 
may terminate (upon or at any time after cessation of ac-
cruals 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; 
‘‘(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. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION. 
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified 
under this part and which provides benefits other than 
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health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of 
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the 
board determines that there is reason to believe that there 
is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so 
notifies the board, the board shall immediately notify the 
qualified health actuary engaged by the plan, and such 
actuary shall, not later than the end of the next following 
month, make such recommendations to the board for cor-
rective action as the actuary determines necessary to en-
sure compliance with section 806. Not later than 30 days 
after receiving from the actuary recommendations for cor-
rective actions, the board shall notify the applicable au-
thority (in such form and manner as the applicable au-
thority may prescribe by regulation) of such recommenda-
tions of the actuary for corrective action, together with 
a description of the actions (if any) that the board has 
taken or plans to take in response to such recommenda-
tions. The board shall thereafter report to the applicable 
authority, in such form and frequency as the applicable 
authority may specify to the board, regarding corrective 
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action taken by the board until the requirements of section 
806 are met. 
‘‘(b) MANDATORY TERMINATION.—In any case in 
which— 
‘‘(1) the applicable authority has been notified 
under subsection (a) (or by an issuer of excess/stop 
loss insurance or indemnity insurance pursuant to 
section 806(a)) of a failure of an association health 
plan which is or has been certified under this part 
and is described in section 806(a)(2) to meet the re-
quirements of section 806 and has not been notified 
by the board of trustees of the plan that corrective 
action has restored compliance with such require-
ments; and 
‘‘(2) the applicable authority determines that 
there is a reasonable expectation that the plan will 
continue to fail to meet the requirements of section 
806, 
the board of trustees of the plan shall, at the direction 
of the applicable authority, terminate the plan and, in the 
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any 
claims referred to in section 806(a)(2)(B)(iii) and recov-
ering for the plan any liability under subsection 
(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
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that the affairs of the plan will be, to the maximum extent 
possible, wound up in a manner which will result in timely 
provision of all benefits for which the plan is obligated. 
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO 
HEALTH INSURANCE COVERAGE. 
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR 
INSOLVENT PLANS.—Whenever the Secretary determines 
that an association health plan which is or has been cer-
tified under this part and which is described in section 
806(a)(2) will be unable to provide benefits when due or 
is otherwise in a financially hazardous condition, as shall 
be defined by the Secretary by regulation, the Secretary 
shall, upon notice to the plan, apply to the appropriate 
United States district court for appointment of the Sec-
retary as trustee to administer the plan for the duration 
of the insolvency. The plan may appear as a party and 
other interested persons may intervene in the proceedings 
at the discretion of the court. The court shall appoint such 
Secretary trustee if the court determines that the trustee-
ship is necessary to protect the interests of the partici-
pants and beneficiaries or providers of medical care or to 
avoid any unreasonable deterioration of the financial con-
dition of the plan. The trusteeship of such Secretary shall 
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continue until the conditions described in the first sen-
tence of this subsection are remedied or the plan is termi-
nated. 
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 
appointment as trustee under subsection (a), shall have 
the power— 
‘‘(1) to do any act authorized by the plan, this 
title, or other applicable provisions of law to be done 
by the plan administrator or any trustee of the plan; 
‘‘(2) to require the transfer of all (or any part) 
of the assets and records of the plan to the Sec-
retary as trustee; 
‘‘(3) to invest any assets of the plan which the 
Secretary holds in accordance with the provisions of 
the plan, regulations prescribed by the Secretary, 
and applicable provisions of law; 
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee 
organization representing plan participants to fur-
nish any information with respect to the plan which 
the Secretary as trustee may reasonably need in 
order to administer the plan; 
‘‘(5) to collect for the plan any amounts due the 
plan and to recover reasonable expenses of the trust-
eeship; 
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‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the 
plan; 
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation or required by any order of the 
court; 
‘‘(8) to terminate the plan (or provide for its 
termination in accordance with section 809(b)) and 
liquidate the plan assets, to restore the plan to the 
responsibility of the sponsor, or to continue the 
trusteeship; 
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and 
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the 
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical 
care. 
‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the 
Secretary shall give notice of such appointment to— 
‘‘(1) the sponsor and plan administrator; 
‘‘(2) each participant; 
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‘‘(3) each participating employer; and 
‘‘(4) if applicable, each employee organization 
which, for purposes of collective bargaining, rep-
resents plan participants. 
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be 
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject 
to the same duties as those of a trustee under section 704 
of title 11, United States Code, and shall have the duties 
of a fiduciary for purposes of this title. 
‘‘(e) OTHER PROCEEDINGS.—An application by the 
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of 
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve, 
or liquidate such plan or its property, or any proceeding 
to enforce a lien against property of the plan. 
‘‘(f) JURISDICTION OF COURT.— 
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance 
of a decree under this section, the court to which the 
application is made shall have exclusive jurisdiction 
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with 
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the purposes of this section, of a court of the United 
States having jurisdiction over cases under chapter 
11 of title 11, United States Code. Pending an adju-
dication under this section such court shall stay, and 
upon appointment by it of the Secretary as trustee, 
such court shall continue the stay of, any pending 
mortgage foreclosure, equity receivership, or other 
proceeding to reorganize, conserve, or liquidate the 
plan, the sponsor, or property of such plan or spon-
sor, and any other suit against any receiver, conser-
vator, or trustee of the plan, the sponsor, or prop-
erty of the plan or sponsor. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary as trustee, the court may stay any proceeding 
to enforce a lien against property of the plan or the 
sponsor or any other suit against the plan or the 
sponsor. 
‘‘(2) VENUE.—An action under this section 
may be brought in the judicial district where the 
sponsor or the plan administrator resides or does 
business or where any asset of the plan is situated. 
A district court in which such action is brought may 
issue process with respect to such action in any 
other judicial district. 
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100 
‘‘(g) PERSONNEL.—In accordance with regulations 
which shall be prescribed by the Secretary, the Secretary 
shall appoint, retain, and compensate accountants, actu-
aries, and other professional service personnel as may be 
necessary in connection with the Secretary’s service as 
trustee under this section. 
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 
‘‘(a) IN GENERAL.—Notwithstanding section 514, a 
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan 
commenced operations in such State after the date of the 
enactment of the Small Business Health Fairness Act of 
2011. 
‘‘(b) CONTRIBUTION TAX.—For purposes of this sec-
tion, the term ‘contribution tax’ imposed by a State on 
an association health plan means any tax imposed by such 
State if— 
‘‘(1) such tax is computed by applying a rate to 
the amount of premiums or contributions, with re-
spect to individuals covered under the plan who are 
residents of such State, which are received by the 
plan from participating employers located in such 
State or from such individuals; 
‘‘(2) the rate of such tax does not exceed the 
rate of any tax imposed by such State on premiums 
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101 
or contributions received by insurers or health main-
tenance organizations for health insurance coverage 
offered in such State in connection with a group 
health plan; 
‘‘(3) such tax is otherwise nondiscriminatory; 
and 
‘‘(4) the amount of any such tax assessed on 
the plan is reduced by the amount of any tax or as-
sessment otherwise imposed by the State on pre-
miums, contributions, or both received by insurers or 
health maintenance organizations for health insur-
ance coverage, aggregate excess/stop loss insurance 
(as defined in section 806(g)(1)), specific excess/stop 
loss insurance (as defined in section 806(g)(2)), 
other insurance related to the provision of medical 
care under the plan, or any combination thereof pro-
vided by such insurers or health maintenance organi-
zations in such State in connection with such plan. 
‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 
‘‘(a) DEFINITIONS.—For purposes of this part— 
‘‘(1) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning provided in section 
733(a)(1) (after applying subsection (b) of this sec-
tion). 
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102 
‘‘(2) MEDICAL CARE.—The term ‘medical care’ 
has the meaning provided in section 733(a)(2). 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap-
plicable authority’ means the Secretary, except that, 
in connection with any exercise of the Secretary’s 
authority regarding which the Secretary is required 
under section 506(d) to consult with a State, such 
term means the Secretary, in consultation with such 
State. 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
provided in section 733(d)(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.— 
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103 
‘‘(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. 
‘‘(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) PARTICIPATING
EMPLOYER.—The term 
‘participating employer’ means, in connection with 
an association health plan, any employer, if any indi-
vidual who is an employee of such employer, a part-
ner in such employer, or a self-employed individual 
who is such employer (or any dependent, as defined 
under the terms of the plan, of such individual) is 
or was covered under such plan in connection with 
the status of such individual as such an employee, 
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104 
partner, or self-employed individual in relation to the 
plan. 
‘‘(9) 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. 
‘‘(10) QUALIFIED
HEALTH
ACTUARY.—The 
term ‘qualified health actuary’ means an individual 
who is a member of the American Academy of Actu-
aries with expertise in health care. 
‘‘(11) AFFILIATED MEMBER.—The term ‘affili-
ated member’ means, in connection with a sponsor— 
‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
is a member of any such association and elects 
an affiliated status with the sponsor, or 
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of the Small Business Health Fairness Act of 
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2011, a person eligible to be a member of the 
sponsor or one of its member associations. 
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
employed an average of at least 51 employees on 
business days during the preceding calendar year 
and who employs at least 2 employees on the first 
day of the plan year. 
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
is not a large employer. 
‘‘(b) RULES OF CONSTRUCTION.— 
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an 
association health plan, and for purposes of applying 
this title in connection with such plan, fund, or pro-
gram so determined to be such an employee welfare 
benefit plan— 
‘‘(A) in the case of a partnership, the term 
‘employer’ (as defined in section 3(5)) includes 
the partnership in relation to the partners, and 
the term ‘employee’ (as defined in section 3(6)) 
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includes any partner in relation to the partner-
ship; and 
‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined 
in section 3(6)) shall include such individual. 
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED 
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 
case of any plan, fund, or program which was estab-
lished or is maintained for the purpose of providing 
medical care (through the purchase of insurance or 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under 
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
employee welfare benefit plan on and after the date 
of such demonstration. 
‘‘(3) EXCEPTION
FOR
CERTAIN
BENEFITS.— 
The requirements of this part shall not apply to a 
group health plan in relation to its provision of ex-
cepted benefits, as defined in section 706(c).’’. 
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(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.— 
(1) Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of an association health plan which is certified under part 
8.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144) 
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 
(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: 
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‘‘(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, or 
have the effect of precluding, a health insurance issuer 
from offering health insurance coverage in connection with 
an association health plan which is certified under part 
8. 
‘‘(2) Except as provided in paragraphs (4) and (5) 
of subsection (b) of this section— 
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not 
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered in a State under 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
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fined in section 812(a)(9)), of the policy form in 
connection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with re-
spect to health insurance issuers or health insurance cov-
erage, to supersede or impair the law of any State— 
‘‘(A) providing solvency standards or similar 
standards regarding the adequacy of insurer capital, 
surplus, reserves, or contributions, or 
‘‘(B) relating to prompt payment of claims. 
‘‘(4) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(5) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
ticipating employer’, and ‘health insurance issuer’ have 
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110 
the meanings provided such terms in section 812, respec-
tively.’’. 
(3) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended— 
(A) in clause (i)(II), by striking ‘‘and’’ at 
the end; 
(B) in clause (ii), by inserting ‘‘and which 
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
ment,’’, and by striking ‘‘title.’’ and inserting 
‘‘title, and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) subject to subparagraph (E), in the case 
of any other employee welfare benefit plan which is 
a multiple employer welfare arrangement and which 
provides medical care (within the meaning of section 
733(a)(2)), any law of any State which regulates in-
surance may apply.’’. 
(4) Section 514(e) of such Act (as redesignated 
by paragraph (2)(C)) is amended— 
(A) by striking ‘‘Nothing’’ and inserting 
‘‘(1) Except as provided in paragraph (2), noth-
ing’’; and 
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(B) by adding at the end the following new 
paragraph: 
‘‘(2) Nothing in any other provision of law enacted 
on or after the date of the enactment of the Small Busi-
ness Health Fairness Act of 2011 shall be construed to 
alter, amend, modify, invalidate, impair, or supersede any 
provision of this title, except by specific cross-reference to 
the affected section.’’. 
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)) is amended by adding at the end 
the following new sentence: ‘‘Such term also includes a 
person serving as the sponsor of an association health plan 
under part 8.’’. 
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS 
UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at 
the end the following: ‘‘An association health plan shall 
include in its summary plan description, in connection 
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to 
this Act or applicable State law, if any.’’. 
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is 
amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
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112 
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH 
PLANS.—Not later than January 1, 2014, the Secretary 
of Labor shall report to the Committee on Education and 
the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of 
the Senate the effect association health plans have had, 
if any, on reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items: 
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘801. Association health plans. 
‘‘802. Certification of association health plans. 
‘‘803. Requirements relating to sponsors and boards of trustees. 
‘‘804. Participation and coverage requirements. 
‘‘805. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘806. Maintenance of reserves and provisions for solvency for plans providing 
health benefits in addition to health insurance coverage. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Corrective actions and mandatory termination. 
‘‘810. Trusteeship by the Secretary of insolvent association health plans pro-
viding health benefits in addition to health insurance coverage. 
‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
SEC. 233. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed— 
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(1) in clause (i), by inserting after ‘‘control 
group,’’ the following: ‘‘except that, in any case in 
which the benefit referred to in subparagraph (A) 
consists of medical care (as defined in section 
812(a)(2)), two or more trades or businesses, wheth-
er or not incorporated, shall be deemed a single em-
ployer for any plan year of such plan, or any fiscal 
year of such other arrangement, if such trades or 
businesses are within the same control group during 
such year or at any time during the preceding 1-year 
period,’’; 
(2) in clause (iii), by striking ‘‘(iii) the deter-
mination’’ and inserting the following: 
‘‘(iii)(I) in any case in which the benefit re-
ferred to in subparagraph (A) consists of medical 
care (as defined in section 812(a)(2)), the deter-
mination of whether a trade or business is under 
‘common control’ with another trade or business 
shall be determined under regulations of the Sec-
retary applying principles consistent and coextensive 
with the principles applied in determining whether 
employees of two or more trades or businesses are 
treated as employed by a single employer under sec-
tion 4001(b), except that, for purposes of this para-
graph, an interest of greater than 25 percent may 
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114 
not be required as the minimum interest necessary 
for common control, or 
‘‘(II) in any other case, the determination’’; 
(3) by redesignating clauses (iv) and (v) as 
clauses (v) and (vi), respectively; and 
(4) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) in any case in which the benefit referred 
to in subparagraph (A) consists of medical care (as 
defined in section 812(a)(2)), in determining, after 
the application of clause (i), whether benefits are 
provided to employees of two or more employers, the 
arrangement shall be treated as having only one par-
ticipating employer if, after the application of clause 
(i), the number of individuals who are employees and 
former employees of any one participating employer 
and who are covered under the arrangement is 
greater than 75 percent of the aggregate number of 
all individuals who are employees or former employ-
ees of participating employers and who are covered 
under the arrangement,’’. 
SEC. 234. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS. 
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL 
MISREPRESENTATIONS.—Section 501 of the Employee 
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Retirement Income Security Act of 1974 (29 U.S.C. 1131) 
is amended— 
(1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) Any person who willfully falsely represents, to 
any employee, any employee’s beneficiary, any employer, 
the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as— 
‘‘(1) being an association health plan which has 
been certified under part 8; 
‘‘(2) having been established or maintained 
under or pursuant to one or more collective bar-
gaining agreements which are reached pursuant to 
collective bargaining described in section 8(d) of the 
National Labor Relations Act (29 U.S.C. 158(d)) or 
paragraph Fourth of section 2 of the Railway Labor 
Act (45 U.S.C. 152, paragraph Fourth) or which are 
reached pursuant to labor-management negotiations 
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement described in 
section 3(40)(A)(i), 
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‘‘(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. 
‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
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‘‘(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 
responsible for the risk is insolvent at the time 
of the transaction. 
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‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed 200 percent of the poverty line 
and who are eligible for child health 
assistance under this title. 
‘‘(ii) PROSPECTIVE
TEST.—The 90 
percent prospective test specified in this 
clause is, for a State for a fiscal year, that 
on average during the fiscal year, the State 
will enroll under this title or title XIX at 
least 90 percent of the individuals residing 
in the State who— 
‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed such percent of the poverty 
line (in excess of 200 percent) as the 
State elects consistent with this para-
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