139
erence to the provisions of such section as made ap-
plicable under section 2707 or 2753 of the Public
Health Service Act or section 9813 of the Internal
Revenue Code of 1986, as applicable.
SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUC-
TION.
(a) CONTINUED APPLICABILITY
OF STATE LAW
WITH RESPECT TO HEALTH INSURANCE ISSUERS.—
(1) IN GENERAL.—Subject to paragraph (2),
this title (and the amendments made thereby) shall
not be construed to supersede any provision of State
law which establishes, implements, or continues in
effect any standard or requirement solely relating to
health insurance issuers (in connection with group
health insurance coverage or otherwise) except to the
extent that such standard or requirement prevents
the application of a requirement of this title (or such
amendments).
(2) CONTINUED
PREEMPTION
WITH
RESPECT
TO GROUP HEALTH PLANS.—Nothing in this title (or
the amendments made thereby) shall be construed to
affect or modify the provisions of section 514 of the
Employee Retirement Income Security Act of 1974
with respect to group health plans.
140
(3) CONSTRUCTION.—In applying this section,
a State law that provides for equal access to, and
availability of, all categories of licensed health care
providers and services shall not be treated as pre-
venting the application of any requirement of this
title (or the amendments made thereby).
(b) APPLICATION
OF SUBSTANTIALLY COMPLIANT
STATE LAWS.—
(1) IN GENERAL.—In the case of a State law
that imposes, with respect to health insurance cov-
erage offered by a health insurance issuer and with
respect to a group health plan that is a non-Federal
governmental plan, a requirement that substantially
complies (within the meaning of subsection (c)) with
a patient protection requirement (as defined in para-
graph (3)) and does not prevent the application of
other requirements under this Act or the amend-
ments made thereby (except in the case of other sub-
stantially compliant requirements), in applying the
requirements of this title under section 2707 and
2753 (as applicable) of the Public Health Service
Act (as added by title II), subject to subsection
(a)(2)—
(A) the State law shall not be treated as
being superseded under subsection (a); and
141
(B) the State law shall apply instead of the
patient protection requirement otherwise appli-
cable with respect to health insurance coverage
and non-Federal governmental plans.
(2) LIMITATION.—In the case of a group health
plan covered under title I of the Employee Retire-
ment Income Security Act of 1974, paragraph (1)
shall be construed to apply only with respect to the
health insurance coverage (if any) offered in connec-
tion with the plan and only with respect to patient
protection requirements under section 101 and sub-
titles B, C, and D and this subtitle.
(3) DEFINITIONS.—In this section:
(A) 
PATIENT
PROTECTION
REQUIRE-
MENT.—The term ‘‘patient protection require-
ment’’ means a requirement under this title (or
the amendments made thereby), and includes
(as a single requirement) a group or related set
of requirements under a section or similar unit
under this title (or such amendments).
(B) 
SUBSTANTIALLY
COMPLIANT.—The
terms ‘‘substantially compliant’’, substantially
complies’’, or ‘‘substantial compliance’’ with re-
spect to a State law, mean that the State law
has the same or similar features as the patient
142
protection requirements and has a similar ef-
fect.
(c) DETERMINATIONS
OF SUBSTANTIAL COMPLI-
ANCE.—
(1) CERTIFICATION BY STATES.—A State may
submit to the Secretary a certification that a State
law provides for patient protections that are at least
substantially compliant with one or more patient
protection requirements. Such certification shall be
accompanied by such information as may be re-
quired to permit the Secretary to make the deter-
mination described in paragraph (2)(A).
(2) REVIEW.—
(A) IN
GENERAL.—The Secretary shall
promptly review a certification submitted under
paragraph (1) with respect to a State law to de-
termine if the State law substantially complies
with the patient protection requirement (or re-
quirements) to which the law relates.
(B) APPROVAL DEADLINES.—
(i) INITIAL REVIEW.—Such a certifi-
cation is considered approved unless the
Secretary notifies the State in writing,
within 90 days after the date of receipt of
the certification, that the certification is
143
disapproved (and the reasons for dis-
approval) or that specified additional infor-
mation is needed to make the determina-
tion described in subparagraph (A).
(ii) 
ADDITIONAL
INFORMATION.—
With respect to a State that has been noti-
fied by the Secretary under clause (i) that
specified additional information is needed
to make the determination described in
subparagraph (A), the Secretary shall
make the determination within 60 days
after the date on which such specified ad-
ditional information is received by the Sec-
retary.
(3) APPROVAL.—
(A) IN GENERAL.—The Secretary shall ap-
prove a certification under paragraph (1)
unless—
(i) the State fails to provide sufficient
information to enable the Secretary to
make a determination under paragraph
(2)(A); or
(ii) the Secretary determines that the
State law involved does not provide for pa-
tient protections that substantially comply
144
with the patient protection requirement (or
requirements) to which the law relates.
(B) STATE CHALLENGE.—A State that has
a certification disapproved by the Secretary
under subparagraph (A) may challenge such
disapproval in the appropriate United States
district court.
(C) DEFERENCE
TO
STATES.—With re-
spect to a certification submitted under para-
graph (1), the Secretary shall give deference to
the State’s interpretation of the State law in-
volved with respect to the patient protection in-
volved.
(D) PUBLIC
NOTIFICATION.—The Sec-
retary shall—
(i) provide a State with a notice of the
determination to approve or disapprove a
certification under this paragraph;
(ii) promptly publish in the Federal
Register a notice that a State has sub-
mitted a certification under paragraph (1);
(iii) promptly publish in the Federal
Register the notice described in clause (i)
with respect to the State; and
145
(iv) annually publish the status of all
States with respect to certifications.
(4) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the certifi-
cation (and approval of certification) of a State law
under this subsection solely because it provides for
greater protections for patients than those protec-
tions otherwise required to establish substantial
compliance.
(5) PETITIONS.—
(A) PETITION PROCESS.—Effective on the
date on which the provisions of this Act become
effective, as provided for in section 601, a
group health plan, health insurance issuer, par-
ticipant, beneficiary, or enrollee may submit a
petition to the Secretary for an advisory opinion
as to whether or not a standard or requirement
under a State law applicable to the plan, issuer,
participant, beneficiary, or enrollee that is not
the subject of a certification under this sub-
section, is superseded under subsection (a)(1)
because such standard or requirement prevents
the application of a requirement of this title (or
the amendments made thereby).
146
(B) OPINION.—The Secretary shall issue
an advisory opinion with respect to a petition
submitted under subparagraph (A) within the
60-day period beginning on the date on which
such petition is submitted.
(d) DEFINITIONS.—For purposes of this section:
(1) STATE
LAW.—The term ‘‘State law’’ in-
cludes all laws, decisions, rules, regulations, or other
State action having the effect of law, of any State.
A law of the United States applicable only to the
District of Columbia shall be treated as a State law
rather than a law of the United States.
(2) STATE.—The term ‘‘State’’ includes a
State, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, American Samoa, the North-
ern Mariana Islands, any political subdivisions of
such, or any agency or instrumentality of such.
SEC. 153. EXCLUSIONS.
(a) NO BENEFIT REQUIREMENTS.—Nothing in this
title or the amendments made thereby shall be construed
to require a group health plan or a health insurance issuer
offering health insurance coverage to include specific items
and services under the terms of such a plan or coverage,
other than those provided under the terms and conditions
of such plan or coverage.
147
(b) EXCLUSION FROM ACCESS TO CARE MANAGED
CARE PROVISIONS FOR FEE-FOR-SERVICE COVERAGE.—
(1) IN GENERAL.—The provisions of sections
111 through 117 shall not apply to a group health
plan or health insurance coverage if the only cov-
erage offered under the plan or coverage is fee-for-
service coverage (as defined in paragraph (2)).
(2) FEE-FOR-SERVICE
COVERAGE
DEFINED.—
For purposes of this subsection, the term ‘‘fee-for-
service coverage’’ means coverage under a group
health plan or health insurance coverage that—
(A) reimburses hospitals, health profes-
sionals, and other providers on a fee-for-service
basis without placing the provider at financial
risk;
(B) does not vary reimbursement for such
a provider based on an agreement to contract
terms and conditions or the utilization of health
care items or services relating to such provider;
(C) allows access to any provider that is
lawfully authorized to provide the covered serv-
ices and that agrees to accept the terms and
conditions of payment established under the
plan or by the issuer; and
148
(D) for which the plan or issuer does not
require prior authorization before providing for
any health care services.
SEC. 154. TREATMENT OF EXCEPTED BENEFITS.
(a) IN GENERAL.—The requirements of this title and
the amendments made thereby shall not apply to excepted
benefits (as defined in section 733(c) of the Employee Re-
tirement Income Security Act of 1974), other than bene-
fits described in section 733(c)(2)(A) of such Act, in the
same manner as the provisions of part 7 of subtitle B of
title I of such Act do not apply to such benefits under
subsections (b) and (c) of section 732 of such Act.
(b) COVERAGE
OF
CERTAIN
LIMITED
SCOPE
PLANS.—Only for purposes of applying the requirements
of this title and sections 503A, 503B, and 503C of the
Employee Retirement Income Security Act of 1974 under
sections 2707 and 2753 of the Public Health Service Act,
sections 503(b) and 714 of the Employee Retirement In-
come Security Act of 1974, and section 9813 of the Inter-
nal Revenue Code of 1986, the following sections shall be
deemed not to apply:
(1) Section 2791(c)(2)(A) of the Public Health
Service Act.
(2) Section 733(c)(2)(A) of the Employee Re-
tirement Income Security Act of 1974.
149
(3) Section 9832(c)(2)(A) of the Internal Rev-
enue Code of 1986.
SEC. 155. REGULATIONS.
The Secretaries of Health and Human Services,
Labor, and the Treasury shall issue such regulations as
may be necessary or appropriate to carry out this title and
the amendments made thereby. Such regulations shall be
issued consistent with section 104 of Health Insurance
Portability and Accountability Act of 1996. Such Secre-
taries may promulgate any interim final rules as the Sec-
retaries determine are appropriate to carry out this title
and the amendments made thereby.
SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOC-
UMENTS.
The requirements of this title and the amendments
made thereby with respect to a group health plan or health
insurance coverage are, subject to section 154, deemed to
be incorporated into, and made a part of, such plan or
the policy, certificate, or contract providing such coverage
and are enforceable under law as if directly included in
the documentation of such plan or such policy, certificate,
or contract.
SEC. 157. PRESERVATION OF PROTECTIONS.
(a) IN GENERAL.—The rights under this Act (includ-
ing the right to maintain a civil action and any other
150
rights under the amendments made by this Act) may not
be waived, deferred, or lost pursuant to any agreement
not authorized under this Act (or such amendments).
(b) EXCEPTION.—Subsection (a) shall not apply to
an agreement providing for arbitration or participation in
any other nonjudicial procedure to resolve a dispute if the
agreement is entered into knowingly and voluntarily by the
parties involved after the dispute has arisen or is pursuant
to the terms of a collective bargaining agreement. Nothing
in this subsection shall be construed to permit the waiver
of the requirements of sections 503B and 503C of the Em-
ployee Retirement Income Security Act of 1974 (relating
to internal and external review).
TITLE 
II—APPLICATION 
OF
QUALITY CARE STANDARDS
TO GROUP HEALTH PLANS
AND 
HEALTH 
INSURANCE
COVERAGE UNDER THE PUB-
LIC HEALTH SERVICE ACT
SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND
GROUP HEALTH INSURANCE COVERAGE.
(a) IN GENERAL.—Subpart 2 of part A of title
XXVII of the Public Health Service Act is amended by
adding at the end the following new section:
152
participants and beneficiaries under group health insur-
ance coverage) with respect to individual health insurance
coverage it offers, and such requirements shall be deemed
to be incorporated into this subsection.’’.
SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
Part C of title XXVII of the Public Health Service
Act (42 U.S.C. 300gg–91 et seq.) is amended by adding
at the end the following:
‘‘SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
‘‘(a) AGREEMENT WITH STATES.—A State may enter
into an agreement with the Secretary for the delegation
to the State of some or all of the Secretary’s authority
under this title to enforce the requirements applicable
under sections 2707 and 2753 with respect to health in-
surance coverage offered by a health insurance issuer and
with respect to a group health plan that is a non-Federal
governmental plan.
‘‘(b) DELEGATIONS.—Any department, agency, or in-
strumentality of a State to which authority is delegated
pursuant to an agreement entered into under this section
may, if authorized under State law and to the extent con-
sistent with such agreement, exercise the powers of the
Secretary under this title which relate to such authority.’’.
153
TITLE III—APPLICATION OF PA-
TIENT PROTECTION STAND-
ARDS TO FEDERAL HEALTH
INSURANCE PROGRAMS
SEC. 301. APPLICATION OF PATIENT PROTECTION STAND-
ARDS TO FEDERAL HEALTH INSURANCE PRO-
GRAMS.
(a) SENSE OF CONGRESS.—It is the sense of Con-
gress that enrollees in Federal health insurance programs
should have the same rights and privileges as those af-
forded under title I, under the amendments made by such
title, and under the amendments made by subtitle A of
title IV to participants and beneficiaries under group
health plans.
(b) CONFORMING FEDERAL HEALTH INSURANCE
PROGRAMS.—It is the sense of Congress that the Presi-
dent should require, by executive order, the Federal offi-
cial with authority over each Federal health insurance pro-
gram, to the extent feasible, to take such steps as are nec-
essary to implement the rights and privileges described in
subsection (a) with respect to such program.
(c) GAO REPORT
ON
ADDITIONAL
STEPS
RE-
QUIRED.—Not later than 1 year after the date of the en-
actment of this Act, the Comptroller General of the United
States shall submit to Congress a report on statutory
154
changes that are required to implement such rights and
privileges in a manner that is consistent with the missions
of the Federal health insurance programs and that avoids
unnecessary duplication or disruption of such programs.
(d) FEDERAL HEALTH INSURANCE PROGRAM.—In
this section, the term ‘‘Federal health insurance program’’
means a Federal program that provides creditable cov-
erage (as defined in section 2701(c)(1) of the Public
Health Service Act) and includes a health program of the
Department of Veterans Affairs.
TITLE IV—AMENDMENTS TO THE
EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974
Subtitle A—General Provisions
SEC. 401. APPLICATION OF PATIENT PROTECTION STAND-
ARDS TO GROUP HEALTH PLANS AND GROUP
HEALTH INSURANCE COVERAGE UNDER THE
EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.
Subpart B of part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 is
amended by adding at the end the following new section:
‘‘SEC. 714. PATIENT PROTECTION STANDARDS.
‘‘(a) IN GENERAL.—Subject to subsection (b), a
group health plan (and a health insurance issuer offering
155
group health insurance coverage in connection with such
a plan) shall comply with the requirements of section 101
and subtitles B, C, D, and E of title I of the Bipartisan
Patient Protection Act (as in effect as of the date of the
enactment of such Act), and such requirements shall be
deemed to be incorporated into this subsection.
‘‘(b) PLAN SATISFACTION OF CERTAIN REQUIRE-
MENTS.—
‘‘(1) SATISFACTION
OF
CERTAIN
REQUIRE-
MENTS
THROUGH
INSURANCE.—For purposes of
subsection (a), insofar as a group health plan pro-
vides benefits in the form of health insurance cov-
erage through a health insurance issuer, the plan
shall be treated as meeting the following require-
ments of title I of the Bipartisan Patient Protection
Act with respect to such benefits and not be consid-
ered as failing to meet such requirements because of
a failure of the issuer to meet such requirements so
long as the plan sponsor or its representatives did
not cause such failure by the issuer:
‘‘(A) Section 111 (relating to consumer
choice option).
‘‘(B) Section 112 (relating to choice of
health care professional).
156
‘‘(C) Section 113 (relating to access to
emergency care).
‘‘(D) Section 114 (relating to timely access
to specialists).
‘‘(E) Section 115 (relating to patient ac-
cess to obstetrical and gynecological care).
‘‘(F) Section 116 (relating to access to pe-
diatric care).
‘‘(G) Section 117 (relating to continuity of
care), but only insofar as a replacement issuer
assumes the obligation for continuity of care.
‘‘(H) Section 118 (relating to access to
needed prescription drugs).
‘‘(I) Section 119 (relating to coverage for
individuals participating in approved clinical
trials).
‘‘(J) Section 120 (relating to required cov-
erage 
for 
minimum 
hospital 
stay 
for
mastectomies and lymph node dissections for
the treatment of breast cancer and coverage for
secondary consultations).
‘‘(K) Section 134 (relating to payment of
claims).
‘‘(2) INFORMATION.—With respect to informa-
tion required to be provided or made available under
157
section 121 of the Bipartisan Patient Protection
Act, in the case of a group health plan that provides
benefits in the form of health insurance coverage
through a health insurance issuer, the Secretary
shall determine the circumstances under which the
plan is not required to provide or make available the
information (and is not liable for the issuer’s failure
to provide or make available the information), if the
issuer is obligated to provide and make available (or
provides and makes available) such information.
‘‘(3) APPLICATION TO PROHIBITIONS.—Pursu-
ant to rules of the Secretary, if a health insurance
issuer offers health insurance coverage in connection
with a group health plan and takes an action in vio-
lation of any of the following sections of the Bipar-
tisan Patient Protection Act, the group health plan
shall not be liable for such violation unless the plan
caused such violation:
‘‘(A) Section 131 (relating to prohibition of
interference with certain medical communica-
tions).
‘‘(B) Section 132 (relating to prohibition
of discrimination against providers based on li-
censure).
158
‘‘(C) Section 133 (relating to prohibition
against improper incentive arrangements).
‘‘(D) Section 135 (relating to protection
for patient advocacy).
‘‘(4) CONSTRUCTION.—Nothing in this sub-
section shall be construed to affect or modify the re-
sponsibilities of the fiduciaries of a group health
plan under part 4 of subtitle B.
‘‘(5) TREATMENT OF SUBSTANTIALLY COMPLI-
ANT STATE LAWS.—For purposes of applying this
subsection in connection with health insurance cov-
erage, any reference in this subsection to a require-
ment in a section or other provision in the Bipar-
tisan Patient Protection Act with respect to a health
insurance issuer is deemed to include a reference to
a requirement under a State law that substantially
complies (as determined under section 152(c) of
such Act) with the requirement in such section or
other provisions.
‘‘(6) APPLICATION TO CERTAIN PROHIBITIONS
AGAINST RETALIATION.—With respect to compliance
with the requirements of section 135(b)(1) of the Bi-
partisan Patient Protection Act, for purposes of this
subtitle the term ‘group health plan’ is deemed to in-
159
clude a reference to an institutional health care pro-
vider.
‘‘(c) ENFORCEMENT OF CERTAIN REQUIREMENTS.—
‘‘(1) COMPLAINTS.—Any protected health care
professional who believes that the professional has
been retaliated or discriminated against in violation
of section 135(b)(1) of the Bipartisan Patient Pro-
tection Act may file with the Secretary a complaint
within 180 days of the date of the alleged retaliation
or discrimination.
‘‘(2) INVESTIGATION.—The Secretary shall in-
vestigate such complaints and shall determine if a
violation of such section has occurred and, if so,
shall issue an order to ensure that the protected
health care professional does not suffer any loss of
position, pay, or benefits in relation to the plan,
issuer, or provider involved, as a result of the viola-
tion found by the Secretary.
‘‘(d) CONFORMING REGULATIONS.—The Secretary
shall issue regulations to coordinate the requirements on
group health plans and health insurance issuers under this
section with the requirements imposed under the other
provisions of this title. In order to reduce duplication and
clarify the rights of participants and beneficiaries with re-
spect to information that is required to be provided, such
160
regulations shall coordinate the information disclosure re-
quirements under section 121 of the Bipartisan Patient
Protection Act with the reporting and disclosure require-
ments imposed under part 1, so long as such coordination
does not result in any reduction in the information that
would otherwise be provided to participants and bene-
ficiaries.’’.
(b) SATISFACTION OF ERISA CLAIMS PROCEDURE
REQUIREMENT.—Section 503 of such Act (29 U.S.C.
1133) is amended by inserting ‘‘(a)’’ after ‘‘SEC. 503.’’
and by adding at the end the following new subsection:
‘‘(b)(1)(A) Subject to subparagraphs (B) and (C), a
group health plan (and a health insurance issuer offering
group health insurance coverage in connection with such
a plan) shall comply with the requirements of sections
503A, 503B, and 503C, and such requirements shall be
deemed to be incorporated into this subsection.
‘‘(B) With respect to the internal appeals process re-
quired to be established under section 503B, in the case
of a group health plan that provides benefits in the form
of health insurance coverage through a health insurance
issuer, the Secretary shall determine the circumstances
under which the plan is not required to provide for such
process and system (and is not liable for the issuer’s fail-
ure to provide for such process and system), if the issuer
161
is obligated to provide for (and provides for) such process
and system.
‘‘(C) Pursuant to rules of the Secretary, insofar as
a group health plan enters into a contract with a qualified
external review entity for the conduct of external appeal
activities in accordance with section 503C, the plan shall
be treated as meeting the requirement of such section and
is not liable for the entity’s failure to meet any require-
ments under such section.
‘‘(2) In the case of a group health plan, compliance
with the requirements of sections 503A, 503B, and 503C,
and compliance with regulations promulgated by the Sec-
retary, in connection with a denial of a claim under a
group health plan shall be deemed compliance with sub-
section (a) with respect to such claim denial.
‘‘(3) Terms used in this subsection which are defined
in section 733 shall have the meanings provided such
terms in such section.’’.
(c) CONFORMING AMENDMENTS.—(1) Section 732(a)
of such Act (29 U.S.C. 1185(a)) is amended by striking
‘‘section 711’’ and inserting ‘‘sections 711 and 714’’.
(2) The table of contents in section 1 of such Act
is amended by inserting after the item relating to section
713 the following new item:
‘‘Sec. 714. Patient protection standards.’’.
162
(3) Section 502(b)(3) of such Act (29 U.S.C.
1132(b)(3)) is amended by inserting ‘‘(other than section
135(b) of the Bipartisan Patient Protection Act, as
enforcible under section 714(c))’’ after ‘‘part 7’’.
SEC. 402. AVAILABILITY OF CIVIL REMEDIES.
(a) IN GENERAL.—Section 502 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1132)
is amended by adding at the end the following:
‘‘(n) CAUSE OF ACTION RELATING TO CLAIMS FOR
HEALTH BENEFITS.—
‘‘(1) CAUSE OF ACTION.—
‘‘(A) IN GENERAL.—With respect to an ac-
tion commenced by a participant or beneficiary
(or the estate of the participant or beneficiary)
in connection with a claim for benefits under a
group health plan, if—
‘‘(i) a designated decisionmaker de-
scribed in paragraph (2) fails to exercise
ordinary care—
‘‘(I) in making a determination
denying the claim for benefits under
section 503A (relating to an initial
claim for benefits),
‘‘(II) in making a determination
denying the claim for benefits under
163
section 503B (relating to an internal
appeal), or
‘‘(III) in failing to authorize cov-
erage in compliance with the written
determination of an independent med-
ical 
reviewer 
under 
section
503C(d)(3)(F) that reverses a deter-
mination denying the claim for bene-
fits, and
‘‘(ii) the delay in receiving, or failure
to receive, benefits attributable to the fail-
ure described in clause (i) is the proximate
cause of personal injury to, or death of,
the participant or beneficiary,
such designated decisionmaker shall be liable to
the participant or beneficiary (or the estate) for
economic and noneconomic damages in connec-
tion with such failure and such injury or death
(subject to paragraph (4)).
‘‘(B) REBUTTABLE PRESUMPTION.—In the
case of a cause of action under subparagraph
(A)(i)(I) or (A)(i)(II), if an independent med-
ical 
reviewer 
under 
section 
503C(d) 
or
503C(e)(4)(B) upholds the determination deny-
ing the claim for benefits involved, there shall
164
be a presumption (rebuttable by clear and con-
vincing evidence) that the designated decision-
maker exercised ordinary care in making such
determination.
‘‘(2) DESIGNATED DECISIONMAKER.—
‘‘(A) APPOINTMENT.—
‘‘(i) IN GENERAL.—The plan sponsor
or named fiduciary of a group health plan
shall, in accordance with this paragraph
with respect to a participant or beneficiary,
designate a person that meets the require-
ments of subparagraph (B) to serve as a
designated decisionmaker with respect to
the cause of action described in paragraph
(1), except that—
‘‘(I) with respect to health insur-
ance coverage offered in connection
with a group health plan, the health
insurance issuer shall be the des-
ignated decisionmaker unless the plan
sponsor and the issuer specifically
agree in writing (on a form to be pre-
scribed by the Secretary) to substitute
another person as the designated deci-
sionmaker; or
165
‘‘(II) with respect to the designa-
tion of a person other than a plan
sponsor or health insurance issuer,
such person shall satisfy the require-
ments of subparagraph (D).
‘‘(ii) PLAN
DOCUMENTS.—The des-
ignated decisionmaker shall be specifically
designated as such in the written instru-
ments of the plan (under section 402(a))
and be identified as required under section
121(b)(20) of the Bipartisan Patient Pro-
tection Act.
‘‘(B) REQUIREMENTS.—For purposes of
this paragraph, a designated decisionmaker
meets the requirements of this subparagraph
with respect to any participant or beneficiary
if—
‘‘(i) such designation is in such form
as may be specified in regulations pre-
scribed by the Secretary,
‘‘(ii) the designated decisionmaker—
‘‘(I) meets the requirements of
subparagraph (C),
‘‘(II) assumes unconditionally all
liability arising under this subsection
166
in connection with actions and failures
to act described in subparagraph (A)
(whether undertaken by the des-
ignated decisionmaker or the em-
ployer, plan, plan sponsor, or em-
ployee or agent thereof) during the
period in which the designation under
this paragraph is in effect relating to
such participant or beneficiary, and
‘‘(III) 
where 
subparagraph
(C)(ii) applies, assumes uncondition-
ally the exclusive authority under the
group health plan to make determina-
tions on claims for benefits (irrespec-
tive of whether they constitute medi-
cally reviewable determinations) under
the plan with respect to such partici-
pant or beneficiary, and
‘‘(iii) the designated decisionmaker
and the participants and beneficiaries for
whom the decisionmaker has assumed li-
ability are identified in the written instru-
ment required under section 402(a) and as
required under section 121(b)(15) of the
Bipartisan Patient Protection Act.
167
Any liability assumed by a designated decision-
maker pursuant to this paragraph shall be in
addition to any liability that it may otherwise
have under applicable law.
‘‘(C) QUALIFICATIONS
FOR
DESIGNATED
DECISIONMAKERS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), an entity is qualified under this sub-
paragraph to serve as a designated deci-
sionmaker with respect to a group health
plan if the entity has the ability to assume
the liability described in subparagraph (A)
with respect to participants and bene-
ficiaries under such plan, including re-
quirements relating to the financial obliga-
tion for timely satisfying the assumed li-
ability, and maintains with the plan spon-
sor certification of such ability. Such cer-
tification shall be provided to the plan
sponsor or named fiduciary upon designa-
tion under this paragraph and not less fre-
quently than annually thereafter, or if such
designation constitutes a multiyear ar-
rangement, in conjunction with the renewal
of the arrangement.
168
‘‘(ii) SPECIAL QUALIFICATION IN THE
CASE
OF
CERTAIN
REVIEWABLE
DECI-
SIONS.—In the case of a group health plan
that provides benefits consisting of medical
care to a participant or beneficiary only
through health insurance coverage offered
by a health insurance issuer, such issuer is
the only entity that may be qualified under
this subparagraph to serve as a designated
decisionmaker with respect to such partici-
pant or beneficiary, and shall serve as the
designated decisionmaker unless the em-
ployer or other plan sponsor acts affirma-
tively to prevent such service.
‘‘(D) REQUIREMENTS
RELATING
TO
FI-
NANCIAL OBLIGATIONS.—For purposes of sub-
paragraphs (A)(i)(II) and (C)(i), the require-
ments relating to the financial obligation of an
entity for liability shall include—
‘‘(i) coverage of such entity under an
insurance policy or other arrangement, se-
cured and maintained by such entity, to ef-
fectively insure such entity against losses
arising from professional liability claims,
including those arising from its service as
169
a designated decisionmaker under this sub-
section; or
‘‘(ii) evidence of minimum capital and
surplus levels that are maintained by such
entity to cover any losses as a result of li-
ability arising from its service as a des-
ignated decisionmaker under this sub-
section.
The appropriate amounts of liability insurance
and minimum capital and surplus levels for
purposes of clauses (i) and (ii) shall be deter-
mined by an actuary using sound actuarial
principles and accounting practices pursuant to
established guidelines of the American Academy
of Actuaries and in accordance with such regu-
lations as the Secretary may prescribe and shall
be maintained throughout the term for which
the designation is in effect. The provisions of
this subparagraph shall not apply in the case of
a designated decisionmaker that is a group
health plan, plan sponsor, or health insurance
issuer and that is regulated under Federal law
or a State financial solvency law.
‘‘(E) LIMITATION
ON
APPOINTMENT
OF
TREATING
PHYSICIANS.—A treating physician
170
who directly delivered the care or treatment or
provided services which is the subject of a cause
of action by a participant or beneficiary under
paragraph (1) may not be appointed (or deemed
to be appointed) as a designated decisionmaker
under this paragraph with respect to such par-
ticipant or beneficiary.
‘‘(F) FAILURE TO APPOINT.—With respect
to any cause of action under paragraph (1) re-
lating to a denial of a claim for benefits where
a designated decisionmaker has not been ap-
pointed in accordance with this paragraph, the
plan sponsor or named fiduciary responsible for
determinations under section 503 shall be
deemed to be the designated decisionmaker.
‘‘(G) EFFECT OF APPOINTMENT.—The ap-
pointment of a designated decisionmaker in ac-
cordance with this paragraph shall not affect
the liability of the appointing plan sponsor or
named fiduciary for the failure of the plan
sponsor or named fiduciary to comply with any
other requirement of this title.
‘‘(H) TREATMENT
OF
CERTAIN
TRUST
FUNDS.—For purposes of this subsection, the
terms ‘employer’ and ‘plan sponsor’, in connec-
171
tion with the assumption by a designated deci-
sionmaker of the liability of employer or other
plan sponsor pursuant to this paragraph, shall
be construed to include a trust fund maintained
pursuant to section 302 of the Labor Manage-
ment Relations Act, 1947 (29 U.S.C. 186) or
the Railway Labor Act (45 U.S.C. 151 et seq.).
‘‘(3) REQUIREMENT OF EXHAUSTION OF INDE-
PENDENT MEDICAL REVIEW.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
apply only if—
‘‘(i) a final determination denying a
claim for benefits under section 503B has
been referred for independent medical re-
view under section 503C(d) and a written
determination by an independent medical
reviewer has been issued with respect to
such review, or
‘‘(ii) the qualified external review enti-
ty 
has 
determined 
under 
section
503C(c)(3) that a referral to an inde-
pendent medical reviewer is not required.
‘‘(B) INJUNCTIVE
RELIEF
FOR
IRREP-
ARABLE
HARM.—A participant or beneficiary
may seek relief under subsection (a)(1)(B) prior
172
to the exhaustion of administrative remedies
under section 503B or 503C (as required under
subparagraph (A)) if it is demonstrated to the
court, by a preponderance of the evidence, that
the exhaustion of such remedies would cause ir-
reparable harm to the health of the participant
or beneficiary. Any determinations that already
have been made under section 503A, 503B, or
503C in such case, or that are made in such
case while an action under this subparagraph is
pending, shall be given due consideration by the
court in any action under subsection (a)(1)(B)
in such case. Notwithstanding the awarding of
such relief under subsection (a)(1)(B) pursuant
to this subparagraph, no relief shall be available
under paragraph (1), with respect to a partici-
pant or beneficiary, unless the requirements of
subparagraph (A) are met.
‘‘(C) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or
beneficiary of the benefits involved in the claim
for benefits during the pendency of any admin-
istrative processes referred to in subparagraph
(A) or of any action commenced under this
subsection—
173
‘‘(i) shall not preclude continuation of
all such administrative processes to their
conclusion if so moved by any party, and
‘‘(ii) shall not preclude any liability
under subsection (a)(1)(C) and this sub-
section in connection with such claim.
The court in any action commenced under this
subsection shall take into account any receipt of
benefits during such administrative processes or
such action in determining the amount of the
damages awarded.
‘‘(4) LIMITATIONS
ON
RECOVERY
OF
DAM-
AGES.—
‘‘(A) MAXIMUM AWARD OF NONECONOMIC
DAMAGES.—The aggregate amount of liability
for noneconomic loss in an action under para-
graph (1) may not exceed $1,500,000.
‘‘(B) LIMITATION ON AWARD OF PUNITIVE
DAMAGES.—In the case of any action com-
menced pursuant to paragraph (1), the court
may not award any punitive, exemplary, or
similar damages against a defendant, except
that the court may award punitive, exemplary,
or similar damages (in addition to damages de-
174
scribed in subparagraph (A)), in an aggregate
amount not to exceed $1,500,000, if—
‘‘(i) the denial of a claim for benefits
involved in the case was reversed by a writ-
ten determination by an independent med-
ical reviewer under section 503C(d)(3)(F);
and
‘‘(ii) there has been a failure to au-
thorize coverage in compliance with such
written determination.
‘‘(C) PERMITTING APPLICATION OF LOWER
STATE
DAMAGE
LIMITS.—A State may limit
damages for noneconomic loss or punitive, ex-
emplary, or similar damages in an action under
paragraph (1) to amounts less than the
amounts permitted under this paragraph.
‘‘(5) ADMISSIBILITY.—In an action described in
subclause (I) or (II) of paragraph (1)(A) relating to
a denial of a claim for benefits, any determination
by an independent medical reviewer under section
503C(d) or 503C(e)(4)(B) relating to such denial is
admissible.
‘‘(6) WAIVER OF INTERNAL REVIEW.—In the
case of any cause of action under paragraph (1), the
waiver or nonwaiver of internal review under section
175
503B(a)(4) by the group health plan, or health in-
surance issuer that offers health insurance coverage
in connection with a group health plan, shall not be
used in determining liability.
‘‘(7) LIMITATIONS
ON
ACTIONS.—Paragraph
(1) shall not apply in connection with any action
that is commenced more than 5 years after the date
on which the failure described in such paragraph oc-
curred or, if earlier, not later than 2 years after the
first date the participant or beneficiary became
aware of the personal injury or death referred to in
such paragraph.
‘‘(8) 
EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply with respect to a directed record
keeper in connection with a group health plan.
‘‘(B) 
DIRECTED
RECORDKEEPER.—For
purposes of this paragraph, the term ‘directed
record keeper’ means, in connection with a
group health plan, a person engaged in directed
recordkeeping activities pursuant to the specific
instructions of the plan, the employer, or an-
other plan sponsor, including the distribution of
enrollment information and distribution of dis-
176
closure materials under this Act or title I of the
Bipartisan Patient Protection Act and whose
duties do not include making determinations on
claims for benefits.
‘‘(C) 
LIMITATION.—Subparagraph 
(A)
does not apply in connection with any directed
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction
of the plan or the employer or other plan spon-
sor.
‘‘(9) PROTECTION
OF
THE
REGULATION
OF
QUALITY OF MEDICAL CARE UNDER STATE LAW.—
Nothing in this subsection shall be construed to pre-
clude any action under State law against a person
or entity for liability or vicarious liability with re-
spect to the delivery of medical care. A cause of ac-
tion that is based on or otherwise relates to a group
health plan’s determination on a claim for benefits
shall not be deemed to be the delivery of medical
care under any State law for purposes of this para-
graph. Any such cause of action shall be maintained
exclusively under this section. Nothing in this para-
graph shall be construed to alter, amend, modify, in-
validate, impair, or supersede section 514.
177
‘‘(10) COORDINATION
WITH
FIDUCIARY
RE-
QUIREMENTS.—A fiduciary shall not be treated as
failing to meet any requirement of part 4 solely by
reason of any action taken by a fiduciary which con-
sists of full compliance with the reversal under sec-
tion 503C (relating to independent external appeals
procedures for group health plans) of a denial of
claim for benefits (within the meaning of section
503C(i)(2)).
‘‘(11) CONSTRUCTION.—Nothing in this sub-
section shall be construed as authorizing a cause of
action under paragraph (1) for the failure of a
group health plan or health insurance issuer to pro-
vide an item or service that is specifically excluded
under the plan or coverage.
‘‘(12) LIMITATION ON CLASS ACTION LITIGA-
TION.—A claim or cause of action under this sub-
section may not be maintained as a class action, as
a derivative action, or as an action on behalf of any
group of 2 or more claimants.
‘‘(13) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—Nothing in section 410 shall be construed
to preclude the purchase by a group health plan of
insurance to cover any liability or losses arising
178
under a cause of action under subsection (a)(1)(C)
and this subsection.
‘‘(14) RETROSPECTIVE
CLAIMS
FOR
BENE-
FITS.—A cause of action shall not arise under para-
graph (1) where the claim for benefits relates to an
item or service that has already been provided to the
participant or beneficiary under the plan or coverage
and the claim relates solely to the subsequent denial
of payment for the provision of such item or service.
‘‘(15) EXEMPTION FROM PERSONAL LIABILITY
FOR INDIVIDUAL MEMBERS OF BOARDS OF DIREC-
TORS, JOINT BOARDS OF TRUSTEES, ETC.—Any indi-
vidual who is—
‘‘(A) a member of a board of directors of
an employer or plan sponsor; or
‘‘(B) a member of an association, com-
mittee, employee organization, joint board of
trustees, or other similar group of representa-
tives of the entities that are the plan sponsor
of plan maintained by two or more employers
and one or more employee organizations;
shall not be personally liable under this subsection
for conduct that is within the scope of employment
or of plan-related duties of the individuals unless the
179
individual acts in a fraudulent manner for personal
enrichment.
‘‘(16) DEFINITIONS
AND
RELATED
RULES.—
For purposes of this subsection:
‘‘(A) CLAIM
FOR
BENEFITS.—The term
‘claim for benefits’ shall have the meaning given
such term in section 503A(e).
‘‘(B) GROUP
HEALTH
PLAN.—The term
‘group health plan’ shall have the meaning
given such term in section 733(a).
‘‘(C) HEALTH
INSURANCE
COVERAGE.—
The term ‘health insurance coverage’ has the
meaning given such term in section 733(b)(1).
‘‘(D) HEALTH
INSURANCE
ISSUER.—The
term ‘health insurance issuer’ has the meaning
given such term in section 733(b)(2).
‘‘(E) ORDINARY
CARE.—The term ‘ordi-
nary care’ means, with respect to a determina-
tion on a claim for benefits, that degree of care,
skill, and diligence that a reasonable and pru-
dent individual would exercise in making a fair
determination on a claim for benefits of like
kind to the claims involved.
‘‘(F) PERSONAL INJURY.—The term ‘per-
sonal injury’ means a physical injury and in-
180
cludes an injury arising out of the treatment
(or failure to treat) a mental illness or disease.
‘‘(G) TREATMENT
OF
EXCEPTED
BENE-
FITS.—The provisions of this subsection (and
subsection (a)(1)(C)) shall not apply to ex-
cepted benefits (as defined in section 733(c)),
other 
than 
benefits 
described 
in 
section
733(c)(2)(A), in the same manner as the provi-
sions of part 7 do not apply to such benefits
under subsections (b) and (c) of section 732.
(2) 
CONFORMING
AMENDMENT.—Section
502(a)(1) of such Act (29 U.S.C. 1132(a)(1)) is
amended—
(A) by striking ‘‘or’’ at the end of subpara-
graph (A);
(B) in subparagraph (B), by striking
‘‘plan;’’ and inserting ‘‘plan, or’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) for the relief provided for in sub-
section (n) of this section.’’.
(b) AVAILABILITY OF ACTIONS IN STATE COURT.—
(1) JURISDICTION OF STATE COURTS.—Section
502(e)(1) of such Act (29 U.S.C. 1132(e)) is
amended—
181
(A) in the first sentence, by striking ‘‘sub-
section (a)(1)(B)’’ and inserting ‘‘paragraphs
(1)(B), (1)(C), and (7) of subsection (a)’’;
(B) in the second sentence, by striking
‘‘paragraphs (1)(B) and (7)’’ and inserting
‘‘paragraphs (1)(B), (1)(C), and (7)’’; and
(C) by adding at the end the following new
sentence: ‘‘State courts of competent jurisdic-
tion in the State in which the plaintiff resides
and district courts of the United States shall
have concurrent jurisdiction over actions under
subsections (a)(1)(C) and (n).’’.
(2) LIMITATION ON REMOVABILITY OF CERTAIN
ACTIONS IN STATE COURT.—Section 1445 of title
28, United States Code, is amended by adding at
the end the following new subsection:
‘‘(e)(1) A civil action brought in any State court
under subsections (a)(1)(C) and (n) of section 502 of the
Employee Retirement Income Security Act of 1974
against any party (other than the employer, plan, plan
sponsor, or other entity treated under section 502(n) of
such Act as such) arising from a medically reviewable de-
termination may not be removed to any district court of
the United States.
182
‘‘(2) For purposes of paragraph (1), the term ‘medi-
cally reviewable decision’ means a denial of a claim for
benefits under the plan which is described in section
503C(d)(2) of the Employee Retirement Income Security
Act of 1974.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts and omissions, from which
a cause of action arises, occurring on or after the applica-
ble effective date under section 601.
SEC. 403. LIMITATION ON CERTAIN CLASS ACTION LITIGA-
TION.
(a) IN GENERAL.—Section 502 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1132),
as amended by section 402, is further amended by adding
at the end the following:
‘‘(o) LIMITATION ON CLASS ACTION LITIGATION.—
Any claim or cause of action that is maintained under this
section (other than under subsection (n)) or under section
1962 or 1964(c) of title 18, United States Code, in con-
nection with a group health plan, or health insurance cov-
erage issued in connection with a group health plan, as
a class action, derivative action, or as an action on behalf
of any group of 2 or more claimants, may be maintained
only if the class, the derivative claimant, or the group of
claimants is limited to the participants or beneficiaries of
183
a group health plan established by only 1 plan sponsor.
No action maintained by such class, such derivative claim-
ant, or such group of claimants may be joined in the same
proceeding with any action maintained by another class,
derivative claimant, or group of claimants or consolidated
for any purpose with any other proceeding. In this para-
graph, the terms ‘group health plan’ and ‘health insurance
coverage’ have the meanings given such terms in section
733.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to actions com-
menced on or after August 2, 2001. Notwithstanding the
preceding sentence, with respect to class actions, the
amendment made by subsection (a) shall apply with re-
spect to civil actions which are pending on such date in
which a class action has not been certified as of such date.
SEC. 404. LIMITATIONS ON ACTIONS.
Section 502 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1132) (as amended by sec-
tions 402 and 403) is amended further by adding at the
end the following new subsection:
‘‘(p) LIMITATIONS ON ACTIONS RELATING TO GROUP
HEALTH PLANS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no action may be brought under sub-
184
section (a)(1)(B), (a)(2), or (a)(3) by a participant
or beneficiary seeking relief based on the application
of any provision in section 101, subtitle B, or sub-
title D of title I of the Bipartisan Patient Protection
Act (as incorporated under section 714).
‘‘(2) CERTAIN ACTIONS ALLOWABLE.—An ac-
tion may be brought under subsection (a)(1)(B),
(a)(2), or (a)(3) by a participant or beneficiary seek-
ing relief based on the application of section 101,
113, 114, 115, 116, 117, 118(a)(3), 119, or 120 of
the Bipartisan Patient Protection Act (as incor-
porated under section 714) to the individual cir-
cumstances of that participant or beneficiary, except
that—
‘‘(A) such an action may not be brought or
maintained as a class action; and
‘‘(B) in such an action, relief may only
provide for the provision of (or payment of)
benefits, items, or services denied to the indi-
vidual participant or beneficiary involved (and
for attorney’s fees and the costs of the action,
at the discretion of the court) and shall not pro-
vide for any other relief to the participant or
beneficiary or for any relief to any other person.
185
‘‘(3) OTHER PROVISIONS UNAFFECTED.—Noth-
ing in this subsection shall be construed as affecting
subsections (a)(1)(C) and (n).
‘‘(4) ENFORCEMENT
BY
SECRETARY
UNAF-
FECTED.—Nothing in this subsection shall be con-
strued as affecting any action brought by the Sec-
retary.’’.
SEC. 405. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
(a) IN GENERAL.—Subpart C of part 7 of subtitle
B of title I of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1191 et seq.) is amended by add-
ing at the end the following new section:
‘‘SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
‘‘(a) AGREEMENT WITH STATES.—A State may enter
into an agreement with the Secretary for the delegation
to the State of some or all of the Secretary’s authority
under this title to enforce the requirements applicable
under sections 503A, 503B, 503C, and 714 with respect
to health insurance coverage offered by a health insurance
issuer and with respect to a group health plan that is a
non-Federal governmental plan.
‘‘(b) DELEGATIONS.—Any department, agency, or in-
strumentality of a State to which authority is delegated
186
pursuant to an agreement entered into under this section
may, if authorized under State law and to the extent con-
sistent with such agreement, exercise the powers of the
Secretary under this title which relate to such authority.’’.
(b) CLERICAL AMENDMENTS.—The table of contents
in section 1 of such Act is amended—
(1) by inserting after the item relating to sec-
tion 503 the following new items:
‘‘Sec. 503A. Procedures for initial claims for benefits and prior authorization
determinations.
‘‘Sec. 503B. Internal appeals of claims denials.
‘‘Sec. 503C. Independent external appeals procedures.’’;
(2) by inserting after the item relating to sec-
tion 713 the following new item:
‘‘Sec. 714. Patient protection standards.’’; and
(3) by inserting after the item relating to sec-
tion 734 the following new item:
‘‘Sec. 735. Cooperation between Federal and State authorities.’’.
SEC. 406. SENSE OF THE SENATE CONCERNING THE IMPOR-
TANCE OF CERTAIN UNPAID SERVICES.
It is the sense of the Senate that the court should
consider the loss of a nonwage earning spouse or parent
as an economic loss for the purposes of this section. Fur-
thermore, the court should define the compensation for the
loss not as minimum services, but, rather, in terms that
fully compensate for the true and whole replacement cost
to the family.
187
Subtitle B—Association Health
Plans
SEC. 
421. 
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-
188
cluding a corporation or similar organization that
operates on a cooperative basis (within the meaning
of section 1381 of the Internal Revenue Code of
1986)), for substantial purposes other than that of
obtaining 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, through negotiated rulemaking, a
189
procedure under which, subject to subsection (b), the ap-
plicable authority shall certify association health plans
which apply for certification as meeting the requirements
of this part.
‘‘(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, through negotiated rulemaking, for continued certifi-
cation of association health plans under this part.
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED
PLANS.—The applicable authority shall establish a class
190
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
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 Bipartisan Patient Pro-
tection Act,
‘‘(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-
191
erships; barbering and cosmetology; certified public
accounting practices; child care; construction; dance,
theatrical and orchestra productions; disinfecting
and 
pest 
control; 
financial 
services; 
fishing;
foodservice 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 which the Secretary shall prescribe through ne-
gotiated rulemaking.
‘‘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.
192
‘‘(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-
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) IN GENERAL.—Except as provided in
subparagraphs (B) and (C), the members of the
board of trustees are individuals selected from
individuals who are the owners, officers, direc-
tors, or employees of the participating employ-
ers or who are partners in the participating em-
ployers and actively participate in the business.
‘‘(B) LIMITATION.—
193
‘‘(i) GENERAL RULE.—Except as pro-
vided in clauses (ii) and (iii), no such
member is an owner, officer, director, or
employee of, or partner in, a contract ad-
ministrator or other service provider to the
plan.
‘‘(ii) LIMITED EXCEPTION FOR PRO-
VIDERS 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 constitute 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 PROVIDERS OF
MEDICAL CARE.—In the case of a sponsor
which is an association whose membership
consists primarily of providers of medical
care, clause (i) shall not apply in the case
of any service provider described in sub-
paragraph (A) who is a provider of medical
care under the plan.
194
‘‘(C) CERTAIN
PLANS
EXCLUDED.—Sub-
paragraph (A) shall not apply to an association
health plan which is in existence on the date of
the enactment of the Bipartisan Patient Protec-
tion Act.
‘‘(D) 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)(1) 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.
195
The Secretary may by regulation, through negotiated rule-
making, define for purposes of this subsection the terms
‘franchiser’, ‘franchise network’, and ‘franchisee’.
‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.—
‘‘(1) IN
GENERAL.—In the case of a group
health plan described in paragraph (2)—
‘‘(A) the requirements of subsection (a)
and section 801(a)(1) shall be deemed met;
‘‘(B) the joint board of trustees shall be
deemed a board of trustees with respect to
which the requirements of subsection (b) are
met; and
‘‘(C) the requirements of section 804 shall
be deemed met.
‘‘(2) REQUIREMENTS.—A group health plan is
described in this paragraph if—
‘‘(A) the plan is a multiemployer plan; or
‘‘(B) the plan is in existence on April 1,
2001, and would be described in section
3(40)(A)(i) but solely for the failure to meet
the requirements of section 3(40)(C)(ii).
‘‘(3) CONSTRUCTION.—A group health plan de-
scribed in paragraph (2) shall only be treated as an
association health plan under this part if the spon-
sor of the plan applies for, and obtains, certification
196
of the plan as an association health plan under this
part.
‘‘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
197
‘‘(2) all individuals commencing coverage under
the plan after certification under this part must
be—
‘‘(A) active or retired owners (including
self-employed individuals), officers, directors, or
employees of, or partners in, participating em-
ployers; or
‘‘(B) the 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 Bipartisan
Patient Protection Act, an affiliated member of the spon-
sor 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.
198
‘‘(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
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;
199
‘‘(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.
‘‘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
200
‘‘(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 the claims experience of such employer
and do not vary on the basis of the type of
business or industry in which such employer 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
201
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.
‘‘(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
202
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.
‘‘(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 through negotiated rulemaking.
‘‘(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 any law to the extent that it (1) prohibits an exclusion
of a specific disease from such coverage, or (2) is not pre-
empted under section 731(a)(1) with respect to matters
governed by section 711 or 712.
203
‘‘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 actu-
ary, 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
204
‘‘(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, through negotiated
rulemaking, provide for upward adjust-
ments in the amount of such percentage in
specified circumstances in which the plan
specifically 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
205
qualified actuary. The applicable authority
may by regulation, through negotiated
rulemaking, provide for adjustments in the
amount of such insurance in specified cir-
cumstances in which the plan specifically
provides for and maintains reserves in ex-
cess of the amounts required under sub-
paragraph (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 regulations prescribed by the applicable authority
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 actuary may rec-
ommend, 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—
‘‘(1) $500,000, or
206
‘‘(2) such greater amount (but not greater than
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority through nego-
tiated rulemaking, based on the level of aggregate
and specific excess /stop loss insurance provided with
respect to such plan.
‘‘(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 and excess /stop loss insur-
ance as the applicable authority considers appropriate.
Such requirements may be provided by regulation, through
negotiated rulemaking, 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.
‘‘(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-
207
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
(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
208
$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-
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
209
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.
‘‘(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
210
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 pur-
poses 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—
‘‘(A) under which an insurer (meeting such
minimum standards as the applicable authority
may prescribe by regulation through negotiated
rulemaking) provides for payment to the plan
with respect to aggregate claims under the plan
in excess of an amount or amounts specified in
such contract;
211
‘‘(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 through negotiated
rulemaking) provides for payment to the plan
with respect to claims under the plan in connec-
tion 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
‘‘(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—
212
‘‘(1) under which an insurer (meeting such min-
imum standards as the applicable authority may pre-
scribe through negotiated rulemaking) 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 through
negotiated rulemaking); 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
through negotiated rulemaking.
‘‘(j) SOLVENCY STANDARDS WORKING GROUP.—
‘‘(1) IN GENERAL.—Within 90 days after the
date of the enactment of the Bipartisan Patient Pro-
tection Act, the applicable authority shall establish a
Solvency Standards Working Group. In prescribing
the initial regulations under this section, the applica-
213
ble authority shall take into account the rec-
ommendations 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 Asso-
ciation 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; and
‘‘(F) a representative of multiemployer
plans that are group health plans, or their in-
terests.
214
‘‘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 through nego-
tiated rulemaking, 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.
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO
BUSINESS.—The States in which participants and
beneficiaries under the plan are to be located and
215
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
120-day period ending with the date of the applica-
tion, including the following:
216
‘‘(A) RESERVES.—A statement, certified
by the board of trustees of the plan, and a
statement of actuarial opinion, signed by a
qualified actuary, that all applicable require-
ments of section 806 are or will be met in ac-
cordance with regulations which the applicable
authority shall prescribe through negotiated
rulemaking.
‘‘(B) 
ADEQUACY
OF
CONTRIBUTION
RATES.—A statement of actuarial opinion,
signed by a qualified actuary, which sets forth
a description of the extent to which contribution
rates are adequate to provide for the payment
of all obligations and the maintenance of re-
quired 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-
tuarial opinion signed by a qualified actuary,
217
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 pe-
riod referred to in subparagraph (B). The in-
come 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 through nego-
tiated rulemaking, 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
218
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 through negotiated rulemaking. The
applicable authority may require by regulation, through
negotiated rulemaking, 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 503B 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 503C(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).
219
The applicable authority may require by regulation
through negotiated rulemaking such interim reports as it
considers appropriate.
‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—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 actuary
who shall be responsible for the preparation of the mate-
rials comprising information necessary to be submitted by
a qualified actuary under this part. The qualified actuary
shall utilize such assumptions and techniques as are nec-
essary to enable such actuary to form an opinion as to
whether the contents of the matters 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 actuary shall be made with
respect to, and shall be made a part of, the annual report.
220
‘‘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—
‘‘(1) not less than 60 days before the proposed
termination date, provides to the participants and
beneficiaries a written notice of intent to terminate
stating that such termination is intended and the
proposed 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 through negotiated rulemaking.
‘‘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
health insurance coverage shall continue to meet the re-
221
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 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 corrective
action as the actuary determines necessary to ensure com-
pliance with section 806. Not later than 30 days after re-
ceiving from the actuary recommendations for corrective
actions, the board shall notify the applicable authority (in
such form and manner as the applicable authority may
prescribe by regulation through negotiated rulemaking) of
such recommendations 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 rec-
ommendations. 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 action taken by the board until the requirements
of section 806 are met.
222
‘‘(b) MANDATORY TERMINATION.—In any case in
which—
‘‘(1) the applicable authority has been notified
under subsection (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 requirements of section 806 and has not been
notified by the board of trustees of the plan that
corrective action has restored compliance with such
requirements; 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
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.
223
‘‘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 through nego-
tiated rulemaking, the Secretary shall, upon notice to the
plan, apply to the appropriate United States district court
for appointment of the Secretary as trustee to administer
the plan for the duration of the insolvency. The plan may
appear as a party and other interested persons may inter-
vene in the proceedings at the discretion of the court. The
court shall appoint such Secretary trustee if the court de-
termines that the trusteeship is necessary to protect the
interests of the participants and beneficiaries or providers
of medical care or to avoid any unreasonable deterioration
of the financial condition of the plan. The trusteeship of
such Secretary shall continue until the conditions de-
scribed in the first sentence of this subsection are rem-
edied or the plan is terminated.
224
‘‘(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
through negotiated rulemaking, and applicable provi-
sions 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;
225
‘‘(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 through negotiated rulemaking
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;
226
‘‘(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
227
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.
228
‘‘(g) PERSONNEL.—In accordance with regulations
which shall be prescribed by the Secretary through nego-
tiated rulemaking, the Secretary shall appoint, retain, and
compensate accountants, actuaries, 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 Bipartisan Patient Protection Act.
‘‘(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
or contributions received by insurers or health main-
229
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).
‘‘(2) MEDICAL CARE.—The term ‘medical care’
has the meaning provided in section 733(a)(2).
230
‘‘(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.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘applicable author-
ity’ means, in connection with an association
health plan—
‘‘(i) the State recognized pursuant to
subsection (c) of section 506 as the State
to which authority has been delegated in
connection with such plan; or
‘‘(ii) if there if no State referred to in
clause (i), the Secretary.
‘‘(B) EXCEPTIONS.—
‘‘(i) 
JOINT
AUTHORITIES.—Where
such term appears in section 808(3), sec-
tion 807(e) (in the first instance), section
809(a) (in the second instance), section
809(a) (in the fourth instance), and sec-
tion 809(b)(1), such term means, in con-
nection with an association health plan, the
231
Secretary and the State referred to in sub-
paragraph (A)(i) (if any) in connection
with such plan.
‘‘(ii) REGULATORY
AUTHORITIES.—
Where such term appears in section 802(a)
(in the first instance), section 802(d), sec-
tion 
802(e), 
section 
803(d), 
section
805(a)(5), 
section 
806(a)(2), 
section
806(b), section 806(c), section 806(d),
paragraphs (1)(A) and (2)(A) of section
806(g), section 806(h), section 806(i), sec-
tion 806(j), section 807(a) (in the second
instance), section 807(b), section 807(d),
section 807(e) (in the second instance),
section 808 (in the matter after paragraph
(3)), and section 809(a) (in the third in-
stance), such term means, in connection
with an association health plan, the Sec-
retary.
‘‘(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
232
coverage offered to individuals other than in
connection with a group health plan.
‘‘(B) 
TREATMENT
OF
VERY
SMALL
GROUPS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), such term includes coverage offered in
connection with a group health plan that
has fewer than 2 participants as current
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan
year.
‘‘(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
233
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,
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 ACTUARY.—The term ‘quali-
fied actuary’ means an individual who is a member
of the American Academy of Actuaries or meets
such reasonable standards and qualifications as the
Secretary may provide by regulation through nego-
tiated rulemaking.
‘‘(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,
234
‘‘(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 Bipartisan Patient Protection Act, a per-
son 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
235
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))
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
236
employee welfare benefit plan on and after the date
of such demonstration.’’.
(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
(e)’’;
(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
237
(D) by inserting after subsection (c) the
following new subsection:
‘‘(d)(1) Except as provided in subsection (b)(4), the
provisions of this title shall supersede any and all State
laws insofar as they may now or hereafter preclude, 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 under an associa-
238
tion health plan in a State and the filing, with the
applicable State authority, of the policy form in con-
nection 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) For additional provisions relating to association
health plans, see subsections (a)(2)(B) and (b) of section
805.
‘‘(4) 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
the meanings provided such terms in section 811, 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-
239
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
(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 Bipartisan
Patient Protection Act 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.’’.
240
(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’’.
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH
PLANS.—Not later than January 1, 2006, 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.
241
(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
‘‘Sec. 801. Association health plans.
‘‘Sec. 802. Certification of association health plans.
‘‘Sec. 803. Requirements relating to sponsors and boards of trustees.
‘‘Sec. 804. Participation and coverage requirements.
‘‘Sec. 805. Other requirements relating to plan documents, contribution rates,
and benefit options.
‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans pro-
viding health benefits in addition to health insurance coverage.
‘‘Sec. 807. Requirements for application and related requirements.
‘‘Sec. 808. Notice requirements for voluntary termination.
‘‘Sec. 809. Corrective actions and mandatory termination.
‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health plans
providing health benefits in addition to health insurance cov-
erage.
‘‘Sec. 811. State assessment authority.
‘‘Sec. 812. Definitions and rules of construction.’’.
SEC. 422. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is
amended—
(1) in clause (i), by inserting ‘‘for any plan year
of any such plan, or any fiscal year of any such
other arrangement;’’ after ‘‘single employer’’, and by
inserting ‘‘during such year or at any time during
the preceding 1-year period’’ after ‘‘control group’’;
(2) in clause (iii)—
(A) by striking ‘‘common control shall not
be based on an interest of less than 25 percent’’
242
and inserting ‘‘an interest of greater than 25
percent may not be required as the minimum
interest necessary for common control’’; and
(B) by striking ‘‘similar to’’ and inserting
‘‘consistent and coextensive with’’;
(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 determining, after the application of
clause (i), whether benefits are provided to employ-
ees of two or more employers, the arrangement shall
be treated as having only one participating 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 cov-
ered under the arrangement is greater than 75 per-
cent of the aggregate number of all individuals who
are employees or former employees of participating
employers and who are covered under the arrange-
ment;’’.
243
SEC. 423. CLARIFICATION OF TREATMENT OF CERTAIN
COLLECTIVELY 
BARGAINED 
ARRANGE-
MENTS.
(a) IN GENERAL.—Section 3(40)(A)(i) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1002(40)(A)(i)) is amended to read as follows:
‘‘(i)(I) under or pursuant to one or more collec-
tive bargaining agreements which are reached pursu-
ant 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 relations laws, and (II) in ac-
cordance with subparagraphs (C), (D), and (E);’’.
(b) LIMITATIONS.—Section 3(40) of such Act (29
U.S.C. 1002(40)) is amended by adding at the end the
following new subparagraphs:
‘‘(C) For purposes of subparagraph (A)(i)(II), a plan
or other arrangement shall be treated as established or
maintained in accordance with this subparagraph only if
the following requirements are met:
‘‘(i) The plan or other arrangement, and the
employee organization or any other entity sponsoring
the plan or other arrangement, do not—
244
‘‘(I) utilize the services of any licensed in-
surance agent or broker for soliciting or enroll-
ing employers or individuals as participating
employers or covered individuals under the plan
or other arrangement; or
‘‘(II) pay any type of compensation to a
person, other than a full time employee of the
employee organization (or a member of the or-
ganization to the extent provided in regulations
prescribed by the Secretary through negotiated
rulemaking), that is related either to the volume
or number of employers or individuals solicited
or enrolled as participating employers or cov-
ered individuals under the plan or other ar-
rangement, or to the dollar amount or size of
the contributions made by participating employ-
ers or covered individuals to the plan or other
arrangement;
except to the extent that the services used by the
plan, arrangement, organization, or other entity con-
sist solely of preparation of documents necessary for
compliance with the reporting and disclosure re-
quirements of part 1 or administrative, investment,
or consulting services unrelated to solicitation or en-
rollment of covered individuals.
245
‘‘(ii) As of the end of the preceding plan year,
the number of covered individuals under the plan or
other arrangement who are neither—
‘‘(I) employed within a bargaining unit
covered by any of the collective bargaining
agreements with a participating employer (nor
covered on the basis of an individual’s employ-
ment in such a bargaining unit); nor
‘‘(II) present employees (or former employ-
ees who were covered while employed) of the
sponsoring employee organization, of an em-
ployer who is or was a party to any of the col-
lective bargaining agreements, or of the plan or
other arrangement or a related plan or arrange-
ment (nor covered on the basis of such present
or former employment),
does not exceed 15 percent of the total number of
individuals who are covered under the plan or ar-
rangement and who are present or former employees
who are or were covered under the plan or arrange-
ment pursuant to a collective bargaining agreement
with a participating employer. The requirements of
the preceding provisions of this clause shall be treat-
ed as satisfied if, as of the end of the preceding plan
year, such covered individuals are comprised solely
246
of individuals who were covered individuals under
the plan or other arrangement as of the date of the
enactment of the Bipartisan Patient Protection Act
and, as of the end of the preceding plan year, the
number of such covered individuals does not exceed
25 percent of the total number of present and
former employees enrolled under the plan or other
arrangement.
‘‘(iii) The employee organization or other entity
sponsoring the plan or other arrangement certifies
to the Secretary each year, in a form and manner
which shall be prescribed by the Secretary through
negotiated rulemaking that the plan or other ar-
rangement meets the requirements of clauses (i) and
(ii).
‘‘(D) For purposes of subparagraph (A)(i)(II), a plan
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
‘‘(i) all of the benefits provided under the plan
or arrangement consist of health insurance coverage;
or
‘‘(ii)(I) the plan or arrangement is a multiem-
ployer plan; and
‘‘(II) the requirements of clause (B) of the pro-
viso to clause (5) of section 302(c) of the Labor
247
Management Relations Act, 1947 (29 U.S.C.
186(c)) are met with respect to such plan or other
arrangement.
‘‘(E) For purposes of subparagraph (A)(i)(II), a plan
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
‘‘(i) the plan or arrangement is in effect as of
the date of the enactment of the Bipartisan Patient
Protection Act; or
‘‘(ii) the employee organization or other entity
sponsoring the plan or arrangement—
‘‘(I) has been in existence for at least 3
years; or
‘‘(II) demonstrates to the satisfaction of
the Secretary that the requirements of subpara-
graphs (C) and (D) are met with respect to the
plan or other arrangement.’’.
(c) CONFORMING AMENDMENTS TO DEFINITIONS OF
PARTICIPANT AND BENEFICIARY.—Section 3(7) of such
Act (29 U.S.C. 1002(7)) is amended by adding at the end
the following new sentence: ‘‘Such term includes an indi-
vidual who is a covered individual described in paragraph
(40)(C)(ii).’’.
248
SEC. 424. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS.
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL
MISREPRESENTATIONS.—Section 501 of the Employee
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
249
under similar provisions of State public employee re-
lations laws; or
‘‘(3) being a plan or arrangement with respect
to which the requirements of subparagraph (C), (D),
or (E) of section 3(40) are met,
shall, upon conviction, be imprisoned not more than 5
years, be fined under title 18, United States Code, or
both.’’.
(b) CEASE ACTIVITIES ORDERS.—Section 502 of
such Act (29 U.S.C. 1132), as amended by sections 141
and 143, is further amended by adding at the end the
following new subsection:
‘‘(p) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section
733(a)(2))) that—
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
250
censed, registered, or otherwise approved under
the insurance laws of such State; or
‘‘(B) is an association health plan certified
under part 8 and is not operating in accordance
with the requirements under part 8 for such
certification,
a district court of the United States shall enter an
order requiring that the plan or arrangement cease
activities.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply in the case of an association health plan or
other arrangement if the plan or arrangement shows
that—
‘‘(A) all benefits under it referred to in
paragraph (1) consist of health insurance cov-
erage; and
‘‘(B) with respect to each State in which
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in
accordance with applicable State laws that are
not superseded under section 514.
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it
deems necessary to protect the interests of the pub-
251
lic and of persons having claims for benefits against
the plan.’’.
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.—
Section 503 of such Act (29 U.S.C. 1133), as amended
by section 301(b), is amended by adding at the end the
following new subsection:
‘‘(c) ASSOCIATION HEALTH PLANS.—The terms of
each association health plan which is or has been certified
under part 8 shall require the board of trustees or the
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims
filed under the plan.’’.
SEC. 425. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding
at the end the following new subsection:
‘‘(c) CONSULTATION WITH STATES WITH RESPECT
TO ASSOCIATION HEALTH PLANS.—
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under
paragraph (2) with respect to an association health
plan regarding the exercise of—
252
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements
for certification under part 8; and
‘‘(B) the Secretary’s authority to certify
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8.
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association
health plan, as the State to with which consultation
is required. In carrying out this paragraph, the Sec-
retary shall take into account the places of residence
of the participants and beneficiaries under the plan
and the State in which the trust is maintained.’’.
SEC. 426. EFFECTIVE DATE AND TRANSITIONAL AND
OTHER RULES.
(a) EFFECTIVE DATE.—The amendments made by
sections 421, 424, and 425 shall take effect one year from
the date of the enactment. The amendments made by sec-
tions 422 and 423 shall take effect on the date of the
enactment of this Act. The Secretary of Labor shall first
issue all regulations necessary to carry out the amend-
ments made by this subtitle within one year from the date
253
of the enactment. Such regulations shall be issued through
negotiated rulemaking.
(b) EXCEPTION.—Section 801(a)(2) of the Employee
Retirement Income Security Act of 1974 (added by section
421) does not apply in connection with an association
health plan (certified under part 8 of subtitle B of title
I of such Act) existing on the date of the enactment of
this Act, if no benefits provided thereunder as of the date
of the enactment of this Act consist of health insurance
coverage (as defined in section 733(b)(1) of such Act).
(c) TREATMENT
OF CERTAIN EXISTING HEALTH
BENEFITS PROGRAMS.—
(1) IN GENERAL.—In any case in which, as of
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of
providing benefits consisting of medical care for the
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and
such arrangement is licensed under the laws of one
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of
the Employee Retirement Income Security Act of
254
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of
such Act—
(A) such arrangement shall be deemed to
be a group health plan for purposes of title I
of such Act;
(B) the requirements of sections 801(a)(1)
and 803(a)(1) of the Employee Retirement In-
come Security Act of 1974 shall be deemed met
with respect to such arrangement;
(C) the requirements of section 803(b) of
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors
which—
(i) is elected by the participating em-
ployers, with each employer having one
vote; and
(ii) has complete fiscal control over
the arrangement and which is responsible
for all operations of the arrangement;
(D) the requirements of section 804(a) of
such Act shall be deemed met with respect to
such arrangement; and
255
(E) the arrangement may be certified by
any applicable authority with respect to its op-
erations in any State only if it operates in such
State on the date of certification.
The provisions of this subsection shall cease to apply
with respect to any such arrangement at such time
after the date of the enactment of this Act as the
applicable requirements of this subsection are not
met with respect to such arrangement.
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical
care’’, and ‘‘participating employer’’ shall have the
meanings provided in section 812 of the Employee
Retirement Income Security Act of 1974, except
that the reference in paragraph (7) of such section
to an ‘‘association health plan’’ shall be deemed a
reference to an arrangement referred to in this sub-
section.
256
TITLE V—AMENDMENTS TO THE
INTERNAL 
REVENUE 
CODE
OF 1986
Subtitle A—Application of Patient
Protection Provisions
SEC. 501. APPLICATION TO GROUP HEALTH PLANS UNDER
THE INTERNAL REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986 is amended—
(1) in the table of sections, by inserting after
the item relating to section 9812 the following new
item:
‘‘Sec. 9813. Standard relating to patients’ bill of rights.’’;
and
(2) by inserting after section 9812 the fol-
lowing:
‘‘SEC. 9813. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘A group health plan shall comply with the require-
ments of title I of the Bipartisan Patient Protection Act
and sections 503A through 503C of the Employee Retire-
ment Income Security Act of 1974 (as in effect as of the
date of the enactment of such Act), and such requirements
shall be deemed to be incorporated into this section.’’.
257
SEC. 502. CONFORMING ENFORCEMENT FOR WOMEN’S
HEALTH AND CANCER RIGHTS.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986, as amended by section 501, is further
amended—
(1) in the table of sections, by inserting after
the item relating to section 9813 the following new
item:
‘‘Sec. 9814. Standard relating to women’s health and cancer
rights.’’;
and
(2) by inserting after section 9813 the fol-
lowing:
‘‘SEC. 9814. STANDARD RELATING TO WOMEN’S HEALTH
AND CANCER RIGHTS.
‘‘The provisions of section 713 of the Employee Re-
tirement Income Security Act of 1974 (as in effect as of
the date of the enactment of this section) shall apply to
group health plans as if included in this subchapter.’’.
Subtitle B—Health Care Coverage
Access Tax Incentives
SEC. 511. EXPANSION OF AVAILABILITY OF ARCHER MED-
ICAL SAVINGS ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MED-
ICAL SAVINGS ACCOUNTS.—
258
(1) IN GENERAL.—Subsections (i) and (j) of
section 220 of the Internal Revenue Code of 1986
are hereby repealed.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of
such Code is amended by striking subparagraph
(D).
(B) Section 138 of such Code is amended
by striking subsection (f).
(b) AVAILABILITY NOT LIMITED TO ACCOUNTS FOR
EMPLOYEES
OF
SMALL
EMPLOYERS
AND
SELF-EM-
PLOYED INDIVIDUALS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(1) of such Code (relating to eligible indi-
vidual) is amended to read as follows:
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any
individual if—
‘‘(i) such individual is covered under a
high deductible health plan as of the 1st
day of such month, and
‘‘(ii) such individual is not, while cov-
ered under a high deductible health plan,
covered under any health plan—
259
‘‘(I) which is not a high deduct-
ible health plan, and
‘‘(II) which provides coverage for
any benefit which is covered under the
high deductible health plan.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 220(c)(1) of such Code is
amended by striking subparagraph (C).
(B) Section 220(c) of such Code is amend-
ed by striking paragraph (4) (defining small
employer) and by redesignating paragraph (5)
as paragraph (4).
(C) Section 220(b) of such Code is amend-
ed by striking paragraph (4) (relating to deduc-
tion limited by compensation) and by redesig-
nating paragraphs (5), (6), and (7) as para-
graphs (4), (5), and (6), respectively.
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section
220(b) of such Code is amended to read as follows:
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of
the annual deductible (as of the first day of such
260
month) of the individual’s coverage under the high
deductible health plan.’’.
(2) CONFORMING AMENDMENT.—Clause (ii) of
section 220(d)(1)(A) of such Code is amended by
striking ‘‘75 percent of’’.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph
(4) of section 220(b) of such Code (as redesignated by
subsection (b)(2)(C)) is amended to read as follows:
‘‘(4) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be
reduced (but not below zero) by the amount which
would (but for section 106(b)) be includible in the
taxpayer’s gross income for such taxable year.’’.
(e) REDUCTION
OF
PERMITTED
DEDUCTIBLES
UNDER HIGH DEDUCTIBLE HEALTH PLANS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(2) of such Code (defining high deductible
health plan) is amended—
(A) by striking ‘‘$1,500’’ in clause (i) and
inserting ‘‘$1,000’’; and
(B) by striking ‘‘$3,000’’ in clause (ii) and
inserting ‘‘$2,000’’.
261
(2) CONFORMING AMENDMENT.—Subsection (g)
of section 220 of such Code is amended to read as
follows:
‘‘(g) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1998, each
dollar amount in subsection (c)(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 such taxable year begins by sub-
stituting ‘calendar year 1997’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(2) SPECIAL
RULES.—In the case of the
$1,000 amount in subsection (c)(2)(A)(i) and the
$2,000 amount in subsection (c)(2)(A)(ii), para-
graph (1)(B) shall be applied by substituting ‘cal-
endar year 2000’ for ‘calendar year 1997’.
‘‘(3) ROUNDING.—If any increase under para-
graph (1) or (2) is not a multiple of $50, such in-
crease shall be rounded to the nearest multiple of
$50.’’.
262
(f) PROVIDING INCENTIVES FOR PREFERRED PRO-
VIDER ORGANIZATIONS TO OFFER MEDICAL SAVINGS AC-
COUNTS.—
(1) 
PREVENTIVE
CARE
COVERAGE
PER-
MITTED.—Clause (ii) of section 220(c)(2)(B) of such
Code is amended by striking ‘‘preventive care if’’
and all that follows and inserting ‘‘preventive care’’.
(2) TREATMENT
OF
NETWORK
SERVICES.—
Subparagraph (B) of section 220(c)(2) of such Code
is amended by adding at the end the following new
clause:
‘‘(iii) 
TREATMENT
OF
NETWORK
SERVICES.—In the case of a health plan
which provides benefits for services pro-
vided by providers in a network (as defined
in section 161 of the Patient’s Bill of
Rights Act of 2001) and which would
(without regard to services provided by
providers outside the network) be a high
deductible health plan, such plan shall not
fail to be a high deductible health plan
because—
‘‘(I) the annual deductible for
services provided by providers outside
the network exceeds the applicable
263
maximum dollar amount in clause (i)
or (ii), or
‘‘(II) the annual out-of-pocket ex-
penses required to be paid for services
provided by providers outside the net-
work exceeds the applicable dollar
amount in clause (iii).
The annual deductible taken into account
under subsection (b)(2) with respect to a
plan to which the preceding sentence ap-
plies shall be the annual deductible for
services provided by providers within the
network.’’.
(g) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED
UNDER CAFETERIA PLANS.—Subsection (f) of section
125 of such Code is amended by striking ‘‘106(b),’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 512. DEDUCTION FOR 100 PERCENT OF HEALTH IN-
SURANCE COSTS OF SELF-EMPLOYED INDI-
VIDUALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
of the Internal Revenue Code of 1986 is amended to read
as follows:
264
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to 100 percent of the amount paid during the tax-
able year for insurance which constitutes medical
care for the taxpayer and the taxpayer’s spouse and
dependents.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 513. CREDIT FOR HEALTH INSURANCE EXPENSES OF
SMALL BUSINESSES.
(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:
‘‘SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EX-
PENSES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of a small employer, the health insurance credit
determined under this section for the taxable year is an
amount equal to the applicable percentage of the expenses
paid by the taxpayer during the taxable year for health
265
insurance coverage for such year provided under a new
health plan for employees of such employer.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage is—
‘‘(1) in the case of insurance purchased as a
member of a qualified health benefit purchasing coa-
lition (as defined in section 9841), 30 percent, and
‘‘(2) in the case of insurance not described in
paragraph (1), 20 percent.
‘‘(c) LIMITATIONS.—
‘‘(1) PER
EMPLOYEE
DOLLAR
LIMITATION.—
The amount of expenses taken into account under
subsection (a) with respect to any employee for any
taxable year shall not exceed—
‘‘(A) $2,000 in the case of self-only cov-
erage, and
‘‘(B) $5,000 in the case of family coverage.
In the case of an employee who is covered by a new
health plan of the employer for only a portion of
such taxable year, the limitation under the preceding
sentence shall be an amount which bears the same
ratio to such limitation (determined without regard
to this sentence) as such portion bears to the entire
taxable year.
266
‘‘(2) PERIOD OF COVERAGE.—Expenses may be
taken into account under subsection (a) only with
respect to coverage for the 4-year period beginning
on the date the employer establishes a new health
plan.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
given such term by section 9832(b)(1).
‘‘(2) NEW HEALTH PLAN.—
‘‘(A) IN GENERAL.—The term ‘new health
plan’ means any arrangement of the employer
which provides health insurance coverage to em-
ployees if—
‘‘(i) such employer (and any prede-
cessor employer) did not establish or main-
tain such arrangement (or any similar ar-
rangement) at any time during the 2 tax-
able years ending prior to the taxable year
in which the credit under this section is
first allowed, and
‘‘(ii) 
such 
arrangement 
provides
health insurance coverage to at least 70
percent of the qualified employees of such
employer.
267
‘‘(B) QUALIFIED EMPLOYEE.—
‘‘(i) IN GENERAL.—The term ‘quali-
fied employee’ means any employee of an
employer if the annual rate of such em-
ployee’s compensation (as defined in sec-
tion 414(s)) exceeds $10,000.
‘‘(ii) TREATMENT
OF
CERTAIN
EM-
PLOYEES.—The term ‘employee’ shall in-
clude a leased employee within the mean-
ing of section 414(n).
‘‘(3) SMALL EMPLOYER.—The term ‘small em-
ployer’ has the meaning given to such term by sec-
tion 4980D(d)(2); except that only qualified employ-
ees shall be taken into account.
‘‘(e) SPECIAL RULES.—
‘‘(1) CERTAIN RULES MADE APPLICABLE.—For
purposes of this section, rules similar to the rules of
section 52 shall apply.
‘‘(2) AMOUNTS
PAID
UNDER
SALARY
REDUC-
TION ARRANGEMENTS.—No amount paid or incurred
pursuant to a salary reduction arrangement shall be
taken into account under subsection (a).
‘‘(f) TERMINATION.—This section shall not apply to
expenses paid or incurred by an employer with respect to
268
any arrangement established on or after January 1,
2010.’’.
(b) CREDIT TO BE PART OF GENERAL BUSINESS
CREDIT.—Section 38(b) of such Code (relating to current
year business credit) is amended by striking ‘‘plus’’ at the
end of paragraph (12), by striking the period at the end
of paragraph (13) and inserting ‘‘, plus’’, and by adding
at the end the following:
‘‘(14) in the case of a small employer (as de-
fined in section 45E(d)(3)), the health insurance
credit determined under section 45E(a).’’.
(c) NO CARRYBACKS.—Subsection (d) of section 39
of such Code (relating to carryback and carryforward of
unused credits) is amended by adding at the end the fol-
lowing:
‘‘(10) NO CARRYBACK OF SECTION 45E CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the employee health insurance ex-
penses credit determined under section 45E may be
carried back to a taxable year ending before the date
of the enactment of section 45E.’’.
(d) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code is amended by adding at the end the following
new subsection:
269
‘‘(d) CREDIT FOR SMALL BUSINESS HEALTH INSUR-
ANCE EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the expenses (otherwise al-
lowable as a deduction) taken into account in deter-
mining the credit under section 45E for the taxable
year which is equal to the amount of the credit de-
termined for such taxable year under section
45E(a).
‘‘(2) CONTROLLED
GROUPS.—Persons treated
as a single employer under subsection (a) or (b) of
section 52 shall be treated as 1 person for purposes
of this section.’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the fol-
lowing:
‘‘Sec. 45E. Small business health insurance expenses.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2001, for ar-
rangements established after the date of the enactment
of this Act.
271
connection with the establishment and mainte-
nance of such coalition.
‘‘(B) EXCLUSIONS.—Such term shall not
include any amount used by a qualified health
benefit purchasing coalition (as so defined)—
‘‘(i) for the purchase of real property,
‘‘(ii) as payment to, or for the benefit
of, members (or employees or affiliates of
such members) of such coalition, or
‘‘(iii) for any expense paid or incurred
more than 48 months after the date of es-
tablishment of such coalition.
‘‘(3) TERMINATION.—This subsection shall not
apply—
‘‘(A) to qualified health benefit purchasing
coalition distributions paid or incurred after
December 31, 2009, and
‘‘(B) with respect to start-up costs of a co-
alition which are paid or incurred after Decem-
ber 31, 2010.’’.
(b) QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.—
(1) IN GENERAL.—Chapter 100 of such Code
(relating to group health plan requirements) is
272
amended by adding at the end the following new
subchapter:
‘‘Subchapter D—Qualified Health Benefit
Purchasing Coalition
‘‘Sec.
9841.
Qualified health benefit purchasing coalition.
‘‘SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.
‘‘(a) IN GENERAL.—A qualified health benefit pur-
chasing coalition is a private not-for-profit corporation
which—
‘‘(1) sells health insurance through State li-
censed health insurance issuers in the State in which
the employers to which such coalition is providing
insurance are located, and
‘‘(2) establishes to the Secretary, under State
certification procedures or other procedures as the
Secretary may provide by regulation, that such coali-
tion meets the requirements of this section.
‘‘(b) BOARD OF DIRECTORS.—
‘‘(1) IN GENERAL.—Each purchasing coalition
under this section shall be governed by a Board of
Directors.
‘‘(2) ELECTION.—The Secretary shall establish
procedures governing election of such Board.
273
‘‘(3) MEMBERSHIP.—The Board of Directors
shall—
‘‘(A) be composed of representatives of the
members of the coalition, in equal number, in-
cluding small employers and employee rep-
resentatives of such employers, but
‘‘(B) not include other interested parties,
such as service providers, health insurers, or in-
surance agents or brokers which may have a
conflict of interest with the purposes of the coa-
lition.
‘‘(c) MEMBERSHIP OF COALITION.—
‘‘(1) IN
GENERAL.—A purchasing coalition
shall accept all small employers residing within the
area served by the coalition as members if such em-
ployers request such membership.
‘‘(2) OTHER MEMBERS.—The coalition, at the
discretion of its Board of Directors, may be open to
individuals and large employers.
‘‘(3) VOTING.—Members of a purchasing coali-
tion shall have voting rights consistent with the rules
established by the State.
‘‘(d) DUTIES OF PURCHASING COALITIONS.—Each
purchasing coalition shall—
274
‘‘(1) enter into agreements with small employ-
ers (and, at the discretion of its Board, with individ-
uals and other employers) to provide health insur-
ance benefits to employees and retirees of such em-
ployers,
‘‘(2) where feasible, enter into agreements with
3 or more unaffiliated, qualified licensed health
plans, to offer benefits to members,
‘‘(3) offer to members at least 1 open enroll-
ment period of at least 30 days per calendar year,
‘‘(4) serve a significant geographical area and
market to all eligible members in that area, and
‘‘(5) carry out other functions provided for
under this section.
‘‘(e) LIMITATION ON ACTIVITIES.—A purchasing coa-
lition shall not—
‘‘(1) perform any activity (including certifi-
cation or enforcement) relating to compliance or li-
censing of health plans,
‘‘(2) assume insurance or financial risk in rela-
tion to any health plan, or
‘‘(3) perform other activities identified by the
State as being inconsistent with the performance of
its duties under this section.
275
‘‘(f) ADDITIONAL REQUIREMENTS FOR PURCHASING
COALITIONS.—As provided by the Secretary in regula-
tions, a purchasing coalition shall be subject to require-
ments similar to the requirements of a group health plan
under this chapter.
‘‘(g) RELATION TO OTHER LAWS.—
‘‘(1) 
PREEMPTION
OF
STATE
FICTITIOUS
GROUP LAWS.—Requirements (commonly referred to
as fictitious group laws) relating to grouping and
similar requirements for health insurance coverage
are preempted to the extent such requirements im-
pede the establishment and operation of qualified
health benefit purchasing coalitions.
‘‘(2) ALLOWING
SAVINGS
TO
BE
PASSED
THROUGH.—Any State law that prohibits health in-
surance issuers from reducing premiums on health
insurance coverage sold through a qualified health
benefit purchasing coalition to reflect administrative
savings is preempted. This paragraph shall not be
construed to preempt State laws that impose restric-
tions on premiums based on health status, claims
history, industry, age, gender, or other underwriting
factors.
‘‘(3) NO WAIVER OF HIPAA REQUIREMENTS.—
Nothing in this section shall be construed to change
276
the obligation of health insurance issuers to comply
with the requirements of title XXVII of the Public
Health Service Act with respect to health insurance
coverage offered to small employers in the small
group market through a qualified health benefit pur-
chasing coalition.
‘‘(h) DEFINITION OF SMALL EMPLOYER.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘small employer’
means, with respect to any calendar year, any em-
ployer if such employer employed an average of at
least 2 and not more than 50 qualified employees on
business days during either of the 2 preceding cal-
endar years. For purposes of the preceding sentence,
a preceding calendar year may be taken into account
only if the employer was in existence throughout
such year.
‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which
was not in existence throughout the 1st preceding
calendar year, the determination under paragraph
(1) shall be based on the average number of quali-
fied employees that it is reasonably expected such
employer will employ on business days in the current
calendar year.’’.
277
(2) CONFORMING AMENDMENT.—The table of
subchapters for chapter 100 of such Code is amend-
ed by adding at the end the following item:
‘‘Subchapter D. Qualified health benefit purchasing coalition.’’.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 515. STATE GRANT PROGRAM FOR MARKET INNOVA-
TION.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a program (in this section referred
to as the ‘‘program’’) to award demonstration grants
under this section to States to allow States to demonstrate
the effectiveness of innovative ways to increase access to
health insurance through market reforms and other inno-
vative means. Such innovative means may include (and are
not limited to) any of the following:
(1) Alternative group purchasing or pooling ar-
rangements, such as purchasing cooperatives for
small businesses, reinsurance pools, or high risk
pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both,
in obtaining health insurance.
278
(b) SCOPE; DURATION.—The program shall be lim-
ited to not more than 10 States and to a total period of
5 years, beginning on the date the first demonstration
grant is made.
(c) CONDITIONS FOR DEMONSTRATION GRANTS.—
(1) IN GENERAL.—The Secretary may not pro-
vide for a demonstration grant to a State under the
program unless the Secretary finds that under the
proposed demonstration grant—
(A) the State will provide for demonstrated
increase of access for some portion of the exist-
ing uninsured population through a market in-
novation (other than merely through a financial
expansion of a program initiated before the
date of the enactment of this Act);
(B) the State will comply with applicable
Federal laws;
(C) the State will not discriminate among
participants on the basis of any health status-
related factor (as defined in section 2791(d)(9)
of the Public Health Service Act), except to the
extent a State wishes to focus on populations
that otherwise would not obtain health insur-
ance because of such factors; and
279
(D) the State will provide for such evalua-
tion, in coordination with the evaluation re-
quired under subsection (d), as the Secretary
may specify.
(2) APPLICATION.—The Secretary shall not
provide a demonstration grant under the program to
a State unless—
(A) the State submits to the Secretary
such an application, in such a form and man-
ner, as the Secretary specifies;
(B) the application includes information
regarding how the demonstration grant will ad-
dress issues such as governance, targeted popu-
lation, expected cost, and the continuation after
the completion of the demonstration grant pe-
riod; and
(C) the Secretary determines that the dem-
onstration grant will be used consistent with
this section.
(3) FOCUS.—A demonstration grant proposal
under section need not cover all uninsured individ-
uals in a State or all health care benefits with re-
spect to such individuals.
(d) EVALUATION.—The Secretary shall enter into a
contract with an appropriate entity outside the Depart-
280
ment of Health and Human Services to conduct an overall
evaluation of the program at the end of the program pe-
riod. Such evaluation shall include an analysis of improve-
ments in access, costs, quality of care, or choice of cov-
erage, under different demonstration grants.
(e) OPTION TO PROVIDE FOR INITIAL PLANNING
GRANTS.—Notwithstanding the previous provisions of this
section, under the program the Secretary may provide for
a portion of the amounts appropriated under subsection
(f) (not to exceed $5,000,000) to be made available to any
State for initial planning grants to permit States to de-
velop demonstration grant proposals under the previous
provisions of this section.
(f) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $100,000,000 for each
fiscal year to carry out this section. Amounts appropriated
under this subsection shall remain available until ex-
pended.
(g) STATE DEFINED.—For purposes of this section,
the term ‘‘State’’ has the meaning given such term for
purposes of title XIX of the Social Security Act.
281
TITLE 
VI—EFFECTIVE 
DATES;
COORDINATION 
IN 
IMPLE-
MENTATION
SEC. 601. EFFECTIVE DATES.
(a) GROUP HEALTH COVERAGE.—
(1) IN
GENERAL.—Subject to paragraph (2)
and subsection (d), the amendments made by sec-
tions 201(a), 401, 403, 501, and 502 (and title I in-
sofar as it relates to such sections) shall apply with
respect to group health plans, and health insurance
coverage offered in connection with group health
plans, for plan years beginning on or after October
1, 2002 (in this section referred to as the ‘‘general
effective date’’).
(2) TREATMENT OF COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan
maintained pursuant to one or more collective bar-
gaining agreements between employee representa-
tives and one or more employers ratified before the
date of the enactment of this Act, the amendments
made by sections 201(a), 401, 403, 501, and 502
(and title I insofar as it relates to such sections)
shall not apply to plan years beginning before the
later of—
282
(A) the date on which the last collective
bargaining agreements relating to the plan ter-
minates (excluding any extension thereof agreed
to after the date of the enactment of this Act);
or
(B) the general effective date,
but shall apply not later than 1 year after the gen-
eral effective date. For purposes of subparagraph
(A), any plan amendment made pursuant to a collec-
tive bargaining agreement relating to the plan which
amends the plan solely to conform to any require-
ment added by this Act shall not be treated as a ter-
mination of such collective bargaining agreement.
(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.—
Subject to subsection (d), the amendments made by sec-
tion 202 shall apply with respect to individual health in-
surance coverage offered, sold, issued, renewed, in effect,
or operated in the individual market on or after the gen-
eral effective date.
(c) TREATMENT OF RELIGIOUS NONMEDICAL PRO-
VIDERS.—
(1) IN GENERAL.—Nothing in this Act (or the
amendments made thereby) shall be construed to—
(A) restrict or limit the right of group
health plans, and of health insurance issuers of-
283
fering health insurance coverage, to include as
providers religious nonmedical providers;
(B) require such plans or issuers to—
(i) utilize medically based eligibility
standards or criteria in deciding provider
status of religious nonmedical providers;
(ii) use medical professionals or cri-
teria to decide patient access to religious
nonmedical providers;
(iii) utilize medical professionals or
criteria in making decisions in internal or
external appeals regarding coverage for
care by religious nonmedical providers; or
(iv) compel a participant or bene-
ficiary to undergo a medical examination
or test as a condition of receiving health
insurance coverage for treatment by a reli-
gious nonmedical provider; or
(C) require such plans or issuers to ex-
clude religious nonmedical providers because
they do not provide medical or other required
data, if such data is inconsistent with the reli-
gious nonmedical treatment or nursing care
provided by the provider.
284
(2) RELIGIOUS NONMEDICAL PROVIDER.—For
purposes of this subsection, the term ‘‘religious non-
medical provider’’ means a provider who provides no
medical care but who provides only religious non-
medical treatment or religious nonmedical nursing
care.
(d) TRANSITION FOR NOTICE REQUIREMENT.—The
disclosure of information required under section 121 of
this Act shall first be provided pursuant to—
(1) subsection (a) with respect to a group
health plan that is maintained as of the general ef-
fective date, not later than 30 days before the begin-
ning of the first plan year to which title I applies
in connection with the plan under such subsection;
or
(2) subsection (b) with respect to a individual
health insurance coverage that is in effect as of the
general effective date, not later than 30 days before
the first date as of which title I applies to the cov-
erage under such subsection.
SEC. 602. COORDINATION IN IMPLEMENTATION.
The Secretary of Labor and the Secretary of Health
and Human Services shall ensure, through the execution
of an interagency memorandum of understanding among
such Secretaries, that—
285
(1) regulations, rulings, and interpretations
issued by such Secretaries relating to the same mat-
ter over which such Secretaries have responsibility
under the provisions of this Act (and the amend-
ments made thereby) are administered so as to have
the same effect at all times; and
(2) coordination of policies relating to enforcing
the same requirements through such Secretaries in
order to have a coordinated enforcement strategy
that avoids duplication of enforcement efforts and
assigns priorities in enforcement.
SEC. 603. SEVERABILITY.
(a) IN GENERAL.—Except as provided in subsections
(b) and (c), if any provision of this Act, an amendment
made by this Act, or the application of such provision or
amendment to any person or circumstance is held to be
unconstitutional, the remainder of this Act, the amend-
ments made by this Act, and the application of the provi-
sions of such to any person or circumstance shall not be
affected thereby.
(b) DEPENDENCE OF REMEDIES ON APPEALS.—If
any provision of section 503A, 503B, or 503C of the Em-
ployee Retirement Income Security Act of 1974 (as in-
serted by section 131) or the application of either such
section to any person or circumstance is held to be uncon-
286
stitutional, section 502(n) of such Act (as inserted by sec-
tion 402) shall be deemed to be null and void and shall
be given no force or effect.
(c) REMEDIES.—If any provision of section 502(n)
of the Employee Retirement Income Security Act of 1974
(as inserted by section 402), or the application of such
section to any person or circumstance, is held to be uncon-
stitutional, the remainder of such section shall be deemed
to be null and void and shall be given no force or effect.
TITLE VII—MISCELLANEOUS
PROVISIONS
SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.—Nothing in this Act (or an amend-
ment made by this Act) shall be construed to alter or
amend the Social Security Act (or any regulation promul-
gated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE OF SECRETARY.—The Secretary
of the Treasury shall annually estimate the impact
that the enactment of this Act has on the income
and balances of the trust funds established under
section 201 of the Social Security Act (42 U.S.C.
401).
(2) TRANSFER
OF
FUNDS.—If, under para-
graph (1), the Secretary of the Treasury estimates
287
that the enactment of this Act has a negative impact
on the income and balances of the trust funds estab-
lished under section 201 of the Social Security Act
(42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general reve-
nues of the Federal Government an amount suffi-
cient so as to ensure that the income and balances
of such trust funds are not reduced as a result of
the enactment of such Act.
SEC. 702. CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3))
is amended by striking ‘‘2003’’ and inserting ‘‘2011, ex-
cept that fees may not be charged under paragraphs (9)
and (10) of such subsection after March 31, 2006’’.
SEC. 703. FISCAL YEAR 2002 MEDICARE PAYMENTS.
Notwithstanding any other provision of law, any let-
ter of credit under part B of title XVIII of the Social Se-
curity Act (42 U.S.C. 1395j et seq.) that would otherwise
be sent to the Treasury or the Federal Reserve Board on
September 30, 2002, by a carrier with a contract under
section 1842 of that Act (42 U.S.C. 1395u) shall be sent
on October 1, 2002.
288
SEC. 704. SENSE OF THE SENATE WITH RESPECT TO PAR-
TICIPATION IN CLINICAL TRIALS AND AC-
CESS TO SPECIALTY CARE.
(a) FINDINGS.—The Senate finds the following:
(1) Breast cancer is the most common form of
cancer among women, excluding skin cancers.
(2) During 2001, 182,800 new cases of female
invasive breast cancer will be diagnosed, and 40,800
women will die from the disease.
(3) In addition, 1,400 male breast cancer cases
are projected to be diagnosed, and 400 men will die
from the disease.
(4) Breast cancer is the second leading cause of
cancer death among all women and the leading
cause of cancer death among women between ages
40 and 55.
(5) This year 8,600 children are expected to be
diagnosed with cancer.
(6) 1,500 children are expected to die from can-
cer this year.
(7) There are approximately 333,000 people di-
agnosed with multiple sclerosis in the United States
and 200 more cases are diagnosed each week.
(8) Parkinson’s disease is a progressive disorder
of the central nervous system affecting 1,000,000 in
the United States.
289
(9) An estimated 198,100 men will be diag-
nosed with prostate cancer this year.
(10) 31,500 men will die from prostate cancer
this year. It is the second leading cause of cancer in
men.
(11) While information obtained from clinical
trials is essential to finding cures for diseases, it is
still research which carries the risk of fatal results.
Future efforts should be taken to protect the health
and safety of adults and children who enroll in clin-
ical trials.
(12) While employers and health plans should
be responsible for covering the routine costs associ-
ated with federally approved or funded clinical trials,
such employers and health plans should not be held
legally responsible for the design, implementation, or
outcome of such clinical trials, consistent with any
applicable State or Federal liability statutes.
(b) SENSE OF THE SENATE.—It is the sense of the
Senate that—
(1) men and women battling life-threatening,
deadly diseases, including advanced breast or ovar-
ian cancer, should have the opportunity to partici-
pate in a federally approved or funded clinical trial
recommended by their physician;
290
(2) an individual should have the opportunity to
participate in a federally approved or funded clinical
trial recommended by their physician if—
(A) that individual—
(i) has a life-threatening or serious ill-
ness for which no standard treatment is ef-
fective;
(ii) is eligible to participate in a feder-
ally approved or funded clinical trial ac-
cording to the trial protocol with respect to
treatment of the illness;
(B) that individual’s participation in the
trial offers meaningful potential for significant
clinical benefit for the individual; and
(C) either—
(i) the referring physician is a partici-
pating health care professional and has
concluded that the individual’s participa-
tion in the trial would be appropriate,
based upon the individual meeting the con-
ditions described in subparagraph (A); or
(ii) the participant, beneficiary, or en-
rollee provides medical and scientific infor-
mation establishing that the individual’s
participation in the trial would be appro-
291
priate, based upon the individual meeting
the conditions described in subparagraph
(A);
(3) a child with a life-threatening illness, in-
cluding cancer, should be allowed to participate in a
federally approved or funded clinical trial if that
participation meets the requirements of paragraph
(2);
(4) a child with a rare cancer should be allowed
to go to a cancer center capable of providing high
quality care for that disease; and
(5) a health maintenance organization’s deci-
sion that an in-network physician without the nec-
essary expertise can provide care for a seriously ill
patient, including a woman battling cancer, should
be appealable to an independent, impartial body, and
that this same right should be available to all Ameri-
cans in need of access to high quality specialty care.
SEC. 705. SENSE OF THE SENATE REGARDING FAIR REVIEW
PROCESS.
(a) FINDINGS.—The Senate finds the following:
(1) A fair, timely, impartial independent exter-
nal appeals process is essential to any meaningful
program of patient protection.
292
(2) The independence and objectivity of the re-
view organization and review process must be en-
sured.
(3) It is incompatible with a fair and inde-
pendent appeals process to allow a health mainte-
nance organization to select the review organization
that is entrusted with providing a neutral and unbi-
ased medical review.
(4) The American Arbitration Association and
arbitration standards adopted under chapter 44 of
title 28, United States Code (28 U.S.C. 651 et seq.)
both prohibit, as inherently unfair, the right of one
party to a dispute to choose the judge in that dis-
pute.
(b) SENSE OF THE SENATE.—It is the sense of the
Senate that—
(1) every patient who is denied care by a health
maintenance organization or other health insurance
company should be entitled to a fair, speedy, impar-
tial appeal to a review organization that has not
been selected by the health plan;
(2) the States should be empowered to maintain
and develop the appropriate process for selection of
the independent external review entity;
293
(3) a child battling a rare cancer whose health
maintenance organization has denied a covered
treatment recommended by its physician should be
entitled to a fair and impartial external appeal to a
review organization that has not been chosen by the
organization or plan that has denied the care; and
(4) patient protection legislation should not pre-
empt existing State laws in States where there al-
ready are strong laws in place regarding the selec-
tion of independent review organizations.
SEC. 706. ANNUAL REVIEW.
(a) IN GENERAL.—Not later than 24 months after
the general effective date referred to in section 601(a)(1),
and annually thereafter for each of the succeeding 4 cal-
endar years (or until a repeal is effective under subsection
(b)), the Secretary of Health and Human Services shall
request that the Institute of Medicine of the National
Academy of Sciences prepare and submit to the appro-
priate committees of Congress a report concerning the im-
pact of this Act, and the amendments made by this Act,
on the number of individuals in the United States with
health insurance coverage.
(b) LIMITATION
WITH
RESPECT
TO
CERTAIN
PLANS.—If the Secretary, in any report submitted under
subsection (a), determines that more than 1,000,000 indi-
294
viduals in the United States have lost their health insur-
ance coverage as a result of the enactment of this Act,
as compared to the number of individuals with health in-
surance coverage in the 12-month period preceding the
date of the enactment of this Act, section 402 of this Act
shall be repealed effective on the date that is 12 month
after the date on which the report is submitted, and the
submission of any further reports under subsection (a)
shall not be required.
(c) FUNDING.—From funds appropriated to the De-
partment of Health and Human Services for fiscal years
2003 and 2004, the Secretary of Health and Human Serv-
ices shall provide for such funding as the Secretary deter-
mines necessary for the conduct of the study of the Na-
tional Academy of Sciences under this section.
SEC. 707. DEFINITION OF BORN-ALIVE INFANT.
(a) IN GENERAL.—Chapter 1 of title 1, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 8. ‘Person’, ‘human being’, ‘child’, and ‘individual’
as including born-alive infant
‘‘(a) In determining the meaning of any Act of Con-
gress, or of any ruling, regulation, or interpretation of the
various administrative bureaus and agencies of the United
States, the words ‘person’, ‘human being’, ‘child’, and ‘in-
295
dividual’, shall include every infant member of the species
homo sapiens who is born alive at any stage of develop-
ment.
‘‘(b) As used in this section, the term ‘born alive’,
with respect to a member of the species homo sapiens,
means the complete expulsion or extraction from his or
her mother of that member, at any stage of development,
who after such expulsion or extraction breathes or has a
beating heart, pulsation of the umbilical cord, or definite
movement of voluntary muscles, regardless of whether the
umbilical cord has been cut, and regardless of whether the
expulsion or extraction occurs as a result of natural or
induced labor, caesarean section, or induced abortion.
‘‘(c) Nothing in this section shall be construed to af-
firm, deny, expand, or contract any legal status or legal
right applicable to any member of the species homo sapi-
ens at any point prior to being born alive as defined in
this section.’’.
296
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 1 of title 1, United States
Code, is amended by adding at the end the following new
item:
‘‘8. ‘Person’, ‘human being’, ‘child’, and ‘individual’ as including born-alive in-
fant.’’.
Passed the House of Representatives August 2,
2001.
Attest:
Clerk.
107TH CONGRESS
1ST SESSION
H. R. 2563
AN ACT
To amend the Public Health Service Act, the Em-
ployee Retirement Income Security Act of 1974,
and the Internal Revenue Code of 1986 to pro-
tect consumers in managed care plans and other
health coverage.