mark benefits if, with respect to a benchmark plan 
described in paragraph (1), (2), (3), or (4), the pri-
vate group health plan covers all items and services 
offered by the benchmark plan, with out-of-pocket 
cost-sharing for such items and services that is not 
greater than under the benchmark plan. Nothing in 
this title shall be construed to forbid a private group 
health plan from offering additional items and serv-
ices not covered by such a benchmark plan or reduc-
ing out-of-pocket cost-sharing below levels applicable 
under such plan. 
SEC. 407. ENROLLMENT PROCESS FOR ELIGIBLE INDIVID-
UALS. 
(a) IN GENERAL.—The Secretary shall establish a 
process through which an eligible individual— 
(1) may make an annual election to enroll in 
any private group health insurance plan offered by 
a participating insurer that has been awarded a con-
tract under section 405(a) and serves the geographic 
area in which the individual resides, provided that 
such insurer’s geographic area of service and guar-
anteed issuance under this section is conterminous 
with, or includes all of, a geographic area served 
pursuant to an entity’s contact under section 8902 
of title 5, United States Code; and 
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(2) may make an annual election to change the 
election under this clause. 
(b) RULES.—In establishing the process under sub-
section (a), the Secretary shall use rules similar to the 
rules for enrollment, disenrollment, and termination of en-
rollment under the Federal employees health benefits pro-
gram under chapter 89 of title 5, United States Code, in-
cluding the application of the guaranteed issuance provi-
sion described in subsection (c). 
(c) GUARANTEED ISSUANCE.—An eligible individual 
who is eligible to enroll for health benefits coverage under 
a private group health insurance plan that has been 
awarded a contract under section 405(a) at a time during 
which elections are accepted under this title with respect 
to the plan shall not be denied enrollment based on any 
health 
status-related 
factor 
(described 
in 
section 
2702(a)(1) of the Public Health Service Act (42 U.S.C. 
300gg–1(a)(1))) or any other factor. 
SEC. 408. PLAN PREMIUMS. 
(a) IN GENERAL.—Each purchasing pool operator 
shall negotiate (or, in the case of a purchasing pool oper-
ated pursuant to section 403(b)(1)(B), shall otherwise de-
termine) a premium for each private group health insur-
ance plan offered by a participating insurer. 
(b) PERMITTED PROFIT MARGINS.— 
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(1) IN
GENERAL.—Each premium negotiated 
under subsection (a) may not permit a profit margin 
that exceeds the applicable percentage (as defined in 
paragraph (2)). 
(2) APPLICABLE
PERCENTAGE
DEFINED.—In 
this subsection, the term ‘‘applicable percentage’’ 
means— 
(A) for the first 3 years that a purchasing 
pool is operated, 2 percent; 
(B) for any subsequent year, the percent-
age determined by the purchasing pool oper-
ator, which may not be— 
(i) less than the profit margin per-
mitted under the Federal employees health 
benefits program under chapter 89 of title 
5, United States Code; or 
(ii) more than a multiple, established 
by the Secretary for purposes of this sub-
section, of profit margins permitted under 
such program. 
SEC. 409. ENROLLEE PREMIUM SHARE. 
(a) IN GENERAL.—A participating insurer offering a 
private group health insurance plan that has been awarded 
a contract under section 405(a) in which the eligible indi-
vidual is enrolled may not deny, limit, or condition the 
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coverage (including out-of-pocket cost-sharing) or provi-
sion of health benefits coverage or vary or increase the 
enrollee premium share under the plan based on any 
health 
status-related 
factor 
described 
in 
section 
2702(a)(1) of the Public Health Service Act (42 U.S.C. 
300gg–1(a)(1)) or any other factor. 
(b) RISK-ADJUSTED PLAN PAYMENTS
AND PRE-
MIUMS CHARGED TO ENROLLEES.— 
(1) IN
GENERAL.—For each private group 
health insurance plan operated by a participating in-
surer, the pool operator shall adjust premium pay-
ments to compensate for the difference in health risk 
factors between plan enrollees and State residents as 
a whole (including residents who are not eligible in-
dividuals). Such adjustments shall employ risk-ad-
justment mechanisms promulgated by the Secretary. 
(2) ADDITIONAL ADJUSTMENTS.—The pool op-
erator shall also provide additional adjustments to 
premium payments that compensate participating in-
surers for the cost of keeping out-of-pocket cost- 
sharing 
amounts 
consistent 
with 
section 
404(c)(9)(B). 
(3) ENROLLEE PREMIUM COSTS.—The adjust-
ments described in this subsection shall not affect 
enrollee premium shares, which shall be based on the 
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premium that would be charged for enrollees with 
health risk factors for State residents as a whole (as 
described in paragraph (1)), without taking into ac-
count 
cost-sharing 
adjustments 
under 
section 
404(c)(9)(B). 
(c) AMOUNT OF PREMIUM.—The amount of the en-
rollee premium share shall be equal to premium amounts 
(if any) above the applicable cap set pursuant to section 
404(c)(10), plus 100 percent of the remainder minus the 
applicable percentage (as defined in section 36(b) of the 
Internal Revenue Code of 1986, as added by section 311). 
SEC. 410. PAYMENTS TO PURCHASING POOL OPERATORS 
AND PAYMENTS TO PARTICIPATING INSUR-
ERS. 
The Secretary shall establish procedures for making 
payments to each purchasing pool operator as follows: 
(1) RISK-ADJUSTMENT
PAYMENT.—The Sec-
retary shall pay each purchasing pool operator for 
the net costs of risk-adjusted payments to plans 
under section 409(b), to the extent the sum of up-
ward adjustments exceeds the sum of downward ad-
justments for the pool operator. 
(2) 
STOP-LOSS
AND
REINSURANCE
PAY-
MENTS.— 
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(A) IN GENERAL.—The Secretary shall pay 
each purchasing pool operator for the applicable 
percentage (as defined in subparagraph (B)) 
of— 
(i) the costs of any stop-loss coverage 
funded by the purchasing pool operator 
under section 405(d)(1); and 
(ii) any reinsurance provided in ac-
cordance with section 405(d)(2). 
(B) 
APPLICABLE
PERCENTAGE
DE-
FINED.—In this paragraph, the term ‘‘applica-
ble percentage’’ means— 
(i) for the first 3 years that a pur-
chasing pool is operated, 100 percent; 
(ii) for the next 2 years that such 
purchasing pool is operated, 50 percent; 
and 
(iii) for any subsequent year, 0 per-
cent. 
(3) PAYMENTS
NECESSARY
TO
KEEP
COST- 
SHARING
WITHIN
APPLICABLE
LIMITS.—The Sec-
retary shall make payments to purchasing pool oper-
ators to reimburse purchasing pool operators for the 
amount paid by such operators to participating in-
surers necessary to keep out-of-pocket cost-sharing 
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for individuals with limited ability to pay within ap-
plicable limits. 
(4) PAYMENT FOR ADMINISTRATIVE COSTS.— 
The Secretary shall make payments to each pur-
chasing pool operator for necessary pool administra-
tive expenses. 
(5) PAYMENTS TO OPM.—In the case of a pur-
chasing pool described in section 403(b)(1)(B), pay-
ments under this section shall be made to the Direc-
tor of the Office of Personnel Management. 
SEC. 411. STATE-BASED REINSURANCE PROGRAMS. 
(a) ESTABLISHMENT.—The Secretary shall establish 
standards for State-based reinsurance programs for eligi-
ble individuals to guard against adverse selection and to 
improve the functioning of the individual health insurance 
market. 
(b) GRANTS FOR STATEWIDE REINSURANCE PRO-
GRAMS.— 
(1) IN GENERAL.—The Secretary may award 
grants to States for the reasonable costs incurred in 
providing reinsurance under this section, consistent 
with standards developed by the Secretary, for cov-
erage offered in the individual health insurance mar-
ket and through State-based purchasing pools de-
scribed in section 403. 
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(2) LIMITATION.—Such grants may not pay for 
reinsurance extending beyond individuals in the top 
3 percent of the national health care spending dis-
tribution, as determined by the Secretary. 
(3) APPLICATION.—A State desiring a grant 
under this section shall submit an application to the 
Secretary in such manner, at such time, and con-
taining such information as the Secretary may re-
quire. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to the Sec-
retary such sums as may be necessary for making 
grants under this section. 
SEC. 412. COVERAGE UNDER INDIVIDUAL HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Eligible individuals may use cred-
its allowed under the Internal Revenue Code of 1986 (in-
cluding supplemental assistance provided under such 
Code) for the purchase of health insurance coverage to en-
roll in State-licensed individual health insurance meeting 
the conditions of participation described in subsection (b). 
(b) CONDITIONS OF PARTICIPATION.—The Secretary 
shall promulgate regulations that establish the terms and 
conditions under which an entity may participate in the 
program under this section and that include the following: 
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(1) PLAN MARKETING.—Conditions of partici-
pation for plans in the individual market (as devel-
oped by the Secretary) that— 
(A) ensure that consumers receive the con-
sumer information described in paragraph (2) 
before selecting a plan; and 
(B) detect, deter, and penalize marketing 
fraud by entities offering or purporting to offer 
individual insurance. 
(2) CONSUMER
INFORMATION.—Requirements 
for each entity offering individual insurance to pro-
vide eligible individuals with information in a uni-
form and easily comprehensible manner that allows 
for informed comparisons by eligible individuals and 
that includes information regarding the health bene-
fits coverage, costs, provider networks, quality, the 
amount and proportion of health insurance premium 
payments that go directly to patient care, and the 
plan’s coverage rules (including amount, duration, 
and scope limits) and out-of-pocket cost-sharing 
(both inside and outside plan networks) for each es-
sential service recommended by the National Advi-
sory Commission on Expanded Access to Health 
Care and adopted by Congress under title III (which 
shall be prominently identified as an essential serv-
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ice, including by reference to the Commission rec-
ommendation denoting the service as essential). To 
the maximum extent feasible, such requirements 
shall specify that the content and presentation of the 
information shall be provided in the same manner as 
similar information is presented to enrollees in the 
Federal employees health benefits program under 
chapter 89 of title 5, United States Code. 
(3) OTHER
CONDITIONS, 
INCLUDING
THE 
ELIMINATION OF BARRIERS TO AFFORDABLE COV-
ERAGE.— 
(A) IN GENERAL.—Requirements for each 
entity offering individual insurance to abide by 
conditions of participation that the Secretary 
believes are reasonable and appropriate meas-
ures to address barriers to affordable health in-
surance coverage. 
(B) SPECIFIC CONDITIONS.—The require-
ments developed by the Secretary under sub-
paragraph (A) shall include (but need not be 
limited to)— 
(i) guaranteed renewability, without 
premium increases based on changed indi-
vidual risk; and 
(ii) limits on risk rating. 
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