167
Title I, Subtitle E
HR 995 SC
‘‘(i) INABILITY
TO
PAY
DEBTS.—A
person satisfies the distress criteria of this
clause if such person breaches a material
payment covenant, under any debt instru-
ment, that is not cured within any grace
period applicable under such covenant.
‘‘(ii) LIQUIDATION
IN
BANKRUPTCY
OR INSOLVENCY PROCEEDINGS.—A person
satisfies the distress criteria of this clause
if—
‘‘(I) such person has filed, or has
had filed against such person, a peti-
tion seeking liquidation in a case
under title 11, United States Code, or
under any similar law of a State or
political subdivision of a State (or a
case described in subparagraph (A)
filed by or against such person has
been converted to a case in which liq-
uidation is sought), and
‘‘(II) such case has not been dis-
missed.
‘‘(iii) REORGANIZATION
IN
BANK-
RUPTCY OR INSOLVENCY PROCEEDINGS.—
168
Title I, Subtitle E
HR 995 SC
A person satisfies the distress criteria of
this clause if—
‘‘(I) such person has filed, or has
had filed against such person, a peti-
tion seeking reorganization in a case
under title 11, United States Code, or
under any similar law of a State or
political subdivision of a State (or a
case described in subparagraph (B)
filed by or against such person has
been converted to such a case in
which reorganization is sought), and
‘‘(II) such case has not been dis-
missed.
‘‘(3) STRATEGY
FOR
PLAN
MAINTENANCE.—
Any strategy for plan maintenance referred to in
paragraph (1) shall include such measures as are
necessary (as determined in accordance with such
regulations as the Secretary may prescribe) to en-
sure that, as of the end of a reasonable period of
time (determined in accordance with such regula-
tions as the Secretary may prescribe)—
‘‘(A) there is no unreasonable risk of fail-
ure by the plan to timely provide benefits under
the terms of the plan, and
169
Title I, Subtitle E
HR 995 SC
‘‘(B) if the plan were to then terminate,
the affairs of the plan could be wound up in a
manner which would result in timely provision
of all benefits for which the plan is then obli-
gated.
‘‘(4) QUALIFIED ACTUARY.—The requirements
of subsection (c) of section 705 shall apply with re-
spect to self-insured group health plans for purposes
of this subsection in the same manner and to the
same extent as such subsection applies to multiple
employer health plans under section 705.
‘‘(5) ELECTION OF RESERVE REQUIREMENTS IN
LIEU OF DISTRESS RULES.—In any case in which
the plan sponsor of a self-insured group health plan
referred to in paragraph (1) makes an election (in
such form and manner as shall be prescribed in reg-
ulations of the Secretary) to have subsection (b)
apply with respect to the plan—
‘‘(A) the preceding paragraphs of this sub-
section shall not apply with respect to such plan
in connection with any distress, and
‘‘(B) subsection (b) shall apply with re-
spect to such plan for the period of such elec-
tion in the same manner and to the same extent
170
Title I, Subtitle E
HR 995 SC
as subsection (b) applies to plans described in
subsection (b)(1).
Any such election may be made before, on, or after
the date on which the plan enters into such distress
and shall apply for a reasonable period of time
(specified in accordance with such regulations of the
Secretary) in relation to such date.
‘‘(d) FUNDING REQUIREMENTS FOR OVERBURDENED
MULTIEMPLOYER PLANS.—
‘‘(1) IN
GENERAL.—If a self-insured group
health plan which is a multiemployer plan is over-
burdened for a plan year, then the plan sponsor
shall, within a reasonable period of time after the
beginning of such plan year, amend the plan, in ac-
cordance with such regulations as the Secretary may
prescribe, to increase required employer contribu-
tions, decrease benefits, or both, to the extent nec-
essary to ensure that the plan is not overburdened
for the subsequent plan year.
‘‘(2) DEFINITIONS.—
‘‘(A) OVERBURDENED
PLAN.—For pur-
poses of this section, a self-insured group health
plan which is a multiemployer plan is ‘overbur-
dened’ for a plan year if the overburden ratio
171
Title I, Subtitle E
HR 995 SC
for the plan for the plan year exceeds 10 per-
cent.
‘‘(B) OVERBURDEN RATIO.—For purposes
of subparagraph (A), the term ‘overburden
ratio’ for a plan for a plan year is a fraction—
‘‘(i) the numerator of which is the ex-
cess of—
‘‘(I) the sum of expected claims
reported and not yet paid as of the
end of the preceding plan year, ex-
pected claims incurred but not yet re-
ported as of the end of the preceding
plan year, expected administrative
costs with respect to such claims, and
the amount of expected incurred
claims for the plan year, over
‘‘(II) the sum of the value of
plan assets of the plan as of the end
of the preceding plan year, expected
earnings on plan assets for the plan
year (if any), and the amount of ex-
pected contributions to the plan for
the plan year, and
172
Title I, Subtitle E
HR 995 SC
‘‘(ii) the denominator of which is the
amount of expected contributions to the
plan for the plan year.
‘‘(e) CORRECTIVE ACTIONS TO AVOID DEPLETION
OF RESERVES FOR SINGLE-EMPLOYER PLANS.—
‘‘(1) ANNUAL REVIEW.—In any case in which
the requirements of subsection (b) are applicable to
a self-insured group health plan, each named fidu-
ciary of such plan shall conduct an annual review of
the plan for the purpose of determining whether the
requirements of subsection (b) are met with respect
to such plan.
‘‘(2) NOTIFICATION OF FAILURE TO MEET RE-
SERVES
AND
REQUIRED
RECOMMENDATIONS.—In
any case in which a named fiduciary of such self-in-
sured group health plan determines that there is
reason to believe that there is or will be a failure to
meet the applicable requirements referred to in para-
graph (1) with respect to such plan, or the Secretary
makes such a determination and so notifies the
named fiduciary, the named fiduciary shall imme-
diately notify a qualified actuary who shall be en-
gaged by the plan on behalf of plan participants and
beneficiaries, and such actuary shall, not later than
the end of the next following month, provide to each
173
Title I, Subtitle E
HR 995 SC
named fiduciary under the plan all information nec-
essary to enable the fiduciary or fiduciaries to take
such corrective action as may be necessary to ensure
compliance with such requirements.
‘‘(3) CORRECTIVE ACTION.—Not later than 10
days after the named fiduciary receives information
from the actuary pursuant to paragraph (2), the
named fiduciary shall notify the participants and
beneficiaries and the Secretary (in such form and
manner as the Secretary may prescribe by regula-
tion) of the nature and extent of the failure referred
to in paragraph (2) and the information provided by
the actuary pursuant to paragraph (2), and shall in-
clude in such notification a description of the actions
(if any) that the plan administrator or any named
fiduciary has taken or plans to take to ensure com-
pliance with the applicable requirements referred to
in paragraph (1). The named fiduciary shall there-
after report to the Secretary, in such form and fre-
quency as the Secretary may specify, regarding cor-
rective action taken by the administrator or named
fiduciary until the applicable requirements referred
to in paragraph (1) are met.
‘‘(4) QUALIFIED ACTUARY.—The requirements
of subsection (c) of section 705 shall apply with re-
174
Title I, Subtitle E
HR 995 SC
spect to self-insured group health plans for purposes
of this subsection in the same manner and to the
same extent as such subsection applies to multiple
employer health plans under section 705.
‘‘(f) CORRECTIVE ACTIONS TO AVOID DEPLETION OF
RESERVES FOR MULTIEMPLOYER PLANS.—
‘‘(1) ANNUAL
REVIEW.—Not later than 3
months after the beginning of each plan year, the
plan sponsor of each self-insured group health plan
which is a multiemployer plan shall conduct a review
of the plan for the purpose of determining whether
the plan will be overburdened for such plan year.
‘‘(2) NOTIFICATION THAT PLAN WILL BE OVER-
BURDENED
AND
REQUIRED
RECOMMENDATIONS.—
In any case in which the plan sponsor of such multi-
employer plan determines that there is reason to be-
lieve that the plan will be overburdened for a plan
year, or the Secretary makes such a determination
and so notifies the plan sponsor, the plan sponsor
shall immediately notify a qualified actuary who
shall be engaged by the plan on behalf of plan par-
ticipants and beneficiaries, and such actuary shall,
not later than the end of the next following month,
provide to the plan sponsor all information necessary
to enable the plan sponsor to take such corrective
175
Title I, Subtitle E
HR 995 SC
action as may be necessary to ensure that the plan
will not be overburdened for such plan year.
‘‘(3) CORRECTIVE ACTION.—Not later than 10
days after the plan sponsor receives information
from the actuary pursuant to paragraph (2), the
plan sponsor shall notify the participants and bene-
ficiaries and the Secretary (in such form and man-
ner as the Secretary may prescribe by regulation)
that there is reason to believe that the plan will be
overburdened for the plan year and of the extent to
which the plan will be overburdened for the plan
year and the information provided by the actuary
pursuant to paragraph (2), and shall include in such
notification a description of the actions (if any) that
the plan sponsor has taken or plans to take in re-
sponse to ensure that the plan will not be overbur-
dened for such plan year. The plan sponsor shall
thereafter report to the Secretary, in such form and
frequency as the Secretary may specify, regarding
corrective action taken by the plan sponsor.
‘‘(4) QUALIFIED ACTUARY.—The requirements
of subsection (c) of section 705 shall apply with re-
spect to self-insured group health plans which are
multiemployer plans for purposes of this subsection
in the same manner and to the same extent as such
176
Title I, Subtitle E
HR 995 SC
subsection applies to multiple employer health plans
under section 705.
‘‘SEC. 
611. 
TERMINATION 
OF 
SELF-INSURED 
GROUP
HEALTH PLANS.
‘‘In the case of any self-insured group health plan
(as defined in section 610(a))—
‘‘(1) NOTICE REQUIREMENTS FOR VOLUNTARY
TERMINATION.—Except as provided in paragraph
(2), the plan may terminate only if, not less than 60
days before the proposed termination date, the plan
administrator provides to the participants and bene-
ficiaries a written notice of intent to terminate stat-
ing that such termination is intended and the pro-
posed termination date.
‘‘(2) MANDATORY TERMINATION.—In any case
in which—
‘‘(A) the Secretary has been notified under
section 610(e)(3) of a failure of the plan to
meet the applicable requirements referred to in
section 610(e)(1) or has been notified under
section 610(f)(3) that the plan will be overbur-
dened and has not been notified by the adminis-
trator or the plan within the time prescribed by
the Secretary that corrective action has restored
compliance with such requirements or prevented
177
Title I, Subtitle E
HR 995 SC
the plan from being overburdened for the plan
year, and
‘‘(B) the Secretary directs the plan admin-
istrator of the plan to terminate the plan,
the administrator of the plan shall terminate the
plan. In the course of the termination, the adminis-
trator shall take such actions as the Secretary may
require 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.’’.
(b) CLERICAL AMENDMENT.—The table of contents
in section 1 of such Act is amended by inserting after the
item relating to section 609 the following new items:
‘‘Sec. 610. Special rules for self-insured group health plans.
‘‘Sec. 611. Termination of self-insured group health plans.’’.
SEC. 1402. EFFECTIVE DATE.
Subsections (b), (c), (d), and (e) of section 610 of
the Employee Retirement Income Security Act of 1974
(added by section 1401) shall apply with respect to plan
years beginning on or after January 1, 1998. Section 611
of such Act shall apply with respect to plan terminations
occurring on or after such date.
178
Title I, Subtitle F
HR 995 SC
Subtitle F—General Provisions
SEC. 1501. RULE OF CONSTRUCTION.
Nothing in this Act or any amendment made thereby
may be construed to require the coverage of any specific
procedure, treatment, or service as part of a group health
plan or health insurance coverage under this Act or
through regulation.
Æ
HR 995 SC——2
HR 995 SC——3
HR 995 SC——4
HR 995 SC——5
HR 995 SC——6
HR 995 SC——7
HR 995 SC——8
HR 995 SC——9
HR 995 SC——10
HR 995 SC——11
HR 995 SC——12