I 
116TH CONGRESS 
2D SESSION 
H. R. 8527 
To address the high costs of health care services, prescription drugs, and 
health insurance coverage in the United States, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 2, 2020 
Mr. WESTERMAN (for himself, Mr. BURCHETT, Mr. SMUCKER, and Mr. 
RIGGLEMAN) introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees 
on Ways and Means, Education and Labor, the Judiciary, Oversight and 
Reform, House Administration, Rules, the Budget, and Armed Services, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To address the high costs of health care services, prescription 
drugs, and health insurance coverage in the United 
States, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Fair Care Act of 2020’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
TITLE I—MEDISAVE 
Subtitle A—Medisave Accounts and Contributions 
Sec. 101. Establishment of Medisave accounts. 
Sec. 102. Consolidation of HSAs, HRAs, FSAs, and MSAs into Medisave ac-
counts. 
Sec. 103. Health Reimbursement Arrangements and Other Account-Based 
Group Health Plans. 
Sec. 104. Cost-sharing reduction payments as eligible contributions. 
Sec. 105. Direct Primary Care. 
Subtitle B—Assistance to Medisave Accounts 
Sec. 111. Support in implementation. 
Sec. 112. New corporations required to use Medisave. 
Sec. 113. Federal employee health benefits and Medisave. 
Sec. 114. Grants to States for consumer assistance. 
TITLE II—IMPROVING PRIVATE HEALTH INSURANCE 
Subtitle A—Maintaining Protections for Patients With Preexisting Conditions 
Sec. 201. Guaranteed availability of coverage; prohibiting discrimination. 
Subtitle B—Expanding Coverage Options 
Sec. 211. Rules governing association health plans. 
Sec. 212. Clarification of treatment of single employer arrangements. 
Sec. 213. Enforcement provisions relating to association health plans. 
Sec. 214. Cooperation between Federal and State authorities. 
Sec. 215. Effective date and transitional and other rules. 
Sec. 216. Short-term limited duration insurance. 
Subtitle C—Improving Commercial Health Insurance 
Sec. 221. Invisible Guaranteed Coverage Pool Reinsurance Program; tax on ex-
change plans. 
Sec. 222. Employer health insurance mandate repeal. 
Sec. 223. Refundable credits for coverage under a qualified health plan for indi-
viduals offered employer-sponsored insurance. 
Sec. 224. Inclusion in income of certain costs of employer-provided coverage 
under health plans. 
Sec. 225. Change in permissible age variation in health insurance premium 
rates. 
Sec. 226. Premium assistance adjustment to reflect age. 
Sec. 227. Premium assistance. 
Sec. 228. Adding copper plans to Exchanges. 
Sec. 229. Copper and bronze plans. 
Sec. 230. Waivers for State innovation. 
Sec. 231. Enrollment periods. 
Sec. 232. State-operated Exchanges flexibility for open enrollment periods. 
Sec. 233. Promoting health plans that cover individuals in more than one State. 
TITLE III—COMPETITION, TRANSPARENCY AND ACCOUNTABILITY 
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Subtitle A—Provider and Insurer Competition 
Sec. 301. Hospital consolidation. 
Sec. 302. Authority of Federal Trade Commission over certain tax-exempt or-
ganizations. 
Sec. 303. Restoring the application of antitrust laws to the business of health 
insurance. 
Sec. 304. Leveling the playing field between payers and providers. 
Sec. 305. Increasing transparency by removing gag clauses on price and quality 
information. 
Sec. 306. Banning anticompetitive terms in facility and insurance contracts 
that limit access to higher quality, lower cost care. 
Sec. 307. Repealing eligibility of certain ACOs. 
Sec. 308. Repeal of health care reform provisions limiting Medicare exception 
to the prohibition on certain physician referrals for hospitals. 
Sec. 309. Alternative payment model for certain shoppable procedures. 
Subtitle B—Price Transparency 
Sec. 321. Price transparency. 
Sec. 322. Price transparency requirements. 
Sec. 323. Designation of nongovernmental, nonprofit transparency organiza-
tions to lower Americans’ health care costs. 
Sec. 324. Protecting patients and improving the accuracy of provider directory 
information. 
Sec. 325. Ensuring enrollee access to cost-sharing information. 
Sec. 326. Access of individuals to protected health information. 
Sec. 327. Timely bills for patients. 
Sec. 328. Advisory group on reducing burden of hospital administrative require-
ments. 
Sec. 329. Data reporting to improve the transparency regarding how 340B hos-
pital covered entities provide care for patients. 
Sec. 330. Requiring 340B drug discount program reports by DSH hospital cov-
ered entities on low-income utilization rate of outpatient hos-
pital services. 
Sec. 331. Employer benefits reports. 
Sec. 332. Group health plan reporting requirements. 
Sec. 333. Government Accountability Office study on profit- and revenue-shar-
ing in health care. 
Subtitle C—Prescription Drug Competition and Innovation 
Sec. 341. Expedited development and priority review for generic complex drug 
products. 
Sec. 342. Preventing blocking of generic drugs. 
Sec. 343. Ensuring timely access to generics. 
Sec. 344. Preemption of State barriers to the substitution of biosimilar prod-
ucts. 
Sec. 345. Increasing pharmaceutical options to treat an unmet medical need. 
Sec. 346. Provisional approval of new human drugs. 
Sec. 347. Consolidating exclusivity periods for drugs treating rare diseases and 
conditions. 
Sec. 348. Exclusivity period for brand name biological products. 
Sec. 349. Protecting access to biological products. 
Sec. 350. Streamlining the transition of biological products. 
Sec. 351. Regulation of manufacturer-sponsored copay contributions. 
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Sec. 352. Antitrust exemption for private health insurer issuers to negotiate 
wholesale acquisition prices of prescription drugs purchased 
from drug manufacturers. 
Sec. 353. Biological product innovation. 
Sec. 354. Clarifying the meaning of new chemical entity. 
Sec. 355. Prompt approval of drugs related to safety information. 
Sec. 356. Conditions of use for biosimilar biological products. 
Sec. 357. Education on biological products. 
Sec. 358. Congressional review of the Food and Drug Administration rule-
making. 
Sec. 359. Government Accountability Office study of rules. 
Subtitle D—Prescription Drug and Pharmacy Benefit Manager Transparency 
Sec. 361. Patent disclosure requirements. 
Sec. 362. Biological product patent transparency. 
Sec. 363. Orange Book modernization. 
Sec. 364. Modernizing the labeling of certain generic drugs. 
Sec. 365. Requirements with respect to prescription drug benefits. 
Sec. 366. PBM transparency and elimination of DIR fees. 
Sec. 367. Health plan oversight of pharmacy benefit manager services. 
Sec. 368. Study by Comptroller General of United States. 
Subtitle E—Medicare and Medicaid Prescription Drug Reforms 
Sec. 371. Medicare part B rebate by manufacturers for drugs or biologicals 
with prices increasing faster than inflation. 
Sec. 372. Market based part B pricing index. 
Sec. 373. Innovation model testing of Medicare drug payments. 
Sec. 374. Modification of maximum rebate amount under Medicaid drug rebate 
program. 
Subtitle F—Medical Malpractice Reform 
Sec. 381. Definitions. 
Sec. 382. Encouraging speedy resolution of claims. 
Sec. 383. Compensating patient injury. 
Sec. 384. Maximizing patient recovery. 
Sec. 385. Authorization of payment of future damages to claimants in health 
care lawsuits. 
Sec. 386. Product liability for health care providers. 
Sec. 387. Effect on other laws. 
Sec. 388. Limitation on expert witness testimony. 
Sec. 389. Expert witness qualifications. 
Sec. 390. Communications following unanticipated outcome. 
Sec. 391. Affidavit of merit. 
Sec. 392. Notice of intent to commence lawsuit. 
Sec. 393. Limitation on liability for volunteer health care professionals. 
Sec. 394. Rules of construction. 
Sec. 395. Effective date. 
TITLE IV—MEDICARE AND MEDICAID REFORMS 
Subtitle A—Medicaid Reforms 
Sec. 401. Medicaid payment reform. 
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Sec. 402. Income limitations for refundable credits for coverage under a quali-
fied health plan. 
Sec. 403. Medicaid eligibility determinations. 
Sec. 404. Lowering safe harbor threshold with respect to State taxes on health 
care providers. 
Sec. 405. Providing for State approval and implementation of specified waivers 
under the Medicaid program. 
Sec. 406. Deduction for qualified charity care. 
Subtitle B—Medicare Reforms 
Sec. 411. Off-campus provider-based department Medicare site neutral pay-
ment. 
Sec. 412. Eliminating FEHBP eligibility for annuitants. 
Sec. 413. Elimination of Medicare eligibility for certain individuals. 
Sec. 414. Medicare part D tax deduction. 
Sec. 415. Repeal of net investment income tax. 
Sec. 416. Medicare coverage of bad debt. 
Subtitle C—Medicare Choice and Competition 
Sec. 421. Competitive bidding and premiums under unified Medicare. 
Sec. 422. New unified eligibility and enrollment rules. 
Sec. 423. New benefit structure under unified Medicare. 
Sec. 424. Late enrollment penalty not to apply for months of any health cov-
erage. 
Sec. 425. Medigap reform. 
Sec. 426. ACO revision. 
Sec. 427. Primary care options. 
Sec. 428. General provisions; effective date. 
Subtitle D—Telehealth Improvements and Expansion 
Sec. 431. Expansion of coverage of telehealth services. 
Sec. 432. Expanding the use of telehealth through the waiver of certain re-
quirements. 
Sec. 433. Expanding the use of telehealth for mental health services. 
Sec. 434. Use of telehealth in emergency medical care. 
Sec. 435. Improvements to the process for adding telehealth services. 
Sec. 436. Rural health clinics and Federally qualified health centers. 
Sec. 437. Native American health facilities. 
Sec. 438. Waiver of telehealth restrictions during national emergencies. 
Sec. 439. Use of telehealth in recertification for hospice care. 
Sec. 440. Clarification for fraud and abuse laws regarding technologies pro-
vided to beneficiaries. 
Sec. 441. Study and report on increasing access to telehealth services in the 
home. 
Sec. 442. Analysis of telehealth waivers in alternative payment models. 
Sec. 443. Model to allow additional health professionals to furnish telehealth 
services. 
Sec. 444. Testing of models to examine the use of telehealth under the Medi-
care program. 
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TITLE I—MEDISAVE 
Subtitle A—Medisave Accounts and 
Contributions 
SEC. 101. ESTABLISHMENT OF MEDISAVE ACCOUNTS. 
(a) IN GENERAL.—Part VIII of subchapter F of 
chapter 1 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new section: 
‘‘SEC. 530A. MEDISAVE ACCOUNTS. 
‘‘(a) MEDISAVE ACCOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN
GENERAL.—The term ‘Medisave ac-
count’ means a trust created or organized in the 
United States as a Medisave account exclusively for 
the purpose of paying the qualified medical expenses 
of the account beneficiary, but only if the written 
governing instrument creating the trust meets the 
following requirements: 
‘‘(A) Except in the case of a rollover con-
tribution described in subparagraph (A) or (B) 
of subsection (e)(5), no contribution will be ac-
cepted— 
‘‘(i) unless it is in cash, 
‘‘(ii) to the extent such contribution, 
when added to previous contributions to 
the trust for the calendar year, exceeds the 
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limitation amount specified in subsection 
(b)(1), or 
‘‘(iii) to the extent such contribution, 
when added to the balance of the account, 
exceeds the limitation amount specified in 
subsection (b)(2). 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), an insurance company (as de-
fined in section 816), or another person who 
demonstrates to the satisfaction of the Sec-
retary that the manner in which such person 
will administer the trust will be consistent with 
the requirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(E) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
medical expenses’ means, with respect to an ac-
count beneficiary, amounts paid by such bene-
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ficiary for medical care, but only to the extent 
such amounts are not compensated for by in-
surance or otherwise— 
‘‘(i) for— 
‘‘(I) such individual, 
‘‘(II) the spouse of such indi-
vidual, 
‘‘(III) any dependent (as defined 
in section 152, determined without re-
gard to subsections (b)(1), (b)(2), and 
(d)(1)(B) thereof) of such individual, 
and 
‘‘(IV) any individual who bears a 
relationship to the account beneficiary 
that is described in subparagraph (C) 
or (D) of section 152(d) if the ac-
count beneficiary is or was a depend-
ent of such individual for any taxable 
year ending before or with the taxable 
year in which the individual attained 
18 years of age, and 
‘‘(ii) if, on the date such medical care 
was provided, such individual, spouse or 
dependent to whom such care was provided 
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was covered under the qualified health in-
surance of the account beneficiary. 
‘‘(B) MODIFIED DEFINITION OF MEDICAL 
CARE.—For purposes of subparagraph (A), the 
term ‘medical care’ has the meaning given such 
term by section 213(d), except that such term 
includes— 
‘‘(i) a direct primary care service ar-
rangement, and 
‘‘(ii) predetermined level of access to 
care from an integrated health plan. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the Medisave account was established. 
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers). 
‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Except as provided in section 106(d), 
section 219(f)(5) (relating to employer pay-
ments). 
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‘‘(D) Section 408(g) (relating to commu-
nity property laws). 
‘‘(E) Section 408(h) (relating to custodial 
accounts). 
‘‘(b) LIMITATIONS.— 
‘‘(1) ANNUAL LIMITATION.— 
‘‘(A) IN GENERAL.—The limitation amount 
specified in this paragraph is— 
‘‘(i) $5,000 in the case of a qualified 
health plan with an actuarial value of less 
than 40 percent, 
‘‘(ii) $4,300 in the case of a qualified 
health plan with an actuarial value that is 
40 percent or more and less than 75 per-
cent, and 
‘‘(iii) $3,600 in the case of a qualified 
health plan with an actuarial value that is 
75 percent or more. 
‘‘(B) ACTUARIAL
VALUE
OF
QUALIFIED 
HEALTH PLAN.—For purposes of subparagraph 
(A), the actuarial value of a qualified health 
plan is the percentage of the total average costs 
of covered benefits under the health plan. 
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‘‘(2) ACCOUNT ACCUMULATION LIMITATION.— 
The limitation amount specified in this paragraph is 
$50,000. 
‘‘(3) INDEXING.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2020, each dollar amount contained in para-
graph (1)(A) shall be increased by the medical 
care cost adjustment of such amount for such 
calendar year. 
‘‘(B) 
MEDICAL
CARE
COST
ADJUST-
MENT.—For purposes of subparagraph (A), the 
medical care cost adjustment for any calendar 
year is the percentage (if any) by which— 
‘‘(i) the medical care component of 
the C–CPI–U (as defined in section 
1(f)(6)) for August of the preceding cal-
endar year, exceeds 
‘‘(ii) such component of the C–CPI–U 
(as so defined) for August of 2019. 
‘‘(C) ROUNDING.— 
‘‘(i) ANNUAL LIMITATION.—If any in-
crease in a dollar amount contained in 
paragraph (1)(A) determined under sub-
paragraph (A) is not a multiple of $100, 
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such increase shall be rounded to the near-
est multiple of $100. 
‘‘(ii) ACCOUNT
LIMITATION.—If any 
increase in the dollar amount contained in 
paragraph (2) determined under subpara-
graph (A) is not a multiple of $1,000, such 
increase shall be rounded to the nearest 
multiple of $1,000. 
‘‘(4) COORDINATION WITH OTHER CONTRIBU-
TIONS.—The limitation which would (but for this 
paragraph) apply under paragraphs (1) and (2) to 
an individual for any taxable year shall be reduced 
(but not below zero) by the sum of— 
‘‘(A) the aggregate amount contributed to 
Medisave accounts of such individual which is 
excludable from the taxpayer’s gross income for 
such taxable year under section 106(d), and 
‘‘(B) the aggregate amount contributed to 
Medisave accounts of such individual for such 
taxable year under section 408(d)(9). 
‘‘(5) DEPOSIT
OF
ADVANCE
PREMIUM
TAX 
CREDIT.—An account beneficiary who is eligible for 
an advance payment of the premium tax credit 
under section 36B may elect to have the Secretary 
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deposit the advance payment into the Medisave ac-
count of the account beneficiary. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.— 
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month— 
‘‘(i) any individual who is covered 
under a qualified health plan as of the 1st 
day of such month; and 
‘‘(ii) any individual whose household 
income is greater than 250 percent of the 
Federal poverty level— 
‘‘(I) if such individual is covered 
under a qualified health plan with an 
actuarial value not more than 80 per-
cent; or 
‘‘(II) if— 
‘‘(aa) such individual is cov-
ered under a high deductible 
health plan as of the 1st day of 
such month; and 
‘‘(bb) such individual is not, 
while covered under a high de-
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ductible 
health 
plan, 
covered 
under any health plan— 
‘‘(AA) which is not a 
high deductible health plan; 
and 
‘‘(BB) which provides 
coverage for any benefit 
which is covered under the 
high deductible health plan. 
‘‘(B) 
CERTAIN
COVERAGE
DIS-
REGARDED.—Subparagraph (A) shall be ap-
plied without regard to— 
‘‘(i) coverage for any benefit provided 
by permitted insurance, and 
‘‘(ii) coverage (whether through insur-
ance or otherwise) for accidents, disability, 
dental care, vision care, or long-term care. 
‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI-
GIBLE FOR CERTAIN VETERANS BENEFITS.—An 
individual shall not fail to be treated as an eli-
gible individual for any period merely because 
the individual receives hospital care or medical 
services under any law administered by the Sec-
retary of Veterans Affairs for a service-con-
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nected disability (within the meaning of section 
101(16) of title 38, United States Code). 
‘‘(2) QUALIFIED HEALTH PLAN.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
health plan’ means a health plan that offers 
health insurance coverage. Such term includes 
entitlement to benefits under title XVIII or title 
XIX of the Social Security Act. 
‘‘(B) EXCLUSION
OF
CERTAIN
PLANS.— 
Such term does not include a health plan if 
substantially all of its coverage is disregarded 
under paragraph (1)(B). 
‘‘(C) HEALTH
INSURANCE
COVERAGE.— 
The term ‘health insurance coverage’ means 
benefits consisting of medical care (provided di-
rectly, through insurance or reimbursement, or 
otherwise and including items and services paid 
for as medical care) under any hospital or med-
ical service policy or certificate, hospital or 
medical service plan contract, or health mainte-
nance organization contract offered by a health 
insurance issuer. 
‘‘(D) HEALTH
INSURANCE
ISSUER.—The 
term ‘health insurance issuer’ means an insur-
ance company, insurance service, or insurance 
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organization (including a health maintenance 
organization) which is licensed to engage in the 
business of insurance in a State and which is 
subject to State law which regulates insurance 
(within the meaning of section 514(b)(2) of the 
Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1144(b)(2))). 
‘‘(E) HEALTH
MAINTENANCE
ORGANIZA-
TION.—The term ‘health maintenance organiza-
tion’ means— 
‘‘(i) a Federally qualified health main-
tenance organization (as defined in section 
1301(a) of the Public Health Service Act 
(42 U.S.C. 300e(a))), 
‘‘(ii) an organization recognized under 
State law as a health maintenance organi-
zation, or 
‘‘(iii) a similar organization regulated 
under State law for solvency in the same 
manner and to the same extent as such a 
health maintenance organization. 
‘‘(3) PERMITTED INSURANCE.—The term ‘per-
mitted insurance’ means— 
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‘‘(A) insurance if substantially all of the 
coverage provided under such insurance relates 
to— 
‘‘(i) liabilities incurred under workers’ 
compensation laws, 
‘‘(ii) tort liabilities, 
‘‘(iii) liabilities relating to ownership 
or use of property, or 
‘‘(iv) such other similar liabilities as 
the Secretary may specify by regulations, 
‘‘(B) insurance for a specified disease or 
illness, and 
‘‘(C) insurance paying a fixed amount per 
day (or other period) of hospitalization. 
‘‘(4) FAMILY
COVERAGE.—The term ‘family 
coverage’ means any coverage other than self-only 
coverage. 
‘‘(d) TAX TREATMENT OF ACCOUNTS.— 
‘‘(1) IN GENERAL.—A Medisave account is ex-
empt from taxation under this subtitle unless such 
account has ceased to be a Medisave account. Not-
withstanding the preceding sentence, any Medisave 
account is subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated busi-
ness income of charitable, etc. organizations). 
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‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 
408(e) shall apply to Medisave accounts, and any 
amount treated as distributed under such rules shall 
be treated as not used to pay qualified medical ex-
penses. 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 
EXPENSES.—Any amount paid or distributed out of 
a Medisave account which is used exclusively to pay 
qualified medical expenses of any account beneficiary 
shall not be includible in gross income. 
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED MEDICAL EXPENSES.—Any amount paid 
or distributed out of a Medisave account which is 
not used exclusively to pay the qualified medical ex-
penses of the account beneficiary shall be included in 
the gross income of such beneficiary. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any Medisave account of an individual, para-
graph (2) shall not apply to distributions from 
the Medisave accounts of such individual (to the 
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extent such distributions do not exceed the ag-
gregate excess contributions to all such ac-
counts of such individual for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term excess con-
tribution means any contribution (other than a 
rollover contribution described in paragraph 
(5)) which exceeds the limitations specified in 
subsection (b). 
‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
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tribution from a Medisave account of such ben-
eficiary which is includible in gross income 
under paragraph (2) shall be increased by 20 
percent of the amount which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(5) ROLLOVER CONTRIBUTION.— 
‘‘(A) IN
GENERAL.—An amount is de-
scribed in this subparagraph as a rollover con-
tribution if it meets the requirements of clauses 
(i) and (ii). 
‘‘(i) IN
GENERAL.—Paragraph (2) 
shall not apply to any amount paid or dis-
tributed from a Medisave account to the 
account beneficiary to the extent the 
amount received is paid into a Medisave 
account for the benefit of such beneficiary 
not later than the 60th day after the day 
on which the beneficiary receives the pay-
ment or distribution. 
‘‘(ii) LIMITATION.—This paragraph 
shall not apply to any amount described in 
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clause (i) received by an individual from a 
Medisave account if, at any time during 
the 1-year period ending on the day of 
such receipt, such individual received any 
other amount described in clause (i) from 
a Medisave account which was not includ-
ible in the individual’s gross income be-
cause of the application of this paragraph. 
‘‘(B) ROLLOVER FROM FSA, ARCHER MSA, 
AND HSA.—An amount is described in this sub-
paragraph for a calendar year as a rollover con-
tribution if the amount is the remaining balance 
in a flexible spending account, Archer MSA, or 
health savings account that is contributed to 
the Medisave account for a taxable year ending 
on or before one year after the date of the en-
actment of the Fair Care Act of 2020. 
‘‘(6) COORDINATION WITH MEDICAL EXPENSE 
DEDUCTION.—For purposes of determining the 
amount of the deduction under section 213, any pay-
ment or distribution out of a Medisave account for 
qualified medical expenses shall not be treated as an 
expense paid for medical care. 
‘‘(7) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
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a Medisave account to an individual’s spouse or 
former spouse under a divorce or separation instru-
ment described in clause (i) of section 121(d)(3)(C) 
shall not be considered a taxable transfer made by 
such individual notwithstanding any other provision 
of this subtitle, and such interest shall, after such 
transfer, be treated as a Medisave account with re-
spect to which such spouse is the account bene-
ficiary. 
‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT 
BENEFICIARY.— 
‘‘(A) TREATMENT IF DESIGNATED BENE-
FICIARY
IS
SPOUSE.—If the account bene-
ficiary’s surviving spouse acquires such bene-
ficiary’s interest in a Medisave account by rea-
son of being the designated beneficiary of such 
account at the death of the account beneficiary, 
such Medisave account shall be treated as if the 
spouse were the account beneficiary. 
‘‘(B) OTHER CASES.— 
‘‘(i) IN GENERAL.—If, by reason of 
the death of the account beneficiary, any 
person acquires the account beneficiary’s 
interest in a Medisave account in a case to 
which subparagraph (A) does not apply— 
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‘‘(I) such account shall cease to 
be a Medisave account as of the date 
of death, and 
‘‘(II) an amount equal to the fair 
market value of the assets in such ac-
count on such date shall be includible 
if such person is not the estate of 
such beneficiary, in such person’s 
gross income for the taxable year 
which includes such date, or if such 
person is the estate of such bene-
ficiary, in such beneficiary’s gross in-
come for the last taxable year of such 
beneficiary. 
‘‘(ii) SPECIAL RULES.— 
‘‘(I) REDUCTION
OF
INCLUSION 
FOR
PREDEATH
EXPENSES.—The 
amount includible in gross income 
under clause (i) by any person (other 
than the estate) shall be reduced by 
the amount of qualified medical ex-
penses which were incurred by the de-
cedent before the date of the dece-
dent’s death and paid by such person 
within 1 year after such date. 
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‘‘(II) DEDUCTION
FOR
ESTATE 
TAXES.—An 
appropriate 
deduction 
shall be allowed under section 691(c) 
to any person (other than the dece-
dent or the decedent’s spouse) with 
respect to amounts included in gross 
income under clause (i) by such per-
son. 
‘‘(f) REPORTS.—The Secretary may require— 
‘‘(1) the trustee of a Medisave account to make 
such reports regarding such account to the Secretary 
and to the account beneficiary with respect to con-
tributions, distributions, the return of excess con-
tributions, and such other matters as the Secretary 
determines appropriate, and 
‘‘(2) any person who provides an individual with 
a qualified health plan to make such reports to the 
Secretary and to the account beneficiary with re-
spect to such plan as the Secretary determines ap-
propriate. 
The reports required by this subsection shall be filed at 
such time and in such manner and furnished to such indi-
viduals at such time and in such manner as may be re-
quired by the Secretary. 
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‘‘(g) REGULATIONS AND GUIDANCE.—For purposes 
of this section, the Secretary shall prescribe such regula-
tions or other guidance as the Secretary determines nec-
essary or appropriate to carry out this section, including 
regulations or guidance on the methods acceptable to the 
Secretary for determining qualified health plan actuarial 
value.’’. 
(b) CLERICAL AMENDMENTS.—The table of sections 
for part VIII of subchapter F of chapter 1 of such Code 
is amended by adding at the end the following new item: 
‘‘Sec. 530A. Medisave accounts.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
one year after the date of the enactment of this Act. 
SEC. 102. CONSOLIDATION OF HSAS, HRAS, FSAS, AND MSAS 
INTO MEDISAVE ACCOUNTS. 
(a) TREATMENT OF EMPLOYER PAYMENTS.— 
(1) EXCLUSION
LIMITED
TO
SELF-FUNDED 
MAJOR
MEDICAL
PLAN
OF
EMPLOYERS.—Section 
105(b) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘paid,’’ and inserting ‘‘paid 
under a self-funded major medical plan of the em-
ployer’’. 
(2) EXCLUSION NOT APPLICABLE TO HEALTH 
REIMBURSEMENT
ARRANGEMENTS.—Subsection (h) 
of such Code is amended to read as follows: 
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‘‘(h) EXCLUSION NOT APPLICABLE TO HEALTH RE-
IMBURSEMENT ARRANGEMENTS.—Subsection (b) shall 
not apply to health reimbursement arrangements.’’. 
(3) REPEAL OF EXCLUSIONS FROM INCOME FOR 
ARCHER MSAS, FSAS, AND HSAS.— 
(A) IN
GENERAL.—Section 106 of such 
Code is amended— 
(i) by striking subsections (b), (d), 
and (e), and 
(ii) by redesignating subsections (f) 
and (g) as subsections (d) and (e), respec-
tively. 
(B) 
EXCLUSION
FROM
INCOME
FOR 
MEDISAVE
ACCOUNTS.—Section 106 of such 
Code, as amended by subparagraph (A), is 
amended by inserting after subsection (a) the 
following: 
‘‘(b) CONTRIBUTIONS TO MEDISAVE ACCOUNTS.— 
‘‘(1) IN GENERAL.—In the case of an employee 
who is an eligible individual (as defined in section 
530A(c)(1)), amounts contributed by such employ-
ee’s employer to any Medisave account (as defined in 
section 530A(a)) of such employee shall be treated 
as employer-provided coverage for medical expenses 
under an accident or health plan to the extent such 
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amounts do not exceed the limitations specified in 
clauses (ii) and (iii) of section 530A(a)(1)(A) (deter-
mined without regard to this subsection) which is 
applicable to such employee for such taxable year 
unless such employee is receiving and advance pay-
ment of the premium tax credit under section, then 
such amounts shall not be treated as employer-pro-
vided coverage for medical expense under an acci-
dent or health plan and are subject to taxation as 
personal income. 
‘‘(2) NO CONSTRUCTIVE RECEIPT.—No amount 
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween the contributions referred to in paragraph (1) 
and employer contributions to another health plan of 
the employer. 
‘‘(3) SPECIAL RULE FOR DEDUCTION OF EM-
PLOYER CONTRIBUTIONS.—Any employer contribu-
tion to a Medisave account, if otherwise allowable as 
a deduction under this chapter, shall be allowed only 
for the taxable year in which paid. 
‘‘(4) EMPLOYER
MEDISAVE
ACCOUNT
CON-
TRIBUTIONS
REQUIRED
TO
BE
SHOWN
ON
RE-
TURN.—Every individual required to file a return 
under section 6012 for the taxable year shall include 
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on such return the aggregate amount contributed by 
employers to the Medisave accounts of such indi-
vidual or such individual’s spouse for such taxable 
year. 
‘‘(5) MEDISAVE ACCOUNT CONTRIBUTIONS NOT 
PART OF COBRA COVERAGE.—Paragraph (1) shall 
not apply for purposes of section 4980B. 
‘‘(6) CROSS REFERENCE.—For penalty on fail-
ure by employer to make comparable contributions 
to the Medisave accounts of comparable employees, 
see section 4980G.’’. 
(4) DISTRIBUTION FROM CERTAIN RETIREMENT 
ACCOUNTS
FOR
MEDISAVE
ACCOUNT
FUNDING.— 
Section 408(d)(9) of such Code is amended to read 
as follows: 
‘‘(9) DISTRIBUTION
FOR
MEDISAVE
ACCOUNT 
FUNDING.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is an eligible individual (as defined 
in section 530A(c)(1)) and who elects the appli-
cation of this paragraph for a taxable year, 
gross income of the individual for the taxable 
year does not include a qualified Medisave ac-
count funding distribution to the extent such 
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distribution is otherwise includible in gross in-
come. 
‘‘(B) 
QUALIFIED
MEDISAVE
ACCOUNT 
FUNDING DISTRIBUTION.—For purposes of this 
paragraph, the term ‘qualified Medisave ac-
count funding distribution’ means a distribution 
from an individual retirement plan (other than 
a plan described in subsection (k) or (p)) of the 
employee to the extent that— 
‘‘(i) such distribution is contributed to 
the Medisave account of the individual in 
a direct trustee-to-trustee transfer, and 
‘‘(ii) such distribution— 
‘‘(I) when added to previous con-
tributions to the Medisave account for 
the calendar year does not exceed the 
limitation amount specified in section 
530A(b)(1), and 
‘‘(II) when added to the balance 
of the Medisave account, exceeds the 
limitation amount specified in section 
530A(b)(2). 
‘‘(C) ONE-TIME TRANSFER.—An individual 
may make an election under subparagraph (A) 
only for one qualified Medisave account funding 
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distribution during the lifetime of the indi-
vidual. Such an election, once made, shall be ir-
revocable. 
‘‘(D) APPLICATION OF SECTION 72.—Not-
withstanding section 72, in determining the ex-
tent to which an amount is treated as otherwise 
includible in gross income for purposes of sub-
paragraph (A), the aggregate amount distrib-
uted from an individual retirement plan shall be 
treated as includible in gross income to the ex-
tent that such amount does not exceed the ag-
gregate amount which would have been so in-
cludible if all amounts from all individual retire-
ment plans were distributed. Proper adjust-
ments shall be made in applying section 72 to 
other distributions in such taxable year and 
subsequent taxable years.’’. 
(5) FAILURE
OF
EMPLOYER
TO
MAKE
COM-
PARABLE CONTRIBUTIONS.— 
(A) Section 4980G(a) of such Code is 
amended by striking ‘‘health savings account’’ 
and inserting ‘‘Medisave account’’. 
(B) Section 4980G(c) of such Code is 
amended by striking ‘‘Archer MSAs and health 
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savings accounts’’ and inserting ‘‘Medisave ac-
counts’’. 
(6) W–2 STATEMENTS.—Section 6051(a) of 
such Code is amended— 
(A) by striking paragraph (11) and redes-
ignating paragraphs (12) through (17) as para-
graphs (11) through (16), respectively, and 
(B) by amending paragraph (11), as so re-
designated, to read as follows: 
‘‘(11) the amount contributed to any Medisave 
account (as defined in section 530A) of such em-
ployee or such employee’s spouse,’’. 
(b) OTHER CONFORMING AMENDMENTS.— 
(1) ARCHER
MSAS.—Section 220(a) of such 
Code is amended by adding at the end the following: 
‘‘No amount is allowed as a deduction under the 
preceding sentence for any taxable year beginning 
after one year after the date of the enactment of the 
Fair Care Act of 2020.’’. 
(2) 
HEALTH
SAVINGS
ACCOUNTS.—Section 
223(a) of such Code is amended by adding at the 
end the following: ‘‘No amount is allowed as a de-
duction under the preceding sentence for any taxable 
year beginning after one year after the date of the 
enactment of the Fair Care Act of 2020.’’. 
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(c) ROLLOVER OF FSA, ARCHER MSA, HSA TO 
MEDISAVE ACCOUNT.—Notwithstanding any other provi-
sion of law, if the remaining balance in a health flexible 
spending arrangement, Archer MSA, or health savings ac-
count is transferred to a Medisave account before the end 
of any taxable year ending on or before one year after 
the date of the enactment of the Fair Care Act of 2020, 
such transfer shall be treated as a rollover to the Medisave 
account under section 530A(e)(5)(B) of the Internal Rev-
enue Code of 1986 and the distribution from the health 
flexible spending arrangement, Archer MSA, or health 
savings account shall not be includible in gross income. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
one year after the date of the enactment of this Act. 
SEC. 103. HEALTH REIMBURSEMENT ARRANGEMENTS AND 
OTHER 
ACCOUNT-BASED 
GROUP 
HEALTH 
PLANS. 
The rule published by the Internal Revenue Service, 
the Employee Benefits Security Administration, and the 
Health and Human Services Department relating to 
‘‘Health Reimbursement Arrangements and Other Ac-
count-Based Group Health Plans’’ (June 20, 2019) shall 
have the force and effect of law. Health Reimbursement 
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Arrangements as described in this rule are subject to all 
sections in this title. 
SEC. 104. COST-SHARING REDUCTION PAYMENTS AS ELIGI-
BLE CONTRIBUTIONS. 
(a) ALTERNATIVE WAIVER
FOR STATE INNOVA-
TION.—Section 1332 of the Patient Protection and Af-
fordable Care Act (42 U.S.C. 18052) is amended by add-
ing at the end the following new subsection: 
‘‘(f) ALTERNATIVE WAIVER
FOR STATE INNOVA-
TION.— 
‘‘(1) IN GENERAL.—Notwithstanding any pre-
ceding provision of this section, a State may apply 
to the Secretary for the waiver of any requirement 
of subsection (a)(2) with respect to health insurance 
coverage within that State for plan years beginning 
on or after January 1, 2022, if instead of complying 
with section 1402 the State provides for the dis-
tribution of funding received under paragraph (2) to 
Medisave accounts of qualifying individuals with re-
spect to such State. Such application shall be filed 
at such time and in such manner as the Secretary 
may require, and shall include such information as 
the Secretary may require (including a 10-year 
budget plan for such plan that is budget neutral for 
the Federal Government). 
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‘‘(2) PASS-THROUGH FUNDING.—With respect 
to a State waiver under paragraph (1), under which, 
due to the structure of such waiver, individuals in 
the State would not qualify for cost-sharing reduc-
tions under section 1402 for which they would other-
wise be eligible, the Secretary shall provide for an al-
ternative means by which an amount is transferred 
to the State equal to the aggregate amount of such 
reductions that would have been paid on behalf of 
the participants in the Exchanges established under 
this title— 
‘‘(A) had the State not received such waiv-
er; 
‘‘(B) had references to ‘eligible insureds’ 
under section 1402 referred to ‘qualifying in-
sureds (as defined in section 1332(f))’; 
‘‘(C) had, after application of clause (ii), in 
the case of a qualifying insured enrolled in the 
bronze level of coverage— 
‘‘(i) the percentages specified in sub-
clauses (I), (II), and (III) of section 
1402(c)(1)(B) were references to 84 per-
cent, 77 percent, and 63 percent, respec-
tively; and 
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‘‘(ii) the references in subparagraphs 
(A), (B), and (C) of section 1402(c)(2) to 
94 percent, 87 percent, and 73 percent, re-
spectively, were references to 84 percent, 
77 percent, and 63 percent, respectively; 
and 
‘‘(D) had, after application of clause (ii), 
in the case of a qualifying insured enrolled in 
the copper level of coverage— 
‘‘(i) the percentages specified in sub-
clauses (I), (II), and (III) of section 
1402(c)(1)(B) were references to 74 per-
cent, 67 percent, and 53 percent, respec-
tively; and 
‘‘(ii) the references in subparagraphs 
(A), (B), and (C) of section 1402(c)(2) to 
94 percent, 87 percent, and 73 percent, re-
spectively, were references to 74 percent, 
67 percent, and 53 percent, respectively. 
The amount transferred pursuant to the previous 
sentence shall be determined annually by the Sec-
retary, taking into consideration the experience of 
other States with respect to participation in an Ex-
change and reductions provided under such provi-
sions to residents of the other States, and shall be 
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paid to the State for purposes of implementing such 
waiver. 
‘‘(3) WAIVER
CONSIDERATION
AND
TRANS-
PARENCY.—The provisions of paragraph (4) of sub-
section (a) shall apply to an application for a waiver 
under paragraph (1) in the same manner as such 
provisions apply with respect to an application for a 
waiver under subsection (a)(1), except that, for pur-
poses of this paragraph, the provisions of subsection 
(a)(4)(B)(ii) shall not apply. 
‘‘(4) DETERMINATIONS; TERM
OF
WAIVER.— 
The provisions of subsections (d) and (e) shall apply 
with respect to a determination with respect to an 
application under paragraph (1), and with respect to 
the term of a waiver under such paragraph, in the 
same manner as such provisions apply with respect 
to a determination with respect to an application 
under subsection (a)(1), and with respect to the 
term of a waiver under such subsection. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) MEDISAVE
ACCOUNT.—The term 
‘Medisave account’ has the meaning given such 
term in section 530A(a) of the Internal Rev-
enue Code of 1986. 
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‘‘(B) QUALIFYING
INSURED.—The term 
‘qualifying insured’ means, with respect to a 
State and a year, an individual— 
‘‘(i) who is enrolled in a Medisave ac-
count; 
‘‘(ii) who is enrolled for such year in 
a silver, bronze, or copper level coverage 
offered through an Exchange; and 
‘‘(iii) whose household income is not 
more than 250 percent of the Federal pov-
erty line for a family of the size involved.’’. 
(b) ADDITIONAL AMENDMENTS.—Section 1402 of 
the Patient Protection and Affordable Care Act (42 
U.S.C. 18071) is amended by striking ‘‘not less than 100 
percent but’’ and ‘‘exceeds 100 percent but’’ and ‘‘more 
than 100 percent but’’ each place such phrases appear. 
(c) CONFORMING AMENDMENTS.—Section 1332 of 
the Patient Protection and Affordable Care Act (42 
U.S.C. 18052), as amended by subsection (a), is further 
amended in subsection (a)(4)— 
(1) in subparagraph (A) by striking the period 
and inserting ‘‘, except in the case of a waiver de-
scribed in subsection (f).’’; and 
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(2) in subparagraph (B)(ii) by inserting after 
‘‘an application’’ the following: ‘‘(except in the case 
of a waiver described in subsection (f))’’. 
(d) APPROPRIATION
FOR
COST-SHARING
PAY-
MENTS.—Section 1402 of the Patient Protection and Af-
fordable Care Act (42 U.S.C. 18071) is amended by add-
ing at the end the following new subsection: 
‘‘(g) FUNDING.— 
‘‘(1) APPROPRIATIONS.—Out of any funds in 
the Treasury not otherwise appropriated, there is 
appropriated such sums as may be necessary to, 
subject to paragraph (2), provide health benefits 
coverage through payment to issuers (under this sec-
tion or through advance payment by the Secretary 
of the Treasury under section 1412(c)(3)) of the 
amounts computed under this section for each of 
plan years 2022 through 2026. 
‘‘(2) 
ADJUSTMENTS.—Notwithstanding 
any 
other provision of law, payments and other actions 
for adjustments to obligations incurred prior to De-
cember 31, 2022, may be made through December 
31, 2022. 
‘‘(3) 
LIMITATION.—Amounts 
appropriated 
under paragraph (1) for each of plan years 2022 
through 2026 are subject to the requirements and 
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limitations under sections 506 and 507 of division H 
of Public Law 115–31 in the same manner and to 
the same extent as if such amounts for each such 
year were appropriated under such division.’’. 
SEC. 105. DIRECT PRIMARY CARE. 
(a) IN GENERAL.—Section 223(c)(1) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(D) TREATMENT
OF
DIRECT
PRIMARY 
CARE SERVICE ARRANGEMENTS.— 
‘‘(i) IN GENERAL.—A direct primary 
care service arrangement shall not be 
treated as a health plan for purposes of 
subparagraph (A)(ii). 
‘‘(ii) DIRECT PRIMARY CARE SERVICE 
ARRANGEMENT.—For purposes of this 
paragraph— 
‘‘(I) IN GENERAL.—The term ‘di-
rect primary care service arrange-
ment’ means, with respect to any indi-
vidual, an arrangement under which 
such individual is provided medical 
care (as defined in section 213(d)) 
consisting solely of primary care serv-
ices provided by primary care practi-
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tioners 
(as 
defined 
in 
section 
1833(x)(2)(A) of the Social Security 
Act, determined without regard to 
clause (ii) thereof), if the sole com-
pensation for such care is a fixed peri-
odic fee. 
‘‘(II) LIMITATION.—With respect 
to any individual for any month, such 
term shall not include any arrange-
ment if the aggregate fees for all di-
rect primary care service arrange-
ments (determined without regard to 
this subclause) with respect to such 
individual for such month exceed 
$150 (twice such dollar amount in the 
case of an individual with any direct 
primary care service arrangement (as 
so determined) that covers more than 
one individual). 
‘‘(iii) CERTAIN
SERVICES
SPECIFI-
CALLY
EXCLUDED
FROM
TREATMENT
AS 
PRIMARY
CARE
SERVICES.—For purposes 
of this paragraph, the term ‘primary care 
services’ shall not include— 
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‘‘(I) procedures that require the 
use of general anesthesia, and 
‘‘(II) laboratory services not typi-
cally administered in an ambulatory 
primary care setting. 
The Secretary, after consultation with the 
Secretary of Health and Human Services, 
shall issue regulations or other guidance 
regarding the application of this clause.’’. 
(b) DIRECT PRIMARY CARE SERVICE ARRANGEMENT 
FEES
TREATED
AS
MEDICAL
EXPENSES.—Section 
223(d)(2)(C) is amended by striking ‘‘or’’ at the end of 
clause (iii), by striking the period at the end of clause (iv) 
and inserting ‘‘, or’’, and by adding at the end the fol-
lowing new clause: 
‘‘(v) any direct primary care service arrangement.’’. 
(c) INFLATION ADJUSTMENT.—Section 223(g)(1) of 
such Code is amended— 
(1) by inserting ‘‘, (c)(1)(D)(ii)(II),’’ after 
‘‘(b)(2),’’ each place such term appears, and 
(2) in subparagraph (B), by inserting ‘‘and 
(iii)’’ after ‘‘clause (ii)’’ in clause (i), by striking 
‘‘and’’ at the end of clause (i), by striking the period 
at the end of clause (ii) and inserting ‘‘, and’’, and 
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by inserting after clause (ii) the following new 
clause: 
‘‘(iii) in the case of the dollar amount 
in subsection (c)(1)(D)(ii)(II) for taxable 
years beginning in calendar years after 
2020, calendar year 2019.’’. 
(d) REPORTING OF DIRECT PRIMARY CARE SERVICE 
ARRANGEMENT FEES ON W–2.—Section 6051(a) of such 
Code is amended by striking ‘‘and’’ at the end of para-
graph (16), by striking the period at the end of paragraph 
(17) and inserting ‘‘, and’’, and by inserting after para-
graph (17) the following new paragraph: 
‘‘(18) in the case of a direct primary care serv-
ice 
arrangement 
(as 
defined 
in 
section 
223(c)(1)(D)(ii)) which is provided in connection 
with employment, the aggregate fees for such ar-
rangement for such employee.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months beginning after Decem-
ber 31, 2019, in taxable years ending after such date. 
Subtitle B—Assistance to Medisave 
Accounts 
SEC. 111. SUPPORT IN IMPLEMENTATION. 
(a) IN GENERAL.—In the case of an individual who 
makes a contribution to a Medisave account before the end 
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of the 1-year period beginning on the date of the enact-
ment of this Act, there shall be allowed as a credit against 
the tax imposed by subtitle A of the Internal Revenue 
Code of 1986 for the taxable year in which the contribu-
tion is made an amount equal to the aggregate of $1 for 
every $3 contributed to the account (other than a rollover 
contribution under section 530A(e)(5) of such Code) for 
such taxable year. 
(b) LIMITATION.—The aggregate amount allowed to 
an individual as a credit under subsection (a) for all tax-
able years shall not exceed $1,000. 
(c) PORTION OF CREDIT REFUNDABLE.—For pur-
poses of this section— 
(1) IN GENERAL.—For purposes of the Internal 
Revenue Code of 1986, in the case of an eligible in-
dividual— 
(A) INCREASE
IN
CREDIT
RATE.—Sub-
section (a) shall be applied by substituting ‘‘$1 
for every $1 contributed’’ for ‘‘$1 for every $3 
contributed’’. 
(B) CREDIT REFUNDABLE.—The credit al-
lowed under this section shall be treated in the 
same manner as a credit allowed under subpart 
C of part IV of subchapter A of chapter 1 of 
such Code. 
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(2) ELIGIBLE INDIVIDUAL.— 
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means, with respect to any taxable year, 
a taxpayer whose household income for the tax-
able year does not exceed 400 percent of an 
amount equal to the poverty line for a family of 
the size involved. 
(B) MARRIED COUPLES MUST FILE JOINT 
RETURN.—If the taxpayer is married (within 
the meaning of section 7703 of such Code) at 
the close of the taxable year— 
(i) the taxpayer shall be treated as an 
eligible individual only if the taxpayer and 
the taxpayer’s spouse file a joint return for 
the taxable year, and 
(ii) paragraph (1) shall be applied 
separately to each spouse. 
(3) FAMILY SIZE, HOUSEHOLD INCOME, MODI-
FIED ADJUSTED GROSS INCOME, POVERTY LINE.— 
The terms ‘‘family size’’, ‘‘household income’’, 
‘‘modified adjusted gross income’’, and ‘‘poverty 
line’’ have the meaning given such terms by section 
36B(d) of such Code. 
(d) DENIAL OF CREDIT TO DEPENDENTS.—No cred-
it shall be allowed under this section to any individual with 
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respect to whom a deduction under section 151 is allow-
able to another taxpayer for a taxable year beginning in 
the calendar year in which such individual’s taxable year 
begins. 
SEC. 
112. 
NEW 
CORPORATIONS 
REQUIRED 
TO 
USE 
MEDISAVE. 
Notwithstanding any other provision of law, a cor-
poration incorporated after December 31, 2021, may not 
receive tax benefits for offering employees health insur-
ance. The previous sentence shall not apply to Medisave 
contributions offered by such a corporation. 
SEC. 113. FEDERAL EMPLOYEE HEALTH BENEFITS AND 
MEDISAVE. 
(a) IN GENERAL.—Section 1312(d)(3)(D) of the Pa-
tient Protection and Affordable Care Act (42 U.S.C. 
18032(d)(3)(D)) is amended— 
(1) in the subparagraph heading, by striking 
‘‘MEMBERS OF CONGRESS’’ and inserting ‘‘PRESI-
DENT, VICE PRESIDENT, MEMBERS OF CONGRESS, 
AND FEDERAL EMPLOYEES’’; 
(2) in clause (i), in the matter preceding sub-
clause (I)— 
(A) by striking ‘‘Members of Congress and 
congressional staff’’ and inserting ‘‘the Presi-
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dent, Vice President, Members of Congress, and 
Federal employees’’; and 
(B) by striking ‘‘a Member of Congress or 
congressional staff’’ and inserting ‘‘the Presi-
dent, the Vice President, a Member of Con-
gress, or a Federal employee’’; and 
(3) in clause (ii), by amending subclause (II) to 
read as follows: 
‘‘(II) FEDERAL EMPLOYEE.—The 
term ‘Federal employee’ means— 
‘‘(aa) an ‘employee’, as such 
term is defined in section 2105 of 
title 5, United States Code; and 
‘‘(bb) includes an individual 
to whom subsection (c) or (f) of 
such 
section 
2105 
pertains 
(whether or not such individual 
satisfies item (aa)).’’. 
(b) CONVERSION TO MEDISAVE ACCOUNTS.—Each 
plan offered under chapter 89 of title 5, United States 
Code, shall be converted into a Medisave account deposit 
and funded at the level of the second-least expensive silver 
plan available through the Exchange where the applicable 
individual resides. 
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SEC. 114. GRANTS TO STATES FOR CONSUMER ASSISTANCE. 
(a) IN GENERAL.—The Administrator shall establish 
a grant program to provide assistance to eligible entities 
to carry out the activities described in subsection (c) for 
the 5-year period beginning on the date of the enactment 
of this section. 
(b) APPLICATION.—An eligible entity shall submit an 
application to the Administrator in such time and in such 
manner as the Administrator may require, providing that 
such application requires a demonstration of the existence 
of a relationship with, or the ability to establish a relation-
ship with, an employer, employee, self-employed indi-
vidual, or consumer eligible to enroll in a Medisave ac-
count. 
(c) USE OF FUNDS.—An eligible entity receiving a 
grant under this section shall use such funds to— 
(1) distribute fair and impartial information to 
consumers about Medisave accounts, including the 
availability of such accounts and how such accounts 
may be utilized; 
(2) conduct activities to raise public awareness 
of Medisave accounts; 
(3) facilitate enrollment in Medisave accounts; 
and 
(4) refer individuals enrolled in a Medisave ac-
count to the appropriate official, organization, or 
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State agency for the purpose of addressing a com-
plaint, grievance, or other question with respect to 
such Medisave account. 
(d) AMOUNT.—The Administrator may distribute up 
to $5,000,000 annually for each year occurring during the 
period described in subsection (a) to be divided among 
grant recipients under this section. 
(e) REPORT.—Not later than one year after the date 
on which the last of the grant periods awarded under this 
section ends, the Administrator shall submit a report to 
the Congress on the effectiveness of the grants provided 
under this section. 
(f) DEFINITIONS.—In this section: 
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Centers for 
Medicare & Medicaid Services. 
(2) CONSUMER.—The term ‘‘consumer’’ means 
an individual enrolled in, or seeking to enroll in, a 
Medisave account. 
(3) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ includes the following: 
(A) A State. 
(B) Trade. 
(C) Industry. 
(D) Professional associations. 
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(E) Commercial fishing industry organiza-
tions. 
(F) Ranching and farming organizations. 
(G) Community and consumer-focused 
nonprofit groups. 
(H) Chambers of Commerce. 
(I) Unions. 
(J) Small business development centers (as 
defined in section 21 of the Small Business Act 
(15 U.S.C. 648)). 
(K) Other entities capable of carrying out 
the activities described under subsection (b). 
(4) MEDISAVE ACCOUNT.—The term ‘‘Medisave 
account’’ has the meaning given such term in section 
530A(a) of the Internal Revenue Code of 1986 (as 
added by section 2(a)). 
(5) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, each 
territory and possession of the United States, and 
each federally recognized Indian Tribe. 
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TITLE II—IMPROVING PRIVATE 
HEALTH INSURANCE 
Subtitle 
A—Maintaining 
Protec-
tions for Patients With Pre-
existing Conditions 
SEC. 201. GUARANTEED AVAILABILITY OF COVERAGE; PRO-
HIBITING DISCRIMINATION. 
(a) IN GENERAL.—Subtitle C of title I of the Health 
Insurance Portability and Accountability Act of 1996 
(Public Law 104–191) is amended by adding at the end 
the following: 
‘‘SEC. 196. GUARANTEED AVAILABILITY OF COVERAGE. 
‘‘(a) GUARANTEED ISSUANCE OF COVERAGE IN THE 
INDIVIDUAL
AND GROUP MARKET.—Subject to sub-
sections (b) through (d), each health insurance issuer that 
offers health insurance coverage in the individual or group 
market in a State must accept every employer and indi-
vidual in the State that applies for such coverage. 
‘‘(b) ENROLLMENT.— 
‘‘(1) RESTRICTION.—A health insurance issuer 
described in subsection (a) may restrict enrollment 
in coverage described in such subsection to open or 
special enrollment periods. 
‘‘(2) ESTABLISHMENT.—A health insurance 
issuer described in subsection (a) shall, in accord-
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ance with the regulations promulgated under para-
graph (3), establish special enrollment periods for 
qualifying events (under section 603 of the Em-
ployee Retirement Income Security Act of 1974). 
‘‘(3) REGULATIONS.—The Secretary shall pro-
mulgate regulations with respect to enrollment peri-
ods under paragraphs (1) and (2). 
‘‘(c) SPECIAL RULES FOR NETWORK PLANS.— 
‘‘(1) IN GENERAL.—In the case of a health in-
surance issuer that offers health insurance coverage 
in the group and individual market through a net-
work plan, the issuer may— 
‘‘(A) limit the employers that may apply 
for such coverage to those with eligible individ-
uals who live, work, or reside in the service area 
for such network plan; and 
‘‘(B) within the service area of such plan, 
deny such coverage to such employers and indi-
viduals if the issuer has demonstrated, if re-
quired, to the applicable State authority that— 
‘‘(i) it will not have the capacity to de-
liver services adequately to enrollees of any 
additional groups or any additional individ-
uals because of its obligations to existing 
group contract holders and enrollees; and 
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‘‘(ii) it is applying this paragraph uni-
formly to all employers and individuals 
without regard to the claims experience of 
those individuals, employers and their em-
ployees (and their dependents), or any 
health status-related factor relating to 
such individuals, employees, and depend-
ents. 
‘‘(2) 180-DAY
SUSPENSION
UPON
DENIAL
OF 
COVERAGE.—An issuer, upon denying health insur-
ance coverage in any service area in accordance with 
paragraph (1)(B), may not offer coverage in the 
group or individual market within such service area 
for a period of 180 days after the date such cov-
erage is denied. 
‘‘(d) APPLICATION OF FINANCIAL CAPACITY LIM-
ITS.— 
‘‘(1) IN GENERAL.—A health insurance issuer 
may deny health insurance coverage in the group or 
individual market if the issuer has demonstrated, if 
required, to the applicable State authority that— 
‘‘(A) it does not have the financial reserves 
necessary to underwrite additional coverage; 
and 
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‘‘(B) it is applying this paragraph uni-
formly to all employers and individuals in the 
group or individual market in the State con-
sistent with applicable State law and without 
regard to the claims experience of those individ-
uals, employers and their employees (and their 
dependents) or any health status-related factor 
relating to such individuals, employees, and de-
pendents. 
‘‘(2) 180-DAY
SUSPENSION
UPON
DENIAL
OF 
COVERAGE.—A health insurance issuer upon denying 
health insurance coverage in connection with group 
health plans in accordance with paragraph (1) in a 
State may not offer coverage in connection with 
group health plans in the group or individual market 
in the State for a period of 180 days after the date 
such coverage is denied or until the issuer has dem-
onstrated to the applicable State authority, if re-
quired under applicable State law, that the issuer 
has sufficient financial reserves to underwrite addi-
tional coverage, whichever is later. An applicable 
State authority may provide for the application of 
this subsection on a service-area-specific basis. 
‘‘(e) DEFINITIONS.—In this section and in sections 
197 through 199A: 
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‘‘(1) The term ‘Secretary’ means the Secretary 
of Health and Human Services. 
‘‘(2) The terms ‘genetic information’, ‘genetic 
test’, ‘group health plan’, ‘group market’, ‘health in-
surance coverage’, ‘health insurance issuer’, ‘group 
health insurance coverage’, ‘individual health insur-
ance coverage’, ‘individual market’, and ‘under-
writing purpose’ have the meanings given such terms 
in section 2791 of the Public Health Service Act. 
‘‘SEC. 197. FAIR HEALTH INSURANCE PREMIUMS. 
‘‘(a) 
PROHIBITING
DISCRIMINATORY
PREMIUM 
RATES.— 
‘‘(1) IN GENERAL.—With respect to the pre-
mium rate charged by a health insurance issuer for 
health insurance coverage offered in the individual 
or small group market— 
‘‘(A) such rate shall vary with respect to 
the particular plan or coverage involved only 
by— 
‘‘(i) whether such plan or coverage 
covers an individual or family; 
‘‘(ii) rating area, as established in ac-
cordance with paragraph (2); 
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‘‘(iii) age, except that such rate shall 
not vary by more than 5 to 1 for adults; 
and 
‘‘(iv) tobacco use, except that such 
rate shall not vary by more than 1.5 to 1; 
and 
‘‘(B) such rate shall not vary with respect 
to the particular plan or coverage involved by 
any other factor not described in subparagraph 
(A). 
‘‘(2) RATING AREA.— 
‘‘(A) IN GENERAL.—Each State shall es-
tablish 1 or more rating areas within that State 
for purposes of applying the requirements of 
this title. 
‘‘(B) SECRETARIAL
REVIEW.—The Sec-
retary shall review the rating areas established 
by each State under subparagraph (A) to en-
sure the adequacy of such areas for purposes of 
carrying out the requirements of this title. If 
the Secretary determines a State’s rating areas 
are not adequate, or that a State does not es-
tablish such areas, the Secretary may establish 
rating areas for that State. 
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‘‘(3) PERMISSIBLE
AGE
BANDS.—The Sec-
retary, in consultation with the National Association 
of Insurance Commissioners, shall define the permis-
sible age bands for rating purposes under paragraph 
(1)(A)(iii). 
‘‘(4) APPLICATION OF VARIATIONS BASED ON 
AGE OR TOBACCO USE.—With respect to family cov-
erage under a group health plan or health insurance 
coverage, the rating variations permitted under 
clauses (iii) and (iv) of paragraph (1)(A) shall be 
applied based on the portion of the premium that is 
attributable to each family member covered under 
the plan or coverage. 
‘‘SEC. 198. PROHIBITING DISCRIMINATION AGAINST INDI-
VIDUAL PARTICIPANTS AND BENEFICIARIES 
BASED ON HEALTH STATUS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage may not establish rules for eligibility (in-
cluding continued eligibility) of any individual to enroll 
under the terms of the plan or coverage based on any of 
the following health status-related factors in relation to 
the individual or a dependent of the individual: 
‘‘(1) Health status. 
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‘‘(2) Medical condition (including both physical 
and mental illnesses). 
‘‘(3) Claims experience. 
‘‘(4) Receipt of health care. 
‘‘(5) Medical history. 
‘‘(6) Genetic information. 
‘‘(7) Evidence of insurability (including condi-
tions arising out of acts of domestic violence). 
‘‘(8) Disability. 
‘‘(9) Any other health status-related factor de-
termined appropriate by the Secretary. 
‘‘(b) IN PREMIUM CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering group or individual 
health insurance coverage, may not require any indi-
vidual (as a condition of enrollment or continued en-
rollment under the plan) to pay a premium or con-
tribution which is greater than such premium or 
contribution for a similarly situated individual en-
rolled in the plan on the basis of any health status- 
related factor in relation to the individual or to an 
individual enrolled under the plan as a dependent of 
the individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed— 
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‘‘(A) to restrict the amount that an em-
ployer or individual may be charged for cov-
erage under a group health plan except as pro-
vided in paragraph (3) or individual health cov-
erage, as the case may be; or 
‘‘(B) to prevent a group health plan, and 
a health insurance issuer offering group health 
insurance coverage, from establishing premium 
discounts or rebates or modifying otherwise ap-
plicable copayments or deductibles in return for 
adherence to programs of health promotion and 
disease prevention. 
‘‘(3) NO
GROUP-BASED
DISCRIMINATION
ON 
BASIS OF GENETIC INFORMATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, a group health plan, and health insur-
ance issuer offering group health insurance cov-
erage in connection with a group health plan, 
may not adjust premium or contribution 
amounts for the group covered under such plan 
on the basis of genetic information. 
‘‘(B) RULE OF CONSTRUCTION.—Nothing 
in subparagraph (A) or in paragraphs (1) and 
(2) of subsection (d) shall be construed to limit 
the ability of a health insurance issuer offering 
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group or individual health insurance coverage to 
increase the premium for an employer based on 
the manifestation of a disease or disorder of an 
individual who is enrolled in the plan. In such 
case, the manifestation of a disease or disorder 
in one individual cannot also be used as genetic 
information about other group members and to 
further increase the premium for the employer. 
‘‘(c) GENETIC TESTING.— 
‘‘(1) LIMITATION ON REQUESTING OR REQUIR-
ING GENETIC TESTING.—A group health plan, and a 
health insurance issuer offering health insurance 
coverage in connection with a group health plan, 
shall not request or require an individual or a family 
member of such individual to undergo a genetic test. 
‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1) 
shall not be construed to limit the authority of a 
health care professional who is providing health care 
services to an individual to request that such indi-
vidual undergo a genetic test. 
‘‘(3) RULE OF CONSTRUCTION REGARDING PAY-
MENT.— 
‘‘(A) IN GENERAL.—Nothing in paragraph 
(1) shall be construed to preclude a group 
health plan, or a health insurance issuer offer-
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ing health insurance coverage in connection 
with a group health plan, from obtaining and 
using the results of a genetic test in making a 
determination regarding payment (as such term 
is defined for the purposes of applying the regu-
lations promulgated by the Secretary under 
part C of title XI of the Social Security Act and 
section 264 of this Act, as may be revised from 
time to time) consistent with subsection (a). 
‘‘(B) LIMITATION.—For purposes of sub-
paragraph (A), a group health plan, or a health 
insurance issuer offering health insurance cov-
erage in connection with a group health plan, 
may request only the minimum amount of in-
formation necessary to accomplish the intended 
purpose. 
‘‘(4) RESEARCH EXCEPTION.—Notwithstanding 
paragraph (1), a group health plan, or a health in-
surance issuer offering health insurance coverage in 
connection with a group health plan, may request, 
but not require, that a participant or beneficiary un-
dergo a genetic test if each of the following condi-
tions is met: 
‘‘(A) The request is made pursuant to re-
search that complies with part 46 of title 45, 
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Code of Federal Regulations, or equivalent Fed-
eral regulations, and any applicable State or 
local law or regulations for the protection of 
human subjects in research. 
‘‘(B) The plan or issuer clearly indicates to 
each participant or beneficiary, or in the case of 
a minor child, to the legal guardian of such 
beneficiary, to whom the request is made that— 
‘‘(i) compliance with the request is 
voluntary; and 
‘‘(ii) noncompliance will have no effect 
on enrollment status or premium or con-
tribution amounts. 
‘‘(C) No genetic information collected or 
acquired under this paragraph shall be used for 
underwriting purposes. 
‘‘(D) The plan or issuer notifies the Sec-
retary in writing that the plan or issuer is con-
ducting activities pursuant to the exception pro-
vided for under this paragraph, including a de-
scription of the activities conducted. 
‘‘(E) The plan or issuer complies with such 
other conditions as the Secretary may by regu-
lation require for activities conducted under this 
paragraph. 
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‘‘(d) PROHIBITION ON COLLECTION OF GENETIC IN-
FORMATION.— 
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering health insurance 
coverage in connection with a group health plan, 
shall not request, require, or purchase genetic infor-
mation for underwriting purposes. 
‘‘(2) PROHIBITION
ON
COLLECTION
OF
GE-
NETIC
INFORMATION
PRIOR
TO
ENROLLMENT.—A 
group health plan, and a health insurance issuer of-
fering health insurance coverage in connection with 
a group health plan, shall not request, require, or 
purchase genetic information with respect to any in-
dividual prior to such individual’s enrollment under 
the plan or coverage in connection with such enroll-
ment. 
‘‘(3) INCIDENTAL
COLLECTION.—If a group 
health plan, or a health insurance issuer offering 
health insurance coverage in connection with a group 
health plan, obtains genetic information incidental to 
the requesting, requiring, or purchasing of other in-
formation concerning any individual, such request, 
requirement, or purchase shall not be considered a 
violation of paragraph (2) if such request, require-
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ment, or purchase is not in violation of paragraph 
(1). 
‘‘(e) GENETIC INFORMATION OF A FETUS OR EM-
BRYO.—Any reference in this part to genetic information 
concerning an individual or family member of an indi-
vidual shall— 
‘‘(1) with respect to such an individual or fam-
ily member of an individual who is a pregnant 
woman, include genetic information of any fetus car-
ried by such pregnant woman; and 
‘‘(2) with respect to an individual or family 
member utilizing an assisted reproductive tech-
nology, include genetic information of any embryo le-
gally held by the individual or family member. 
‘‘(f) PROGRAMS OF HEALTH PROMOTION OR DIS-
EASE PREVENTION.— 
‘‘(1) GENERAL PROVISIONS.— 
‘‘(A) GENERAL
RULE.—For purposes of 
subsection (b)(2)(B), a program of health pro-
motion or disease prevention (referred to in this 
subsection as a ‘wellness program’) shall be a 
program offered by an employer that is de-
signed to promote health or prevent disease 
that meets the applicable requirements of this 
subsection. 
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‘‘(B) NO CONDITIONS BASED ON HEALTH 
STATUS FACTOR.—If none of the conditions for 
obtaining a premium discount or rebate or 
other reward for participation in a wellness pro-
gram is based on an individual satisfying a 
standard that is related to a health status fac-
tor, such wellness program shall not violate this 
section if participation in the program is made 
available to all similarly situated individuals 
and the requirements of paragraph (2) are com-
plied with. 
‘‘(C) CONDITIONS BASED ON HEALTH STA-
TUS FACTOR.—If any of the conditions for ob-
taining a premium discount or rebate or other 
reward for participation in a wellness program 
is based on an individual satisfying a standard 
that is related to a health status factor, such 
wellness program shall not violate this section if 
the requirements of paragraph (3) are complied 
with. 
‘‘(2) WELLNESS PROGRAMS NOT SUBJECT TO 
REQUIREMENTS.—If none of the conditions for ob-
taining a premium discount or rebate or other re-
ward under a wellness program as described in para-
graph (1)(B) are based on an individual satisfying 
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a standard that is related to a health status factor 
(or if such a wellness program does not provide such 
a reward), the wellness program shall not violate 
this section if participation in the program is made 
available to all similarly situated individuals. The 
following programs shall not have to comply with the 
requirements of paragraph (3) if participation in the 
program is made available to all similarly situated 
individuals: 
‘‘(A) A program that reimburses all or 
part of the cost for memberships in a fitness 
center. 
‘‘(B) A diagnostic testing program that 
provides a reward for participation and does 
not base any part of the reward on outcomes. 
‘‘(C) A program that encourages preven-
tive care related to a health condition through 
the waiver of the copayment or deductible re-
quirement under group health plan for the costs 
of certain items or services related to a health 
condition (such as prenatal care or well-baby 
visits). 
‘‘(D) A program that reimburses individ-
uals for the costs of smoking cessation pro-
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grams without regard to whether the individual 
quits smoking. 
‘‘(E) A program that provides a reward to 
individuals for attending a periodic health edu-
cation seminar. 
‘‘(3) WELLNESS
PROGRAMS
SUBJECT
TO
RE-
QUIREMENTS.—If any of the conditions for obtaining 
a premium discount, rebate, or reward under a 
wellness program as described in paragraph (1)(C) 
is based on an individual satisfying a standard that 
is related to a health status factor, the wellness pro-
gram shall not violate this section if the following re-
quirements are complied with: 
‘‘(A) The reward for the wellness program, 
together with the reward for other wellness pro-
grams with respect to the plan that requires 
satisfaction of a standard related to a health 
status factor, shall not exceed 30 percent of the 
cost of employee-only coverage under the plan. 
If, in addition to employees or individuals, any 
class of dependents (such as spouses or spouses 
and dependent children) may participate fully 
in the wellness program, such reward shall not 
exceed 30 percent of the cost of the coverage in 
which an employee or individual and any de-
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pendents are enrolled. For purposes of this 
paragraph, the cost of coverage shall be deter-
mined based on the total amount of employer 
and employee contributions for the benefit 
package under which the employee is (or the 
employee and any dependents are) receiving 
coverage. A reward may be in the form of a dis-
count or rebate of a premium or contribution, 
a waiver of all or part of a cost-sharing mecha-
nism (such as deductibles, copayments, or coin-
surance), the absence of a surcharge, or the 
value of a benefit that would otherwise not be 
provided under the plan. The Secretaries of 
Labor, Health and Human Services, and the 
Treasury may increase the reward available 
under this subparagraph to up to 50 percent of 
the cost of coverage if the Secretaries determine 
that such an increase is appropriate. 
‘‘(B) The wellness program shall be rea-
sonably designed to promote health or prevent 
disease. A program complies with the preceding 
sentence if the program has a reasonable 
chance of improving the health of, or preventing 
disease in, participating individuals and it is 
not overly burdensome, is not a subterfuge for 
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discriminating based on a health status factor, 
and is not highly suspect in the method chosen 
to promote health or prevent disease. 
‘‘(C) The plan shall give individuals eligible 
for the program the opportunity to qualify for 
the reward under the program at least once 
each year. 
‘‘(D) The full reward under the wellness 
program shall be made available to all similarly 
situated individuals. For such purpose, among 
other things: 
‘‘(i) The reward is not available to all 
similarly situated individuals for a period 
unless the wellness program allows— 
‘‘(I) for a reasonable alternative 
standard (or waiver of the otherwise 
applicable standard) for obtaining the 
reward for any individual for whom, 
for that period, it is unreasonably dif-
ficult due to a medical condition to 
satisfy the otherwise applicable stand-
ard; and 
‘‘(II) for a reasonable alternative 
standard (or waiver of the otherwise 
applicable standard) for obtaining the 
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reward for any individual for whom, 
for that period, it is medically inadvis-
able to attempt to satisfy the other-
wise applicable standard. 
‘‘(ii) If reasonable under the cir-
cumstances, the plan or issuer may seek 
verification, such as a statement from an 
individual’s physician, that a health status 
factor makes it unreasonably difficult or 
medically inadvisable for the individual to 
satisfy or attempt to satisfy the otherwise 
applicable standard. 
‘‘(E) The plan or issuer involved shall dis-
close in all plan materials describing the terms 
of the wellness program the availability of a 
reasonable alternative standard (or the possi-
bility of waiver of the otherwise applicable 
standard) required under subparagraph (D). If 
plan materials disclose that such a program is 
available, without describing its terms, the dis-
closure under this subparagraph shall not be re-
quired. 
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‘‘SEC. 199. PROHIBITION OF PREEXISTING CONDITION EX-
CLUSIONS 
OR 
OTHER 
DISCRIMINATION 
BASED ON HEALTH STATUS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage may not impose any preexisting condition 
exclusion with respect to such plan or coverage. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) PREEXISTING CONDITION EXCLUSION.— 
‘‘(A) IN GENERAL.—The term ‘preexisting 
condition exclusion’ means, with respect to cov-
erage, a limitation or exclusion of benefits relat-
ing to a condition based on the fact that the 
condition was present before the date of enroll-
ment for such coverage, whether or not any 
medical advice, diagnosis, care, or treatment 
was recommended or received before such date. 
‘‘(B) TREATMENT OF GENETIC INFORMA-
TION.—Genetic information shall not be treated 
as a condition described in subsection (a)(1) in 
the absence of a diagnosis of the condition re-
lated to such information. 
‘‘(2) ENROLLMENT
DATE.—The term ‘enroll-
ment date’ means, with respect to an individual cov-
ered under a group health plan or health insurance 
coverage, the date of enrollment of the individual in 
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the plan or coverage or, if earlier, the first day of 
the waiting period for such enrollment. 
‘‘(3) LATE
ENROLLEE.—The term ‘late en-
rollee’ means, with respect to coverage under a 
group health plan, a participant or beneficiary who 
enrolls under the plan other than during— 
‘‘(A) the first period in which the indi-
vidual is eligible to enroll under the plan; or 
‘‘(B) a special enrollment period under 
subsection (f). 
‘‘(4) WAITING PERIOD.—The term ‘waiting pe-
riod’ means, with respect to a group health plan and 
an individual who is a potential participant or bene-
ficiary in the plan, the period that must pass with 
respect to the individual before the individual is eli-
gible to be covered for benefits under the terms of 
the plan. 
‘‘(c) RULES RELATING
TO CREDITING PREVIOUS 
COVERAGE.— 
‘‘(1) CREDITABLE
COVERAGE
DEFINED.—For 
purposes of this title, the term ‘creditable coverage’ 
means, with respect to an individual, coverage of the 
individual under any of the following: 
‘‘(A) A group health plan. 
‘‘(B) Health insurance coverage. 
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‘‘(C) Part A or part B of title XVIII of the 
Social Security Act. 
‘‘(D) Title XIX of the Social Security Act, 
other than coverage consisting solely of benefits 
under section 1928. 
‘‘(E) Chapter 55 of title 10, United States 
Code. 
‘‘(F) A medical care program of the Indian 
Health Service or of a tribal organization. 
‘‘(G) A State health benefits risk pool. 
‘‘(H) A health plan offered under chapter 
89 of title 5, United States Code. 
‘‘(I) A public health plan (as defined in 
regulations). 
‘‘(J) A health benefit plan under section 
5(e) of the Peace Corps Act (22 U.S.C. 
2504(e)). 
Such term does not include coverage consisting sole-
ly of coverage of excepted benefits (as defined in sec-
tion 2791(c)). 
‘‘(2) NOT COUNTING PERIODS BEFORE SIGNIFI-
CANT BREAKS IN COVERAGE.— 
‘‘(A) IN GENERAL.—A period of creditable 
coverage shall not be counted, with respect to 
enrollment of an individual under a group or in-
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dividual health plan, if, after such period and 
before the enrollment date, there was a 63-day 
period during all of which the individual was 
not covered under any creditable coverage. 
‘‘(B) WAITING PERIOD NOT TREATED AS A 
BREAK IN COVERAGE.—For purposes of sub-
paragraph (A) and subsection (d)(4), any pe-
riod that an individual is in a waiting period for 
any coverage under a group or individual health 
plan (or for group health insurance coverage) or 
is in an affiliation period (as defined in sub-
section (g)(2)) shall not be taken into account 
in determining the continuous period under 
subparagraph (A). 
‘‘(C) TAA-ELIGIBLE INDIVIDUALS.—In the 
case of plan years beginning before January 1, 
2014— 
‘‘(i) TAA PRE-CERTIFICATION PERIOD 
RULE.—In the case of a TAA-eligible indi-
vidual, the period beginning on the date 
the individual has a TAA-related loss of 
coverage and ending on the date that is 7 
days after the date of the issuance by the 
Secretary (or by any person or entity des-
ignated by the Secretary) of a qualified 
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health insurance costs credit eligibility cer-
tificate for such individual for purposes of 
section 7527 of the Internal Revenue Code 
of 1986 shall not be taken into account in 
determining the continuous period under 
subparagraph (A). 
‘‘(ii) DEFINITIONS.—The terms ‘TAA- 
eligible individual’ and ‘TAA-related loss of 
coverage’ have the meanings given such 
terms in section 2205(b)(4). 
‘‘(3) METHOD OF CREDITING COVERAGE.— 
‘‘(A) STANDARD METHOD.—Except as oth-
erwise provided under subparagraph (B), for 
purposes of applying subsection (a)(3), a group 
health plan, and a health insurance issuer offer-
ing group or individual health insurance cov-
erage, shall count a period of creditable cov-
erage without regard to the specific benefits 
covered during the period. 
‘‘(B) ELECTION OF ALTERNATIVE METH-
OD.—A group health plan, or a health insur-
ance issuer offering group or individual health 
insurance, may elect to apply subsection (a)(3) 
based on coverage of benefits within each of 
several classes or categories of benefits specified 
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in regulations rather than as provided under 
subparagraph (A). Such election shall be made 
on a uniform basis for all participants and 
beneficiaries. Under such election a group or in-
dividual health plan or issuer shall count a pe-
riod of creditable coverage with respect to any 
class or category of benefits if any level of bene-
fits is covered within such class or category. 
‘‘(C) PLAN
NOTICE.—In the case of an 
election with respect to a group health plan 
under subparagraph (B) (whether or not health 
insurance coverage is provided in connection 
with such plan), the plan shall— 
‘‘(i) prominently state in any disclo-
sure statements concerning the plan, and 
state to each enrollee at the time of enroll-
ment under the plan, that the plan has 
made such election; and 
‘‘(ii) include in such statements a de-
scription of the effect of this election. 
‘‘(D) ISSUER NOTICE.—In the case of an 
election under subparagraph (B) with respect to 
health insurance coverage offered by an issuer 
in the individual or group market, the issuer— 
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‘‘(i) shall prominently state in any dis-
closure statements concerning the cov-
erage, and to each employer at the time of 
the offer or sale of the coverage, that the 
issuer has made such election; and 
‘‘(ii) shall include in such statements 
a description of the effect of such election. 
‘‘(4) ESTABLISHMENT OF PERIOD.—Periods of 
creditable coverage with respect to an individual 
shall be established through presentation of certifi-
cations described in subsection (e) or in such other 
manner as may be specified in regulations. 
‘‘(d) EXCEPTIONS.— 
‘‘(1) EXCLUSION NOT APPLICABLE TO CERTAIN 
NEWBORNS.—Subject to paragraph (4), a group 
health plan, and a health insurance issuer offering 
group or individual health insurance coverage, may 
not impose any preexisting condition exclusion in the 
case of an individual who, as of the last day of the 
30-day period beginning with the date of birth, is 
covered under creditable coverage. 
‘‘(2) EXCLUSION NOT APPLICABLE TO CERTAIN 
ADOPTED CHILDREN.—Subject to paragraph (4), a 
group health plan, and a health insurance issuer of-
fering group or individual health insurance coverage, 
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may not impose any preexisting condition exclusion 
in the case of a child who is adopted or placed for 
adoption before attaining 18 years of age and who, 
as of the last day of the 30-day period beginning on 
the date of the adoption or placement for adoption, 
is covered under creditable coverage. The previous 
sentence shall not apply to coverage before the date 
of such adoption or placement for adoption. 
‘‘(3) EXCLUSION NOT APPLICABLE TO PREG-
NANCY.—A group health plan, and health insurance 
issuer offering group or individual health insurance 
coverage, may not impose any preexisting condition 
exclusion relating to pregnancy as a preexisting con-
dition. 
‘‘(4) LOSS
IF
BREAK
IN
COVERAGE.—Para-
graphs (1) and (2) shall no longer apply to an indi-
vidual after the end of the first 63-day period during 
all of which the individual was not covered under 
any creditable coverage. 
‘‘(e) CERTIFICATIONS
AND DISCLOSURE
OF COV-
ERAGE.— 
‘‘(1) REQUIREMENT
FOR
CERTIFICATION
OF 
PERIOD OF CREDITABLE COVERAGE.— 
‘‘(A) IN GENERAL.—A group health plan, 
and a health insurance issuer offering group or 
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individual health insurance coverage, shall pro-
vide the certification described in subparagraph 
(B)— 
‘‘(i) at the time an individual ceases 
to be covered under the plan or otherwise 
becomes covered under a COBRA continu-
ation provision; 
‘‘(ii) in the case of an individual be-
coming covered under such a provision, at 
the time the individual ceases to be covered 
under such provision; and 
‘‘(iii) on the request on behalf of an 
individual made not later than 24 months 
after the date of cessation of the coverage 
described in clause (i) or (ii), whichever is 
later. 
The certification under clause (i) may be pro-
vided, to the extent practicable, at a time con-
sistent with notices required under any applica-
ble COBRA continuation provision. 
‘‘(B) CERTIFICATION.—The certification 
described in this subparagraph is a written cer-
tification of— 
‘‘(i) the period of creditable coverage 
of the individual under such plan and the 
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coverage (if any) under such COBRA con-
tinuation provision; and 
‘‘(ii) the waiting period (if any) (and 
affiliation period, if applicable) imposed 
with respect to the individual for any cov-
erage under such plan. 
‘‘(C) ISSUER COMPLIANCE.—To the extent 
that medical care under a group health plan 
consists of group health insurance coverage, the 
plan is deemed to have satisfied the certification 
requirement under this paragraph if the health 
insurance issuer offering the coverage provides 
for such certification in accordance with this 
paragraph. 
‘‘(2) DISCLOSURE OF INFORMATION ON PRE-
VIOUS BENEFITS.—In the case of an election de-
scribed in subsection (c)(3)(B) by a group health 
plan or health insurance issuer, if the plan or issuer 
enrolls an individual for coverage under the plan and 
the individual provides a certification of coverage of 
the individual under paragraph (1)— 
‘‘(A) upon request of such plan or issuer, 
the entity which issued the certification pro-
vided by the individual shall promptly disclose 
to such requesting plan or issuer information 
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on coverage of classes and categories of health 
benefits available under such entity’s plan or 
coverage; and 
‘‘(B) such entity may charge the request-
ing plan or issuer for the reasonable cost of dis-
closing such information. 
‘‘(3) REGULATIONS.—The Secretary shall es-
tablish rules to prevent an entity’s failure to provide 
information under paragraph (1) or (2) with respect 
to previous coverage of an individual from adversely 
affecting any subsequent coverage of the individual 
under another group health plan or health insurance 
coverage. 
‘‘(f) SPECIAL ENROLLMENT PERIODS.— 
‘‘(1) INDIVIDUALS LOSING OTHER COVERAGE.— 
A group health plan, and a health insurance issuer 
offering group health insurance coverage in connec-
tion with a group health plan, shall permit an em-
ployee who is eligible, but not enrolled, for coverage 
under the terms of the plan (or a dependent of such 
an employee if the dependent is eligible, but not en-
rolled, for coverage under such terms) to enroll for 
coverage under the terms of the plan if each of the 
following conditions is met: 
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‘‘(A) The employee or dependent was cov-
ered under a group health plan or had health 
insurance coverage at the time coverage was 
previously offered to the employee or dependent. 
‘‘(B) The employee stated in writing at 
such time that coverage under a group health 
plan or health insurance coverage was the rea-
son for declining enrollment, but only if the 
plan sponsor or issuer (if applicable) required 
such a statement at such time and provided the 
employee with notice of such requirement (and 
the consequences of such requirement) at such 
time. 
‘‘(C) The employee’s or dependent’s cov-
erage described in subparagraph (A)— 
‘‘(i) was under a COBRA continu-
ation provision and the coverage under 
such provision was exhausted; or 
‘‘(ii) was not under such a provision 
and either the coverage was terminated as 
a result of loss of eligibility for the cov-
erage (including as a result of legal separa-
tion, divorce, death, termination of employ-
ment, or reduction in the number of hours 
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of employment) or employer contributions 
toward such coverage were terminated. 
‘‘(D) Under the terms of the plan, the em-
ployee requests such enrollment not later than 
30 days after the date of exhaustion of coverage 
described in subparagraph (C)(i) or termination 
of coverage or employer contribution described 
in subparagraph (C)(ii). 
‘‘(2) FOR DEPENDENT BENEFICIARIES.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) a group health plan makes cov-
erage available with respect to a dependent 
of an individual; 
‘‘(ii) the individual is a participant 
under the plan (or has met any waiting pe-
riod applicable to becoming a participant 
under the plan and is eligible to be enrolled 
under the plan but for a failure to enroll 
during a previous enrollment period); and 
‘‘(iii) a person becomes such a de-
pendent of the individual through mar-
riage, birth, or adoption or placement for 
adoption, 
the group health plan shall provide for a de-
pendent special enrollment period described in 
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subparagraph (B) during which the person (or, 
if not otherwise enrolled, the individual) may be 
enrolled under the plan as a dependent of the 
individual, and in the case of the birth or adop-
tion of a child, the spouse of the individual may 
be enrolled as a dependent of the individual if 
such spouse is otherwise eligible for coverage. 
‘‘(B) DEPENDENT SPECIAL ENROLLMENT 
PERIOD.—A dependent special enrollment pe-
riod under this subparagraph shall be a period 
of not less than 30 days and shall begin on the 
later of— 
‘‘(i) the date dependent coverage is 
made available; or 
‘‘(ii) the date of the marriage, birth, 
or adoption or placement for adoption (as 
the case may be) described in subpara-
graph (A)(iii). 
‘‘(C) NO
WAITING
PERIOD.—If an indi-
vidual seeks to enroll a dependent during the 
first 30 days of such a dependent special enroll-
ment period, the coverage of the dependent 
shall become effective— 
‘‘(i) in the case of marriage, not later 
than the first day of the first month begin-
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ning after the date the completed request 
for enrollment is received; 
‘‘(ii) in the case of a dependent’s 
birth, as of the date of such birth; or 
‘‘(iii) in the case of a dependent’s 
adoption or placement for adoption, the 
date of such adoption or placement for 
adoption. 
‘‘(3) SPECIAL RULES FOR APPLICATION IN CASE 
OF MEDICAID AND CHIP.— 
‘‘(A) IN GENERAL.—A group health plan, 
and a health insurance issuer offering group 
health insurance coverage in connection with a 
group health plan, shall permit an employee 
who is eligible, but not enrolled, for coverage 
under the terms of the plan (or a dependent of 
such an employee if the dependent is eligible, 
but not enrolled, for coverage under such 
terms) to enroll for coverage under the terms of 
the plan if either of the following conditions is 
met: 
‘‘(i) TERMINATION OF MEDICAID OR 
CHIP
COVERAGE.—The employee or de-
pendent is covered under a Medicaid plan 
under title XIX of the Social Security Act 
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or under a State child health plan under 
title XXI of such Act and coverage of the 
employee or dependent under such a plan 
is terminated as a result of loss of eligi-
bility for such coverage and the employee 
requests coverage under the group health 
plan (or health insurance coverage) not 
later than 60 days after the date of termi-
nation of such coverage. 
‘‘(ii) ELIGIBILITY FOR EMPLOYMENT 
ASSISTANCE UNDER MEDICAID OR CHIP.— 
The employee or dependent becomes eligi-
ble for assistance, with respect to coverage 
under the group health plan or health in-
surance coverage, under such Medicaid 
plan or State child health plan (including 
under any waiver or demonstration project 
conducted under or in relation to such a 
plan), if the employee requests coverage 
under the group health plan or health in-
surance coverage not later than 60 days 
after the date the employee or dependent is 
determined to be eligible for such assist-
ance. 
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‘‘(B) COORDINATION WITH MEDICAID AND 
CHIP.— 
‘‘(i) OUTREACH TO EMPLOYEES RE-
GARDING AVAILABILITY OF MEDICAID AND 
CHIP COVERAGE.— 
‘‘(I) IN
GENERAL.—Each em-
ployer that maintains a group health 
plan in a State that provides medical 
assistance under a State Medicaid 
plan under title XIX of the Social Se-
curity Act, or child health assistance 
under a State child health plan under 
title XXI of such Act, in the form of 
premium assistance for the purchase 
of coverage under a group health 
plan, shall provide to each employee a 
written notice informing the employee 
of potential opportunities then cur-
rently available in the State in which 
the employee resides for premium as-
sistance under such plans for health 
coverage of the employee or the em-
ployee’s dependents. For purposes of 
compliance with this subclause, the 
employer may use any State-specific 
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model notice developed in accordance 
with section 701(f)(3)(B)(i)(II) of the 
Employee Retirement Income Security 
Act 
of 
1974 
(29 
U.S.C. 
1181(f)(3)(B)(i)(II)). 
‘‘(II) OPTION TO PROVIDE CON-
CURRENT WITH PROVISION OF PLAN 
MATERIALS
TO
EMPLOYEE.—An em-
ployer may provide the model notice 
applicable to the State in which an 
employee resides concurrent with the 
furnishing of materials notifying the 
employee of health plan eligibility, 
concurrent with materials provided to 
the employee in connection with an 
open season or election process con-
ducted under the plan, or concurrent 
with the furnishing of the summary 
plan description as provided in section 
104(b) of the Employee Retirement 
Income Security Act of 1974. 
‘‘(ii) 
DISCLOSURE
ABOUT
GROUP 
HEALTH PLAN BENEFITS TO STATES FOR 
MEDICAID
AND
CHIP
ELIGIBLE
INDIVID-
UALS.—In the case of an enrollee in a 
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group health plan who is covered under a 
Medicaid plan of a State under title XIX 
of the Social Security Act or under a State 
child health plan under title XXI of such 
Act, the plan administrator of the group 
health plan shall disclose to the State, 
upon request, information about the bene-
fits available under the group health plan 
in sufficient specificity, as determined 
under regulations of the Secretary of 
Health and Human Services in consulta-
tion with the Secretary that require use of 
the model coverage coordination disclosure 
form developed under section 311(b)(1)(C) 
of the Children’s Health Insurance Reau-
thorization Act of 2009, so as to permit 
the State to make a determination (under 
paragraph (2)(B), (3), or (10) of section 
2105(c) of the Social Security Act or oth-
erwise) concerning the cost-effectiveness of 
the State providing medical or child health 
assistance through premium assistance for 
the purchase of coverage under such group 
health plan and in order for the State to 
provide supplemental benefits required 
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under paragraph (10)(E) of such section 
or other authority. 
‘‘(g) USE OF AFFILIATION PERIOD BY HMOS AS AL-
TERNATIVE TO PREEXISTING CONDITION EXCLUSION.— 
‘‘(1) IN GENERAL.—A health maintenance orga-
nization which offers health insurance coverage in 
connection with a group health plan and which does 
not impose any preexisting condition exclusion al-
lowed under subsection (a) with respect to any par-
ticular coverage option may impose an affiliation pe-
riod for such coverage option, but only if— 
‘‘(A) such period is applied uniformly with-
out regard to any health status-related factors; 
and 
‘‘(B) such period does not exceed 2 months 
(or 3 months in the case of a late enrollee). 
‘‘(2) AFFILIATION PERIOD.— 
‘‘(A) DEFINED.—For purposes of this 
title, the term ‘affiliation period’ means a pe-
riod which, under the terms of the health insur-
ance coverage offered by the health mainte-
nance organization, must expire before the 
health insurance coverage becomes effective. 
The organization is not required to provide 
health care services or benefits during such pe-
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riod and no premium shall be charged to the 
participant or beneficiary for any coverage dur-
ing the period. 
‘‘(B) BEGINNING.—Such period shall begin 
on the enrollment date. 
‘‘(C) RUNS CONCURRENTLY WITH WAITING 
PERIODS.—An affiliation period under a plan 
shall run concurrently with any waiting period 
under the plan. 
‘‘(3) ALTERNATIVE METHODS.—A health main-
tenance organization described in paragraph (1) may 
use alternative methods, from those described in 
such paragraph, to address adverse selection as ap-
proved by the State insurance commissioner or offi-
cial or officials designated by the State to enforce 
the requirements of this part for the State involved 
with respect to such issuer. 
‘‘SEC. 199A. EXTENSION OF DEPENDENT COVERAGE. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage that provides dependent coverage of chil-
dren shall continue to make such coverage available for 
an adult child (who is not married) until the child turns 
26 years of age. Nothing in this section shall require a 
health plan or a health insurance issuer described in the 
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preceding sentence to make coverage available for a child 
of a child receiving dependent coverage. 
‘‘(b) REGULATIONS.—The Secretary shall promul-
gate regulations to define the dependents to which cov-
erage shall be made available under subsection (a). 
‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to modify the definition of ‘depend-
ent’ as used in the Internal Revenue Code of 1986 with 
respect to the tax treatment of the cost of coverage. 
‘‘SEC. 199B. ANNUAL LIMITATION ON COST-SHARING. 
‘‘(a) IN GENERAL.— 
‘‘(1) 2014.—The cost-sharing incurred under a 
group health plan or group or individual health in-
surance coverage with respect to self-only coverage 
or coverage other than self-only coverage for a plan 
year beginning in 2014 shall not exceed the dollar 
amounts in effect under section 223(c)(2)(A)(ii) of 
the Internal Revenue Code of 1986 for self-only and 
family coverage, respectively, for taxable years begin-
ning in 2014. 
‘‘(2) 2015 AND
LATER.—In the case of any 
plan year beginning in a calendar year after 2014, 
the limitation under this paragraph shall— 
‘‘(A) in the case of self-only coverage, be 
equal to the dollar amount under paragraph (1) 
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for self-only coverage for plan years beginning 
in 2014, increased by an amount equal to the 
product of that amount and the premium ad-
justment percentage under subsection (c) for 
the calendar year; and 
‘‘(B) in the case of other coverage, twice 
the amount in effect under subparagraph (A). 
If the amount of any increase under subparagraph 
(A) is not a multiple of $50, such increase shall be 
rounded to the next lowest multiple of $50. 
‘‘(b) COST-SHARING.—In this section: 
‘‘(1) IN GENERAL.—The term ‘cost-sharing’ in-
cludes— 
‘‘(A) deductibles, coinsurance, copayments, 
or similar charges; and 
‘‘(B) any other expenditure required of an 
insured individual which is a qualified medical 
expense 
(within 
the 
meaning 
of 
section 
223(d)(2) of the Internal Revenue Code of 
1986) with respect to essential health benefits 
covered under the plan. 
‘‘(2) EXCEPTIONS.—Such term does not include 
premiums, balance billing amounts for non-network 
providers, or spending for non-covered services. 
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‘‘(c) PREMIUM ADJUSTMENT PERCENTAGE.—For 
purposes of subsection (a)(2)(A), the premium adjustment 
percentage for any calendar year is the percentage (if any) 
by which the average per capita premium for health insur-
ance coverage in the United States for the preceding cal-
endar year (as estimated by the Secretary no later than 
October 1 of such preceding calendar year) exceeds such 
average per capita premium for 2013 (as determined by 
the Secretary). 
‘‘SEC. 199C. ENFORCEMENT OF CERTAIN HEALTH INSUR-
ANCE REQUIREMENTS. 
‘‘(a) STATE ENFORCEMENT.— 
‘‘(1) STATE AUTHORITY.—Each State may re-
quire that health insurance issuers that issue, sell, 
renew, or offer health insurance coverage in the 
State in the individual or group market meet the re-
quirements of this part with respect to such issuers. 
‘‘(2) FAILURE TO IMPLEMENT PROVISIONS.—In 
the case of a determination by the Secretary that a 
State has failed to substantially enforce a provision 
(or provisions) of sections 196 through 199A with 
respect to health insurance issuers in the State, the 
Secretary shall enforce such provision (or provisions) 
under subsection (b) insofar as they relate to the 
issuance, sale, renewal, and offering of health insur-
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ance coverage in connection with group health plans 
or individual health insurance coverage in such 
State. 
‘‘(b) SECRETARIAL ENFORCEMENT AUTHORITY.— 
‘‘(1) LIMITATION.—The provisions of this sub-
section shall apply to enforcement of a provision (or 
provisions) described in subsection (a)(2) only— 
‘‘(A) as provided under such subsection; 
and 
‘‘(B) with respect to individual health in-
surance coverage or group health plans that are 
non-Federal governmental plans. 
‘‘(2) IMPOSITION OF PENALTIES.—In the cases 
described in paragraph (1)— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, any non- 
Federal governmental plan that is a group 
health plan and any health insurance issuer 
that fails to meet a provision of this part appli-
cable to such plan or issuer is subject to a civil 
money penalty under this subsection. 
‘‘(B) LIABILITY
FOR
PENALTY.—In the 
case of a failure by— 
‘‘(i) a health insurance issuer, the 
issuer is liable for such penalty; or 
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‘‘(ii) a group health plan that is a 
non-Federal governmental plan which is— 
‘‘(I) sponsored by 2 or more em-
ployers, the plan is liable for such 
penalty; or 
‘‘(II) not so sponsored, the em-
ployer is liable for such penalty. 
‘‘(C) AMOUNT OF PENALTY.— 
‘‘(i) IN
GENERAL.—The maximum 
amount of penalty imposed under this 
paragraph is $100 for each day for each 
individual with respect to which such a 
failure occurs. 
‘‘(ii) CONSIDERATIONS
IN
IMPOSI-
TION.—In determining the amount of any 
penalty to be assessed under this para-
graph, the Secretary shall take into ac-
count the previous record of compliance of 
the entity being assessed with the applica-
ble provisions of this part and the gravity 
of the violation. 
‘‘(iii) LIMITATIONS.— 
‘‘(I) PENALTY
NOT
TO
APPLY 
WHERE
FAILURE
NOT
DISCOVERED 
EXERCISING
REASONABLE
DILI-
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GENCE.—No civil money penalty shall 
be imposed under this paragraph on 
any failure during any period for 
which it is established to the satisfac-
tion of the Secretary that none of the 
entities against whom the penalty 
would be imposed knew, or exercising 
reasonable 
diligence 
would 
have 
known, that such failure existed. 
‘‘(II) PENALTY
NOT
TO
APPLY 
TO FAILURES CORRECTED WITHIN 30 
DAYS.—No civil money penalty shall 
be imposed under this paragraph on 
any failure if such failure was due to 
reasonable cause and not to willful ne-
glect, and such failure is corrected 
during the 30-day period beginning on 
the first day any of the entities 
against whom the penalty would be 
imposed knew, or exercising reason-
able diligence would have known, that 
such failure existed. 
‘‘(D) ADMINISTRATIVE REVIEW.— 
‘‘(i) OPPORTUNITY
FOR
HEARING.— 
The entity assessed shall be afforded an 
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opportunity for hearing by the Secretary 
upon request made within 30 days after 
the date of the issuance of a notice of as-
sessment. In such hearing the decision 
shall be made on the record pursuant to 
section 554 of title 5, United States Code. 
If no hearing is requested, the assessment 
shall constitute a final and unappealable 
order. 
‘‘(ii) HEARING
PROCEDURE.—If a 
hearing is requested, the initial agency de-
cision shall be made by an administrative 
law judge, and such decision shall become 
the final order unless the Secretary modi-
fies or vacates the decision. Notice of in-
tent to modify or vacate the decision of the 
administrative law judge shall be issued to 
the parties within 30 days after the date of 
the decision of the judge. A final order 
which takes effect under this paragraph 
shall be subject to review only as provided 
under subparagraph (E). 
‘‘(E) JUDICIAL REVIEW.— 
‘‘(i) FILING
OF
ACTION
FOR
RE-
VIEW.—Any entity against whom an order 
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imposing a civil money penalty has been 
entered after an agency hearing under this 
paragraph may obtain review by the 
United States district court for any district 
in which such entity is located or the 
United States District Court for the Dis-
trict of Columbia by filing a notice of ap-
peal in such court within 30 days from the 
date of such order, and simultaneously 
sending a copy of such notice by registered 
mail to the Secretary. 
‘‘(ii) CERTIFICATION OF ADMINISTRA-
TIVE
RECORD.—The 
Secretary 
shall 
promptly certify and file in such court the 
record upon which the penalty was im-
posed. 
‘‘(iii) STANDARD FOR REVIEW.—The 
findings of the Secretary shall be set aside 
only if found to be unsupported by sub-
stantial evidence as provided by section 
706(2)(E) of title 5, United States Code. 
‘‘(iv) APPEAL.—Any final decision, 
order, or judgment of the district court 
concerning such review shall be subject to 
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appeal as provided in chapter 83 of title 28 
of such Code. 
‘‘(F) FAILURE TO PAY ASSESSMENT; MAIN-
TENANCE OF ACTION.— 
‘‘(i) FAILURE TO PAY ASSESSMENT.— 
If any entity fails to pay an assessment 
after 
it 
has 
become 
a 
final 
and 
unappealable order, or after the court has 
entered final judgment in favor of the Sec-
retary, the Secretary shall refer the matter 
to the Attorney General who shall recover 
the amount assessed by action in the ap-
propriate United States district court. 
‘‘(ii) NONREVIEWABILITY.—In such 
action the validity and appropriateness of 
the final order imposing the penalty shall 
not be subject to review. 
‘‘(G) PAYMENT OF PENALTIES.—Except as 
otherwise provided, penalties collected under 
this paragraph shall be paid to the Secretary 
(or other officer) imposing the penalty and shall 
be available without appropriation and until ex-
pended for the purpose of enforcing the provi-
sions with respect to which the penalty was im-
posed. 
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100 
‘‘(3) ENFORCEMENT AUTHORITY RELATING TO 
GENETIC DISCRIMINATION.— 
‘‘(A) GENERAL RULE.—In the cases de-
scribed in paragraph (1), notwithstanding the 
provisions of paragraph (2)(C), the succeeding 
subparagraphs of this paragraph shall apply 
with respect to an action under this subsection 
by the Secretary with respect to any failure of 
a health insurance issuer in connection with a 
group health plan, to meet the requirements of 
subsection (a)(1)(F), (b)(3), (c), or (d) of sec-
tion 196 or section 197 or 196(b)(1) with re-
spect to genetic information in connection with 
the plan. 
‘‘(B) AMOUNT.— 
‘‘(i) IN
GENERAL.—The amount of 
the penalty imposed under this paragraph 
shall be $100 for each day in the non-
compliance period with respect to each par-
ticipant or beneficiary to whom such fail-
ure relates. 
‘‘(ii) NONCOMPLIANCE PERIOD.—For 
purposes of this paragraph, the term ‘non-
compliance period’ means, with respect to 
any failure, the period— 
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101 
‘‘(I) beginning on the date such 
failure first occurs; and 
‘‘(II) ending on the date the fail-
ure is corrected. 
‘‘(C) MINIMUM PENALTIES WHERE FAIL-
URE DISCOVERED.—Notwithstanding clauses (i) 
and (ii) of subparagraph (D): 
‘‘(i) IN GENERAL.—In the case of 1 or 
more failures with respect to an indi-
vidual— 
‘‘(I) which are not corrected be-
fore the date on which the plan re-
ceives a notice from the Secretary of 
such violation; and 
‘‘(II) which occurred or continued 
during the period involved; 
the amount of penalty imposed by subpara-
graph (A) by reason of such failures with 
respect to such individual shall not be less 
than $2,500. 
‘‘(ii) 
HIGHER
MINIMUM
PENALTY 
WHERE VIOLATIONS ARE MORE THAN DE 
MINIMIS.—To the extent violations for 
which any person is liable under this para-
graph for any year are more than de mini-
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102 
mis, clause (i) shall be applied by sub-
stituting ‘$15,000’ for ‘$2,500’ with re-
spect to such person. 
‘‘(D) LIMITATIONS.— 
‘‘(i) PENALTY NOT TO APPLY WHERE 
FAILURE
NOT
DISCOVERED
EXERCISING 
REASONABLE
DILIGENCE.—No 
penalty 
shall be imposed by subparagraph (A) on 
any failure during any period for which it 
is established to the satisfaction of the 
Secretary that the person otherwise liable 
for such penalty did not know, and exer-
cising reasonable diligence would not have 
known, that such failure existed. 
‘‘(ii) PENALTY
NOT
TO
APPLY
TO 
FAILURES
CORRECTED
WITHIN
CERTAIN 
PERIODS.—No penalty shall be imposed by 
subparagraph (A) on any failure if— 
‘‘(I) such failure was due to rea-
sonable cause and not to willful ne-
glect; and 
‘‘(II) such failure is corrected 
during the 30-day period beginning on 
the first date the person otherwise lia-
ble for such penalty knew, or exer-
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103 
cising reasonable diligence would have 
known, that such failure existed. 
‘‘(iii) OVERALL LIMITATION FOR UN-
INTENTIONAL FAILURES.—In the case of 
failures which are due to reasonable cause 
and not to willful neglect, the penalty im-
posed by subparagraph (A) for failures 
shall not exceed the amount equal to the 
lesser of— 
‘‘(I) 10 percent of the aggregate 
amount paid or incurred by the em-
ployer (or predecessor employer) dur-
ing the preceding taxable year for 
group health plans; or 
‘‘(II) $500,000. 
‘‘(E) WAIVER BY SECRETARY.—In the case 
of a failure which is due to reasonable cause 
and not to willful neglect, the Secretary may 
waive part or all of the penalty imposed by sub-
paragraph (A) to the extent that the payment 
of such penalty would be excessive relative to 
the failure involved. 
‘‘(c) DEFINITIONS.—For purposes of this section: 
‘‘(1) GOVERNMENTAL PLAN.—The term ‘gov-
ernmental plan’ has the meaning given such term 
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104 
under section 3(32) of the Employee Retirement In-
come Security Act of 1974 and any Federal govern-
mental plan. 
‘‘(2) FEDERAL
GOVERNMENTAL
PLAN.—The 
term ‘‘Federal governmental plan’’ means a govern-
mental plan established or maintained for its em-
ployees by the Government of the United States or 
by any agency or instrumentality of such Govern-
ment. 
‘‘(3) NON-FEDERAL
GOVERNMENTAL
PLAN.— 
The term ‘non-Federal governmental plan’ means a 
governmental plan that is not a Federal govern-
mental plan.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents under section 1(b) of the Health Insurance Port-
ability and Accountability Act of 1996 (Public Law 104– 
191) is amended by inserting after the item relating to 
section 195 the following: 
‘‘Sec. 196. Guaranteed availability of coverage. 
‘‘Sec. 197. Fair health insurance premiums. 
‘‘Sec. 198. Prohibiting discrimination against individual participants and bene-
ficiaries based on health status. 
‘‘Sec. 199. Prohibition of preexisting condition exclusions or other discrimina-
tion based on health status. 
‘‘Sec. 199A. Extension of dependent coverage. 
‘‘Sec. 199B. Annual limitation on cost-sharing. 
‘‘Sec. 199C. Enforcement of certain health insurance requirements.’’. 
(c) ERISA AND IRC ENFORCEMENT.— 
(1) ERISA.—Subpart B of part 7 of title I of 
the Employee Retirement Income Security Act of 
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105 
1974 (29 U.S.C. 1185 et seq.) is amended by adding 
at the end the following new section: 
‘‘SEC. 716. OTHER MARKET REFORMS. 
‘‘Sections 196 and 197 of the Health Insurance Port-
ability and Accountability Act of 1996 shall apply to 
health insurance issuers providing health insurance cov-
erage in connection with group health plans, and sections 
198 through 199B of such Act shall apply to group health 
plans and health insurance issuers providing health insur-
ance coverage in connection with group health plans, as 
if included in this subpart, and to the extent that any pro-
vision of this part conflicts with a provision of such section 
196 or 197 with respect to health insurance issuers pro-
viding health insurance coverage in connection with group 
health plans or of such section 198, 199, 199A, or 199B 
with respect to group health plans or health insurance 
issuers providing health insurance coverage in connection 
with group health plans, the provisions of such sections 
196 through 199B shall apply.’’. 
(2) IRC.—Subchapter B of chapter 100 of sub-
title K of title 26 of the Internal Revenue Code of 
1986 is amended by adding at the end the following 
new section: 
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‘‘SEC. 9816. OTHER MARKET REFORMS. 
‘‘Sections 196 and 197 of the Health Insurance Port-
ability and Accountability Act of 1996 shall apply to 
health insurance issuers providing health insurance cov-
erage in connection with group health plans, and sections 
198 through 199B of such Act shall apply to group health 
plans and health insurance issuers providing health insur-
ance coverage in connection with group health plans, as 
if included in this subchapter, and to the extent that any 
provision of this chapter conflicts with a provision of such 
section 196 or 197 with respect to health insurance issuers 
providing health insurance coverage in connection with 
group health plans or of such section 198, 199, 199A, or 
199B with respect to group health plans or health insur-
ance issuers providing health insurance coverage in con-
nection with group health plans, the provisions of such 
sections 196 through 199B shall apply.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date on which the Su-
preme Court of the United States issues a decision strik-
ing down the Patient Protection and Affordable Care Act 
(Public Law 111–148) in its entirety. 
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Subtitle B—Expanding Coverage 
Options 
SEC. 
211. 
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-
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108 
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 a procedure under which, subject 
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to subsection (b), the applicable authority shall certify as-
sociation 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 for continued certification of association health plans 
under this part. 
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED 
PLANS.—The applicable authority shall establish a class 
certification procedure for association health plans under 
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110 
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 this section. 
‘‘(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. 
‘‘(3) A plan whose eligible participating employ-
ers represent one or more trades or businesses, or 
one or more industries, consisting of any of the fol-
lowing: agriculture; equipment and automobile deal-
erships; barbering and cosmetology; certified public 
accounting practices; child care; construction; dance, 
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111 
theatrical and orchestra productions; disinfecting 
and pest control; financial services; fishing; food 
service establishments; hospitals; labor organiza-
tions; logging; manufacturing (metals); mining; med-
ical and dental practices; medical laboratories; pro-
fessional consulting services; sanitary services; trans-
portation (local and freight); warehousing; whole-
saling/distributing; or any other trade or business or 
industry which has been indicated as having average 
or above-average risk or health claims experience by 
reason of State rate filings, denials of coverage, pro-
posed premium rate levels, or other means dem-
onstrated by such plan in accordance with regula-
tions. 
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 
BOARDS OF TRUSTEES. 
‘‘(a) SPONSOR.—The requirements of this subsection 
are met with respect to an association health plan if the 
sponsor has met (or is deemed under this part to have 
met) the requirements of section 801(b) for a continuous 
period of not less than 3 years ending with the date of 
the application for certification under this part. 
‘‘(b) BOARD OF TRUSTEES.—The requirements of 
this subsection are met with respect to an association 
health plan if the following requirements are met: 
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112 
‘‘(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) BOARD MEMBERSHIP.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (ii) and (iii), the members 
of the board of trustees are individuals se-
lected from individuals who are the owners, 
officers, directors, or employees of the par-
ticipating employers or who are partners in 
the participating employers and actively 
participate in the business. 
‘‘(ii) LIMITATION.— 
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113 
‘‘(I) GENERAL RULE.—Except as 
provided in subclauses (II) and (III), 
no such member is an owner, officer, 
director, or employee of, or partner in, 
a contract administrator or other 
service provider to the plan. 
‘‘(II) LIMITED
EXCEPTION
FOR 
PROVIDERS OF SERVICES SOLELY ON 
BEHALF OF THE SPONSOR.—Officers 
or employees of a sponsor which is a 
service provider (other than a contract 
administrator) to the plan may be 
members of the board if they con-
stitute not more than 25 percent of 
the membership of the board and they 
do not provide services to the plan 
other than on behalf of the sponsor. 
‘‘(III) 
TREATMENT
OF
PRO-
VIDERS
OF
MEDICAL
CARE.—In the 
case of a sponsor which is an associa-
tion whose membership consists pri-
marily of providers of medical care, 
subclause (I) shall not apply in the 
case of any service provider described 
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114 
in subclause (I) who is a provider of 
medical care under the plan. 
‘‘(iii) CERTAIN
PLANS
EXCLUDED.— 
Clause (i) shall not apply to an association 
health plan which is in existence on the 
date of the enactment of this section. 
‘‘(B) SOLE
AUTHORITY.—The board has 
sole authority under the plan to approve appli-
cations for participation in the plan and to con-
tract with a service provider to administer the 
day-to-day affairs of the plan. 
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 
the case of a group health plan which is established and 
maintained by a franchiser for a franchise network con-
sisting of its franchisees— 
‘‘(1) the requirements of subsection (a) and sec-
tion 801(a) shall be deemed met if such require-
ments would otherwise be met if the franchiser were 
deemed to be the sponsor referred to in section 
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee 
were deemed to be a member (of the association and 
the sponsor) referred to in section 801(b); and 
‘‘(2) the requirements of section 804(a)(1) shall 
be deemed met. 
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115 
The Secretary may by regulation define for purposes of 
this subsection the terms ‘franchiser’, ‘franchise network’, 
and ‘franchisee’. 
‘‘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 
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116 
‘‘(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 this section, an 
affiliated member of the sponsor of the plan may be of-
fered 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. 
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117 
‘‘(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; 
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118 
‘‘(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 
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119 
‘‘(C) incorporates the requirements of sec-
tion 806. 
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.— 
‘‘(A) The contribution rates for any par-
ticipating small employer do not vary on the 
basis of any health status-related factor in rela-
tion to employees of such employer or their 
beneficiaries and do not vary on the basis of the 
type of business or industry in which such em-
ployer is engaged. 
‘‘(B) Nothing in this title or any other pro-
vision of law shall be construed to preclude an 
association health plan, or a health insurance 
issuer offering health insurance coverage in 
connection with an association health plan, 
from— 
‘‘(i) setting contribution rates based 
on the claims experience of the plan; or 
‘‘(ii) varying contribution rates for 
small employers in a State to the extent 
that such rates could vary using the same 
methodology employed in such State for 
regulating premium rates in the small 
group market with respect to health insur-
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120 
ance coverage offered in connection with 
bona fide associations (within the meaning 
of section 2791(d)(3) of the Public Health 
Service Act), 
subject to the requirements of section 702(b) 
relating to contribution rates. 
‘‘(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 
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121 
a State and are subject to the laws of such 
State relating to licensure, qualification, test-
ing, examination, and continuing education of 
persons authorized to offer, sell, or solicit 
health insurance coverage in such State. 
‘‘(5) 
REGULATORY
REQUIREMENTS.—Such 
other requirements as the applicable authority deter-
mines are necessary to carry out the purposes of this 
part, which shall be prescribed by the applicable au-
thority by regulation. 
‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO 
DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 
nothing in this part or any provision of State law (as de-
fined in section 514(c)(1)) shall be construed to preclude 
an association health plan, or a health insurance issuer 
offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion 
in selecting the specific items and services consisting of 
medical care to be included as benefits under such plan 
or coverage, except (subject to section 514) in the case 
of (1) any law to the extent that it is not preempted under 
section 731(a)(1) with respect to matters governed by sec-
tion 711, 712, or 713, or (2) any law of the State with 
which filing and approval of a policy type offered by the 
plan was initially obtained to the extent that such law pro-
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122 
hibits an exclusion of a specific disease from such cov-
erage. 
‘‘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; 
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123 
‘‘(iii) a reserve sufficient for any other 
obligations of the plan; and 
‘‘(iv) a reserve sufficient for a margin 
of error and other fluctuations, taking into 
account the specific circumstances of the 
plan; and 
‘‘(B) establishes and maintains aggregate 
and specific excess/stop loss insurance and sol-
vency indemnification, with respect to such ad-
ditional benefit options for which risk of loss 
has not yet been transferred, as follows: 
‘‘(i) The plan shall secure aggregate 
excess/stop loss insurance for the plan with 
an attachment point which is not greater 
than 125 percent of expected gross annual 
claims. The applicable authority may by 
regulation provide for upward adjustments 
in the amount of such percentage in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
serves in excess of the amounts required 
under subparagraph (A). 
‘‘(ii) The plan shall secure specific ex-
cess/stop loss insurance for the plan with 
an attachment point which is at least equal 
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124 
to an amount recommended by the plan’s 
qualified actuary. The applicable authority 
may by regulation provide for adjustments 
in the amount of such insurance in speci-
fied circumstances in which the plan spe-
cifically provides for and maintains re-
serves in excess of the amounts required 
under subparagraph (A). 
‘‘(iii) The plan shall secure indem-
nification insurance for any claims which 
the plan is unable to satisfy by reason of 
a plan termination. 
Any person issuing to a plan insurance described in clause 
(i), (ii), or (iii) of subparagraph (B) shall notify the Sec-
retary of any failure of premium payment meriting can-
cellation of the policy prior to undertaking such a cancella-
tion. Any regulations prescribed by the applicable author-
ity pursuant to clause (i) or (ii) of subparagraph (B) may 
allow for such adjustments in the required levels of excess/ 
stop loss insurance as the qualified 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-
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section are met if the plan establishes and maintains sur-
plus in an amount at least equal to— 
‘‘(1) $500,000; or 
‘‘(2) such greater amount (but not greater than 
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority, considering the 
level of aggregate and specific excess/stop loss insur-
ance provided with respect to such plan and other 
factors related to solvency risk, such as the plan’s 
projected levels of participation or claims, the nature 
of the plan’s liabilities, and the types of assets avail-
able to assure that such liabilities are met. 
‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 
any association health plan described in subsection (a)(2), 
the applicable authority may provide such additional re-
quirements relating to reserves, excess/stop loss insurance, 
and indemnification insurance as the applicable authority 
considers appropriate. Such requirements may be provided 
by regulation with respect to any such plan or any class 
of such plans. 
‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR-
ANCE.—The applicable authority may provide for adjust-
ments to the levels of reserves otherwise required under 
subsections (a) and (b) with respect to any plan or class 
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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-
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.— 
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‘‘(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 
$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 
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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 
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 
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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 
shall be credited with payments received pursu-
ant to paragraph (1)(A), penalties received pur-
suant to paragraph (1)(B); and earnings on in-
vestments of amounts of the Fund under sub-
paragraph (B). 
‘‘(B) INVESTMENT.—Whenever the Sec-
retary determines that the moneys of the fund 
are in excess of current needs, the Secretary 
may request the investment of such amounts as 
the Secretary determines advisable by the Sec-
retary of the Treasury in obligations issued or 
guaranteed by the United States. 
‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 
of this section— 
‘‘(1) AGGREGATE
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘aggregate excess/stop loss insur-
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ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
ment to the plan with respect to aggregate 
claims under the plan in excess of an amount 
or amounts specified in such contract; 
‘‘(B) which is guaranteed renewable; and 
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(2) SPECIFIC
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘specific excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation) provides for pay-
ment to the plan with respect to claims under 
the plan in connection with a covered individual 
in excess of an amount or amounts specified in 
such contract in connection with such covered 
individual; 
‘‘(B) which is guaranteed renewable; and 
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‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 
of this section, the term ‘indemnification insurance’ 
means, in connection with an association health plan, a 
contract— 
‘‘(1) under which an insurer (meeting such min-
imum standards as the applicable authority may pre-
scribe by regulation) provides for payment to the 
plan with respect to claims under the plan which the 
plan is unable to satisfy by reason of a termination 
pursuant to section 809(b) (relating to mandatory 
termination); 
‘‘(2) which is guaranteed renewable and 
noncancellable for any reason (except as the applica-
ble authority may prescribe by regulation); and 
‘‘(3) which allows for payment of premiums by 
any third party on behalf of the insured plan. 
‘‘(i) RESERVES.—For purposes of this section, the 
term ‘reserves’ means, in connection with an association 
health plan, plan assets which meet the fiduciary stand-
ards under part 4 and such additional requirements re-
garding liquidity as the applicable authority may prescribe 
by regulation. 
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132 
‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 
‘‘(1) IN GENERAL.—Within 90 days after the 
date of the enactment of this section, the applicable 
authority shall establish a Solvency Standards Work-
ing Group. In prescribing the initial regulations 
under this section, the applicable authority shall 
take into account the recommendations of such 
Working Group. 
‘‘(2) MEMBERSHIP.—The Working Group shall 
consist of not more than 15 members appointed by 
the applicable authority. The applicable authority 
shall include among persons invited to membership 
on the Working Group at least one of each of the 
following: 
‘‘(A) A representative of the National As-
sociation of Insurance Commissioners. 
‘‘(B) A representative of the American 
Academy of Actuaries. 
‘‘(C) A representative of the State govern-
ments, or their interests. 
‘‘(D) A representative of existing self-in-
sured arrangements, or their interests. 
‘‘(E) A representative of associations of 
the type referred to in section 801(b)(1), or 
their interests. 
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‘‘(F) A representative of multiemployer 
plans that are group health plans, or their in-
terests. 
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS. 
‘‘(a) FILING FEE.—Under the procedure prescribed 
pursuant to section 802(a), an association health plan 
shall pay to the applicable authority at the time of filing 
an application for certification under this part a filing fee 
in the amount of $5,000, which shall be available in the 
case of the Secretary, to the extent provided in appropria-
tion Acts, for the sole purpose of administering the certifi-
cation procedures applicable with respect to association 
health plans. 
‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA-
TION FOR CERTIFICATION.—An application for certifi-
cation under this part meets the requirements of this sec-
tion only if it includes, in a manner and form which shall 
be prescribed by the applicable authority by regulation, at 
least the following information: 
‘‘(1) IDENTIFYING INFORMATION.—The names 
and addresses of— 
‘‘(A) the sponsor; and 
‘‘(B) the members of the board of trustees 
of the plan. 
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134 
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO 
BUSINESS.—The States in which participants and 
beneficiaries under the plan are to be located and 
the number of them expected to be located in each 
such State. 
‘‘(3) BONDING REQUIREMENTS.—Evidence pro-
vided by the board of trustees that the bonding re-
quirements of section 412 will be met as of the date 
of the application or (if later) commencement of op-
erations. 
‘‘(4) PLAN DOCUMENTS.—A copy of the docu-
ments governing the plan (including any bylaws and 
trust agreements), the summary plan description, 
and other material describing the benefits that will 
be provided to participants and beneficiaries under 
the plan. 
‘‘(5) 
AGREEMENTS
WITH
SERVICE
PRO-
VIDERS.—A copy of any agreements between the 
plan and contract administrators and other service 
providers. 
‘‘(6) FUNDING REPORT.—In the case of asso-
ciation health plans providing benefits options in ad-
dition to health insurance coverage, a report setting 
forth information with respect to such additional 
benefit options determined as of a date within the 
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120-day period ending with the date of the applica-
tion, including the following: 
‘‘(A) RESERVES.—A statement, certified 
by the board of trustees of the plan, and a 
statement of actuarial opinion, signed by a 
qualified 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. 
‘‘(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-
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136 
tuarial opinion signed by a qualified actuary, 
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, as necessary to 
carry out the purposes of this part. 
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to an 
association health plan shall not be effective unless written 
notice of such certification is filed with the applicable 
State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are 
located. For purposes of this subsection, an individual 
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shall be considered to be located in the State in which a 
known address of such individual is located or in which 
such individual is employed. 
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 
of any association health plan certified under this part, 
descriptions of material changes in any information which 
was required to be submitted with the application for the 
certification under this part shall be filed in such form 
and manner as shall be prescribed by the applicable au-
thority by regulation. The applicable authority may re-
quire by regulation prior notice of material changes with 
respect to specified matters which might serve as the basis 
for suspension or revocation of the certification. 
‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS-
SOCIATION HEALTH PLANS.—An association health plan 
certified under this part which provides benefit options in 
addition to health insurance coverage for such plan year 
shall meet the requirements of section 103 by filing an 
annual report under such section which shall include infor-
mation described in subsection (b)(6) with respect to the 
plan year and, notwithstanding section 104(a)(1)(A), shall 
be filed with the applicable authority not later than 90 
days after the close of the plan year (or on such later date 
as may be prescribed by the applicable authority). The ap-
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138 
plicable authority may require by regulation 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. 
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139 
‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION. 
‘‘Except as provided in section 809(b), an association 
health plan which is or has been certified under this part 
may terminate (upon or at any time after cessation of ac-
cruals in benefit liabilities) only if the board of trustees, 
not less than 60 days before the proposed termination 
date— 
‘‘(1) provides to the participants and bene-
ficiaries a written notice of intent to terminate stat-
ing that such termination is intended and the pro-
posed termination date; 
‘‘(2) develops a plan for winding up the affairs 
of the plan in connection with such termination in 
a manner which will result in timely payment of all 
benefits for which the plan is obligated; and 
‘‘(3) submits such plan in writing to the appli-
cable authority. 
Actions required under this section shall be taken in such 
form and manner as may be prescribed by the applicable 
authority by regulation. 
‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION. 
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified 
under this part and which provides benefits other than 
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health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of 
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the 
board determines that there is reason to believe that there 
is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so 
notifies the board, the board shall immediately notify the 
qualified 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) 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 recommendations. The board 
shall thereafter report to the applicable authority, in such 
form and frequency as the applicable authority may speci-
fy to the board, regarding corrective action taken by the 
board until the requirements of section 806 are met. 
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141 
‘‘(b) MANDATORY TERMINATION.—In any case in 
which— 
‘‘(1) the applicable authority has been notified 
under subsection (a) (or by an issuer of excess/stop 
loss insurance or indemnity insurance pursuant to 
section 806(a)) of a failure of an association health 
plan which is or has been certified under this part 
and is described in section 806(a)(2) to meet the re-
quirements of section 806 and has not been notified 
by the board of trustees of the plan that corrective 
action has restored compliance with such require-
ments; and 
‘‘(2) the applicable authority determines that 
there is a reasonable expectation that the plan will 
continue to fail to meet the requirements of section 
806, 
the board of trustees of the plan shall, at the direction 
of the applicable authority, terminate the plan and, in the 
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any 
claims referred to in section 806(a)(2)(B)(iii) and recov-
ering for the plan any liability under subsection 
(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent 
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possible, wound up in a manner which will result in timely 
provision of all benefits for which the plan is obligated. 
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO 
HEALTH INSURANCE COVERAGE. 
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR 
INSOLVENT PLANS.—Whenever the Secretary determines 
that an association health plan which is or has been cer-
tified under this part and which is described in section 
806(a)(2) will be unable to provide benefits when due or 
is otherwise in a financially hazardous condition, as shall 
be defined by the Secretary by regulation, the Secretary 
shall, upon notice to the plan, apply to the appropriate 
United States district court for appointment of the Sec-
retary as trustee to administer the plan for the duration 
of the insolvency. The plan may appear as a party and 
other interested persons may intervene in the proceedings 
at the discretion of the court. The court shall appoint such 
Secretary trustee if the court determines that the trustee-
ship is necessary to protect the interests of the partici-
pants and beneficiaries or providers of medical care or to 
avoid any unreasonable deterioration of the financial con-
dition of the plan. The trusteeship of such Secretary shall 
continue until the conditions described in the first sen-
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tence of this subsection are remedied or the plan is termi-
nated. 
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 
appointment as trustee under subsection (a), shall have 
the power— 
‘‘(1) to do any act authorized by the plan, this 
title, or other applicable provisions of law to be done 
by the plan administrator or any trustee of the plan; 
‘‘(2) to require the transfer of all (or any part) 
of the assets and records of the plan to the Sec-
retary as trustee; 
‘‘(3) to invest any assets of the plan which the 
Secretary holds in accordance with the provisions of 
the plan, regulations prescribed by the Secretary, 
and applicable provisions of law; 
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee 
organization representing plan participants to fur-
nish any information with respect to the plan which 
the Secretary as trustee may reasonably need in 
order to administer the plan; 
‘‘(5) to collect for the plan any amounts due the 
plan and to recover reasonable expenses of the trust-
eeship; 
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‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the 
plan; 
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation or required by any order of the 
court; 
‘‘(8) to terminate the plan (or provide for its 
termination in accordance with section 809(b)) and 
liquidate the plan assets, to restore the plan to the 
responsibility of the sponsor, or to continue the 
trusteeship; 
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and 
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the 
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical 
care. 
‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the 
Secretary shall give notice of such appointment to— 
‘‘(1) the sponsor and plan administrator; 
‘‘(2) each participant; 
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‘‘(3) each participating employer; and 
‘‘(4) if applicable, each employee organization 
which, for purposes of collective bargaining, rep-
resents plan participants. 
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be 
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject 
to the same duties as those of a trustee under section 704 
of title 11, United States Code, and shall have the duties 
of a fiduciary for purposes of this title. 
‘‘(e) OTHER PROCEEDINGS.—An application by the 
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of 
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve, 
or liquidate such plan or its property, or any proceeding 
to enforce a lien against property of the plan. 
‘‘(f) JURISDICTION OF COURT.— 
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance 
of a decree under this section, the court to which the 
application is made shall have exclusive jurisdiction 
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with 
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the purposes of this section, of a court of the United 
States having jurisdiction over cases under chapter 
11 of title 11, United States Code. Pending an adju-
dication under this section such court shall stay, and 
upon appointment by it of the Secretary as trustee, 
such court shall continue the stay of, any pending 
mortgage foreclosure, equity receivership, or other 
proceeding to reorganize, conserve, or liquidate the 
plan, the sponsor, or property of such plan or spon-
sor, and any other suit against any receiver, conser-
vator, or trustee of the plan, the sponsor, or prop-
erty of the plan or sponsor. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary as trustee, the court may stay any proceeding 
to enforce a lien against property of the plan or the 
sponsor or any other suit against the plan or the 
sponsor. 
‘‘(2) VENUE.—An action under this section 
may be brought in the judicial district where the 
sponsor or the plan administrator resides or does 
business or where any asset of the plan is situated. 
A district court in which such action is brought may 
issue process with respect to such action in any 
other judicial district. 
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‘‘(g) PERSONNEL.—In accordance with regulations 
which shall be prescribed by the Secretary, the Secretary 
shall appoint, retain, and compensate accountants, actu-
aries, and other professional service personnel as may be 
necessary in connection with the Secretary’s service as 
trustee under this section. 
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 
‘‘(a) IN GENERAL.—Notwithstanding section 514, a 
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan 
commenced operations in such State after the date of the 
enactment of this section. 
‘‘(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-
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148 
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). 
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‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap-
plicable authority’ means the Secretary, except that, 
in connection with any exercise of the Secretary’s 
authority regarding which the Secretary is required 
under section 506(d) to consult with a State, such 
term means the Secretary, in consultation with such 
State. 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
provided in section 733(d)(2). 
‘‘(7) INDIVIDUAL MARKET.— 
‘‘(A) IN GENERAL.—The term ‘individual 
market’ means the market for health insurance 
coverage offered to individuals other than in 
connection with a group health plan. 
‘‘(B) 
TREATMENT
OF
VERY
SMALL 
GROUPS.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), such term includes coverage offered in 
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150 
connection with a group health plan that 
has fewer than 2 participants as current 
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan 
year. 
‘‘(ii) STATE
EXCEPTION.—Clause (i) 
shall not apply in the case of health insur-
ance coverage offered in a State if such 
State regulates the coverage described in 
such clause in the same manner and to the 
same extent as coverage in the small group 
market (as defined in section 2791(e)(5) of 
the Public Health Service Act) is regulated 
by such State. 
‘‘(8) PARTICIPATING
EMPLOYER.—The term 
‘participating employer’ means, in connection with 
an association health plan, any employer, if any indi-
vidual who is an employee of such employer, a part-
ner in such employer, or a self-employed individual 
who is such employer (or any dependent, as defined 
under the terms of the plan, of such individual) is 
or was covered under such plan in connection with 
the status of such individual as such an employee, 
partner, or self-employed individual in relation to the 
plan. 
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151 
‘‘(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. 
‘‘(11) AFFILIATED MEMBER.—The term ‘affili-
ated member’ means, in connection with a sponsor— 
‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
is a member of any such association and elects 
an affiliated status with the sponsor, or 
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of this section, a person eligible to be a member 
of the sponsor or one of its member associa-
tions. 
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152 
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
employed an average of at least 51 employees on 
business days during the preceding calendar year 
and who employs at least 2 employees on the first 
day of the plan year. 
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
is not a large employer. 
‘‘(b) RULES OF CONSTRUCTION.— 
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an 
association health plan, and for purposes of applying 
this title in connection with such plan, fund, or pro-
gram so determined to be such an employee welfare 
benefit plan— 
‘‘(A) in the case of a partnership, the term 
‘employer’ (as defined in section 3(5)) includes 
the partnership in relation to the partners, and 
the term ‘employee’ (as defined in section 3(6)) 
includes any partner in relation to the partner-
ship; and 
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‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined 
in section 3(6)) shall include such individual. 
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED 
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 
case of any plan, fund, or program which was estab-
lished or is maintained for the purpose of providing 
medical care (through the purchase of insurance or 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under 
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
employee welfare benefit plan on and after the date 
of such demonstration.’’. 
(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 
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154 
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 
(f)’’; 
(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’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(f)(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— 
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155 
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not 
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered in a State under 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
fined in section 812(a)(9)), of the policy form in 
connection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
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‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with re-
spect to health insurance issuers or health insurance cov-
erage, to supersede or impair the law of any State— 
‘‘(A) providing solvency standards or similar 
standards regarding the adequacy of insurer capital, 
surplus, reserves, or contributions, or 
‘‘(B) relating to prompt payment of claims. 
‘‘(4) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(5) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
ticipating employer’, and ‘health insurance issuer’ have 
the meanings provided such terms in section 812, respec-
tively.’’. 
(3) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended— 
(A) in clause (i)(II), by striking ‘‘and’’ at 
the end; 
(B) in clause (ii), by inserting ‘‘and which 
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
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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(d) of such Act (29 U.S.C. 
1144(d)) 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 this paragraph 
shall be construed to alter, amend, modify, invalidate, im-
pair, or supersede any provision of this title, except by 
specific cross-reference to the affected section.’’. 
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)) is amended by adding at the end 
the following new sentence: ‘‘Such term also includes a 
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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, 2022, the Secretary 
of Labor shall report to the Committee on Education and 
Labor of the House of Representatives and the Committee 
on Health, Education, Labor, and Pensions of the Senate 
the effect association health plans have had, if any, on 
reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items: 
‘‘PART 8. RULES GOVERNING ASSOCIATION HEALTH PLANS 
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‘‘801. Association health plans. 
‘‘802. Certification of association health plans. 
‘‘803. Requirements relating to sponsors and boards of trustees. 
‘‘804. Participation and coverage requirements. 
‘‘805. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘806. Maintenance of reserves and provisions for solvency for plans providing 
health benefits in addition to health insurance coverage. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Corrective actions and mandatory termination. 
‘‘810. Trusteeship by the Secretary of insolvent association health plans pro-
viding health benefits in addition to health insurance coverage. 
‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
SEC. 212. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed— 
(1) in clause (i), by inserting after ‘‘control 
group,’’ the following: ‘‘except that, in any case in 
which the benefit referred to in subparagraph (A) 
consists of medical care (as defined in section 
812(a)(2)), two or more trades or businesses, wheth-
er or not incorporated, shall be deemed a single em-
ployer for any plan year of such plan, or any fiscal 
year of such other arrangement, if such trades or 
businesses are within the same control group during 
such year or at any time during the preceding 1-year 
period,’’; 
(2) in clause (iii), by striking ‘‘(iii) the deter-
mination’’ and inserting the following: 
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