I 
110TH CONGRESS 
2D SESSION 
H. R. 5923 
To amend the Internal Revenue Code of 1986 to allow individuals a refund-
able and advancable credit against income tax for health insurance costs, 
to allow employees who elect not to participate in employer subsidized 
health plans an exclusion from gross income for employer payments 
in lieu of such participations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 29, 2008 
Mr. SHADEGG (for himself, Mrs. MUSGRAVE, Mr. WAMP, Mr. AKIN, Mr. 
CAMPBELL of California, Mr. DAVID DAVIS of Tennessee, Mr. KINGSTON, 
Mr. GINGREY, Mr. MARCHANT, Mr. ISSA, Mr. PENCE, Mr. FRANKS of 
Arizona, Mr. FORTUN˜O, Mr. PITTS, Mr. WILSON of South Carolina, Mr. 
BROWN of South Carolina, Mr. BARTLETT of Maryland, Mr. SOUDER, 
and Mr. FEENEY) introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees 
on Ways and Means and Education and Labor, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to allow indi-
viduals a refundable and advancable credit against in-
come tax for health insurance costs, to allow employees 
who elect not to participate in employer subsidized health 
plans an exclusion from gross income for employer pay-
ments in lieu of such participations, and for other pur-
poses. 
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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 
‘‘Patients’ Health Care Reform Act’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings. 
Sec. 3. Purposes. 
TITLE I—HEALTHMARTS 
Sec. 101. Expansion of consumer choice through Healthmarts. 
TITLE II—HEALTH CARE ACCESS AND CHOICE THROUGH 
INDIVIDUAL MEMBERSHIP ASSOCIATIONS (IMAS) 
Sec. 201. Expansion of access and choice through individual membership asso-
ciations (IMAs). 
TITLE III—FEDERAL MATCHING FUNDING FOR STATE 
INSURANCE EXPENDITURES 
Sec. 301. Federal matching funding for State insurance expenditures. 
TITLE IV—AFFORDABLE HEALTH COVERAGE FOR EMPLOYEES 
OF SMALL BUSINESSES 
Sec. 401. Short title of title. 
Sec. 402. Rules. 
Sec. 403. Clarification of treatment of single employer arrangements. 
Sec. 404. Clarification of treatment of certain collectively bargained arrange-
ments. 
Sec. 405. Enforcement provisions. 
Sec. 406. Cooperation between Federal and State authorities. 
Sec. 407. Effective date and transitional and other rules. 
TITLE V—IMPROVEMENT TO ACCESS AND CHOICE OF HEALTH 
CARE 
Sec. 501. Refundable and advanceable credit for health insurance costs. 
Sec. 502. Exclusion for employer payments made to compensate employees who 
elect not to participate in employer-subsidized health plans. 
TITLE VI—PATIENT ACCESS TO INFORMATION 
Sec. 601. Patient access to information regarding plan coverage, managed care 
procedures, health care providers, and quality of medical care. 
Sec. 602. Effective date. 
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(c) CONSTITUTIONAL AUTHORITY TO ENACT THIS 
LEGISLATION.—The constitutional authority upon which 
this Act rests is the power of Congress to regulate com-
merce with foreign nations and among the several States, 
set forth in article I, section 8 of the United States Con-
stitution. 
SEC. 2. FINDINGS. 
(a) NEED FOR STRUCTURAL REFORMS.—Congress 
finds that the majority of Americans are receiving health 
care of a quality unmatched elsewhere in the world but 
that the method by which health care currently is financed 
and delivered is inflationary and does not distribute qual-
ity care to all Americans. Congress further finds that the 
major structural reforms must be implemented in order 
to institute a competitive system based on individual 
choice, under which each American is permitted individual 
choice to select the method of health care delivery which 
he believes is most appropriate for himself and his family, 
with appropriate assistance from the United States Gov-
ernment. Such a system would introduce internal incen-
tives for the cost-effective delivery of quality health care 
to the American people. 
(b) SPECIFIC DEFICIENCIES.—Congress finds that 
the major deficiencies of the present method of delivering 
and financing health care as follows: 
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(1) EMPLOYER OWNERSHIP OF HEALTH BENE-
FITS.—The biggest problem with health care today 
is that the tax code has encouraged employers, not 
individuals, to become the purchaser of health insur-
ance. Employers have a tax incentive to offer health 
care benefits to their employees, which means that 
employers are truly the owner of the plan, not indi-
viduals. Therefore employees, who are the consumers 
of health care services are unconcerned with and not 
involved with issues of cost and overutilize health 
care services in the belief that such services are 
‘‘free’’. 
(2) INSUFFICIENT ACCESS.—Numerous persons 
are not able to obtain sufficient health care either 
because the necessary personnel and facilities are 
not located in their communities or because they do 
not have adequate financial resources to obtain such 
services, or both. 
(3) EXCESSIVE
GOVERNMENT
REGULATION.— 
Continually increasing and complex Government reg-
ulation of the economic aspects of the health care 
delivery system has proven ineffective in restraining 
costs and is itself expensive and counterproductive in 
fulfilling its purposes and detrimental to the care of 
patients. 
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(4) THIRD-PARTY
PAYMENT
SYSTEMS.—Pay-
ment by third-party payers (including commercial in-
surance companies and various levels of government) 
for the preponderance of the health care delivered 
each year insulates patients, as well as physicians, 
hospitals, and other deliverers of health care, from 
the need to consider the cost of treatment in addi-
tion to the medical benefit expected from it. 
(5) REASONABLE COST REIMBURSEMENT.—Re-
imbursement of hospitals and other health care insti-
tutions by third-party payers on the basis of reason-
able costs of operation provides these institutions in-
sufficient incentives to introduce more efficient 
methods of delivering care and at the same time di-
minishes the extent to which these institutions and 
their patients are affected by the consequences of in-
efficiency and overexpansion. 
(6) GOVERNMENT AND THIRD-PARTY PAYER.— 
The present role of government as a third-party 
payer poses a conflict of interest whereby the Gov-
ernment purchases or finances health care services 
and unilaterally determines the amount the deliverer 
will be paid for those services. 
(7) LACK OF COMPETITION.—The present sys-
tem of financing and regulation prevents health care 
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deliverers from competing with each other on the 
basis of efficiency and price as well as quality. 
SEC. 3. PURPOSES. 
The purposes of Act are— 
(1) to make it possible for individuals, employ-
ees, and the self-employed to purchase and own their 
own health insurance without suffering any negative 
tax consequences; 
(2) to enable individuals to make their own in-
formed choice of the method by which their health 
care is provided, the persons who deliver it, and the 
price they wish to pay for it; 
(3) to assist individuals in obtaining and in 
paying for basic health care services; 
(4) to render patients and deliverers sensitive to 
the cost of health care, giving them both the incen-
tive and the ability to restrain undesired increases in 
health care costs; 
(5) to simplify and rationalize the payment 
mechanism for health care services; 
(6) to foster the development of numerous, var-
ied, and innovative systems of providing health care 
which will compete against each other in terms of 
price, service, and quality, and thus allow the Amer-
ican people to benefit from competitive forces which 
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will reward efficient and effective deliverers and 
eliminate those which provide unsatisfactory quality 
of care or are inefficient; 
(7) to replace governmental regulation of the 
economic aspects of health care delivery with indi-
vidual choice, private initiative, and marketplace in-
centives and disciplines; 
(8) to encourage the development of systems of 
delivering health care which are capable of supplying 
a broad range of health care services in a com-
prehensive and systematic manner, and 
(9) to preserve the independence of health care 
deliverers and encourage their close identification 
with and their accountability to the individuals they 
serve. 
TITLE I—HEALTHMARTS 
SEC. 101. EXPANSION OF CONSUMER CHOICE THROUGH 
HEALTHMARTS. 
The Public Health Service Act, as amended by sec-
tion 2 of the Lifespan Respite Care Act of 2006 (Public 
Law 109–442), is amended by adding at the end the fol-
lowing new title: 
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‘‘TITLE XXX—HEALTHMARTS 
‘‘SEC. 3001. DEFINITION OF HEALTHMART. 
‘‘(a) IN GENERAL.—For purposes of this title, the 
term ‘HealthMart’ means a legal entity that meets the fol-
lowing requirements: 
‘‘(1) ORGANIZATION.—The HealthMart is an 
organization operated under the direction of a board 
of directors which is composed of representatives of 
not fewer than 2 from each of the following: 
‘‘(A) Employers. 
‘‘(B) Employees. 
‘‘(C) Individuals (other than those de-
scribed in subparagraph (B)) who are eligible to 
participate in the HealthMart. 
‘‘(D) Health care providers, which may be 
physicians, other health care professionals, 
health care facilities, or any combination there-
of. 
‘‘(E) Entities, such as insurance compa-
nies, health maintenance organizations, and li-
censed provider-sponsored organizations, that 
underwrite or administer health benefits cov-
erage. 
‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.— 
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‘‘(A) 
DIFFERENT
GROUPS.—The 
HealthMart, in conjunction with those health 
insurance issuers that offer health benefits cov-
erage through the HealthMart, makes available 
health benefits coverage in the manner de-
scribed in subsection (b) to all employers, eligi-
ble employees, and individuals in the manner 
described in subsection (c)(2) at rates (includ-
ing employer’s and employee’s share, if applica-
ble) that are established by the health insurance 
issuer on a policy or product specific basis and 
that may vary only as permissible under State 
law. A HealthMart is deemed to be a group 
health plan for purposes of applying section 702 
of the Employee Retirement Income Security 
Act of 1974, section 2702 of this Act, and sec-
tion 9802(b) of the Internal Revenue Code of 
1986 (which limit variation among similarly sit-
uated individuals of required premiums for 
health benefits coverage on the basis of health 
status-related factors). 
‘‘(B) NONDISCRIMINATION
IN
COVERAGE 
OFFERED.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the HealthMart may not offer health 
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benefits coverage to an eligible employee or 
individual in a geographic area (as speci-
fied under paragraph (3)(A)) unless the 
same coverage is offered to all such em-
ployees or individuals in the same geo-
graphic area. Section 2711(a)(1)(B) of this 
Act limits denial of enrollment of certain 
eligible individuals under health benefits 
coverage in the small group market. 
‘‘(ii) 
CONSTRUCTION.—Nothing 
in 
this title shall be construed as requiring or 
permitting a health insurance issuer to 
provide coverage outside the service area of 
the issuer, as approved under State law. 
‘‘(C) NO FINANCIAL UNDERWRITING.—The 
HealthMart provides health benefits coverage 
only through contracts with health insurance 
issuers and does not assume insurance risk with 
respect to such coverage. 
‘‘(D) MINIMUM COVERAGE.—By the end of 
the first year of its operation and thereafter, 
the HealthMart maintains not fewer than 10 
purchasers and 100 members. 
‘‘(3) GEOGRAPHIC AREAS.— 
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‘‘(A) 
SPECIFICATION
OF
GEOGRAPHIC 
AREAS.—The HealthMart shall specify the geo-
graphic area (or areas) in which it makes avail-
able health benefits coverage offered by health 
insurance issuers to employers, or individuals, 
as the case may be. Any such area shall encom-
pass at least one entire county or equivalent 
area. 
‘‘(B) MULTISTATE AREAS.—In the case of 
a HealthMart that serves more than one State, 
such geographic areas may be areas that in-
clude portions of two or more contiguous 
States. 
‘‘(C) 
MULTIPLE
HEALTHMARTS
PER-
MITTED IN SINGLE GEOGRAPHIC AREA.—Noth-
ing in this title shall be construed as preventing 
the establishment and operation of more than 
one HealthMart in a geographic area or as lim-
iting the number of HealthMarts that may op-
erate in any area. 
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES 
TO PURCHASERS.— 
‘‘(A) IN GENERAL.—The HealthMart pro-
vides administrative services for purchasers. 
Such services may include accounting, billing, 
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enrollment information, and employee coverage 
status reports. 
‘‘(B) CONSTRUCTION.—Nothing in this 
subsection shall be construed as preventing a 
HealthMart from serving as an administrative 
service organization to any entity. 
‘‘(5) DISSEMINATION
OF
INFORMATION.—The 
HealthMart collects and disseminates (or arranges 
for the collection and dissemination of) consumer- 
oriented information on the scope, cost, and enrollee 
satisfaction of all coverage options offered through 
the HealthMart to its members and eligible individ-
uals. Such information shall be defined by the 
HealthMart and shall be in a manner appropriate to 
the type of coverage offered. To the extent prac-
ticable, such information shall include information 
on provider performance, locations and hours of op-
eration of providers, outcomes, and similar matters. 
Nothing in this section shall be construed as pre-
venting the dissemination of such information or 
other information by the HealthMart or by health 
insurance issuers through electronic or other means. 
‘‘(6) 
FILING
INFORMATION.—The 
Health-
Mart— 
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‘‘(A) files with the applicable Federal au-
thority information that demonstrates the 
HealthMart’s compliance with the applicable re-
quirements of this title; or 
‘‘(B) in accordance with rules established 
under section 3003(a), files with a State such 
information as the State may require to dem-
onstrate such compliance. 
‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.— 
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage 
offered through a HealthMart shall— 
‘‘(A) be underwritten by a health insurance 
issuer that— 
‘‘(i) is licensed (or otherwise regu-
lated) under State law; 
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 3002(b); and 
‘‘(iii) offers the coverage under a con-
tract with the HealthMart; 
‘‘(B) subject to paragraph (2), be approved 
or otherwise permitted to be offered under 
State law; and 
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‘‘(C) provide full portability of creditable 
coverage for individuals who remain members of 
the same HealthMart notwithstanding that they 
change the employer through which they are 
members in accordance with the provisions of 
the parts 6 and 7 of subtitle B of title I of the 
Employee Retirement Income Security Act of 
1974 and titles XXII and XXVII of this Act, 
so long as both employers are purchasers in the 
HealthMart, and notwithstanding that they ter-
minate such employment, if the HealthMart 
permits enrollment directly by eligible individ-
uals. 
‘‘(2) ALTERNATIVE PROCESS FOR APPROVAL OF 
HEALTH BENEFITS COVERAGE IN CASE OF DISCRIMI-
NATION OR DELAY.— 
‘‘(A) IN
GENERAL.—The requirement of 
paragraph (1)(B) shall not apply to a policy or 
product of health benefits coverage offered in a 
State if the health insurance issuer seeking to 
offer such policy or product files an application 
to waive such requirement with the applicable 
Federal authority, and the authority deter-
mines, based on the application and other evi-
dence presented to the authority, that— 
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‘‘(i) either (or both) of the grounds 
described in subparagraph (B) for approval 
of the application has been met; and 
‘‘(ii) the coverage meets the applicable 
State standards (other than those that 
have been preempted under section 3002). 
‘‘(B) GROUNDS.—The grounds described 
in this subparagraph with respect to a policy or 
product of health benefits coverage are as fol-
lows: 
‘‘(i) FAILURE
TO
ACT
ON
POLICY, 
PRODUCT, OR
RATE
APPLICATION
ON
A 
TIMELY BASIS.—The State has failed to 
complete action on the policy or product 
(or rates for the policy or product) within 
90 days of the date of the State’s receipt 
of a substantially complete application. No 
period before the date of the enactment of 
this section shall be included in deter-
mining such 90-day period. 
‘‘(ii) DENIAL OF APPLICATION BASED 
ON
DISCRIMINATORY
TREATMENT.—The 
State has denied such an application 
and— 
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‘‘(I) the standards or review 
process imposed by the State as a 
condition of approval of the policy or 
product imposes either any material 
requirements, procedures, or stand-
ards to such policy or product that 
are not generally applicable to other 
policies and products offered or any 
requirements 
that 
are 
preempted 
under section 3002; or 
‘‘(II) the State requires the 
issuer, as a condition of approval of 
the policy or product, to offer any pol-
icy or product other than such policy 
or product. 
‘‘(C) ENFORCEMENT.—In the case of a 
waiver granted under subparagraph (A) to an 
issuer with respect to a State, the Secretary 
may enter into an agreement with the State 
under which the State agrees to provide for 
monitoring and enforcement activities with re-
spect to compliance of such an issuer and its 
health insurance coverage with the applicable 
State standards described in subparagraph 
(A)(ii). Such monitoring and enforcement shall 
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be conducted by the State in the same manner 
as the State enforces such standards with re-
spect to other health insurance issuers and 
plans, without discrimination based on the type 
of issuer to which the standards apply. Such an 
agreement shall specify or establish mechanisms 
by which compliance activities are undertaken, 
while not lengthening the time required to re-
view and process applications for waivers under 
subparagraph (A). 
‘‘(3) EXAMPLES OF TYPES OF COVERAGE.—The 
benefits 
coverage 
made 
available 
through 
a 
HealthMart may include, but is not limited to, any 
of the following if it meets the other applicable re-
quirements of this title: 
‘‘(A) Coverage through a health mainte-
nance organization. 
‘‘(B) Coverage in connection with a pre-
ferred provider organization. 
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization. 
‘‘(D) Indemnity coverage through an insur-
ance company. 
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‘‘(E) Coverage offered in connection with a 
contribution into a medical savings account or 
flexible spending account. 
‘‘(F) Coverage that includes a point-of- 
service option. 
‘‘(G) Any combination of such types of 
coverage. 
‘‘(4) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as 
precluding a health insurance issuer offering health 
benefits coverage through a HealthMart from estab-
lishing premium discounts or rebates for members or 
from modifying otherwise applicable copayments or 
deductibles in return for adherence to programs of 
health promotion and disease prevention so long as 
such programs are agreed to in advance by the 
HealthMart and comply with all other provisions of 
this title and do not discriminate among similarly 
situated members. 
‘‘(c) PURCHASERS; MEMBERS; HEALTH INSURANCE 
ISSUERS.— 
‘‘(1) PURCHASERS.— 
‘‘(A) IN GENERAL.—Subject to the provi-
sions of this title, a HealthMart shall permit 
any employer or any individual described in 
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subsection (a)(1)(C) to contract with the 
HealthMart for the purchase of health benefits 
coverage for its employees and dependents of 
those employees or for the individual (and the 
individual’s dependents), respectively, and may 
not vary conditions of eligibility (including pre-
mium rates and membership fees) of an em-
ployer or individual to be a purchaser. 
‘‘(B) ROLE
OF
ASSOCIATIONS, BROKERS, 
AND LICENSED HEALTH INSURANCE AGENTS.— 
Nothing in this section shall be construed as 
preventing an association, broker, licensed 
health insurance agent, or other entity from as-
sisting or representing a HealthMart or employ-
ers or individuals from entering into appro-
priate arrangements to carry out this title. 
‘‘(C) 
PERIOD
OF
CONTRACT.—The 
HealthMart may not require a contract under 
subparagraph (A) between a HealthMart and a 
purchaser to be effective for a period of longer 
than 24 months. The previous sentence shall 
not be construed as preventing such a contract 
from being extended for additional 24-month 
periods or preventing the purchaser from volun-
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tarily electing a contract period of longer than 
24 months. 
‘‘(D) 
EXCLUSIVE
NATURE
OF
CON-
TRACT.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), such a contract shall provide that the 
purchaser agrees not to obtain or sponsor 
health benefits coverage, on behalf of any 
eligible employees (and their dependents), 
other than through the HealthMart. 
‘‘(ii) EXCEPTION IF NO COVERAGE OF-
FERED IN AREA OF RESIDENCES.—Clause 
(i) shall not apply to an eligible individual 
who resides in an area for which no cov-
erage is offered by any health insurance 
issuer through the HealthMart. 
‘‘(iii) NOTHING
PRECLUDING
INDI-
VIDUAL EMPLOYEE OPT-OUT.—Nothing in 
this subparagraph shall be construed as re-
quiring an eligible employee of a large or 
small employer that is a purchaser to ob-
tain health benefits coverage through the 
HealthMart. 
‘‘(2) MEMBERS.— 
‘‘(A) IN GENERAL.— 
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‘‘(i) EMPLOYMENT
BASED
MEMBER-
SHIP.—Under rules established to carry 
out this title, with respect to an employer 
that has a purchaser contract with a 
HealthMart, individuals who are employees 
of the employer may enroll for health bene-
fits coverage (including coverage for de-
pendents of such enrolling employees) of-
fered by a health insurance issuer through 
the HealthMart. 
‘‘(ii) INDIVIDUALS.—Under rules es-
tablished to carry out this title, with re-
spect to an individual who has a purchaser 
contract with a HealthMart for himself or 
herself, the individual may enroll for health 
benefits coverage (including coverage for 
dependents of such individual) offered by a 
health 
insurance 
issuer 
through 
the 
HealthMart. 
‘‘(B) NONDISCRIMINATION
IN
ENROLL-
MENT.—A HealthMart may not deny enroll-
ment as a member to an individual who is an 
employee or individual (or dependent of such an 
employee or individual) eligible to be so enrolled 
based on health status-related factors, except as 
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may be permitted consistent with section 
2742(b). 
‘‘(C) ANNUAL
OPEN
ENROLLMENT
PE-
RIOD.—In the case of members enrolled in 
health benefits coverage offered by a health in-
surance issuer through a HealthMart, subject 
to subparagraph (D), the HealthMart shall pro-
vide for an annual open enrollment period of 30 
days during which such members may change 
the coverage option in which the members are 
enrolled. 
‘‘(D) RULES OF ELIGIBILITY.—Nothing in 
this paragraph shall preclude a HealthMart 
from establishing rules of employee or indi-
vidual eligibility for enrollment and reenroll-
ment of members during the annual open en-
rollment period under subparagraph (C). Such 
rules shall be applied consistently to all pur-
chasers and members within the HealthMart 
and shall not be based in any manner on health 
status-related factors and may not conflict with 
sections 2701 and 2702 of this Act. 
‘‘(3) HEALTH INSURANCE ISSUERS.— 
‘‘(A) PREMIUM
COLLECTION.—The con-
tract between a HealthMart and a health insur-
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ance issuer shall provide, with respect to a 
member enrolled with health benefits coverage 
offered by the issuer through the HealthMart, 
for the payment of the premiums collected by 
the HealthMart (or the issuer) for such cov-
erage (less a pre-determined administrative 
charge negotiated by the HealthMart and the 
issuer) to the issuer. 
‘‘(B) SCOPE OF SERVICE AREA.—Nothing 
in this title shall be construed as requiring the 
service area of a health insurance issuer with 
respect to health insurance coverage to cover 
the entire geographic area served by a 
HealthMart. 
‘‘(C) AVAILABILITY
OF
COVERAGE
OP-
TIONS.— 
‘‘(i) IN
GENERAL.—A HealthMart 
shall enter into contracts with one or more 
health insurance issuers in a manner that 
assures that at least 2 health insurance 
coverage options are made available. 
‘‘(ii) REQUIREMENT
OF
NON-NET-
WORK OPTION.—At least one of the health 
insurance coverage options made available 
under clause (i) shall be a non-network 
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coverage option under which enrollees may 
obtain benefits for health care items and 
services that are not provided under a con-
tract between the provider of the service 
and the issuer involved. 
‘‘(d) PREVENTION OF CONFLICTS OF INTEREST.— 
‘‘(1) FOR BOARDS OF DIRECTORS.—A member 
of a board of directors of a HealthMart may not 
serve as an employee or paid consultant to the 
HealthMart, but may receive reasonable reimburse-
ment for travel expenses for purposes of attending 
meetings of the board or committees thereof. 
‘‘(2) FOR BOARDS OF DIRECTORS OR EMPLOY-
EES.—An individual is not eligible to serve in a paid 
or unpaid capacity on the board of directors of a 
HealthMart or as an employee of the HealthMart, if 
the individual is employed by, represents in any ca-
pacity, owns, or controls any ownership interest in 
an organization from whom the HealthMart receives 
contributions, grants, or other funds not connected 
with 
a 
contract 
for 
coverage 
through 
the 
HealthMart. 
‘‘(3) 
EMPLOYMENT
AND
EMPLOYEE
REP-
RESENTATIVES.— 
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‘‘(A) IN GENERAL.—An individual who is 
serving on a board of directors of a HealthMart 
as a representative described in subparagraph 
(A) or (B) of section 3001(a)(1) shall not be 
employed by or affiliated with a health insur-
ance issuer or be licensed as or employed by or 
affiliated with a health care provider. 
‘‘(B) CONSTRUCTION.—For purposes of 
subparagraph (A), the term ‘affiliated’ does not 
include membership in a health benefits plan or 
the obtaining of health benefits coverage offered 
by a health insurance issuer. 
‘‘(e) CONSTRUCTION.— 
‘‘(1) 
NETWORK
OF
AFFILIATED 
HEALTHMARTS.—Nothing in this section shall be 
construed as preventing one or more HealthMarts 
serving different areas (whether or not contiguous) 
from providing for some or all of the following 
(through a single administrative organization or oth-
erwise): 
‘‘(A) Coordinating the offering of the same 
or similar health benefits coverage in different 
areas served by the different HealthMarts. 
‘‘(B) Providing for crediting of deductibles 
and other cost-sharing for individuals who are 
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provided health benefits coverage through the 
HealthMarts 
(or 
affiliated 
HealthMarts) 
after— 
‘‘(i) a change of employers through 
which the coverage is provided, or 
‘‘(ii) a change in place of employment 
to an area not served by the previous 
HealthMart. 
‘‘(2) PERMITTING
HEALTHMARTS
TO
ADJUST 
DISTRIBUTIONS AMONG ISSUERS TO REFLECT REL-
ATIVE RISK OF ENROLLEES.—Nothing in this sec-
tion shall be construed as precluding a HealthMart 
from providing for adjustments in amounts distrib-
uted among the health insurance issuers offering 
health benefits coverage through the HealthMart 
based on factors such as the relative health care risk 
of members enrolled under the coverage offered by 
the different issuers. 
‘‘SEC. 3002. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS. 
‘‘(a) AUTHORITY OF STATES.—Nothing in this sec-
tion shall be construed as preempting State laws relating 
to the following: 
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‘‘(1) The regulation of underwriters of health 
coverage, including licensure and solvency require-
ments. 
‘‘(2) The application of premium taxes and re-
quired payments for guaranty funds or for contribu-
tions to high-risk pools. 
‘‘(3) The application of fair marketing require-
ments and other consumer protections (other than 
those specifically relating to an item described in 
subsection (b)). 
‘‘(4) The application of requirements relating to 
the adjustment of rates for health insurance cov-
erage. 
‘‘(b) TREATMENT OF BENEFIT AND GROUPING RE-
QUIREMENTS.—State laws insofar as they relate to any 
of the following are superseded and shall not apply to 
health benefits coverage made available through a 
HealthMart: 
‘‘(1) Benefit requirements for health benefits 
coverage offered through a HealthMart, including 
(but not limited to) requirements relating to cov-
erage of specific providers, specific services or condi-
tions, or the amount, duration, or scope of benefits, 
but not including requirements to the extent re-
quired to implement title XXVII or other Federal 
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law and to the extent the requirement prohibits an 
exclusion of a specific disease from such coverage. 
‘‘(2) Requirements (commonly referred to as 
fictitious group laws) relating to grouping and simi-
lar requirements for such coverage to the extent 
such requirements impede the establishment and op-
eration of HealthMarts pursuant to this title. 
‘‘(3) Any other requirements (including limita-
tions on compensation arrangements) that, directly 
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through a 
HealthMart, if the HealthMart meets the require-
ments of this title. 
Any State law or regulation relating to the composition 
or organization of a HealthMart is preempted to the ex-
tent the law or regulation is inconsistent with the provi-
sions of this title. 
‘‘(c) APPLICATION OF ERISA FIDUCIARY AND DIS-
CLOSURE REQUIREMENTS.—The board of directors of a 
HealthMart is deemed to be a plan administrator of an 
employee welfare benefit plan which is a group health plan 
for purposes of applying parts 1 and 4 of subtitle B of 
title I of the Employee Retirement Income Security Act 
of 1974 and those provisions of part 5 of such subtitle 
which are applicable to enforcement of such parts 1 and 
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4, and the HealthMart shall be treated as such a plan 
and the enrollees enrolled on the basis of employment shall 
be treated as participants and beneficiaries for purposes 
of applying such provisions pursuant to this subsection. 
‘‘(d) APPLICATION OF ERISA RENEWABILITY PRO-
TECTION.—A HealthMart is deemed to be group health 
plan that is a multiple employer welfare arrangement for 
purposes of applying section 703 of the Employee Retire-
ment Income Security Act of 1974. 
‘‘(e) APPLICATION OF RULES FOR NETWORK PLANS 
AND
FINANCIAL
CAPACITY.—The provisions of sub-
sections (c) and (d) of section 2711 apply to health bene-
fits coverage offered by a health insurance issuer through 
a HealthMart. 
‘‘(f) CONSTRUCTION RELATING TO OFFERING RE-
QUIREMENT.—Nothing in section 2711(a) of this Act or 
703 of the Employee Retirement Income Security Act of 
1974 shall be construed as permitting the offering outside 
the HealthMart of health benefits coverage that is only 
made available through a HealthMart under this section 
because of the application of subsection (b). 
‘‘(g) APPLICATION TO GUARANTEED RENEWABILITY 
REQUIREMENTS IN CASE OF DISCONTINUATION OF AN 
ISSUER.—For purposes of applying section 2712 in the 
case of health insurance coverage offered by a health in-
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surance issuer through a HealthMart, if the contract be-
tween the HealthMart and the issuer is terminated and 
the HealthMart continues to make available any health in-
surance coverage after the date of such termination, the 
following rules apply: 
‘‘(1) RENEWABILITY.—The HealthMart shall 
fulfill the obligation under such section of the issuer 
renewing and continuing in force coverage by offer-
ing purchasers (and members and their dependents) 
all available health benefits coverage that would oth-
erwise be available to similarly-situated purchasers 
and members from the remaining participating 
health insurance issuers in the same manner as 
would be required of issuers under section 2712(c). 
‘‘(2) APPLICATION OF ASSOCIATION RULES.— 
The HealthMart shall be considered an association 
for purposes of applying section 2712(e). 
‘‘(h) CONSTRUCTION
IN RELATION
TO CERTAIN 
OTHER LAWS.—Nothing in this title shall be construed 
as modifying or affecting the applicability to HealthMarts 
or health benefits coverage offered by a health insurance 
issuer through a HealthMart of parts 6 and 7 of subtitle 
B of title I of the Employee Retirement Income Security 
Act of 1974 or titles XXII and XXVII of this Act. 
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‘‘SEC. 3003. ADMINISTRATION. 
‘‘(a) IN GENERAL.—The applicable Federal authority 
shall administer this title and is authorized to issue such 
regulations as may be required to carry out this title. Such 
regulations shall be subject to Congressional review under 
the provisions of chapter 8 of title 5, United States Code. 
The applicable Federal authority shall incorporate the 
process of ‘deemed file and use’ with respect to the infor-
mation filed under section 3001(a)(6)(A) and shall deter-
mine whether information filed by a HealthMart dem-
onstrates compliance with the applicable requirements of 
this title. Such authority shall exercise its authority under 
this title in a manner that fosters and promotes the devel-
opment of HealthMarts in order to improve access to 
health care coverage and services. 
‘‘(b) PERIODIC REPORTS.—The applicable Federal 
authority shall submit to Congress a report every 30 
months, during the 10-year period beginning on the effec-
tive date of the rules promulgated by the applicable Fed-
eral authority to carry out this title, on the effectiveness 
of this title in promoting coverage of uninsured individ-
uals. Such authority may provide for the production of 
such reports through one or more contracts with appro-
priate private entities. 
‘‘SEC. 3004. DEFINITIONS. 
‘‘For purposes of this title: 
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‘‘(1) APPLICABLE FEDERAL AUTHORITY.—The 
term ‘applicable Federal authority’ means the Sec-
retary of Health and Human Services . 
‘‘(2) ELIGIBLE
EMPLOYEE
OR
INDIVIDUAL.— 
The term ‘eligible’ means, with respect to an em-
ployee or other individual and a HealthMart, an em-
ployee or individual who is eligible under section 
3001(c)(2) to enroll or be enrolled in health benefits 
coverage offered through the HealthMart. 
‘‘(3) EMPLOYER; EMPLOYEE; DEPENDENT.— 
Except as the applicable Federal authority may oth-
erwise provide, the terms ‘employer’, ‘employee’, and 
‘dependent’, as applied to health insurance coverage 
offered by a health insurance issuer licensed (or oth-
erwise regulated) in a State, shall have the meanings 
applied to such terms with respect to such coverage 
under the laws of the State relating to such coverage 
and such an issuer. The term ‘dependent’ may in-
clude the spouse and children of the individual in-
volved. 
‘‘(4) HEALTH BENEFITS COVERAGE.—The term 
‘health benefits coverage’ has the meaning given the 
term group health insurance coverage in section 
2791(b)(4). 
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‘‘(5) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2). 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
given such term in section 2791(d)(9). 
‘‘(7) HEALTHMART.—The term ‘HealthMart’ is 
defined in section 3001(a). 
‘‘(8) MEMBER.—The term ‘member’ means, 
with respect to a HealthMart, an individual enrolled 
for health benefits coverage through the HealthMart 
under section 3001(c)(2). 
‘‘(9) 
PURCHASER.—The 
term 
‘purchaser’ 
means, with respect to a HealthMart, an employer 
or individual that has contracted under section 
3001(c)(1)(A) with the HealthMart for the purchase 
of health benefits coverage.’’. 
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TITLE II—HEALTH CARE ACCESS 
AND CHOICE THROUGH INDI-
VIDUAL MEMBERSHIP ASSO-
CIATIONS (IMAS) 
SEC. 201. EXPANSION OF ACCESS AND CHOICE THROUGH 
INDIVIDUAL 
MEMBERSHIP 
ASSOCIATIONS 
(IMAS). 
The Public Health Service Act, as amended by sec-
tion 102, is further amended by adding at the end the 
following new title: 
‘‘TITLE XXXI—INDIVIDUAL 
MEMBERSHIP ASSOCIATIONS 
‘‘SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP AS-
SOCIATION (IMA). 
‘‘(a) IN GENERAL.—For purposes of this title, the 
terms ‘individual membership association’ and ‘IMA’ 
mean a legal entity that meets the following requirements: 
‘‘(1) ORGANIZATION.—The IMA is an organiza-
tion operated under the direction of an association 
(as defined in section 3104(1)). 
‘‘(2) 
OFFERING
HEALTH
BENEFITS
COV-
ERAGE.— 
‘‘(A) DIFFERENT GROUPS.—The IMA, in 
conjunction with those health insurance issuers 
that offer health benefits coverage through the 
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IMA, makes available health benefits coverage 
in the manner described in subsection (b) to all 
members of the IMA and the dependents of 
such members in the manner described in sub-
section (c)(2) at rates that are established by 
the health insurance issuer on a policy or prod-
uct specific basis and that may vary only as 
permissible under State law. 
‘‘(B) NONDISCRIMINATION
IN
COVERAGE 
OFFERED.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the IMA may not offer health benefits 
coverage to a member of an IMA unless 
the same coverage is offered to all such 
members of the IMA. 
‘‘(ii) 
CONSTRUCTION.—Nothing 
in 
this title shall be construed as requiring or 
permitting a health insurance issuer to 
provide coverage outside the service area of 
the issuer, as approved under State law, or 
requiring a health insurance issuer from 
excluding or limiting the coverage on any 
individual, subject to the requirement of 
section 2741. 
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‘‘(C) NO FINANCIAL UNDERWRITING.—The 
IMA provides health benefits coverage only 
through contracts with health insurance issuers 
and does not assume insurance risk with re-
spect to such coverage. 
‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 
shall be construed as preventing the establishment 
and operation of more than one IMA in a geographic 
area or as limiting the number of IMAs that may 
operate in any area. 
‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES 
TO PURCHASERS.— 
‘‘(A) IN GENERAL.—The IMA may provide 
administrative services for members. Such serv-
ices may include accounting, billing, and enroll-
ment information. 
‘‘(B) CONSTRUCTION.—Nothing in this 
subsection shall be construed as preventing an 
IMA from serving as an administrative service 
organization to any entity. 
‘‘(5) FILING
INFORMATION.—The IMA files 
with the Secretary information that demonstrates 
the IMA’s compliance with the applicable require-
ments of this title. 
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‘‘(b) HEALTH
BENEFITS
COVERAGE
REQUIRE-
MENTS.— 
‘‘(1) COMPLIANCE
WITH
CONSUMER
PROTEC-
TION REQUIREMENTS.—Any health benefits coverage 
offered through an IMA shall— 
‘‘(A) be underwritten by a health insurance 
issuer that— 
‘‘(i) is licensed (or otherwise regu-
lated) under State law, 
‘‘(ii) meets all applicable State stand-
ards relating to consumer protection, sub-
ject to section 3002(b), and 
‘‘(B) subject to paragraph (2), be approved 
or otherwise permitted to be offered under 
State law. 
‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 
benefits coverage made available through an IMA 
may include, but is not limited to, any of the fol-
lowing if it meets the other applicable requirements 
of this title: 
‘‘(A) Coverage through a health mainte-
nance organization. 
‘‘(B) Coverage in connection with a pre-
ferred provider organization. 
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‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization. 
‘‘(D) Indemnity coverage through an insur-
ance company. 
‘‘(E) Coverage offered in connection with a 
contribution into a medical savings account or 
flexible spending account. 
‘‘(F) Coverage that includes a point-of- 
service option. 
‘‘(G) Any combination of such types of 
coverage. 
‘‘(3) WELLNESS BONUSES FOR HEALTH PRO-
MOTION.—Nothing in this title shall be construed as 
precluding a health insurance issuer offering health 
benefits coverage through an IMA from establishing 
premium discounts or rebates for members or from 
modifying 
otherwise 
applicable 
copayments 
or 
deductibles in return for adherence to programs of 
health promotion and disease prevention so long as 
such programs are agreed to in advance by the IMA 
and comply with all other provisions of this title and 
do not discriminate among similarly situated mem-
bers. 
‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.— 
‘‘(1) MEMBERS.— 
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‘‘(A) IN
GENERAL.—Under rules estab-
lished to carry out this title, with respect to an 
individual who is a member of an IMA, the in-
dividual may enroll for health benefits coverage 
(including coverage for dependents of such indi-
vidual) offered by a health insurance issuer 
through the IMA. 
‘‘(B) RULES FOR ENROLLMENT.—Nothing 
in this paragraph shall preclude an IMA from 
establishing rules of enrollment and reenroll-
ment of members. Such rules shall be applied 
consistently to all members within the IMA and 
shall not be based in any manner on health sta-
tus-related factors. 
‘‘(2) HEALTH INSURANCE ISSUERS.—The con-
tract between an IMA and a health insurance issuer 
shall provide, with respect to a member enrolled with 
health benefits coverage offered by the issuer 
through the IMA, for the payment of the premiums 
collected by the issuer. 
‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE-
MENTS. 
‘‘State laws insofar as they relate to any of the fol-
lowing are superseded and shall not apply to health bene-
fits coverage made available through an IMA: 
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‘‘(1) Benefit requirements for health benefits 
coverage offered through an IMA, including (but not 
limited to) requirements relating to coverage of spe-
cific providers, specific services or conditions, or the 
amount, duration, or scope of benefits, but not in-
cluding requirements to the extent required to imple-
ment title XXVII or other Federal law and to the 
extent the requirement prohibits an exclusion of a 
specific disease from such coverage. 
‘‘(2) Any other requirements (including limita-
tions on compensation arrangements) that, directly 
or indirectly, preclude (or have the effect of pre-
cluding) the offering of such coverage through an 
IMA, if the IMA meets the requirements of this 
title. 
Any State law or regulation relating to the composition 
or organization of an IMA is preempted to the extent the 
law or regulation is inconsistent with the provisions of this 
title. 
‘‘SEC. 3103. ADMINISTRATION. 
‘‘(a) IN GENERAL.—The Secretary shall administer 
this title and is authorized to issue such regulations as 
may be required to carry out this title. Such regulations 
shall be subject to Congressional review under the provi-
sions of chapter 8 of title 5, United States Code. The Sec-
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retary shall incorporate the process of ‘deemed file and 
use’ with respect to the information filed under section 
3001(a)(5)(A) and shall determine whether information 
filed by an IMA demonstrates compliance with the applica-
ble requirements of this title. The Secretary shall exercise 
authority under this title in a manner that fosters and 
promotes the development of IMAs in order to improve 
access to health care coverage and services. 
‘‘(b) PERIODIC REPORTS.—The Secretary shall sub-
mit to Congress a report every 30 months, during the 10- 
year period beginning on the effective date of the rules 
promulgated by the Secretary to carry out this title, on 
the effectiveness of this title in promoting coverage of un-
insured individuals. The Secretary may provide for the 
production of such reports through one or more contracts 
with appropriate private entities. 
‘‘SEC. 3104. DEFINITIONS. 
‘‘For purposes of this title: 
‘‘(1) ASSOCIATION.—The term ‘association’ 
means, with respect to health insurance coverage of-
fered in a State, an association which— 
‘‘(A) has been actively in existence for at 
least 5 years; 
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‘‘(B) has been formed and maintained in 
good faith for purposes other than obtaining in-
surance; 
‘‘(C) does not condition membership in the 
association on any health status-related factor 
relating to an individual (including an employee 
of an employer or a dependent of an employee); 
and 
‘‘(D) does not make health insurance cov-
erage offered through the association available 
other than in connection with a member of the 
association. 
‘‘(2) DEPENDENT.—The term ‘dependent’, as 
applied to health insurance coverage offered by a 
health insurance issuer licensed (or otherwise regu-
lated) in a State, shall have the meaning applied to 
such term with respect to such coverage under the 
laws of the State relating to such coverage and such 
an issuer. Such term may include the spouse and 
children of the individual involved. 
‘‘(3) HEALTH BENEFITS COVERAGE.—The term 
‘health benefits coverage’ has the meaning given the 
term 
health 
insurance 
coverage 
in 
section 
2791(b)(1). 
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‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2). 
‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
given such term in section 2791(d)(9). 
‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA-
TION.—The terms ‘IMA’ and ‘individual membership 
association’ are defined in section 3101(a). 
‘‘(7) MEMBER.—The term ‘member’ means, 
with respect to an IMA, an individual who is a mem-
ber of the association to which the IMA is offering 
coverage.’’. 
TITLE III—FEDERAL MATCHING 
FUNDING FOR STATE INSUR-
ANCE EXPENDITURES 
SEC. 301. FEDERAL MATCHING FUNDING FOR STATE IN-
SURANCE EXPENDITURES. 
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, each State shall receive from the Sec-
retary of Health and Human Services an amount equal 
to 50 percent of the funds expended by the State in pro-
viding for the use, in connection with providing health ben-
efits coverage, of a high-risk pool, a reinsurance pool, or 
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other risk-adjustment mechanism used for the purpose of 
subsidizing the purchase of private health insurance. 
(b) FUNDING LIMITATION.—A State shall not receive 
under this section for a fiscal year more than a total of 
50 cents multiplied by the average number of residents 
(as estimated by the Secretary) in the State in the fiscal 
year. 
(c) ADMINISTRATION.—The Secretary of Health and 
Human Services shall provide for the administration of 
this section and may establish such terms and conditions, 
including the requirement of an application, as may be ap-
propriate to carry out this section. 
(d) CONSTRUCTION.—Nothing in this section shall be 
construed as requiring a State to operate a reinsurance 
pool (or other risk-adjustment mechanism) under this sec-
tion or as preventing a State from operating such a pool 
or mechanism through one or more private entities. 
(e) HIGH-RISK POOL.—For purposes of this section, 
the term ‘‘high-risk pool’’ means any qualified high risk 
pool (as defined in section 2744(c)(2) of the Public Health 
Service Act). 
(f) REINSURANCE POOL OR OTHER RISK-ADJUST-
MENT MECHANISM DEFINED.—For purposes of this sec-
tion, the term ‘‘reinsurance pool or other risk-adjustment 
mechanism’’ means any State-based risk spreading mecha-
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nism to subsidize the purchase of private health insurance 
for the high-risk population. 
(g) HIGH-RISK POPULATION.—For purposes of this 
section, the term ‘‘high-risk population’’ means— 
(1) individuals who, by reason of the existence 
or history of a medical condition, are able to acquire 
health coverage only at rates which are at least 150 
percent of the standard risk rates for such coverage, 
and 
(2) individuals who are provided health cov-
erage by a high-risk pool. 
(h) STATE DEFINED.—For purposes of this section, 
the term ‘‘State’’ includes the District of Columbia, Puer-
to Rico, the Virgin Islands, Guam, American Samoa, and 
the Northern Mariana Islands. 
TITLE IV—AFFORDABLE HEALTH 
COVERAGE FOR EMPLOYEES 
OF SMALL BUSINESSES 
SEC. 401. SHORT TITLE OF TITLE. 
This title may be cited as the ‘‘Small Business Access 
and Choice for Entrepreneurs Act of 2007’’. 
SEC. 402. RULES. 
(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: 
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‘‘PART —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— 
‘‘(1) whose sponsor is (or is deemed under this 
part to be) described in subsection (b); and 
‘‘(2) under which at least one option of health 
insurance coverage offered by a health insurance 
issuer (which may include, among other options, 
managed care options, point of service options, and 
preferred provider options) is provided to partici-
pants and beneficiaries, unless, for any plan year, 
such coverage remains unavailable to the plan de-
spite good faith efforts exercised by the plan to se-
cure such coverage. 
‘‘(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-
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sional association, or a bona fide chamber of com-
merce (or similar bona fide business association, in-
cluding a corporation or similar organization that 
operates on a cooperative basis (within the meaning 
of section 1381 of the Internal Revenue Code of 
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 col-
lects from its members on a periodic basis dues or 
payments necessary to maintain eligibility for mem-
bership 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. 
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‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH 
PLANS. 
‘‘(a) IN GENERAL.—The applicable authority shall 
prescribe by regulation, through negotiated rulemaking, a 
procedure under which, subject to subsection (b), the ap-
plicable authority shall certify association health plans 
which apply for certification as meeting the requirements 
of this part. 
‘‘(b) STANDARDS.—Under the procedure prescribed 
pursuant to subsection (a), in the case of an association 
health plan that provides at least one benefit option which 
does not consist of health insurance coverage, the applica-
ble authority shall certify such plan as meeting the re-
quirements of this part only if the applicable authority is 
satisfied that— 
‘‘(1) such certification— 
‘‘(A) is administratively feasible; 
‘‘(B) is not adverse to the interests of the 
individuals covered under the plan; and 
‘‘(C) is protective of the rights and benefits 
of the individuals covered under the plan; and 
‘‘(2) 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. 
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‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED 
PLANS.—An association health plan with respect to which 
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date 
of certification (or, if later, on the date on which the plan 
is to commence operations). 
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The applicable authority may provide by regula-
tion, through negotiated rulemaking, for continued certifi-
cation of association health plans under this part. 
‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED 
PLANS.—The applicable authority shall establish a class 
certification procedure for association health plans under 
which all benefits consist of health insurance coverage. 
Under such procedure, the applicable authority shall pro-
vide for the granting of certification under this part to 
the plans in each class of such association health plans 
upon appropriate filing under such procedure in connec-
tion with plans in such class and payment of the pre-
scribed fee under section 807(a). 
‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION 
HEALTH PLANS.—An association health plan which offers 
one or more benefit options which do not consist of health 
insurance coverage may be certified under this part only 
if such plan consists of any of the following: 
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‘‘(1) a plan which offered such coverage on the 
date of the enactment of the Small Business Access 
and Choice for Entrepreneurs Act of 2007; 
‘‘(2) a plan under which the sponsor does not 
restrict membership to one or more trades and busi-
nesses or industries and whose eligible participating 
employers represent a broad cross-section of trades 
and businesses or industries; or 
‘‘(3) a plan whose eligible participating employ-
ers represent one or more trades or businesses, or 
one or more industries, which have been indicated as 
having average or above-average health insurance 
risk or health claims experience by reason of State 
rate filings, denials of coverage, proposed premium 
rate levels, and other means demonstrated by such 
plan in accordance with regulations which the Sec-
retary shall prescribe through negotiated rule-
making, including (but not limited to) the following: 
agriculture; automobile dealerships; barbering and 
cosmetology; child care; construction; dance, theat-
rical, and orchestra productions; disinfecting and 
pest control; eating and drinking establishments; 
fishing; hospitals; labor organizations; logging; man-
ufacturing (metals); mining; medical and dental 
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practices; medical laboratories; sanitary services; 
transportation (local and freight); and warehousing. 
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 
BOARDS OF TRUSTEES. 
‘‘(a) SPONSOR.—The requirements of this subsection 
are met with respect to an association health plan if the 
sponsor has met (or is deemed under this part to have 
met) the requirements of section 801(b) for a continuous 
period of not less than 3 years ending with the date of 
the application for certification under this part. 
‘‘(b) BOARD OF TRUSTEES.—The requirements of 
this subsection are met with respect to an association 
health plan if the following requirements are met: 
‘‘(1) FISCAL CONTROL.—The plan is operated, 
pursuant to a trust agreement, by a board of trust-
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. 
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‘‘(3) RULES
GOVERNING
RELATIONSHIP
TO 
PARTICIPATING
EMPLOYERS
AND
TO
CONTRAC-
TORS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B) and (C), the members of the 
board of trustees are individuals selected from 
individuals who are the owners, officers, direc-
tors, or employees of the participating employ-
ers or who are partners in the participating em-
ployers and actively participate in the business. 
‘‘(B) LIMITATION.— 
‘‘(i) GENERAL RULE.—Except as pro-
vided in clauses (ii) and (iii), no such 
member is an owner, officer, director, or 
employee of, or partner in, a contract ad-
ministrator or other service provider to the 
plan. 
‘‘(ii) LIMITED EXCEPTION FOR PRO-
VIDERS OF SERVICES SOLELY ON BEHALF 
OF THE SPONSOR.—Officers or employees 
of a sponsor which is a service provider 
(other than a contract administrator) to 
the plan may be members of the board if 
they constitute not more than 25 percent 
of the membership of the board and they 
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do not provide services to the plan other 
than on behalf of the sponsor. 
‘‘(iii) TREATMENT OF PROVIDERS OF 
MEDICAL CARE.—In the case of a sponsor 
which is an association whose membership 
consists primarily of providers of medical 
care, clause (i) shall not apply in the case 
of any service provider described in sub-
paragraph (A) who is a provider of medical 
care under the plan. 
‘‘(C) CERTAIN
PLANS
EXCLUDED.—Sub-
paragraph (A) shall not apply to an association 
health plan which is in existence on the date of 
the enactment of the Small Business Access 
and Choice for Entrepreneurs Act of 2007. 
‘‘(D) SOLE AUTHORITY.—The board has 
sole authority under the plan to approve appli-
cations for participation in the plan and to con-
tract with a service provider to administer the 
day-to-day affairs of the plan. 
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 
the case of a group health plan which is established and 
maintained by a franchiser for a franchise network con-
sisting of its franchisees— 
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‘‘(1) the requirements of subsection (a) and sec-
tion 801(a)(1) shall be deemed met if such require-
ments would otherwise be met if the franchiser were 
deemed to be the sponsor referred to in section 
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee 
were deemed to be a member (of the association and 
the sponsor) referred to in section 801(b); and 
‘‘(2) the requirements of section 804(a)(1) shall 
be deemed met. 
The Secretary may by regulation, through negotiated rule-
making, define for purposes of this subsection the terms 
‘franchiser’, ‘franchise network’, and ‘franchisee’. 
‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.— 
‘‘(1) IN
GENERAL.—In the case of a group 
health plan described in paragraph (2)— 
‘‘(A) the requirements of subsection (a) 
and section 801(a)(1) shall be deemed met; 
‘‘(B) the joint board of trustees shall be 
deemed a board of trustees with respect to 
which the requirements of subsection (b) are 
met; and 
‘‘(C) the requirements of section 804 shall 
be deemed met. 
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‘‘(2) REQUIREMENTS.—A group health plan is 
described in this paragraph if— 
‘‘(A) the plan is a multiemployer plan; or 
‘‘(B) the plan is in existence on April 1, 
1997, and would be described in section 
3(40)(A)(i) but solely for the failure to meet 
the requirements of section 3(40)(C)(ii). 
‘‘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 
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such an affiliated member of the sponsor, partici-
pating employers may also include such employer; 
and 
‘‘(2) all individuals commencing coverage under 
the plan after certification under this part must 
be— 
‘‘(A) active or retired owners (including 
self-employed individuals), officers, directors, or 
employees of, or partners in, participating em-
ployers; or 
‘‘(B) the beneficiaries of individuals de-
scribed in subparagraph (A). 
‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM-
PLOYEES.—In the case of an association health plan in 
existence on the date of the enactment of the Small Busi-
ness Access and Choice for Entrepreneurs Act of 2007, 
an affiliated member of the sponsor of the plan may be 
offered coverage under the plan as a participating em-
ployer 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 
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group health plan with respect to any of its employ-
ees who would otherwise be eligible to participate in 
such association health plan. 
‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to an 
association health plan if, under the terms of the plan, 
no participating employer may provide health insurance 
coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
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 
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section 2711 of the Public Health Service Act are 
not met; 
‘‘(2) upon request, any employer eligible to par-
ticipate is furnished information regarding all cov-
erage options available under the plan; and 
‘‘(3) the applicable requirements of sections 
701, 702, and 703 are met with respect to the plan. 
‘‘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)); 
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‘‘(B) provides that the sponsor of the plan 
is to serve as plan sponsor (referred to in sec-
tion 3(16)(B)); and 
‘‘(C) incorporates the requirements of sec-
tion 806. 
‘‘(2) CONTRIBUTION
RATES
MUST
BE
NON-
DISCRIMINATORY.— 
‘‘(A) The contribution rates for any par-
ticipating small employer do not vary on the 
basis of the claims experience of such employer 
and do not vary on the basis of the type of 
business or industry in which such employer is 
engaged. 
‘‘(B) Nothing in this title or any other pro-
vision of law shall be construed to preclude an 
association health plan, or a health insurance 
issuer offering health insurance coverage in 
connection with an association health plan, 
from— 
‘‘(i) setting contribution rates based 
on the claims experience of the plan; or 
‘‘(ii) varying contribution rates for 
small employers in a State to the extent 
that such rates could vary using the same 
methodology employed in such State for 
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regulating premium rates in the small 
group market with respect to health insur-
ance coverage offered in connection with 
bona fide associations (within the meaning 
of section 2791(d)(3) of the Public Health 
Service Act), 
subject to the requirements of section 702(b) 
relating to contribution rates. 
‘‘(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), 
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the term ‘State-licensed insurance agents’ 
means one or more agents who are licensed in 
a State and are subject to the laws of such 
State relating to licensure, qualification, test-
ing, examination, and continuing education of 
persons authorized to offer, sell, or solicit 
health insurance coverage in such State. 
‘‘(5) 
REGULATORY
REQUIREMENTS.—Such 
other requirements as the applicable authority deter-
mines are necessary to carry out the purposes of this 
part, which shall be prescribed by the applicable au-
thority by regulation through negotiated rulemaking. 
‘‘(b) HEALTH BENEFIT OPTIONS UNDER AN ASSO-
CIATION HEALTH PLAN.— 
‘‘(1) EXAMPLES OF TYPES OF COVERAGE.—The 
health benefits coverage made available through an 
association health plan may include, but is not lim-
ited to, any of the following if it meets the other ap-
plicable requirements of this title: 
‘‘(A) Coverage through a health mainte-
nance organization. 
‘‘(B) Coverage in connection with a pre-
ferred provider organization. 
‘‘(C) Coverage in connection with a li-
censed provider-sponsored organization. 
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‘‘(D) Indemnity coverage through an insur-
ance company. 
‘‘(E) Coverage offered in connection with a 
contribution into a medical savings account or 
flexible spending account. 
‘‘(F) Coverage that includes a point-of- 
service option. 
‘‘(G) Any combination of such types of 
coverage. 
‘‘(2) 
HEALTH
INSURANCE
COVERAGE
OP-
TIONS.— 
‘‘(A) IN GENERAL.—An association health 
plan shall include a minimum of 4 health insur-
ance coverage options. At least 1 option shall be 
a non network option. At least 2 options shall 
meet all applicable State benefit mandates. 
‘‘(B) MODEL
BENEFITS
PACKAGE.—The 
Secretary in consultation with the National As-
sociation of Insurance Commissioners shall de-
velop a model benefits package for health insur-
ance coverage not later than one year after the 
date of the enactment of the Consensus Health 
Care Access and Choice Act of 2003. 
‘‘(C) EXCEPTION TO GENERAL RULE.—An 
association health plan may offer 2 options that 
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meet the requirements of the model benefits 
package in lieu of the State benefit mandate of-
ferings required under subparagraph (A). 
‘‘(3) PERMITTING ASSOCIATION HEALTH PLANS 
TO ADJUST DISTRIBUTIONS AMONG ISSUERS TO RE-
FLECT RELATIVE RISK OF ENROLLEES.—Nothing in 
this section shall be construed as precluding an asso-
ciation health plan from providing for adjustments 
in amounts distributed among the health insurance 
issuers offering health benefits coverage through the 
association health plan based on factors such as the 
relative health care risk of members enrolled under 
the coverage offered by the different issuers. 
‘‘(4) CONSTRUCTION.—Except as provided in 
subparagraph (2), nothing in this part or any provi-
sion of State law (as defined in section 514(c)(1)) 
shall be construed to preclude an association health 
plan, or a health insurance issuer offering health in-
surance coverage in connection with an association 
health plan, from exercising its sole discretion in se-
lecting the specific items and services consisting of 
medical care to be included as benefits under such 
plan or coverage, except (subject to section 514) in 
the case of any law to the extent that it (1) prohibits 
an exclusion of a specific disease from such cov-
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erage, or (2) is not preempted under section 
731(a)(1) with respect to matters governed by sec-
tion 711 or 712. 
‘‘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 
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for expected administrative costs with re-
spect to such benefit liabilities; 
‘‘(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, through negotiated rulemaking, 
provide for upward adjustments in the 
amount of such percentage in specified cir-
cumstances in which the plan specifically 
provides for and maintains reserves in ex-
cess of the amounts required under sub-
paragraph (A). 
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‘‘(ii) The plan shall secure specific ex-
cess/stop loss insurance for the plan with 
an attachment point which is at least equal 
to an amount recommended by the plan’s 
qualified actuary (but not more than 
$175,000). The applicable authority may 
by regulation, through negotiated rule-
making, provide for adjustments in the 
amount of such insurance in specified cir-
cumstances in which the plan specifically 
provides for and maintains reserves in ex-
cess of the amounts required under sub-
paragraph (A). 
‘‘(iii) The plan shall secure indem-
nification insurance for any claims which 
the plan is unable to satisfy by reason of 
a plan termination. 
Any regulations prescribed by the applicable authority 
pursuant to clause (i) or (ii) of subparagraph (B) may 
allow for such adjustments in the required levels of excess/ 
stop loss insurance as the qualified actuary may rec-
ommend, taking into account the specific circumstances 
of the plan. 
‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS 
RESERVES.—In the case of any association health plan de-
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scribed in subsection (a)(2), the requirements of this sub-
section are met if the plan establishes and maintains sur-
plus in an amount at least equal to— 
‘‘(1) $500,000; or 
‘‘(2) such greater amount (but not greater than 
$2,000,000) as may be set forth in regulations pre-
scribed by the applicable authority through nego-
tiated rulemaking, based on the level of aggregate 
and specific excess/stop loss insurance provided with 
respect to such plan. 
‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 
any association health plan described in subsection (a)(2), 
the applicable authority may provide such additional re-
quirements relating to reserves and excess/stop loss insur-
ance as the applicable authority considers appropriate. 
Such requirements may be provided by regulation, through 
negotiated rulemaking, with respect to any such plan or 
any class of such plans. 
‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR-
ANCE.—The applicable authority may provide for adjust-
ments to the levels of reserves otherwise required under 
subsections (a) and (b) with respect to any plan or class 
of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans. 
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‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 
applicable authority may permit an association health plan 
described in subsection (a)(2) to substitute, for all or part 
of the requirements of this section (except subsection 
(a)(2)(B)(iii)), such security, guarantee, hold-harmless ar-
rangement, or other financial arrangement as the applica-
ble authority determines to be adequate to enable the plan 
to fully meet all its financial obligations on a timely basis 
and is otherwise no less protective of the interests of par-
ticipants and beneficiaries than the requirements for 
which it is substituted. The applicable authority may take 
into account, for purposes of this subsection, evidence pro-
vided by the plan or sponsor which demonstrates an as-
sumption of liability with respect to the plan. Such evi-
dence may be in the form of a contract of indemnification, 
lien, bonding, insurance, letter of credit, recourse under 
applicable terms of the plan in the form of assessments 
of participating employers, security, or other financial ar-
rangement. 
‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT 
OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 
‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO-
CIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—In the case of an as-
sociation health plan described in subsection 
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(a)(2), the requirements of this subsection are 
met if the plan makes payments into the Asso-
ciation Health Plan Fund under this subpara-
graph when they are due. Such payments shall 
consist of annual payments in the amount of 
$5,000, and, in addition to such annual pay-
ments, such supplemental payments as the Sec-
retary may determine to be necessary under 
paragraph (2). Payments under this paragraph 
are payable to the Fund at the time determined 
by the Secretary. Initial payments are due in 
advance of certification under this part. Pay-
ments shall continue to accrue until a plan’s as-
sets are distributed pursuant to a termination 
procedure. 
‘‘(B) PENALTIES FOR FAILURE TO MAKE 
PAYMENTS.—If any payment is not made by a 
plan when it is due, a late payment charge of 
not more than 100 percent of the payment 
which was not timely paid shall be payable by 
the plan to the Fund. 
‘‘(C) CONTINUED
DUTY
OF
THE
SEC-
RETARY.—The Secretary shall not cease to 
carry out the provisions of paragraph (2) on ac-
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count of the failure of a plan to pay any pay-
ment when due. 
‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE 
EXCESS/STOP LOSS INSURANCE COVERAGE AND IN-
DEMNIFICATION
INSURANCE
COVERAGE
FOR
CER-
TAIN PLANS.—In any case in which the applicable 
authority determines that there is, or that there is 
reason to believe that there will be: (A) a failure to 
take necessary corrective actions under section 
809(a) with respect to an association health plan de-
scribed in subsection (a)(2); or (B) a termination of 
such a plan under section 809(b) or 810(b)(8) (and, 
if the applicable authority is not the Secretary, cer-
tifies such determination to the Secretary), the Sec-
retary shall determine the amounts necessary to 
make payments to an insurer (designated by the 
Secretary) to maintain in force excess/stop loss in-
surance coverage or indemnification insurance cov-
erage for such plan, if the Secretary determines that 
there is a reasonable expectation that, without such 
payments, claims would not be satisfied by reason of 
termination of such coverage. The Secretary shall, to 
the extent provided in advance in appropriation 
Acts, pay such amounts so determined to the insurer 
designated by the Secretary. 
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‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 
‘‘(A) IN GENERAL.—There is established 
on the books of the Treasury a fund to be 
known as the ‘Association Health Plan Fund’. 
The Fund shall be available for making pay-
ments pursuant to paragraph (2). The Fund 
shall be credited with payments received pursu-
ant to paragraph (1)(A), penalties received pur-
suant to paragraph (1)(B); and earnings on in-
vestments of amounts of the Fund under sub-
paragraph (B). 
‘‘(B) INVESTMENT.—Whenever the Sec-
retary determines that the moneys of the fund 
are in excess of current needs, the Secretary 
may request the investment of such amounts as 
the Secretary determines advisable by the Sec-
retary of the Treasury in obligations issued or 
guaranteed by the United States. 
‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 
of this section— 
‘‘(1) AGGREGATE
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘aggregate excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
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‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation through negotiated 
rulemaking) provides for payment to the plan 
with respect to aggregate claims under the plan 
in excess of an amount or amounts specified in 
such contract; 
‘‘(B) which is guaranteed renewable; and 
‘‘(C) which allows for payment of pre-
miums by any third party on behalf of the in-
sured plan. 
‘‘(2) SPECIFIC
EXCESS/STOP
LOSS
INSUR-
ANCE.—The term ‘specific excess/stop loss insur-
ance’ means, in connection with an association 
health plan, a contract— 
‘‘(A) under which an insurer (meeting such 
minimum standards as the applicable authority 
may prescribe by regulation through negotiated 
rulemaking) provides for payment to the plan 
with respect to claims under the plan in connec-
tion with a covered individual in excess of an 
amount or amounts specified in such contract 
in connection with such covered individual; 
‘‘(B) which is guaranteed renewable; and 
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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 through negotiated rulemaking) provides for 
payment to the plan with respect to claims under the 
plan which the plan is unable to satisfy by reason 
of a termination pursuant to section 809(b) (relating 
to mandatory termination); 
‘‘(2) which is guaranteed renewable and 
noncancellable for any reason (except as the applica-
ble authority may prescribe by regulation through 
negotiated rulemaking); and 
‘‘(3) which allows for payment of premiums by 
any third party on behalf of the insured plan. 
‘‘(i) RESERVES.—For purposes of this section, the 
term ‘reserves’ means, in connection with an association 
health plan, plan assets which meet the fiduciary stand-
ards under part 4 and such additional requirements re-
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garding liquidity as the applicable authority may prescribe 
through negotiated rulemaking. 
‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 
‘‘(1) IN GENERAL.—Within 90 days after the 
date of the enactment of the Small Business Access 
and Choice for Entrepreneurs Act of 2007, the ap-
plicable authority shall establish a Solvency Stand-
ards Working Group. In prescribing the initial regu-
lations 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 Asso-
ciation of Insurance Commissioners; 
‘‘(B) a representative of the American 
Academy of Actuaries; 
‘‘(C) a representative of the State govern-
ments, or their interests; 
‘‘(D) a representative of existing self-in-
sured arrangements, or their interests; 
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smartinez on PROD1PC64 with BILLS
‘‘(E) a representative of associations of the 
type referred to in section 801(b)(1), or their 
interests; and 
‘‘(F) a representative of multiemployer 
plans that are group health plans, or their in-
terests. 
‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE-
LATED REQUIREMENTS. 
‘‘(a) FILING FEE.—Under the procedure prescribed 
pursuant to section 802(a), an association health plan 
shall pay to the applicable authority at the time of filing 
an application for certification under this part a filing fee 
in the amount of $5,000, which shall be available in the 
case of the Secretary, to the extent provided in appropria-
tion Acts, for the sole purpose of administering the certifi-
cation procedures applicable with respect to association 
health plans. 
‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA-
TION FOR CERTIFICATION.—An application for certifi-
cation under this part meets the requirements of this sec-
tion only if it includes, in a manner and form which shall 
be prescribed by the applicable authority through nego-
tiated rulemaking, at least the following information: 
‘‘(1) IDENTIFYING INFORMATION.—The names 
and addresses of— 
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‘‘(A) the sponsor; and 
‘‘(B) the members of the board of trustees 
of the plan. 
‘‘(2) STATES IN WHICH PLAN INTENDS TO DO 
BUSINESS.—The States in which participants and 
beneficiaries under the plan are to be located and 
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-
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dition to health insurance coverage, a report setting 
forth information with respect to such additional 
benefit options determined as of a date within the 
120-day period ending with the date of the applica-
tion, including the following: 
‘‘(A) RESERVES.—A statement, certified 
by the board of trustees of the plan, and a 
statement of actuarial opinion, signed by a 
qualified actuary, that all applicable require-
ments of section 806 are or will be met in ac-
cordance with regulations which the applicable 
authority shall prescribe through negotiated 
rulemaking. 
‘‘(B) 
ADEQUACY
OF
CONTRIBUTION 
RATES.—A statement of actuarial opinion, 
signed by a qualified actuary, which sets forth 
a description of the extent to which contribution 
rates are adequate to provide for the payment 
of all obligations and the maintenance of re-
quired reserves under the plan for the 12- 
month period beginning with such date within 
such 120-day period, taking into account the 
expected coverage and experience of the plan. If 
the contribution rates are not fully adequate, 
the statement of actuarial opinion shall indicate 
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the extent to which the rates are inadequate 
and the changes needed to ensure adequacy. 
‘‘(C) CURRENT AND PROJECTED VALUE OF 
ASSETS AND LIABILITIES.—A statement of ac-
tuarial opinion signed by a qualified actuary, 
which sets forth the current value of the assets 
and liabilities accumulated under the plan and 
a projection of the assets, liabilities, income, 
and expenses of the plan for the 12-month pe-
riod referred to in subparagraph (B). The in-
come statement shall identify separately the 
plan’s administrative expenses and claims. 
‘‘(D) 
COSTS
OF
COVERAGE
TO
BE 
CHARGED
AND
OTHER
EXPENSES.—A state-
ment of the costs of coverage to be charged, in-
cluding an itemization of amounts for adminis-
tration, reserves, and other expenses associated 
with the operation of the plan. 
‘‘(E) OTHER
INFORMATION.—Any other 
information as may be determined by the appli-
cable authority, by regulation through nego-
tiated rulemaking, as necessary to carry out the 
purposes of this part. 
‘‘(c) FILING
NOTICE
OF
CERTIFICATION
WITH 
STATES.—A certification granted under this part to an 
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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 
shall be considered to be located in the State in which a 
known address of such individual is located or in which 
such individual is employed. 
‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 
of any association health plan certified under this part, 
descriptions of material changes in any information which 
was required to be submitted with the application for the 
certification under this part shall be filed in such form 
and manner as shall be prescribed by the applicable au-
thority by regulation through negotiated rulemaking. The 
applicable authority may require by regulation, through 
negotiated rulemaking, prior notice of material changes 
with respect to specified matters which might serve as the 
basis for suspension or revocation of the certification. 
‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS-
SOCIATION HEALTH PLANS.—An association health plan 
certified under this part which provides benefit options in 
addition to health insurance coverage for such plan year 
shall meet the requirements of section 103 by filing an 
annual report under such section which shall include infor-
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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-
plicable authority may require by regulation through nego-
tiated rulemaking such interim reports as it considers ap-
propriate. 
‘‘(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 
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‘‘(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. 
‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER-
MINATION. 
‘‘Except as provided in section 809(b), an association 
health plan which is or has been certified under this part 
may terminate (upon or at any time after cessation of ac-
cruals in benefit liabilities) only if the board of trustees— 
‘‘(1) not less than 60 days before the proposed 
termination date, provides to the participants and 
beneficiaries a written notice of intent to terminate 
stating that such termination is intended and the 
proposed termination date; 
‘‘(2) develops a plan for winding up the affairs 
of the plan in connection with such termination in 
a manner which will result in timely payment of all 
benefits for which the plan is obligated; and 
‘‘(3) submits such plan in writing to the appli-
cable authority. 
Actions required under this section shall be taken in such 
form and manner as may be prescribed by the applicable 
authority by regulation through negotiated rulemaking. 
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‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION. 
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified 
under this part and which provides benefits other than 
health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of 
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the 
board determines that there is reason to believe that there 
is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so 
notifies the board, the board shall immediately notify the 
qualified actuary engaged by the plan, and such actuary 
shall, not later than the end of the next following month, 
make such recommendations to the board for corrective 
action as the actuary determines necessary to ensure com-
pliance with section 806. Not later than 30 days after re-
ceiving from the actuary recommendations for corrective 
actions, the board shall notify the applicable authority (in 
such form and manner as the applicable authority may 
prescribe by regulation through negotiated rulemaking) of 
such recommendations of the actuary for corrective action, 
together with a description of the actions (if any) that the 
board has taken or plans to take in response to such rec-
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ommendations. The board shall thereafter report to the 
applicable authority, in such form and frequency as the 
applicable authority may specify to the board, regarding 
corrective action taken by the board until the requirements 
of section 806 are met. 
‘‘(b) MANDATORY TERMINATION.—In any case in 
which— 
‘‘(1) the applicable authority has been notified 
under subsection (a) of a failure of an association 
health plan which is or has been certified under this 
part and is described in section 806(a)(2) to meet 
the requirements of section 806 and has not been 
notified by the board of trustees of the plan that 
corrective action has restored compliance with such 
requirements; and 
‘‘(2) the applicable authority determines that 
there is a reasonable expectation that the plan will 
continue to fail to meet the requirements of section 
806, 
the board of trustees of the plan shall, at the direction 
of the applicable authority, terminate the plan and, in the 
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any 
claims referred to in section 806(a)(2)(B)(iii) and recov-
ering for the plan any liability under subsection 
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(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent 
possible, wound up in a manner which will result in timely 
provision of all benefits for which the plan is obligated. 
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO 
HEALTH INSURANCE COVERAGE. 
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR 
INSOLVENT PLANS.—Whenever the Secretary determines 
that an association health plan which is or has been cer-
tified under this part and which is described in section 
806(a)(2) will be unable to provide benefits when due or 
is otherwise in a financially hazardous condition, as shall 
be defined by the Secretary by regulation through nego-
tiated rulemaking, the Secretary shall, upon notice to the 
plan, apply to the appropriate United States district court 
for appointment of the Secretary as trustee to administer 
the plan for the duration of the insolvency. The plan may 
appear as a party and other interested persons may inter-
vene in the proceedings at the discretion of the court. The 
court shall appoint such Secretary trustee if the court de-
termines that the trusteeship is necessary to protect the 
interests of the participants and beneficiaries or providers 
of medical care or to avoid any unreasonable deterioration 
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of the financial condition of the plan. The trusteeship of 
such Secretary shall continue until the conditions de-
scribed in the first sentence of this subsection are rem-
edied or the plan is terminated. 
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 
appointment as trustee under subsection (a), shall have 
the power— 
‘‘(1) to do any act authorized by the plan, this 
title, or other applicable provisions of law to be done 
by the plan administrator or any trustee of the plan; 
‘‘(2) to require the transfer of all (or any part) 
of the assets and records of the plan to the Sec-
retary as trustee; 
‘‘(3) to invest any assets of the plan which the 
Secretary holds in accordance with the provisions of 
the plan, regulations prescribed by the Secretary 
through negotiated rulemaking, and applicable provi-
sions of law; 
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee 
organization representing plan participants to fur-
nish any information with respect to the plan which 
the Secretary as trustee may reasonably need in 
order to administer the plan; 
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‘‘(5) to collect for the plan any amounts due the 
plan and to recover reasonable expenses of the trust-
eeship; 
‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the 
plan; 
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation through negotiated rulemaking 
or required by any order of the court; 
‘‘(8) to terminate the plan (or provide for its 
termination accordance with section 809(b)) and liq-
uidate the plan assets, to restore the plan to the re-
sponsibility of the sponsor, or to continue the trust-
eeship; 
‘‘(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. 
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tion 809(b)(1), such term means, in con-
nection with an association health plan, the 
Secretary and the State referred to in sub-
paragraph (A)(i) (if any) in connection 
with such plan. 
‘‘(ii) REGULATORY
AUTHORITIES.— 
Where such term appears in section 802(a) 
(in the first instance), section 802(d), sec-
tion 
802(e), 
section 
803(d), 
section 
805(a)(5), 
section 
806(a)(2), 
section 
806(b), section 806(c), section 806(d), 
paragraphs (1)(A) and (2)(A) of section 
806(g), section 806(h), section 806(i), sec-
tion 806(j), section 807(a) (in the second 
instance), section 807(b), section 807(d), 
section 807(e) (in the second instance), 
section 808 (in the matter after paragraph 
(3)), and section 809(a) (in the third in-
stance), such term means, in connection 
with an association health plan, the Sec-
retary. 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
provided in section 733(d)(2). 
‘‘(7) INDIVIDUAL MARKET.— 
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100 
‘‘(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 
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-
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142 
‘‘(F) MEDICAL APPROPRIATENESS OR NE-
CESSITY.—Whether coverage for medical care 
may be limited or excluded by reason of a fail-
ure to meet the plan’s requirements for medical 
appropriateness or necessity, and any defini-
tions provided in connection with such coverage 
for the relevant coverage terminology referring 
to such limited or excluded care. 
‘‘(G) SECOND
OR
SUBSEQUENT
OPIN-
IONS.—A description of the circumstances 
under which, and the extent to which, coverage 
for second or subsequent opinions is limited or 
excluded. 
‘‘(H) SPECIALTY CARE.—A description of 
the circumstances under which, and the extent 
to which, coverage of benefits for specialty care 
is conditioned on referral from a primary care 
provider. 
‘‘(I) CONTINUITY OF CARE.—A description 
of the circumstances under which, and the ex-
tent to which, coverage of items and services 
provided by any health care professional is lim-
ited or excluded by reason of the departure by 
the professional from any defined set of pro-
viders. 
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