H. R. 3103
One Hundred Fourth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, one thousand nine hundred and ninety-six
An Act
To amend the Internal Revenue Code of 1986 to improve portability and continuity
of health insurance coverage in the group and individual markets, to combat
waste, fraud, and abuse in health insurance and health care delivery, to promote
the use of medical savings accounts, to improve access to long-term care services
and coverage, to simplify the administration of health insurance, and for other
purposes.
Be it enacted by the Senate and House of Representatives 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 ‘‘Health Insur-
ance Portability and Accountability Act of 1996’’.
(b) TABLE OF CONTENTS.—The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I—HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
Subtitle A—Group Market Rules
PART 1—PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS
Sec. 101. Through the Employee Retirement Income Security Act of 1974.
‘‘PART 7—GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY
REQUIREMENTS
‘‘Sec. 701. Increased portability through limitation on preexisting condition ex-
clusions.
‘‘Sec. 702. Prohibiting discrimination against individual participants and bene-
ficiaries based on health status.
‘‘Sec. 703. Guaranteed renewability in multiemployer plans and multiple em-
ployer welfare arrangements.
‘‘Sec. 704. Preemption; State flexibility; construction.
‘‘Sec. 705. Special rules relating to group health plans.
‘‘Sec. 706. Definitions.
‘‘Sec. 707. Regulations.’’.
Sec. 102. Through the Public Health Service Act.
‘‘TITLE XXVII—ASSURING PORTABILITY, AVAILABILITY, AND
RENEWABILITY OF HEALTH INSURANCE COVERAGE
‘‘PART A—GROUP MARKET REFORMS
‘‘Subpart 1—Portability, Access, and Renewability Requirements
‘‘Sec. 2701. Increased portability through limitation on preexisting condition
exclusions.
‘‘Sec. 2702. Prohibiting discrimination against individual participants and
beneficiaries based on health status.
‘‘Subpart 2—Provisions Applicable Only to Health Insurance Issuers
‘‘Sec. 2711. Guaranteed availability of coverage for employers in the group
market.
H. R. 3103—2
‘‘Sec. 2712. Guaranteed renewability of coverage for employers in the group
market.
‘‘Sec. 2713. Disclosure of information.
‘‘Subpart 3—Exclusion of Plans; Enforcement; Preemption
‘‘Sec. 2721. Exclusion of certain plans.
‘‘Sec. 2722. Enforcement.
‘‘Sec. 2723. Preemption; State flexibility; construction.
‘‘PART C—DEFINITIONS; MISCELLANEOUS PROVISIONS
‘‘Sec. 2791. Definitions.
‘‘Sec. 2792. Regulations.’’.
Sec. 103. Reference to implementation through the Internal Revenue Code of 1986.
Sec. 104. Assuring coordination.
Subtitle B—Individual Market Rules
Sec. 111. Amendment to Public Health Service Act.
‘‘PART B—INDIVIDUAL MARKET RULES
‘‘Sec. 2741. Guaranteed availability of individual health insurance coverage to
certain individuals with prior group coverage.
‘‘Sec. 2742. Guaranteed renewability of individual health insurance coverage.
‘‘Sec. 2743. Certification of coverage.
‘‘Sec. 2744. State flexibility in individual market reforms.
‘‘Sec. 2745. Enforcement.
‘‘Sec. 2746. Preemption.
‘‘Sec. 2747. General exceptions.’’.
Subtitle C—General and Miscellaneous Provisions
Sec. 191. Health coverage availability studies.
Sec. 192. Report on Medicare reimbursement of telemedicine.
Sec. 193. Allowing federally-qualified HMOs to offer high deductible plans.
Sec. 194. Volunteer services provided by health professionals at free clinics.
Sec. 195. Findings; severability.
TITLE II—PREVENTING HEALTH CARE FRAUD AND ABUSE;
ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM
Sec. 200. References in title.
Subtitle A—Fraud and Abuse Control Program
Sec. 201. Fraud and abuse control program.
Sec. 202. Medicare integrity program.
Sec. 203. Beneficiary incentive programs.
Sec. 204. Application of certain health antifraud and abuse sanctions to fraud and
abuse against Federal health care programs.
Sec. 205. Guidance regarding application of health care fraud and abuse sanctions.
Subtitle B—Revisions to Current Sanctions for Fraud and Abuse
Sec. 211. Mandatory exclusion from participation in Medicare and State health
care programs.
Sec. 212. Establishment of minimum period of exclusion for certain individuals and
entities subject to permissive exclusion from Medicare and State health
care programs.
Sec. 213. Permissive exclusion of individuals with ownership or control interest in
sanctioned entities.
Sec. 214. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 215. Intermediate sanctions for Medicare health maintenance organizations.
Sec. 216. Additional exception to anti-kickback penalties for risk-sharing arrange-
ments.
Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain
medicaid benefits.
Sec. 218. Effective date.
Subtitle C—Data Collection
Sec. 221. Establishment of the health care fraud and abuse data collection
program.
Subtitle D—Civil Monetary Penalties
Sec. 231. Social Security Act civil monetary penalties.
H. R. 3103—3
Sec. 232. Penalty for false certification for home health services.
Subtitle E—Revisions to Criminal Law
Sec. 241. Definitions relating to Federal health care offense.
Sec. 242. Health care fraud.
Sec. 243. Theft or embezzlement.
Sec. 244. False statements.
Sec. 245. Obstruction of criminal investigations of health care offenses.
Sec. 246. Laundering of monetary instruments.
Sec. 247. Injunctive relief relating to health care offenses.
Sec. 248. Authorized investigative demand procedures.
Sec. 249. Forfeitures for Federal health care offenses.
Sec. 250. Relation to ERISA authority.
Subtitle F—Administrative Simplification
Sec. 261. Purpose.
Sec. 262. Administrative simplification.
‘‘PART C—ADMINISTRATIVE SIMPLIFICATION
‘‘Sec. 1171. Definitions.
‘‘Sec. 1172. General requirements for adoption of standards.
‘‘Sec. 1173. Standards for information transactions and data elements.
‘‘Sec. 1174. Timetables for adoption of standards.
‘‘Sec. 1175. Requirements.
‘‘Sec. 1176. General penalty for failure to comply with requirements and stand-
ards.
‘‘Sec. 1177. Wrongful disclosure of individually identifiable health information.
‘‘Sec. 1178. Effect on State law.
‘‘Sec. 1179. Processing payment transactions.’’.
Sec. 263. Changes in membership and duties of National Committee on Vital and
Health Statistics.
Sec. 264. Recommendations with respect to privacy of certain health information.
Subtitle G—Duplication and Coordination of Medicare-Related Plans
Sec. 271. Duplication and coordination of Medicare-related plans.
TITLE III—TAX-RELATED HEALTH PROVISIONS
Sec. 300. Amendment of 1986 Code.
Subtitle A—Medical Savings Accounts
Sec. 301. Medical savings accounts.
Subtitle B—Increase in Deduction for Health Insurance Costs of Self-Employed
Individuals
Sec. 311. Increase in deduction for health insurance costs of self-employed indi-
viduals.
Subtitle C—Long-Term Care Services and Contracts
PART I—GENERAL PROVISIONS
Sec. 321. Treatment of long-term care insurance.
Sec. 322. Qualified long-term care services treated as medical care.
Sec. 323. Reporting requirements.
PART II—CONSUMER PROTECTION PROVISIONS
Sec. 325. Policy requirements.
Sec. 326. Requirements for issuers of qualified long-term care insurance contracts.
Sec. 327. Effective dates.
Subtitle D—Treatment of Accelerated Death Benefits
Sec. 331. Treatment of accelerated death benefits by recipient.
Sec. 332. Tax treatment of companies issuing qualified accelerated death benefit
riders.
Subtitle E—State Insurance Pools
Sec. 341. Exemption from income tax for State-sponsored organizations providing
health coverage for high-risk individuals.
Sec. 342. Exemption from income tax for State-sponsored workmen’s compensation
reinsurance organizations.
H. R. 3103—4
Subtitle F—Organizations Subject to Section 833
Sec. 351. Organizations subject to section 833.
Subtitle G—IRA Distributions to the Unemployed
Sec. 361. Distributions from certain plans may be used without additional tax to
pay financially devastating medical expenses.
Subtitle H—Organ and Tissue Donation Information Included With Income Tax
Refund Payments
Sec. 371. Organ and tissue donation information included with income tax refund
payments.
TITLE IV—APPLICATION AND ENFORCEMENT OF GROUP HEALTH PLAN
REQUIREMENTS
Subtitle A—Application and Enforcement of Group Health Plan Requirements
Sec. 401. Group health plan portability, access, and renewability requirements.
Sec. 402. Penalty on failure to meet certain group health plan requirements.
Subtitle B—Clarification of Certain Continuation Coverage Requirements
Sec. 421. COBRA clarifications.
TITLE V—REVENUE OFFSETS
Sec. 500. Amendment of 1986 Code.
Subtitle A—Company-Owned Life Insurance
Sec. 501. Denial of deduction for interest on loans with respect to company-owned
life insurance.
Subtitle B—Treatment of Individuals Who Lose United States Citizenship
Sec. 511. Revision of income, estate, and gift taxes on individuals who lose United
States citizenship.
Sec. 512. Information on individuals losing United States citizenship.
Sec. 513. Report on tax compliance by United States citizens and residents living
abroad.
Subtitle C—Repeal of Financial Institution Transition Rule to Interest Allocation
Rules
Sec. 521. Repeal of financial institution transition rule to interest allocation rules.
TITLE I—HEALTH CARE ACCESS,
PORTABILITY, AND RENEWABILITY
Subtitle A—Group Market Rules
PART 1—PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS
SEC. 101. THROUGH THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.
(a) IN GENERAL.—Subtitle B of title I of the Employee Retire-
ment Income Security Act of 1974 is amended by adding at the
end the following new part:
‘‘PART 7—GROUP HEALTH PLAN PORTABILITY, ACCESS, AND
RENEWABILITY REQUIREMENTS
‘‘SEC. 701. INCREASED PORTABILITY THROUGH LIMITATION ON
PREEXISTING CONDITION EXCLUSIONS.
‘‘(a) LIMITATION ON PREEXISTING CONDITION EXCLUSION PERIOD;
CREDITING FOR PERIODS OF PREVIOUS COVERAGE.—Subject to sub-
section (d), a group health plan, and a health insurance issuer
H. R. 3103—5
offering group health insurance coverage, may, with respect to
a participant or beneficiary, impose a preexisting condition exclusion
only if—
‘‘(1) such exclusion relates to a condition (whether physical
or mental), regardless of the cause of the condition, for which
medical advice, diagnosis, care, or treatment was recommended
or received within the 6-month period ending on the enrollment
date;
‘‘(2) such exclusion extends for a period of not more than
12 months (or 18 months in the case of a late enrollee) after
the enrollment date; and
‘‘(3) the period of any such preexisting condition exclusion
is reduced by the aggregate of the periods of creditable coverage
(if any, as defined in subsection (c)(1)) applicable to the partici-
pant or beneficiary as of the enrollment date.
‘‘(b) DEFINITIONS.—For purposes of this part—
‘‘(1) PREEXISTING CONDITION EXCLUSION.—
‘‘(A) IN
GENERAL.—The term ‘preexisting condition
exclusion’ means, with respect to coverage, a limitation
or exclusion of benefits relating to a condition based on
the fact that the condition was present before the date
of enrollment for such coverage, whether or not any medical
advice, diagnosis, care, or treatment was recommended
or received before such date.
‘‘(B) TREATMENT
OF
GENETIC
INFORMATION.—Genetic
information shall not be treated as a condition described
in subsection (a)(1) in the absence of a diagnosis of the
condition related to such information.
‘‘(2) ENROLLMENT
DATE.—The term ‘enrollment date’
means, with respect to an individual covered under a group
health plan or health insurance coverage, the date of enrollment
of the individual in the plan or coverage or, if earlier, the
first day of the waiting period for such enrollment.
‘‘(3) LATE ENROLLEE.—The term ‘late enrollee’ means, with
respect to coverage under a group health plan, a participant
or beneficiary who enrolls under the plan other than during—
‘‘(A) the first period in which the individual is eligible
to enroll under the plan, or
‘‘(B) a special enrollment period under subsection (f).
‘‘(4) WAITING PERIOD.—The term ‘waiting period’ means,
with respect to a group health plan and an individual who
is a potential participant or beneficiary in the plan, the period
that must pass with respect to the individual before the individ-
ual is eligible to be covered for benefits under the terms of
the plan.
‘‘(c) RULES RELATING TO CREDITING PREVIOUS COVERAGE.—
‘‘(1) CREDITABLE COVERAGE DEFINED.—For purposes of this
part, the term ‘creditable coverage’ means, with respect to
an individual, coverage of the individual under any of the
following:
‘‘(A) A group health plan.
‘‘(B) Health insurance coverage.
‘‘(C) Part A or part B of title XVIII of the Social
Security Act.
‘‘(D) Title XIX of the Social Security Act, other than
coverage consisting solely of benefits under section 1928.
‘‘(E) Chapter 55 of title 10, United States Code.
H. R. 3103—6
‘‘(F) A medical care program of the Indian Health
Service or of a tribal organization.
‘‘(G) A State health benefits risk pool.
‘‘(H) A health plan offered under chapter 89 of title
5, United States Code.
‘‘(I) A public health plan (as defined in regulations).
‘‘(J) A health benefit plan under section 5(e) of the
Peace Corps Act (22 U.S.C. 2504(e)).
Such term does not include coverage consisting solely of cov-
erage of excepted benefits (as defined in section 706(c)).
‘‘(2) NOT COUNTING PERIODS BEFORE SIGNIFICANT BREAKS
IN COVERAGE.—
‘‘(A) IN GENERAL.—A period of creditable coverage shall
not be counted, with respect to enrollment of an individual
under a group health plan, if, after such period and before
the enrollment date, there was a 63-day period during
all of which the individual was not covered under any
creditable coverage.
‘‘(B) WAITING PERIOD NOT TREATED AS A BREAK IN COV-
ERAGE.—For purposes of subparagraph (A) and subsection
(d)(4), any period that an individual is in a waiting period
for any coverage under a group health plan (or for group
health insurance coverage) or is in an affiliation period
(as defined in subsection (g)(2)) shall not be taken into
account in determining the continuous period under
subparagraph (A).
‘‘(3) METHOD OF CREDITING COVERAGE.—
‘‘(A) STANDARD METHOD.—Except as otherwise provided
under subparagraph (B), for purposes of applying sub-
section (a)(3), a group health plan, and a health insurance
issuer offering group health insurance coverage, shall count
a period of creditable coverage without regard to the specific
benefits covered during the period.
‘‘(B) ELECTION
OF
ALTERNATIVE
METHOD.—A group
health plan, or a health insurance issuer offering group
health insurance coverage, may elect to apply subsection
(a)(3) based on coverage of benefits within each of several
classes or categories of benefits specified in regulations
rather than as provided under subparagraph (A). Such
election shall be made on a uniform basis for all partici-
pants and beneficiaries. Under such election a group health
plan or issuer shall count a period of creditable coverage
with respect to any class or category of benefits if any
level of benefits is covered within such class or category.
‘‘(C) PLAN NOTICE.—In the case of an election with
respect to a group health plan under subparagraph (B)
(whether or not health insurance coverage is provided in
connection with such plan), the plan shall—
‘‘(i) prominently state in any disclosure statements
concerning the plan, and state to each enrollee at the
time of enrollment under the plan, that the plan has
made such election, and
‘‘(ii) include in such statements a description of
the effect of this election.
‘‘(4) ESTABLISHMENT OF PERIOD.—Periods of creditable cov-
erage with respect to an individual shall be established through
H. R. 3103—7
presentation of certifications described in subsection (e) or in
such other manner as may be specified in regulations.
‘‘(d) EXCEPTIONS.—
‘‘(1) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS.—
Subject to paragraph (4), a group health plan, and a health
insurance issuer offering group health insurance coverage, may
not impose any preexisting condition exclusion in the case
of an individual who, as of the last day of the 30-day period
beginning with the date of birth, is covered under creditable
coverage.
‘‘(2) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHIL-
DREN.—Subject to paragraph (4), a group health plan, and
a health insurance issuer offering group health insurance cov-
erage, may not impose any preexisting condition exclusion in
the case of a child who is adopted or placed for adoption
before attaining 18 years of age and who, as of the last day
of the 30-day period beginning on the date of the adoption
or placement for adoption, is covered under creditable coverage.
The previous sentence shall not apply to coverage before the
date of such adoption or placement for adoption.
‘‘(3) EXCLUSION NOT APPLICABLE TO PREGNANCY.—A group
health plan, and health insurance issuer offering group health
insurance coverage, may not impose any preexisting condition
exclusion relating to pregnancy as a preexisting condition.
‘‘(4) LOSS IF BREAK IN COVERAGE.—Paragraphs (1) and (2)
shall no longer apply to an individual after the end of the
first 63-day period during all of which the individual was not
covered under any creditable coverage.
‘‘(e) CERTIFICATIONS AND DISCLOSURE OF COVERAGE.—
‘‘(1) REQUIREMENT FOR CERTIFICATION OF PERIOD OF CRED-
ITABLE COVERAGE.—
‘‘(A) IN GENERAL.—A group health plan, and a health
insurance issuer offering group health insurance coverage,
shall provide the certification described in subparagraph
(B)—
‘‘(i) at the time an individual ceases to be covered
under the plan or otherwise becomes covered under
a COBRA continuation provision,
‘‘(ii) in the case of an individual becoming covered
under such a provision, at the time the individual
ceases to be covered under such provision, and
‘‘(iii) on the request on behalf of an individual
made not later than 24 months after the date of ces-
sation of the coverage described in clause (i) or (ii),
whichever is later.
The certification under clause (i) may be provided, to the
extent practicable, at a time consistent with notices
required under any applicable COBRA continuation provi-
sion.
‘‘(B) CERTIFICATION.—The certification described in this
subparagraph is a written certification of—
‘‘(i) the period of creditable coverage of the individ-
ual under such plan and the coverage (if any) under
such COBRA continuation provision, and
‘‘(ii) the waiting period (if any) (and affiliation
period, if applicable) imposed with respect to the
individual for any coverage under such plan.
H. R. 3103—8
‘‘(C) ISSUER COMPLIANCE.—To the extent that medical
care under a group health plan consists of group health
insurance coverage, the plan is deemed to have satisfied
the certification requirement under this paragraph if the
health insurance issuer offering the coverage provides for
such certification in accordance with this paragraph.
‘‘(2) DISCLOSURE OF INFORMATION ON PREVIOUS BENEFITS.—
In the case of an election described in subsection (c)(3)(B)
by a group health plan or health insurance issuer, if the plan
or issuer enrolls an individual for coverage under the plan
and the individual provides a certification of coverage of the
individual under paragraph (1)—
‘‘(A) upon request of such plan or issuer, the entity
which issued the certification provided by the individual
shall promptly disclose to such requesting plan or issuer
information on coverage of classes and categories of health
benefits available under such entity’s plan or coverage,
and
‘‘(B) such entity may charge the requesting plan or
issuer for the reasonable cost of disclosing such information.
‘‘(3) REGULATIONS.—The Secretary shall establish rules to
prevent an entity’s failure to provide information under para-
graph (1) or (2) with respect to previous coverage of an individ-
ual from adversely affecting any subsequent coverage of the
individual under another group health plan or health insurance
coverage.
‘‘(f) SPECIAL ENROLLMENT PERIODS.—
‘‘(1) INDIVIDUALS LOSING OTHER COVERAGE.—A group health
plan, and a health insurance issuer offering group health insur-
ance coverage in connection with a group health plan, shall
permit an employee who is eligible, but not enrolled, for cov-
erage under the terms of the plan (or a dependent of such
an employee if the dependent is eligible, but not enrolled,
for coverage under such terms) to enroll for coverage under
the terms of the plan if each of the following conditions is
met:
‘‘(A) The employee or dependent was covered under
a group health plan or had health insurance coverage at
the time coverage was previously offered to the employee
or dependent.
‘‘(B) The employee stated in writing at such time that
coverage under a group health plan or health insurance
coverage was the reason for declining enrollment, but only
if the plan sponsor or issuer (if applicable) required such
a statement at such time and provided the employee with
notice of such requirement (and the consequences of such
requirement) at such time.
‘‘(C) The employee’s or dependent’s coverage described
in subparagraph (A)—
‘‘(i) was under a COBRA continuation provision
and the coverage under such provision was exhausted;
or
‘‘(ii) was not under such a provision and either
the coverage was terminated as a result of loss of
eligibility for the coverage (including as a result of
legal separation, divorce, death, termination of employ-
ment, or reduction in the number of hours of employ-
H. R. 3103—9
ment) or employer contributions toward such coverage
were terminated.
‘‘(D) Under the terms of the plan, the employee
requests such enrollment not later than 30 days after the
date of exhaustion of coverage described in subparagraph
(C)(i) or termination of coverage or employer contribution
described in subparagraph (C)(ii).
‘‘(2) FOR DEPENDENT BENEFICIARIES.—
‘‘(A) IN GENERAL.—If—
‘‘(i) a group health plan makes coverage available
with respect to a dependent of an individual,
‘‘(ii) the individual is a participant under the plan
(or has met any waiting period applicable to becoming
a participant under the plan and is eligible to be
enrolled under the plan but for a failure to enroll
during a previous enrollment period), and
‘‘(iii) a person becomes such a dependent of the
individual through marriage, birth, or adoption or
placement for adoption,
the group health plan shall provide for a dependent special
enrollment period described in subparagraph (B) during
which the person (or, if not otherwise enrolled, the individ-
ual) may be enrolled under the plan as a dependent of
the individual, and in the case of the birth or adoption
of a child, the spouse of the individual may be enrolled
as a dependent of the individual if such spouse is otherwise
eligible for coverage.
‘‘(B) DEPENDENT
SPECIAL
ENROLLMENT
PERIOD.—A
dependent special enrollment period under this subpara-
graph shall be a period of not less than 30 days and
shall begin on the later of—
‘‘(i) 
the 
date 
dependent 
coverage 
is 
made
available, or
‘‘(ii) the date of the marriage, birth, or adoption
or placement for adoption (as the case may be)
described in subparagraph (A)(iii).
‘‘(C) NO WAITING PERIOD.—If an individual seeks to
enroll a dependent during the first 30 days of such a
dependent special enrollment period, the coverage of the
dependent shall become effective—
‘‘(i) in the case of marriage, not later than the
first day of the first month beginning after the date
the completed request for enrollment is received;
‘‘(ii) in the case of a dependent’s birth, as of the
date of such birth; or
‘‘(iii) in the case of a dependent’s adoption or place-
ment for adoption, the date of such adoption or place-
ment for adoption.
‘‘(g) USE OF AFFILIATION PERIOD BY HMOS AS ALTERNATIVE
TO PREEXISTING CONDITION EXCLUSION.—
‘‘(1) IN GENERAL.—In the case of a group health plan that
offers medical care through health insurance coverage offered
by a health maintenance organization, the plan may provide
for an affiliation period with respect to coverage through the
organization only if—
‘‘(A) no preexisting condition exclusion is imposed with
respect to coverage through the organization,
H. R. 3103—10
‘‘(B) the period is applied uniformly without regard
to any health status-related factors, and
‘‘(C) such period does not exceed 2 months (or 3 months
in the case of a late enrollee).
‘‘(2) AFFILIATION PERIOD.—
‘‘(A) DEFINED.—For purposes of this part, the term
‘affiliation period’ means a period which, under the terms
of the health insurance coverage offered by the health
maintenance organization, must expire before the health
insurance coverage becomes effective. The organization is
not required to provide health care services or benefits
during such period and no premium shall be charged to
the participant or beneficiary for any coverage during the
period.
‘‘(B) BEGINNING.—Such period shall begin on the enroll-
ment date.
‘‘(C) RUNS
CONCURRENTLY
WITH
WAITING
PERIODS.—
An affiliation period under a plan shall run concurrently
with any waiting period under the plan.
‘‘(3) 
ALTERNATIVE
METHODS.—A 
health 
maintenance
organization described in paragraph (1) may use alternative
methods, from those described in such paragraph, to address
adverse selection as approved by the State insurance commis-
sioner or official or officials designated by the State to enforce
the requirements of part A of title XXVII of the Public Health
Service Act for the State involved with respect to such issuer.
‘‘SEC. 702. PROHIBITING 
DISCRIMINATION 
AGAINST 
INDIVIDUAL
PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH
STATUS.
‘‘(a) IN ELIGIBILITY TO ENROLL.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a group health
plan, and a health insurance issuer offering group health insur-
ance coverage in connection with a group health plan, may
not establish rules for eligibility (including continued eligibility)
of any individual to enroll under the terms of the plan based
on any of the following health status-related factors in relation
to the individual or a dependent of the individual:
‘‘(A) Health status.
‘‘(B) Medical condition (including both physical and
mental illnesses).
‘‘(C) Claims experience.
‘‘(D) Receipt of health care.
‘‘(E) Medical history.
‘‘(F) Genetic information.
‘‘(G) Evidence of insurability (including conditions aris-
ing out of acts of domestic violence).
‘‘(H) Disability.
‘‘(2) NO APPLICATION TO BENEFITS OR EXCLUSIONS.—To the
extent consistent with section 701, paragraph (1) shall not
be construed—
‘‘(A) to require a group health plan, or group health
insurance coverage, to provide particular benefits other
than those provided under the terms of such plan or cov-
erage, or
‘‘(B) to prevent such a plan or coverage from establish-
ing limitations or restrictions on the amount, level, extent,
H. R. 3103—11
or nature of the benefits or coverage for similarly situated
individuals enrolled in the plan or coverage.
‘‘(3) CONSTRUCTION.—For purposes of paragraph (1), rules
for eligibility to enroll under a plan include rules defining
any applicable waiting periods for such enrollment.
‘‘(b) IN PREMIUM CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—A group health plan, and a health insur-
ance issuer offering health insurance coverage in connection
with a group health plan, may not require any individual
(as a condition of enrollment or continued enrollment under
the plan) to pay a premium or contribution which is greater
than such premium or contribution for a similarly situated
individual enrolled in the plan on the basis of any health
status-related factor in relation to the individual or to an
individual enrolled under the plan as a dependent of the
individual.
‘‘(2) CONSTRUCTION.—Nothing in paragraph (1) shall be
construed—
‘‘(A) to restrict the amount that an employer may be
charged for coverage under a group health plan; or
‘‘(B) to prevent a group health plan, and a health
insurance issuer offering group health insurance coverage,
from establishing premium discounts or rebates or modify-
ing otherwise applicable copayments or deductibles in
return for adherence to programs of health promotion and
disease prevention.
‘‘SEC. 703. GUARANTEED RENEWABILITY IN MULTIEMPLOYER PLANS
AND MULTIPLE EMPLOYER WELFARE ARRANGEMENTS.
‘‘A group health plan which is a multiemployer plan or which
is a multiple employer welfare arrangement may not deny an
employer whose employees are covered under such a plan continued
access to the same or different coverage under the terms of such
a plan, other than—
‘‘(1) for nonpayment of contributions;
‘‘(2) for fraud or other intentional misrepresentation of
material fact by the employer;
‘‘(3) for noncompliance with material plan provisions;
‘‘(4) because the plan is ceasing to offer any coverage in
a geographic area;
‘‘(5) in the case of a plan that offers benefits through
a network plan, there is no longer any individual enrolled
through the employer who lives, resides, or works in the service
area of the network plan and the plan applies this paragraph
uniformly without regard to the claims experience of employers
or any health status-related factor in relation to such individ-
uals or their dependents; and
‘‘(6) for failure to meet the terms of an applicable collective
bargaining agreement, to renew a collective bargaining or other
agreement requiring or authorizing contributions to the plan,
or to employ employees covered by such an agreement.
‘‘SEC. 704. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.
‘‘(a) CONTINUED APPLICABILITY OF STATE LAW WITH RESPECT
TO HEALTH INSURANCE ISSUERS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2) and except
as provided in subsection (b), this part shall not be construed
to supersede any provision of State law which establishes,
H. R. 3103—12
implements, or continues in effect any standard or requirement
solely relating to health insurance issuers in connection with
group health insurance coverage except to the extent that such
standard or requirement prevents the application of a require-
ment of this part.
‘‘(2) CONTINUED
PREEMPTION
WITH
RESPECT
TO
GROUP
HEALTH
PLANS.—Nothing in this part shall be construed to
affect or modify the provisions of section 514 with respect
to group health plans.
‘‘(b) SPECIAL RULES IN CASE OF PORTABILITY REQUIREMENTS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), the provisions
of this part relating to health insurance coverage offered by
a health insurance issuer supersede any provision of State
law which establishes, implements, or continues in effect a
standard or requirement applicable to imposition of a preexist-
ing condition exclusion specifically governed by section 701
which differs from the standards or requirements specified
in such section.
‘‘(2) EXCEPTIONS.—Only in relation to health insurance cov-
erage offered by a health insurance issuer, the provisions of
this part do not supersede any provision of State law to the
extent that such provision—
‘‘(A) substitutes for the reference to ‘6-month period’
in section 701(a)(1) a reference to any shorter period of
time;
‘‘(B) substitutes for the reference to ‘12 months’ and
‘18 months’ in section 701(a)(2) a reference to any shorter
period of time;
‘‘(C) substitutes for the references to ‘63 days’ in sec-
tions 701 (c)(2)(A) and (d)(4)(A) a reference to any greater
number of days;
‘‘(D) substitutes for the reference to ‘30-day period’
in sections 701 (b)(2) and (d)(1) a reference to any greater
period;
‘‘(E) prohibits the imposition of any preexisting condi-
tion exclusion in cases not described in section 701(d) or
expands the exceptions described in such section;
‘‘(F) requires special enrollment periods in addition
to those required under section 701(f); or
‘‘(G) reduces the maximum period permitted in an
affiliation period under section 701(g)(1)(B).
‘‘(c) RULES OF CONSTRUCTION.—Nothing in this part shall be
construed as requiring a group health plan or health insurance
coverage to provide specific benefits under the terms of such plan
or coverage.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) STATE LAW.—The term ‘State law’ includes all laws,
decisions, rules, regulations, or other State action having the
effect of law, of any State. A law of the United States applicable
only to the District of Columbia shall be treated as a State
law rather than a law of the United States.
‘‘(2) STATE.—The term ‘State’ includes a State, the Northern
Mariana Islands, any political subdivisions of a State or such
Islands, or any agency or instrumentality of either.
H. R. 3103—13
‘‘SEC. 705. SPECIAL RULES RELATING TO GROUP HEALTH PLANS.
‘‘(a) GENERAL EXCEPTION FOR CERTAIN SMALL GROUP HEALTH
PLANS.—The requirements of this part shall not apply to any group
health plan (and group health insurance coverage offered in connec-
tion with a group health plan) for any plan year if, on the first
day of such plan year, such plan has less than 2 participants
who are current employees.
‘‘(b) EXCEPTION FOR CERTAIN BENEFITS.—The requirements of
this part shall not apply to any group health plan (and group
health insurance coverage) in relation to its provision of excepted
benefits described in section 706(c)(1).
‘‘(c) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS
MET.—
‘‘(1) LIMITED, EXCEPTED
BENEFITS.—The requirements of
this part shall not apply to any group health plan (and group
health insurance coverage offered in connection with a group
health plan) in relation to its provision of excepted benefits
described in section 706(c)(2) if the benefits—
‘‘(A) are provided under a separate policy, certificate,
or contract of insurance; or
‘‘(B) are otherwise not an integral part of the plan.
‘‘(2) NONCOORDINATED, EXCEPTED BENEFITS.—The require-
ments of this part shall not apply to any group health plan
(and group health insurance coverage offered in connection
with a group health plan) in relation to its provision of excepted
benefits described in section 706(c)(3) if all of the following
conditions are met:
‘‘(A) The benefits are provided under a separate policy,
certificate, or contract of insurance.
‘‘(B) There is no coordination between the provision
of such benefits and any exclusion of benefits under any
group health plan maintained by the same plan sponsor.
‘‘(C) Such benefits are paid with respect to an event
without regard to whether benefits are provided with
respect to such an event under any group health plan
maintained by the same plan sponsor.
‘‘(3) SUPPLEMENTAL
EXCEPTED
BENEFITS.—The require-
ments of this part shall not apply to any group health plan
(and group health insurance coverage) in relation to its provi-
sion of excepted benefits described in section 706(c)(4) if the
benefits are provided under a separate policy, certificate, or
contract of insurance.
‘‘(d) TREATMENT OF PARTNERSHIPS.—For purposes of this part—
‘‘(1) TREATMENT AS A GROUP HEALTH PLAN.—Any plan, fund,
or program which would not be (but for this subsection) an
employee welfare benefit plan and which is established or main-
tained by a partnership, to the extent that such plan, fund,
or program provides medical care (including items and services
paid for as medical care) to present or former partners in
the partnership or to their dependents (as defined under the
terms of the plan, fund, or program), directly or through insur-
ance, reimbursement, or otherwise, shall be treated (subject
to paragraph (2)) as an employee welfare benefit plan which
is a group health plan.
‘‘(2) EMPLOYER.—In the case of a group health plan, the
term ‘employer’ also includes the partnership in relation to
any partner.
H. R. 3103—14
‘‘(3) PARTICIPANTS OF GROUP HEALTH PLANS.—In the case
of a group health plan, the term ‘participant’ also includes—
‘‘(A) in connection with a group health plan maintained
by a partnership, an individual who is a partner in relation
to the partnership, or
‘‘(B) in connection with a group health plan maintained
by a self-employed individual (under which one or more
employees are participants), the self-employed individual,
if such individual is, or may become, eligible to receive a benefit
under the plan or such individual’s beneficiaries may be eligible
to receive any such benefit.
‘‘SEC. 706. DEFINITIONS.
‘‘(a) GROUP HEALTH PLAN.—For purposes of this part—
‘‘(1) IN
GENERAL.—The term ‘group health plan’ means
an employee welfare benefit plan to the extent that the plan
provides medical care (as defined in paragraph (2) and including
items and services paid for as medical care) to employees or
their dependents (as defined under the terms of the plan)
directly or through insurance, reimbursement, or otherwise.
‘‘(2) MEDICAL
CARE.—The term ‘medical care’ means
amounts paid for—
‘‘(A) the diagnosis, cure, mitigation, treatment, or
prevention of disease, or amounts paid for the purpose
of affecting any structure or function of the body,
‘‘(B) amounts paid for transportation primarily for and
essential to medical care referred to in subparagraph (A),
and
‘‘(C) amounts paid for insurance covering medical care
referred to in subparagraphs (A) and (B).
‘‘(b) DEFINITIONS RELATING TO HEALTH INSURANCE.—For pur-
poses of this part—
‘‘(1) HEALTH
INSURANCE
COVERAGE.—The term ‘health
insurance coverage’ means benefits consisting of medical care
(provided directly, through insurance or reimbursement, or
otherwise and including items and services paid for as medical
care) under any hospital or medical service policy or certificate,
hospital or medical service plan contract, or health maintenance
organization contract offered by a health insurance issuer.
‘‘(2) HEALTH INSURANCE ISSUER.—The term ‘health insur-
ance issuer’ means an insurance company, insurance service,
or insurance organization (including a health maintenance
organization, as defined in paragraph (3)) which is licensed
to engage in the business of insurance in a State and which
is subject to State law which regulates insurance (within the
meaning of section 514(b)(2)). Such term does not include a
group health plan.
‘‘(3) HEALTH
MAINTENANCE
ORGANIZATION.—The term
‘health maintenance organization’ means—
‘‘(A) a federally qualified health maintenance organiza-
tion (as defined in section 1301(a) of the Public Health
Service Act (42 U.S.C. 300e(a))),
‘‘(B) an organization recognized under State law as
a health maintenance organization, or
‘‘(C) a similar organization regulated under State law
for solvency in the same manner and to the same extent
as such a health maintenance organization.
H. R. 3103—15
‘‘(4) GROUP
HEALTH
INSURANCE
COVERAGE.—The term
‘group health insurance coverage’ means, in connection with
a group health plan, health insurance coverage offered in
connection with such plan.
‘‘(c) EXCEPTED BENEFITS.—For purposes of this part, the term
‘excepted benefits’ means benefits under one or more (or any com-
bination thereof) of the following:
‘‘(1) BENEFITS NOT SUBJECT TO REQUIREMENTS.—
‘‘(A) Coverage only for accident, or disability income
insurance, or any combination thereof.
‘‘(B) Coverage issued as a supplement to liability insur-
ance.
‘‘(C) Liability insurance, including general liability
insurance and automobile liability insurance.
‘‘(D) Workers’ compensation or similar insurance.
‘‘(E) Automobile medical payment insurance.
‘‘(F) Credit-only insurance.
‘‘(G) Coverage for on-site medical clinics.
‘‘(H) Other similar insurance coverage, specified in
regulations, under which benefits for medical care are
secondary or incidental to other insurance benefits.
‘‘(2) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED
SEPARATELY.—
‘‘(A) Limited scope dental or vision benefits.
‘‘(B) Benefits for long-term care, nursing home care,
home health care, community-based care, or any combina-
tion thereof.
‘‘(C) Such other similar, limited benefits as are specified
in regulations.
‘‘(3) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED
AS INDEPENDENT, NONCOORDINATED BENEFITS.—
‘‘(A) Coverage only for a specified disease or illness.
‘‘(B) Hospital indemnity or other fixed indemnity insur-
ance.
‘‘(4) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED
AS
SEPARATE
INSURANCE
POLICY.—Medicare supplemental
health insurance (as defined under section 1882(g)(1) of the
Social Security Act), coverage supplemental to the coverage
provided under chapter 55 of title 10, United States Code,
and similar supplemental coverage provided to coverage under
a group health plan.
‘‘(d) OTHER DEFINITIONS.—For purposes of this part—
‘‘(1) COBRA CONTINUATION PROVISION.—The term ‘COBRA
continuation provision’ means any of the following:
‘‘(A) Part 6 of this subtitle.
‘‘(B) Section 4980B of the Internal Revenue Code of
1986, other than subsection (f)(1) of such section insofar
as it relates to pediatric vaccines.
‘‘(C) Title XXII of the Public Health Service Act.
‘‘(2) HEALTH STATUS-RELATED FACTOR.—The term ‘health
status-related factor’ means any of the factors described in
section 702(a)(1).
‘‘(3) NETWORK
PLAN.—The term ‘network plan’ means
health insurance coverage offered by a health insurance issuer
under which the financing and delivery of medical care (includ-
ing items and services paid for as medical care) are provided,
H. R. 3103—16
in whole or in part, through a defined set of providers under
contract with the issuer.
‘‘(4) PLACED FOR ADOPTION.—The term ‘placement’, or being
‘placed’, for adoption, has the meaning given such term in
section 609(c)(3)(B).
‘‘SEC. 707. REGULATIONS.
‘‘The Secretary, consistent with section 104 of the Health Care
Portability and Accountability Act of 1996, may promulgate such
regulations as may be necessary or appropriate to carry out the
provisions of this part. The Secretary may promulgate any interim
final rules as the Secretary determines are appropriate to carry
out this part.’’.
(b) ENFORCEMENT WITH RESPECT TO HEALTH INSURANCE ISSU-
ERS.—Section 502(b) of such Act (29 U.S.C. 1132(b)) is amended
by adding at the end the following new paragraph:
‘‘(3) The Secretary is not authorized to enforce under this part
any requirement of part 7 against a health insurance issuer offering
health insurance coverage in connection with a group health plan
(as defined in section 706(a)(1)). Nothing in this paragraph shall
affect the authority of the Secretary to issue regulations to carry
out such part.’’.
(c) DISCLOSURE OF INFORMATION TO PARTICIPANTS AND BENE-
FICIARIES.—
(1) IN GENERAL.—Section 104(b)(1) of such Act (29 U.S.C.
1024(b)(1)) is amended in the matter following subpara-
graph (B)—
(A) by striking ‘‘102(a)(1),’’ and inserting ‘‘102(a)(1)
(other than a material reduction in covered services or
benefits provided in the case of a group health plan (as
defined in section 706(a)(1))),’’; and
(B) by adding at the end the following new sentences:
‘‘If there is a modification or change described in section
102(a)(1) that is a material reduction in covered services
or benefits provided under a group health plan (as defined
in section 706(a)(1)), a summary description of such modi-
fication or change shall be furnished to participants and
beneficiaries not later than 60 days after the date of the
adoption of the modification or change. In the alternative,
the plan sponsors may provide such description at regular
intervals of not more than 90 days. The Secretary shall
issue regulations within 180 days after the date of enact-
ment of the Health Insurance Portability and Accountabil-
ity Act of 1996, providing alternative mechanisms to
delivery by mail through which group health plans (as
so defined) may notify participants and beneficiaries of
material reductions in covered services or benefits.’’.
(2) PLAN DESCRIPTION AND SUMMARY.—Section 102(b) of
such Act (29 U.S.C. 1022(b)) is amended—
(A) by inserting ‘‘in the case of a group health plan
(as defined in section 706(a)(1)), whether a health insurance
issuer (as defined in section 706(b)(2)) is responsible for
the financing or administration (including payment of
claims) of the plan and (if so) the name and address of
such issuer;’’ after ‘‘type of administration of the plan;’’;
and
H. R. 3103—17
(B) by inserting ‘‘including the office at the Department
of Labor through which participants and beneficiaries may
seek assistance or information regarding their rights under
this Act and the Health Insurance Portability and Account-
ability Act of 1996 with respect to health benefits that
are offered through a group health plan (as defined in
section 706(a)(1))’’ after ‘‘benefits under the plan’’.
(d) TREATMENT
OF HEALTH INSURANCE ISSUERS OFFERING
HEALTH INSURANCE COVERAGE TO NONCOVERED PLANS.—Section
4(b) of such Act (29 U.S.C. 1003(b)) is amended by adding at
the end (after and below paragraph (5)) the following:
‘‘The provisions of part 7 of subtitle B shall not apply to a health
insurance issuer (as defined in section 706(b)(2)) solely by reason
of health insurance coverage (as defined in section 706(b)(1)) pro-
vided by such issuer in connection with a group health plan (as
defined in section 706(a)(1)) if the provisions of this title do not
apply to such group health plan.’’.
(e) REPORTING AND ENFORCEMENT WITH RESPECT TO CERTAIN
ARRANGEMENTS.—
(1) IN GENERAL.—Section 101 of such Act (29 U.S.C. 1021)
is amended—
(A) by redesignating subsection (g) as subsection
(h), and
(B) by inserting after subsection (f) the following new
subsection:
‘‘(g) REPORTING BY CERTAIN ARRANGEMENTS.—The Secretary
may, by regulation, require multiple employer welfare arrangements
providing benefits consisting of medical care (within the meaning
of section 706(a)(2)) which are not group health plans to report,
not more frequently than annually, in such form and such manner
as the Secretary may require for the purpose of determining the
extent to which the requirements of part 7 are being carried out
in connection with such benefits.’’.
(2) ENFORCEMENT.—
(A) IN GENERAL.—Section 502 of such Act (29 U.S.C.
1132) is amended—
(i) in subsection (a)(6), by striking ‘‘under sub-
section (c)(2) or (i) or (l)’’ and inserting ‘‘under para-
graph (2), (4), or (5) of subsection (c) or under
subsection (i) or (l)’’; and
(ii) in the last 2 sentences of subsection (c), by
striking ‘‘For purposes of this paragraph’’ and all that
follows through ‘‘The Secretary and’’ and inserting the
following:
‘‘(5) The Secretary may assess a civil penalty against any person
of up to $1,000 a day from the date of the person’s failure or
refusal to file the information required to be filed by such person
with the Secretary under regulations prescribed pursuant to section
101(g).
‘‘(6) The Secretary and’’.
(B) TECHNICAL
AND
CONFORMING
AMENDMENT.—Sec-
tion 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended
by adding at the end the following sentence: ‘‘For purposes
of this paragraph, each violation described in subparagraph
(A) with respect to any single participant, and each viola-
tion described in subparagraph (B) with respect to any
H. R. 3103—18
single participant or beneficiary, shall be treated as a sepa-
rate violation.’’.
(3) COORDINATION.—Section 506 of such Act (29 U.S.C.
1136) is amended by adding at the end the following new
subsection:
‘‘(c) COORDINATION
OF
ENFORCEMENT
WITH
STATES
WITH
RESPECT
TO CERTAIN ARRANGEMENTS.—A State may enter into
an agreement with the Secretary for delegation to the State of
some or all of the Secretary’s authority under sections 502 and
504 to enforce the requirements under part 7 in connection with
multiple employer welfare arrangements, providing medical care
(within the meaning of section 706(a)(2)), which are not group
health plans.’’.
(f) CONFORMING AMENDMENTS.—
(1) Section 514(b) of such Act (29 U.S.C. 1144(b)) is
amended by adding at the end the following new paragraph:
‘‘(9) For additional provisions relating to group health plans,
see section 704.’’.
(2)(A) Part 6 of subtitle B of title I of such Act (29 U.S.C.
1161 et seq.) is amended by striking the heading and inserting
the following:
‘‘PART 6—CONTINUATION COVERAGE AND ADDITIONAL STANDARDS
FOR GROUP HEALTH PLANS’’.
(B) The table of contents in section 1 of such Act is amended
by striking the item relating to the heading for part 6 of
subtitle B of title I and inserting the following:
‘‘PART 6—CONTINUATION COVERAGE AND ADDITIONAL STANDARDS FOR GROUP
HEALTH PLANS’’.
(3) The table of contents in section 1 of such Act (as
amended by the preceding provisions of this section) is amended
by inserting after the items relating to part 6 the following
new items:
‘‘PART 7—GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY
REQUIREMENTS
‘‘Sec. 701. Increased portability through limitation on preexisting condition exclu-
sions.
‘‘Sec. 702. Prohibiting discrimination against individual participants and bene-
ficiaries based on health status.
‘‘Sec. 703. Guaranteed renewability in multiemployer plans and multiple employer
welfare arrangements.
‘‘Sec. 704. Preemption; State flexibility; construction.
‘‘Sec. 705. Special rules relating to group health plans.
‘‘Sec. 706. Definitions.
‘‘Sec. 707. Regulations.’’.
(g) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in this section, this
section (and the amendments made by this section) shall apply
with respect to group health plans for plan years beginning
after June 30, 1997.
(2) DETERMINATION OF CREDITABLE COVERAGE.—
(A) PERIOD OF COVERAGE.—
(i) IN GENERAL.—Subject to clause (ii), no period
before July 1, 1996, shall be taken into account under
part 7 of subtitle B of title I of the Employee Retire-
ment Income Security Act of 1974 (as added by this
section) in determining creditable coverage.