the number of them expected to be located in each 
such State. 
‘‘(3) BONDING REQUIREMENTS.—Evidence pro-
vided by the board of trustees that the bonding re-
quirements of section 412 will be met as of the date 
of the application or (if later) commencement of op-
erations.
‘‘(4) PLAN DOCUMENTS.—A copy of the docu-
ments governing the plan (including any bylaws and 
trust agreements), the summary plan description, 
and other material describing the benefits that will 
be provided to participants and beneficiaries under 
the plan. 
‘‘(5) 
AGREEMENTS
WITH
SERVICE
PRO-
VIDERS.—A copy of any agreements between the 
plan and contract administrators and other service 
providers. 
‘‘(6) FUNDING REPORT.—In the case of asso-
ciation health plans providing benefits options in ad-
dition to health insurance coverage, a report setting 
forth information with respect to such additional 
benefit options determined as of a date within the 
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 
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 
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 503B by filing an 
annual report under such section which shall include infor-
mation described in subsection (b)(6) with respect to the 
plan year and, notwithstanding section 503C(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 applicable authority may require by regulation 
through negotiated rulemaking such interim reports as it 
considers appropriate. 
‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The 
board of trustees of each association health plan which 
provides benefits options in addition to health insurance 
coverage and which is applying for certification under this 
part or is certified under this part shall engage, on behalf 
of all participants and beneficiaries, a qualified actuary 
who shall be responsible for the preparation of the mate-
rials comprising information necessary to be submitted by 
a qualified actuary under this part. The qualified actuary 
shall utilize such assumptions and techniques as are nec-
essary to enable such actuary to form an opinion as to 
whether the contents of the matters reported under this 
part—
‘‘(1) are in the aggregate reasonably related to 
the experience of the plan and to reasonable expecta-
tions; and
‘‘(2) represent such actuary’s best estimate of 
anticipated experience under the plan. 
The opinion by the qualified actuary shall be made with 
respect to, and shall be made a part of, the annual report.
‘‘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. 
‘‘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-
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 
(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 
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;
‘‘(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 in accordance with section 809(b)) and 
liquidate the plan assets, to restore the plan to the 
responsibility of the sponsor, or to continue the 
trusteeship; 
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and 
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the 
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical 
care. 
‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the 
Secretary shall give notice of such appointment to—
‘‘(1) the sponsor and plan administrator; 
‘‘(2) each participant;
‘‘(3) each participating employer; and 
‘‘(4) if applicable, each employee organization 
which, for purposes of collective bargaining, rep-
resents plan participants. 
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be 
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject 
to the same duties as those of a trustee under section 704 
of title 11, United States Code, and shall have the duties 
of a fiduciary for purposes of this title. 
‘‘(e) OTHER PROCEEDINGS.—An application by the 
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of 
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve, 
or liquidate such plan or its property, or any proceeding 
to enforce a lien against property of the plan. 
‘‘(f) JURISDICTION OF COURT.—
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance 
of a decree under this section, the court to which the 
application is made shall have exclusive jurisdiction 
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with
‘‘(g) PERSONNEL.—In accordance with regulations 
which shall be prescribed by the Secretary through nego-
tiated rulemaking, the Secretary shall appoint, retain, and 
compensate accountants, actuaries, and other professional 
service personnel as may be necessary in connection with 
the Secretary’s service as trustee under this section. 
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 
‘‘(a) IN GENERAL.—Notwithstanding section 514, a 
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan 
commenced operations in such State after the date of the 
enactment of the Small Business Health Fairness Act of 
2003. 
‘‘(b) CONTRIBUTION TAX.—For purposes of this sec-
tion, the term ‘contribution tax’ imposed by a State on 
an association health plan means any tax imposed by such 
State if—
‘‘(1) such tax is computed by applying a rate to 
the amount of premiums or contributions, with re-
spect to individuals covered under the plan who are 
residents of such State, which are received by the 
plan from participating employers located in such 
State or from such individuals; 
‘‘(2) the rate of such tax does not exceed the 
rate of any tax imposed by such State on premiums
or contributions received by insurers or health main-
tenance organizations for health insurance coverage 
offered in such State in connection with a group 
health plan; 
‘‘(3) such tax is otherwise nondiscriminatory; 
and 
‘‘(4) the amount of any such tax assessed on 
the plan is reduced by the amount of any tax or as-
sessment otherwise imposed by the State on pre-
miums, contributions, or both received by insurers or 
health maintenance organizations for health insur-
ance coverage, aggregate excess /stop loss insurance 
(as defined in section 806(g)(1)), specific excess /
stop loss insurance (as defined in section 806(g)(2)), 
other insurance related to the provision of medical 
care under the plan, or any combination thereof pro-
vided by such insurers or health maintenance organi-
zations in such State in connection with such plan. 
‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 
‘‘(a) DEFINITIONS.—For purposes of this part—
‘‘(1) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning provided in section 
733(a)(1) (after applying subsection (b) of this sec-
tion).
‘‘(2) MEDICAL CARE.—The term ‘medical care’ 
has the meaning provided in section 733(a)(2). 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(5) APPLICABLE AUTHORITY.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘applicable author-
ity’ means, in connection with an association 
health plan—
‘‘(i) the State recognized pursuant to 
subsection (c) of section 506 as the State 
to which authority has been delegated in 
connection with such plan; or 
‘‘(ii) if there if no State referred to in 
clause (i), the Secretary. 
‘‘(B) EXCEPTIONS.—
‘‘(i) 
JOINT
AUTHORITIES.—Where 
such term appears in section 808(3), sec-
tion 807(e) (in the first instance), section 
809(a) (in the second instance), section 
809(a) (in the fourth instance), and sec-
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.—
‘‘(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-
‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
is a member of any such association and elects 
an affiliated status with the sponsor, or 
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of the Small Business Health Fairness Act of 
2003, a person eligible to be a member of the 
sponsor or one of its member associations. 
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
employed an average of at least 51 employees on 
business days during the preceding calendar year 
and who employs at least 2 employees on the first 
day of the plan year. 
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health
plan with respect to a plan year, an employer who 
is not a large employer. 
‘‘(b) RULES OF CONSTRUCTION.—
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an 
association health plan, and for purposes of applying 
this title in connection with such plan, fund, or pro-
gram so determined to be such an employee welfare 
benefit plan—
‘‘(A) in the case of a partnership, the term 
‘employer’ (as defined in section 3(5)) includes 
the partnership in relation to the partners, and 
the term ‘employee’ (as defined in section 3(6)) 
includes any partner in relation to the partner-
ship; and 
‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined 
in section 3(6)) shall include such individual. 
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED 
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 
case of any plan, fund, or program which was estab-
lished or is maintained for the purpose of providing 
medical care (through the purchase of insurance or 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
employee welfare benefit plan on and after the date 
of such demonstration.’’. 
(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.—
(1) Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of an association health plan which is certified under part 
8.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144) 
is amended—
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and 
(e)’’; 
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting 
‘‘subsection (a) of this section and subsections 
(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’; 
(C) by redesignating subsection (d) as sub-
section (e); and 
(D) by inserting after subsection (c) the 
following new subsection: 
‘‘(d)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State 
laws insofar as they may now or hereafter preclude, or 
have the effect of precluding, a health insurance issuer 
from offering health insurance coverage in connection with 
an association health plan which is certified under part 
8. 
‘‘(2) Except as provided in paragraphs (4) and (5) 
of subsection (b) of this section—
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan in a State and the filing, with the 
applicable State authority, of the policy form in con-
nection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
‘‘(3) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(4) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
ticipating employer’, and ‘health insurance issuer’ have 
the meanings provided such terms in section 811, respec-
tively.’’. 
(3) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended—
(A) in clause (i)(II), by striking ‘‘and’’ at 
the end; 
(B) in clause (ii), by inserting ‘‘and which 
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
ment,’’, and by striking ‘‘title.’’ and inserting 
‘‘title, and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) subject to subparagraph (E), in the case 
of any other employee welfare benefit plan which is 
a multiple employer welfare arrangement and which 
provides medical care (within the meaning of section 
733(a)(2)), any law of any State which regulates in-
surance may apply.’’. 
(4) Section 514(e) of such Act (as redesignated 
by paragraph (2)(C)) is amended—
(A) by striking ‘‘Nothing’’ and inserting 
‘‘(1) Except as provided in paragraph (2), noth-
ing’’; and
(B) by adding at the end the following new 
paragraph: 
‘‘(2) Nothing in any other provision of law enacted 
on or after the date of the enactment of the Small Busi-
ness Health Fairness Act of 2003 shall be construed to
alter, amend, modify, invalidate, impair, or supersede any 
provision of this title, except by specific cross-reference to 
the affected section.’’. 
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)) is amended by adding at the end 
the following new sentence: ‘‘Such term also includes a 
person serving as the sponsor of an association health plan 
under part 8.’’. 
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS 
UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at 
the end the following: ‘‘An association health plan shall 
include in its summary plan description, in connection 
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to 
this Act or applicable State law, if any.’’. 
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is 
amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH 
PLANS.—Not later than January 1, 2008, the Secretary 
of Labor shall report to the Committee on Education and 
the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of
the Senate the effect association health plans have had, 
if any, on reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘Sec. 801. Association health plans. 
‘‘Sec. 802. Certification of association health plans. 
‘‘Sec. 803. Requirements relating to sponsors and boards of trustees. 
‘‘Sec. 804. Participation and coverage requirements. 
‘‘Sec. 805. Other requirements relating to plan documents, contribution rates, 
and benefit options. 
‘‘Sec. 806. Maintenance of reserves and provisions for solvency for plans pro-
viding health benefits in addition to health insurance coverage. 
‘‘Sec. 807. Requirements for application and related requirements. 
‘‘Sec. 808. Notice requirements for voluntary termination. 
‘‘Sec. 809. Corrective actions and mandatory termination. 
‘‘Sec. 810. Trusteeship by the Secretary of insolvent association health plans 
providing health benefits in addition to health insurance cov-
erage. 
‘‘Sec. 811. State assessment authority. 
‘‘Sec. 812. Definitions and rules of construction.’’.
SEC. 3. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed—
(1) in clause (i), by inserting ‘‘for any plan year 
of any such plan, or any fiscal year of any such 
other arrangement;’’ after ‘‘single employer’’, and by 
inserting ‘‘during such year or at any time during 
the preceding 1-year period’’ after ‘‘control group’’; 
(2) in clause (iii)—
(A) by striking ‘‘common control shall not 
be based on an interest of less than 25 percent’’ 
and inserting ‘‘an interest of greater than 25 
percent may not be required as the minimum 
interest necessary for common control’’; and 
(B) by striking ‘‘similar to’’ and inserting 
‘‘consistent and coextensive with’’; 
(3) by redesignating clauses (iv) and (v) as 
clauses (v) and (vi), respectively; and 
(4) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) in determining, after the application of 
clause (i), whether benefits are provided to employ-
ees of two or more employers, the arrangement shall 
be treated as having only one participating employer 
if, after the application of clause (i), the number of 
individuals who are employees and former employees 
of any one participating employer and who are cov-
ered under the arrangement is greater than 75 per-
cent of the aggregate number of all individuals who 
are employees or former employees of participating 
employers and who are covered under the arrange-
ment;’’.
SEC. 4. CLARIFICATION OF TREATMENT OF CERTAIN COL-
LECTIVELY BARGAINED ARRANGEMENTS. 
(a) IN GENERAL.—Section 3(40)(A)(i) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1002(40)(A)(i)) is amended to read as follows: 
‘‘(i)(I) under or pursuant to one or more collec-
tive bargaining agreements which are reached pursu-
ant to collective bargaining described in section 8(d) 
of the National Labor Relations Act (29 U.S.C. 
158(d)) or paragraph Fourth of section 2 of the 
Railway Labor Act (45 U.S.C. 152, paragraph 
Fourth) or which are reached pursuant to labor-
management negotiations under similar provisions of 
State public employee relations laws, and (II) in ac-
cordance with subparagraphs (C), (D), and (E);’’. 
(b) LIMITATIONS.—Section 3(40) of such Act (29 
U.S.C. 1002(40)) is amended by adding at the end the 
following new subparagraphs: 
‘‘(C) For purposes of subparagraph (A)(i)(II), a plan 
or other arrangement shall be treated as established or
maintained in accordance with this subparagraph only if 
the following requirements are met: 
‘‘(i) The plan or other arrangement, and the 
employee organization or any other entity sponsoring 
the plan or other arrangement, do not—
‘‘(ii) As of the end of the preceding plan year, 
the number of covered individuals under the plan or 
other arrangement who are neither—
‘‘(I) employed within a bargaining unit 
covered by any of the collective bargaining 
agreements with a participating employer (nor 
covered on the basis of an individual’s employ-
ment in such a bargaining unit); nor 
‘‘(II) present employees (or former employ-
ees who were covered while employed) of the 
sponsoring employee organization, of an em-
ployer who is or was a party to any of the col-
lective bargaining agreements, or of the plan or 
other arrangement or a related plan or arrange-
ment (nor covered on the basis of such present 
or former employment), 
does not exceed 15 percent of the total number of 
individuals who are covered under the plan or ar-
rangement and who are present or former employees 
who are or were covered under the plan or arrange-
ment pursuant to a collective bargaining agreement 
with a participating employer. The requirements of 
the preceding provisions of this clause shall be treat-
ed as satisfied if, as of the end of the preceding plan 
year, such covered individuals are comprised solely
of individuals who were covered individuals under 
the plan or other arrangement as of the date of the 
enactment of the Small Business Health Fairness 
Act of 2003 and, as of the end of the preceding plan 
year, the number of such covered individuals does 
not exceed 25 percent of the total number of present 
and former employees enrolled under the plan or 
other arrangement. 
‘‘(iii) The employee organization or other entity 
sponsoring the plan or other arrangement certifies 
to the Secretary each year, in a form and manner 
which shall be prescribed by the Secretary through 
negotiated rulemaking that the plan or other ar-
rangement meets the requirements of clauses (i) and 
(ii). 
‘‘(D) For purposes of subparagraph (A)(i)(II), a plan 
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
‘‘(i) all of the benefits provided under the plan 
or arrangement consist of health insurance coverage; 
or 
‘‘(ii)(I) the plan or arrangement is a multiem-
ployer plan; and 
‘‘(II) the requirements of clause (B) of the pro-
viso to clause (5) of section 302(c) of the Labor
Management Relations Act, 1947 (29 U.S.C. 
186(c)) are met with respect to such plan or other 
arrangement. 
‘‘(E) For purposes of subparagraph (A)(i)(II), a plan 
or arrangement shall be treated as established or main-
tained in accordance with this subparagraph only if—
‘‘(i) the plan or arrangement is in effect as of 
the date of the enactment of the Small Business 
Health Fairness Act of 2003; or 
‘‘(ii) the employee organization or other entity 
sponsoring the plan or arrangement—
‘‘(I) has been in existence for at least 3 
years; or 
‘‘(II) demonstrates to the satisfaction of 
the Secretary that the requirements of subpara-
graphs (C) and (D) are met with respect to the 
plan or other arrangement.’’.
(c) CONFORMING AMENDMENTS TO DEFINITIONS OF 
PARTICIPANT AND BENEFICIARY.—Section 3(7) of such 
Act (29 U.S.C. 1002(7)) is amended by adding at the end 
the following new sentence: ‘‘Such term includes an indi-
vidual who is a covered individual described in paragraph 
(40)(C)(ii).’’.
SEC. 5. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS. 
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL 
MISREPRESENTATIONS.—Section 501 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1131) 
is amended— 
(1) by inserting ‘‘(a)’’ after ‘‘SEC. 501.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) Any person who willfully falsely represents, to 
any employee, any employee’s beneficiary, any employer, 
the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as—
‘‘(1) being an association health plan which has 
been certified under part 8;
‘‘(2) having been established or maintained 
under or pursuant to one or more collective bar-
gaining agreements which are reached pursuant to 
collective bargaining described in section 8(d) of the 
National Labor Relations Act (29 U.S.C. 158(d)) or 
paragraph Fourth of section 2 of the Railway Labor 
Act (45 U.S.C. 152, paragraph Fourth) or which are 
reached pursuant to labor-management negotiations
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement with respect 
to which the requirements of subparagraph (C), (D), 
or (E) of section 3(40) are met, 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) CEASE ACTIVITIES ORDERS.—Section 502 of 
such Act (29 U.S.C. 1132), as amended by sections 141 
and 143, is further amended by adding at the end the 
following new subsection: 
‘‘(p) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that—
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
censed, registered, or otherwise approved under 
the insurance laws of such State; or 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that—
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
lic and of persons having claims for benefits against 
the plan.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.—
Section 503 of such Act (29 U.S.C. 1133), as amended 
by section 301(b), is amended by adding at the end the 
following new subsection: 
‘‘(c) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
SEC. 6. COOPERATION BETWEEN FEDERAL AND STATE AU-
THORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding 
at the end the following new subsection: 
‘‘(c) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.—
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of—
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State to with which consultation 
is required. In carrying out this paragraph, the Sec-
retary shall take into account the places of residence 
of the participants and beneficiaries under the plan 
and the State in which the trust is maintained.’’. 
SEC. 7. EFFECTIVE DATE AND TRANSITIONAL AND OTHER 
RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
sections 2, 5, and 6 shall take effect one year from the 
date of the enactment. The amendments made by sections 
3 and 4 shall take effect on the date of the enactment 
of this Act. The Secretary of Labor shall first issue all 
regulations necessary to carry out the amendments made 
by this subtitle within one year from the date of the enact-
ment. Such regulations shall be issued through negotiated 
rulemaking. 
(b) EXCEPTION.—Section 801(a)(2) of the Employee 
Retirement Income Security Act of 1974 (added by section 
2) does not apply in connection with an association health 
plan (certified under part 8 of subtitle B of title I of such 
Act) existing on the date of the enactment of this Act, 
if no benefits provided thereunder as of the date of the 
enactment of this Act consist of health insurance coverage 
(as defined in section 733(b)(1) of such Act). 
(c) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.—
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of 
such Act—
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a)(1) 
and 803(a)(1) of the Employee Retirement In-
come Security Act of 1974 shall be deemed met 
with respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which—
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement. 
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 812 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section.
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