‘‘(1) APPLICATION OF AGGREGATION RULE FOR 
EMPLOYERS.—All persons treated as a single em-
ployer under subsection (b), (c), (m), or (o) of sec-
tion 414 of the Internal Revenue Code of 1986 shall 
be treated as 1 employer. 
‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which 
was not in existence for the full year prior to the 
date on which the employer applies to participate, 
the determination of whether such employer meets 
the requirements of subsection (a)(4) shall be based 
on the average number of employees that it is rea-
sonably expected such employer will employ on busi-
ness days in the employer’s first full year. 
‘‘(3) PREDECESSORS.—Any reference in this 
subsection to an employer shall include a reference 
to any predecessor of such employer. 
‘‘(c) WAIVER
AND CONTINUATION
OF PARTICIPA-
TION.— 
‘‘(1) WAIVER.—The Administrator may waive 
the limitations relating to the size of an employer 
which may participate in the health insurance pro-
gram established under this title on a case by case 
basis if the Administrator determines that such em-
ployer makes a compelling case for such a waiver. In 
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making determinations under this paragraph, the 
Administrator may consider the effects of the em-
ployment of temporary and seasonal workers and 
other factors. 
‘‘(2) CONTINUATION
OF
PARTICIPATION.—An 
employer participating in the program under this 
title that experiences an increase in the number of 
employees so that such employer has in excess of 
100 employees, may not be excluded from participa-
tion solely as a result of such increase in employees. 
‘‘(d) TREATMENT
OF HEALTH INSURANCE COV-
ERAGE AS GROUP HEALTH PLAN.—Health insurance cov-
erage offered under this title shall be treated as a group 
health plan for purposes of applying the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1001 et 
seq.) except to the extent that a provision of this title ex-
pressly provides otherwise. 
‘‘(e) APPLICATION
OF HIPAA RULES.—Notwith-
standing any provision of State law, the provisions of sub-
parts 1, 3, and 4 of part A of title XXVII shall apply 
to health insurance coverage offered under this title. A 
State may modify State law as appropriate to provide for 
the enforcement of such provisions for health insurance 
coverage offered in the State under this title. 
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‘‘SEC. 3002. ADMINISTRATION OF SMALL BUSINESS HEALTH 
INSURANCE POOL. 
‘‘(a) OFFICE AND ADMINISTRATOR.—The Secretary 
shall designate an office within the Department of Health 
and Human Services to administer the program under this 
title. Such office shall be headed by an Administrator to 
be appointed by the Secretary. 
‘‘(b) QUALIFICATIONS.—The Secretary shall ensure 
that the individual appointed to serve as the Administrator 
under subsection (a) has an appropriate background with 
experience in health insurance, business, or health policy. 
‘‘(c) DUTIES.—The Administrator shall— 
‘‘(1) enter into contracts with health insurance 
issuers to provide health insurance coverage to indi-
viduals and employees who enroll in health insurance 
coverage in accordance with this title; 
‘‘(2) maintain the contracts for health insur-
ance policies when an employee elects which health 
plan offered under this title to enroll in as permitted 
under section 3007(d)(7); 
‘‘(3) ensure that health insurance issuers com-
ply with the requirements of this title; 
‘‘(4) ensure that employers meet eligibility re-
quirements for participation in the health insurance 
pool established under this title; 
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‘‘(5) enter into agreements with entities to 
serve as navigators, as defined in section 3003; 
‘‘(6) collect premiums from employers and em-
ployees and make payments for health insurance 
coverage; 
‘‘(7) collect other information needed to admin-
ister the program under this title; 
‘‘(8) compile, produce, and distribute informa-
tion (which shall not be subject to review or modi-
fication by the States) to employers and employees 
(directly and through navigators) concerning the 
open enrollment process, the health insurance cov-
erage available through the pool, and standardized 
comparative information concerning such coverage, 
which shall be available through an interactive Inter-
net website, including a description of the coverage 
plans available in each State and comparative infor-
mation, about premiums, index rates, benefits, qual-
ity, and consumer satisfaction under such plans; 
‘‘(9) provide information to health insurance 
issuers, including, at the discretion of the Adminis-
trator, notification when proposed rates are not in a 
competitive range; 
‘‘(10) conduct public education activities (di-
rectly and through navigators) to raise the aware-
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ness of the public of the program under this title 
and the associated tax credit under the Internal 
Revenue Code of 1986; 
‘‘(11) develop methods to facilitate enrollment 
in health insurance coverage under this title, includ-
ing through the use of the Internet; 
‘‘(12) if appropriate, enter into contracts for 
the performance of administrative functions under 
this title as permitted under section 3009; 
‘‘(13) carefully consider benefit recommenda-
tions that are endorsed by at least two-thirds of the 
members of the Small Business Health Board; 
‘‘(14) establish and administer a contingency 
fund for risk corridors as provided for in section 
3008; and 
‘‘(15) carry out any other activities necessary to 
administer this title. 
‘‘(d) LIMITATIONS.—The Administrator shall not— 
‘‘(1) negotiate premiums with participating 
health insurance issuers; or 
‘‘(2) exclude health insurance issuers from par-
ticipating in the program under this title except for 
violating contracts or the requirements of this title. 
‘‘(e) SMALL BUSINESS HEALTH BOARD.— 
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‘‘(1) IN GENERAL.—There shall be established 
a Small Business Health Board to monitor the im-
plementation of the program under this title and to 
make recommendations to the Administrator con-
cerning improvements in the program. 
‘‘(2) APPOINTMENT.—The Comptroller General 
shall appoint 13 individuals who have expertise in 
health care benefits, financing, economics, actuarial 
science or other related fields, to serve as members 
of the Small Business Health Board. In appointing 
members under the preceding sentence, the Comp-
troller General shall ensure that such members in-
clude— 
‘‘(A) a mix of different types of profes-
sionals; 
‘‘(B) a broad geographic representation; 
‘‘(C) not less than 3 individuals with an 
employee perspective; 
‘‘(D) not less than 3 individuals with a 
small business perspective, at least 1 of whom 
shall have a self-employed perspective; and 
‘‘(E) not less than 1 individual with a 
background in insurance regulation. 
‘‘(3) TERMS.—Members of the Small Business 
Health Board shall serve for a term of 3 years, such 
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terms to end on March 15 of the applicable year, ex-
cept as provided in paragraph (4). The Comptroller 
General shall stagger the terms for members first 
appointed. A member may be reappointed after the 
expiration of a term. A member may serve after ex-
piration of a term until a successor has been ap-
pointed. 
‘‘(4) SMALL
BUSINESS
REPRESENTATIVES.— 
Beginning on March 16, 2012, 3 of the individuals 
the Comptroller General appoints to the Small Busi-
ness Health Board shall be representatives of the 3 
navigators through which the largest number of indi-
viduals have enrolled for health insurance coverage 
over the previous 2-year period. Such appointees 
shall serve for 1 year. The Comptroller General shall 
consider for appointment in years prior to the date 
specified in this paragraph, individuals who are rep-
resentatives of entities that may serve as navigators. 
‘‘(5) CHAIRPERSON; VICE CHAIRPERSON.—The 
Comptroller General shall designate a member of the 
Small Business Health Board, at the time of ap-
pointment of such member, to serve as Chairperson 
and a member to serve as Vice Chairperson for the 
term of the appointment, except that in the case of 
a vacancy of either such position, the Comptroller 
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General may designate another member to serve in 
such position for the remainder of such member’s 
term. 
‘‘(6) COMPENSATION.—While serving on the 
business of the Small Business Health Board (in-
cluding travel time), a member of the Small Busi-
ness Health Board shall be entitled to compensation 
at the per diem equivalent of the rate provided for 
level IV of the Executive Schedule under section 
5315 of title 5, United States Code, and while so 
serving away from home and the member’s regular 
place of business, a member may be allowed travel 
expenses, as authorized by the Chairperson of the 
Small Business Health Board. 
‘‘(7) DISCLOSURE.—The Comptroller General 
shall establish a system for the public disclosure, by 
members of the Small Business Health Board, of fi-
nancial and other potential conflicts of interest. 
‘‘(8) MEETINGS.—The Small Business Health 
Board shall meet at the call of the Chairperson. 
Each such meeting shall be open to the public. 
‘‘(9) DUTIES.—The Small Business Health 
Board shall— 
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‘‘(A) provide general oversight of the pro-
gram under this title and make recommenda-
tions to the Administrator; 
‘‘(B) monitor and make recommendations 
to the Administrator on the benefit require-
ments for national plans in this title; 
‘‘(C) make recommendations concerning 
information that the Administrator, health 
plans, and navigators should distribute to em-
ployers and employees participating in the pro-
gram under this title; and 
‘‘(D) monitor and make recommendations 
to the Administrator on adverse selection within 
the program under this title and between the 
coverage provided under the program and the 
State-regulated health insurance market. 
‘‘(10) APPROVAL
OF
RECOMMENDATIONS.—A 
recommendation shall require approval by not less 
than two-thirds of the members of the Board. 
‘‘(11) PUBLIC NOTICE AND COMMENT ON REC-
OMMENDATIONS.—The Administrator shall— 
‘‘(A) publish recommendations by the 
Small Business Health Board in the Federal 
Register; 
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‘‘(B) solicit written comments concerning 
such recommendations; and 
‘‘(C) provide an opportunity for the pres-
entation of oral comments concerning such rec-
ommendations at a public meeting. 
‘‘SEC. 3003. NAVIGATORS. 
‘‘(a) IN GENERAL.—The Administrator shall enter 
into agreements with private and public entities, beginning 
a reasonable period prior to the beginning of the first cal-
endar year in which health insurance coverage is offered 
under this title, under which such entities will serve as 
navigators. 
‘‘(b) ELIGIBILITY.—To be eligible to enter into an 
agreement under subsection (a), an entity shall dem-
onstrate to the Administrator that the entity has existing 
relationships with, or could readily establish relationships 
with, employers and employees, and self-employed individ-
uals, likely to be eligible to participate in the program 
under this title. Such entities may include trade, industry 
and professional associations, chambers of commerce, 
unions, small business development centers, and other en-
tities that the Administrator determines to be capable of 
carrying out the duties described in subsection (c). 
‘‘(c) DUTIES.—An entity that serves as a navigator 
under an agreement under subsection (a) shall— 
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‘‘(1) coordinate with the Administrator on pub-
lic education activities to raise awareness of the pro-
gram under this title; 
‘‘(2) distribute information developed by the 
Administrator on the open enrollment process, pri-
vate health plans available through the program 
under this title, and standardized comparative infor-
mation about the health insurance coverage under 
the program; 
‘‘(3) distribute information about the avail-
ability of the tax credit under section 36 of the In-
ternal Revenue Code of 1986 as added by the Small 
Business Health Options Program Act of 2008; 
‘‘(4) assist employers and employees in enroll-
ing in the program under this title; and 
‘‘(5) respond to questions about the program 
under this title and participating plans. 
‘‘(d) SUPPLEMENTAL MATERIALS.—In addition to 
information developed by the Administrator under sub-
section (c)(2), a navigator may develop and distribute 
other information that is related to the health insurance 
program established under this title, subject to review and 
approval by the Administrator and filing in each State in 
which the navigator operates. 
‘‘(e) STANDARDS.— 
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pensation arrangements to the Administrator, and 
the Administrator shall take such information into 
account in determining the appropriate standards 
and agreement terms for such navigator. 
‘‘SEC. 
3004. 
CONTRACTS 
WITH 
HEALTH 
INSURANCE 
ISSUERS. 
‘‘(a) IN GENERAL.—The Administrator may enter 
into contracts with qualified health insurance issuers, 
without regard to section 5 of title 41, United States Code, 
or other statutes requiring competitive bidding, to provide 
health benefits plans to employees of participating employ-
ers and self-employed individuals under this title. Each 
contract shall be for a uniform term of at least 1 year, 
but may be made automatically renewable from term to 
term in the absence of notice of termination by either 
party. In entering into such contracts, the Administrator 
shall ensure that health benefits coverage is provided for 
an individual only, two adults in a household, one adult 
and one or more children, and a family. 
‘‘(b) ELIGIBILITY.—A health insurance issuer shall 
be eligible to enter into a contract under subsection (a) 
if such issuer— 
‘‘(1) is licensed to offer health benefits plan 
coverage in each State in which the plan is offered; 
and 
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‘‘(2) meets such other reasonable requirements 
as determined appropriate by the Administrator, 
after an opportunity for public comment and publi-
cation in the Federal Register. 
‘‘(c) COST-SHARING AND NETWORKS.—The Adminis-
trator shall ensure that health benefits plans with a range 
of cost-sharing and network arrangements are available 
under this title. 
‘‘(d) REVOCATION.—Approval of a health benefits 
plan participating in the program under this title may be 
withdrawn or revoked by the Administrator only after no-
tice to the health insurance issuer involved and an oppor-
tunity for a hearing without regard to subchapter II of 
chapter 5 and chapter 7 of title 5, United States Code. 
‘‘(e) CONVERSION.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a contract may not be made or a plan ap-
proved under this section if the health insurance 
issuer under such contract or plan does not provide 
to each enrollee whose coverage under the plan is 
terminated, including a termination due to dis-
continuance of the contract or plan, the option to 
have issued to that individual a nongroup policy 
without evidence of insurability. A health insurance 
issuer shall provide a notice of such option to indi-
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viduals who enroll in the plan. An enrollee who exer-
cises such conversion option shall pay the full peri-
odic charges for the nongroup policy. 
‘‘(2) EXCEPTIONS.—A health insurance issuer 
shall not be required to offer a nongroup policy 
under paragraph (1) if the termination under the 
plan occurred because— 
‘‘(A) the enrollee failed to pay any required 
monthly premiums under the plan; 
‘‘(B) the enrollee performed an act or 
practice that constitutes fraud in connection 
with the coverage under the plan; 
‘‘(C) the enrollee made an intentional mis-
representation of a material fact under the 
terms of coverage of the plan; or 
‘‘(D) the terminated coverage under the 
plan was replaced by similar coverage within 31 
days after the date of termination. 
‘‘(f) PAYMENT OF PREMIUMS.— 
‘‘(1) IN GENERAL.—Employers shall collect pre-
mium payments from their employees through pay-
roll deductions and shall forward such payments and 
the contribution of the employer (if any) to the Ad-
ministrator. The Administrator shall develop proce-
dures through which such payments shall be received 
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and forwarded to the health insurance issuer in-
volved. 
‘‘(2) FAILURE TO PAY.— 
‘‘(A) IN
GENERAL.—Failure to pay pre-
miums shall be treated as a debt owed to the 
United States in the same manner as the fail-
ure to repay a loan made to an individual under 
the Higher Education Act of 1965 is treated as 
such a debt. 
‘‘(B) PROCEDURES.—The Administrator 
shall establish procedures— 
‘‘(i) for the termination of employers 
that fail, for a two consecutive month pe-
riod (or such other time period as deter-
mined appropriate by the Administrator), 
to make premium payments in a timely 
manner; and 
‘‘(ii) for recovering the cost of unpaid 
and uncollected premiums through an ad-
justment in the rates charged for the sub-
sequent year in accordance with section 
3007(b)(1)(C). 
‘‘SEC. 3005. EMPLOYER PARTICIPATION. 
‘‘(a) PARTICIPATION PROCEDURE.—The Adminis-
trator shall develop a procedure for employers and self- 
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employed individuals to participate in the program under 
this title, including procedures relating to the offering of 
health benefits plans to employees and the payment of pre-
miums for health insurance coverage under this title. For 
the purpose of premium payments, a self-employed indi-
vidual shall be considered an employer that is making a 
100 percent contribution toward the premium amount. 
‘‘(b) ENROLLMENT AND OFFERING OF OTHER COV-
ERAGE.— 
‘‘(1) ENROLLMENT.—A participating employer 
shall ensure that each eligible employee has an op-
portunity to enroll in a plan of the employer’s choice 
or a plan of the employee’s choice in accordance with 
section 3007(d)(7). 
‘‘(2) PROHIBITION ON OFFERING OTHER COM-
PREHENSIVE HEALTH BENEFIT COVERAGE.—A par-
ticipating employer may not offer a health insurance 
plan providing comprehensive health benefit coverage 
to employees other than a health benefits plan of-
fered under this title. 
‘‘(3) PROHIBITION
ON
COERCION.—An em-
ployer shall not pressure, coerce, or offer induce-
ments to an employee to elect not to enroll in cov-
erage under the program under this title or to select 
a particular health benefits plan. 
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‘‘(4) OFFER OF SUPPLEMENTAL COVERAGE OP-
TIONS.— 
‘‘(A) IN
GENERAL.—A participating em-
ployer may offer supplementary coverage op-
tions to employees. 
‘‘(B) DEFINITION.—In subparagraph (A), 
the term ‘supplementary coverage’ means bene-
fits described as ‘excepted benefits’ under sec-
tion 2791(c). 
‘‘(c) REGULATORY FLEXIBILITY.—In developing the 
procedure under subsection (a), the Administrator shall 
comply with the requirements specified under the Regu-
latory Flexibility Act under chapter 6 of title 5, United 
States Code, consider the economic impacts that the regu-
lation will have on small businesses, and consider regu-
latory alternatives that would mitigate such impact. The 
Administrator shall publish and publicly disseminate a 
small business compliance guide, pursuant to section 212 
of the Small Business Regulatory Enforcement Fairness 
Act, that explains the compliance requirements for em-
ployer participation. Such compliance guide shall be pub-
lished not later than the date of the publication of the 
final rule under this title, or the effective date of such 
rules, whichever is later. 
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‘‘(d) RULE OF CONSTRUCTION.—Except as provided 
in section 3004(f), nothing in this title shall be construed 
to require that an employer make premium contributions 
on behalf of employees. 
‘‘SEC. 3006. ELIGIBILITY AND ENROLLMENT. 
‘‘(a) IN GENERAL.—An individual shall be eligible to 
enroll in health insurance coverage under this title for cov-
erage beginning in 2011 if such individual is an employee 
of 
a 
participating 
employer 
described 
in 
section 
3001(a)(4) or is a self-employed individual as defined in 
section 401(c)(1)(B) of the Internal Revenue Code of 
1986 and meets the definition of a participating employer 
in section 3001(a)(8). An employer may allow employees 
who average fewer than 35 hours per week to enroll. 
‘‘(b) LIMITATION.—A health insurance issuer may 
not refuse to provide coverage to any eligible individual 
under subsection (a) who selects a health benefits plan of-
fered by such issuer under this title. 
‘‘(c) TYPE OF ENROLLMENT.—An eligible individual 
may enroll as an individual or as an adult with one or 
more children regardless of whether another adult is 
present in the enrollee’s household or family. 
‘‘(d) OPEN ENROLLMENT.— 
‘‘(1) IN GENERAL.—The Administrator shall es-
tablish an annual open enrollment period during 
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which an employer may elect to become a partici-
pating employer and an employee may enroll in a 
health benefits plan under this title for the following 
calendar year. 
‘‘(2) OPEN
ENROLLMENT
PERIOD.—For pur-
poses of this title, the term ‘open enrollment period’ 
means, with respect to calendar year 2011 and each 
succeeding calendar year, the period beginning on 
October 1, 2010, and ending December 1, 2010, and 
each succeeding period beginning October 1 and 
ending December 1. Coverage in a health benefits 
plan selected during such an open enrollment period 
shall begin on January 1 of the calendar year fol-
lowing the selection. 
‘‘(3) NEWLY
ELIGIBLE
EMPLOYERS
AND
EM-
PLOYEES.—Notwithstanding the open enrollment pe-
riod provided for under paragraph (2), the Adminis-
trator shall establish an enrollment process to enable 
a newly eligible employer or an employer with an ex-
isting health benefits policy whose term is ending to 
become a participating employer and for an em-
ployee of such employer, or a new employee of a par-
ticipating employer, to enroll in a health benefits 
plan under this title outside of an open enrollment 
period. The Administrator may establish a process 
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for setting the renewal date for the participation of 
an employer that initially becomes a participating 
employer outside of the open enrollment period to 
coincide with a subsequent open enrollment period. 
‘‘(4) 
LIMITATION
OF
CHANGING
ENROLL-
MENT.—An employer or employee (as the case may 
be) may elect to change the health benefits plan that 
the employee is enrolled in only during an open en-
rollment period. 
‘‘(5) 
EFFECTIVENESS
OF
ELECTION
AND 
CHANGE OF ELECTION.—An election to change a 
health benefits plan that is made during the open 
enrollment period under paragraph (2) shall take ef-
fect as of the first day of the following calendar 
year. 
‘‘(6) CONTINUATION
OF
ENROLLMENT.—An 
employee who has enrolled in a health benefits plan 
under this title is considered to have been continu-
ously enrolled in that health benefits plan until such 
time as— 
‘‘(A) the employer or employee (as the case 
may be) elects to change health benefits plans; 
or 
‘‘(B) the health benefits plan is termi-
nated. 
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‘‘(e) PROVIDING INFORMATION TO PROMOTE IN-
FORMED
CHOICE.—The Administrator shall compile, 
produce, and disseminate information to employers, em-
ployees, and navigators under section 3002(c)(8) to pro-
mote informed choice that shall be made available at least 
30 days prior to the beginning of each open enrollment 
period. 
‘‘(f) TERMINATION OF EMPLOYMENT.—An employee 
may remain enrolled in a health plan under this title for 
the remainder of the calendar year following the termi-
nation or separation of the employee from employment or 
termination of the employer, if the employee pays 100 per-
cent of the monthly premium for the remainder of the year 
involved. 
‘‘(g) RULE OF CONSTRUCTION.—Nothing in this title 
shall be construed to prohibit a health insurance issuer 
providing coverage through the program under this title 
from using the services of a licensed agent or broker. 
‘‘SEC. 3007. HEALTH COVERAGE AVAILABLE WITHIN THE 
SMALL BUSINESS POOL. 
‘‘(a) PREEXISTING CONDITION EXCLUSIONS.— 
‘‘(1) IN GENERAL.—Each contract under this 
title may include a preexisting condition exclusion as 
defined under section 9801(b)(1) of the Internal 
Revenue Code of 1986. 
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‘‘(2) EXCLUSION PERIOD.—A preexisting condi-
tion exclusion under this subsection shall provide for 
coverage of a preexisting condition to begin not later 
than 6 months after the date on which the coverage 
of the individual under a health benefits plan com-
mences, reduced by the aggregate of 1 day for each 
day that the individual was covered under creditable 
health insurance coverage (as defined for purposes 
of section 2701(c)) immediately preceding the date 
the individual submitted an application for coverage 
under this title. This provision shall be applied not-
withstanding the applicable provision for the reduc-
tion of the exclusion period provided for in section 
701(a)(3) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1181(a)(3)). 
‘‘(b) RATES AND PREMIUMS; STATE LAWS.— 
‘‘(1) IN
GENERAL.—Rates charged and pre-
miums paid for a health benefits plan under this 
title— 
‘‘(A) shall be determined in accordance 
with subsection (d); 
‘‘(B) may be annually adjusted; and 
‘‘(C) shall be adjusted to cover the admin-
istrative costs of the Administrator under this 
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title and the office established under section 
3002. 
‘‘(2) BENEFIT MANDATE LAWS.—With respect 
to a contract entered into under this title under 
which a health insurance issuer will offer health ben-
efits plan coverage, State mandated benefit laws in 
effect in the State in which the plan is offered shall 
continue to apply, except in the case of a nationwide 
plan. 
‘‘(3) LIMITATION.—Nothing in this subsection 
shall be construed to preempt any State or local law 
(including any State grievance, claims, and appeals 
procedure laws, State provider mandate laws, and 
State network adequacy laws) except those laws and 
regulations described in subsection (b)(2), (d)(2)(B), 
and (d)(5). 
‘‘(c) TERMINATION AND REENROLLMENT.—If an in-
dividual who is enrolled in a health benefits plan under 
this title voluntarily terminates the enrollment, except in 
the case of an individual who has lost or changes employ-
ment or whose employer is terminated for failure to pay 
premiums, the individual shall not be eligible for reenroll-
ment until the first open enrollment period following the 
expiration of 6 months after the date of such termination. 
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‘‘(d) RATING RULES AND TRANSITIONAL APPLICA-
TION OF STATE LAW.— 
‘‘(1) YEARS 2011 AND 2012.—With respect to 
calendar years 2011 and 2012 (open enrollment pe-
riod beginning October 1, 2010, and October 1, 
2011), the following shall apply: 
‘‘(A) In the case of an employer that elects 
to participate in the program under this title, 
the State rating requirements applicable to em-
ployers purchasing health insurance coverage in 
the small group market in the State in which 
the employer is located shall apply with respect 
to such coverage, except that premium rates for 
such coverage shall not vary based on health- 
status related factors. 
‘‘(B) State rating requirements shall apply 
to health insurance coverage purchased in the 
small group market in the State, except that a 
State shall be prohibited from allowing pre-
mium rates to vary based on health-status re-
lated factors. 
‘‘(2) SUBSEQUENT YEARS.— 
‘‘(A) NAIC RECOMMENDATIONS.— 
‘‘(i) STUDY.—Beginning in 2009, the 
Administrator shall contract with the Na-
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tional Association of Insurance Commis-
sioners to conduct a study of the rating re-
quirements utilized in the program under 
this title and the rating requirements that 
apply to health insurance purchased in the 
small group markets in the States, and to 
develop recommendations concerning rat-
ing requirements. Such recommendations 
shall be submitted to the appropriate com-
mittees of Congress during calendar year 
2011. 
‘‘(ii) CONSULTATION.—In conducting 
the study under clause (i), the National 
Association of Insurance Commissioners 
shall consult with key stakeholders (includ-
ing small businesses, self-employed individ-
uals, employees of small businesses, health 
insurance issuers, health care providers, 
and patient advocates). 
‘‘(iii) 
RECOMMENDATIONS.—During 
calendar year 2011, the recommendations 
of the National Association of Insurance 
Commissioners shall be submitted to Con-
gress (in the form of a legislative pro-
posal), and shall concern— 
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‘‘(I) 
rating 
requirements 
for 
health insurance coverage under this 
title for calendar year 2013 and sub-
sequent calendar years; and 
‘‘(II) a maximum permissible 
variance between State rating require-
ments and the rating requirements for 
coverage under this title that will 
allow State flexibility without causing 
significant adverse selection for health 
insurance coverage under this title. 
‘‘(B) APPLICATION OF REQUIREMENTS.— 
If, pursuant to this subsection, an Act is en-
acted to implement rating requirements pursu-
ant to the recommendations submitted under 
subparagraph (A), or alternative rating require-
ments developed by Congress, such rating re-
quirements shall apply to the program under 
this title beginning in calendar year 2013 (open 
enrollment periods beginning October 1, 2012, 
and thereafter). 
‘‘(3) FAILURE TO ENACT LEGISLATION.—If an 
Act is not enacted as provided for in paragraph 
(2)(B), the fallback rating rules under paragraph 
(5) shall apply beginning in calendar year 2013 
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(open enrollment periods beginning October 1, 2012, 
and thereafter). 
‘‘(4) EXPEDITED
CONGRESSIONAL
CONSIDER-
ATION.— 
‘‘(A) 
INTRODUCTION
AND
COMMITTEE 
CONSIDERATION.— 
‘‘(i) 
INTRODUCTION.—A 
legislative 
proposal submitted to Congress pursuant 
to paragraph (2) shall be introduced in the 
House of Representatives by the Speaker, 
and in the Senate by the majority leader, 
immediately upon receipt of the language 
and shall be referred to the appropriate 
committees of Congress. If the proposal is 
not introduced in accordance with the pre-
ceding sentence, legislation may be intro-
duced in either House of Congress by any 
member thereof. 
‘‘(ii) COMMITTEE
CONSIDERATION.— 
Legislation introduced in the House of 
Representatives and the Senate under 
clause (i) shall be referred to the appro-
priate committees of jurisdiction of the 
House of Representatives and the Senate. 
Not later than 45 calendar days after the 
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introduction of the legislation or February 
15th, 2012, whichever is later, the com-
mittee of Congress to which the legislation 
was referred shall report the legislation or 
a committee amendment thereto. If the 
committee has not reported such legislation 
(or identical legislation) at the end of 45 
calendar days after its introduction, or 
February 15th, 2012, whichever is later, 
such committee shall be deemed to be dis-
charged from further consideration of such 
legislation and such legislation shall be 
placed on the appropriate calendar of the 
House involved. 
‘‘(B) EXPEDITED PROCEDURE.— 
‘‘(i) CONSIDERATION.—Not later than 
15 calendar days after the date on which 
a committee has been or could have been 
discharged from consideration of legislation 
under this paragraph, the Speaker of the 
House of Representatives, or the Speaker’s 
designee, or the majority leader of the Sen-
ate, or the leader’s designee, shall move to 
proceed to the consideration of the com-
mittee amendment to the legislation, and if 
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there is no such amendment, to the legisla-
tion. It shall also be in order for any mem-
ber of the House of Representatives or the 
Senate, respectively, to move to proceed to 
the consideration of the legislation at any 
time after the conclusion of such 15-day 
period. All points of order against the leg-
islation (and against consideration of the 
legislation) with the exception of points of 
order under the Congressional Budget Act 
of 1974 are waived. A motion to proceed to 
the consideration of the legislation is high-
ly privileged in the House of Representa-
tives and is privileged in the Senate and is 
not debatable. The motion is not subject to 
amendment, to a motion to postpone con-
sideration of the legislation, or to a motion 
to proceed to the consideration of other 
business. A motion to reconsider the vote 
by which the motion to proceed is agreed 
to or not agreed to shall not be in order. 
If the motion to proceed is agreed to, the 
House of Representatives or the Senate, as 
the case may be, shall immediately proceed 
to consideration of the legislation in ac-
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cordance with the Standing Rules of the 
House of Representatives or the Senate, as 
the case may be, without intervening mo-
tion, order, or other business, and the reso-
lution shall remain the unfinished business 
of the House of Representatives or the 
Senate, as the case may be, until disposed 
of, except as provided in clause (iii). 
‘‘(ii) 
CONSIDERATION
BY
OTHER 
HOUSE.—If, before the passage by one 
House of the legislation that was intro-
duced in such House, such House receives 
from the other House legislation as passed 
by such other House— 
‘‘(I) the legislation of the other 
House shall not be referred to a com-
mittee and shall immediately displace 
the legislation that was introduced in 
the House in receipt of the legislation 
of the other House; and 
‘‘(II) the legislation of the other 
House shall immediately be considered 
by the receiving House under the 
same procedures applicable to legisla-
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tion reported by or discharged from a 
committee under this paragraph. 
‘‘Upon disposition of legislation that 
is received by one House from the other 
House, it shall no longer be in order to 
consider the legislation that was introduced 
in the receiving House. 
‘‘(iii) SENATE VOTE REQUIREMENT.— 
Legislation under this paragraph shall only 
be approved in the Senate if affirmed by 
the votes of 3⁄5 of the Senators duly chosen 
and sworn. If legislation in the Senate has 
not reached final passage within 10 days 
after the motion to proceed is agreed to 
(excluding periods in which the Senate is 
in recess) it shall be in order for the ma-
jority leader to file a cloture petition on 
the legislation or amendments thereto, in 
accordance with rule XXII of the Standing 
Rules of the Senate. If such a cloture mo-
tion on the legislation fails, is shall be in 
order for the majority leader to proceed to 
other business and the legislation shall be 
returned to or placed on the Senate cal-
endar. 
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‘‘(iv) 
CONSIDERATION
IN
CON-
FERENCE.—Immediately upon a final pas-
sage of the legislation that results in a dis-
agreement between the two Houses of Con-
gress with respect to the legislation, con-
ferees shall be appointed and a conference 
convened. Not later than 15 days after the 
date on which conferees are appointed (ex-
cluding periods in which one or both 
Houses are in recess), the conferees shall 
file a report with the House of Representa-
tives and the Senate resolving the dif-
ferences between the Houses on the legisla-
tion. Notwithstanding any other rule of the 
House of Representatives or the Senate, it 
shall be in order to immediately consider a 
report of a committee of conference on the 
legislation filed in accordance with this 
subclause. Debate in the House of Rep-
resentatives and the Senate on the con-
ference report shall be limited to 10 hours, 
equally divided and controlled by the 
Speaker of the House of Representatives 
and the minority leader of the House of 
Representatives or their designees and the 
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majority and minority leaders of the Sen-
ate or their designees. A vote on final pas-
sage of the conference report shall occur 
immediately at the conclusion or yielding 
back of all time for debate on the con-
ference report. The conference report shall 
be approved in the Senate only if affirmed 
by the votes of 3⁄5 of the Senators duly 
chosen and sworn. 
‘‘(C) RULES OF THE SENATE AND HOUSE 
OF REPRESENTATIVES.—This paragraph is en-
acted by Congress— 
‘‘(i) as an exercise of the rulemaking 
power of the Senate and House of Rep-
resentatives, respectively, and is deemed to 
be part of the rules of each House, respec-
tively, but applicable only with respect to 
the procedure to be followed in that House 
in the case of legislation under this para-
graph, and it supersedes other rules only 
to the extent that it is inconsistent with 
such rules; and 
‘‘(ii) with full recognition of the con-
stitutional right of either House to change 
the rules (so far as they relate to the pro-
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cedure of that House) at any time, in the 
same manner, and to the same extent as in 
the case of any other rule of that House. 
‘‘(5) FALLBACK RATING RULES.—For purposes 
of paragraph (3), the fallback rating rules are as fol-
lows: 
‘‘(A) PROGRAM.— 
‘‘(i) RATING RULES.—A health insur-
ance issuer that enters into a contract 
under the program under this title shall 
determine the amount of premiums to as-
sess for coverage under a health benefits 
plan based on a community rate that may 
be annually adjusted only— 
‘‘(I) based on the age of covered 
individuals (subject to clause (iii)); 
‘‘(II) based on the geographic 
area involved if the adjustment is 
based on geographical divisions that 
are not smaller than a metropolitan 
statistical area and the issuer provides 
evidence of geographic variation in 
cost of services; 
‘‘(III) based on industry (subject 
to clause (iv)); 
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‘‘(IV) based on tobacco use; and 
‘‘(V) based on whether such cov-
erage is for an individual, 2 adults in 
a household, 1 adult and 1 or more 
children, or a family. 
‘‘(ii) 
LIMITATION.—Premium 
rates 
charged for coverage under the program 
under this title shall not vary based on 
health-status related factors, gender, class 
of business, or claims experience or any 
other factor not described in clause (i). 
‘‘(iii) AGE ADJUSTMENTS.— 
‘‘(I) IN GENERAL.—With respect 
to clause (i)(I), in making adjust-
ments based on age, the Adminis-
trator shall establish not more than 5 
age brackets to be used by a health 
insurance issuer in establishing rates 
for individuals under the age of 65. 
The rates for any age bracket shall 
not exceed 300 percent of the rate for 
the lowest age bracket. Age-related 
premiums may not vary within age 
brackets. 
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‘‘(II) AGES
AND
OLDER.— 
With respect to clause (i)(I), a health 
insurance issuer may develop separate 
rates for covered individuals who are 
65 years of age or older for whom the 
primary payor for health benefits cov-
erage is the medicare program under 
title XVIII of the Social Security Act, 
for the coverage of health benefits 
that are not otherwise covered under 
medicare. 
‘‘(iv) INDUSTRY ADJUSTMENT.—With 
respect to clause (i)(III), in making adjust-
ments based on industry, the rates for any 
industry shall not exceed 115 percent of 
the rate for the lowest industry and shall 
be based on evidence of industry variation 
in cost of services. 
‘‘(B) STATE RATING RULES.—State rating 
requirements shall apply to health insurance 
coverage purchased in the small group market, 
except that a State shall not permit premium 
rates to vary based on health-status related fac-
tors. 
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‘‘(6) STATE WITH LESS PREMIUM VARIATION.— 
Effective beginning in calendar year 2013, in the 
case of a State that provides a rating variance with 
respect to age that is less than the Federal limit es-
tablished under paragraph (2)(B) or (3) or that pro-
vides for some form of community rating, or that 
provides a rating variance with respect to industry 
that is less than the Federal limit established under 
paragraph (2)(B) or (3), or that provides a rating 
variance with respect to the geographic area involved 
that is less than the Federal limit established in 
paragraph (2)(B) or (3), premium rates charged for 
health insurance coverage under this title in such 
State with respect to such factor shall reflect the 
rating requirements of such State. 
‘‘(7) EMPLOYEE CHOICE.— 
‘‘(A) CALENDAR YEARS 2011 AND 2012.— 
With respect to calendar years 2011 and 2012 
(open enrollment periods beginning October 1, 
2010, and October 1, 2011), in the case of a 
State that applies community rating or adjusted 
community rating where any age bracket does 
not exceed 300 percent of the lowest age brack-
et, employees of an employer located in that 
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State may elect to enroll in any health plan of-
fered under this title. 
‘‘(B) SUBSEQUENT YEARS.—Beginning in 
calendar year 2013 (open enrollment periods 
beginning October 1, 2012, and thereafter), em-
ployees of an employer that participates in the 
program under this title may elect to enroll in 
any health plan offered under this title. 
‘‘(C) EXCEPTION.—In any State or year in 
which an employee is not able to select a health 
plan as provided for in subparagraph (A) or 
(B), the employer shall select the health plan or 
plans that shall be made available to the em-
ployees of such employer. 
‘‘(8) STATE APPROVAL OF RATES.—State laws 
requiring the approval of rates with respect to health 
insurance shall continue to apply to health insurance 
coverage under this title in such State unless the 
State fails to enforce the application of rates that 
would otherwise apply to health insurance issuers 
under the program under this title. 
‘‘(e) BENEFITS.— 
‘‘(1) STATEMENT
OF
BENEFITS.—Each con-
tract under this title shall contain a detailed state-
ment of benefits offered and shall include informa-
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tion concerning such maximums, limitations, exclu-
sions, and other definitions of benefits as the Ad-
ministrator considers necessary or reasonable. 
‘‘(2) NATIONWIDE PLANS.— 
‘‘(A) IN GENERAL.—In the case of con-
tracts with health insurance issuers that offer a 
health benefit plan on a nationwide basis, in the 
first year after the date of enactment of this 
title, the benefit package shall include benefits 
established by the Administrator. 
‘‘(B) PROCESS FOR ESTABLISHING BENE-
FITS
FOR
NATIONWIDE
PLANS.—The benefits 
provide for under subparagraph (A) shall be de-
termined as follows: 
‘‘(i) Not later than 30 days after the 
date of enactment of this title, the Sec-
retary shall enter into a contract with the 
Institute of Medicine to develop a min-
imum set of benefits to be offered by na-
tionwide plans. 
‘‘(ii) In developing such minimum set 
of benefits, the Institute of Medicine shall 
convene public forums to allow input from 
key stakeholders (including small busi-
nesses, self-employed individuals, employ-
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ees of small businesses, health insurance 
issuers, insurance regulators, health care 
providers, and patient advocates) and shall 
consult with the Small Business Health 
Board. 
‘‘(iii) The Institute of Medicine shall 
consider— 
‘‘(I) the clinical appropriateness 
and effectiveness of the benefits cov-
ered; 
‘‘(II) the affordability of the ben-
efits covered; 
‘‘(III) the financial protection of 
enrollees against high health care ex-
penses; 
‘‘(IV) access to necessary health 
care services; and 
‘‘(V) benefits similar to those 
available in the small group market 
on the date of enactment of this title. 
‘‘(iv) The benefits package shall not 
be discriminatory or be likely to promote 
or induce adverse selection. 
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‘‘(v) The Administrator shall publish 
the benefits recommended by the Institute 
of Medicine for public comment. 
‘‘(vi) Based on the comments received, 
the Administrator may make changes only 
to the extent that the recommendation 
from the Institute of Medicine is not con-
sistent with the criteria contained in clause 
(iii) or there is a compelling need for the 
changes to ensure the effective functioning 
of the program. 
‘‘(C) CHANGES TO BENEFITS.— 
‘‘(i) IN
GENERAL.—By a vote of a 
two-thirds majority, the Small Business 
Health Board may recommend to the Ad-
ministrator changes to the benefit package 
for nationwide plans under this paragraph 
for years subsequent to the first year in 
which such benefits are in effect. 
‘‘(ii) REDUCTION IN BENEFITS.—The 
Administrator may reduce benefits that 
were previously covered under this para-
graph only if— 
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‘‘(I) two-thirds of the Small 
Business Health Board recommend 
such change; or 
‘‘(II) there is a compelling need 
for the change to prevent a substan-
tial reduction in participation in the 
program under this title. 
‘‘(f) ADDITIONAL PREMIUM FOR DELAYED ENROLL-
MENT.— 
‘‘(1) IN GENERAL.—A self-employed individual 
who is eligible to participate in the program under 
this title, who does not reside in a State where a 
self-employed individual is eligible for coverage in 
the small group market, and who does not elect to 
enroll in coverage under such program in the first 
year in which the self-employed individual is eligible 
to so enroll, shall be subject to an additional pre-
mium for delayed enrollment. 
‘‘(2) AMOUNT.—The Administrator shall estab-
lish the amount of the additional premium under 
paragraph (1), which shall be the amount deter-
mined by the Administrator to be actuarially appro-
priate, to encourage enrollment, and to reduce ad-
verse selection. The amount of the additional pre-
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mium shall be calculated by the Administrator based 
on the number of years specified in paragraph (4). 
‘‘(3) PAYMENT.—A self-employed individual 
shall pay the additional premium under this sub-
section, if any, for a period of time equal to the 
number of years specified in paragraph (4). After 
the expiration of such period the additional premium 
for delayed enrollment shall be terminated. 
‘‘(4) YEARS.—The number of years specified in 
this paragraph is the number of years that the self- 
employed individual involved was eligible to partici-
pate in the program under this title but did not en-
roll in coverage under such program and did not 
otherwise have creditable coverage (as defined for 
purposes of section 2701(c)). 
‘‘(g) STATE ENFORCEMENT.— 
‘‘(1) STATE AUTHORITY.—With respect to the 
enforcement of provisions in this title that supersede 
State law (as described in paragraph (2)), a State 
may require that health insurance issuers that issue, 
sell, renew, or offer health insurance coverage in the 
State in the small group market or through the pro-
gram under this title, comply with the requirements 
of this title with respect to such issuers. 
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‘‘(2) PROVISIONS DESCRIBED.—The provisions 
described in this paragraph shall include the fol-
lowing: 
‘‘(A) Prohibitions on varying premium 
rates based on health-status related factors 
(subsections (d)(1)(A) and (B) of section 
3007). 
‘‘(B) The implementation of rating re-
quirements that shall apply to the program 
under this title beginning in calendar year 2013 
(subsections (d)(2)(B) and (d)(3) of section 
3007). 
‘‘(C) Benefit requirements for nationwide 
plans available in the program under this title 
(subsection (e)). 
‘‘(3) FAILURE
TO
IMPLEMENT
OR
ENFORCE 
PROVISIONS.—In the case of a determination by the 
Secretary that a State has failed to substantially en-
force a provision (or provisions) described in para-
graph (2) with respect to health insurance issuers in 
the State, the Secretary shall enforce such provision 
(or provisions). 
‘‘(4) SECRETARIAL
ENFORCEMENT
AUTHOR-
ITY.—The Secretary shall have the same authority 
in relation to the enforcement of the provisions of 
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this title with respect to issuers of health insurance 
coverage in a State as the Secretary has under sec-
tion 2722(b)(2) in relation to the enforcement of the 
provisions of part A of title XXVII with respect to 
issuers of health insurance coverage in the small 
group market in the State. 
‘‘(h) STATE OPT OUT.—A State may prohibit small 
employers and self-employed individuals in the State from 
participating in the program under this title if the State— 
‘‘(1) defines its small group market to include 
groups of one (so that self-employed individuals are 
eligible for coverage in such market); 
‘‘(2) prohibits the use of health-status related 
factors and other factors described in subsection 
(d)(5)(A); 
‘‘(3) has in effect rating rules that— 
‘‘(A) in calendar years 2011 and 2012, 
comply with subsection (d)(5)(A); and 
‘‘(B) in calendar year 2013 and thereafter, 
comply with subsection (d)(2)(B) or (d)(3), 
whichever is in effect for such calendar year; 
except that such rules may impose limits on rating 
variation in addition to those provided for in such 
subsection; 
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‘‘(4) maintains a State-wide purchasing pool 
that provides purchasers in the small group market 
a choice of health benefit plans, with comparative in-
formation provided concerning such plans and the 
premiums charged for such plans made available 
through the Internet; and 
‘‘(5) enacts a law to request an opt out under 
this subsection. 
‘‘SEC. 3008. ENCOURAGING PARTICIPATION BY HEALTH IN-
SURANCE ISSUERS THROUGH ADJUSTMENTS 
FOR RISK. 
‘‘(a) APPLICATION OF RISK CORRIDORS.— 
‘‘(1) IN
GENERAL.—This section shall only 
apply to health insurance issuers with respect to 
health benefits plans offered under this Act during 
any of calendar years 2011 through 2013. 
‘‘(2) NOTIFICATION
OF
COSTS
UNDER
THE 
PLAN.—In the case of a health insurance issuer that 
offers a health benefits plan under this title in any 
of calendar years 2011 through 2013, the issuer 
shall notify the Administrator, before such date in 
the succeeding year as the Administrator specifies, 
of the total amount of costs incurred in providing 
benefits under the health benefits plan for the year 
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involved and the portion of such costs that is attrib-
utable to administrative expenses. 
‘‘(3) ALLOWABLE COSTS DEFINED.—For pur-
poses of this section, the term ‘allowable costs’ 
means, with respect to a health benefits plan offered 
by a health insurance issuer under this title, for a 
year, the total amount of costs described in para-
graph (2) for the plan and year, reduced by the por-
tion of such costs attributable to administrative ex-
penses incurred in providing the benefits described 
in such paragraph. 
‘‘(b) ADJUSTMENT OF PAYMENT.— 
‘‘(1) NO ADJUSTMENT IF ALLOWABLE COSTS 
WITHIN 3 PERCENT OF TARGET AMOUNT.—If the al-
lowable costs for the health insurance issuer with re-
spect to the health benefits plan involved for a cal-
endar year are at least 97 percent, but do not exceed 
103 percent, of the target amount for the plan and 
year involved, there shall be no payment adjustment 
under this section for the plan and year. 
‘‘(2) INCREASE
IN
PAYMENT
IF
ALLOWABLE 
COSTS ABOVE 103 PERCENT OF TARGET AMOUNT.— 
‘‘(A) COSTS BETWEEN 103 AND 108 PER-
CENT OF TARGET AMOUNT.—If the allowable 
costs for the health insurance issuer with re-
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spect to the health benefits plan involved for 
the year are greater than 103 percent, but not 
greater than 108 percent, of the target amount 
for the plan and year, the Administrator shall 
reimburse the issuer for such excess costs 
through payment to the issuer of an amount 
equal to 75 percent of the difference between 
such allowable costs and 103 percent of such 
target amount. 
‘‘(B) COSTS ABOVE 108 PERCENT OF TAR-
GET AMOUNT.—If the allowable costs for the 
health insurance issuer with respect to the 
health benefits plan involved for the year are 
greater than 108 percent of the target amount 
for the plan and year, the Administrator shall 
reimburse the issuer for such excess costs 
through payment to the issuer in an amount 
equal to the sum of— 
‘‘(i) 3.75 percent of such target 
amount; and 
‘‘(ii) 90 percent of the difference be-
tween such allowable costs and 108 percent 
of such target amount. 
‘‘(3) REDUCTION IN PAYMENT IF ALLOWABLE 
COSTS BELOW 97 PERCENT OF TARGET AMOUNT.— 
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‘‘(A) COSTS BETWEEN 92 AND 97 PERCENT 
OF TARGET AMOUNT.—If the allowable costs for 
the health insurance issuer with respect to the 
health benefits plan involved for the year are 
less than 97 percent, but greater than or equal 
to 92 percent, of the target amount for the plan 
and year, the issuer shall be required to pay 
into a contingency reserve fund established and 
maintained by the Administrator, an amount 
equal to 75 percent of the difference between 
97 percent of the target amount and such al-
lowable costs. 
‘‘(B) COSTS BELOW 92 PERCENT OF TAR-
GET AMOUNT.—If the allowable costs for the 
health insurance issuer with respect to the 
health benefits plan involved for the year are 
less than 92 percent of the target amount for 
the plan and year, the issuer shall be required 
to pay into the contingency fund established 
under subparagraph (A), an amount equal to 
the sum of— 
‘‘(i) 3.75 percent of such target 
amount; and 
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‘‘(ii) 90 percent of the difference be-
tween 92 percent of such target amount 
and such allowable costs. 
‘‘(4) TARGET AMOUNT DESCRIBED.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘target amount’ means, 
with respect to a health benefits plan offered by 
an issuer under this title in any of calendar 
years 2011 through 2013, an amount equal 
to— 
‘‘(i) the total of the monthly pre-
miums estimated by the health insurance 
issuer and accepted by the Administrator 
to be paid for enrollees in the plan under 
this title for the calendar year involved; re-
duced by 
‘‘(ii) the amount of administrative ex-
penses that the issuer estimates, and the 
Administrator accepts, will be incurred by 
the issuer with respect to the plan for such 
calendar year. 
‘‘(B) SUBMISSION OF TARGET AMOUNT.— 
Not later than December 31, 2010, and each 
December 31 thereafter through calendar year 
2012, an issuer shall submit to the Adminis-
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trator a description of the target amount for 
such issuer with respect to health benefits plans 
provided by the issuer under this title. 
‘‘(c) DISCLOSURE OF INFORMATION.— 
‘‘(1) IN GENERAL.—Each contract under this 
title shall provide— 
‘‘(A) that a health insurance issuer offer-
ing a health benefits plan under this title shall 
provide the Administrator with such informa-
tion as the Administrator determines is nec-
essary to carry out this subsection including the 
notification of costs under subsection (a)(2) and 
the target amount under subsection (b)(4)(B); 
and 
‘‘(B) that the Administrator has the right 
to inspect and audit any books and records of 
the issuer that pertain to the information re-
garding costs provided to the Administrator 
under such subsections. 
‘‘(2) RESTRICTION ON USE OF INFORMATION.— 
Information disclosed or obtained pursuant to the 
provisions of this subsection may be used by the of-
fice designated under section 3002(a) and its em-
ployees and contractors only for the purposes of, and 
to the extent necessary in, carrying out this section. 
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‘‘SEC. 3009. ADMINISTRATION THROUGH REGIONAL OR 
OTHER ADMINISTRATIVE ENTITIES. 
‘‘(a) IN GENERAL.—In order to provide for the ad-
ministration of the benefits under this title with maximum 
efficiency and convenience for participating employers and 
health care providers and other individuals and entities 
providing services to such employers, the Administrator— 
‘‘(1) shall enter into contracts with eligible enti-
ties, to the extent appropriate, to perform, on a re-
gional or other basis, activities to receive, disburse, 
and account for payments of premiums to partici-
pating employers by individuals, and for payments 
by participating employers and employees to health 
insurance issuers; and 
‘‘(2) may enter into contracts with eligible enti-
ties, to the extent appropriate, to perform, on a re-
gional or other basis, one or more of the following: 
‘‘(A) Collect and maintain all information 
relating to individuals, families, and employers 
participating in the program under this title. 
‘‘(B) Serve as a channel of communication 
between health insurance issuers, participating 
employers, and individuals relating to the ad-
ministration of this title. 
‘‘(C) Otherwise carry out such activities 
for the administration of this title, in such 
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manner, as may be provided for in the contract 
entered into under this section. 
‘‘(b) APPLICATION.—To be eligible to receive a con-
tract under subsection (a), an entity shall prepare and 
submit to the Administrator an application at such time, 
in such manner, and containing such information as the 
Administration may require. 
‘‘(c) PROCESS.— 
‘‘(1) COMPETITIVE
BIDDING.—All contracts 
under this section shall be awarded through a com-
petitive bidding process on a bi-annual basis. 
‘‘(2) REQUIREMENT.—No contract shall be en-
tered into with any entity under this section unless 
the Administrator finds that such entity will perform 
its obligations under the contract efficiently and ef-
fectively and will meet such requirements as to fi-
nancial responsibility, legal authority, and other 
matters as the Administrator finds pertinent. 
‘‘(3) PUBLICATION
OF
STANDARDS
AND
CRI-
TERIA.—If the Administrator enters into contracts 
under subsection (a), the Administrator shall publish 
in the Federal Register standards and criteria for 
the efficient and effective performance of contract 
obligations under this section, and opportunity shall 
be provided for public comment prior to implementa-
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tion. In establishing such standards and criteria, the 
Administrator shall provide for a system to measure 
an entity’s performance of responsibilities. 
‘‘(4) TERM.—Each contract under this section 
shall be for a term of at least 2 years, and may be 
made automatically renewable from term to term in 
the absence of notice by either party of intention to 
terminate at the end of the current term, except that 
the Administrator may terminate any such contract 
at any time (after such reasonable notice and oppor-
tunity for hearing to the entity involved as the Ad-
ministrator may provide in regulations) if the Ad-
ministrator finds that the entity has failed substan-
tially to carry out the contract or is carrying out the 
contract in a manner inconsistent with the efficient 
and effective administration of the program estab-
lished by this title. 
‘‘(d) TERMS OF CONTRACT.—A contract entered into 
under this section shall include— 
‘‘(1) a description of the duties of the con-
tracting entity; 
‘‘(2) an assurance that the entity will furnish to 
the Administrator such timely information and re-
ports as the Administrator determines appropriate; 
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‘‘(3) an assurance that the entity will maintain 
such records and afford such access thereto as the 
Administrator finds necessary to assure the correct-
ness and verification of the information and reports 
under paragraph (2) and otherwise to carry out the 
purposes of this title; 
‘‘(4) an assurance that the entity shall comply 
with such confidentiality and privacy protection 
guidelines and procedures as the Administrator may 
require; 
‘‘(5) an assurance that the entity does not have, 
and will continue to avoid, any conflicts of interest 
relative to any functions it will perform; and 
‘‘(6) such other terms and conditions not incon-
sistent with this section as the Administrator may 
find necessary or appropriate. 
‘‘SEC. 3010. PUBLIC EDUCATION CAMPAIGN AND REPORT. 
‘‘(a) IN GENERAL.—In carrying out this title, the Ad-
ministrator shall develop and implement an educational 
campaign with interagency participation (including at a 
minimum the Small Business Administration, the Depart-
ment of Labor, and employees of the office established 
under section 3002 who oversee the provision of informa-
tion through navigators) to provide information to employ-
ers and the general public concerning the health insurance 
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program developed under this title, including the contact 
information relating to an individual or individuals who 
will be available to resolve various types of problems with 
health insurance coverage provided under this title. 
‘‘(b) PUBLIC EDUCATION CAMPAIGN.—There is au-
thorized to be appropriated to carry out this section, such 
sums as may be necessary for each of fiscal years 2008 
through 2010. 
‘‘(c) REPORTS TO CONGRESS.—Not later than 1 year 
and 2 years after the implementation of the campaign 
under subsection (a), the Administrator shall submit to 
the appropriate committees of Congress a report that de-
scribes the activities of the Administrator under sub-
section (a), including a determination by the Adminis-
trator of the percentage of employers with knowledge of 
the health benefits program under this title. 
‘‘SEC. 3011. APPROPRIATIONS. 
‘‘There are authorized to be appropriated to the Ad-
ministrator such sums as may be necessary in each fiscal 
year for the development and administration of the pro-
gram under this title. 
‘‘SEC. 3012. EFFECTIVE DATE. 
‘‘This title shall take effect on the date of enactment 
of this title.’’. 
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SEC. 3. AMENDMENT TO ERISA. 
Section 514(b)(2) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1144(b)(2)) is 
amended by adding at the end the following: 
‘‘(C) Notwithstanding subparagraph (A), the provi-
sions of subsections (d)(1)(B) and (g)(2)(A) of section 
3007 of the Public Health Service Act (relating to the pro-
hibition on health-status related rating and the Federal 
enforcement of such provisions) shall supercede any State 
law that conflicts with such provisions.’’. 
SEC. 4. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH 
INSURANCE EXPENSES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to credits) is amended by inserting after 
section 45N the following new section: 
‘‘SEC. 45O. SMALL BUSINESS EMPLOYEE HEALTH INSUR-
ANCE CREDIT. 
‘‘(a) DETERMINATION OF CREDIT.—In the case of a 
qualified small employer, there shall be allowed as a credit 
against the tax imposed by this chapter for the taxable 
year an amount equal to the credit amount described in 
subsection (b). 
‘‘(b) GENERAL CREDIT AMOUNT.—For purposes of 
this section— 
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‘‘(1) IN
GENERAL.—The credit amount de-
scribed in this subsection is the product of— 
‘‘(A) the amount specified in paragraph 
(2), 
‘‘(B) the employer size factor specified in 
paragraph (3), and 
‘‘(C) the percentage of year factor specified 
in paragraph (4). 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
paragraph (1)— 
‘‘(A) 
IN
GENERAL.—The 
applicable 
amount is equal to— 
‘‘(i) $1,000 for each employee of the 
employer who receives self-only health in-
surance coverage through the employer, 
‘‘(ii) $2,000 for each employee of the 
employer who receives family health insur-
ance coverage through the employer, and 
‘‘(iii) $1,500 for each employee of the 
employer who receives health insurance 
coverage for two adults or one adult and 
one or more children through the employer. 
‘‘(B) BONUS FOR PAYMENT OF GREATER 
PERCENTAGE
OF
PREMIUMS.—The applicable 
amount otherwise specified in subparagraph (A) 
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shall be increased by $200 in the case of sub-
paragraph (A)(i), $400 in the case of subpara-
graph (A)(ii), and $300 in the case of subpara-
graph (A)(iii), for each additional 10 percent of 
the qualified employee health insurance ex-
penses exceeding 60 percent which are paid by 
the qualified small employer. 
‘‘(3) EMPLOYER SIZE FACTOR.—For purposes 
of paragraph (1), the employer size factor is the per-
centage determined in accordance with the following 
table: 
‘‘If the employer size is: 
The percent-
age is: 
10 or fewer full-time employees 
100% 
More than 10 but not more than 20 full-time employees 
80% 
More than 20 but not more than 30 full-time employees 
60% 
More than 30 but not more than 40 full-time employees 
40% 
More than 40 but not more than 50 full-time employees 
20% 
More than 50 full-time employees 
0% 
‘‘(4) PERCENTAGE OF YEAR FACTOR.—For pur-
poses of paragraph (1), the percentage of year factor 
is equal to the ratio of— 
‘‘(A) the number of months during the tax-
able year for which the employer paid or in-
curred qualified employee health insurance ex-
penses, and 
‘‘(B) 12. 
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‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) QUALIFIED SMALL EMPLOYER.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
small employer’ means any employer (as defined 
in section 3001(a)(4) of the Public Health 
Service Act) which— 
‘‘(i) either— 
‘‘(I) purchases health insurance 
coverage for its employees in a small 
group market in a State which meets 
the requirements under subparagraph 
(B), or 
‘‘(II) with respect to any taxable 
year beginning after 2010, is a par-
ticipating employer (as defined in sec-
tion 3001(a)(8) of such Act) in the 
program under title XXX of such Act, 
‘‘(ii) pays or incurs at least 60 per-
cent of the qualified employee health insur-
ance expenses of such employer or is self- 
employed, and 
‘‘(iii) employed an average of 50 or 
fewer full-time employees during the pre-
ceding taxable year or was a self-employed 
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individual with either not less than $5,000 
in net earnings or not less than $15,000 in 
gross earnings from self-employment in the 
preceding taxable year. 
‘‘(B) STATE SMALL GROUP MARKET RE-
QUIREMENTS.—A State meets the requirements 
of this subparagraph if— 
‘‘(i) during calendar years 2009 and 
2010, the State— 
‘‘(I) defines its small group mar-
ket to include groups of one (so that 
self-employed individuals are eligible 
for coverage in such market), 
‘‘(II) prohibits the use of health- 
status related factors and other fac-
tors 
described 
in 
section 
3007(d)(5)(A) of such Act, and 
‘‘(III) has in effect rating rules 
that 
comply 
with 
section 
3007(d)(5)(A) of such Act (except 
that such rules may impose limits on 
rating variation in addition to those 
provided for in such section), 
‘‘(ii) during calendar years 2011 and 
2012, the State— 
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‘‘(I) 
meets 
the 
requirements 
under clause (i), and 
‘‘(II) maintains a State-wide pur-
chasing pool that provides purchasers 
in the small group market a choice of 
health benefit plans, with comparative 
information provided concerning such 
plans and the premiums charged for 
such plans made available through the 
Internet, and 
‘‘(iii) for calendar years after 2012, 
the State— 
‘‘(I) 
meets 
the 
requirements 
under clauses (i)(I), (i)(II), and 
(ii)(II), and 
‘‘(II) has in effect rating rules 
that comply with paragraph (2)(B) or 
(3) of section 3007(d) of such Act, 
whichever is in effect for such cal-
endar year (except that such rules 
may impose limits on rating variation 
in addition to those provided for in 
such section). 
‘‘(2) QUALIFIED
EMPLOYEE
HEALTH
INSUR-
ANCE EXPENSES.— 
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‘‘(A) IN
GENERAL.—The term ‘qualified 
employee health insurance expenses’ means any 
amount paid by an employer or an employee of 
such employer for health insurance coverage 
under such Act to the extent such amount is at-
tributable to coverage— 
‘‘(i) provided to any employee (as de-
fined in subsection 3001(a)(3) of such 
Act), or 
‘‘(ii) for the employer, in the case of 
a self-employed individual. 
‘‘(B) EXCEPTION
FOR
AMOUNTS
PAID 
UNDER SALARY REDUCTION ARRANGEMENTS.— 
No amount paid or incurred for health insur-
ance coverage pursuant to a salary reduction 
arrangement shall be taken into account under 
subparagraph (A). 
‘‘(3) FULL-TIME EMPLOYEE.—The term ‘full- 
time employee’ means, with respect to any period, an 
employee (as defined in section 3001(a)(3) of such 
Act) of an employer if the average number of hours 
worked by such employee in the preceding taxable 
year for such employer was at least 35 hours per 
week. 
‘‘(d) INFLATION ADJUSTMENT.— 
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‘‘(1) IN GENERAL.—For each taxable year after 
2009, the dollar amounts specified in subsections 
(b)(2)(A), (b)(2)(B), and (c)(1)(A)(iii) (after the ap-
plication of this paragraph) shall be the amounts in 
effect in the preceding taxable year or, if greater, 
the product of— 
‘‘(A) the corresponding dollar amount 
specified in such subsection, and 
‘‘(B) the ratio of the index of wage infla-
tion (as determined by the Bureau of Labor 
Statistics) for August of the preceding calendar 
year to such index of wage inflation for August 
of 2008. 
‘‘(2) ROUNDING.—If any amount determined 
under paragraph (1) is not a multiple of $100, such 
amount shall be rounded to the next lowest multiple 
of $100. 
‘‘(e) APPLICATION OF CERTAIN RULES IN DETER-
MINATION OF EMPLOYER SIZE.—For purposes of this sec-
tion— 
‘‘(1) APPLICATION OF AGGREGATION RULE FOR 
EMPLOYERS.—All persons treated as a single em-
ployer under subsection (b), (c), (m), or (o) of sec-
tion 414 shall be treated as 1 employer. 
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‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which 
was not in existence for the full preceding taxable 
year, the determination of whether such employer 
meets the requirements of this section shall be based 
on the average number of full-time employees that it 
is reasonably expected such employer will employ on 
business days in the employer’s first full taxable 
year. 
‘‘(3) PREDECESSORS.—Any reference in this 
subsection to an employer shall include a reference 
to any predecessor of such employer. 
‘‘(f) COORDINATION WITH ADVANCE PAYMENTS OF 
CREDIT.—With respect to any taxable year, the amount 
which would (but for this subsection) be allowed as a cred-
it to the taxpayer under subsection (a) shall be reduced 
by the aggregate amount paid on behalf of such taxpayer 
under section 7527A for months beginning in such taxable 
year. If the amount determined under this subsection is 
less than zero, the taxpayer shall owe additional tax in 
such amount under this chapter. 
‘‘(g) CREDITS FOR NONPROFIT ORGANIZATIONS.— 
Any credit which would be allowable under subsection (a) 
with respect to a qualified small business if such qualified 
small business were not exempt from tax under this chap-
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ter shall be treated as a credit allowable under this sub-
part to such qualified small business.’’. 
(b) ADVANCE PAYMENTS OF CREDIT.—Chapter 77 
of the Internal Revenue Code of 1986 is amended by in-
serting after section 7527 the following new section: 
‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR HEALTH 
INSURANCE COSTS FOR QUALIFIED SMALL 
EMPLOYERS. 
‘‘(a) GENERAL RULE.—Not later than December 31, 
2008, the Secretary shall establish a program for making 
monthly payments on behalf of qualified small employers 
to the program established under title XXX of the Public 
Health Service Act. The amount of the monthly payment 
for a qualified small employer shall be one twelfth of the 
amount of the credit for the tax year to which the qualified 
small employer is entitled under section 36. If a monthly 
payment is made by the Secretary for which the employer 
is not entitled to a corresponding credit, the employer shall 
owe additional tax in such amount under this chapter. 
‘‘(b) QUALIFIED SMALL EMPLOYER.—For purposes 
of this section, the term ‘qualified small employer’ has the 
meaning given such term in section 36(c)(1).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of the Internal Rev-
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enue Code of 1986 is amended by adding at the end 
the following new items: 
‘‘Sec. 45O. Small business employee health insurance credit.’’. 
(2) The table of sections for chapter 77 of such 
Code is amended by inserting after the item relating 
to section 7527 the following new item: 
‘‘Sec. 7527A. Advance payment of credit for health insurance costs for qualified 
small employers.’’. 
(d) DEDUCTIBILITY.—The payment of premiums by 
a participating employer under this Act shall be consid-
ered to be an ordinary and necessary expense in carrying 
on a trade or business for purposes of the Internal Rev-
enue Code of 1986 and shall be deductible. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2008. 
Æ 
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