I
105TH CONGRESS
1ST SESSION
H. R. 1515
To amend title I of the Employee Retirement Income Security Act of 1974
to provide new portability, participation, solvency, and other health insur-
ance protections and freedoms for workers in a mobile workforce, to
increase the purchasing power of employees and employers by removing
barriers to the voluntary formation of association health plans, to in-
crease health plan competition providing more affordable choice of cov-
erage, to expand access to health insurance coverage for employees of
small employers through open markets, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 1, 1997
Mr. FAWELL (for himself, Mr. GOODLING, Mr. HASTERT, Mr. ARMEY, Mr.
PICKETT, Mr. LIPINSKI, Mr. MORAN of Virginia, Mr. POSHARD, Mr.
TRAFICANT, Mr. MCHALE, Mr. DAVIS of Illinois, Mr. COSTELLO, Mr.
ACKERMAN, Mr. FROST, Mr. CONDIT, Mr. HALL of Texas, Mr. STEN-
HOLM, Mr. BOSWELL, Mr. RUSH, Ms. MOLINARI, Mr. PETRI, Mrs. ROU-
KEMA, Mr. BALLENGER, Mr. HOEKSTRA, Mr. MCKEON, Mr. SAM JOHN-
SON, of Texas, Mr. TALENT, Mr. GREENWOOD, Mr. KNOLLENBERG, Mr.
RIGGS, Mr. GRAHAM, Mr. SOUDER, Mr. MCINTOSH, Mr. PAUL, Mr. PE-
TERSON of Pennsylvania, Mr. UPTON, Mr. DEAL of Georgia, Mr.
HILLEARY, Mr. SCARBOROUGH, Mr. BAKER, Mr. BARTLETT of Maryland,
Mr. BARTON of Texas, Mr. BATEMAN, Mr. BOEHLERT, Mr. BONILLA,
Mr. BURTON of Indiana, Mr. CALVERT, Mr. CAMPBELL, Mr. CANADY of
Florida, Mr. COLLINS, Mr. COOKSEY, Mr. COX of California, Mr. CRANE,
Mr. CUNNINGHAM, Mr. DICKEY, Ms. DUNN, Mrs. EMERSON, Mr. ENG-
LISH of Pennsylvania, Mr. EWING, Mr. FOLEY, Mrs. FOWLER, Mr. FOX
of Pennsylvania, Mr. GALLEGLY, Mr. GEKAS, Mr. GILCHREST, Mr. GIL-
MAN, Mr. GOSS, Mr. HERGER, Mr. BEREUTER, Mr. HORN, Mr.
HOSTETTLER, Mr. HOUGHTON, Mr. HUNTER, Mr. HYDE, Mr. KIM, Mr.
KINGSTON, Mr. KOLBE, Mr. LAHOOD, Mr. LEACH, Mr. LEWIS of Califor-
nia, Mr. LINDER, Mr. MCCOLLUM, Mr. MCHUGH, Mr. MANZULLO, Mr.
MILLER of Florida, Mrs. MORELLA, Mrs. MYRICK, Mr. NEUMANN, Mr.
NEY, Mr. PACKARD, Mr. PORTER, Ms. PRYCE of Ohio, Mr. QUINN, Mr.
REGULA, Mr. ROYCE, Mr. SAXTON, Mr. DAN SCHAEFER of Colorado, Mr.
SCHIFF, Mr. SHAYS, Mr. SHIMKUS, Mr. SMITH of Texas, Mrs. LINDA
SMITH of Washington, Mr. SNOWBARGER, Mr. SOLOMON, Mr. SPENCE,
Mr. STEARNS, Mr. WALSH, Mr. WAMP, Mr. WATKINS, Mr. WATTS of
Oklahoma, Mr. WELDON of Pennsylvania, Mr. WELDON of Florida, Mr.
WELLER, and Mr. WICKER) introduced the following bill; which was re-
ferred to the Committee on Education and the Workforce
A BILL
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 to provide new portability, participation,
solvency, and other health insurance protections and free-
doms for workers in a mobile workforce, to increase
the purchasing power of employees and employers by
removing barriers to the voluntary formation of associa-
tion health plans, to increase health plan competition
providing more affordable choice of coverage, to expand
access to health insurance coverage for employees of
small employers through open markets, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Expansion of Port-
ability and Health Insurance Coverage Act of 1997’’.
SEC. 2. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) IN GENERAL.—Subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding after part 7 the following new part:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH
PLANS
‘‘SEC. 801. ASSOCIATION HEALTH PLANS.
‘‘(a) IN GENERAL.—For purposes of this part, the
term ‘association health plan’ means a group health
plan—
‘‘(1) whose sponsor is (or is deemed under this
part to be) described in subsection (b), and
‘‘(2) under which at least one option of health
insurance coverage offered by a health insurance is-
suer (which may include, among other options, man-
aged care options, point of service options, and pre-
ferred provider options) is provided to participants
and beneficiaries.
‘‘(b) SPONSORSHIP.—The sponsor of a group health
plan is described in this subsection if such sponsor—
‘‘(1) is organized and maintained in good faith,
with a constitution and bylaws specifically stating its
purpose and providing for periodic meetings on at
least an annual basis, as a trade association, an in-
dustry association (including a rural electric cooper-
ative association or a rural telephone cooperative as-
sociation), a professional association, or a chamber
of commerce (or similar business group, including a
corporation or similar organization that operates on
a cooperative basis (within the meaning of section
1381 of the Internal Revenue Code of 1986)), for
substantial purposes other than that of obtaining or
providing medical care, and
‘‘(2) is established as a permanent entity which
receives the active support of its members and col-
lects dues or contributions from its members (includ-
ing affiliated members) on a periodic basis, without
conditioning such dues or contributions on the basis
of health status-related factors with respect to the
employees of such members or the dependents of
such employees or on the basis of participation in a
group health plan.
Any sponsor consisting of an association of entities which
meet the requirements of paragraphs (1) and (2) shall be
deemed to be a sponsor described in this subsection.
‘‘SEC. 
802. 
CERTIFICATION 
OF 
ASSOCIATION 
HEALTH
PLANS.
‘‘(a) IN GENERAL.—The Secretary shall prescribe by
regulation a procedure under which, subject to subsection
(b), the Secretary shall certify association health plans
which apply for certification as meeting the requirements
of this part.
‘‘(b) STANDARDS.—Under the procedure prescribed
pursuant to subsection (a), the Secretary shall certify an
association health plan as meeting the requirements of
this part only if the Secretary is satisfied that—
‘‘(1) such certification—
‘‘(A) is administratively feasible,
‘‘(B) is not adverse to the interests of the
individuals covered under the plan, and
‘‘(C) is protective of the rights and benefits
of the individuals covered under the plan, and
‘‘(2) the applicable requirements of this part
are met (or, upon the date on which the plan is to
commence operations, will be met) with respect to
the plan.
‘‘(c) REQUIREMENTS APPLICABLE
TO CERTIFIED
PLANS.—An association health plan with respect to which
certification under this part is in effect shall meet the ap-
plicable requirements of this part, effective on the date
of certification (or, if later, on the date on which the plan
is to commence operations).
‘‘(d) REQUIREMENTS
FOR
CONTINUED
CERTIFI-
CATION.—The Secretary may provide by regulation for
continued certification under this part, including require-
ments relating to any commencement, by an association
health plan which has been certified under this part, of
a benefit option which does not consist of health insurance
coverage.
‘‘(e) CLASS CERTIFICATION
FOR FULLY–INSURED
PLANS.—The Secretary shall establish a class certification
procedure for association health plans under which all ben-
efits consist of health insurance coverage. Under such pro-
cedure, the Secretary shall provide for the granting of cer-
tification under this part to the plans in each class of such
association health plans upon appropriate filing under
such procedure in connection with plans in such class and
payment of the prescribed fee under section 807(a).
‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND
BOARDS OF TRUSTEES.
‘‘(a) SPONSOR.—The requirements of this subsection
are met with respect to an association health plan if—
‘‘(1) the sponsor (together with its immediate
predecessor, if any) has met (or is deemed under
this part to have met) for a continuous period of not
less than 3 years ending with the date of the appli-
cation for certification under this part, the require-
ments of section 801(b)(1), and
‘‘(2) the sponsor meets (or is deemed under this
part to meet) the requirements of section 801(b)(2).
‘‘(b) BOARD OF TRUSTEES.—The requirements of
this subsection are met with respect to an association
health plan if the following requirements are met:
‘‘(1) FISCAL CONTROL.—The plan is operated,
pursuant to a trust agreement, by a board of trust-
ees which has complete fiscal control over the plan
and which is responsible for all operations of the
plan.
‘‘(2) RULES
OF
OPERATION
AND
FINANCIAL
CONTROLS.—The board of trustees has in effect
rules of operation and financial controls, based on a
3-year plan of operation, adequate to carry out the
terms of the plan and to meet all requirements of
this title applicable to the plan.
‘‘(3) RULES
GOVERNING
RELATIONSHIP
TO
PARTICIPATING
EMPLOYERS
AND
TO
CONTRAC-
TORS.—The members of the board of trustees are
individuals selected from individuals who are the
owners, officers, directors, or employees of the par-
ticipating employers or who are partners in the par-
ticipating employers and actively participate in the
business. No such member is an owner, officer, di-
rector, or employee of, or partner in, a contract ad-
ministrator or other service provider to the plan, ex-
cept that officers or employees of a sponsor which is
a service provider (other than a contract adminis-
trator) to the plan may be members of the board if
they constitute not more than 25 percent of the
membership of the board and they do not provide
services to the plan other than on behalf of the spon-
sor. The board has sole authority to approve applica-
tions for participation in the plan and to contract
with a service provider to administer the day-to-day
affairs of the plan.
‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In
the case of a group health plan which is established and
maintained by a franchiser for a franchise network con-
sisting of its franchisees—
‘‘(1) the requirements of subsection (a) and sec-
tion 801(a)(1) shall be deemed met if such require-
ments would otherwise be met if the franchiser were
deemed to be the sponsor referred to in section
801(b), such network were deemed to be an associa-
tion described in section 801(b), and each franchisee
were deemed to be a member (of the association and
the sponsor) referred to in section 801(b), and
‘‘(2) the requirements of section 804(a)(1) shall
be deemed met.
‘‘(d) CERTAIN COLLECTIVELY BARGAINED PLANS.—
‘‘(1) IN
GENERAL.—In the case of a group
health plan described in paragraph (2)—
‘‘(A) the requirements of subsection (a)
and section 801(a)(1) shall be deemed met,
‘‘(B) the joint board of trustees shall be
deemed a board of trustees with respect to
which the requirements of subsection (b) are
met, and
‘‘(C) the requirements of section 804 shall
be deemed met.
‘‘(2) REQUIREMENTS.—A group health plan is
described in this paragraph if—
‘‘(A) the plan is a multiemployer plan,
‘‘(B) the plan is in existence on April 1,
1997, and would be described in section
3(40)(A)(i) but solely for the failure to meet
the requirements of section 3(40)(C)(ii) or (to
the extent provided in regulations of the Sec-
retary) solely for the failure to meet the re-
quirements of subparagraph (D) of section
3(40), or
‘‘(C)(i) the plan is in existence on April 1,
1997, has been in existence as of such date for
at least 3 years, meets the requirements of sec-
tion 801(b)(2), and would be described in sec-
tion 3(40)(A)(i) but solely for the failure to
meet the requirements of subparagraph (C)(i)
or (C)(ii), and
‘‘(ii) individuals who are members of the
plan sponsor—
‘‘(I) participate by elections in the or-
ganizational governance of the plan spon-
sor,
‘‘(II) are eligible for appointment as
trustee of the plan or for participation in
the appointment of trustees of the plan,
and
‘‘(III) if covered under the plan, have
full rights under the plan of a participant
in an employee welfare benefit plan.
‘‘(e) CERTAIN PLANS NOT MEETING SINGLE EM-
PLOYER REQUIREMENT.—
‘‘(1) IN GENERAL.—In any case in which the
majority of the employees covered under a group
health plan are employees of a single employer
(within the meaning of clauses (i) and (ii) of section
3(40)(B)), if all other employees covered under the
plan are employed by employers who are related to
such single employer—
‘‘(A) the requirements of subsection (a)
and section 801(a)(1) shall not apply if such
single employer is the sponsor of the plan, and
‘‘(B) the requirements of subsection (b)
shall be deemed met if the board of trustees is
the named fiduciary in connection with the
plan.
‘‘(2) RELATED EMPLOYERS.—For purposes of
paragraph (1), employers are ‘related’ if there is
among all such employers a common ownership in-
terest or a substantial commonality of business oper-
ations based on common suppliers or customers.
‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE-
MENTS.
‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The
requirements of this subsection are met with respect to
an association health plan if, under the terms of the
plan—
‘‘(1) all participating employers must be mem-
bers or affiliated members of the sponsor, except
that, in the case of a sponsor which is a professional
association or other individual-based association, if
at least one of the officers, directors, or employees
of an employer, or at least one of the individuals
who are partners in an employer and who actively
participates in the business, is a member or affili-
ated member of the sponsor, participating employers
may also include such employer, and
‘‘(2) all individuals commencing coverage under
the plan after certification under this part must
be—
‘‘(A) active or retired owners (including
self-employed individuals), officers, directors, or
employees of, or partners in, participating em-
ployers, or
‘‘(B) the beneficiaries of individuals de-
scribed in subparagraph (A).
‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM-
PLOYEES.—The requirements of this subsection are met
with respect to an association health plan if, under the
terms of the plan, no affiliated member of the sponsor may
be offered coverage under the plan as a participating em-
ployer unless—
‘‘(1) the affiliated member was an affiliated
member on the date of certification under this part,
or
‘‘(2) during the 12-month period preceding the
date of the offering of such coverage, the affiliated
member has not maintained or contributed to a
group health plan with respect to any of its employ-
ees who would otherwise be eligible to participate in
such association health plan.
‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re-
quirements of this subsection are met with respect to an
association health plan if, under the terms of the plan,
no participating employer may provide health insurance
coverage in the individual market for any employee not
covered under the plan which is similar to the coverage
contemporaneously provided to employees of the employer
under the plan, if such exclusion of the employee from cov-
erage under the plan is based on a health status-related
factor with respect to the employee and such employee
would, but for such exclusion on such basis, be eligible
for coverage under the plan.
‘‘(d) PROHIBITION
OF DISCRIMINATION AGAINST
EMPLOYERS
AND EMPLOYEES ELIGIBLE
TO PARTICI-
PATE.—The requirements of this subsection are met with
respect to an association health plan if—
‘‘(1) under the terms of the plan, no employer
meeting the preceding requirements of this section is
excluded as a participating employer, unless—
‘‘(A) participation or contribution require-
ments of the type referred to in section 2711 of
the Public Health Service Act are not met with
respect to the excluded employer, or