Title: Small Business Health Plans Act of 2017
Policy area: Health

Summary:
Small Business Health Plans Act of 2017
This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to provide for the establishment and governance of small business health plans where multiple small business employers pool their employees for the purpose of creating a large group market for health insurance coverage.
The small business health plan must have a plan sponsor who, among other requirements, is established for a purpose other than providing health benefits to its members, such as a trade association, and does not condition membership on the basis of a minimum group size.
The bill establishes requirements for certification, plan administrators, boards of trustees, participation, nondiscrimination, and voluntary termination.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1818 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 1818

          To provide health care options for small businesses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 14, 2017

   Mr. Enzi introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
          To provide health care options for small businesses.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Health Plans Act of 
2017''.

SEC. 2. SMALL BUSINESS HEALTH PLANS.

    (a) In General.--Notwithstanding any other provision of law, with 
respect to small business health plans--
            (1) multiple, unaffiliated small employers may pool their 
        employees for the purpose of purchasing health insurance 
        coverage for such employees in the large group market;
            (2) health insurance issuers may offer health plans in the 
        large group market to employees of the small employers 
        described in paragraph (1); and
            (3) privately administered health insurance exchanges may 
        offer health plans in the large group market to a pool of 
        employees of multiple, unaffiliated small employers.
    (b) Multistate Participation.--Notwithstanding any other provision 
of law, pools of employees described in subsection (a)(1) may include 
employers and employees from multiple States.
    (c) Tax Treatment of Small Business Health Plans.--A small business 
health plan (as defined in section 801(a) of the Employee Retirement 
Income Security Act of 1974) shall be treated--
            (1) as a group health plan (as defined in section 2791 of 
        the Public Health Service Act (42 U.S.C. 300gg-91)) for 
        purposes of applying title XXVII of the Public Health Service 
        Act (42 U.S.C. 300gg et seq.) and title XXII of such Act (42 
        U.S.C. 300bb-1);
            (2) as a group health plan (as defined in section 
        5000(b)(1) of the Internal Revenue Code of 1986) for purposes 
        of applying sections 4980B and 5000 and chapter 100 of the 
        Internal Revenue Code of 1986; and
            (3) as a group health plan (as defined in section 733(a)(1) 
        of the Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1191b(a)(1))) for purposes of applying parts 6 and 7 of 
        title I of the Employee Retirement Income Security Act of 1974 
        (29 U.S.C. 1161 et seq.).
    (d) Small Business Health Plans.--Subtitle B of title I of the 
Employee Retirement Income Security Act of 1974 is amended by adding at 
the end the following new part:

         ``PART 8--RULES GOVERNING SMALL BUSINESS HEALTH PLANS

``SEC. 801. SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `small 
business health plan' means a fully insured group health plan whose 
sponsor is described in subsection (b).
    ``(b) Plan Sponsor.--The sponsor of a group health plan is 
described in this subsection if such plan sponsor--
            ``(1) receives certification by the Secretary as a 
        qualified sponsor and files a notice of certification with the 
        State in which it operates;
            ``(2) 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;
            ``(3) is established as a permanent entity;
            ``(4) is established for a purpose other than providing 
        health benefits to its members, such as a bona fide trade 
        association or a consortium of such associations, a franchise, 
        or a section 7705 professional employer organization; and
            ``(5) does not condition membership on the basis of a 
        minimum group size.

``SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

    ``(a) In General.--Not later than 6 months after the date of 
enactment of this part, the Secretary shall prescribe by interim final 
rule a procedure under which the Secretary will certify a qualified 
sponsor of a small business health plan.
    ``(b) Requirements Applicable to Certified Plans.--A small business 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(c) Requirements for Continued Certification.--The Secretary may 
provide by regulation for continued certification of small business 
health plans under this part. Such regulation shall provide for the 
revocation of a certification if the applicable authority finds that 
the small business health plan involved is failing to comply with the 
requirements of this part.
    ``(d) Oversight of Certified Plans.--The Secretary shall determine 
whether any person has violated, or is about to violate, any provision 
of this part, including by conducting periodic reviews of certified 
small business health plans in accordance with section 504, and 
applying the requirements of sections 518, 519, and 520.
    ``(e) Expedited and Deemed Certification.--
            ``(1) In general.--If the Secretary fails to act on an 
        application for certification under this section within 180 
        days of receipt of such application, the applying small 
        business health plan shall be deemed certified until such time 
        as the Secretary may deny for cause the application for 
        certification.
            ``(2) Civil penalty.--The Secretary may assess a civil 
        penalty against the board of trustees, plan administrator, and 
        plan sponsor (jointly and severally) of a small business health 
        plan that is deemed certified under paragraph (1) of up to 
        $500,000 in the event the Secretary determines that the 
        application for certification of such small business health 
        plan was willfully or with gross negligence incomplete or 
        inaccurate.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to a small business health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b).
    ``(b) Board of Trustees or Plan Administrator.--The requirements of 
this subsection with respect to a small business health plan are as 
follows:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        plan document, by a board of trustees or plan administrator 
        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 or plan administrator 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 contractors.--
                    ``(A) Board membership.--
                            ``(i) In general.--With respect to a plan 
                        operated by a board of trustees, except as 
                        provided in clauses (ii) and (iii), the members 
                        of the board of trustees are individuals 
                        selected from individuals who are the owners, 
                        officers, directors, or employees of the 
                        participating employers or who are partners in 
                        the participating employers and actively 
                        participate in the business.
                            ``(ii) Limitation.--
                                    ``(I) General rule.--Except as 
                                provided in subclauses (II) and (III), 
                                no such member is an owner, officer, 
                                director, or employee of, or partner 
                                in, a contract administrator or other 
                                service provider to the plan.
                                    ``(II) Limited exception for 
                                providers of services solely on behalf 
                                of the sponsor.--Officers or employees 
                                of a sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may be 
                                members of the board if they constitute 
                                not more than 25 percent of the 
                                membership of the board and they do not 
                                provide services to the plan other than 
                                on behalf of the sponsor.
                                    ``(III) Treatment of providers of 
                                medical care.--In the case of a sponsor 
                                which is an association whose 
                                membership consists primarily of 
                                providers of medical care, subclause 
                                (I) shall not apply in the case of any 
                                service provider described in subclause 
                                (I) who is a provider of medical care 
                                under the plan.
                            ``(iii) Certain plans excluded.--Clause (i) 
                        shall not apply to a small business health plan 
                        that is in existence on the date of the 
                        enactment of this Act.
                    ``(B) Plan administrator.--The requirements of this 
                section are met with respect to section 7705 
                professional employer organizations if the requirements 
                of subsections (a) and (b) of section 804 have been 
                met.
                    ``(C) Sole authority.--The board or plan 
                administrator has sole authority under the plan to 
                approve applications for participation in the plan and 
                to contract with insurers.
    ``(c) Treatment of Franchises.--In the case of a group health plan 
that is established and maintained by a franchisor for the benefit of 
the employees of the franchisor and its franchisees, by multiple 
franchisors for the benefit of the employees of such franchisors and 
their franchisees, or by multiple franchisees for the benefit of the 
employees of such franchisees--
            ``(1) the requirements of subsection (a) and section 801(a) 
        shall be deemed met if such requirements would otherwise be met 
        if all franchisors or franchisees establishing and maintaining 
        such plan, as applicable, were deemed to be the sponsor 
        described in section 801(b) and each employee of such 
        franchisors or franchisees, as applicable, were deemed to be a 
        member of the sponsor described in section 801(b);
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met; and
            ``(3) the establishment and maintenance of such a group 
        health plan shall not cause any one or more franchisor or 
        franchisee employers participating in such a group health plan 
        to be treated as the employer, co-employer, or joint employer 
        of the employees of another participating franchisor or 
        franchisee employer for any purpose.

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to a small business health plan if, 
under the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor;
                    ``(B) the sponsor; or
                    ``(C) an affiliated member of the sponsor, 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 such an 
                affiliated 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 employers; 
                or
                    ``(B) the dependents of individuals described in 
                subparagraph (A).
    ``(b) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to a small business 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, if such exclusion of the employee from coverage 
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.
    ``(c) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to a small business health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the requirements of subsections (a) and (b) are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2705 of the Public Health Service 
        Act are not met;
            ``(2) information regarding all coverage options available 
        under the plan is made readily available to any employer 
        eligible to participate; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to a small business health plan if the following requirements 
are met:
            ``(1) Contents of governing instruments.--
                    ``(A) In general.--The instruments governing the 
                plan include a written instrument which--
                            ``(i) provides that the board of trustees 
                        or plan administrator serves as the named 
                        fiduciary required for plans under section 
                        402(a)(1) and serves in the capacity of a plan 
                        administrator (referred to in section 
                        3(16)(A)); and
                            ``(ii) provides that the sponsor of the 
                        plan is to serve as plan sponsor (referred to 
                        in section 3(16)(B)).
                    ``(B) Description of material provisions.--The 
                terms of the health insurance coverage (including the 
                terms of any individual certificates that may be 
                offered to individuals in connection with such 
                coverage), if any, describe the material benefit and 
                rating, and other provisions set forth in this section 
                and such material provisions are included in the 
                summary plan description.
            ``(2) Contribution rates must be nondiscriminatory.--The 
        contribution rates for any participating small employer shall 
        not vary on the basis of any health status-related factor in 
        relation to employees of such employer or their beneficiaries 
        and shall not vary on the basis of the type of business or 
        industry in which such employer is engaged, subject to the 
        terms of this title.
            ``(3) Exceptions regarding self-employed and large 
        employers.--
                    ``(A) Self-employed.--Small business health plans 
                with participating employers who are self-employed 
                individuals (and their dependents) shall enroll such 
                self-employed participating employers in accordance 
                with rating rules that do not violate the rating rules 
                for self-employed individuals in the State in which 
                such self-employed participating employers are located.
                    ``(B) Large employers.--Small business health plans 
                with participating employers that are larger than small 
                employers (as defined in section 809(a)) shall enroll 
                such large participating employers in accordance with 
                rating rules that do not violate the rating rules for 
                large employers in the State in which such large 
                participating employers are located.
            ``(4) Regulatory requirements.--Such other requirements as 
        the Secretary determines are necessary to carry out the 
        purposes of this part, which shall be prescribed by the 
        Secretary by regulation.
    ``(b) Domicile and Non-Domicile States.--
            ``(1) Domicile state.--Coverage shall be issued by a health 
        insurance issuer to a small business health plan in the State 
        in which the sponsor's principal place of business is located.
            ``(2) Non-domicile states.--With respect to a State (other 
        than the domicile State) in which participating employers of a 
        small business health plan are located but in which the insurer 
        of the small business health plan in the domicile State is not 
        yet licensed, the following shall apply:
                    ``(A) Temporary preemption.--If, upon the 
                expiration of the 180-day period following the 
                submission of a licensure application by such insurer 
                (that includes a certified copy of an approved 
                licensure application as submitted by such insurer in 
                the domicile State) to such State, such State has not 
                approved or denied such application, such State's 
                health insurance licensure laws shall be temporarily 
                preempted and the insurer shall be permitted to operate 
                in such State, subject to the following terms:
                            ``(i) Application of non-domicile state 
                        law.--Except with respect to licensure, the 
                        laws and authority of the non-domicile State 
                        shall remain in full force and effect.
                            ``(ii) Revocation of preemption.--The 
                        preemption of a non-domicile State's health 
                        insurance licensure laws pursuant to this 
                        subparagraph, shall be terminated upon the 
                        occurrence of either of the following:
                                    ``(I) Approval or denial of 
                                application.--The approval or denial of 
                                an insurer's licensure application, 
                                following the laws and regulations of 
                                the non-domicile State with respect to 
                                licensure.
                                    ``(II) Determination of material 
                                violation.--A determination by a non-
                                domicile State that an insurer 
                                operating in a non-domicile State 
                                pursuant to the preemption provided for 
                                in this subparagraph is in material 
                                violation of the insurance laws (other 
                                than licensure of such State).
                    ``(B) No prohibition on promotion.--Nothing in this 
                paragraph shall be construed to prohibit a small 
                business health plan or an insurer from promoting 
                coverage prior to the expiration of the 180-day period 
                provided for in subparagraph (A), except that no 
                enrollment or collection of contributions shall occur 
                before the expiration of such 180-day period.
                    ``(C) Licensure.--Except with respect to the 
                application of the temporary preemption provision of 
                this paragraph, nothing in this part shall be construed 
                to limit the requirement that insurers issuing coverage 
                to small business health plans shall be licensed in 
                each State in which the small business health plans 
                operate.
                    ``(D) Servicing by licensed insurers.--
                Notwithstanding subparagraph (C), the requirements of 
                this subsection may also be satisfied if the 
                participating employers of a small business health plan 
                are serviced by a licensed insurer in that State, even 
                where such insurer is not the insurer of such small 
                business health plan in the State in which such small 
                business health plan is domiciled.

``SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), a small business health plan shall pay to the Secretary 
at the time of filing an application for certification under this part 
a filing fee in the amount of $5,000 which shall be made available to 
the Secretary, for the sole purpose of administering the certification 
procedures applicable with respect to small business health plans.
    ``(b) Information To Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form which shall be prescribed by the applicable authority by 
regulation, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees or the 
                plan administrator of the plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of participants and 
        beneficiaries expected to be located in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents 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 providers.--A copy of any 
        agreements between the plan, health insurance issuer, and 
        contract administrators and other service providers.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to a small business health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which the small business 
health plans operate.
    ``(d) Notice of Material Changes.--In the case of any small 
business 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 
authority by regulation. The applicable authority may require by 
regulation prior notice of material changes with respect to specified 
matters which might serve as the basis for suspension or revocation of 
the certification.

``SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``(a) In General.--A small business health plan which is or has 
been certified under this part may terminate (upon or at any time after 
cessation of accruals in benefit liabilities) only if the board of 
trustees, or the plan administrator, not less than 60 days before the 
proposed termination date--
            ``(1) 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 applicable 
        authority.
    ``(b) Regulations.--Actions required under this section shall be 
taken in such form and manner as may be prescribed by the applicable 
authority by regulation.

``SEC. 808. IMPLEMENTATION AND APPLICATION AUTHORITY BY SECRETARY.

    ``The Secretary shall, through promulgation and implementation of 
such regulations as the Secretary may reasonably determine necessary or 
appropriate, and in consultation with a balanced spectrum of effected 
entities and persons, modify the implementation and application of this 
part to accommodate with minimum disruption such changes to State or 
Federal law provided in this part and the (and the amendments made by 
such Act) or in regulations issued thereto.

``SEC. 809. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part:
            ``(1) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor, or
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member or 
                employee of any such association and elects an 
                affiliated status with the sponsor.
            ``(2) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(3) Franchisor; franchisee.--The terms `franchisor' and 
        `franchisee' have the meanings given such terms for purposes of 
        sections 436.2(a) through 436.2(c) of title 16, Code of Federal 
        Regulations (including any such amendments to such regulation 
        after the date of enactment of this part).
            ``(4) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1).
            ``(5) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1), except that such term shall not include excepted 
        benefits (as defined in section 733(c)).
            ``(6) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(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), 
                        the term `individual market' includes coverage 
                        offered in connection with a group health plan 
                        that has fewer than 2 participants as current 
                        employees or participants described in section 
                        732(d)(3) on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        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) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(9) Participating employer.--The term `participating 
        employer' means, in connection with a small business health 
        plan, any employer, if any individual who is an employee of 
        such employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(10) Section 7705 professional employer organization.--
        The term `section 7705 professional employer organization' 
        means an organization providing services for a customer 
        pursuant to a contract meeting the conditions of subparagraphs 
        (A) through (E) of subsection (e)(2) of section 7705 of the 
        Internal Revenue Code of 1986, without regard to subsection (a) 
        of such section. Such term includes an entity that is part of a 
        controlled group or is under common control with respect to a 
        section 7705 professional employer organization (within the 
        meaning of section 414 of such Code). Solely for purposes of 
        this part, references in this part to `member' shall include 
        such a customer of a section 7705 professional employer 
        organization except as applied to references to `member' or 
        `members' in paragraph (1) of this subsection (relating to the 
        definition of affiliated member).
            ``(11) Small employer.--The term `small employer', in 
        connection with a group health plan with respect to a plan 
        year, has the meaning given the term `small business concern' 
        in the Small Business Act.
    ``(b) Rule of Construction.--For purposes of determining whether a 
plan, fund, or program is an employee welfare benefit plan which is a 
small business health plan, and for purposes of applying this title in 
connection with such plan, fund, or program so determined to be such an 
employee welfare benefit plan--
            ``(1) 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 partnership; and
            ``(2) in the case of a self-employed individual, the term 
        `employer' (as defined in section 3(5)) and the term `employee' 
        (as defined in section 3(6)) shall include such individual.
    ``(c) Renewal.--Notwithstanding any provision of law to the 
contrary, a participating employer in a small business health plan 
shall not be deemed to be a plan sponsor in applying requirements 
relating to coverage renewal.''.
    (e) 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) Subparagraphs (A) through (D) do not apply with respect to 
any State law in the case of a small business 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 ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5)--
                            (i) in subparagraph (A), by striking 
                        ``subsection (a)'' and inserting ``subsection 
                        (a) of this section and subsections (a)(2)(B) 
                        and (b) of section 804''; and
                            (ii) in subparagraph (B), by striking 
                        ``subsection (a)'' and inserting ``subsection 
                        (a) of this section or subsection (a)(2)(B) or 
                        (b) of section 805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d) 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 a health insurance issuer from offering 
health insurance coverage to a small business health plan sponsor that 
is certified under part 8.''.
    (f) 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 a small 
business health plan under part 8.''.
    (g) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (h) 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 relating to section 734 the following new items:

         ``Part 8--Rules Governing Small Business Health Plans

``801. Small business health plans.
``802. Certification of small business health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``806. Requirements for application and related requirements.
``807. Notice requirements for voluntary termination.
``808. Implementation and application authority by Secretary.
``809. Definitions and rules of construction.''.

SEC. 3. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(d) Consultation With States With Respect to Small Business 
Health Plans.--
            ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to a 
        small business health plan regarding the exercise of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                    ``(B) the Secretary's authority to certify small 
                business health plans under part 8 in accordance with 
                regulations of the Secretary applicable to 
                certification under part 8.
            ``(2) Recognition of domicile state.--In carrying out 
        paragraph (1), the Secretary shall ensure that only one State 
        will be recognized, with respect to any particular small 
        business health plan, as the State with which consultation is 
        required. In carrying out this paragraph such State shall be 
        the domicile State, as defined in section 805(b).''.

SEC. 4. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by this Act shall take 
effect 1 year after 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 Act within 6 months after the date of 
the enactment of this Act.
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