		I
		112th CONGRESS
		1st Session
		H. R. 299
		IN THE HOUSE OF REPRESENTATIVES

			January 18, 2011
			Mr. Broun of Georgia
			 introduced the following bill; which was referred to the
			 Committee on Energy and
			 Commerce, and in addition to the Committees on
			 Ways and Means,
			 Education and the
			 Workforce, Appropriations,
			 the Judiciary,
			 Natural Resources,
			 House Administration, and
			 Rules, for a period to be
			 subsequently determined by the Speaker, in each case for consideration of such
			 provisions as fall within the jurisdiction of the committee
			 concerned

		A BILL
		To repeal the Patient Protection and Affordable Care Act
		  and the Health Care and Education Reconciliation Act of 2010, repeal the 7.5
		  percent threshold on the deduction for medical expenses, provide for increased
		  funding for high-risk pools, allow acquiring health insurance across State
		  lines, and allow for the creation of association health plans.

		1.Table of
			 contentsThe table of contents
			 for this Act is as follows:

				Sec. 1. Table of contents.
				Title I—Repeal of PPACA and HCERA
				Sec. 101. Repeal of PPACA and HCERA.
				Title II—Deductibility of medical expenses
				Sec. 201. Repeal of 7.5
				percent threshold on deduction for medical expenses.
				Title III—Universal Access
				Sec. 301. Increased funding for high risk pools.
				Title IV—Interstate purchasing of health insurance
				Sec. 401. Interstate purchasing of health
				insurance.
				Title V—Association Health Plans
				Sec. 501. Rules governing association health plans.
				Sec. 502. Clarification of treatment of single employer
				arrangements.
				Sec. 503. Enforcement provisions relating to association health
				plans.
				Sec. 504. Cooperation between Federal and State
				authorities.
				Sec. 505. Effective date and transitional and other
				rules.

		IRepeal of PPACA
			 and HCERA
			101.Repeal of PPACA
			 and HCERAThe Patient
			 Protection and Affordable Care Act and the Health Care and Education
			 Reconciliation Act of 2010 are each repealed, effective as of the respective
			 date of enactment of each such Act, and the provisions of law amended or
			 repealed by such Acts are restored or revived as if such Acts had not been
			 enacted.
			IIDeductibility of
			 medical expenses
			201.Repeal of
			 7.5 percent threshold on deduction for medical
			 expenses
				(a)In
			 generalSubsection (a) of section 213 of the Internal Revenue
			 Code of 1986 (relating to deduction for medical expenses) is amended by
			 striking to the extent that such expenses exceed 7.5 percent of adjusted
			 gross income.
				(b)Effective
			 dateThe amendment made by this section shall apply to taxable
			 years beginning after the date of the enactment of this Act.
				IIIUniversal
			 Access
			301.Increased
			 funding for high risk poolsSection 2745(d)(2) of the Public Health
			 Service Act (42 U.S.C. 300gg–45(d)(2)), as restored by section 101, is
			 amended—
				(1)in the heading, by
			 striking 2010 and inserting 2015; and
				(2)by inserting after
			 2010, the following: and $5,000,000,000 in each of fiscal
			 years 2011 through 2015.
				IVInterstate
			 purchasing of health insurance
			401.Interstate
			 purchasing of health insurance
				(a)In
			 GeneralTitle XXVII of the Public
			 Health Service Act (42 U.S.C. 300gg et seq.), as restored by section
			 101, is amended by adding at the end the following new part:

						DCooperative
				Governing of Individual Health Insurance Coverage
							2795.DefinitionsIn this part:
								(1)Primary
				stateThe term primary State means, with respect to
				individual health insurance coverage offered by a health insurance issuer, the
				State designated by the issuer as the State whose covered laws shall govern the
				health insurance issuer in the sale of such coverage under this part. An
				issuer, with respect to a particular policy, may only designate one such State
				as its primary State with respect to all such coverage it offers. Such an
				issuer may not change the designated primary State with respect to individual
				health insurance coverage once the policy is issued, except that such a change
				may be made upon renewal of the policy. With respect to such designated State,
				the issuer is deemed to be doing business in that State.
								(2)Secondary
				stateThe term secondary State means, with respect
				to individual health insurance coverage offered by a health insurance issuer,
				any State that is not the primary State. In the case of a health insurance
				issuer that is selling a policy in, or to a resident of, a secondary State, the
				issuer is deemed to be doing business in that secondary State.
								(3)Health insurance
				issuerThe term health insurance issuer has the
				meaning given such term in section 2791(b)(2), except that such an issuer must
				be licensed in the primary State and be qualified to sell individual health
				insurance coverage in that State.
								(4)Individual
				health insurance coverageThe term individual health
				insurance coverage means health insurance coverage offered in the
				individual market, as defined in section 2791(e)(1).
								(5)Applicable state
				authorityThe 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 this title for the State with respect to the issuer.
								(6)Hazardous
				financial conditionThe term hazardous financial
				condition means that, based on its present or reasonably anticipated
				financial condition, a health insurance issuer is unlikely to be able—
									(A)to meet
				obligations to policyholders with respect to known claims and reasonably
				anticipated claims; or
									(B)to pay other
				obligations in the normal course of business.
									(7)Covered
				laws
									(A)In
				generalThe term covered laws means the laws, rules,
				regulations, agreements, and orders governing the insurance business pertaining
				to—
										(i)individual health
				insurance coverage issued by a health insurance issuer;
										(ii)the offer, sale,
				rating (including medical underwriting), renewal, and issuance of individual
				health insurance coverage to an individual;
										(iii)the provision to
				an individual in relation to individual health insurance coverage of health
				care and insurance related services;
										(iv)the provision to
				an individual in relation to individual health insurance coverage of
				management, operations, and investment activities of a health insurance issuer;
				and
										(v)the provision to
				an individual in relation to individual health insurance coverage of loss
				control and claims administration for a health insurance issuer with respect to
				liability for which the issuer provides insurance.
										(B)ExceptionSuch
				term does not include any law, rule, regulation, agreement, or order governing
				the use of care or cost management techniques, including any requirement
				related to provider contracting, network access or adequacy, health care data
				collection, or quality assurance.
									(8)StateThe
				term State means the 50 States and includes the District of
				Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
				Northern Mariana Islands.
								(9)Unfair claims
				settlement practicesThe term unfair claims settlement
				practices means only the following practices:
									(A)Knowingly
				misrepresenting to claimants and insured individuals relevant facts or policy
				provisions relating to coverage at issue.
									(B)Failing to
				acknowledge with reasonable promptness pertinent communications with respect to
				claims arising under policies.
									(C)Failing to adopt
				and implement reasonable standards for the prompt investigation and settlement
				of claims arising under policies.
									(D)Failing to
				effectuate prompt, fair, and equitable settlement of claims submitted in which
				liability has become reasonably clear.
									(E)Refusing to pay
				claims without conducting a reasonable investigation.
									(F)Failing to affirm
				or deny coverage of claims within a reasonable period of time after having
				completed an investigation related to those claims.
									(G)A pattern or
				practice of compelling insured individuals or their beneficiaries to institute
				suits to recover amounts due under its policies by offering substantially less
				than the amounts ultimately recovered in suits brought by them.
									(H)A pattern or
				practice of attempting to settle or settling claims for less than the amount
				that a reasonable person would believe the insured individual or his or her
				beneficiary was entitled by reference to written or printed advertising
				material accompanying or made part of an application.
									(I)Attempting to
				settle or settling claims on the basis of an application that was materially
				altered without notice to, or knowledge or consent of, the insured.
									(J)Failing to provide
				forms necessary to present claims within 15 calendar days of a requests with
				reasonable explanations regarding their use.
									(K)Attempting to
				cancel a policy in less time than that prescribed in the policy or by the law
				of the primary State.
									(10)Fraud and
				abuseThe term fraud and abuse means an act or
				omission committed by a person who, knowingly and with intent to defraud,
				commits, or conceals any material information concerning, one or more of the
				following:
									(A)Presenting,
				causing to be presented or preparing with knowledge or belief that it will be
				presented to or by an insurer, a reinsurer, broker or its agent, false
				information as part of, in support of or concerning a fact material to one or
				more of the following:
										(i)An
				application for the issuance or renewal of an insurance policy or reinsurance
				contract.
										(ii)The rating of an
				insurance policy or reinsurance contract.
										(iii)A claim for
				payment or benefit pursuant to an insurance policy or reinsurance
				contract.
										(iv)Premiums paid on
				an insurance policy or reinsurance contract.
										(v)Payments made in
				accordance with the terms of an insurance policy or reinsurance
				contract.
										(vi)A
				document filed with the commissioner or the chief insurance regulatory official
				of another jurisdiction.
										(vii)The financial
				condition of an insurer or reinsurer.
										(viii)The formation,
				acquisition, merger, reconsolidation, dissolution or withdrawal from one or
				more lines of insurance or reinsurance in all or part of a State by an insurer
				or reinsurer.
										(ix)The issuance of
				written evidence of insurance.
										(x)The reinstatement
				of an insurance policy.
										(B)Solicitation or
				acceptance of new or renewal insurance risks on behalf of an insurer reinsurer
				or other person engaged in the business of insurance by a person who knows or
				should know that the insurer or other person responsible for the risk is
				insolvent at the time of the transaction.
									(C)Transaction of the
				business of insurance in violation of laws requiring a license, certificate of
				authority or other legal authority for the transaction of the business of
				insurance.
									(D)Attempt to commit,
				aiding or abetting in the commission of, or conspiracy to commit the acts or
				omissions specified in this paragraph.
									2796.Application of
				law
								(a)In
				GeneralThe covered laws of the primary State shall apply to
				individual health insurance coverage offered by a health insurance issuer in
				the primary State and in any secondary State, but only if the coverage and
				issuer comply with the conditions of this section with respect to the offering
				of coverage in any secondary State.
								(b)Exemptions From
				Covered Laws in a Secondary StateExcept as provided in this
				section, a health insurance issuer with respect to its offer, sale, rating
				(including medical underwriting), renewal, and issuance of individual health
				insurance coverage in any secondary State is exempt from any covered laws of
				the secondary State (and any rules, regulations, agreements, or orders sought
				or issued by such State under or related to such covered laws) to the extent
				that such laws would—
									(1)make unlawful, or
				regulate, directly or indirectly, the operation of the health insurance issuer
				operating in the secondary State, except that any secondary State may require
				such an issuer—
										(A)to pay, on a
				nondiscriminatory basis, applicable premium and other taxes (including high
				risk pool assessments) which are levied on insurers and surplus lines insurers,
				brokers, or policyholders under the laws of the State;
										(B)to register with
				and designate the State insurance commissioner as its agent solely for the
				purpose of receiving service of legal documents or process;
										(C)to submit to an
				examination of its financial condition by the State insurance commissioner in
				any State in which the issuer is doing business to determine the issuer’s
				financial condition, if—
											(i)the State
				insurance commissioner of the primary State has not done an examination within
				the period recommended by the National Association of Insurance Commissioners;
				and
											(ii)any such
				examination is conducted in accordance with the examiners’ handbook of the
				National Association of Insurance Commissioners and is coordinated to avoid
				unjustified duplication and unjustified repetition;
											(D)to comply with a
				lawful order issued—
											(i)in
				a delinquency proceeding commenced by the State insurance commissioner if there
				has been a finding of financial impairment under subparagraph (C); or
											(ii)in a voluntary
				dissolution proceeding;
											(E)to comply with an
				injunction issued by a court of competent jurisdiction, upon a petition by the
				State insurance commissioner alleging that the issuer is in hazardous financial
				condition;
										(F)to participate, on
				a nondiscriminatory basis, in any insurance insolvency guaranty association or
				similar association to which a health insurance issuer in the State is required
				to belong;
										(G)to comply with any
				State law regarding fraud and abuse (as defined in section 2795(10)), except
				that if the State seeks an injunction regarding the conduct described in this
				subparagraph, such injunction must be obtained from a court of competent
				jurisdiction;
										(H)to comply with any
				State law regarding unfair claims settlement practices (as defined in section
				2795(9)); or
										(I)to comply with the
				applicable requirements for independent review under section 2798 with respect
				to coverage offered in the State;
										(2)require any
				individual health insurance coverage issued by the issuer to be countersigned
				by an insurance agent or broker residing in that Secondary State; or
									(3)otherwise
				discriminate against the issuer issuing insurance in both the primary State and
				in any secondary State.
									(c)Clear and
				Conspicuous DisclosureA health insurance issuer shall provide
				the following notice, in 12-point bold type, in any insurance coverage offered
				in a secondary State under this part by such a health insurance issuer and at
				renewal of the policy, with the 5 blank spaces therein being appropriately
				filled with the name of the health insurance issuer, the name of primary State,
				the name of the secondary State, the name of the secondary State, and the name
				of the secondary State, respectively, for the coverage concerned:
									This policy is issued by ____
				and is governed by the laws and regulations of the State of _____, and it has
				met all the laws of that State as determined by that State’s Department of
				Insurance. This policy may be less expensive than others because it is not
				subject to all of the insurance laws and regulations of the State of _____,
				including coverage of some services or benefits mandated by the law of the
				State of _____. Additionally, this policy is not subject to all of the consumer
				protection laws or restrictions on rate changes of the State of _____. As with
				all insurance products, before purchasing this policy, you should carefully
				review the policy and determine what health care services the policy covers and
				what benefits it provides, including any exclusions, limitations, or conditions
				for such services or benefits.
									(d)Prohibition on
				Certain Reclassifications and Premium Increases
									(1)In
				generalFor purposes of this section, a health insurance issuer
				that provides individual health insurance coverage to an individual under this
				part in a primary or secondary State may not upon renewal—
										(A)move or reclassify
				the individual insured under the health insurance coverage from the class such
				individual is in at the time of issue of the contract based on the
				health-status related factors of the individual; or
										(B)increase the
				premiums assessed the individual for such coverage based on a health
				status-related factor or change of a health status-related factor or the past
				or prospective claim experience of the insured individual.
										(2)ConstructionNothing
				in paragraph (1) shall be construed to prohibit a health insurance
				issuer—
										(A)from terminating
				or discontinuing coverage or a class of coverage in accordance with subsections
				(b) and (c) of section 2742;
										(B)from raising
				premium rates for all policy holders within a class based on claims
				experience;
										(C)from changing
				premiums or offering discounted premiums to individuals who engage in wellness
				activities at intervals prescribed by the issuer, if such premium changes or
				incentives—
											(i)are disclosed to
				the consumer in the insurance contract;
											(ii)are based on
				specific wellness activities that are not applicable to all individuals;
				and
											(iii)are not
				obtainable by all individuals to whom coverage is offered;
											(D)from reinstating
				lapsed coverage; or
										(E)from retroactively
				adjusting the rates charged an insured individual if the initial rates were set
				based on material misrepresentation by the individual at the time of
				issue.
										(e)Prior Offering
				of Policy in Primary StateA health insurance issuer may not
				offer for sale individual health insurance coverage in a secondary State unless
				that coverage is currently offered for sale in the primary State.
								(f)Licensing of
				Agents or Brokers for Health Insurance IssuersAny State may
				require that a person acting, or offering to act, as an agent or broker for a
				health insurance issuer with respect to the offering of individual health
				insurance coverage obtain a license from that State, with commissions or other
				compensation subject to the provisions of the laws of that State, except that a
				State may not impose any qualification or requirement which discriminates
				against a nonresident agent or broker.
								(g)Documents for
				Submission to State Insurance CommissionerEach health insurance
				issuer issuing individual health insurance coverage in both primary and
				secondary States shall submit—
									(1)to the insurance
				commissioner of each State in which it intends to offer such coverage, before
				it may offer individual health insurance coverage in such State—
										(A)a copy of the plan
				of operation or feasibility study or any similar statement of the policy being
				offered and its coverage (which shall include the name of its primary State and
				its principal place of business);
										(B)written notice of
				any change in its designation of its primary State; and
										(C)written notice
				from the issuer of the issuer’s compliance with all the laws of the primary
				State; and
										(2)to the insurance
				commissioner of each secondary State in which it offers individual health
				insurance coverage, a copy of the issuer’s quarterly financial statement
				submitted to the primary State, which statement shall be certified by an
				independent public accountant and contain a statement of opinion on loss and
				loss adjustment expense reserves made by—
										(A)a member of the
				American Academy of Actuaries; or
										(B)a qualified loss
				reserve specialist.
										(h)Power of Courts
				To Enjoin ConductNothing in this section shall be construed to
				affect the authority of any Federal or State court to enjoin—
									(1)the solicitation
				or sale of individual health insurance coverage by a health insurance issuer to
				any person or group who is not eligible for such insurance; or
									(2)the solicitation
				or sale of individual health insurance coverage that violates the requirements
				of the law of a secondary State which are described in subparagraphs (A)
				through (H) of section 2796(b)(1).
									(i)Power of
				Secondary States To Take Administrative ActionNothing in this
				section shall be construed to affect the authority of any State to enjoin
				conduct in violation of that State’s laws described in section
				2796(b)(1).
								(j)State Powers To
				Enforce State Laws
									(1)In
				generalSubject to the provisions of subsection (b)(1)(G)
				(relating to injunctions) and paragraph (2), nothing in this section shall be
				construed to affect the authority of any State to make use of any of its powers
				to enforce the laws of such State with respect to which a health insurance
				issuer is not exempt under subsection (b).
									(2)Courts of
				competent jurisdictionIf a State seeks an injunction regarding
				the conduct described in paragraphs (1) and (2) of subsection (h), such
				injunction must be obtained from a Federal or State court of competent
				jurisdiction.
									(k)States’
				Authority To SueNothing in this section shall affect the
				authority of any State to bring action in any Federal or State court.
								(l)Generally
				Applicable LawsNothing in this section shall be construed to
				affect the applicability of State laws generally applicable to persons or
				corporations.
								(m)Guaranteed
				Availability of Coverage to HIPAA Eligible IndividualsTo the
				extent that a health insurance issuer is offering coverage in a primary State
				that does not accommodate residents of secondary States or does not provide a
				working mechanism for residents of a secondary State, and the issuer is
				offering coverage under this part in such secondary State which has not adopted
				a qualified high risk pool as its acceptable alternative mechanism (as defined
				in section 2744(c)(2)), the issuer shall, with respect to any individual health
				insurance coverage offered in a secondary State under this part, comply with
				the guaranteed availability requirements for eligible individuals in section
				2741.
								2797.Primary State
				must meet Federal floor before issuer may sell into secondary
				StatesA health insurance
				issuer may not offer, sell, or issue individual health insurance coverage in a
				secondary State if the State insurance commissioner does not use a risk-based
				capital formula for the determination of capital and surplus requirements for
				all health insurance issuers.
							2798.Independent
				external appeals procedures
								(a)Right to
				External AppealA health insurance issuer may not offer, sell, or
				issue individual health insurance coverage in a secondary State under the
				provisions of this title unless—
									(1)both the secondary
				State and the primary State have legislation or regulations in place
				establishing an independent review process for individuals who are covered by
				individual health insurance coverage, or
									(2)in any case in
				which the requirements of subparagraph (A) are not met with respect to the
				either of such States, the issuer provides an independent review mechanism
				substantially identical (as determined by the applicable State authority of
				such State) to that prescribed in the Health Carrier External Review
				Model Act of the National Association of Insurance Commissioners for
				all individuals who purchase insurance coverage under the terms of this part,
				except that, under such mechanism, the review is conducted by an independent
				medical reviewer, or a panel of such reviewers, with respect to whom the
				requirements of subsection (b) are met.
									(b)Qualifications
				of Independent Medical ReviewersIn the case of any independent
				review mechanism referred to in subsection (a)(2)—
									(1)In
				generalIn referring a denial of a claim to an independent
				medical reviewer, or to any panel of such reviewers, to conduct independent
				medical review, the issuer shall ensure that—
										(A)each independent
				medical reviewer meets the qualifications described in paragraphs (2) and
				(3);
										(B)with respect to
				each review, each reviewer meets the requirements of paragraph (4) and the
				reviewer, or at least 1 reviewer on the panel, meets the requirements described
				in paragraph (5); and
										(C)compensation
				provided by the issuer to each reviewer is consistent with paragraph
				(6).
										(2)Licensure and
				expertiseEach independent medical reviewer shall be a physician
				(allopathic or osteopathic) or health care professional who—
										(A)is appropriately
				credentialed or licensed in 1 or more States to deliver health care services;
				and
										(B)typically treats
				the condition, makes the diagnosis, or provides the type of treatment under
				review.
										(3)Independence
										(A)In
				generalSubject to subparagraph (B), each independent medical
				reviewer in a case shall—
											(i)not be a related
				party (as defined in paragraph (7));
											(ii)not have a
				material familial, financial, or professional relationship with such a party;
				and
											(iii)not otherwise
				have a conflict of interest with such a party (as determined under
				regulations).
											(B)ExceptionNothing
				in subparagraph (A) shall be construed to—
											(i)prohibit an
				individual, solely on the basis of affiliation with the issuer, from serving as
				an independent medical reviewer if—
												(I)a non-affiliated
				individual is not reasonably available;
												(II)the affiliated
				individual is not involved in the provision of items or services in the case
				under review;
												(III)the fact of such
				an affiliation is disclosed to the issuer and the enrollee (or authorized
				representative) and neither party objects; and
												(IV)the affiliated
				individual is not an employee of the issuer and does not provide services
				exclusively or primarily to or on behalf of the issuer;
												(ii)prohibit an
				individual who has staff privileges at the institution where the treatment
				involved takes place from serving as an independent medical reviewer merely on
				the basis of such affiliation if the affiliation is disclosed to the issuer and
				the enrollee (or authorized representative), and neither party objects;
				or
											(iii)prohibit receipt
				of compensation by an independent medical reviewer from an entity if the
				compensation is provided consistent with paragraph (6).
											(4)Practicing
				health care professional in same field
										(A)In
				generalIn a case involving treatment, or the provision of items
				or services—
											(i)by
				a physician, a reviewer shall be a practicing physician (allopathic or
				osteopathic) of the same or similar specialty, as a physician who, acting
				within the appropriate scope of practice within the State in which the service
				is provided or rendered, typically treats the condition, makes the diagnosis,
				or provides the type of treatment under review; or
											(ii)by a
				non-physician health care professional, the reviewer, or at least 1 member of
				the review panel, shall be a practicing non-physician health care professional
				of the same or similar specialty as the non-physician health care professional
				who, acting within the appropriate scope of practice within the State in which
				the service is provided or rendered, typically treats the condition, makes the
				diagnosis, or provides the type of treatment under review.
											(B)Practicing
				definedFor purposes of this paragraph, the term
				practicing means, with respect to an individual who is a physician
				or other health care professional, that the individual provides health care
				services to individual patients on average at least 2 days per week.
										(5)Pediatric
				expertiseIn the case of an external review relating to a child,
				a reviewer shall have expertise under paragraph (2) in pediatrics.
									(6)Limitations on
				reviewer compensationCompensation provided by the issuer to an
				independent medical reviewer in connection with a review under this section
				shall—
										(A)not exceed a
				reasonable level; and
										(B)not be contingent
				on the decision rendered by the reviewer.
										(7)Related party
				definedFor purposes of this section, the term related
				party means, with respect to a denial of a claim under a coverage
				relating to an enrollee, any of the following:
										(A)The issuer
				involved, or any fiduciary, officer, director, or employee of the
				issuer.
										(B)The enrollee (or
				authorized representative).
										(C)The health care
				professional that provides the items or services involved in the denial.
										(D)The institution at
				which the items or services (or treatment) involved in the denial are
				provided.
										(E)The manufacturer
				of any drug or other item that is included in the items or services involved in
				the denial.
										(F)Any other party
				determined under any regulations to have a substantial interest in the denial
				involved.
										(8)DefinitionsFor
				purposes of this subsection:
										(A)EnrolleeThe
				term enrollee means, with respect to health insurance coverage
				offered by a health insurance issuer, an individual enrolled with the issuer to
				receive such coverage.
										(B)Health care
				professionalThe term health care professional means
				an individual who is licensed, accredited, or certified under State law to
				provide specified health care services and who is operating within the scope of
				such licensure, accreditation, or certification.
										2799.Enforcement
								(a)In
				GeneralSubject to subsection (b), with respect to specific
				individual health insurance coverage the primary State for such coverage has
				sole jurisdiction to enforce the primary State’s covered laws in the primary
				State and any secondary State.
								(b)Secondary
				State’s AuthorityNothing in subsection (a) shall be construed to
				affect the authority of a secondary State to enforce its laws as set forth in
				the exception specified in section 2796(b)(1).
								(c)Court
				InterpretationIn reviewing action initiated by the applicable
				secondary State authority, the court of competent jurisdiction shall apply the
				covered laws of the primary State.
								(d)Notice of
				Compliance FailureIn the case of individual health insurance
				coverage offered in a secondary State that fails to comply with the covered
				laws of the primary State, the applicable State authority of the secondary
				State may notify the applicable State authority of the primary
				State.
								.
				(b)Effective
			 DateThe amendment made by subsection (a) shall apply to
			 individual health insurance coverage offered, issued, or sold after the date
			 that is one year after the date of the enactment of this Act.
				(c)GAO Ongoing
			 Study and Reports
					(1)StudyThe
			 Comptroller General of the United States shall conduct an ongoing study
			 concerning the effect of the amendment made by subsection (a) on—
						(A)the number of
			 uninsured and under-insured;
						(B)the availability
			 and cost of health insurance policies for individuals with preexisting medical
			 conditions;
						(C)the availability
			 and cost of health insurance policies generally;
						(D)the elimination or
			 reduction of different types of benefits under health insurance policies
			 offered in different States; and
						(E)cases of fraud or
			 abuse relating to health insurance coverage offered under such amendment and
			 the resolution of such cases.
						(2)Annual
			 reportsThe Comptroller General shall submit to Congress an
			 annual report, after the end of each of the 5 years following the effective
			 date of the amendment made by subsection (a), on the ongoing study conducted
			 under paragraph (1).
					VAssociation Health
			 Plans
			501.Rules governing
			 association health plans
				(a)In
			 GeneralSubtitle B of title I
			 of the Employee Retirement Income Security Act
			 of 1974 is amended by adding after part 7 the following new
			 part:

						8RULES GOVERNING
				ASSOCIATION HEALTH PLANS
							801.Association
				health plans
								(a)In
				GeneralFor purposes of this part, the term association
				health plan means a group health plan whose sponsor is (or is deemed
				under this part to be) described in subsection (b).
								(b)SponsorshipThe
				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 bona fide trade association, a bona fide industry association (including a
				rural electric cooperative association or a rural telephone cooperative
				association), a bona fide professional association, or a bona fide chamber of
				commerce (or similar bona fide business association, 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;
									(2)is established as
				a permanent entity which receives the active support of its members and
				requires for membership payment on a periodic basis of dues or payments
				necessary to maintain eligibility for membership in the sponsor; and
									(3)does not condition
				membership, such dues or payments, or coverage under the plan on the basis of
				health status-related factors with respect to the employees of its members (or
				affiliated members), or the dependents of such employees, and does not
				condition such dues or payments on the basis of group health plan
				participation.
									Any
				sponsor consisting of an association of entities which meet the requirements of
				paragraphs (1), (2), and (3) shall be deemed to be a sponsor described in this
				subsection.802.Certification
				of association health plans
								(a)In
				GeneralThe applicable authority shall prescribe by regulation a
				procedure under which, subject to subsection (b), the applicable authority
				shall certify association health plans which apply for certification as meeting
				the requirements of this part.
								(b)StandardsUnder
				the procedure prescribed pursuant to subsection (a), in the case of an
				association health plan that provides at least one benefit option which does
				not consist of health insurance coverage, the applicable authority shall
				certify such plan as meeting the requirements of this part only if the
				applicable authority is satisfied that 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 PlansAn association 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).
								(d)Requirements for
				Continued CertificationThe applicable authority may provide by
				regulation for continued certification of association health plans under this
				part.
								(e)Class
				Certification for Fully Insured PlansThe applicable authority
				shall establish a class certification procedure for association health plans
				under which all benefits consist of health insurance coverage. Under such
				procedure, the applicable authority shall provide for the granting of
				certification 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).
								(f)Certification of
				Self-Insured Association Health PlansAn association health plan
				which offers one or more benefit options which do not consist of health
				insurance coverage may be certified under this part only if such plan consists
				of any of the following:
									(1)a plan which
				offered such coverage on the date of the enactment of this Act,
									(2)a plan under which
				the sponsor does not restrict membership to one or more trades and businesses
				or industries and whose eligible participating employers represent a broad
				cross-section of trades and businesses or industries, or
									(3)a plan whose
				eligible participating employers represent one or more trades or businesses, or
				one or more industries, consisting of any of the following: agriculture;
				equipment and automobile dealerships; barbering and cosmetology; certified
				public accounting practices; child care; construction; dance, theatrical and
				orchestra productions; disinfecting and pest control; financial services;
				fishing; food service establishments; hospitals; labor organizations; logging;
				manufacturing (metals); mining; medical and dental practices; medical
				laboratories; professional consulting services; sanitary services;
				transportation (local and freight); warehousing; wholesaling/distributing; or
				any other trade or business or industry which has been indicated as having
				average or above-average risk or health claims experience by reason of State
				rate filings, denials of coverage, proposed premium rate levels, or other means
				demonstrated by such plan in accordance with regulations.
									803.Requirements
				relating to sponsors and boards of trustees
								(a)SponsorThe
				requirements of this subsection are met with respect to an association health
				plan if the sponsor has met (or is deemed under this part to have met) the
				requirements of section 801(b) for a continuous period of not less than 3 years
				ending with the date of the application for certification under this
				part.
								(b)Board of
				TrusteesThe requirements of this subsection are met with respect
				to an association health plan if the following requirements are met:
									(1)Fiscal
				controlThe plan is operated, pursuant to a trust agreement, by a
				board of trustees which has complete fiscal control over the plan and which is
				responsible for all operations of the plan.
									(2)Rules of
				operation and financial controlsThe 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 contractors
										(A)Board
				membership
											(i)In
				generalExcept 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
				ruleExcept 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
				sponsorOfficers 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 careIn 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
				excludedClause (i) shall not apply to an association health plan
				which is in existence on the date of the enactment of this Act.
											(B)Sole
				authorityThe board has sole authority under the plan to approve
				applications 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 NetworksIn the case of a group health plan which is
				established and maintained by a franchiser for a franchise network consisting
				of its franchisees—
									(1)the requirements
				of subsection (a) and section 801(a) shall be deemed met if such requirements
				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 association 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.
									The
				Secretary may by regulation define for purposes of this subsection the terms
				franchiser, franchise network, and
				franchisee.804.Participation
				and coverage requirements
								(a)Covered
				Employers and IndividualsThe requirements of this subsection are
				met with respect to an association 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 with respect to which the requirements of subsection (b)
				are met,
										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 beneficiaries
				of individuals described in subparagraph (A).
										(b)Coverage of
				Previously Uninsured EmployeesIn the case of an association
				health plan in existence on the date of the enactment of this Act, an
				affiliated member of the sponsor of the plan may be offered coverage under the
				plan as a participating employer only if—
									(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 employees who would otherwise be eligible to participate
				in such association health plan.
									(c)Individual
				Market UnaffectedThe requirements 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 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.
								(d)Prohibition of
				Discrimination Against Employers and Employees Eligible To
				ParticipateThe requirements of this subsection are met with
				respect to an association health plan if—
									(1)under the terms of
				the plan, all employers meeting the preceding requirements of this section 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 2711 of the
				Public Health Service Act are not
				met;
									(2)upon request, any
				employer eligible to participate is furnished information regarding all
				coverage options available under the plan; and
									(3)the applicable
				requirements of sections 701, 702, and 703 are met with respect to the
				plan.
									805.Other
				requirements relating to plan documents, contribution rates, and benefit
				options
								(a)In
				GeneralThe requirements of this section are met with respect to
				an association health plan if the following requirements are met:
									(1)Contents of
				governing instrumentsThe instruments governing the plan include
				a written instrument, meeting the requirements of an instrument required under
				section 402(a)(1), which—
										(A)provides that the
				board of trustees 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));
										(B)provides that the
				sponsor of the plan is to serve as plan sponsor (referred to in section
				3(16)(B)); and
										(C)incorporates the
				requirements of section 806.
										(2)Contribution
				rates must be nondiscriminatory
										(A)The contribution
				rates for any participating small employer do not vary on the basis of any
				health status-related factor in relation to employees of such employer or their
				beneficiaries and do not vary on the basis of the type of business or industry
				in which such employer is engaged.
										(B)Nothing in this
				title or any other provision of law shall be construed to preclude an
				association health plan, or a health insurance issuer offering health insurance
				coverage in connection with an association health plan, from—
											(i)setting
				contribution rates based on the claims experience of the plan; or
											(ii)varying
				contribution rates for small employers in a State to the extent that such rates
				could vary using the same methodology employed in such State for regulating
				premium rates in the small group market with respect to health insurance
				coverage offered in connection with bona fide associations (within the meaning
				of section 2791(d)(3) of the Public Health
				Service Act),
											subject
				to the requirements of section 702(b) relating to contribution rates.(3)Floor for number
				of covered individuals with respect to certain plansIf any
				benefit option under the plan does not consist of health insurance coverage,
				the plan has as of the beginning of the plan year not fewer than 1,000
				participants and beneficiaries.
									(4)Marketing
				requirements
										(A)In
				generalIf a benefit option which consists of health insurance
				coverage is offered under the plan, State-licensed insurance agents shall be
				used to distribute to small employers coverage which does not consist of health
				insurance coverage in a manner comparable to the manner in which such agents
				are used to distribute health insurance coverage.
										(B)State-licensed
				insurance agentsFor purposes of subparagraph (A), the term
				State-licensed insurance agents means one or more agents who are
				licensed in a State and are subject to the laws of such State relating to
				licensure, qualification, testing, examination, and continuing education of
				persons authorized to offer, sell, or solicit health insurance coverage in such
				State.
										(5)Regulatory
				requirementsSuch other requirements as the applicable authority
				determines are necessary to carry out the purposes of this part, which shall be
				prescribed by the applicable authority by regulation.
									(b)Ability of
				Association Health Plans To Design Benefit OptionsSubject to
				section 514(d), nothing in this part or any provision of State law (as defined
				in section 514(c)(1)) shall be construed to preclude an association health
				plan, or a health insurance issuer offering health insurance coverage in
				connection with an association health plan, from exercising its sole discretion
				in selecting the specific items and services consisting of medical care to be
				included as benefits under such plan or coverage, except (subject to section
				514) in the case of (1) any law to the extent that it is not preempted under
				section 731(a)(1) with respect to matters governed by section 711, 712, or 713,
				or (2) any law of the State with which filing and approval of a policy type
				offered by the plan was initially obtained to the extent that such law
				prohibits an exclusion of a specific disease from such coverage.
								806.Maintenance of
				reserves and provisions for solvency for plans providing health benefits in
				addition to health insurance coverage
								(a)In
				GeneralThe requirements of this section are met with respect to
				an association health plan if—
									(1)the benefits under
				the plan consist solely of health insurance coverage; or
									(2)if the plan
				provides any additional benefit options which do not consist of health
				insurance coverage, the plan—
										(A)establishes and
				maintains reserves with respect to such additional benefit options, in amounts
				recommended by the qualified actuary, consisting of—
											(i)a
				reserve sufficient for unearned contributions;
											(ii)a
				reserve sufficient for benefit liabilities which have been incurred, which have
				not been satisfied, and for which risk of loss has not yet been transferred,
				and for expected administrative costs with respect to such benefit
				liabilities;
											(iii)a reserve
				sufficient for any other obligations of the plan; and
											(iv)a
				reserve sufficient for a margin of error and other fluctuations, taking into
				account the specific circumstances of the plan; and
											(B)establishes and
				maintains aggregate and specific excess/stop loss insurance and solvency
				indemnification, with respect to such additional benefit options for which risk
				of loss has not yet been transferred, as follows:
											(i)The plan shall
				secure aggregate excess/stop loss insurance for the plan with an attachment
				point which is not greater than 125 percent of expected gross annual claims.
				The applicable authority may by regulation provide for upward adjustments in
				the amount of such percentage in specified circumstances in which the plan
				specifically provides for and maintains reserves in excess of the amounts
				required under subparagraph (A).
											(ii)The plan shall
				secure specific excess/stop loss insurance for the plan with an attachment
				point which is at least equal to an amount recommended by the plan’s qualified
				actuary. The applicable authority may by regulation provide for adjustments in
				the amount of such insurance in specified circumstances in which the plan
				specifically provides for and maintains reserves in excess of the amounts
				required under subparagraph (A).
											(iii)The plan shall
				secure indemnification insurance for any claims which the plan is unable to
				satisfy by reason of a plan termination.
											Any
				person issuing to a plan insurance described in clause (i), (ii), or (iii) of
				subparagraph (B) shall notify the Secretary of any failure of premium payment
				meriting cancellation of the policy prior to undertaking such a cancellation.
				Any regulations prescribed by the applicable authority pursuant to clause (i)
				or (ii) of subparagraph (B) may allow for such adjustments in the required
				levels of excess/stop loss insurance as the qualified actuary may recommend,
				taking into account the specific circumstances of the plan.(b)Minimum Surplus
				in Addition to Claims ReservesIn the case of any association
				health plan described in subsection (a)(2), the requirements of this subsection
				are met if the plan establishes and maintains surplus in an amount at least
				equal to—
									(1)$500,000,
				or
									(2)such greater
				amount (but not greater than $2,000,000) as may be set forth in regulations
				prescribed by the applicable authority, considering the level of aggregate and
				specific excess/stop loss insurance provided with respect to such plan and
				other factors related to solvency risk, such as the plan’s projected levels of
				participation or claims, the nature of the plan’s liabilities, and the types of
				assets available to assure that such liabilities are met.
									(c)Additional
				RequirementsIn the case of any association health plan described
				in subsection (a)(2), the applicable authority may provide such additional
				requirements relating to reserves, excess/stop loss insurance, and
				indemnification insurance as the applicable authority considers appropriate.
				Such requirements may be provided by regulation with respect to any such plan
				or any class of such plans.
								(d)Adjustments for
				Excess/Stop Loss InsuranceThe applicable authority may provide
				for adjustments to the levels of reserves otherwise required under subsections
				(a) and (b) with respect to any plan or class of plans to take into account
				excess/stop loss insurance provided with respect to such plan or plans.
								(e)Alternative
				Means of ComplianceThe applicable authority may permit an
				association health plan described in subsection (a)(2) to substitute, for all
				or part of the requirements of this section (except subsection (a)(2)(B)(iii)),
				such security, guarantee, hold-harmless arrangement, or other financial
				arrangement as the applicable authority determines to be adequate to enable the
				plan to fully meet all its financial obligations on a timely basis and is
				otherwise no less protective of the interests of participants and beneficiaries
				than the requirements for which it is substituted. The applicable authority may
				take into account, for purposes of this subsection, evidence provided by the
				plan or sponsor which demonstrates an assumption of liability with respect to
				the plan. Such evidence may be in the form of a contract of indemnification,
				lien, bonding, insurance, letter of credit, recourse under applicable terms of
				the plan in the form of assessments of participating employers, security, or
				other financial arrangement.
								(f)Measures To
				Ensure Continued Payment of Benefits by Certain Plans in Distress
									(1)Payments by
				certain plans to association health plan fund
										(A)In
				generalIn the case of an association health plan described in
				subsection (a)(2), the requirements of this subsection are met if the plan
				makes payments into the Association Health Plan Fund under this subparagraph
				when they are due. Such payments shall consist of annual payments in the amount
				of $5,000, and, in addition to such annual payments, such supplemental payments
				as the Secretary may determine to be necessary under paragraph (2). Payments
				under this paragraph are payable to the Fund at the time determined by the
				Secretary. Initial payments are due in advance of certification under this
				part. Payments shall continue to accrue until a plan’s assets are distributed
				pursuant to a termination procedure.
										(B)Penalties for
				failure to make paymentsIf any payment is not made by a plan
				when it is due, a late payment charge of not more than 100 percent of the
				payment which was not timely paid shall be payable by the plan to the
				Fund.
										(C)Continued duty
				of the secretaryThe Secretary shall not cease to carry out the
				provisions of paragraph (2) on account of the failure of a plan to pay any
				payment when due.
										(2)Payments by
				secretary to continue excess/stop loss insurance coverage and indemnification
				insurance coverage for certain plansIn any case in which the
				applicable authority determines that there is, or that there is reason to
				believe that there will be: (A) a failure to take necessary corrective actions
				under section 809(a) with respect to an association health plan described in
				subsection (a)(2); or (B) a termination of such a plan under section 809(b) or
				810(b)(8) (and, if the applicable authority is not the Secretary, certifies
				such determination to the Secretary), the Secretary shall determine the amounts
				necessary to make payments to an insurer (designated by the Secretary) to
				maintain in force excess/stop loss insurance coverage or indemnification
				insurance coverage for such plan, if the Secretary determines that there is a
				reasonable expectation that, without such payments, claims would not be
				satisfied by reason of termination of such coverage. The Secretary shall, to
				the extent provided in advance in appropriation Acts, pay such amounts so
				determined to the insurer designated by the Secretary.
									(3)Association
				health plan fund
										(A)In
				generalThere is established on the books of the Treasury a fund
				to be known as the Association Health Plan Fund. The Fund shall
				be available for making payments pursuant to paragraph (2). The Fund shall be
				credited with payments received pursuant to paragraph (1)(A), penalties
				received pursuant to paragraph (1)(B); and earnings on investments of amounts
				of the Fund under subparagraph (B).
										(B)InvestmentWhenever
				the Secretary determines that the moneys of the fund are in excess of current
				needs, the Secretary may request the investment of such amounts as the
				Secretary determines advisable by the Secretary of the Treasury in obligations
				issued or guaranteed by the United States.
										(g)Excess/Stop Loss
				InsuranceFor purposes of this section—
									(1)Aggregate
				excess/stop loss insuranceThe term aggregate excess/stop
				loss insurance means, in connection with an association health plan, a
				contract—
										(A)under which an
				insurer (meeting such minimum standards as the applicable authority may
				prescribe by regulation) provides for payment to the plan with respect to
				aggregate claims under the plan in excess of an amount or amounts specified in
				such contract;
										(B)which is
				guaranteed renewable; and
										(C)which allows for
				payment of premiums by any third party on behalf of the insured plan.
										(2)Specific
				excess/stop loss insuranceThe term specific excess/stop
				loss insurance means, in connection with an association health plan, a
				contract—
										(A)under which an
				insurer (meeting such minimum standards as the applicable authority may
				prescribe by regulation) provides for payment to the plan with respect to
				claims under the plan in connection with a covered individual in excess of an
				amount or amounts specified in such contract in connection with such covered
				individual;
										(B)which is
				guaranteed renewable; and
										(C)which allows for
				payment of premiums by any third party on behalf of the insured plan.
										(h)Indemnification
				InsuranceFor purposes of this section, the term
				indemnification insurance means, in connection with an association
				health plan, a contract—
									(1)under which an
				insurer (meeting such minimum standards as the applicable authority may
				prescribe by regulation) provides for payment to the plan with respect to
				claims under the plan which the plan is unable to satisfy by reason of a
				termination pursuant to section 809(b) (relating to mandatory
				termination);
									(2)which is
				guaranteed renewable and noncancellable for any reason (except as the
				applicable authority may prescribe by regulation); and
									(3)which allows for
				payment of premiums by any third party on behalf of the insured plan.
									(i)ReservesFor
				purposes of this section, the term reserves means, in connection
				with an association health plan, plan assets which meet the fiduciary standards
				under part 4 and such additional requirements regarding liquidity as the
				applicable authority may prescribe by regulation.
								(j)Solvency
				Standards Working Group
									(1)In
				generalWithin 90 days after the date of the enactment of this
				Act, the applicable authority shall establish a Solvency Standards Working
				Group. In prescribing the initial regulations under this section, the
				applicable authority shall take into account the recommendations of such
				Working Group.
									(2)MembershipThe
				Working Group shall consist of not more than 15 members appointed by the
				applicable authority. The applicable authority shall include among persons
				invited to membership on the Working Group at least one of each of the
				following:
										(A)a representative
				of the National Association of Insurance Commissioners;
										(B)a representative
				of the American Academy of Actuaries;
										(C)a representative
				of the State governments, or their interests;
										(D)a representative
				of existing self-insured arrangements, or their interests;
										(E)a representative
				of associations of the type referred to in section 801(b)(1), or their
				interests; and
										(F)a representative
				of multiemployer plans that are group health plans, or their interests.
										807.Requirements
				for application and related requirements
								(a)Filing
				FeeUnder the procedure prescribed pursuant to section 802(a), an
				association health plan shall pay to the applicable authority at the time of
				filing an application for certification under this part a filing fee in the
				amount of $5,000, which shall be available in the case of the Secretary, to the
				extent provided in appropriation Acts, for the sole purpose of administering
				the certification procedures applicable with respect to association health
				plans.
								(b)Information To
				Be Included in Application for CertificationAn 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
				informationThe names and addresses of—
										(A)the sponsor;
				and
										(B)the members of the
				board of trustees of the plan.
										(2)States in which
				plan intends to do businessThe States in which participants and
				beneficiaries under the plan are to be located and the number of them expected
				to be located in each such State.
									(3)Bonding
				requirementsEvidence 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
				documentsA 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 providersA copy of any agreements between the plan and
				contract administrators and other service providers.
									(6)Funding
				reportIn the case of association health plans providing benefits
				options in addition to health insurance coverage, a report setting forth
				information with respect to such additional benefit options determined as of a
				date within the 120-day period ending with the date of the application,
				including the following:
										(A)ReservesA
				statement, certified by the board of trustees of the plan, and a statement of
				actuarial opinion, signed by a qualified actuary, that all applicable
				requirements of section 806 are or will be met in accordance with regulations
				which the applicable authority shall prescribe.
										(B)Adequacy of
				contribution ratesA statement of actuarial opinion, signed by a
				qualified actuary, which sets forth a description of the extent to which
				contribution rates are adequate to provide for the payment of all obligations
				and the maintenance of required reserves under the plan for the 12-month period
				beginning with such date within such 120-day period, taking into account the
				expected coverage and experience of the plan. If the contribution rates are not
				fully adequate, the statement of actuarial opinion shall indicate the extent to
				which the rates are inadequate and the changes needed to ensure
				adequacy.
										(C)Current and
				projected value of assets and liabilitiesA statement of
				actuarial opinion signed by a qualified actuary, which sets forth the current
				value of the assets and liabilities accumulated under the plan and a projection
				of the assets, liabilities, income, and expenses of the plan for the 12-month
				period referred to in subparagraph (B). The income statement shall identify
				separately the plan’s administrative expenses and claims.
										(D)Costs of
				coverage to be charged and other expensesA statement of the
				costs of coverage to be charged, including an itemization of amounts for
				administration, reserves, and other expenses associated with the operation of
				the plan.
										(E)Other
				informationAny other information as may be determined by the
				applicable authority, by regulation, as necessary to carry out the purposes of
				this part.
										(c)Filing Notice of
				Certification With StatesA certification granted under this part
				to an association health plan shall not be effective unless written notice of
				such certification is filed with the applicable State authority of each State
				in which at least 25 percent of the participants and beneficiaries under the
				plan are located. For purposes of this subsection, an individual shall be
				considered to be located in the State in which a known address of such
				individual is located or in which such individual is employed.
								(d)Notice of
				Material ChangesIn the case of any association health plan
				certified under this part, descriptions of material changes in any information
				which was required to be submitted with the application for the certification
				under this part shall be filed in such form and manner as shall be prescribed
				by the applicable 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.
								(e)Reporting
				Requirements for Certain Association Health PlansAn association
				health plan certified under this part which provides benefit options in
				addition to health insurance coverage for such plan year shall meet the
				requirements of section 103 by filing an annual report under such section which
				shall include information described in subsection (b)(6) with respect to the
				plan year and, notwithstanding section 104(a)(1)(A), shall be filed with the
				applicable authority not later than 90 days after the close of the plan year
				(or on such later date as may be prescribed by the applicable authority). The
				applicable authority may require by regulation such interim reports as it
				considers appropriate.
								(f)Engagement of
				Qualified ActuaryThe board of trustees of each association
				health plan which provides benefits options in addition to health insurance
				coverage and which is applying for certification under this part or is
				certified under this part shall engage, on behalf of all participants and
				beneficiaries, a qualified actuary who shall be responsible for the preparation
				of the materials comprising information necessary to be submitted by a
				qualified actuary under this part. The qualified actuary shall utilize such
				assumptions and techniques as are necessary to enable such actuary to form an
				opinion as to whether the contents of the matters reported under this
				part—
									(1)are in the
				aggregate reasonably related to the experience of the plan and to reasonable
				expectations; and
									(2)represent such
				actuary’s best estimate of anticipated experience under the plan.
									The
				opinion by the qualified actuary shall be made with respect to, and shall be
				made a part of, the annual report.808.Notice
				requirements for voluntary terminationExcept as provided in section 809(b), an
				association health plan which is or has been certified under this part may
				terminate (upon or at any time after cessation of accruals in benefit
				liabilities) only if the board of trustees, 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.
								Actions
				required under this section shall be taken in such form and manner as may be
				prescribed by the applicable authority by regulation.809.Corrective
				actions and mandatory termination
								(a)Actions To Avoid
				Depletion of ReservesAn association health plan which is
				certified under this part and which provides benefits other than health
				insurance coverage shall continue to meet the requirements of section 806,
				irrespective of whether such certification continues in effect. The board of
				trustees of such plan shall determine quarterly whether the requirements of
				section 806 are met. In any case in which the board determines that there is
				reason to believe that there is or will be a failure to meet such requirements,
				or the applicable authority makes such a determination and so notifies the
				board, the board shall immediately notify the qualified actuary engaged by the
				plan, and such actuary shall, not later than the end of the next following
				month, make such recommendations to the board for corrective action as the
				actuary determines necessary to ensure compliance with section 806. Not later
				than 30 days after receiving from the actuary recommendations for corrective
				actions, the board shall notify the applicable authority (in such form and
				manner as the applicable authority may prescribe by regulation) of such
				recommendations of the actuary for corrective action, together with a
				description of the actions (if any) that the board has taken or plans to take
				in response to such recommendations. The board shall thereafter report to the
				applicable authority, in such form and frequency as the applicable authority
				may specify to the board, regarding corrective action taken by the board until
				the requirements of section 806 are met.
								(b)Mandatory
				TerminationIn any case in which—
									(1)the applicable
				authority has been notified under subsection (a) (or by an issuer of
				excess/stop loss insurance or indemnity insurance pursuant to section 806(a))
				of a failure of an association health plan which is or has been certified under
				this part and is described in section 806(a)(2) to meet the requirements of
				section 806 and has not been notified by the board of trustees of the plan that
				corrective action has restored compliance with such requirements; and
									(2)the applicable
				authority determines that there is a reasonable expectation that the plan will
				continue to fail to meet the requirements of section 806,
									the board
				of trustees of the plan shall, at the direction of the applicable authority,
				terminate the plan and, in the course of the termination, take such actions as
				the applicable authority may require, including satisfying any claims referred
				to in section 806(a)(2)(B)(iii) and recovering for the plan any liability under
				subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure that
				the affairs of the plan will be, to the maximum extent possible, wound up in a
				manner which will result in timely provision of all benefits for which the plan
				is obligated.810.Trusteeship by
				the Secretary of insolvent association health plans providing health benefits
				in addition to health insurance coverage
								(a)Appointment of
				Secretary as Trustee for Insolvent PlansWhenever the Secretary
				determines that an association health plan which is or has been certified under
				this part and which is described in section 806(a)(2) will be unable to provide
				benefits when due or is otherwise in a financially hazardous condition, as
				shall be defined by the Secretary by regulation, the Secretary shall, upon
				notice to the plan, apply to the appropriate United States district court for
				appointment of the Secretary as trustee to administer the plan for the duration
				of the insolvency. The plan may appear as a party and other interested persons
				may intervene in the proceedings at the discretion of the court. The court
				shall appoint such Secretary trustee if the court determines that the
				trusteeship is necessary to protect the interests of the participants and
				beneficiaries or providers of medical care or to avoid any unreasonable
				deterioration of the financial condition of the plan. The trusteeship of such
				Secretary shall continue until the conditions described in the first sentence
				of this subsection are remedied or the plan is terminated.
								(b)Powers as
				TrusteeThe Secretary, upon appointment as trustee under
				subsection (a), shall have the power—
									(1)to do any act
				authorized by the plan, this title, or other applicable provisions of law to be
				done by the plan administrator or any trustee of the plan;
									(2)to require the
				transfer of all (or any part) of the assets and records of the plan to the
				Secretary as trustee;
									(3)to invest any
				assets of the plan which the Secretary holds in accordance with the provisions
				of the plan, regulations prescribed by the Secretary, and applicable provisions
				of law;
									(4)to require the
				sponsor, the plan administrator, any participating employer, and any employee
				organization representing plan participants to furnish any information with
				respect to the plan which the Secretary as trustee may reasonably need in order
				to administer the plan;
									(5)to collect for the
				plan any amounts due the plan and to recover reasonable expenses of the
				trusteeship;
									(6)to commence,
				prosecute, or defend on behalf of the plan any suit or proceeding involving the
				plan;
									(7)to issue, publish,
				or file such notices, statements, and reports as may be required by the
				Secretary by regulation or required by any order of the court;
									(8)to terminate the
				plan (or provide for its termination in accordance with section 809(b)) and
				liquidate the plan assets, to restore the plan to the responsibility of the
				sponsor, or to continue the trusteeship;
									(9)to provide for the
				enrollment of plan participants and beneficiaries under appropriate coverage
				options; and
									(10)to do such other
				acts as may be necessary to comply with this title or any order of the court
				and to protect the interests of plan participants and beneficiaries and
				providers of medical care.
									(c)Notice of
				AppointmentAs soon as practicable after the Secretary’s
				appointment as trustee, the Secretary shall give notice of such appointment
				to—
									(1)the sponsor and
				plan administrator;
									(2)each
				participant;
									(3)each participating
				employer; and
									(4)if applicable,
				each employee organization which, for purposes of collective bargaining,
				represents plan participants.
									(d)Additional
				DutiesExcept to the extent inconsistent with the provisions of
				this title, or as may be otherwise ordered by the court, the Secretary, upon
				appointment as trustee under this section, shall be subject to the same duties
				as those of a trustee under section 704 of title 11, United States Code, and
				shall have the duties of a fiduciary for purposes of this title.
								(e)Other
				ProceedingsAn application by the Secretary under this subsection
				may be filed notwithstanding the pendency in the same or any other court of any
				bankruptcy, mortgage foreclosure, or equity receivership proceeding, or any
				proceeding to reorganize, conserve, or liquidate such plan or its property, or
				any proceeding to enforce a lien against property of the plan.
								(f)Jurisdiction of
				Court
									(1)In
				generalUpon the filing of an application for the appointment as
				trustee or the issuance of a decree under this section, the court to which the
				application is made shall have exclusive jurisdiction of the plan involved and
				its property wherever located with the powers, to the extent consistent with
				the purposes of this section, of a court of the United States having
				jurisdiction over cases under chapter 11 of title 11, United States Code.
				Pending an adjudication under this section such court shall stay, and upon
				appointment by it of the Secretary as trustee, such court shall continue the
				stay of, any pending mortgage foreclosure, equity receivership, or other
				proceeding to reorganize, conserve, or liquidate the plan, the sponsor, or
				property of such plan or sponsor, and any other suit against any receiver,
				conservator, or trustee of the plan, the sponsor, or property of the plan or
				sponsor. Pending such adjudication and upon the appointment by it of the
				Secretary as trustee, the court may stay any proceeding to enforce a lien
				against property of the plan or the sponsor or any other suit against the plan
				or the sponsor.
									(2)VenueAn
				action under this section may be brought in the judicial district where the
				sponsor or the plan administrator resides or does business or where any asset
				of the plan is situated. A district court in which such action is brought may
				issue process with respect to such action in any other judicial
				district.
									(g)PersonnelIn
				accordance with regulations which shall be prescribed by the Secretary, the
				Secretary shall appoint, retain, and compensate accountants, actuaries, and
				other professional service personnel as may be necessary in connection with the
				Secretary’s service as trustee under this section.
								811.State
				assessment authority
								(a)In
				GeneralNotwithstanding section 514, a State may impose by law a
				contribution tax on an association health plan described in section 806(a)(2),
				if the plan commenced operations in such State after the date of the enactment
				of this Act.
								(b)Contribution
				TaxFor purposes of this section, the term contribution
				tax imposed by a State on an association health plan means any tax
				imposed by such State if—
									(1)such tax is
				computed by applying a rate to the amount of premiums or contributions, with
				respect to individuals covered under the plan who are residents of such State,
				which are received by the plan from participating employers located in such
				State or from such individuals;
									(2)the rate of such
				tax does not exceed the rate of any tax imposed by such State on premiums or
				contributions received by insurers or health maintenance organizations for
				health insurance coverage offered in such State in connection with a group
				health plan;
									(3)such tax is
				otherwise nondiscriminatory; and
									(4)the amount of any
				such tax assessed on the plan is reduced by the amount of any tax or assessment
				otherwise imposed by the State on premiums, contributions, or both received by
				insurers or health maintenance organizations for health insurance coverage,
				aggregate excess/stop loss insurance (as defined in section 806(g)(1)),
				specific excess/stop loss insurance (as defined in section 806(g)(2)), other
				insurance related to the provision of medical care under the plan, or any
				combination thereof provided by such insurers or health maintenance
				organizations in such State in connection with such plan.
									812.Definitions and
				rules of construction
								(a)DefinitionsFor
				purposes of this part—
									(1)Group health
				planThe term group health plan has the meaning
				provided in section 733(a)(1) (after applying subsection (b) of this
				section).
									(2)Medical
				careThe term medical care has the meaning provided
				in section 733(a)(2).
									(3)Health insurance
				coverageThe term health insurance coverage has the
				meaning provided in section 733(b)(1).
									(4)Health insurance
				issuerThe term health insurance issuer has the
				meaning provided in section 733(b)(2).
									(5)Applicable
				authorityThe term applicable authority means the
				Secretary, except that, in connection with any exercise of the Secretary’s
				authority regarding which the Secretary is required under section 506(d) to
				consult with a State, such term means the Secretary, in consultation with such
				State.
									(6)Health
				status-related factorThe term health status-related
				factor has the meaning provided in section 733(d)(2).
									(7)Individual
				market
										(A)In
				generalThe 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
				generalSubject to clause (ii), such term includes coverage
				offered in connection with a group health plan that has fewer than 2
				participants as current employees or participants described in section
				732(d)(3) on the first day of the plan year.
											(ii)State
				exceptionClause (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)Participating
				employerThe term participating employer means, in
				connection with an association 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.
									(9)Applicable state
				authorityThe 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.
									(10)Qualified
				actuaryThe term qualified actuary means an
				individual who is a member of the American Academy of Actuaries.
									(11)Affiliated
				memberThe 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,
										(B)in the case of a
				sponsor with members which consist of associations, a person who is a member of
				any such association and elects an affiliated status with the sponsor,
				or
										(C)in the case of an
				association health plan in existence on the date of the enactment of this Act,
				a person eligible to be a member of the sponsor or one of its member
				associations.
										(12)Large
				employerThe term large employer means, in
				connection with a group health plan with respect to a plan year, an employer
				who employed an average of at least 51 employees on business days during the
				preceding calendar year and who employs at least 2 employees on the first day
				of the plan year.
									(13)Small
				employerThe term small employer means, in
				connection with a group health plan with respect to a plan year, an employer
				who is not a large employer.
									(b)Rules of
				Construction
									(1)Employers and
				employeesFor purposes of determining whether a plan, fund, or
				program is an employee welfare benefit plan which is an association health
				plan, and for purposes of applying this title in connection with such plan,
				fund, or program so determined to be such an employee welfare benefit
				plan—
										(A)in the case of a
				partnership, the term employer (as defined in section 3(5))
				includes the partnership in relation to the partners, and the term
				employee (as defined in section 3(6)) includes any partner in
				relation to the partnership; and
										(B)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.
										(2)Plans, funds,
				and programs treated as employee welfare benefit plansIn the
				case of any plan, fund, or program which was established or is maintained for
				the purpose of providing medical care (through the purchase of insurance or
				otherwise) for employees (or their dependents) covered thereunder and which
				demonstrates to the Secretary that all requirements for certification under
				this part would be met with respect to such plan, fund, or program if such
				plan, fund, or program were a group health plan, such plan, fund, or program
				shall be treated for purposes of this title as an employee welfare benefit plan
				on and after the date of such
				demonstration.
									.
				(b)Conforming
			 Amendments to Preemption Rules
					(1)Section 514(b)(6)
			 of such Act (29 U.S.C. 1144(b)(6)) is amended by adding at the end the
			 following new subparagraph:

							(E)The preceding subparagraphs of this
				paragraph do not apply with respect to any State law in the case of an
				association health plan which is certified under part
				8.
							.
					(2)Section 514 of
			 such Act (29 U.S.C. 1144) is amended—
						(A)in subsection
			 (b)(4), by striking Subsection (a) and inserting
			 Subsections (a) and (d);
						(B)in subsection
			 (b)(5), by striking subsection (a) in subparagraph (A) and
			 inserting subsection (a) of this section and subsections (a)(2)(B) and
			 (b) of section 805, and by striking subsection (a) in
			 subparagraph (B) 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)(1)Except as provided in
				subsection (b)(4), the provisions of this title shall supersede any and all
				State laws insofar as they may now or hereafter preclude, or have the effect of
				precluding, a health insurance issuer from offering health insurance coverage
				in connection with an association health plan which is certified under part
				8.
									(2)Except as provided in paragraphs (4)
				and (5) of subsection (b) of this section—
										(A)In any case in which health insurance
				coverage of any policy type is offered under an association health plan
				certified under part 8 to a participating employer operating in such State, the
				provisions of this title shall supersede any and all laws of such State insofar
				as they may preclude a health insurance issuer from offering health insurance
				coverage of the same policy type to other employers operating in the State
				which are eligible for coverage under such association health plan, whether or
				not such other employers are participating employers in such plan.
										(B)In any case in which health insurance
				coverage of any policy type is offered in a State under an association health
				plan certified under part 8 and the filing, with the applicable State authority
				(as defined in section 812(a)(9)), of the policy form in connection with such
				policy type is approved by such State authority, the provisions of this title
				shall supersede any and all laws of any other State in which health insurance
				coverage of such type is offered, insofar as they may preclude, upon the filing
				in the same form and manner of such policy form with the applicable State
				authority in such other State, the approval of the filing in such other
				State.
										(3)Nothing in subsection (b)(6)(E) or
				the preceding provisions of this subsection shall be construed, with respect to
				health insurance issuers or health insurance coverage, to supersede or impair
				the law of any State—
										(A)providing solvency standards or
				similar standards regarding the adequacy of insurer capital, surplus, reserves,
				or contributions, or
										(B)relating to prompt payment of
				claims.
										(4)For additional provisions relating to
				association health plans, see subsections (a)(2)(B) and (b) of section
				805.
									(5)For purposes of this subsection, the
				term association health plan has the meaning provided in section
				801(a), and the terms health insurance coverage,
				participating employer, and health insurance issuer
				have the meanings provided such terms in section 812,
				respectively.
									.
						(3)Section
			 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is amended—
						(A)in clause (i)(II),
			 by striking and at the end;
						(B)in clause (ii), by
			 inserting and which does not provide medical care (within the meaning of
			 section 733(a)(2)), after arrangement,, and by striking
			 title. and inserting title, and; and
						(C)by adding at the
			 end the following new clause:

								(iii)subject to subparagraph (E), in the
				case of any other employee welfare benefit plan which is a multiple employer
				welfare arrangement and which provides medical care (within the meaning of
				section 733(a)(2)), any law of any State which regulates insurance may
				apply.
								.
						(4)Section 514(e) of
			 such Act (as redesignated by paragraph (2)(C)) is amended—
						(A)by striking
			 Nothing and inserting (1) Except as provided in paragraph
			 (2), nothing; and
						(B)by adding at the
			 end the following new paragraph:

								(2)Nothing in any other provision of law
				enacted on or after the date of the enactment of this Act shall be construed to
				alter, amend, modify, invalidate, impair, or supersede any provision of this
				title, except by specific cross-reference to the affected
				section.
								.
						(c)Plan
			 SponsorSection 3(16)(B) of such Act (29 U.S.C. 102(16)(B)) is
			 amended by adding at the end the following new sentence: Such term also
			 includes a person serving as the sponsor of an association health plan under
			 part 8..
				(d)Disclosure of
			 Solvency Protections Related to Self-Insured and Fully Insured Options Under
			 Association Health PlansSection 102(b) of such Act (29 U.S.C.
			 102(b)) is amended by adding at the end the following: An association
			 health plan shall include in its summary plan description, in connection with
			 each benefit option, a description of the form of solvency or guarantee fund
			 protection secured pursuant to this Act or applicable State law, if
			 any..
				(e)Savings
			 ClauseSection 731(c) of such Act is amended by inserting
			 or part 8 after this part.
				(f)Report to the
			 Congress Regarding Certification of Self-Insured Association Health
			 PlansNot later than January 1, 2012, the Secretary of Labor
			 shall report to the Committee on Education and the Workforce of the House of
			 Representatives and the Committee on Health, Education, Labor, and Pensions of
			 the Senate the effect association health plans have had, if any, on reducing
			 the number of uninsured individuals.
				(g)Clerical
			 AmendmentThe 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 Association Health
				Plans
							801. Association health plans.
							802. Certification of association 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. Maintenance of reserves and
				provisions for solvency for plans providing health benefits in addition to
				health insurance coverage.
							807. Requirements for application and
				related requirements.
							808. Notice requirements for voluntary
				termination.
							809. Corrective actions and mandatory
				termination.
							810. Trusteeship by the Secretary of
				insolvent association health plans providing health benefits in addition to
				health insurance coverage.
							811. State assessment
				authority.
							812. Definitions and rules of
				construction.

						.
				502.Clarification
			 of treatment of single employer arrangementsSection 3(40)(B) of the
			 Employee Retirement Income Security Act of
			 1974 (29 U.S.C. 1002(40)(B)) is amended—
				(1)in clause (i), by
			 inserting after control group, the following: except
			 that, in any case in which the benefit referred to in subparagraph (A) consists
			 of medical care (as defined in section 812(a)(2)), two or more trades or
			 businesses, whether or not incorporated, shall be deemed a single employer for
			 any plan year of such plan, or any fiscal year of such other arrangement, if
			 such trades or businesses are within the same control group during such year or
			 at any time during the preceding 1-year period,;
				(2)in clause (iii),
			 by striking (iii) the determination and inserting the
			 following:

						(iii)(I)in any case in which the
				benefit referred to in subparagraph (A) consists of medical care (as defined in
				section 812(a)(2)), the determination of whether a trade or business is under
				common control with another trade or business shall be
				determined under regulations of the Secretary applying principles consistent
				and coextensive with the principles applied in determining whether employees of
				two or more trades or businesses are treated as employed by a single employer
				under section 4001(b), except that, for purposes of this paragraph, an interest
				of greater than 25 percent may not be required as the minimum interest
				necessary for common control, or
							(II)in any other case, the
				determination
							;
				(3)by redesignating
			 clauses (iv) and (v) as clauses (v) and (vi), respectively; and
				(4)by inserting after
			 clause (iii) the following new clause:

						(iv)in any case in which the benefit
				referred to in subparagraph (A) consists of medical care (as defined in section
				812(a)(2)), in determining, after the application of clause (i), whether
				benefits are provided to employees of two or more employers, the arrangement
				shall be treated as having only one participating employer if, after the
				application of clause (i), the number of individuals who are employees and
				former employees of any one participating employer and who are covered under
				the arrangement is greater than 75 percent of the aggregate number of all
				individuals who are employees or former employees of participating employers
				and who are covered under the
				arrangement,
						.
				503.Enforcement
			 provisions relating to association health plans
				(a)Criminal
			 Penalties for Certain Willful MisrepresentationsSection 501 of
			 the Employee Retirement Income Security Act of
			 1974 (29 U.S.C. 1131) is amended—
					(1)by inserting
			 (a) after Sec. 501.; and
					(2)by adding at the
			 end the following new subsection:

							(b)Any person who
				willfully falsely represents, to any employee, any employee’s beneficiary, any
				employer, the Secretary, or any State, a plan or other arrangement established
				or maintained for the purpose of offering or providing any benefit described in
				section 3(1) to employees or their beneficiaries as—
								(1)being an
				association health plan which has been certified under part 8;
								(2)having been
				established or maintained under or pursuant to one or more collective
				bargaining agreements which are reached pursuant to collective bargaining
				described in section 8(d) of the National Labor Relations Act (29 U.S.C.
				158(d)) or paragraph Fourth of section 2 of the Railway Labor Act (45 U.S.C.
				152, paragraph Fourth) or which are reached pursuant to labor-management
				negotiations under similar provisions of State public employee relations laws;
				or
								(3)being a plan or
				arrangement described in section 3(40)(A)(i),
								shall,
				upon conviction, be imprisoned not more than 5 years, be fined under title 18,
				United States Code, or
				both..
					(b)Cease Activities
			 OrdersSection 502 of such Act (29 U.S.C. 1132) is amended by
			 adding at the end the following new subsection:

						(n)Association
				Health Plan Cease-and-Desist Orders
							(1)In
				generalSubject to paragraph (2), upon application by the
				Secretary showing the operation, promotion, or marketing of an association
				health plan (or similar arrangement providing benefits consisting of medical
				care (as defined in section 733(a)(2))) that—
								(A)is not certified
				under part 8, is subject under section 514(b)(6) to the insurance laws of any
				State in which the plan or arrangement offers or provides benefits, and is not
				licensed, registered, or otherwise approved under the insurance laws of such
				State; or
								(B)is an association
				health plan certified under part 8 and is not operating in accordance with the
				requirements under part 8 for such certification,
								a district
				court of the United States shall enter an order requiring that the plan or
				arrangement cease activities.(2)ExceptionParagraph
				(1) shall not apply in the case of an association health plan or other
				arrangement if the plan or arrangement shows that—
								(A)all benefits under
				it referred to in paragraph (1) consist of health insurance coverage;
				and
								(B)with respect to
				each State in which the plan or arrangement offers or provides benefits, the
				plan or arrangement is operating in accordance with applicable State laws that
				are not superseded under section 514.
								(3)Additional
				equitable reliefThe court may grant such additional equitable
				relief, including any relief available under this title, as it deems necessary
				to protect the interests of the public and of persons having claims for
				benefits against the
				plan.
							.
				(c)Responsibility
			 for Claims ProcedureSection 503 of such Act (29 U.S.C. 1133) is
			 amended by inserting (a) In general.— before In
			 accordance, and by adding at the end the following new
			 subsection:

						(b)Association
				Health PlansThe terms of each association health plan which is
				or has been certified under part 8 shall require the board of trustees or the
				named fiduciary (as applicable) to ensure that the requirements of this section
				are met in connection with claims filed under the
				plan.
						.
				504.Cooperation
			 between Federal and State authoritiesSection 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 Association Health Plans
						(1)Agreements with
				statesThe Secretary shall consult with the State recognized
				under paragraph (2) with respect to an association health plan regarding the
				exercise of—
							(A)the Secretary’s
				authority under sections 502 and 504 to enforce the requirements for
				certification under part 8; and
							(B)the Secretary’s
				authority to certify association health plans under part 8 in accordance with
				regulations of the Secretary applicable to certification under part 8.
							(2)Recognition of
				primary domicile stateIn carrying out paragraph (1), the
				Secretary shall ensure that only one State will be recognized, with respect to
				any particular association health plan, as the State with which consultation is
				required. In carrying out this paragraph—
							(A)in the case of a
				plan which provides health insurance coverage (as defined in section
				812(a)(3)), such State shall be the State with which filing and approval of a
				policy type offered by the plan was initially obtained, and
							(B)in any other case,
				the Secretary shall take into account the places of residence of the
				participants and beneficiaries under the plan and the State in which the trust
				is
				maintained.
							.
			505.Effective date
			 and transitional and other rules
				(a)Effective
			 DateThe amendments made by this title 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 title
			 within 1 year after the date of the enactment of this Act.
				(b)Treatment of
			 Certain Existing Health Benefits Programs
					(1)In
			 generalIn any case in which, as of the date of the enactment of
			 this Act, an arrangement is maintained in a State for the purpose of providing
			 benefits consisting of medical care for the employees and beneficiaries of its
			 participating employers, at least 200 participating employers make
			 contributions to such arrangement, such arrangement has been in existence for
			 at least 10 years, and such arrangement is licensed under the laws of one or
			 more States to provide such benefits to its participating employers, upon the
			 filing with the applicable authority (as defined in section 812(a)(5) of the
			 Employee Retirement Income Security Act of
			 1974 (as amended by this title)) by the arrangement of an
			 application for certification of the arrangement under part 8 of subtitle B of
			 title I of such Act—
						(A)such arrangement
			 shall be deemed to be a group health plan for purposes of title I of such
			 Act;
						(B)the requirements
			 of sections 801(a) and 803(a) of the Employee
			 Retirement Income Security Act of 1974 shall be deemed met with
			 respect to such arrangement;
						(C)the requirements
			 of section 803(b) of such Act shall be deemed met, if the arrangement is
			 operated by a board of directors which—
							(i)is
			 elected by the participating employers, with each employer having one vote;
			 and
							(ii)has
			 complete fiscal control over the arrangement and which is responsible for all
			 operations of the arrangement;
							(D)the requirements
			 of section 804(a) of such Act shall be deemed met with respect to such
			 arrangement; and
						(E)the arrangement
			 may be certified by any applicable authority with respect to its operations in
			 any State only if it operates in such State on the date of
			 certification.
						The
			 provisions of this subsection shall cease to apply with respect to any such
			 arrangement at such time after the date of the enactment of this Act as the
			 applicable requirements of this subsection are not met with respect to such
			 arrangement.(2)DefinitionsFor
			 purposes of this subsection, the terms group health plan,
			 medical care, and participating employer shall have
			 the meanings provided in section 812 of the Employee Retirement Income Security Act of
			 1974, except that the reference in paragraph (7) of such section to
			 an association health plan shall be deemed a reference to an
			 arrangement referred to in this subsection.