Obamacare Replacement Act
This bill amends the Internal Revenue Code, the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA), and the Social Security Act to repeal certain provisions regarding health insurance, including: the requirement for individuals to maintain minimum essential coverage, limitations on insurers varying premiums by age or health status, requirements for health insurance to cover preexisting conditions, and the prohibition on lifetime or annual limits on benefits.
The bill allows a refundable tax credit for a percentage of health insurance premiums and a tax credit for health savings account (HSA) contributions.
The bill eliminates HSA contribution limits and allows all individuals to make contributions to HSAs. HSAs may be used to pay for over-the-counter medications and health insurance. HSA distributions for abortion are subject to income tax.
The tax deduction for medical care is expanded to include exercise equipment and services, nutritional supplements, and certain primary care fees. Physicians may deduct uncompensated and charity care.
The bill provides for the establishment and governance of: (1) independent health pools, which offer health insurance coverage to their members; and (2) association health plans, which are group health plans sponsored by business associations.
Individual health insurance coverage is governed by the laws of a state designated by the health insurance issuer.
The Centers for Medicare and Medicaid Services must (currently, may) waive Medicaid requirements to enable states to carry out experimental, pilot, or demonstration projects.
Stop-loss insurance obtained by certain health plans or plan sponsors is exempt from requirements for health insurance.
The bill amends the McCarran-Ferguson Act to declare that nothing in that Act affects antitrust laws regarding health insurance.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1072 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 1072
To repeal provisions of the Patient Protection and Affordable Care Act
and provide private health insurance reform, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 15, 2017
Mr. Sanford (for himself, Mr. Duncan of South Carolina, Mr. Meadows,
Mr. Gosar, Mr. Garrett, and Mr. Mooney of West Virginia) 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, and the Judiciary, 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 provisions of the Patient Protection and Affordable Care Act
and provide private health insurance reform, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Obamacare Replacement Act''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--REPEALS
Sec. 101. Repeal of individual and employer mandates.
Sec. 102. Repeal of Public Health Service Act provisions.
Sec. 103. Repeal of Patient Protection and Affordable Care Act
provisions.
Sec. 104. Conforming and technical amendments.
TITLE II--TAXATION REFORM
Subtitle A--Equalizing Tax Treatment of Non-Employer Provided Health
Insurance
Sec. 201. Tax deduction for health insurance premiums.
Sec. 202. Refundable tax credit for payroll taxes attributable to
health insurance premiums.
Subtitle B--Health Savings Accounts
Sec. 211. Repeal of contribution limitations.
Sec. 212. Freedom from mandate.
Sec. 213. Allowance of distributions for prescription and over-the-
counter medicines and drugs.
Sec. 214. Purchase of health insurance from HSA.
Sec. 215. Special rule for certain medical expenses incurred before
establishment of account.
Sec. 216. Administrative error correction before due date of return.
Sec. 217. Allowing HSA rollover to child or parent of account holder.
Sec. 218. Credit for contributions to an HSA.
Sec. 219. Equivalent bankruptcy protections for health savings accounts
as retirement funds.
Sec. 220. Distributions for abortion expenses from health savings
accounts included in gross income.
Subtitle C--Medical Expenses
Sec. 221. Certain exercise equipment and physical fitness programs
treated as medical care.
Sec. 222. Certain nutritional and dietary supplements to be treated as
medical care.
Sec. 223. Certain provider fees to be treated as medical care.
Sec. 224. Clarification of treatment of capitated primary care payments
as amounts paid for medical care.
Subtitle D--Miscellaneous
Sec. 231. Contributions of medicare beneficiaries participating in
medicare advantage MSA.
Sec. 232. Physician charity and uncompensated care deduction.
TITLE III--INDIVIDUAL HEALTH INSURANCE REFORM
Sec. 301. Pool reform for individual membership expansion.
Sec. 302. Cooperative governing of individual health insurance
coverage.
TITLE IV--ASSOCIATION HEALTH PLANS
Sec. 401. Rules governing association health plans.
Sec. 402. Clarification of treatment of single employer arrangements.
Sec. 403. Enforcement provisions relating to association health plans.
Sec. 404. Cooperation between Federal and State authorities.
Sec. 405. Effective date and transitional and other rules.
TITLE V--MEDICAID REFORM
Sec. 501. Increasing State flexibility to conduct Medicaid waivers.
TITLE VI--MISCELLANEOUS PROVISIONS
Sec. 601. Certain medical stop-loss insurance obtained by certain plan
sponsors of group health plans not included
under the definition of health insurance
coverage.
Sec. 602. Restoring the application of antitrust laws to health sector
insurers.
TITLE I--REPEALS
SEC. 101. REPEAL OF INDIVIDUAL AND EMPLOYER MANDATES.
(a) Repeal of Individual Mandate.--Section 5000A of the Internal
Revenue Code of 1986 is amended by adding at the end the following:
``(h) Termination.--This section shall not apply with respect to
any month beginning after the date of enactment of the Obamacare
Replacement Act.''.
(b) Repeal of Employer Mandate.--Section 4980H of the Internal
Revenue Code of 1986 is amended by adding at the end the following:
``(e) Termination.--This section shall not apply with respect to
any month beginning after the date of enactment of the Obamacare
Replacement Act.''.
SEC. 102. REPEAL OF PUBLIC HEALTH SERVICE ACT PROVISIONS.
(a) Repeal.--The following provisions of title XXVII of the Public
Health Service Act (42 U.S.C. 300gg et seq.) are repealed:
(1) Section 2701 (42 U.S.C. 300gg).
(2) Section 2702 (42 U.S.C. 300gg-1).
(3) Section 2703 (42 U.S.C. 300gg-2).
(4) Section 2704 (42 U.S.C. 300gg-3).
(5) Section 2705 (42 U.S.C. 300gg-4).
(6) Section 2707 (42 U.S.C. 300gg-6).
(7) Section 2708 (42 U.S.C. 300gg-7).
(8) Section 2711 (42 U.S.C. 300gg-11).
(9) Section 2712 (42 U.S.C. 300gg-12).
(10) Section 2713 (42 U.S.C. 300gg-13).
(11) Section 2715 (42 U.S.C. 300gg-15).
(12) Section 2715A (42 U.S.C. 300gg-15a).
(13) Section 2716 (42 U.S.C. 300gg-16).
(14) Section 2718 (42 U.S.C. 300gg-18).
(15) Section 2719 (42 U.S.C. 300gg-19).
(16) Section 2719A (42 U.S.C. 300gg-19a).
(17) Section 2794 (42 U.S.C. 300gg-94), relating to
ensuring that consumers get value for their dollars.
(b) Reinstating Pre-PPACA Law.--Sections 2701, 2702, 2711, and 2712
of the Public Health Service Act as in effect on the day before the
date of enactment of the Patient Protection and Affordable Care Act
(Public Law 111-148) shall be restored or revived as if such Act had
not been enacted (subject to paragraphs (1), (2), (6), and (7) of
subsection (c)).
(c) Redesignations and Transfers.--The following provisions of
title XXVII of the Public Health Service Act (42 U.S.C. 300gg et seq.)
shall be redesignated and transferred as follows:
(1) Section 2701, as restored or revived under subsection
(b), shall be transferred so as to appear as the first section
in subpart I of part A.
(2) Section 2702, as restored or revived under subsection
(b), shall be transferred so as to appear after such section
2701.
(3) Section 2706 (42 U.S.C. 300gg-5) shall be redesignated
as section 2703 and transferred so as to appear after such
section 2702.
(4) Section 2709 (42 U.S.C. 300gg-8), relating to coverage
for individuals participating in approved clinical trials,
shall be redesignated as section 2704 and transferred so as to
appear after section 2703 (as so redesignated).
(5) Section 2709 (42 U.S.C. 300gg-9), relating to
disclosure of information, shall be redesignated as section
2705 and transferred so as to appear after section 2704 (as so
redesignated).
(6) Section 2711, as restored or revived under subsection
(b), shall be redesignated as section 2706 and transferred so
as to appear after section 2705 (as so redesignated).
(7) Section 2712, as restored or revived under subsection
(b), shall be redesignated as section 2707 and transferred so
as to appear after section 2706 (as so redesignated).
(8) Section 2714 (42 U.S.C. 300gg-14) shall be redesignated
as section 2711 and transferred so as to appear as the first
section under subpart II of part A.
(9) Section 2717 (42 U.S.C. 300gg-17) shall be redesignated
as section 2712 and transferred so as to appear after section
2711 (as so redesignated).
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
repeals under subsection (a) shall take effect on the date of
enactment of this Act and shall apply to plan years beginning
after such date of enactment.
(2) Delayed effective dates.--The repeals under paragraphs
(2), (3), (4), and (5) of subsection (a), the provisions
restored or revived under subsection (b), and the conforming
amendment in section 104(a)(2) shall be effective for plan
years beginning on January 1, 2019, and (notwithstanding
subsection (c)) the provisions of law repealed by such
paragraphs of subsection (a) or amended by such conforming
amendment shall continue to remain in effect until such date.
SEC. 103. REPEAL OF PATIENT PROTECTION AND AFFORDABLE CARE ACT
PROVISIONS.
(a) In General.--Section 1312(c) of the Patient Protection and
Affordable Care Act (42 U.S.C. 18032(c)) is repealed.
(b) Repeal of 3-Month Grace Period for Non-payment Premiums.--
Clause (iv) of section 1412(c)(2)(B) of the Patient Protection and
Affordable Care Act is amended by striking ``nonpayment of premiums by
the insured'' and all that follows and inserting ``nonpayment of
premiums by the insured, notify the Secretary of such nonpayment.''.
(c) Effective Date.--This section, and the amendments made by this
section, shall take effect on the date of enactment of this Act and
shall apply to plan years and taxable years beginning after such date
of enactment.
SEC. 104. CONFORMING AND TECHNICAL AMENDMENTS.
(a) PHSA Provisions.--Title XXVII of the Public Health Service Act
(42 U.S.C. 300gg et seq.) is amended--
(1) in section 2724(c) (42 U.S.C. 300gg-23(c)), by striking
``(other than section 2704)'' and inserting ``(other than
section 2725)'';
(2) in section 2741(b)(3) (42 U.S.C. 300gg-41(a)(3)), by
striking ``2712'' and inserting ``2707'';
(3) in section 2751(a) (42 U.S.C. 300gg-51(a)), by striking
``2704'' and inserting ``2725'';
(4) in section 2752 (42 U.S.C. 300gg-52), by striking
``2706'' and inserting ``2727''; and
(5) in section 2753 (42 U.S.C. 300gg-54), relating to
coverage of dependent students on medically necessary leave of
absence, by striking ``2707'' and inserting ``2728''.
(b) PPACA Provisions.--The Patient Protection and Affordable Care
Act (Public Law 111-148) is amended--
(1) in section 1103(b)(1) (42 U.S.C. 18003(b)(1))--
(A) by striking ``the percentage of total premium
revenue expended on nonclinical costs (as reported
under section 2718(a) of the Public Health Service
Act),''; and
(B) by striking ``and be consistent with the
standards adopted for the uniform explanation of
coverage as provided for in section 2715 of the Public
Health Service Act'';
(2) in section 1251(a) (42 U.S.C. 18011(a)), by striking
paragraphs (3) and (4), and inserting the following:
``(3) Application of certain provisions.--Section 2711 of
the Public Health Service Act (relating to extension of
dependent coverage) shall apply to grandfathered health plans
for plan years beginning with the first plan year to which such
provisions would otherwise apply.'';
(3) in section 1301(a)(4) (42 U.S.C. 18021(a)(4)), by
striking ``section 2701(a)(2) of the Public Health Service
Act'' and inserting ``section 2701(a)(2) of the Public Health
Service Act as in effect on the day before the date of
enactment of the Obamacare Replacement Act or as determined by
the Secretary'';
(4) in section 1302(e)(1)(B)(i) (42 U.S.C.
18022(e)(1)(B)(i)), by striking ``(except as provided for in
section 2713)'';
(5) in section 1311 (42 U.S.C. 18031)--
(A) in subsection (c)--
(i) in paragraph (1)(B), by striking ``(in
a manner consistent with applicable network
adequacy provisions under section 2702(c) of
the Public Health Service Act)''; and
(ii) in paragraph (5), by striking ``to the
uniform outline of coverage the plan is
required to provide under section 2716 of the
Public Health Service Act and'';
(B) in subsection (d)(4)(E), by striking ``,
including the use of the uniform outline of coverage
established under section 2715 of the Public Health
Service Act'';
(C) in subsection (e)(2), by striking ``, and the
information and the recommendations'' and all that
follows through ``premium increases),''; and
(D) in subsection (f)(2)(B), by inserting before
the period ``as in effect on the day before the date of
enactment of the Obamacare Replacement Act or as
determined by the Secretary''; and
(6) in section 1334(a)(2), by inserting before the period
``as in effect on the day before the date of enactment of the
Obamacare Replacement Act''.
(c) ERISA Provisions.--Section 715 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1185d) is amended--
(1) in subsection (a)--
(A) by striking ``(a) General Rule'' and all that
follows through ``the provisions of part A'' in
paragraph (1) and inserting ``The provisions of part
A''; and
(B) by striking ``as if included in this subpart;
and'' in paragraph (1) and all that follows through
``to the extent that'' in paragraph (2) and inserting
``as if included in this subpart. To the extent that'';
and
(2) by striking subsection (b).
(d) IRC Provisions.--The Internal Revenue Code of 1986 is amended--
(1) section 36B(b)(3)(C) is amended--
(A) in the first sentence, by striking ``and the
premium was adjusted only for the age of each such
individual in the manner allowed under section 2701 of
the Public Health Service Act''; and
(B) by striking the second sentence;
(2) in section 833(c), by striking paragraph (5); and
(3) in section 9815--
(A) in subsection (a)--
(i) by striking ``(a) General Rule'' and
all that follows through ``the provisions of
part A'' in paragraph (1) and inserting ``The
provisions of part A''; and
(ii) by striking ``as if included in this
subpart; and'' in paragraph (1) and all that
follows through ``to the extent that'' in
paragraph (2) and inserting ``as if included in
this subpart. To the extent that''; and
(B) by striking subsection (b).
(e) Social Security Act.--Section 1937(b)(6)(A) of the Social
Security Act (42 U.S.C. 1396u-7(b)(6)(A)) is amended by striking
``2705(a)'' and inserting ``2726(a)''.
(f) Effective Date.--Except as provided in section 102(d)(2), this
section and the amendments made by this section shall take effect on
the date of enactment of this Act and shall apply to plan years and
taxable years beginning after such date of enactment.
TITLE II--TAXATION REFORM
Subtitle A--Equalizing Tax Treatment of Non-Employer Provided Health
Insurance
SEC. 201. TAX DEDUCTION FOR HEALTH INSURANCE PREMIUMS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by redesignating section 224
as section 225 and by inserting after section 222 the following new
section:
``SEC. 224. HEALTH INSURANCE PREMIUMS.
``(a) In General.--There shall be allowed as a deduction the amount
of premiums paid by the taxpayer for health insurance coverage (as
defined in section 9832) of the taxpayer, the taxpayer's spouse, or any
dependent (as defined in section 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of the taxpayer.
``(b) Coordination Provisions.--
``(1) Premium assistance credit.--Subsection (a) shall not
apply with respect to so much of any premium for which a credit
has been allowed under section 36B.
``(2) Archer msas and hsas.--Subsection (a) shall not apply
with respect to any amount which is treated as a qualified
medical expense under either section 220(d) or 223(c).
``(3) Deduction for medical expenses.--For purposes of
determining the amount of the deduction under section 213, any
amount for which a deduction is allowed under subsection (a)
shall not be treated as an expense paid for medical care.''.
(b) Deduction Available Above the Line.--Section 62(a) of the
Internal Revenue Code of 1986 is amended by inserting after paragraph
(21) the following new paragraph:
``(22) Health insurance premiums.--The deduction allowed by
section 224.''.
(c) Conforming Amendments.--
(1) Section 35(g)(2) of the Internal Revenue Code of 1986
is amended by striking ``or 213'' and inserting ``213, or
224''.
(2) Section 162(l)(3) of such Code is amended by inserting
``or 224(a)'' after ``213(a)''.
(3) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by redesignating the item
relating to section 224 as relating to section 225 and by
inserting after the item relating to section 223 the following
new item:
``Sec. 224. Health insurance premiums.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. 202. REFUNDABLE TAX CREDIT FOR PAYROLL TAXES ATTRIBUTABLE TO
HEALTH INSURANCE PREMIUMS.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 36C. REFUND OF PAYROLL TAXES ATTRIBUTABLE TO HEALTH INSURANCE
PREMIUMS.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this subtitle for any taxable year an amount
equal to the applicable percentage of the premiums paid by the taxpayer
for health insurance coverage (as defined in section 9832) of the
taxpayer, the taxpayer's spouse, or any dependent (as defined in
section 152, determined without regard to subsections (b)(1), (b)(2),
and (d)(1)(B) thereof) of the taxpayer.
``(b) Applicable Percentage.--For purposes of subsection (a), the
term `applicable percentage' means the percentage equal to the sum of
the rates of in effect under subsections (a) and (b) of section 3101.
``(c) Limitation.--The amount of the credit allowed under
subsection (a) shall not exceed the excess of--
``(1) the social security taxes (as defined in section
24(d)) of the taxpayer for the taxable year, reduced by
``(2) the sum of the credits allowed under section 24(d)
and 32 for the taxable year.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``, 36C'' after ``36B''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 36B
the following new item:
``Sec. 36C. Refund of payroll taxes attributable to health insurance
premiums.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2017.
Subtitle B--Health Savings Accounts
SEC. 211. REPEAL OF CONTRIBUTION LIMITATIONS.
(a) In General.--Subsection (b) of section 223 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Denial of Deduction to Dependents.--No deduction shall be
allowed under this section to any individual with respect to whom a
deduction under section 151 is allowable to another taxpayer for a
taxable year beginning in the calendar year in which such individual's
taxable year begins.''.
(b) Conforming Amendments.--
(1) Subparagraph (A) of section 223(d)(1) of the Internal
Revenue Code of 1986 is amended--
(A) by striking ``subsection (f)(5)'' and inserting
``subsection (f)(4)'', and
(B) by striking ``accepted--'' and all that follows
and inserting ``accepted unless it is in cash.''.
(2) Subsection (f) of section 223 of such Code is amended
by striking paragraph (3) and by redesignating paragraphs (4)
through (8) as paragraphs (3) through (7), respectively.
(3) Subsection (g) of section 223 of such Code is amended--
(A) by striking ``subsections (b)(2) and
(c)(2)(A)'' both places it appears and inserting
``subsection (c)(2)(A)'', and
(B) by amending subparagraph (B) to read as
follows:
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins determined by substituting
`calendar year 2003' for `calendar year 1992'.''.
(4) Section 26(b)(2) of such Code is amended--
(A) by striking ``, 223(b)(8)(B)(i)(II),'' in
subparagraph (S), and
(B) by striking ``223(f)(4)'' in subparagraph (U)
and inserting ``223(f)(3)''.
(5) Paragraph (1) of section 106(d) of such Code is amended
by striking ``under an accident or health plan'' and all that
follows and inserting ``under an accident or health plan.''.
(6) Subparagraph (C) of section 106(e)(4) of such Code is
amended by striking ``223(f)(5)'' and inserting ``223(f)(4)''.
(7) Subparagraph (C) of section 408(d)(9) of such Code is
amended--
(A) by striking ``Limitations.--'' in the heading
and all that follows through ``(ii) One-time
transfer.--'' in clause (ii), and inserting ``One-time
transfer.--'',
(B) by redesignating subclauses (I) and (II) as
clauses (i) and (ii) and moving such clauses 2 ems to
the left, and
(C) by striking ``subclause (II)'' in clause (i),
as so redesignated, and inserting ``clause (ii)''.
(8) Section 4973 of such Code is amended by striking
subsection (g) and by redesignating subsection (h) as
subsection (g).
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 212. FREEDOM FROM MANDATE.
(a) In General.--Section 223 of the Internal Revenue Code of 1986,
as amended by section 211, is further amended by striking subsections
(c) and (g) and by redesignating subsections (d), (e), (f), and (h) as
subsections (c), (d), (e), and (f), respectively.
(b) Conforming Amendments.--
(1) Subsection (a) of section 223 of the Internal Revenue
Code of 1986 is amended to read as follows:
``(a) Deduction Allowed.--In the case of an individual, there shall
be allowed as a deduction for the taxable year an amount equal to the
aggregate amount paid in cash during such taxable year by or on behalf
of such individual to a health savings account of such individual.''.
(2) Subsection (c)(1)(A) of section 223 of such Code, as
amended by section 211 and redesignated by subsection (a), is
further amended by striking ``subsection (f)(4)'' and inserting
``subsection (e)(4)''.
(3) Subparagraph (U) of section 26(b)(2) of such Code, as
amended by section 211, is further amended by striking
``section 223(f)(3)'' and inserting ``section 223(e)(3)''.
(4) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(B)(v),
4973(a)(5), and 6051(a)(12) of such Code are each amended by
striking ``section 223(d)'' each place it appears and inserting
``section 223(c)''.
(5) Section 106(d)(1) of such Code is amended--
(A) by striking ``who is an eligible individual (as
defined in section 223(c)(1))'', and
(B) by striking ``section 223(d)'' and inserting
``section 223(c)''.
(6) Section 106(e) of such Code is amended--
(A) by striking paragraphs (3) and (4) and by
redesignating paragraph (5) as paragraph (4),
(B) by inserting after paragraph (2) the following
new paragraph:
``(3) Treatment as rollover contribution.--A qualified HSA
distribution shall be treated as a rollover contribution
described in section 223(e)(4).'', and
(C) by striking ``to any eligible individual
covered under a high deductible health plan of the
employer'' in paragraph (4)(B)(ii) (as so redesignated)
and inserting ``to any employee with respect to whom a
health savings account has been established''.
(7) Section 408(d)(9)(A) of such Code is amended by
striking ``who is an eligible individual (as defined in section
223(c)) and''.
(8) Section 877A(g)(6) of such Code is amended by striking
``223(f)(4)'' and inserting ``223(e)(4)''.
(9) Section 4975 of such Code is amended--
(A) in subsection (c)(6)--
(i) by striking ``section 223(d)'' and
inserting ``section 223(c)'', and
(ii) by striking ``section 223(e)(2)'' and
inserting ``section 223(d)(2)'', and
(B) in subsection (e)(1)(E), by striking ``section
223(d)'' and inserting ``section 223(c)''.
(10) Subsection (b) of section 4980G of such Code is
amended to read as follows:
``(b) Rules and Requirements.--
``(1) In general.--An employer meets the requirements of
this subsection for any calendar year if the employer makes
available comparable contributions to the health savings
accounts of all comparable participating employees for each
coverage period during such calendar year.
``(2) Comparable contributions.--
``(A) In general.--For purposes of paragraph (1),
the term `comparable contributions' means
contributions--
``(i) which are the same amount, or
``(ii) if the employees are covered by a
health plan, which are the same percentage of
the annual deductible limit under the plan
covering the employees.
``(B) Part-year employees.--In the case of an
employee who is employed by the employer for only a
portion of the calendar year, a contribution to the
health savings account of such employee shall be
treated as comparable if it is an amount which bears
the same ratio to the comparable amount (determined
without regard to this subparagraph) as such portion
bears to the entire calendar year.
``(3) Comparable participating employees.--For purposes of
paragraph (1), the term `comparable participating employees'
means all employees who are covered (if at all) under the same
health plan of the employer and have the same category of
coverage. For purposes of the preceding sentence, the
categories of coverage are self-only and family coverage.
``(4) Part-time employees.--
``(A) In general.--Paragraph (3) shall be applied
separately with respect to part-time employees and
other employees.
``(B) Part-time employee.--For purposes of
subparagraph (A), the term `part-time employee' means
any employee who is customarily employed for fewer than
30 hours per week.''.
(11) Section 4980G(d) of such Code is amended by striking
``section 4980E'' and inserting ``this section''.
(12) Section 6693(a)(2)(C) of such Code is amended by
striking ``section 223(h)'' and inserting ``section 223(f)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 213. ALLOWANCE OF DISTRIBUTIONS FOR PRESCRIPTION AND OVER-THE-
COUNTER MEDICINES AND DRUGS.
(a) HSAs.--Paragraph (2)(A) of section 223(c) of the Internal
Revenue Code of 1986, as redesignated by section 212, is amended by
striking the last sentence thereof and inserting the following: ``Such
term shall include an amount paid for any prescription or over-the-
counter medicine or drug.''.
(b) Archer MSAs.--Section 220(d)(2)(A) of the Internal Revenue Code
of 1986 is amended by striking the last sentence thereof and inserting
the following: ``Such term shall include an amount paid for any
prescription or over-the-counter medicine or drug.''.
(c) Health Flexible Spending Arrangements and Health Reimbursement
Arrangements.--Subsection (f) of section 106 of the Internal Revenue
Code of 1986 is amended to read as follows:
``(f) Reimbursements for All Medicines and Drugs.--For purposes of
this section and section 105, reimbursement for expenses incurred for
any prescription or over-the-counter medicine or drug shall be treated
as a reimbursement for medical expenses.''.
(d) Effective Dates.--
(1) Distributions from savings accounts.--The amendments
made by subsections (a) and (b) shall apply to amounts paid in
taxable years beginning after the date of the enactment of this
Act.
(2) Reimbursements.--The amendment made by subsection (c)
shall apply to expenses incurred in plan years beginning after
the date of the enactment of this Act.
SEC. 214. PURCHASE OF HEALTH INSURANCE FROM HSA.
(a) In General.--Paragraph (2) of section 223(c) of the Internal
Revenue Code of 1986, as redesignated by section 212, is amended by
striking subparagraphs (B) and (C).
(b) Conforming Amendment.--Paragraph (2) of section 223(c) of the
Internal Revenue Code of 1986, as amended by the preceding sections of
this subtitle, is further amended by striking ``and any dependent (as
defined in section 152, determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof) of such individual'' and
inserting ``any dependent (as defined in section 152, determined
without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of
such individual, and any child (as defined in section 152(f)(1)) of
such individual who has not attained the age of 27 before the end of
such individual's taxable year''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to insurance purchased after the date of the
enactment of this Act in taxable years beginning after such date.
SEC. 215. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF ACCOUNT.
(a) In General.--Paragraph (2) of section 223(c) of the Internal
Revenue Code of 1986, as amended and redesignated by the preceding
sections of this subtitle, is further amended by adding at the end the
following new subparagraph:
``(B) Certain medical expenses incurred before
establishment of account treated as qualified.--An
expense shall not fail to be treated as a qualified
medical expense solely because such expense was
incurred before the establishment of the health savings
account if such expense was incurred--
``(i) during either--
``(I) the taxable year in which the
health savings account was established,
or
``(II) the preceding taxable year,
in the case of a health savings account
established after the taxable year in
which such expense was incurred but
before the time prescribed by law for
filing the return for such taxable year
(not including extensions thereof), and
``(ii) for medical care which (but for the
fact that it was incurred before the
establishment of the account) otherwise meets
the requirements of the preceding
subparagraphs.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 216. ADMINISTRATIVE ERROR CORRECTION BEFORE DUE DATE OF RETURN.
(a) In General.--Paragraph (3) of section 223(f) of the Internal
Revenue Code of 1986, as in effect on the day before the date of the
enactment of this Act, is amended by adding at the end the following
new subparagraph:
``(D) Exception for administrative errors corrected
before due date of return.--Subparagraph (A) shall not
apply if any payment or distribution is made to correct
an administrative, clerical, or payroll contribution
error and if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 217. ALLOWING HSA ROLLOVER TO CHILD OR PARENT OF ACCOUNT HOLDER.
(a) In General.--Paragraph (7)(A) of section 223(e) of the Internal
Revenue Code of 1986, as redesignated by the preceding sections of this
subtitle, is amended--
(1) by inserting ``, child, parent, or grandparent'' after
``surviving spouse'',
(2) by inserting ``, child, parent, or grandparent, as the
case may be,'' after ``the spouse'',
(3) by inserting ``, child, parent, or grandparent'' after
``spouse'' in the heading thereof, and
(4) by adding at the end the following: ``In the case of a
child who acquires such beneficiary's interest and with respect
to whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins, such health
savings account shall be treated as a health savings account of
such child.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 218. CREDIT FOR CONTRIBUTIONS TO AN HSA.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 25D the following new section:
``SEC. 25E. CONTRIBUTIONS TO A HEALTH SAVINGS ACCOUNT.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this subtitle
for the taxable year an amount equal to so much of the qualified HSA
contributions of the individual as does not exceed $5,000 ($10,000 in
the case of a joint return).
``(b) Qualified HSA Contribution.--
``(1) In general.--For purposes of this section, the term
`qualified HSA contribution' means an amount paid in cash
during the taxable year by or on behalf of an individual to a
health savings account (as defined in section 223(c)) of such
individual.
``(2) Exception for amounts not used for qualified medical
expenses.--The amount taken into account as qualified HSA
contributions of the individual under paragraph (1) for a
taxable year shall be reduced by the amount of any distribution
from such health savings account during such taxable year which
is not used exclusively to pay the qualified medical expenses
of the account beneficiary (within the meaning of section
223(e)(2)).
``(c) Coordination With Deduction.--For coordination rule, see
section 223(b)(1).''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Contributions to a health savings account.''.
(c) Conforming Amendment.--Subsection (b) of section 223 of the
Internal Revenue Code of 1986, as amended by section 211, is further
amended to read as follows:
``(b) Special Rules.--
``(1) Coordination with credit.--The amount taken into
account under subsection (a) with respect to any individual
shall be reduced (but not below zero) by the amount of any
credit allowed under section 25E for qualified HSA
contributions with respect to the individual.
``(2) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 219. EQUIVALENT BANKRUPTCY PROTECTIONS FOR HEALTH SAVINGS ACCOUNTS
AS RETIREMENT FUNDS.
(a) In General.--Section 522 of title 11, United States Code, is
amended by adding at the end the following new subsection:
``(r) Treatment of Health Savings Accounts.--For purposes of this
section, any health savings account (as described in section 223 of the
Internal Revenue Code of 1986) shall be treated in the same manner as
an individual retirement account described in section 408 of such
Code.''.
(b) Effective Date.--The amendment made by this section shall apply
to cases commencing under title 11, United States Code, after the date
of the enactment of this Act.
SEC. 220. DISTRIBUTIONS FOR ABORTION EXPENSES FROM HEALTH SAVINGS
ACCOUNTS INCLUDED IN GROSS INCOME.
(a) In General.--Subsection (e) of section 223 of the Internal
Revenue Code of 1986, as amended by the preceding provisions of this
subtitle, is amended by adding at the end the following new paragraph:
``(8) Exception for certain abortion expenses.--
``(A) In general.--Notwithstanding paragraph (1),
any amount used to pay for an abortion (other than an
abortion described in subparagraph (B)) or health
insurance that covers abortions (other than abortions
so described) shall be included in the gross income of
such beneficiary.
``(B) Exceptions.--Subparagraph (A) shall not apply
to--
``(i) an abortion--
``(I) in the case of a pregnancy
that is the result of an act of rape or
incest, or
``(II) in the case where a woman
suffers from a physical disorder,
physical injury, or physical illness
that would, as certified by a
physician, place the woman in danger of
death unless an abortion is performed,
including a life-endangering physical
condition caused by or arising from the
pregnancy, and
``(ii) the treatment of any infection,
injury, disease, or disorder that has been
caused by or exacerbated by the performance of
an abortion.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
Subtitle C--Medical Expenses
SEC. 221. CERTAIN EXERCISE EQUIPMENT AND PHYSICAL FITNESS PROGRAMS
TREATED AS MEDICAL CARE.
(a) In General.--Subsection (d) of section 213 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
paragraph:
``(12) Exercise equipment and physical fitness activity.--
``(A) In general.--The term `medical care' shall
include amounts paid--
``(i) for equipment for use in a program
(including a self-directed program) of physical
exercise or physical activity,
``(ii) to participate, or receive
instruction, in a program of physical exercise,
nutrition, or health coaching (including a
self-directed program), and
``(iii) for membership at a fitness
facility.
``(B) Overall dollar limitation.--
``(i) In general.--Amounts treated as
medical care under subparagraph (A) shall not
exceed $1,000 with respect to any individual
for any taxable year.
``(ii) Exception.--Clause (i) shall not
apply for purposes of determining whether
expenses reimbursed through a health flexible
spending arrangement subject to section
125(i)(1) are incurred for medical care.
``(C) Limitations related to sports and fitness
equipment.--Amounts paid for equipment described in
subparagraph (A)(i) shall be treated as medical care
only--
``(i) if such equipment is utilized
exclusively for participation in fitness,
exercise, sport, or other physical activity
programs,
``(ii) if such equipment is not apparel or
footwear, and
``(iii) in the case of any item of sports
equipment (other than exercise equipment), to
the extent the amount paid for such item does
not exceed $250.
``(D) Fitness facility.--For purposes of
subparagraph (A)(iii), the term `fitness facility'
means a facility--
``(i) which provides instruction in a
program of physical exercise, offers facilities
for the preservation, maintenance,
encouragement, or development of physical
fitness, or serves as the site of such a
program of a State or local government,
``(ii) which is not a private club owned
and operated by its members,
``(iii) which does not offer golf, hunting,
sailing, or riding facilities,
``(iv) whose health or fitness facility is
not incidental to its overall function and
purpose, and
``(v) which is fully compliant with the
State of jurisdiction and Federal anti-
discrimination laws.''.
(b) Limitation Not To Apply for Certain Purposes.--
(1) Health savings accounts.--Subparagraph (A) of section
223(c)(2) of the Internal Revenue Code of 1986, as amended and
redesignated by subtitle B, is further amended by inserting ``,
determined without regard to paragraph (12)(B) thereof)'' after
``medical care (as defined in section 213(d)''.
(2) Archer msas.--Subparagraph (A) of section 220(d)(2) of
the Internal Revenue Code of 1986, as amended by subtitle B, is
further amended by inserting ``, determined without regard to
paragraph (12)(B) thereof'' after ``medical care (as defined in
section 213(d)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 222. CERTAIN NUTRITIONAL AND DIETARY SUPPLEMENTS TO BE TREATED AS
MEDICAL CARE.
(a) In General.--Subsection (d) of section 213 of the Internal
Revenue Code of 1986, as amended by section 221, is further amended by
adding at the end the following new paragraph:
``(13) Nutritional and dietary supplements.--
``(A) In general.--The term `medical care' shall
include amounts paid to purchase herbs, vitamins,
minerals, homeopathic remedies, meal replacement
products, and other dietary and nutritional
supplements.
``(B) Limitation.--Amounts treated as medical care
under subparagraph (A) shall not exceed $1,000 with
respect to any individual for any taxable year.
``(C) Meal replacement product.--For purposes of
this paragraph, the term `meal replacement product'
means any product that--
``(i) is permitted to bear labeling making
a claim described in section 403(r)(3) of the
Federal Food, Drug, and Cosmetic Act, and
``(ii) is permitted to claim under such
section that such product is low in fat and is
a good source of protein, fiber, and multiple
essential vitamins and minerals.
``(D) Exception.--Subparagraph (B) shall not apply
for purposes of determining whether expenses reimbursed
through a health flexible spending arrangement subject
to section 125(i)(1) are incurred for medical care.''.
(b) Limitation Not To Apply for Certain Purposes.--
(1) Health savings accounts.--Subparagraph (A) of section
223(c)(2) of the Internal Revenue Code of 1986, as amended and
redesignated by this Act, is amended by striking ``paragraph
(12)(B)'' and inserting ``paragraphs (12)(B) and (13)(B)''.
(2) Archer msas.--Subparagraph (A) of section 220(d)(2), as
amended by this Act, is amended by striking ``paragraph
(12)(B)'' and inserting ``paragraphs (12)(B) and (13)(B)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 223. CERTAIN PROVIDER FEES TO BE TREATED AS MEDICAL CARE.
(a) In General.--Subsection (d) of section 213 of the Internal
Revenue Code of 1986, as amended by sections 221 and 222, is amended by
adding at the end the following new paragraph:
``(14) Periodic provider fees.--The term `medical care'
shall include--
``(A) periodic fees paid to a primary care
physician for a defined set of medical services or the
right to receive medical services on an as-needed
basis, and
``(B) pre-paid primary care services designed to
screen for, diagnose, cure, mitigate, treat, or prevent
disease and promote wellness.''.
(b) Exception for Flexible Spending Accounts.--Section 125 of the
Internal Revenue Code of 1986 is amended by redesignating subsections
(k) and (l) as subsections (l) and (m), respectively, and by inserting
after subsection (j) the following new subsection:
``(k) Special Rule With Respect to Health Flexible Spending
Arrangements.--For purposes of applying this section with respect to
any health flexible spending arrangement, amounts described in section
213(d)(14) shall not be considered insurance.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 224. CLARIFICATION OF TREATMENT OF CAPITATED PRIMARY CARE PAYMENTS
AS AMOUNTS PAID FOR MEDICAL CARE.
(a) In General.--Subsection (d) of section 213 of the Internal
Revenue Code of 1986, as amended by the preceding provisions of this
Act, is amended by adding at the end the following new paragraph:
``(15) Treatment of capitated primary care payments.--
Capitated primary care payments shall be treated as amounts
paid for medical care.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
Subtitle D--Miscellaneous
SEC. 231. CONTRIBUTIONS OF MEDICARE BENEFICIARIES PARTICIPATING IN
MEDICARE ADVANTAGE MSA.
(a) In General.--Section 138(b) of the Internal Revenue Code of
1986 is amended by striking paragraph (2) and by redesignating
paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 232. PHYSICIAN CHARITY AND UNCOMPENSATED CARE DEDUCTION.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 199A. PHYSICIAN CHARITY AND UNCOMPENSATED CARE.
``(a) In General.--In the case of a physician, there shall be
allowed as a deduction for the taxable year an amount equal to the sum
of--
``(1) the amount such physician would have otherwise
charged for qualified charity care provided by such physician
during such taxable year, and
``(2) the amount of any debt owed to such physician for
physicians' services which becomes worthless during such
taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Physician.--The term `physician' has the meaning
given to such term in section 1861(r) of the Social Security
Act (42 U.S.C. 1395x(r)).
``(2) Qualified charity care.--The term `qualified charity
care' means physicians' services provided on a volunteer or pro
bono basis (not including any services for which an amount was
charged but not paid).
``(3) Physicians' services.--The term `physicians'
services' has the meaning given such term in section 1861(q) of
the Social Security Act (42 U.S.C. 1395x(q)).
``(c) Limitations.--
``(1) Service charge limitation.--The amount determined
under subsection (a) with respect to any services or debt--
``(A) shall be reduced by any reimbursement
received by the physician for such services or debt,
and
``(B) shall not exceed the economic index referred
to in the fourth sentence of section 1842(b)(3) of the
Social Security Act (42 U.S.C. 1395u(b)(3)) applicable
to the qualified charity care provided or the services
provided with respect to which the debt relates.
In the case of physicians' services to which such economic
index is not applicable, the Secretary, in consultation with
the Secretary of Health and Human Services, shall use data on
uncompensated care for purposes of the limitation under
subparagraph (B), and may adjust such data so as to be an
appropriate proxy, including (in the case of qualified charity
care) a downward adjustment to eliminate bad debt data from
uncompensated care data.
``(2) Overall limitation.--The amount allowed as a
deduction under subsection (a) for any taxable year shall not
exceed an amount equal to 10 percent of the gross income of the
taxpayer for the taxable year derived from the taxpayer's
provision of physicians' services.
``(d) Denial of Double Benefit.--No deduction shall be allowed
under section 166 or any other provision of this title for the amount
of any bad debt taken into account under subsection (a)(2) (as reduced,
if applicable, under subsection (c)).''.
(b) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Sec. 199A. Physician charity and uncompensated care.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
TITLE III--INDIVIDUAL HEALTH INSURANCE REFORM
SEC. 301. POOL REFORM FOR INDIVIDUAL MEMBERSHIP EXPANSION.
The Public Health Service Act is amended by inserting after title
XXXIII the following new title:
``TITLE XXXIV--POOL REFORM FOR INDIVIDUAL MEMBERSHIP EXPANSION
``SEC. 3400. PURPOSE.
``The purpose of this title is to provide, through the
establishment of independent health pools (referred to in this title as
`IHP'), for the reform of, and expansion of enrollment in, health
insurance coverage for individuals and small employers.
``SEC. 3401. DEFINITION OF INDEPENDENT HEALTH POOL.
``(a) In General.--For purposes of this title, the terms
`individual health pool' and `IHP' mean a legal nonprofit entity that
meets the following requirements:
``(1) Organization.--The IHP--
``(A) has been formed and maintained in good faith
for a purpose that includes the formation of a risk
pool in order to offer health insurance coverage to its
members;
``(B) does not condition membership in the IHP on
any health status-related factor relating to an
individual (including an employee of an employer or a
dependent of an employee);
``(C) does not make health insurance coverage
offered through the IHP available other than in
connection with a member of the IHP;
``(D) is not a health insurance issuer; and
``(E) does not receive any consideration directly
or indirectly from any health insurance issuer in
connection with the enrollment of any individuals, or
employees of employers, in any health insurance
coverage, except in conjunction with services offered
through the IHP.
``(2) Offering health benefits coverage.--
``(A) Different groups.--The IHP, in conjunction
with those health insurance issuers that offer health
benefits coverage through the IHP, makes available
health benefits coverage in the manner described in
subsection (b) to all members of the IHP and the
dependents of such members (and, in the case of small
employers, employees and their dependents) in the
manner described in subsection (c)(2) at rates that are
established by the health insurance issuer on a policy
or product specific basis and that may vary for
individuals covered through an IHP.
``(B) Nondiscrimination in coverage offered.--
``(i) In general.--Subject to clause (ii),
the IHP may not offer health benefits coverage
to a member of an IHP unless the same coverage
is offered to all such members of the IHP.
``(ii) Construction.--Nothing in this title
shall be construed as requiring or permitting a
health insurance issuer to provide coverage
outside the service area of the issuer, as
approved under State law, or preventing a
health insurance issuer from underwriting or
from excluding or limiting the coverage on any
individual, subject to the requirement of
section 2741 (relating to guaranteed
availability of individual health insurance
coverage to certain individuals with prior
group coverage).
``(C) No assumption of insurance risk by ihp.--The
IHP provides health benefits coverage only through
contracts with health insurance issuers and does not
assume insurance risk with respect to such coverage.
``(3) Geographic areas.--Nothing in this title shall be
construed as preventing the establishment and operation of more
than one IHP in a geographic area or as limiting the number of
IHPs that may operate in any area.
``(4) Provision of administrative services to purchasers.--
The IHP may provide administrative services for members. Such
services may include accounting, billing, and enrollment
information.
``(b) Health Benefits Coverage Requirements.--
``(1) Compliance with consumer protection requirements.--
Except as provided in section 3402, any health benefits
coverage offered through an IHP--
``(A) shall be issued by a health insurance issuer
that meets all applicable State standards relating to
consumer protection;
``(B) shall be approved or otherwise permitted to
be offered under State law; and
``(C) may not impose any exclusion of a specific
disease from such coverage.
``(2) Wellness bonuses for health promotion.--Nothing in
this title shall be construed as precluding a health insurance
issuer offering health benefits coverage through an IHP from
establishing premium discounts or rebates for members or from
modifying otherwise applicable copayments or deductibles in
return for adherence to programs of health promotion and
disease prevention so long as such programs are agreed to in
advance by the IHP and comply with all other provisions of this
title and do not discriminate among similarly situated members.
``(c) Members; Health Insurance Issuers.--
``(1) Members.--
``(A) In general.--Under rules established to carry
out this title, with respect to an individual or small
employer who is a member of an IHP, the individual may
enroll for health benefits coverage (including coverage
for dependents of such individual) or the employer may
enroll employees for health benefits coverage
(including coverage for dependents of such employees)
offered by a health insurance issuer through the IHP.
``(B) Rules for enrollment.--Nothing in this
paragraph shall preclude an IHP from establishing rules
of enrollment and reenrollment of members. Such rules
shall be applied consistently to all members within the
IHP and shall not be based in any manner on health
status-related factors.
``(2) Health insurance issuers.--The contract between an
IHP and a health insurance issuer shall provide, with respect
to a member enrolled with health benefits coverage offered by
the issuer through the IHP, for the payment to the issuer of
the premiums (if any) collected by the IHP for health insurance
coverage offered by the issuer.
``SEC. 3402. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.
``(a) Preemption of State Laws Restricting Formation of IHPs.--Any
State law or regulation relating to the composition or organization of
an IHP is preempted to the extent the law or regulation is inconsistent
with the provisions of this title.
``(b) Preemption of State Requirements Relating to Health Benefit
Coverage.--
``(1) Benefit requirements.--
``(A) In general.--Subject to subparagraph (B),
State laws are superseded, and shall not apply to
health benefits coverage made available through an IHP,
insofar as such laws impose benefit requirements for
such coverage, including requirements relating to
coverage of specific providers, specific services or
conditions, or the amount, duration, or scope of
benefits.
``(B) Exception for federally imposed requirements
and for requirements prohibiting disease-specific
exclusions.--Subparagraph (A) shall not apply to a
requirement to the extent the requirement--
``(i) implements title XXVII or other
Federal law; or
``(ii) prohibits imposition of an exclusion
of a specific disease from health benefits
coverage.
``(2) Other requirements preventing offering of coverage
through an ihp.--State laws are superseded, and shall not apply
to health benefits coverage made available through an IHP,
insofar as such laws impose any other requirements (including
limitations on compensation arrangements) that, directly or
indirectly, preclude (or have the effect of precluding) the
offering of such coverage through an IHP, if the IHP meets the
requirements of this title.
``(c) Preemption of State Premium Rating Requirements.--State laws
are superseded, and shall not apply to the premiums imposed for health
benefits coverage made available through an IHP, insofar as such laws
impose restrictions on the variation of premiums among such coverage
offered to members of the IHP.
``SEC. 3403. DEFINITIONS.
``For purposes of this title:
``(1) Dependent.--The term `dependent', as applied to
health insurance coverage offered by a health insurance issuer
licensed (or otherwise regulated) in a State, shall have the
meaning applied to such term with respect to such coverage
under the laws of the State relating to such coverage and such
an issuer. Such term may include the spouse and children of the
individual involved.
``(2) Health benefits coverage.--The term `health benefits
coverage' has the meaning given the term `health insurance
coverage' in section 2791(b)(1), and does not include excepted
benefits (as defined in section 2791(c)).
``(3) Health insurance issuer.--The term `health insurance
issuer' has the meaning given such term in section 2791(b)(2).
``(4) Health status-related factor.--The term `health
status-related factor' has the meaning given such term in
section 2791(d)(9).
``(5) Member.--The term `member' means, with respect to an
IHP, an individual or small employer who is a member of the
legal entity described in section 3401(a)(1) to which the IHP
is offering coverage.
``(6) Small employer.--The term `small employer' has the
meaning given such term in section 712(c)(1)(B) of the Employee
Retirement and Income Security Act of 1974.''.
SEC. 302. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE
COVERAGE.
(a) In General.--Title XXVII of the Public Health Service Act (42
U.S.C. 300gg et seq.) is amended by adding at the end the following new
part:
``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE
``SEC. 2795. DEFINITIONS.
``In this part:
``(1) Primary state.--The 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 state.--The 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 issuer.--The 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 coverage.--The term
`individual health insurance coverage' means health insurance
coverage offered in the individual market, as defined in
section 2791(e)(1).
``(5) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of this title for the State with respect to the
issuer.
``(6) Hazardous financial condition.--The 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 general.--The 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) Exception.--Such 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) State.--The 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 practices.--The 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 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 abuse.--The 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, or 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.
``SEC. 2796. APPLICATION OF LAW.
``(a) In General.--The 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 State.--Except 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 Disclosure.--A 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 the 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:
```Notice
```This policy is issued by _____ and is governed by the laws and
regulations of the _____, 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 _____, including coverage of some
services or benefits mandated by the law of the _____. Additionally,
this policy is not subject to all of the consumer protection laws or
restrictions on rate changes of the _____. 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 general.--For 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) Construction.--Nothing 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 State.--A 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
Issuers.--Any 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 Commissioner.--
Each 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 Conduct.--Nothing 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 Action.--
Nothing 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 general.--Subject 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 jurisdiction.--If 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 Sue.--Nothing in this section shall
affect the authority of any State to bring action in any Federal or
State court.
``(l) Generally Applicable Laws.--Nothing 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
Individuals.--To 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.
``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY
SELL INTO SECONDARY STATES.
``A 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.
``SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES.
``(a) Right to External Appeal.--A 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 paragraph
(1) 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 Reviewers.--In the case
of any independent review mechanism referred to in subsection (a)(2):
``(1) In general.--In 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 expertise.--Each independent medical
reviewer shall be a physician (allopathic or osteopathic) or
health care professional who--
``(A) is appropriately credentialed or licensed in
one 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 general.--Subject 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) Exception.--Nothing 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 general.--In 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 one
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 defined.--For 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 expertise.--In the case of an external
review relating to a child, a reviewer shall have expertise
under paragraph (2) in pediatrics.
``(6) Limitations on reviewer compensation.--Compensation
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 defined.--For 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) Definitions.--For purposes of this subsection--
``(A) Enrollee.--The 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 professional.--The 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.
``SEC. 2799. ENFORCEMENT.
``(a) In General.--Subject 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 Authority.--Nothing 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 Interpretation.--In 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 Failure.--In 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 Date.--The 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) Study.--The 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 underinsured;
(B) the availability and cost of health insurance
policies for individuals with pre-existing 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 reports.--The 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).
TITLE IV--ASSOCIATION HEALTH PLANS
SEC. 401. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding after part 7 the
following new part:
``PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS
``SEC. 801. ASSOCIATION HEALTH PLANS.
``(a) In General.--For purposes of this part, the term `association
health plan' means a group health plan whose sponsor is (or is deemed
under this part to be) described in subsection (b).
``(b) Sponsorship.--The sponsor of a group health plan is described
in this subsection if such sponsor--
``(1) is organized and maintained in good faith, with a
constitution and bylaws specifically stating its purpose and
providing for periodic meetings on at least an annual basis, as
a 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.
``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.
``(a) In General.--The 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) Standards.--Under 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 Plans.--An 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 Certification.--The applicable
authority may provide by regulation for continued certification of
association health plans under this part.
``(e) Class Certification for Fully Insured Plans.--The 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 Plans.--An
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--
``(1) a plan which offered such coverage on the date of the
enactment of the Obamacare Replacement 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.
``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
``(a) Sponsor.--The requirements of this subsection are met with
respect to an association health plan if 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 Trustees.--The requirements of this subsection are
met with respect to an association health plan if the following
requirements are met:
``(1) Fiscal control.--The plan is operated, pursuant to a
trust agreement, by a board of 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 controls.--The board
of trustees has in effect rules of operation and financial
controls, based on a 3-year plan of operation, adequate to
carry out the terms of the plan and to meet all requirements of
this title applicable to the plan.
``(3) Rules governing relationship to participating
employers and to contractors.--
``(A) Board membership.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), the members of the
board of trustees are individuals selected from
individuals who are the owners, officers,
directors, or employees of the participating
employers or who are partners in the
participating employers and actively
participate in the business.
``(ii) Limitation.--
``(I) General rule.--Except as
provided in subclauses (II) and (III),
no such member is an owner, officer,
director, or employee of, or partner
in, a contract administrator or other
service provider to the plan.
``(II) Limited exception for
providers of services solely on behalf
of the sponsor.--Officers or employees
of a sponsor which is a service
provider (other than a contract
administrator) to the plan may be
members of the board if they constitute
not more than 25 percent of the
membership of the board and they do not
provide services to the plan other than
on behalf of the sponsor.
``(III) Treatment of providers of
medical care.--In the case of a sponsor
which is an association whose
membership consists primarily of
providers of medical care, subclause
(I) shall not apply in the case of any
service provider described in subclause
(I) who is a provider of medical care
under the plan.
``(iii) Certain plans excluded.--Clause (i)
shall not apply to an association health plan
which is in existence on the date of the
enactment of the Obamacare Replacement Act.
``(B) Sole authority.--The 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 Networks.--In 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'.
``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
``(a) Covered Employers and Individuals.--The requirements of this
subsection are met with respect to an association health plan if, under
the terms of the plan--
``(1) 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 Employees.--In the case of
an association health plan in existence on the date of the enactment of
the Obamacare Replacement 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 Unaffected.--The 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 Participate.--The 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.
``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION
RATES, AND BENEFIT OPTIONS.
``(a) In General.--The requirements of this section are met with
respect to an association health plan if the following requirements are
met:
``(1) Contents of governing instruments.--The 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 plans.--If 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 general.--If 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 agents.--For
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 requirements.--Such 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
Options.--Subject 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.
``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR
PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH
INSURANCE COVERAGE.
``(a) In General.--The 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 health 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
health 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 health actuary may recommend, taking
into account the specific circumstances of the plan.
``(b) Minimum Surplus in Addition to Claims Reserves.--In 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 Requirements.--In 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 Insurance.--The 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 Compliance.--The 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 general.--In 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 payments.--If
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 secretary.--The
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 plans.--In 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 general.--There is established in 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) Investment.--Whenever 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 Insurance.--For purposes of this section:
``(1) Aggregate excess/stop loss insurance.--The 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 insurance.--The 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 Insurance.--For 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) Reserves.--For 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 general.--Within 90 days after the date of the
enactment of the Obamacare Replacement 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) Membership.--The 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.
``(F) A representative of multiemployer plans that
are group health plans, or their interests.
``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
``(a) Filing Fee.--Under 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
Certification.--An application for certification under this part meets
the requirements of this section only if it includes, in a manner and
form which shall be prescribed by the applicable authority by
regulation, at least the following information:
``(1) Identifying information.--The names and addresses
of--
``(A) the sponsor; and
``(B) the members of the board of trustees of the
plan.
``(2) States in which plan intends to do business.--The
States in which participants and beneficiaries under the plan
are to be located and the number of them expected to be located
in each such State.
``(3) Bonding requirements.--Evidence provided by the board
of trustees that the bonding requirements of section 412 will
be met as of the date of the application or (if later)
commencement of operations.
``(4) Plan documents.--A copy of the documents governing
the plan (including any bylaws and trust agreements), the
summary plan description, and other material describing the
benefits that will be provided to participants and
beneficiaries under the plan.
``(5) Agreements with service providers.--A copy of any
agreements between the plan and contract administrators and
other service providers.
``(6) Funding report.--In 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) Reserves.--A statement, certified by the
board of trustees of the plan, and a statement of
actuarial opinion, signed by a qualified health
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 rates.--A statement
of actuarial opinion, signed by a qualified health
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
liabilities.--A statement of actuarial opinion signed
by a qualified health 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
expenses.--A 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 information.--Any 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 States.--A certification
granted under this part to an association health plan shall not be
effective unless written notice of such certification is filed with the
applicable State authority of each State in which at least 25 percent
of the participants and beneficiaries under the plan are located. For
purposes of this subsection, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed.
``(d) Notice of Material Changes.--In the case of any association
health plan certified under this part, descriptions of material changes
in any information which was required to be submitted with the
application for the certification under this part shall be filed in
such form and manner as shall be prescribed by the applicable 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
Plans.--An association health plan certified under this part which
provides benefit options in addition to health insurance coverage for
such plan year shall meet the requirements of section 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), 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 Health Actuary.--The board of
trustees of each association health plan which provides benefits
options in addition to health insurance coverage and which is applying
for certification under this part or is certified under this part shall
engage, on behalf of all participants and beneficiaries, a qualified
health actuary who shall be responsible for the preparation of the
materials comprising information necessary to be submitted by a
qualified health actuary under this part. The qualified health 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 health actuary shall be made with respect
to, and shall be made a part of, the annual report.
``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
``Except as provided in section 809(b), an association health plan
which is or has been certified under this part may terminate (upon or
at any time after cessation of 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.
``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
``(a) Actions To Avoid Depletion of Reserves.--An 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 health
actuary engaged by the plan, and such actuary shall, not later than the
end of the 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 Termination.--In 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.
``SEC. 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 Plans.--
Whenever 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 Trustee.--The Secretary, upon appointment as
trustee under subsection (a), shall have the power--
``(1) to do any act authorized by the plan, this title, or
other applicable provisions of law to be done by the plan
administrator or any trustee of the plan;
``(2) to require the transfer of all (or any part) of the
assets and records of the plan to the 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 Appointment.--As 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 Duties.--Except 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 Proceedings.--An 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 general.--Upon 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) Venue.--An 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) Personnel.--In 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.
``SEC. 811. STATE ASSESSMENT AUTHORITY.
``(a) In General.--Notwithstanding 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 the Obamacare Replacement Act.
``(b) Contribution Tax.--For 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.
``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
``(a) Definitions.--For purposes of this part--
``(1) Group health plan.--The term `group health plan' has
the meaning provided in section 733(a)(1) (after applying
subsection (b) of this section).
``(2) Medical care.--The term `medical care' has the
meaning provided in section 733(a)(2).
``(3) Health insurance coverage.--The term `health
insurance coverage' has the meaning provided in section
733(b)(1).
``(4) Health insurance issuer.--The term `health insurance
issuer' has the meaning provided in section 733(b)(2).
``(5) Applicable authority.--The 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 factor.--The term `health
status-related factor' has the meaning provided in section
733(d)(2).
``(7) Individual market.--
``(A) In general.--The term `individual market'
means the market for health insurance coverage offered
to individuals other than in connection with a group
health plan.
``(B) Treatment of very small groups.--
``(i) In general.--Subject to clause (ii),
such term includes coverage offered in
connection with a group health plan that has
fewer than 2 participants as current employees
or participants described in section 732(d)(3)
on the first day of the plan year.
``(ii) State exception.--Clause (i) shall
not apply in the case of health insurance
coverage offered in a State if such State
regulates the coverage described in such clause
in the same manner and to the same extent as
coverage in the small group market (as defined
in section 2791(e)(5) of the Public Health
Service Act) is regulated by such State.
``(8) Participating employer.--The 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 authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of title XXVII of the Public Health Service Act
for the State involved with respect to such issuer.
``(10) Qualified health actuary.--The term `qualified
health actuary' means an individual who is a member of the
American Academy of Actuaries with expertise in health care.
``(11) Affiliated member.--The term `affiliated member'
means, in connection with a sponsor--
``(A) a person who is otherwise eligible to be a
member of the sponsor but who elects an affiliated
status with the sponsor,
``(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 the Obamacare
Replacement Act, a person eligible to be a member of
the sponsor or one of its member associations.
``(12) Large employer.--The 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 employer.--The 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 employees.--For 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 plans.--In 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.
``(3) Exception for certain benefits.--The requirements of
this part shall not apply to a group health plan in relation to
its provision of excepted benefits, as defined in section
733(c).''.
(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)--
(i) by inserting ``and which does not
provide medical care (within the meaning of
section 733(a)(2)),'' after ``arrangement,'';
and
(ii) 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 the Obamacare Replacement 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 Sponsor.--Section 3(16)(B) of such Act (29 U.S.C.
102(16)(B)) is amended by adding at the end the following new sentence:
``Such term also includes a person serving as the sponsor of an
association health plan under part 8 of subtitle B.''.
(d) Disclosure of Solvency Protections Related to Self-Insured and
Fully Insured Options Under Association Health Plans.--Section 102(b)
of such Act (29 U.S.C. 1022(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 Clause.--Section 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 Plans.--Not later than January 1, 2018, the
Secretary of Labor shall report to the Committee on Education and the
Workforce of the House of Representatives and the Committee on Health,
Education, Labor, and Pensions of the Senate the effect association
health plans have had, if any, on reducing the number of uninsured
individuals.
(g) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item 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.''.
SEC. 402. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 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,''.
SEC. 403. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.
(a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1131) is amended by adding at the end the following new
subsection:
``(c) 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 Orders.--Section 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 general.--Subject 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) Exception.--Paragraph (1) shall not apply in the case
of an association health plan or other arrangement if the plan
or arrangement shows that--
``(A) all benefits under it referred to in
paragraph (1) consist of health insurance 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 relief.--The 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 Procedure.--Section 503 of such Act
(29 U.S.C. 1133) is amended--
(1) by inserting ``(a) In General.--'' before ``In
accordance''; and
(2) by adding at the end the following new subsection:
``(b) Association Health Plans.--The terms of each association
health plan which is or has been certified under part 8 shall require
the board of trustees or the named fiduciary (as applicable) to ensure
that the requirements of this section are met in connection with claims
filed under the plan.''.
SEC. 404. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(d) Consultation With States With Respect to Association Health
Plans.--
``(1) Agreements with states.--The 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 state.--In 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.''.
SEC. 405. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) Effective Date.--The amendments made by this subtitle 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 subtitle within 1 year after the date
of the enactment of this Act.
(b) Treatment of Certain Existing Health Benefits Programs.--
(1) In general.--In any case in which, as of the date of
the enactment of this Act, an 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 subtitle)) 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) Definitions.--For 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 subsection (a)(8) of such
section to an ``association health plan'' shall be deemed a
reference to an arrangement referred to in this subsection.
TITLE V--MEDICAID REFORM
SEC. 501. INCREASING STATE FLEXIBILITY TO CONDUCT MEDICAID WAIVERS.
Section 1115(a)(1) of the Social Security Act (42 U.S.C.
1315(a)(1)) is amended--
(1) by striking ``1602, or 1902'' and inserting ``or
1602''; and
(2) by inserting ``and shall waive compliance with section
1902,'' after ``as the case may be,''.
TITLE VI--MISCELLANEOUS PROVISIONS
SEC. 601. CERTAIN MEDICAL STOP-LOSS INSURANCE OBTAINED BY CERTAIN PLAN
SPONSORS OF GROUP HEALTH PLANS NOT INCLUDED UNDER THE
DEFINITION OF HEALTH INSURANCE COVERAGE.
(a) PHSA.--Section 2791(b)(1) of the Public Health Service Act (42
U.S.C. 300gg-91(b)(1)) is amended by adding at the end the following
new sentence: ``Such term shall not include a stop loss policy obtained
by a self-insured health plan or a plan sponsor of a group health plan
that self-insures the health risks of its plan participants to
reimburse the plan or sponsor for losses that the plan or sponsor
incurs in providing health or medical benefits to such plan
participants in excess of a predetermined level set forth in the stop
loss policy obtained by such plan or sponsor.''.
(b) ERISA.--Section 733(b)(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1191b(b)(1)) is amended by adding at
the end the following new sentence: ``Such term shall not include a
stop loss policy obtained by a self-insured health plan or a plan
sponsor of a group health plan that self-insures the health risks of
its plan participants to reimburse the plan or sponsor for losses that
the plan or sponsor incurs in providing health or medical benefits to
such plan participants in excess of a predetermined level set forth in
the stop loss policy obtained by such plan or sponsor.''.
(c) IRC.--Section 9832(b)(1)(A) of the Internal Revenue Code of
1986 is amended by adding at the end the following new sentence: ``Such
term shall not include a stop loss policy obtained by a self-insured
health plan or a plan sponsor of a group health plan that self-insures
the health risks of its plan participants to reimburse the plan or
sponsor for losses that the plan or sponsor incurs in providing health
or medical benefits to such plan participants in excess of a
predetermined level set forth in the stop loss policy obtained by such
plan or sponsor.''.
SEC. 602. RESTORING THE APPLICATION OF ANTITRUST LAWS TO HEALTH SECTOR
INSURERS.
(a) Amendment to Mccarran-Ferguson Act.--Section 3 of the Act of
March 9, 1945 (15 U.S.C. 1013), commonly known as the McCarran-Ferguson
Act, is amended by adding at the end the following:
``(c)(1) Nothing contained in this Act shall modify, impair, or
supersede the operation of any of the antitrust laws with respect to
the business of health insurance (including the business of dental
insurance). For purposes of the preceding sentence, the term `antitrust
laws' has the meaning given it in subsection (a) of the first section
of the Clayton Act, except that such term includes section 5 of the
Federal Trade Commission Act to the extent that such section 5 applies
to unfair methods of competition.
``(2) For purposes of paragraph (1), the term `business of
health insurance (including the business of dental insurance)'
does not include--
``(A) the business of life insurance (including
annuities); or
``(B) the business of property or casualty
insurance, including but not limited to, any insurance
or benefits defined as `excepted benefits' under
paragraph (1), subparagraph (B) or (C) of paragraph
(2), or paragraph (3) of section 9832(c) of the
Internal Revenue Code of 1986 (26 U.S.C. 9832(c))
whether offered separately or in combination with
insurance or benefits described in paragraph (2)(A) of
such section.''.
(b) Related Provision.--For purposes of section 5 of the Federal
Trade Commission Act (15 U.S.C. 45) to the extent such section applies
to unfair methods of competition, section 3(c) of the McCarran-Ferguson
Act shall apply with respect to the business of health insurance
without regard to whether such business is carried on for profit,
notwithstanding the definition of ``Corporation'' contained in section
4 of the Federal Trade Commission Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and the Workforce, and the Judiciary, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and the Workforce, and the Judiciary, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and the Workforce, and the Judiciary, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and the Workforce, and the Judiciary, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and the Workforce, and the Judiciary, 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.
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Referred to the Subcommittee on Health.