108th CONGRESS
1st Session
H. R. 3423
To amend the Internal Revenue Code of 1986 to allow individuals a
refundable credit against income tax for health insurance costs, to allow
employees who elect not to participate in employer subsidized health plans
an exclusion from gross income for employer payments in lieu of such participation,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
October 30, 2003
Mr. SHADEGG introduced the following bill; which was referred to the Committee
on Energy and Commerce, and in addition to the Committees on Education and
the Workforce, and Ways and Means, 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 amend the Internal Revenue Code of 1986 to allow individuals a
refundable credit against income tax for health insurance costs, to allow
employees who elect not to participate in employer subsidized health plans
an exclusion from gross income for employer payments in lieu of such participation,
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; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Patients' Health Care Choice
Act of 2003'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--HEALTHMARTS
Sec. 101. Expansion of consumer choice through Healthmarts.
TITLE II--HEALTH CARE ACCESS AND CHOICE THROUGH INDIVIDUAL MEMBERSHIP ASSOCIATIONS
(IMAs)
Sec. 201. Expansion of access and choice through individual membership associations
(IMAs).
TITLE III--FEDERAL MATCHING FUNDING FOR STATE INSURANCE EXPENDITURES
Sec. 301. Federal matching funding for State insurance expenditures.
TITLE IV--AFFORDABLE HEALTH COVERAGE FOR EMPLOYEES OF SMALL BUSINESSES
Sec. 401. Short title of title.
Sec. 403. Clarification of treatment of single employer arrangements.
Sec. 404. Clarification of treatment of certain collectively bargained arrangements.
Sec. 405. Enforcement provisions.
Sec. 406. Cooperation between Federal and State authorities.
Sec. 407. Effective date and transitional and other rules.
TITLE V--IMPROVEMENT TO ACCESS AND CHOICE OF HEALTH CARE
Sec. 501. Refundable credit for health insurance costs.
Sec. 502. Exclusion for employer payments made to compensate employees who
elect not to participate in employer-subsidized health plans.
Sec. 503. Expanded availability of medical savings accounts.
TITLE VI--PATIENT ACCESS TO INFORMATION
Sec. 601. Patient access to information regarding plan coverage, managed
care procedures, health care providers, and quality of medical care.
Sec. 602. Effective date.
(c) CONSTITUTIONAL AUTHORITY TO ENACT THIS LEGISLATION- The constitutional
authority upon which this Act rests is the power of Congress to regulate commerce
with foreign nations and among the several States, set forth in article I,
section 8 of the United States Constitution.
SEC. 2. FINDINGS.
(a) NEED FOR STRUCTURAL REFORMS- Congress finds that the majority of Americans
are receiving health care of a quality unmatched elsewhere in the world but
that the method by which health care currently is financed and delivered is
inflationary and does not distribute quality care to all Americans. Congress
further finds that the major structural reforms must be implemented in order
to institute a competitive system based on individual choice, under which
each American is permitted individual choice to select the method of health
care delivery which he believes is most appropriate for himself and his family,
with appropriate assistance from the United States Government. Such a system
would introduce internal incentives for the cost-effective delivery of quality
health care to the American people.
(b) SPECIFIC DEFICIENCIES- Congress finds that the major deficiencies of the
present method of delivering and financing health care as follows:
(1) EMPLOYER OWNERSHIP OF HEALTH BENEFITS- The biggest problem with health
care today is that the tax code has encouraged employers, not individuals,
to become the purchaser of health insurance. Employers have a tax incentive
to offer health care benefits to their employees, which means that employers
are truly the owner of the plan, not individuals. Therefore employees, who
are the consumers of health care services are unconcerned with and not involved
with issues of cost and overutilize health care services in the belief that
such services are `free'.
(2) INSUFFICIENT ACCESS- Numerous persons are not able to obtain sufficient
health care either because the necessary personnel and facilities are not
located in their communities or because they do not have adequate financial
resources to obtain such services, or both.
(3) EXCESSIVE GOVERNMENT REGULATION- Continually increasing and complex
Government regulation of the economic aspects of the health care delivery
system has proven ineffective in restraining costs and is itself expensive
and counterproductive in fulfilling its purposes and detrimental to the
care of patients.
(4) THIRD-PARTY PAYMENT SYSTEMS- Payment by third-party payers (including
commercial insurance companies and various levels of government) for the
preponderance of the health care delivered each year insulates patients,
as well as physicians, hospitals, and other deliverers of health care, from
the need to consider the cost of treatment in addition to the medical benefit
expected from it.
(5) REASONABLE COST REIMBURSEMENT- Reimbursement of hospitals and other
health care institutions by third-party payers on the basis of reasonable
costs of operation provides these institutions insufficient incentives to
introduce more efficient methods of delivering care and at the same time
diminishes the extent to which these institutions and their patients are
affected by the consequences of inefficiency and overexpansion.
(6) GOVERNMENT AND THIRD-PARTY PAYER- The present role of government as
a third-party payer poses a conflict of interest whereby the Government
purchases or finances health care services and unilaterally determines the
amount the deliverer will be paid for those services.
(7) LACK OF COMPETITION- The present system of financing and regulation
prevents health care deliverers from competing with each other on the basis
of efficiency and price as well as quality.
SEC. 3. PURPOSES.
The purposes of Act are--
(1) to make it possible for individuals, employees, and the self-employed
to purchase and own their own health insurance without suffering any negative
tax consequences;
(2) to enable individuals to make their own informed choice of the method
by which their health care is provided, the persons who deliver it, and
the price they wish to pay for it;
(3) to assist individuals in obtaining and in paying for basic health care
services;
(4) to render patients and deliverers sensitive to the cost of health care,
giving them both the incentive and the ability to restrain undesired increases
in health care costs;
(5) to simplify and rationalize the payment mechanism for health care services;
(6) to foster the development of numerous, varied, and innovative systems
of providing health care which will compete against each other in terms
of price, service, and quality, and thus allow the American people to benefit
from competitive forces which will reward efficient and effective deliverers
and eliminate those which provide unsatisfactory quality of care or are
inefficient;
(7) to replace governmental regulation of the economic aspects of health
care delivery with individual choice, private initiative, and marketplace
incentives and disciplines;
(8) to encourage the development of systems of delivering health care which
are capable of supplying a broad range of health care services in a comprehensive
and systematic manner, and
(9) to preserve the independence of health care deliverers and encourage
their close identification with and their accountability to the individuals
they serve.
TITLE I--HEALTHMARTS
SEC. 101. EXPANSION OF CONSUMER CHOICE THROUGH HEALTHMARTS.
The Public Health Service Act is amended by adding at the end the following
new title:
`TITLE XXIX--HEALTHMARTS
`SEC. 2901. DEFINITION OF HEALTHMART.
`(a) IN GENERAL- For purposes of this title, the term `HealthMart' means a
legal entity that meets the following requirements:
`(1) ORGANIZATION- The HealthMart is an organization operated under the
direction of a board of directors which is composed of representatives of
not fewer than 2 from each of the following:
`(C) Individuals (other than those described in subparagraph (B)) who
are eligible to participate in the HealthMart.
`(D) Health care providers, which may be physicians, other health care
professionals, health care facilities, or any combination thereof.
`(E) Entities, such as insurance companies, health maintenance organizations,
and licensed provider-sponsored organizations, that underwrite or administer
health benefits coverage.
`(2) OFFERING HEALTH BENEFITS COVERAGE-
`(A) DIFFERENT GROUPS- The HealthMart, in conjunction with those health
insurance issuers that offer health benefits coverage through the HealthMart,
makes available health benefits coverage in the manner described in subsection
(b) to all employers, eligible employees, and individuals in the manner
described in subsection (c)(2) at rates (including employer's and employee's
share, if applicable) that are established by the health insurance issuer
on a policy or product specific basis and that may vary only as permissible
under State law. A HealthMart is deemed to be a group health plan for
purposes of applying section 702 of the Employee Retirement Income Security
Act of 1974, section 2702 of this Act, and section 9802(b) of the Internal
Revenue Code of 1986 (which limit variation among similarly situated individuals
of required premiums for health benefits coverage on the basis of health
status-related factors).
`(B) NONDISCRIMINATION IN COVERAGE OFFERED-
`(i) IN GENERAL- Subject to clause (ii), the HealthMart may not offer
health benefits coverage to an eligible employee or individual in a
geographic area (as specified under paragraph (3)(A)) unless the same
coverage is offered to all such employees or individuals in the same
geographic area. Section 2711(a)(1)(B) of this Act limits denial of
enrollment of certain eligible individuals under health benefits coverage
in the small group market.
`(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.
`(C) NO FINANCIAL UNDERWRITING- The HealthMart provides health benefits
coverage only through contracts with health insurance issuers and does
not assume insurance risk with respect to such coverage.
`(D) MINIMUM COVERAGE- By the end of the first year of its operation and
thereafter, the HealthMart maintains not fewer than 10 purchasers and
100 members.
`(A) SPECIFICATION OF GEOGRAPHIC AREAS- The HealthMart shall specify the
geographic area (or areas) in which it makes available health benefits
coverage offered by health insurance issuers to employers, or individuals,
as the case may be. Any such area shall encompass at least one entire
county or equivalent area.
`(B) MULTISTATE AREAS- In the case of a HealthMart that serves more than
one State, such geographic areas may be areas that include portions of
two or more contiguous States.
`(C) MULTIPLE HEALTHMARTS PERMITTED IN SINGLE GEOGRAPHIC AREA- Nothing
in this title shall be construed as preventing the establishment and operation
of more than one HealthMart in a geographic area or as limiting the number
of HealthMarts that may operate in any area.
`(4) PROVISION OF ADMINISTRATIVE SERVICES TO PURCHASERS-
`(A) IN GENERAL- The HealthMart provides administrative services for purchasers.
Such services may include accounting, billing, enrollment information,
and employee coverage status reports.
`(B) CONSTRUCTION- Nothing in this subsection shall be construed as preventing
a HealthMart from serving as an administrative service organization to
any entity.
`(5) DISSEMINATION OF INFORMATION- The HealthMart collects and disseminates
(or arranges for the collection and dissemination of) consumer-oriented
information on the scope, cost, and enrollee satisfaction of all coverage
options offered through the HealthMart to its members and eligible individuals.
Such information shall be defined by the HealthMart and shall be in a manner
appropriate to the type of coverage offered. To the extent practicable,
such information shall include information on provider performance, locations
and hours of operation of providers, outcomes, and similar matters. Nothing
in this section shall be construed as preventing the dissemination of such
information or other information by the HealthMart or by health insurance
issuers through electronic or other means.
`(6) FILING INFORMATION- The HealthMart--
`(A) files with the applicable Federal authority information that demonstrates
the HealthMart's compliance with the applicable requirements of this title;
or
`(B) in accordance with rules established under section 2903(a), files
with a State such information as the State may require to demonstrate
such compliance.
`(b) HEALTH BENEFITS COVERAGE REQUIREMENTS-
`(1) COMPLIANCE WITH CONSUMER PROTECTION REQUIREMENTS- Any health benefits
coverage offered through a HealthMart shall--
`(A) be underwritten by a health insurance issuer that--
`(i) is licensed (or otherwise regulated) under State law,
`(ii) meets all applicable State standards relating to consumer protection,
subject to section 2902(b), and
`(iii) offers the coverage under a contract with the HealthMart;
`(B) subject to paragraph (2), be approved or otherwise permitted to be
offered under State law; and
`(C) provide full portability of creditable coverage for individuals who
remain members of the same HealthMart notwithstanding that they change
the employer through which they are members in accordance with the provisions
of the parts 6 and 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 and titles XXII and XXVII
of this Act, so long as both employers are purchasers in the HealthMart, and
notwithstanding that they terminate such employment, if the HealthMart permits
enrollment directly by eligible individuals.
`(2) ALTERNATIVE PROCESS FOR APPROVAL OF HEALTH BENEFITS COVERAGE IN CASE
OF DISCRIMINATION OR DELAY-
`(A) IN GENERAL- The requirement of paragraph (1)(B) shall not apply to
a policy or product of health benefits coverage offered in a State if
the health insurance issuer seeking to offer such policy or product files
an application to waive such requirement with the applicable Federal authority,
and the authority determines, based on the application and other evidence
presented to the authority, that--
`(i) either (or both) of the grounds described in subparagraph (B) for
approval of the application has been met; and
`(ii) the coverage meets the applicable State standards (other than
those that have been preempted under section 2902).
`(B) GROUNDS- The grounds described in this subparagraph with respect
to a policy or product of health benefits coverage are as follows:
`(i) FAILURE TO ACT ON POLICY, PRODUCT, OR RATE APPLICATION ON A TIMELY
BASIS- The State has failed to complete action on the policy or product
(or rates for the policy or product) within 90 days of the date of the
State's receipt of a substantially complete application. No period before
the date of the enactment of this section shall be included in determining
such 90-day period.
`(ii) DENIAL OF APPLICATION BASED ON DISCRIMINATORY TREATMENT- The State
has denied such an application and--
`(I) the standards or review process imposed by the State as a condition
of approval of the policy or product imposes either any material requirements,
procedures, or standards to such policy or product that are not generally
applicable to other policies and products offered or any requirements
that are preempted under section 2902; or
`(II) the State requires the issuer, as a condition of approval of
the policy or product, to offer any policy or product other than such
policy or product.
`(C) ENFORCEMENT- In the case of a waiver granted under subparagraph (A)
to an issuer with respect to a State, the Secretary may enter into an
agreement with the State under which the State agrees to provide for monitoring
and enforcement activities with respect to compliance of such an issuer
and its health insurance coverage with the applicable State standards
described in subparagraph (A)(ii). Such monitoring and enforcement shall
be conducted by the State in the same manner as the State enforces such
standards with respect to other health insurance issuers and plans, without
discrimination based on the type of issuer to which the standards apply.
Such an agreement shall specify or establish mechanisms by which compliance
activities are undertaken, while not lengthening the time required to
review and process applications for waivers under subparagraph (A).
`(3) EXAMPLES OF TYPES OF COVERAGE- The benefits coverage made available
through a HealthMart may include, but is not limited to, any of the following
if it meets the other applicable requirements of this title:
`(A) Coverage through a health maintenance organization.
`(B) Coverage in connection with a preferred provider organization.
`(C) Coverage in connection with a licensed provider-sponsored organization.
`(D) Indemnity coverage through an insurance company.
`(E) Coverage offered in connection with a contribution into a medical
savings account or flexible spending account.
`(F) Coverage that includes a point-of-service option.
`(G) Any combination of such types of coverage.
`(4) WELLNESS BONUSES FOR HEALTH PROMOTION- Nothing in this title shall
be construed as precluding a health insurance issuer offering health benefits
coverage through a HealthMart 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 HealthMart and
comply with all other provisions of this title and do not discriminate among
similarly situated members.
`(c) PURCHASERS; MEMBERS; HEALTH INSURANCE ISSUERS-
`(A) IN GENERAL- Subject to the provisions of this title, a HealthMart
shall permit any employer or any individual described in subsection (a)(1)(C)
to contract with the HealthMart for the purchase of health benefits coverage
for its employees and dependents of those employees or for the individual
(and the individual's dependents), respectively, and may not vary conditions
of eligibility (including premium rates and membership fees) of an employer
or individual to be a purchaser.
`(B) ROLE OF ASSOCIATIONS, BROKERS, AND LICENSED HEALTH INSURANCE AGENTS-
Nothing in this section shall be construed as preventing an association,
broker, licensed health insurance agent, or other entity from assisting
or representing a HealthMart or employers or individuals from entering
into appropriate arrangements to carry out this title.
`(C) PERIOD OF CONTRACT- The HealthMart may not require a contract under
subparagraph (A) between a HealthMart and a purchaser to be effective
for a period of longer than 24 months. The previous sentence shall not
be construed as preventing such a contract from being extended for additional
24-month periods or preventing the purchaser from voluntarily electing
a contract period of longer than 24 months.
`(D) EXCLUSIVE NATURE OF CONTRACT-
`(i) IN GENERAL- Subject to clause (ii), such a contract shall provide
that the purchaser agrees not to obtain or sponsor health benefits coverage,
on behalf of any
eligible employees (and their dependents), other than through the HealthMart.
`(ii) EXCEPTION IF NO COVERAGE OFFERED IN AREA OF RESIDENCES- Clause
(i) shall not apply to an eligible individual who resides in an area
for which no coverage is offered by any health insurance issuer through
the HealthMart.
`(iii) NOTHING PRECLUDING INDIVIDUAL EMPLOYEE OPT-OUT- Nothing in this
subparagraph shall be construed as requiring an eligible employee of
a large or small employer that is a purchaser to obtain health benefits
coverage through the HealthMart.
`(i) EMPLOYMENT BASED MEMBERSHIP- Under rules established to carry out
this title, with respect to an employer that has a purchaser contract
with a HealthMart, individuals who are employees of the employer may
enroll for health benefits coverage (including coverage for dependents
of such enrolling employees) offered by a health insurance issuer through
the HealthMart.
`(ii) INDIVIDUALS- Under rules established to carry out this title,
with respect to an individual who has a purchaser contract with a HealthMart
for himself or herself, the individual may enroll for health benefits
coverage (including coverage for dependents of such individual) offered
by a health insurance issuer through the HealthMart.
`(B) NONDISCRIMINATION IN ENROLLMENT- A HealthMart may not deny enrollment
as a member to an individual who is an employee or individual (or dependent
of such an employee or individual) eligible to be so enrolled based on
health status-related factors, except as may be permitted consistent with
section 2742(b).
`(C) ANNUAL OPEN ENROLLMENT PERIOD- In the case of members enrolled in
health benefits coverage offered by a health insurance issuer through
a HealthMart, subject to subparagraph (D), the HealthMart shall provide
for an annual open enrollment period of 30 days during which such members
may change the coverage option in which the members are enrolled.
`(D) RULES OF ELIGIBILITY- Nothing in this paragraph shall preclude a
HealthMart from establishing rules of employee or individual eligibility
for enrollment and reenrollment of members during the annual open enrollment
period under subparagraph (C). Such rules shall be applied consistently
to all purchasers and members within the HealthMart and shall not be based
in any manner on health status-related factors and may not conflict with
sections 2701 and 2702 of this Act.
`(3) HEALTH INSURANCE ISSUERS-
`(A) PREMIUM COLLECTION- The contract between a HealthMart and a health
insurance issuer shall provide, with respect to a member enrolled with
health benefits coverage offered by the issuer through the HealthMart,
for the payment of the premiums collected by the HealthMart (or the issuer)
for such coverage (less a pre-determined administrative charge negotiated
by the HealthMart and the issuer) to the issuer.
`(B) SCOPE OF SERVICE AREA- Nothing in this title shall be construed as
requiring the service area of a health insurance issuer with respect to
health insurance coverage to cover the entire geographic area served by
a HealthMart.
`(C) AVAILABILITY OF COVERAGE OPTIONS-
`(i) IN GENERAL- A HealthMart shall enter into contracts with one or
more health insurance issuers in a manner that assures that at least
2 health insurance coverage options are made available.
`(ii) REQUIREMENT OF NON-NETWORK OPTION- At least one of the health
insurance coverage options made available under clause (i) shall be
a non-network coverage option under which enrollees may obtain benefits
for health care items and services that are not provided under a contract
between the provider of the service and the issuer involved.
`(d) PREVENTION OF CONFLICTS OF INTEREST-
`(1) FOR BOARDS OF DIRECTORS- A member of a board of directors of a HealthMart
may not serve as an employee or paid consultant to the HealthMart, but may
receive reasonable reimbursement for travel expenses for purposes of attending
meetings of the board or committees thereof.
`(2) FOR BOARDS OF DIRECTORS OR EMPLOYEES- An individual is not eligible
to serve in a paid or unpaid capacity on the board of directors of a HealthMart
or as an employee of the HealthMart, if the individual is employed by, represents
in any capacity, owns, or controls any ownership interest in an organization
from whom the HealthMart receives contributions, grants, or other funds
not connected with a contract for coverage through the HealthMart.
`(3) EMPLOYMENT AND EMPLOYEE REPRESENTATIVES-
`(A) IN GENERAL- An individual who is serving on a board of directors
of a HealthMart as a representative described in subparagraph (A) or (B)
of section 2901(a)(1) shall not be employed by or affiliated with a health
insurance issuer or be licensed as or employed by or affiliated with a
health care provider.
`(B) CONSTRUCTION- For purposes of subparagraph (A), the term `affiliated'
does not include membership in a health benefits plan or the obtaining
of health benefits coverage offered by a health insurance issuer.
`(1) NETWORK OF AFFILIATED HEALTHMARTS- Nothing in this section shall be
construed as preventing one or more HealthMarts serving different areas
(whether or not contiguous) from providing for some or all of the following
(through a single administrative organization or otherwise):
`(A) Coordinating the offering of the same or similar health benefits
coverage in different areas served by the different HealthMarts.
`(B) Providing for crediting of deductibles and other cost-sharing for
individuals who are provided health benefits coverage through the HealthMarts
(or affiliated HealthMarts) after--
`(i) a change of employers through which the coverage is provided, or
`(ii) a change in place of employment to an area not served by the previous
HealthMart.
`(2) PERMITTING HEALTHMARTS TO ADJUST DISTRIBUTIONS AMONG ISSUERS TO REFLECT
RELATIVE RISK OF ENROLLEES- Nothing in this section shall be construed as
precluding a HealthMart from providing for adjustments in amounts distributed
among the health insurance issuers offering health benefits coverage through
the HealthMart based on factors such as the relative health care risk of
members enrolled under the coverage offered by the different issuers.
`SEC. 2902. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.
`(a) AUTHORITY OF STATES- Nothing in this section shall be construed as preempting
State laws relating to the following:
`(1) The regulation of underwriters of health coverage, including licensure
and solvency requirements.
`(2) The application of premium taxes and required payments for guaranty
funds or for contributions to high-risk pools.
`(3) The application of fair marketing requirements and other consumer protections
(other than those specifically relating to an item described in subsection
(b)).
`(4) The application of requirements relating to the adjustment of rates
for health insurance coverage.
`(b) TREATMENT OF BENEFIT AND GROUPING REQUIREMENTS- State laws insofar as
they relate to any of the following are superseded and shall not apply to
health benefits coverage made available through a HealthMart:
`(1) Benefit requirements for health benefits coverage offered through a
HealthMart, including (but not limited to) requirements relating to coverage
of specific providers, specific services or conditions, or the amount, duration,
or scope of benefits, but not including requirements to the extent required
to implement title XXVII or other Federal law and to the extent the requirement
prohibits an exclusion of a specific disease from such coverage.
`(2) Requirements (commonly referred to as fictitious group laws) relating
to grouping and similar requirements for such coverage to the extent such
requirements impede the establishment and operation of HealthMarts pursuant
to this title.
`(3) 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 a HealthMart, if the HealthMart meets
the requirements of this title.
Any State law or regulation relating to the composition or organization of
a HealthMart is preempted to the extent the law or regulation is inconsistent
with the provisions of this title.
`(c) APPLICATION OF ERISA FIDUCIARY AND DISCLOSURE REQUIREMENTS- The board
of directors of a HealthMart is deemed to be a plan administrator of an employee
welfare benefit plan which is a group health plan for purposes of applying
parts 1 and 4 of subtitle B of title I of the Employee Retirement Income Security
Act of 1974 and those provisions of part 5 of such subtitle which are applicable
to enforcement of such parts 1 and 4, and the HealthMart shall be treated
as such a plan and the enrollees enrolled on the basis of employment shall
be treated as participants and beneficiaries for purposes of applying such
provisions pursuant to this subsection.
`(d) APPLICATION OF ERISA RENEWABILITY PROTECTION- A HealthMart is deemed
to be group health plan that is a multiple employer welfare arrangement for
purposes of applying section 703 of the Employee Retirement Income Security
Act of 1974.
`(e) APPLICATION OF RULES FOR NETWORK PLANS AND FINANCIAL CAPACITY- The provisions
of subsections (c) and (d) of section 2711 apply to health benefits coverage
offered by a health insurance issuer through a HealthMart.
`(f) CONSTRUCTION RELATING TO OFFERING REQUIREMENT- Nothing in section 2711(a)
of this Act or 703 of the Employee Retirement Income Security Act of 1974
shall be construed as permitting the offering outside the HealthMart of health
benefits coverage that is only made available through a HealthMart under this
section because of the application of subsection (b).
`(g) APPLICATION TO GUARANTEED RENEWABILITY REQUIREMENTS IN CASE OF DISCONTINUATION
OF AN ISSUER- For purposes of applying section 2712 in the case of health
insurance coverage offered by a health insurance issuer through a HealthMart,
if the contract between the HealthMart and the issuer is terminated and the
HealthMart continues to make available any health insurance coverage after
the date of such termination, the following rules apply:
`(1) RENEWABILITY- The HealthMart shall fulfill the obligation under such
section of the issuer renewing and continuing in force coverage by offering
purchasers (and members and their dependents) all available health benefits
coverage that would otherwise be available to similarly-situated purchasers
and members from the remaining participating health insurance issuers in
the same manner as would be required of issuers under section 2712(c).
`(2) APPLICATION OF ASSOCIATION RULES- The HealthMart shall be considered
an association for purposes of applying section 2712(e).
`(h) CONSTRUCTION IN RELATION TO CERTAIN OTHER LAWS- Nothing in this title
shall be construed as modifying or affecting the applicability to HealthMarts
or health benefits coverage offered by a health insurance issuer through a
HealthMart of parts 6 and 7 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 or titles XXII and XXVII of this Act.
`SEC. 2903. ADMINISTRATION.
`(a) IN GENERAL- The applicable Federal authority shall administer this title
and is authorized to issue such regulations as may be required to carry out
this title. Such regulations shall be subject to Congressional review under
the provisions of chapter 8 of title 5, United States Code. The applicable
Federal authority shall incorporate the process of `deemed file and use' with
respect to the information filed under section 2901(a)(6)(A) and shall determine
whether information filed by a HealthMart demonstrates compliance with the
applicable requirements of this title. Such authority shall exercise its authority
under this title in a manner that fosters and promotes the development of
HealthMarts in order to improve access to health care coverage and services.
`(b) PERIODIC REPORTS- The applicable Federal authority shall submit to Congress
a report every 30 months, during the 10-year period beginning on the effective
date of the rules promulgated by the applicable Federal authority to carry
out this title, on the effectiveness of this title in promoting coverage of
uninsured individuals. Such authority may provide for the production of such
reports through one or more contracts with appropriate private entities.
`SEC. 2904. DEFINITIONS.
`For purposes of this title:
`(1) APPLICABLE FEDERAL AUTHORITY- The term `applicable Federal authority'
means the Secretary of Health and Human Services .
`(2) ELIGIBLE EMPLOYEE OR INDIVIDUAL- The term `eligible' means, with respect
to an employee or other individual and a HealthMart, an employee or individual
who is eligible under section 2901(c)(2) to enroll or be enrolled in health
benefits coverage offered through the HealthMart.
`(3) EMPLOYER; EMPLOYEE; DEPENDENT- Except as the applicable Federal authority
may otherwise provide, the terms `employer', `employee', and `dependent',
as applied to health insurance coverage offered by a health insurance issuer
licensed (or otherwise regulated) in a State, shall have the meanings applied
to such terms with respect to such coverage under the laws of the State
relating to such coverage and such an issuer. The term `dependent' may include
the spouse and children of the individual involved.
`(4) HEALTH BENEFITS COVERAGE- The term `health benefits coverage' has the
meaning given the term group health insurance coverage in section 2791(b)(4).
`(5) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning given such term in section 2791(b)(2).
`(6) HEALTH STATUS-RELATED FACTOR- The term `health status-related factor'
has the meaning given such term in section 2791(d)(9).
`(7) HEALTHMART- The term `HealthMart' is defined in section 2901(a).
`(8) MEMBER- The term `member` means, with respect to a HealthMart, an individual
enrolled for health benefits coverage through the HealthMart under section
2901(c)(2).
`(9) PURCHASER- The term `purchaser' means, with respect to a HealthMart,
an employer or individual that has contracted under section 2901(c)(1)(A)
with the HealthMart for the purchase of health benefits coverage.'.
TITLE II--HEALTH CARE ACCESS AND CHOICE THROUGH INDIVIDUAL MEMBERSHIP ASSOCIATIONS
(IMAs)
SEC. 201. EXPANSION OF ACCESS AND CHOICE THROUGH INDIVIDUAL MEMBERSHIP ASSOCIATIONS
(IMAs).
The Public Health Service Act, as amended by section 101, is further amended
by adding at the end the following new title:
`TITLE XXX--INDIVIDUAL MEMBERSHIP ASSOCIATIONS
`SEC. 3001. DEFINITION OF INDIVIDUAL MEMBERSHIP ASSOCIATION (IMA).
`(a) IN GENERAL- For purposes of this title, the terms `individual membership
association' and `IMA' mean a legal entity that meets the following requirements:
`(1) ORGANIZATION- The IMA is an organization operated under the direction
of an association (as defined in section 3004(1)).
`(2) OFFERING HEALTH BENEFITS COVERAGE-
`(A) DIFFERENT GROUPS- The IMA, in conjunction with those health insurance
issuers that offer health benefits coverage through the IMA, makes available
health benefits coverage in the manner described in subsection (b) to
all members of the IMA and the dependents of such members 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
only as permissible under State law.
`(B) NONDISCRIMINATION IN COVERAGE OFFERED-
`(i) IN GENERAL- Subject to clause (ii), the IMA may not offer health
benefits coverage to a member of an IMA unless the same coverage is
offered to all such members of the IMA.
`(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 requiring
a health insurance issuer from excluding or limiting the coverage on
any individual, subject to the requirement of section 2741.
`(C) NO FINANCIAL UNDERWRITING- The IMA 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 IMA in a geographic area
or as limiting the number of IMAs that may operate in any area.
`(4) PROVISION OF ADMINISTRATIVE SERVICES TO PURCHASERS-
`(A) IN GENERAL- The IMA may provide administrative services for members.
Such services may include accounting, billing, and enrollment information.
`(B) CONSTRUCTION- Nothing in this subsection shall be construed as preventing
an IMA from serving as an administrative service organization to any entity.
`(5) FILING INFORMATION- The IMA files with the Secretary information that
demonstrates the IMA's compliance with the applicable requirements of this
title.
`(b) HEALTH BENEFITS COVERAGE REQUIREMENTS-
`(1) COMPLIANCE WITH CONSUMER PROTECTION REQUIREMENTS- Any health benefits
coverage offered through an IMA shall--
`(A) be underwritten by a health insurance issuer that--
`(i) is licensed (or otherwise regulated) under State law,
`(ii) meets all applicable State standards relating to consumer protection,
subject to section 3002(b), and
`(B) subject to paragraph (2), be approved or otherwise permitted to be
offered under State law.
`(2) EXAMPLES OF TYPES OF COVERAGE- The benefits coverage made available
through an IMA may include, but is not limited to, any of the following
if it meets the other applicable requirements of this title:
`(A) Coverage through a health maintenance organization.
`(B) Coverage in connection with a preferred provider organization.
`(C) Coverage in connection with a licensed provider-sponsored organization.
`(D) Indemnity coverage through an insurance company.
`(E) Coverage offered in connection with a contribution into a medical
savings account or flexible spending account.
`(F) Coverage that includes a point-of-service option.
`(G) Any combination of such types of coverage.
`(3) WELLNESS BONUSES FOR HEALTH PROMOTION- Nothing in this title shall
be construed as precluding a health insurance issuer offering health benefits
coverage through an IMA 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 IMA and comply with all other
provisions of this title and do not discriminate among similarly situated
members.
`(c) MEMBERS; HEALTH INSURANCE ISSUERS-
`(A) IN GENERAL- Under rules established to carry out this title, with
respect to an individual who is a member of an IMA, the individual may
enroll for health benefits coverage (including coverage for dependents
of such individual) offered by a health insurance issuer through the IMA.
`(B) RULES FOR ENROLLMENT- Nothing in this paragraph shall preclude an
IMA from establishing rules of enrollment and reenrollment of members.
Such rules shall be applied consistently to all members within the IMA
and shall not be based in any manner on health status-related factors.
`(2) HEALTH INSURANCE ISSUERS- The contract between an IMA and a health
insurance issuer shall provide, with respect to a member enrolled with health
benefits coverage offered by the issuer through the IMA, for the payment
of the premiums collected by the issuer.
`SEC. 3002. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.
`State laws insofar as they relate to any of the following are superseded
and shall not apply to health benefits coverage made available through an
IMA:
`(1) Benefit requirements for health benefits coverage offered through an
IMA, including (but not limited to) requirements relating to coverage of
specific providers, specific services or conditions, or the amount, duration,
or scope of benefits, but not including requirements to the extent required
to implement title XXVII or other Federal law and to the extent the requirement
prohibits an exclusion of a specific disease from such coverage.
`(2) 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 IMA, if the IMA meets the requirements
of this title.
Any State law or regulation relating to the composition or organization of
an IMA is preempted to the extent the law or regulation is inconsistent with
the provisions of this title.
`SEC. 3003. ADMINISTRATION.
`(a) IN GENERAL- The Secretary shall administer this title and is authorized
to issue such regulations as may be required to carry out this title. Such
regulations shall be subject to Congressional review under the provisions
of chapter 8 of title 5, United States Code. The Secretary shall incorporate
the process of `deemed file and use' with respect to the information filed
under section 3001(a)(5)(A) and shall determine whether information filed
by an IMA demonstrates compliance with the applicable requirements of this
title. The Secretary shall exercise authority under this title in a manner
that fosters and promotes the development of IMAs in order to improve access
to health care coverage and services.
`(b) PERIODIC REPORTS- The Secretary shall submit to Congress a report every
30 months, during the 10-year period beginning on the effective date of the
rules promulgated by the Secretary to carry out this title, on the effectiveness
of this title in promoting coverage of uninsured individuals. The Secretary
may provide for the production of such reports through one or more contracts
with appropriate private entities.
`SEC. 3004. DEFINITIONS.
`For purposes of this title:
`(1) ASSOCIATION- The term `association' means, with respect to health insurance
coverage offered in a State, an association which--
`(A) has been actively in existence for at least 5 years;
`(B) has been formed and maintained in good faith for purposes other than
obtaining insurance;
`(C) does not condition membership in the association on any health status-related
factor relating to an individual (including an employee of an employer
or a dependent of an employee); and
`(D) does not make health insurance coverage offered through the association
available other than in connection with a member of the association.
`(2) 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.
`(3) HEALTH BENEFITS COVERAGE- The term `health benefits coverage' has the
meaning given the term health insurance coverage in section 2791(b)(1).
`(4) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning given such term in section 2791(b)(2).
`(5) HEALTH STATUS-RELATED FACTOR- The term `health status-related factor'
has the meaning given such term in section 2791(d)(9).
`(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIATION- The terms `IMA' and `individual
membership association' are defined in section 3001(a).
`(7) MEMBER- The term `member' means, with respect to an IMA, an individual
who is a member of the association to which the IMA is offering coverage.'.
TITLE III--FEDERAL MATCHING FUNDING FOR STATE INSURANCE EXPENDITURES
SEC. 301. FEDERAL MATCHING FUNDING FOR STATE INSURANCE EXPENDITURES.
(a) IN GENERAL- Subject to the succeeding provisions of this section, each
State shall receive from the Secretary of Health and Human Services an amount
equal to 50 percent of the funds expended by the State in providing for the
use, in connection with providing health benefits coverage, of a high-risk
pool, a reinsurance pool, or other risk-adjustment mechanism used for the
purpose of subsidizing the purchase of private health insurance.
(b) FUNDING LIMITATION- A State shall not receive under this section for a
fiscal year more than a total of 50 cents multiplied by the average number
of residents (as estimated by the Secretary) in the State in the fiscal year.
(c) ADMINISTRATION- The Secretary of Health and Human Services shall provide
for the administration of this section and may establish such terms and conditions,
including the requirement of an application, as may be appropriate to carry
out this section.
(d) CONSTRUCTION- Nothing in this section shall be construed as requiring
a State to operate a reinsurance pool (or other risk-adjustment mechanism)
under this section or as preventing a State from operating such a pool or
mechanism through one or more private entities.
(e) HIGH-RISK POOL- For purposes of this section, the term `high-risk pool'
means any qualified high risk pool (as defined in section 2744(c)(2) of the
Public Health Service Act).
(f) REINSURANCE POOL OR OTHER RISK-ADJUSTMENT MECHANISM DEFINED- For purposes
of this section, the term `reinsurance pool or other risk-adjustment mechanism'
means any State-based risk spreading mechanism to subsidize the purchase of
private health insurance for the high-risk population.
(g) HIGH-RISK POPULATION- For purposes of this section, the term `high-risk
population' means--
(1) individuals who, by reason of the existence or history of a medical
condition, are able to acquire health coverage only at rates which are at
least 150 percent of the standard risk rates for such coverage, and
(2) individuals who are provided health coverage by a high-risk pool.
(h) STATE DEFINED- For purposes of this section, the term `State' includes
the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands.
TITLE IV--AFFORDABLE HEALTH COVERAGE FOR EMPLOYEES OF SMALL BUSINESSES
SEC. 401. SHORT TITLE OF TITLE.
This title may be cited as the `Small Business Access and Choice for Entrepreneurs
Act of 2003'.
SEC. 402. RULES.
(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--
`(1) whose sponsor is (or is deemed under this part to be) described in
subsection (b); and
`(2) under which at least one option of health insurance coverage offered
by a health insurance issuer (which may include, among other options, managed
care options, point of service options, and preferred provider options)
is provided to participants and beneficiaries, unless, for any plan year,
such coverage remains unavailable to the plan despite good faith efforts
exercised by the plan to secure such coverage.
`(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 collects from its members on a periodic basis 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, through
negotiated rulemaking, 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--
`(1) such certification--
`(A) is administratively feasible;
`(B) is not adverse to the interests of the individuals covered under
the plan; and
`(C) is protective of the rights and benefits of the individuals covered
under the plan; and
`(2) the applicable requirements of this part are met (or, upon the date
on which the plan is to commence operations, will be met) with respect to
the plan.
`(c) REQUIREMENTS APPLICABLE TO CERTIFIED PLANS- An association health plan
with respect to which certification under this part is in effect shall meet
the 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, through negotiated rulemaking, 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 any of the following:
`(1) a plan which offered such coverage on the date of the enactment of
the Small Business Access and Choice for Entrepreneurs Act of 2003,
`(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, which have been indicated
as having average or above-average health insurance risk or health claims
experience by reason of State rate filings, denials of coverage, proposed
premium rate levels, and other means demonstrated by such plan in accordance
with regulations which the Secretary shall prescribe through negotiated
rulemaking, including (but not limited to) the following: agriculture; automobile
dealerships; barbering and cosmetology; child care; construction; dance,
theatrical, and orchestra productions; disinfecting and pest control; eating
and drinking establishments; fishing; hospitals; labor organizations; logging;
manufacturing (metals); mining; medical and dental practices; medical laboratories;
sanitary services; transportation (local and freight); and warehousing.
`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) IN GENERAL- Except as provided in subparagraphs (B) and (C), 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.
`(i) GENERAL RULE- Except as provided in clauses (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, clause (i) shall not apply in the case of any service
provider described in subparagraph (A) who is a provider of medical
care under the plan.
`(C) CERTAIN PLANS EXCLUDED- Subparagraph (A) shall not apply to an association
health plan which is in existence on the date of the enactment of the
Small Business Access and Choice for Entrepreneurs Act of 2003.
`(D) 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)(1) 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, through negotiated rulemaking, define for
purposes of this subsection the terms `franchiser', `franchise network', and
`franchisee'.
`(d) CERTAIN COLLECTIVELY BARGAINED PLANS-
`(1) IN GENERAL- In the case of a group health plan described in paragraph
(2)--
`(A) the requirements of subsection (a) and section 801(a)(1) shall be
deemed met;
`(B) the joint board of trustees shall be deemed a board of trustees with
respect to which the requirements of subsection (b) are met; and
`(C) the requirements of section 804 shall be deemed met.
`(2) REQUIREMENTS- A group health plan is described in this paragraph if--
`(A) the plan is a multiemployer plan; or
`(B) the plan is in existence on April 1, 1997, and would be described
in section 3(40)(A)(i) but solely for the failure to meet the requirements
of section 3(40)(C)(ii).
`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;
`(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 Small Business
Access and Choice for Entrepreneurs Act of 2003, 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 the claims experience of such employer 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 through
negotiated rulemaking.
`(b) HEALTH BENEFIT OPTIONS UNDER AN ASSOCIATION HEALTH PLAN-
`(1) EXAMPLES OF TYPES OF COVERAGE- The health benefits coverage made available
through an association health plan may include, but is not limited to, any
of the following if it meets the other applicable requirements of this title:
`(A) Coverage through a health maintenance organization.
`(B) Coverage in connection with a preferred provider organization.
`(C) Coverage in connection with a licensed provider-sponsored organization.
`(D) Indemnity coverage through an insurance company.
`(E) Coverage offered in connection with a contribution into a medical
savings account or flexible spending account.
`(F) Coverage that includes a point-of-service option.
`(G) Any combination of such types of coverage.
`(2) HEALTH INSURANCE COVERAGE OPTIONS-
`(A) IN GENERAL- An association health plan shall include a minimum of
4 health insurance coverage options. At least 1 option shall be a non
network option. At least 2 options shall meet all applicable State benefit
mandates.
`(B) MODEL BENEFITS PACKAGE- The Secretary in consultation with the National
Association of Insurance Commissioners shall develop a model benefits
package for health insurance coverage not later than one year after the
date of the enactment of the Consensus Health Care Access and Choice Act
of 2003.
`(C) EXCEPTION TO GENERAL RULE- An association health plan may offer 2
options that meet the requirements of the model benefits package in lieu
of the State benefit mandate offerings required under subparagraph (A).
`(3) PERMITTING ASSOCIATION HEALTH PLANS TO ADJUST DISTRIBUTIONS AMONG ISSUERS
TO REFLECT RELATIVE RISK OF ENROLLEES- Nothing in this section shall be
construed as precluding an association health plan from providing for adjustments
in amounts distributed among the health insurance issuers offering health
benefits coverage through the association health plan based on factors such
as the relative health care risk of members enrolled under the coverage
offered by the different issuers.
`(4) CONSTRUCTION- Except as provided in subparagraph (2), 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 any law to the extent that it (1) prohibits an exclusion of a specific
disease from such coverage, or (2) is not preempted under section 731(a)(1)
with respect to matters governed by section 711 or 712.
`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 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,
through negotiated rulemaking, provide for upward adjustments in the
amount of such percentage in specified circumstances in which the plan
specifically provides for and maintains reserves in excess of the amounts
required under subparagraph (A).
`(ii) The plan shall secure specific excess/stop loss insurance for
the plan with an attachment point which is at least equal to an amount
recommended by the plan's qualified actuary (but not more than $175,000).
The applicable authority may by regulation, through negotiated rulemaking,
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 regulations prescribed by the applicable authority pursuant to clause
(i) or (ii) of subparagraph (B) may allow for such adjustments in the required
levels of excess/stop loss insurance as the qualified actuary may recommend,
taking into account the specific circumstances of the plan.
`(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS 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--
`(2) such greater amount (but not greater than $2,000,000) as may be set
forth in regulations prescribed by the applicable authority through negotiated
rulemaking, based on the level of aggregate and specific excess/stop loss
insurance provided with respect to such plan.
`(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 and excess/stop loss insurance as the applicable
authority considers appropriate. Such requirements may be provided by regulation,
through negotiated rulemaking, 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 on the books of the Treasury a fund
to be known as the `Association Health Plan Fund'. The Fund shall be available
for making payments pursuant to paragraph (2). The Fund shall be credited
with payments received pursuant to paragraph (1)(A), penalties received
pursuant to paragraph (1)(B); and earnings on investments of amounts of
the Fund under subparagraph (B).
`(B) 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 through negotiated rulemaking) 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 through negotiated rulemaking) 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 through negotiated rulemaking) 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 through negotiated
rulemaking); 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 through negotiated rulemaking.
`(j) SOLVENCY STANDARDS WORKING GROUP-
`(1) IN GENERAL- Within 90 days after the date of the enactment of the Small
Business Access and Choice for Entrepreneurs Act of 2003, 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; and
`(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 through negotiated rulemaking, at least the following information:
`(1) IDENTIFYING INFORMATION- The names and addresses of--
`(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 actuary,
that all applicable requirements of section 806 are or will be met in
accordance with regulations which the applicable authority shall prescribe
through negotiated rulemaking.
`(B) ADEQUACY OF CONTRIBUTION RATES- A statement of actuarial opinion,
signed by a qualified actuary, which sets forth a description of the extent
to which contribution rates are adequate to provide for the payment of
all obligations and the maintenance of required reserves under the plan
for the 12-month period beginning with such date within such 120-day period,
taking into account the expected coverage and experience of the plan.
If the contribution rates are not fully adequate, the statement of actuarial
opinion shall indicate the extent to which the rates are inadequate and
the changes needed to ensure adequacy.
`(C) CURRENT AND PROJECTED VALUE OF ASSETS AND LIABILITIES- A statement
of actuarial opinion signed by a qualified actuary, which sets forth the
current value of the assets and liabilities accumulated under the plan
and a projection of the assets, liabilities, income, and expenses of the
plan for the 12-month period referred to in subparagraph (B). The income
statement shall identify separately the plan's administrative expenses
and claims.
`(D) COSTS OF COVERAGE TO BE CHARGED AND OTHER 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 through negotiated rulemaking,
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 through negotiated rulemaking. The
applicable authority may require by regulation, through negotiated rulemaking,
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)(A), shall be filed with the applicable authority not later
than 90 days after the close of the plan year (or on such later date as may
be prescribed by the applicable authority). The applicable authority may require
by regulation through negotiated rulemaking such interim reports as it considers
appropriate.
`(f) ENGAGEMENT OF QUALIFIED 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 actuary who shall be responsible for the preparation of the materials
comprising information necessary to be submitted by a qualified actuary under
this part. The qualified actuary shall utilize such assumptions and techniques
as are necessary to enable such actuary to form an opinion as to whether the
contents of the matters reported under this part--
`(1) are in the aggregate reasonably related to the experience of the plan
and to reasonable expectations; and
`(2) represent such actuary's best estimate of anticipated experience under
the plan.
The opinion by the qualified actuary shall be made with respect to, and shall
be made a part of, the annual report.
`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--
`(1) not less than 60 days before the proposed termination date, 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 through negotiated
rulemaking.
`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 actuary engaged by
the plan, and such actuary shall, not later than the end of the next following
month, make such recommendations to the board for corrective action as the
actuary determines necessary to ensure compliance with section 806. Not later
than 30 days after receiving from the actuary recommendations for corrective
actions, the board shall notify the applicable authority (in such form and
manner as the applicable authority may prescribe by regulation through negotiated
rulemaking) 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) 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 through negotiated
rulemaking, 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
through negotiated rulemaking, 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 through negotiated rulemaking
or required by any order of the court;
`(8) to terminate the plan (or provide for its termination 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;
`(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 through negotiated rulemaking, 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 Small Business Access and Choice for Entrepreneurs Act of 2003.
`(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. SPECIAL RULES FOR CHURCH PLANS.
`(a) ELECTION FOR CHURCH PLANS- Notwithstanding section 4(b)(2), if a church,
a convention or association of churches, or an organization described in section
3(33)(C)(i) maintains a church plan which is a group health plan (as defined
in section 733(a)(1)), and such church, convention, association, or organization
makes an election with respect to such plan under this subsection (in such
form and manner as the Secretary may by regulation prescribe), then the provisions
of this section shall apply to such plan, with respect to benefits provided
under such plan consisting of medical care, as if section 4(b)(2) did not
contain an exclusion for church plans. Nothing in this subsection shall be
construed to render any other section of this title applicable to church plans,
except to the extent that such other section is incorporated by reference
in this section.
`(1) PREEMPTION OF STATE INSURANCE LAWS REGULATING COVERED CHURCH PLANS-
Subject to paragraphs (2) and (3), this section shall supersede any and
all State laws which regulate insurance insofar as they may now or hereafter
regulate church plans to which this section applies or trusts established
under such church plans.
`(2) GENERAL STATE INSURANCE REGULATION UNAFFECTED-
`(A) IN GENERAL- Except as provided in subparagraph (B) and paragraph
(3), nothing in this section shall be construed to exempt or relieve any
person from any provision of State law which regulates insurance.
`(B) CHURCH PLANS NOT TO BE DEEMED INSURANCE COMPANIES OR INSURERS- Neither
a church plan to which this section applies, nor any trust established
under such a church plan, shall be deemed to be an insurance company or
other insurer or to be engaged in the business of insurance for purposes
of any State law purporting to regulate insurance companies or insurance
contracts.
`(3) PREEMPTION OF CERTAIN STATE LAWS RELATING TO PREMIUM RATE REGULATION
AND BENEFIT MANDATES- The provisions of subsections (a)(2)(B) and (b) of
section 805 shall apply with respect to a church plan to which this section
applies in the same manner and to the same extent as such provisions apply
with respect to association health plans.
`(4) DEFINITIONS- For purposes of this subsection--
`(A) STATE LAW- The term `State law' includes all laws, decisions, rules,
regulations, or other State action having the effect of law, of any State.
A law of the United States applicable only to the District of Columbia
shall be treated as a State law rather than a law of the United States.
`(B) STATE- The term `State' includes a State, any political subdivision
thereof, or any agency or instrumentality of either, which purports to
regulate, directly or indirectly, the terms and conditions of church plans
covered by this section.
`(c) REQUIREMENTS FOR COVERED CHURCH PLANS-
`(1) FIDUCIARY RULES AND EXCLUSIVE PURPOSE- A fiduciary shall discharge
his duties with respect to a church plan to which this section applies--
`(A) for the exclusive purpose of:
`(i) providing benefits to participants and their beneficiaries; and
`(ii) defraying reasonable expenses of administering the plan;
`(B) with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like
character and with like aims; and
`(C) in accordance with the documents and instruments governing the plan.
The requirements of this paragraph shall not be treated as not satisfied
solely because the plan assets are commingled with other church assets,
to the extent that such plan assets are separately accounted for.
`(2) CLAIMS PROCEDURE- In accordance with regulations of the Secretary,
every church plan to which this section applies shall--
`(A) provide adequate notice in writing to any participant or beneficiary
whose claim for benefits under the plan has been denied, setting forth
the specific reasons for such denial, written in a manner calculated to
be understood by the participant;
`(B) afford a reasonable opportunity to any participant whose claim for
benefits has been denied for a full and fair review by the appropriate
fiduciary of the decision denying the claim; and
`(C) provide a written statement to each participant describing the procedures
established pursuant to this paragraph.
`(3) ANNUAL STATEMENTS- In accordance with regulations of the Secretary,
every church plan to which this section applies shall file with the Secretary
an annual statement--
`(A) stating the names and addresses of the plan and of the church, convention,
or association maintaining the plan (and its principal place of business);
`(B) certifying that it is a church plan to which this section applies
and that it complies with the requirements of paragraphs (1) and (2);
`(C) identifying the States in which participants and beneficiaries under
the plan are or
likely will be located during the 1-year period covered by the statement;
and
`(D) containing a copy of a statement of actuarial opinion signed by a
qualified actuary that the plan maintains capital, reserves, insurance,
other financial arrangements, or any combination thereof adequate to enable
the plan to fully meet all of its financial obligations on a timely basis.
`(4) DISCLOSURE- At the time that the annual statement is filed by a church
plan with the Secretary pursuant to paragraph (3), a copy of such statement
shall be made available by the Secretary to the State insurance commissioner
(or similar official) of any State. The name of each church plan and sponsoring
organization filing an annual statement in compliance with paragraph (3)
shall be published annually in the Federal Register.
`(d) ENFORCEMENT- The Secretary may enforce the provisions of this section
in a manner consistent with section 502, to the extent applicable with respect
to actions under section 502(a)(5), and with section 3(33)(D), except that,
other than for the purpose of seeking a temporary restraining order, a civil
action may be brought with respect to the plan's failure to meet any requirement
of this section only if the plan fails to correct its failure within the correction
period described in section 3(33)(D). The other provisions of part 5 (except
sections 501(a), 503, 512, 514, and 515) shall apply with respect to the enforcement
and administration of this section.
`(e) DEFINITIONS AND OTHER RULES- For purposes of this section--
`(1) IN GENERAL- Except as otherwise provided in this section, any term
used in this section which is defined in any provision of this title shall
have the definition provided such term by such provision.
`(2) SEMINARY STUDENTS- Seminary students who are enrolled in an institution
of higher learning described in section 3(33)(C)(iv) and who are treated
as participants under the terms of a church plan to which this section applies
shall be deemed to be employees as defined in section 3(6) if the number
of such students constitutes an insignificant portion of the total number
of individuals who are treated as participants under the terms of the plan.
`SEC. 813. 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-
`(A) IN GENERAL- Except as provided in subparagraph (B), the term `applicable
authority' means, in connection with an association health plan--
`(i) the State recognized pursuant to subsection (c) of section 506
as the State to which authority has been delegated in connection with
such plan; or
`(ii) if there is no State referred to in clause (i), the Secretary.
`(i) JOINT AUTHORITIES- Where such term appears in section 808(3), section
807(e) (in the first instance), section 809(a) (in the second instance),
section 809(a) (in the fourth instance), and section 809(b)(1), such
term means, in connection with an association health plan, the Secretary
and the State referred to in subparagraph (A)(i) (if any) in connection
with such plan.
`(ii) REGULATORY AUTHORITIES- Where such term appears in section 802(a)
(in the first instance), section 802(d), section 802(e), section 803(d),
section 805(a)(5), section 806(a)(2), section 806(b), section 806(c),
section 806(d), paragraphs (1)(A) and (2)(A) of section 806(g), section
806(h), section 806(i), section 806(j), section 807(a) (in the second
instance), section 807(b), section 807(d), section 807(e) (in the second
instance), section 808 (in the matter after paragraph (3)), and section
809(a) (in the third instance), such term means, in connection with
an association health plan, the Secretary.
`(6) HEALTH STATUS-RELATED FACTOR- The term `health status-related factor'
has the meaning provided in section 733(d)(2).
`(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 ACTUARY- The term `qualified actuary' means an individual
who is a member of the American Academy of Actuaries or meets such reasonable
standards and qualifications as the
Secretary may provide by regulation through negotiated rulemaking.
`(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 Small Business Access and Choice for Entrepreneurs
Act of 2003, 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.'.
(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 under an association health plan in a State and the filing, with
the applicable State authority, 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) For additional provisions relating to association health plans, see subsections
(a)(2)(B) and (b) of section 805.
`(4) 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 811, respectively.'.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is amended--
(A) in clause (i)(II), by striking `and' at the end;
(B) in clause (ii), by inserting `and which does not provide medical care
(within the meaning of section 733(a)(2)),' after `arrangement,', and
by striking `title.' and inserting `title, and'; and
(C) by adding at the end the following new clause:
`(iii) subject to subparagraph (E), in the case of any other employee welfare
benefit plan which is a multiple employer welfare arrangement and which
provides medical care (within the meaning of section 733(a)(2)), any law
of any State which regulates insurance may apply.'.
(4) Section 514(e) of such Act (as redesignated by paragraph (2)(C)) is
amended--
(A) by striking `Nothing' and inserting `(1) Except as provided in paragraph
(2), nothing'; and
(B) by adding at the end the following new paragraph:
`(2) Nothing in any other provision of law enacted on or after the date of
the enactment of the Small Business Access and Choice for Entrepreneurs Act
of 2003 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.'.
(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.
102(b)) is amended by adding at the end the following: `An association health
plan shall include in its summary plan description, in connection with each
benefit option, a description of the form of solvency or guarantee fund protection
secured pursuant to this Act or applicable State law, if any.'.
(e) SAVINGS 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, 2008, 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
`Sec. 801. Association health plans.
`Sec. 802. Certification of association health plans.
`Sec. 803. Requirements relating to sponsors and boards of trustees.
`Sec. 804. Participation and coverage requirements.
`Sec. 805. Other requirements relating to plan documents, contribution rates,
and benefit options.
`Sec. 806. Maintenance of reserves and provisions for solvency for plans
providing health benefits in addition to health insurance coverage.
`Sec. 807. Requirements for application and related requirements.
`Sec. 808. Notice requirements for voluntary termination.
`Sec. 809. Corrective actions and mandatory termination.
`Sec. 810. Trusteeship by the Secretary of insolvent association health
plans providing health benefits in addition to health insurance coverage.
`Sec. 811. State assessment authority.
`Sec. 812. Special rules for church plans.
`Sec. 813. Definitions and rules of construction.'.
SEC. 403. 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 `for any plan year of any such plan, or
any fiscal year of any such other arrangement,' after `single employer',
and by inserting `during such year or at any time during the preceding 1-year
period' after `control group';
(A) by striking `common control shall not be based on an interest of less
than 25 percent' and inserting `an interest of greater than 25 percent
may not be required as the minimum interest necessary for common control';
and
(B) by striking `similar to' and inserting `consistent and coextensive
with';
(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 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. 404. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED ARRANGEMENTS.
(a) IN GENERAL- Section 3(40)(A)(i) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to read as follows:
`(i)(I) 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, and (II) in accordance
with subparagraphs (C), (D), and (E);'.
(b) LIMITATIONS- Section 3(40) of such Act (29 U.S.C. 1002(40)) is amended
by adding at the end the following new subparagraphs:
`(C) For purposes of subparagraph (A)(i)(II), a plan or other arrangement
shall be treated as established or maintained in accordance with this subparagraph
only if the following requirements are met:
`(i) The plan or other arrangement, and the employee organization or any
other entity sponsoring the plan or other arrangement, do not--
`(I) utilize the services of any licensed insurance agent or broker for
soliciting or enrolling employers or individuals as participating employers
or covered individuals under the plan or other arrangement; or
`(II) pay any type of compensation to a person, other than a full time
employee of the employee organization (or a member of the organization
to the extent provided in regulations prescribed by the Secretary through
negotiated rulemaking), that is related either to the volume or number
of employers or individuals solicited or enrolled as participating employers
or covered individuals under the plan or other arrangement, or to the
dollar amount or size of
the contributions made by participating employers or covered individuals
to the plan or other arrangement;
except to the extent that the services used by the plan, arrangement, organization,
or other entity consist solely of preparation of documents necessary for
compliance with the reporting and disclosure requirements of part 1 or administrative,
investment, or consulting services unrelated to solicitation or enrollment
of covered individuals.
`(ii) As of the end of the preceding plan year, the number of covered individuals
under the plan or other arrangement who are neither--
`(I) employed within a bargaining unit covered by any of the collective
bargaining agreements with a participating employer (nor covered on the
basis of an individual's employment in such a bargaining unit); nor
`(II) present employees (or former employees who were covered while employed)
of the sponsoring employee organization, of an employer who is or was
a party to any of the collective bargaining agreements, or of the plan
or other arrangement or a related plan or arrangement (nor covered on
the basis of such present or former employment);
does not exceed 15 percent of the total number of individuals who are covered
under the plan or arrangement and who are present or former employees who
are or were covered under the plan or arrangement pursuant to a collective
bargaining agreement with a participating employer. The requirements of
the preceding provisions of this clause shall be treated as satisfied if,
as of the end of the preceding plan year, such covered individuals are comprised
solely of individuals who were covered individuals under the plan or other
arrangement as of the date of the enactment of the Small Business Access
and Choice for Entrepreneurs Act of 2003 and, as of the end of the preceding
plan year, the number of such covered individuals does not exceed 25 percent
of the total number of present and former employees enrolled under the plan
or other arrangement.
`(iii) The employee organization or other entity sponsoring the plan or
other arrangement certifies to the Secretary each year, in a form and manner
which shall be prescribed by the Secretary through negotiated rulemaking
that the plan or other arrangement meets the requirements of clauses (i)
and (ii).
`(D) For purposes of subparagraph (A)(i)(II), a plan or arrangement shall
be treated as established or maintained in accordance with this subparagraph
only if--
`(i) all of the benefits provided under the plan or arrangement consist
of health insurance coverage; or
`(ii)(I) the plan or arrangement is a multiemployer plan; and
`(II) the requirements of clause (B) of the proviso to clause (5) of section
302(c) of the Labor Management Relations Act, 1947 (29 U.S.C. 186(c)) are
met with respect to such plan or other arrangement.
`(E) For purposes of subparagraph (A)(i)(II), a plan or arrangement shall
be treated as established or maintained in accordance with this subparagraph
only if--
`(i) the plan or arrangement is in effect as of the date of the enactment
of the Small Business Access and Choice for Entrepreneurs Act of 2003; or
`(ii) the employee organization or other entity sponsoring the plan or arrangement--
`(I) has been in existence for at least 3 years; or
`(II) demonstrates to the satisfaction of the Secretary that the requirements
of subparagraphs (C) and (D) are met with respect to the plan or other
arrangement.'.
(c) CONFORMING AMENDMENTS TO DEFINITIONS OF PARTICIPANT AND BENEFICIARY- Section
3(7) of such Act (29 U.S.C. 1002(7)) is amended by adding at the end the following
new sentence: `Such term includes an individual who is a covered individual
described in paragraph (40)(C)(ii).'.
SEC. 405. ENFORCEMENT PROVISIONS.
(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--
(1) by inserting `(a)' after `SEC. 501.'; and
(2) by adding at the end the following new subsection:
`(b) Any person who willfully falsely represents, to any employee, any employee's
beneficiary, any employer, the Secretary, or any State, a plan or other arrangement
established or maintained for the purpose of offering or providing any benefit
described in section 3(1) to employees or their beneficiaries as--
`(1) being an association health plan which has been certified under part
8;
`(2) having been established or maintained under or pursuant to one or more
collective bargaining agreements which are reached pursuant to collective
bargaining described in section 8(d) of the National Labor Relations Act
(29 U.S.C. 158(d)) or paragraph Fourth of section 2 of the Railway Labor
Act (45 U.S.C. 152, paragraph Fourth) or which are reached pursuant to labor-management
negotiations under similar provisions of State public employee relations
laws; or
`(3) being a plan or arrangement with respect to which the requirements
of subparagraph (C), (D), or (E) of section 3(40) are met;
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)(1) 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) 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) 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- ' after `SEC. 503.'; 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. 406. 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) RESPONSIBILITY OF STATES WITH RESPECT TO ASSOCIATION HEALTH PLANS-
`(1) AGREEMENTS WITH STATES- A State may enter into an agreement with the
Secretary for delegation to the State of some or all of--
`(A) the Secretary's authority under sections 502 and 504 to enforce the
requirements for certification under part 8;
`(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; or
`(C) any combination of the Secretary's authority authorized to be delegated
under subparagraphs (A) and (B).
`(2) DELEGATIONS- Any department, agency, or instrumentality of a State
to which authority is delegated pursuant to an agreement entered into under
this paragraph may, if authorized under State law and to the extent consistent
with such agreement, exercise the powers of the Secretary under this title
which relate to such authority.
`(3) RECOGNITION OF PRIMARY DOMICILE STATE- In entering into any agreement
with a State under subparagraph (A), the Secretary shall ensure that, as
a result of such agreement and all other agreements entered into under subparagraph
(A), only one State will be recognized, with respect to any particular association
health plan, as the State to which all authority has been delegated pursuant
to such agreements in connection with such plan. In carrying out this paragraph,
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. 407. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) EFFECTIVE DATE- The amendments made by sections 101, 104, and 105 shall
take effect on January 1, 2005. The amendments made by sections 102 and 103
shall take effect on 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 before January 1, 2005. Such regulations shall be issued
through negotiated rulemaking.
(b) EXCEPTION- Section 801(a)(2) of the Employee Retirement Income Security
Act of 1974 (added by section 101) does not apply in connection with an association
health plan (certified under part 8 of subtitle B of title I of such Act)
existing on the date of the enactment of this Act, if no benefits provided
thereunder as of the date of the enactment of this Act consist of health insurance
coverage (as defined in section 733(b)(1) of such Act).
(c) 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 813(a)(5)
of the Employee Retirement Income Security Act of 1974 (as amended by this
Act)) 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)(1) and 803(a)(1) 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 813 of the Employee Retirement Income Security Act of
1974, except that the reference in paragraph (7) of such section to an `association
health plan' shall be deemed a reference to an arrangement referred to in
this subsection.
TITLE V--IMPROVEMENT TO ACCESS AND CHOICE OF HEALTH CARE
SEC. 501. REFUNDABLE CREDIT FOR HEALTH INSURANCE COSTS.
(a) IN GENERAL- Subpart C of part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 (relating to refundable credits) is amended by redesignating
section 36 as section 37 and by inserting after section 35 the following new
section:
`SEC. 36. HEALTH INSURANCE COSTS.
`(a) IN GENERAL- In the case of an individual, there shall be allowed as a
credit against the tax imposed by this subtitle an amount equal to the amount
paid during the taxable year for qualified health insurance for coverage of
the taxpayer, his spouse, and dependents.
`(A) IN GENERAL- The amount allowed as a credit under subsection (a) to
the taxpayer for the taxable year shall not exceed the sum of the monthly
limitations for months during such taxable year.
`(B) MONTHLY LIMITATION- The monthly limitation for any month is the amount
equal to 1/12 of the lesser of--
`(i) the product of $1,000 multiplied by the number of individuals taken
into account under subsection (a) who are covered under qualified health
insurance as of the first day of such month, or
`(2) EMPLOYER SUBSIDIZED COVERAGE- Subsection (a) shall not apply to amounts
paid for coverage of any individual for any month for which such individual
participates in any subsidized health plan maintained by any employer of
the taxpayer or of the spouse of the taxpayer. The rule of the last sentence
of section 162(l)(2)(B) shall apply for purposes of the preceding sentence.
`(c) QUALIFIED HEALTH INSURANCE- For purposes of this section--
`(1) IN GENERAL- The term `qualified health insurance' means insurance which
constitutes medical care if--
`(A) there is an annual deductible which is not more than the highest
deductible permitted under--
`(i) section 220(c)(2)(A)(i) in the case of self-only coverage, or
`(ii) section 220(c)(2)(A)(ii) in the case of family coverage,
`(B) the annual out-of-pocket expenses required to be paid (other than
for premiums) for covered benefits does not exceed the amounts specified
in section 220(c)(2)(A)(iii),
`(C) there is no exclusion from, or limitation on, coverage for any preexisting
medical condition of any applicant who, on the date the application is
made, has been continuously insured during the 1-year period ending on
the date of the application under--
`(i) qualified health insurance (determined without regard to this subparagraph),
or
`(ii) a program described in--
`(I) title XVIII or XIX of the Social Security Act,
`(II) chapter 55 of title 10, United States Code,
`(III) chapter 17 of title 38, United States Code,
`(IV) chapter 89 of title 5, United States Code, or
`(V) the Indian Health Care Improvement Act, and
`(D) in the case of each applicant who has not been continuously so insured
during the 1-year period ending on the date the application is made, the
exclusion from, or limitation on, coverage for any preexisting medical
condition does not extend beyond the period after such date equal to the
lesser of--
`(i) the number of months immediately prior to such date during which
the individual was not so insured since the illness or condition in
question was first diagnosed, or
`(2) EXCLUSION OF CERTAIN PLANS- Such term does not include--
`(A) insurance if substantially all of its coverage is coverage described
in section 220(c)(1)(B),
`(B) insurance under a program described in paragraph (1)(C)(ii).
`(3) TRANSITION RULE FOR 2003- In the case of applications made during 2003,
the requirements of subparagraphs (C) and (D) of paragraph (1) are met only
if the insurance does not exclude from coverage, or limit coverage for,
any preexisting medical condition of any applicant.
`(1) COORDINATION WITH MEDICAL DEDUCTION, ETC- Any amount paid by a taxpayer
for insurance to which subsection (a) applies shall not be taken into account
in computing the amount allowable to the taxpayer as a credit under section
35 or as a deduction under section 162(l) or 213(a).
`(2) DENIAL OF CREDIT TO DEPENDENTS- No credit 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.
`(3) MARRIED COUPLES MUST FILE JOINT RETURN-
`(A) IN GENERAL- If the taxpayer is married at the close of the taxable
year, the credit shall be allowed under subsection (a) only if the taxpayer
and his spouse file a joint return for the taxable year.
`(B) MARITAL STATUS; CERTAIN MARRIED INDIVIDUALS LIVING APART- Rules similar
to the rules of paragraphs (3) and (4) of section 21(e) shall apply for
purposes of this paragraph.
`(4) VERIFICATION OF COVERAGE, ETC- No credit shall be allowed under this
section to any individual unless such individual's coverage under qualified
health insurance, and the amount paid for such coverage, are verified in
such manner as the Secretary may prescribe.
`(5) COST-OF-LIVING ADJUSTMENT- In the case of any taxable year beginning
in a calendar year after 2003, each dollar amount contained in subsection
(b)(1)(B) shall be increased by an amount equal to--
`(A) such dollar amount, multiplied by
`(B) the cost-of-living adjustment determined under section 1(f)(3) for
the calendar year in which the taxable year begins by substituting `calendar
year 2002' for `calendar year 1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be rounded to
the nearest multiple of $10.'.
(b) CONFORMING AMENDMENTS-
(1) Paragraph (2) of section 1324(b) of title 31, United States Code, is
amended by inserting before the period `or 36' after `section 35'.
(2) The table of sections for subpart C of part IV of subchapter A of chapter
1 of such Code is amended by inserting after the item relating to section
35 the following new item:
`Sec. 36. Health insurance costs.'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable
years beginning after December 31, 2002.
SEC. 502. EXCLUSION FOR EMPLOYER PAYMENTS MADE TO COMPENSATE EMPLOYEES WHO
ELECT NOT TO PARTICIPATE IN EMPLOYER-SUBSIDIZED HEALTH PLANS.
(a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 (relating to items specifically excluded from gross income) is
amended by inserting after section 139 the following new section:
`SEC. 139A. TREATMENT OF COMPENSATING PAYMENTS MADE FOR EMPLOYEES WHO ELECT
NOT TO PARTICIPATE IN EMPLOYER-SUBSIDIZED HEALTH PLANS.
`(a) IN GENERAL- Gross income of an eligible employee shall not include the
amount of any compensating coverage payment made by an employer of such employee
for such employee's benefit.
`(b) ELIGIBLE EMPLOYEE- For purposes of this section, the term `eligible employee'
means any employee who is eligible to participate in any subsidized health
plan of an employer for any period and who elects not to participate in any
subsidized health plan of such employer for such period.
`(c) COMPENSATING COVERAGE PAYMENT- For purposes of this section, the term
`compensating coverage payment' means--
`(1) any payment made by the employer for qualified health insurance specified
by the employee (for any period for which the employee is described in subsection
(b)) which covers all of the individuals who, but for the election referred
to in subsection (b), would be covered under the subsidized health plan
of the employer, and
`(2) any payment made by the employer to any medical savings account of
such employee or spouse
for a period for which the employee is covered by qualified health insurance.
`(d) QUALIFIED HEALTH INSURANCE- For purposes of this section, the term `qualified
health insurance' has the meaning given such term in section 36(c).
`(e) EMPLOYER PARTICIPATION-
`(1) IN GENERAL- This section shall apply to a compensating coverage payment
made by an employer for an employee's benefit only if--
`(A) the employer, and all other employers which are members of any controlled
group which includes such employer, agree to make such payments to all
their eligible employees,
`(B) the amount of such payment is not less than the employer health plan
contribution for such period with respect to the employee, and
`(C) the employer permits the election referred to in subsection (b) to
be made by employees--
`(i) at the commencement of employment with the employer, and
`(ii) during open enrollment periods (not less frequently than annually)
of at least 30 days.
`(2) EXCEPTION FOR CERTAIN EMPLOYEES- Paragraph (1) shall not apply to--
`(A) any employee who is covered under a subsidized health plan of another
employer of such employee or of an employer of such employee's spouse,
`(B) any employee who normally works less than 25 hours per week,
`(C) any employee who normally works during not more than 6 months during
any year,
`(D) any employee who has not attained age 21, and
`(E) except to the extent provided in regulations, any employee who is
included in a unit of employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement between employee
representatives and the employer.
`(3) CONTROLLED GROUPS- Rules similar to the rules of subclauses (II) and
(III) of paragraph (4)(D)(iii) shall apply for purposes of paragraph (1)(A).
`(4) EMPLOYER HEALTH PLAN CONTRIBUTION- For purposes of this section--
`(A) IN GENERAL- The term `employer health plan contribution' means the
applicable premium for the employee reduced by the employee's share of
such premium.
`(B) APPLICABLE PREMIUM- Except as provided in subparagraph (D), the term
`applicable premium' means an amount which is not less than 98 percent
of--
`(i) the applicable premium (as defined in section 4980B(f)(4)) for
the employee, or
`(ii) if an election under subparagraph (D) is in effect with respect
to an employee, the applicable premium determined under subparagraph
(D).
`(C) EMPLOYEE'S SHARE- The term `employee's share' means, with respect
to the applicable premium for any employee, the amount of the cost to
the plan which is paid by the similarly situated beneficiaries who are
taken into account in determining such premium for such employee.
`(D) AUTHORITY TO USE AGE, SEX, AND GEOGRAPHY IN DETERMINING CONTRIBUTION-
`(i) IN GENERAL- An employer may elect to determine the applicable premium
for an employee on an actuarial basis taking into account age, sex,
and geography of the employee and similarly situated beneficiaries.
`(ii) DETERMINATION OF EMPLOYEE'S SHARE- In the case of an employer
who determines the applicable premium under clause (i), the employee's
share of such premium shall be the same percentage of such premium as
the employee's share of the applicable premium determined without regard
to clause (i).
`(iii) CONSISTENCY REQUIRED-
`(I) IN GENERAL- Except as provided in subclause (III), an employer
may determine the applicable premium under this subparagraph for any
employee only if such employer, and all other employers which are
members of any controlled group which includes such employer, elect
to determine the applicable premium under this subparagraph for all
their employees.
`(II) CONTROLLED GROUP- All persons treated as a single employer under
subsection (a) or (b) of section 52 or subsection (m) or (o) of section
414 shall be treated as members of a controlled group for purposes
of subclause (I).
`(III) TREATMENT OF SEPARATE LINES OF BUSINESS- If an employer is
treated under section 414(r) as operating separate lines of business
during any taxable year, subclause (I) shall not apply to employees
employed in such separate lines of business.
`(f) SPECIAL RULE FOR MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS- Section 220(b)(5)
shall not apply to an employer contribution which is excludable from gross
income under subsection (a).
`(g) EXCLUSION APPLICABLE IN DETERMINING EMPLOYMENT TAX LIABILITY- The exclusion
under this section shall be treated for purposes of subtitle C in the same
manner as the exclusion under section 106.'
(b) EMPLOYER HEALTH PLAN CONTRIBUTION TO BE REPORTED ON W-2- Subsection (a)
of section 6051 of such Code (relating to receipts to employees) is amended
by striking `and' at the end of paragraph (10), by striking the period at
the end of paragraph (11) and inserting a comma, and by inserting after paragraph
(11) the following new paragraphs:
`(12) the amount of the employer health plan contribution (as defined in
section 139(c)(3)), and
`(13) the amount of compensating coverage payment (as defined in section
139(c)(1)).'
(c) CLERICAL AMENDMENT- The table of sections for such part III is amended
by inserting after the item relating to section 139 the following new item:
`Sec. 139A. Treatment of compensating payments made for employees who elect
not to participate in employer-subsidized health plans.'.
(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable
years beginning after December 31, 2003.
SEC. 503. EXPANDED AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MEDICAL SAVINGS ACCOUNTS-
(1) IN GENERAL- Subsections (i) and (j) of section 220 of the Internal Revenue
Code of 1986 are hereby repealed.
(2) CONFORMING AMENDMENTS-
(A) Paragraph (1) of section 220(c) of such Code is amended by striking
subparagraph (D).
(B) Section 138 of such Code is amended by striking subsection (f).
(b) ALL EMPLOYERS MAY OFFER MEDICAL SAVINGS ACCOUNTS-
(1) IN GENERAL- Subclause (I) of section 220(c)(1)(A)(iii) of such Code
(defining eligible individual) is amended by striking `and such employer
is a small employer'.
(2) CONFORMING AMENDMENTS-
(A) Paragraph (1) of section 220(c) of such Code is amended by striking
subparagraph (C).
(B) Subsection (c) of section 220 of such Code is amended by striking
paragraph (4) and by redesignating paragraph (5) as paragraph (4).
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED FOR CONTRIBUTIONS TO MEDICAL SAVINGS
ACCOUNTS-
(1) IN GENERAL- Paragraph (2) of section 220(b) of such Code is amended
to read as follows:
`(2) MONTHLY LIMITATION- The monthly limitation for any month is the amount
equal to 1/12 of the annual deductible (as of the first day of such month)
of the individual's coverage under the high deductible health plan.'.
(2) CONFORMING AMENDMENT- Clause (ii) of section 220(d)(1)(A) of such Code
is amended by striking `75 percent of'.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CONTRIBUTE TO MEDICAL SAVINGS ACCOUNTS-
Paragraph (5) of section 220(b) of such Code is amended to read as follows:
`(5) COORDINATION WITH EXCLUSION FOR EMPLOYER CONTRIBUTIONS- The limitation
which would (but for this paragraph) apply under this subsection to the
taxpayer for any taxable year shall be reduced (but not below zero) by the
amount which would (but for section 106(b)) be includible in the taxpayer's
gross income for such taxable year.'.
(e) EXPANSION OF PERMITTED DEDUCTIBLES-
(1) IN GENERAL- Subparagraph (A) of section 220(c)(2) of such Code (defining
high deductible health plan) is amended--
(A) in clause (i), by striking `not less than $1,500 and not more than
$2,250' and inserting `not less than $1,000 and not more than $5,000',
and
(B) in clause (ii), by striking `not less than $3,000 and not more than
$4,500' and inserting `not less than $2,000 and not more than $10,000'.
(2) CONFORMING AMENDMENT- Subsection (g) of section 220 of such Code is
amended--
(A) by striking `1998' and inserting `2003'; and
(B) by striking `1997' and inserting `2002'.
(f) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED UNDER CAFETERIA PLANS- Subsection
(f) of section 125 of such Code is amended by striking `106(b),'.
(g) EFFECTIVE DATE- The amendments made by this section shall apply to taxable
years ending after the date of the enactment of this Act.
TITLE VI--PATIENT ACCESS TO INFORMATION
SEC. 601. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, MANAGED
CARE PROCEDURES, HEALTH CARE PROVIDERS, AND QUALITY OF MEDICAL CARE.
(a) IN GENERAL- Subpart 2 of part A of title XXVII of the Public Health Service
Act is amended by adding at the end the following new section:
`SEC. 2707. PATIENT ACCESS TO INFORMATION REGARDING PLAN COVERAGE, MANAGED
CARE PROCEDURES, HEALTH CARE PROVIDERS, AND QUALITY OF MEDICAL CARE.
`(a) DISCLOSURE REQUIREMENT- Each health insurance issuer offering health
insurance coverage in connection with a group health plan shall provide the
administrator of such plan on a timely basis with the information necessary
to enable the administrator to include in the summary plan description of
the plan required under section 102 of the Employee Retirement Income Security
Act of 1974 (or each summary plan description in any case in which different
summary plan descriptions are appropriate under part 1 of subtitle B of title
I of such Act for different options of coverage) the information required
under subsections (b), (c), (d), and (e)(2)(A). To the extent that any such
issuer provides such information on a timely basis to plan participants and
beneficiaries, the requirements of this subsection shall be deemed satisfied
in the case of such plan with respect to such information.
`(b) PLAN BENEFITS- The information required under subsection (a) includes
the following:
`(1) COVERED ITEMS AND SERVICES-
`(A) CATEGORIZATION OF INCLUDED BENEFITS- A description of covered benefits,
categorized by--
`(i) types of items and services (including any special disease management
program); and
`(ii) types of health care professionals providing such items and services.
`(B) EMERGENCY MEDICAL CARE- A description of the extent to which the
coverage includes emergency medical care (including the extent to which
the coverage provides for access to urgent care centers), and any definitions
provided under in connection with such coverage for the relevant coverage
terminology referring to such care.
`(C) PREVENTATIVE SERVICES- A description of the extent to which the coverage
includes benefits for preventative services.
`(D) DRUG FORMULARIES- A description of the extent to which covered benefits
are determined by the use or application of a drug formulary and a summary
of the process for determining what is included in such formulary.
`(E) COBRA CONTINUATION COVERAGE- A description of the benefits available
under the coverage provided pursuant to part 6 of subtitle B of title
I of the Employee Retirement Income Security Act of 1974.
`(2) LIMITATIONS, EXCLUSIONS, AND RESTRICTIONS ON COVERED BENEFITS-
`(A) CATEGORIZATION OF EXCLUDED BENEFITS- A description of benefits specifically
excluded from coverage, categorized by types of items and services.
`(B) UTILIZATION REVIEW AND PREAUTHORIZATION REQUIREMENTS- Whether coverage
for medical care is limited or excluded on the basis of utilization review
or preauthorization requirements.
`(C) LIFETIME, ANNUAL, OR OTHER PERIOD LIMITATIONS- A description of the
circumstances under which, and the extent to which, coverage is subject
to lifetime, annual, or other period limitations, categorized by types
of benefits.
`(D) CUSTODIAL CARE- A description of the circumstances under which, and
the extent to which, the coverage of benefits for custodial care is limited
or excluded, and a statement of the definition used in connection with
such coverage for custodial care.
`(E) EXPERIMENTAL TREATMENTS- Whether coverage for any medical care is
limited or excluded because it constitutes experimental treatment or technology,
and any definitions provided in connection with such coverage for the
relevant plan terminology referring to such limited or excluded care.
`(F) MEDICAL APPROPRIATENESS OR NECESSITY- Whether coverage for medical
care may be limited or excluded by reason of a failure to meet the plan's
requirements for medical appropriateness or necessity, and any definitions
provided in connection with such coverage for the relevant coverage terminology
referring to such limited or excluded care.
`(G) SECOND OR SUBSEQUENT OPINIONS- A description of the circumstances
under which, and the extent to which, coverage for second or subsequent
opinions is limited or excluded.
`(H) SPECIALTY CARE- A description of the circumstances under which, and
the extent to which, coverage of benefits for specialty care is conditioned
on referral from a primary care provider.
`(I) CONTINUITY OF CARE- A description of the circumstances under which,
and the extent to which, coverage of items and services provided by any
health care professional is limited or excluded by reason of the departure
by the professional from any defined set of providers.
`(J) RESTRICTIONS ON COVERAGE OF EMERGENCY SERVICES- A description of
the circumstances under which, and the extent to which, the coverage,
in including emergency medical care furnished to a participant or beneficiary
of the plan imposes any financial responsibility described in subsection
(c) on participants or beneficiaries or limits or conditions benefits
for such care subject to any other term or condition of such coverage.
`(c) PARTICIPANT'S FINANCIAL RESPONSIBILITIES- The information required under
subsection (a) includes an explanation of--
`(1) a participant's financial responsibility for payment of premiums, coinsurance,
copayments, deductibles, and any other charges; and
`(2) the circumstances under which, and the extent to which, the participant's
financial responsibility described in paragraph (1) may vary, including
any distinctions based on whether a health care provider from whom covered
benefits are obtained is included in a defined set of providers.
`(d) ACCOUNTABILITY- The information required under subsection (a) includes
a description of the legal recourse options available for participants and
beneficiaries under the plan including--
`(1) the preemption that applies under section 514 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1144) to certain actions arising
out of the provision of health benefits;
`(2) the ability of a participant or beneficiary (or the estate of the participant
or beneficiary) under State law to recover damages resulting from personal
injury or for wrongful death against any person in connection with the provision
of insurance, administrative services, or medical services by such person
to or for a group health plan; and
`(3) the extent to which coverage decisions made by the plan are subject
to internal review or any external review and the proper time frames under
which such reviews may be requested and conducted.
`(e) INFORMATION AVAILABLE ON REQUEST-
`(1) ACCESS TO PLAN BENEFIT INFORMATION IN ELECTRONIC FORM-
`(A) IN GENERAL- A group health plan (and a health insurance issuer offering
health insurance coverage in connection with a group health plan) shall,
upon written request (made not more frequently than annually), make available
to participants and beneficiaries, in a generally recognized electronic
format, the following information:
`(i) the latest summary plan description, including the latest summary
of material modifications; and
`(ii) the actual plan provisions setting forth the benefits available
under the plan,
to the extent such information relates to the coverage options under the
plan available to the participant or beneficiary. A reasonable charge
may be made to cover the cost of providing such information in such generally
recognized electronic format. The Secretary may by regulation prescribe
a maximum amount which will constitute a reasonable charge under the preceding
sentence.
`(B) ALTERNATIVE ACCESS- The requirements of this paragraph may be met
by making such information generally available (rather than upon request)
on the Internet or on a proprietary computer network in a format which
is readily accessible to participants and beneficiaries.
`(2) ADDITIONAL INFORMATION TO BE PROVIDED ON REQUEST-
`(A) INCLUSION IN SUMMARY PLAN DESCRIPTION OF SUMMARY OF ADDITIONAL INFORMATION-
The information required under subsection (a) includes a summary description
of the types of information required by this subsection to be made available
to participants and beneficiaries on request.
`(B) INFORMATION REQUIRED FROM PLANS AND ISSUERS ON REQUEST- In addition
to information required to be included in summary plan descriptions under
this subsection, a group health plan (and a health insurance issuer offering
health insurance coverage in connection with a group health plan) shall
provide the following information to a participant or beneficiary on request:
`(i) NETWORK CHARACTERISTICS- If the plan (or issuer) utilizes a defined
set of providers under contract with the plan (or issuer), a detailed
list of the names of such providers and their geographic location, set
forth separately with respect to primary care providers and with respect
to specialists.
`(ii) CARE MANAGEMENT INFORMATION- A description of the circumstances
under which, and the extent to which, the plan has special disease management
programs or programs for persons with disabilities, indicating whether
these programs are voluntary or mandatory and whether a significant
benefit differential results from participation in such programs.
`(iii) INCLUSION OF DRUGS AND BIOLOGICALS IN FORMULARIES- A statement
of whether a specific drug or biological is included in a formulary
used to determine benefits under the plan and a description of the procedures
for considering requests for any patient-specific waivers.
`(iv) PROCEDURES FOR DETERMINING EXCLUSIONS BASED ON MEDICAL NECESSITY
OR EXPERIMENTAL TREATMENTS- Upon receipt by the participant or beneficiary
of any notification of an adverse coverage decision based on a determination
relating to medical necessity or an experimental treatment or technology,
a description of the procedures and medically-based criteria used in
such decision.
`(v) PREAUTHORIZATION AND UTILIZATION REVIEW PROCEDURES- Upon receipt
by the participant or beneficiary of any notification of an adverse
coverage decision, a description of the basis on which any preauthorization
requirement or any utilization review requirement has resulted in such
decision.
`(vi) ACCREDITATION STATUS OF HEALTH INSURANCE ISSUERS AND SERVICE PROVIDERS-
A description of the accreditation and licensing status (if any) of
each health insurance issuer offering health insurance coverage in connection
with the plan and of any utilization review organization utilized by
the issuer or the plan, together with the name and address of the accrediting
or licensing authority.
`(vii) MEASURES OF ENROLLEE SATISFACTION- The latest information (if
any) maintained by the plan, or by any health insurance issuer offering
health insurance coverage in connection with the plan, relating to enrollee
satisfaction.
`(viii) QUALITY PERFORMANCE MEASURES- The latest information (if any)
maintained by the plan, or by any health insurance issuer offering health
insurance coverage in connection with the plan, relating to quality
of performance of the delivery of medical care with respect to coverage
options offered under the plan and of health care professionals and
facilities providing medical care under the plan.
`(C) INFORMATION REQUIRED FROM HEALTH CARE PROFESSIONALS ON REQUEST- Any
health care professional treating a participant or beneficiary under a
group health plan shall provide to the participant or beneficiary, on
request, a description of his or her professional qualifications (including
board certification status, licensing status, and accreditation status,
if any), privileges, and experience and a general description by category
(including salary, fee-for-service, capitation, and such other categories
as may be specified in regulations of the Secretary) of the applicable
method by which such professional is compensated in connection with the
provision of such medical care.
`(D) INFORMATION REQUIRED FROM HEALTH CARE FACILITIES ON REQUEST- Any
health care facility from which a participant or beneficiary has sought
treatment under a group health plan shall provide to the participant or
beneficiary, on request, a description of the facility's corporate form
or other organizational form and all forms of licensing and accreditation
status (if any) assigned to the facility by standard-setting organizations.
`(f) ACCESS TO INFORMATION RELEVANT TO THE COVERAGE OPTIONS UNDER WHICH THE
PARTICIPANT OR BENEFICIARY IS ELIGIBLE TO ENROLL- In addition to information
otherwise required to be made available under this section, a group health
plan (and a health insurance issuer offering health insurance coverage in
connection with a group health plan) shall, upon written request (made not
more frequently than annually), make available to a participant (and an employee
who, under the terms of the plan, is eligible for coverage but not enrolled)
in connection with a period of enrollment the summary plan description for
any coverage option under the plan under which the participant is eligible
to enroll and any information described in clauses (i), (ii), (iii), (vi),
(vii), and (viii) of subsection (e)(2)(B).
`(g) ADVANCE NOTICE OF CHANGES IN DRUG FORMULARIES- Not later than 30 days
before the effective date of any exclusion of a specific drug or biological
from any drug formulary under the plan that is used in the treatment of a
chronic illness or disease, the plan shall take such actions as are necessary
to reasonably ensure that plan participants are informed of such exclusion.
The requirements of this subsection may be satisfied--
`(1) by inclusion of information in publications broadly distributed by
plan sponsors, employers, or employee organizations;
`(2) by electronic means of communication (including the Internet or proprietary
computer networks in a format which is readily accessible to participants);
`(3) by timely informing participants who, under an ongoing program maintained
under the plan, have submitted their names for such notification; or
`(4) by any other reasonable means of timely informing plan participants.'.
SEC. 602. EFFECTIVE DATE.
(a) IN GENERAL- The amendments made by section 601 shall apply with respect
to plan years beginning on or after January 1 of the second calendar year
following the date of the enactment of this Act. The Secretary shall first
issue all regulations necessary to carry out the amendments made by section
601 before such date.
(b) LIMITATION ON ENFORCEMENT ACTIONS- No enforcement action shall be taken,
pursuant to the amendments made by section 601, against a group health plan
or health insurance issuer with respect to a violation of a requirement imposed
by such amendments before the date of issuance of final regulations issued
in connection with such requirement, if the plan or issuer has sought to comply
in good faith with such requirement.
END
