To amend title I of the Employee Retirement Income Security Act of 1974 to provide for the establishment in the Department of Labor of a Small Employer Health Benefits Program.

June 24, 2005

Mr. ANDREWS (for himself and Mr. KIND) introduced the following bill; which was referred to the Committee on Education and the Workforce

To amend title I of the Employee Retirement Income Security Act of 1974 to provide for the establishment in the Department of Labor of a Small Employer Health Benefits Program.

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 `Small Employer Health Act of 2005'.

(b) Table of Contents- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Establishment of Small Employer Health Benefits Program (SEHBP).

`Part 8--Small Employer Health Benefits Program (SEHBP)

SEC. 2. ESTABLISHMENT OF SMALL EMPLOYER HEALTH BENEFITS PROGRAM (SEHBP).

(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--SMALL EMPLOYER HEALTH BENEFITS PROGRAM (SEHBP)

`SEC. 801. ESTABLISHMENT OF PROGRAM.

`(a) In General- The Secretary shall establish, in accordance with this part, a program under which--

`(1) qualifying small employers (as defined in subsection (b)) are provided access to qualifying health insurance coverage (as defined in subsection (c)) for their employees, and

`(2) such employees may elect alternative forms of coverage offered by various health insurance issuers.

`(b) Qualifying Small Employer Defined; Other Definitions- For purposes of this part:

`(1) QUALIFYING SMALL EMPLOYER-

`(A) IN GENERAL- The term `qualifying small employer' means a small employer (as defined in paragraph (2)) that--

`(i) elects to offer health insurance coverage provided under this part to each employee who has been employed by that employer for 3 months or longer; and

`(ii) elects, with respect to an employee electing coverage under qualified health insurance coverage, to pay at least 50 percent of the total premium for qualifying health insurance coverage provided under this part.

`(B) ELECTIONS- Elections under subparagraph (A) may be filed with the Secretary during the 180-day period beginning with the first enrollment period occurring under section 803 and during open enrollment periods occurring thereafter under such section. Such elections shall be filed in such form and manner as shall be prescribed by the Secretary.

`(C) PART-TIME EMPLOYMENT- Under regulations of the Secretary, in the case of an employee serving in a position in which service is customarily less than 1,500 hours per year, the reference in subparagraph (A)(ii) to `50 percent' shall be deemed a percentage reduced to a percentage that bears the same ratio to 50 percent as the number of hours of service per year customarily in such position bears to 1,500.

`(2) SMALL EMPLOYER- The term `small employer' means, with respect to a year, an employer who employed an average of fewer than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the year.

`(3) SEHBP- The term `SEHBP' means the small employer health benefits program provided under this part.

`(c) Qualifying Health Insurance Coverage- For purposes of this part, the term `qualifying health insurance coverage' means health insurance coverage that meets the following requirements:

`(1) The coverage is offered by a health insurance issuer.

`(2) The benefits under such coverage are equivalent to or greater than the lower level of benefits provided under the service benefit plan described in section 8903(1) of title 5, United States Code.

`(3) The coverage includes, with respect to an eligible individual that elects coverage, coverage of the same dependents that would be covered if the coverage were offered under FEHBP.

`(4)(A) Subject to subparagraph (B), there is no underwriting, through a preexisting condition limitation, differential benefits, or different premium levels, or otherwise, with respect to such coverage for covered individuals or their dependents.

`(B) The premiums charged for such coverage are community-rated for individuals within any State and may vary only--

`(i) by individual or family enrollment, and

`(ii) to the extent permitted under the laws of such State relating to health insurance coverage offered in the small group market, on the basis of geography.

`(d) Other Terms-

`(1) HEALTH INSURANCE COVERAGE; HEALTH INSURANCE ISSUER; HEALTH STATUS-RELATED FACTOR- The terms `health insurance coverage', `health insurance issuer', `health status-related factor' have the meanings provided such terms in section 733.

`(2) SMALL GROUP MARKET- The term `small group market' has the meaning provided such term in section 2791(e)(5) of the Public Health Service Act (42 U.S.C. 300gg-91(e)(5)).

`(3) FEHBP- The term `FEHBP' means the Federal Employees Health Benefits Program under chapter 89 of title 5, United States Code.

`(e) Treatment of Partnerships and Self-Employed Individuals- For purposes of this part, and for purposes of applying section 3 to this part and to part 5 as it applies to this part, in any case in which qualifying health insurance coverage is, or is to be, provided under a plan, fund, or program to individuals covered thereunder--

`(1) if such plan, fund, or program is maintained by a partnership, the term `employer' (as defined in section 3(5)) includes the partnership in relation to the partners, and the term `employee' (as defined in section 3(6)) includes any partner in relation to the partnership; and

`(2) if such plan, fund, or program is maintained by 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.

`SEC. 802. CONTRACTS WITH QUALIFYING INSURERS.

`(a) In General- The Secretary shall enter into contracts with health insurance issuers for the offering of qualifying health insurance coverage under this part in the States in such manner as to offer coverage to employees of employers that elect to offer coverage under this part. Nothing in this part shall be construed as requiring the Secretary to enter into arrangements with all such issuers seeking to offer qualifying health insurance coverage in a State.

`(b) Continued Regulation- Nothing in this part shall be construed as preempting State laws applicable to health insurance issuers that offer coverage under this part in such State.

`(c) Coordination With State Insurance Commissioners- The Secretary shall coordinate with the insurance commissioners for the various States in establishing a process for handling and resolving any complaints relating to health insurance coverage offered under this part, to the extent necessary to augment processes otherwise available under State law.

`SEC. 803. ADDITIONAL CONDITIONS.

`(a) Limitation on Enrollment Periods- The Secretary may limit the periods of times during which employees may elect coverage offered under this part, but such election shall be consistent with the elections permitted for employees under FEHBP and shall provide for at least annual open enrollment periods and enrollment at the time of initial eligibility to enroll and upon appropriate changes in family circumstances.

`(b) Authorizing Use of States in Making Arrangements for Coverage- In lieu of the coverage otherwise arranged by the Secretary under this part, the Secretary may enter an arrangement with a State under which a State arranges for the provision of qualifying health insurance coverage to qualifying small employers in such manner as the Secretary would otherwise arrange for such coverage.

`(c) Use of FEHBP Model- The Secretary shall carry out the SEHBP using the model of the FEHBP to the extent practicable and consistent with the provisions of this part, and, in carrying out such model, the Secretary shall, to the maximum extent practicable, negotiate the most affordable and substantial coverage possible for small employers.

`SEC. 804. DISSEMINATION OF INFORMATION.

`The Secretary shall widely disseminate information about SEHBP through the media, the Internet, public service announcements, and other employer and employee directed communications.

`SEC. 805. SUBSIDIES.

`(a) Employer Subsidies-

`(1) ENROLLMENT DISCOUNT-

`(A) IN GENERAL- In the case of a qualifying small employer who is eligible under subparagraph (B), the portion of the total premium for coverage otherwise payable by such employer under this part shall be reduced by 5 percent. Such reduction shall not cause an increase in the portion of the total premium payable by employees.

`(B) EMPLOYERS ELIGIBLE FOR DISCOUNTS- A qualifying small employer is eligible under this subparagraph if such employer employed an average of fewer than 25 employees on business days during the preceding calendar year.

`(2) EMPLOYER PREMIUM SUBSIDY-

`(A) IN GENERAL- The Secretary shall provide to qualifying small employers who are eligible under subparagraph (C) and who elect to offer health insurance coverage under this part a subsidy for premiums paid by the employer for coverage of employees whose individual income (as determined by the Secretary) is at or below 200 percent of the poverty line (as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section) for an individual.

`(B) SUBSIDY SCALED ACCORDING TO SIZE OF EMPLOYER- The subsidy provided under subparagraph (A) shall be designed so that the subsidy equals, for any calendar year--

`(i) 50 percent of the portion of the premium payable by the employer for the coverage, in the case of eligible qualifying small employers who employ an average of fewer than 11 employees on business days during the preceding calendar year;

`(ii) 35 percent of the portion of the premium payable by the employer for the coverage, in the case of eligible qualifying small employers who employ an average of more than 10 employees but fewer than 26 employees on business days during the preceding calendar year; and

`(iii) 25 percent of the portion of the premium payable by the employer for the coverage, in the case of eligible qualifying small employers who employ an average of more than 25 employees but fewer than 51 employees on business days during the preceding calendar year.

`(C) EMPLOYERS ELIGIBLE FOR PREMIUM SUBSIDY- A qualifying small employer is eligible under this subparagraph if such employer employed an average of fewer than 50 employees on business days during the preceding calendar year.

`(b) Employee Subsidies-

`(1) IN GENERAL- The Secretary shall provide subsidies to employees whose family income (as determined by the Secretary) is at or below 200 percent of the poverty line (as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)), including any revision required by such section) for a family of the size involved.

`(2) AMOUNT OF SUBSIDY- Such subsidies shall be in an amount equal to the excess of the portion of the total premium for coverage otherwise payable by the employee under this part for any period, over 5 percent of the family income (as determined under paragraph (1)(A)) of the employee for such period.

`(3) COORDINATION OF SUBSIDIES- Notwithstanding paragraph (1), under regulations of the Secretary, an employee may be entitled to subsidies under this subsection for any period only if such employee is not eligible for subsidies for such period under any Federal or State health insurance subsidy program (including a program under title V, XIX, or XXI of the Social Security Act). For purposes of this paragraph, an employee is `eligible' for a subsidy under a program if such employee is entitled to such subsidy or would, upon filing application therefore, be entitled to such subsidy.

`(4) AUTHORITY TO EXPAND ELIGIBILITY- The Secretary may, to the extent of available funding, provide for expansion of the subsidy program under this subsection to employees whose family income (as defined by the Secretary) is at or below 300 percent of the poverty line (as determined under paragraph (1)).

`(c) Procedures- The Secretary shall establish by regulation applications, methods, and procedures for carrying out this section, including measures to ascertain or confirm levels of income.

`SEC. 806. AUTHORIZATION OF APPROPRIATIONS.

`There are authorized to be appropriated, for the period beginning with fiscal year 2006 and ending with fiscal year 2015, $50,000,000,000 to carry out this part, including the establishment of subsidies under section 805.'.

(b) Report on Offering National Health Plans- Not later than 18 months after the date of the enactment of this Act, the Secretary of Labor shall report to Congress the Secretary's recommendations regarding the feasibility of offering national health plans under part 8 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, as added by subsection (a).

(c) 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--Small Employer Health Benefits Program (SEHBP)

`801. Establishment of program.

`802. Contracts with qualifying insurers.

`803. Additional conditions.

`804. Dissemination of information.

`805. Subsidies.

`806. Authorization of appropriations.'.

END