Gentle Reader – Soon to be Secretary of Health and Human Services Price’s vision of what will replace the Affordable Care Act. 44,000 words, that spell out less and more expensive coverage, unless you are young and healthy.

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TITLE I—TAX INCENTIVES FOR MAINTAINING HEALTH
INSURANCE COVERAGE
Subtitle A—Tax Credit for Health Insurance Coverage
Sec. 101. Refundable tax credit for health insurance coverage.
Sec. 102. Election of tax credit instead of alternative government or group plan
benefits.
Subtitle B—Health Savings Accounts
Sec. 111. Refundable tax credit for health savings account contributions.
Sec. 112. Allowing HSA rollover to child or parent of account holder.
Sec. 113. Maximum contribution limit to HSA coordinated with retirement savings
account limitation.
Sec. 114. Transfer of required minimum distribution from retirement plan to
health savings account.
Sec. 115. Equivalent bankruptcy protections for health savings accounts as retirement
funds.
Sec. 116. Allow both spouses to make catch-up contributions to the same HSA
account.
Sec. 117. Provisions relating to Medicare.
Sec. 118. Individuals eligible for veterans benefits for a service-connected disability.
Sec. 119. Individuals eligible for Indian Health Service assistance.
Sec. 120. Individuals eligible for TRICARE coverage.
Sec. 121. FSA and HRA interaction with HSAs.
Sec. 122. Special rule for certain medical expenses incurred before establishment
of account.
Sec. 123. Preventive care prescription drug clarification.
Sec. 124. Administrative error correction before due date of return.
Sec. 125. Members of health care sharing ministries eligible to establish health
savings accounts.
Sec. 126. High deductible health plans renamed HSA qualified plans.
Sec. 127. Treatment of direct primary care service arrangements.
Sec. 128. Certain provider fees to be treated as medical care.
Sec. 129. Clarification of treatment of capitated primary care payments as
amounts paid for medical care.
Subtitle C—Other Provisions
Sec. 131. Limitation on employer-provided health care coverage.
Sec. 132. Limitation on abortion funding.
Sec. 133. No government discrimination against certain health care entities.
Sec. 134. Equal employer contribution rule to promote choice.
Sec. 135. Limitations on State restrictions on employer auto-enrollment.
Sec. 136. Credit for small employers adopting auto-enrollment and defined contribution
options.
TITLE II—HEALTH CARE ACCESS AND AVAILABILITY
Subtitle A—Health Insurance Pooling Mechanisms for Individuals
Sec. 201. Federal grants for State insurance expenditures.
Sec. 202. Pool reform for individual membership expansion.
Subtitle B—Small Business Health Fairness
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Sec. 211. Short title.
Sec. 212. Rules governing association health plans.
Sec. 213. Clarification of treatment of single employer arrangements.
Sec. 214. Enforcement provisions relating to association health plans.
Sec. 215. Cooperation between Federal and State authorities.
Sec. 216. Effective date and transitional and other rules.
Subtitle C—Health Insurance Reforms
Sec. 221. Requirements for individual health insurance.
TITLE III—INTERSTATE MARKET FOR HEALTH INSURANCE
Sec. 301. Cooperative governing of individual health insurance coverage.
TITLE IV—LAWSUIT ABUSE REFORMS
Sec. 401. Change in burden of proof based on compliance with clinical practice
guidelines.
Sec. 402. State grants to create expert panels and administrative health care
tribunals.
Sec. 403. Payment of damages and recovery of costs in health care lawsuits.
Sec. 404. Definitions.
Sec. 405. Effect on other laws.
Sec. 406. Applicability; effective date.
TITLE V—WELLNESS AND PREVENTION
Sec. 501. Providing financial incentives for treatment compliance.
TITLE VI—TRANSPARENCY AND INSURANCE REFORM MEASURES
Sec. 601. Receipt and response to requests for claim information.
TITLE VII—QUALITY
Sec. 701. Prohibition on certain uses of data obtained from comparative effectiveness
research or from patient-centered outcomes research;
accounting for personalized medicine and differences in patient
treatment response.
Sec. 702. Establishment of performance-based quality measures.
TITLE VIII—STATE TRANSPARENCY PLAN PORTAL
Sec. 801. Providing information on health coverage options and health care
providers.
TITLE IX—PATIENT FREEDOM OF CHOICE
Sec. 901. Guaranteeing freedom of choice and contracting for patients under
Medicare.
Sec. 902. Preemption of State laws limiting charges for eligible professional
services.
Sec. 903. Health care provider licensure cannot be conditioned on participation
in a health plan.
Sec. 904. Bad debt deduction for doctors to partially offset the cost of providing
uncompensated care required to be provided under
amendments made by the Emergency Medical Treatment and
Labor Act.
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Sec. 905. Right of contract with health care providers.
TITLE X—QUALITY HEALTH CARE COALITION
Sec. 1001. Quality Health Care Coalition.
1 SEC. 2. REPEAL OF PPACA AND HEALTH CARE-RELATED
2 HCERA PROVISIONS.
3 (a) PPACA.—Effective as of the enactment of the
4 Patient Protection and Affordable Care Act (Public Law
5 111–148), such Act is repealed, and the provisions of law
6 amended or repealed by such Act are restored or revived
7 as if such Act had not been enacted.
8 (b) HEALTH CARE-RELATED PROVISIONS IN THE
9 HEALTH CARE AND EDUCATION RECONCILIATION ACT OF
10 2010.—Effective as of the enactment of the Health Care
11 and Education Reconciliation Act of 2010 (Public Law
12 111–152), title I and subtitle B of title II of such Act
13 are repealed, and the provisions of law amended or re14
pealed by such title or subtitle, respectively, are restored
15 or revived as if such title and subtitle had not been en16
acted.
17 SEC. 3. NO MANDATE OF GUARANTEED ISSUE OR COMMU18
NITY RATING.
19 Nothing in this Act shall be construed to provide a
20 mandate for guaranteed issue or community rating in the
21 private insurance market.
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1 TITLE I—TAX INCENTIVES FOR
2 MAINTAINING HEALTH IN3
SURANCE COVERAGE
4 Subtitle A—Tax Credit for Health
5 Insurance Coverage
6 SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSUR7
ANCE COVERAGE.
8 (a) IN GENERAL.—Subpart C of part IV of sub9
chapter A of chapter 1 of the Internal Revenue Code of
10 1986, as amended by section 2, is amended by inserting
11 after section 36A the following new section:
12 ‘‘SEC. 36B. HEALTH INSURANCE COVERAGE.
13 ‘‘(a) IN GENERAL.—In the case of an individual,
14 there shall be allowed as a credit against the tax imposed
15 by subtitle A the aggregate monthly credit amounts deter16
mined under subsection (b) with respect to the taxpayer
17 and the taxpayer’s qualifying family members for eligible
18 coverage months beginning during the taxable year.
19 ‘‘(b) MONTHLY CREDIT AMOUNTS.—
20 ‘‘(1) IN GENERAL.—The monthly credit amount
21 with respect to any individual for any eligible cov22
erage month is 1⁄12 of—
23 ‘‘(A) $900 in the case of an individual who
24 has not attained age 18 as of the beginning of
25 such month,
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1 ‘‘(B) $1,200 in the case of an individual
2 who has so attained age 18 but who has not so
3 attained age 35,
4 ‘‘(C) $2,100 in the case of an individual
5 who has so attained age 35, but who has not
6 so attained age 50, and
7 ‘‘(D) $3,000 in the case of an individual
8 who has so attained age 50.
9 ‘‘(2) INFLATION ADJUSTMENT.—In the case of
10 any taxable year beginning in a calendar year after
11 2016, each dollar amount contained in paragraph
12 (1) shall be increased by an amount equal to—
13 ‘‘(A) such dollar amount, multiplied by
14 ‘‘(B) the cost-of-living adjustment deter15
mined under section 1(f)(3) for the calendar
16 year in which the taxable year begins, deter17
mined by substituting ‘calendar year 2015’ for
18 ‘calendar year 1992’ in subparagraph (B)
19 thereof.
20 Any increase determined under the preceding sen21
tence shall be rounded to the nearest multiple of
22 $50.
23 ‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of
24 this section, the term ‘eligible coverage month’ means,
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1 with respect to any individual, any month if, as of the first
2 day of such month, the individual—
3 ‘‘(1) is covered by qualified health insurance,
4 ‘‘(2) does not have other specified coverage, and
5 ‘‘(3) is not imprisoned under Federal, State, or
6 local authority.
7 ‘‘(d) QUALIFYING FAMILY MEMBER.—For purposes
8 of this section, the term ‘qualifying family member’
9 means—
10 ‘‘(1) in the case of a joint return, the taxpayer’s
11 spouse, and
12 ‘‘(2) any dependent of the taxpayer.
13 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur14
poses of this section, the term ‘qualified health insurance’
15 means health insurance coverage (other than excepted
16 benefits as defined in section 9832(c)) which constitutes
17 medical care.
18 ‘‘(f) OTHER SPECIFIED COVERAGE.—For purposes of
19 this section, an individual has other specified coverage for
20 any month if, as of the first day of such month—
21 ‘‘(1) COVERAGE UNDER MEDICARE, MEDICAID,
22 OR SCHIP.—Such individual—
23 ‘‘(A) is entitled to benefits under part A of
24 title XVIII of the Social Security Act or is en25
rolled under part B of such title, or
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1 ‘‘(B) is enrolled in the program under title
2 XIX or XXI of such Act (other than under sec3
tion 1928 of such Act).
4 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi5
vidual—
6 ‘‘(A) is enrolled in a health benefits plan
7 under chapter 89 of title 5, United States Code,
8 ‘‘(B) is entitled to receive benefits under
9 chapter 55 of title 10, United States Code,
10 ‘‘(C) is entitled to receive benefits under
11 chapter 17 of title 38, United States Code,
12 ‘‘(D) is enrolled in a group health plan
13 (within the meaning of section 5000(b)(1))
14 which is subsidized by the employer, or
15 ‘‘(E) is a member of a health care sharing
16 ministry.
17 ‘‘(3) HEALTH CARE SHARING MINISTRY.—For
18 purposes of this subsection, the term ‘health care
19 sharing ministry’ means an organization—
20 ‘‘(A) which is described in section
21 501(c)(3) and is exempt from taxation under
22 section 501(a),
23 ‘‘(B) members of which share a common
24 set of ethical or religious beliefs and share med25
ical expenses among members in accordance
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1 with those beliefs and without regard to the
2 State in which a member resides or is em3
ployed,
4 ‘‘(C) members of which retain membership
5 even after they develop a medical condition,
6 ‘‘(D) which (or a predecessor of which) has
7 been in existence at all times since December
8 31, 1999, and medical expenses of its members
9 have been shared continuously and without
10 interruption since at least December 31, 1999,
11 and
12 ‘‘(E) which conducts an annual audit
13 which is performed by an independent certified
14 public accounting firm in accordance with gen15
erally accepted accounting principles and which
16 is made available to the public upon request.
17 ‘‘(g) SPECIAL RULES.—
18 ‘‘(1) CREDIT IN EXCESS OF PREMIUMS ONLY
19 PAYABLE TO A HEALTH SAVINGS ACCOUNT.—
20 ‘‘(A) IN GENERAL.—If the credit allowed
21 under subsection (a) (determined without re22
gard to clause (ii)) for any taxable year exceeds
23 the amount of premiums paid by the taxpayer
24 for coverage of the taxpayer and the taxpayer’s
25 qualifying family members under qualified
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1 health insurance for eligible coverage months
2 beginning in the taxable year—
3 ‘‘(i) at the request of the taxpayer,
4 the Secretary shall pay the amount of such
5 excess to one or more health savings ac6
counts of the taxpayer or of any qualifying
7 family member of the taxpayer, and
8 ‘‘(ii) the credit allowed under sub9
section (a) for such taxable year shall not
10 exceed the amount of such premiums.
11 ‘‘(B) MEDICAL AND HEALTH SAVINGS AC12
COUNTS.—Amounts distributed from an Archer
13 MSA (as defined in section 220(d)) or from a
14 health savings account (as defined in section
15 223(d)) shall not be taken into account as pre16
miums paid under subparagraph (A).
17 ‘‘(C) INSURANCE WHICH COVERS OTHER
18 INDIVIDUALS.—For purposes of this paragraph,
19 rules similar to the rules of section 213(d)(6)
20 shall apply with respect to any contract for
21 qualified health insurance under which amounts
22 are payable for coverage of an individual other
23 than the taxpayer and qualifying family mem24
bers.
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1 ‘‘(D) CONTRIBUTIONS TREATED AS ROLL2
OVERS, ETC.—
3 ‘‘(i) IN GENERAL.—Any amount paid
4 the Secretary to a health savings account
5 under this paragraph shall be treated for
6 purposes of this title in the same manner
7 as a rollover contribution described in sec8
tion 223(f)(5).
9 ‘‘(ii) COORDINATION WITH LIMITA10
TION ON ROLLOVERS.—Any amount de11
scribed in clause (i) shall not be taken into
12 account in applying section 223(f)(5)(B)
13 with respect to any other amount and the
14 limitation of section 223(f)(5)(B) shall not
15 apply with respect to the application of
16 clause (i).
17 ‘‘(iii) ESTABLISHMENT OF HSAS.—
18 Nothing in any provision of law shall be
19 construed—
20 ‘‘(I) to prevent an individual
21 from establishing a health savings ac22
count (as defined in section 223(d))
23 merely because such individual is not
24 an eligible individual (as defined in
25 section 223(c)), or
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1 ‘‘(II) to prevent such an account
2 from being treated as a health savings
3 account merely because all or a sub4
stantial portion of the contributions to
5 such account are described in this
6 paragraph.
7 ‘‘(2) COORDINATION WITH ADVANCE PAYMENTS
8 OF CREDIT.—With respect to any taxable year—
9 ‘‘(A) the amount which would (but for this
10 subsection) be allowed as a credit to the tax11
payer under subsection (a) shall be reduced
12 (but not below zero) by the aggregate amount
13 paid on behalf of such taxpayer under section
14 7529 for months beginning in such taxable
15 year, and
16 ‘‘(B) the tax imposed by section 1 for such
17 taxable year shall be increased by the excess (if
18 any) of—
19 ‘‘(i) the aggregate amount paid on be20
half of such taxpayer under section 7529
21 for months beginning in such taxable year,
22 over
23 ‘‘(ii) the amount which would (but for
24 this subsection) be allowed as a credit to
25 the taxpayer under subsection (a).
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1 ‘‘(3) COORDINATION WITH OTHER PROVI2
SIONS.—For purposes of any deduction allowed
3 under section 162(l), 213, or 224, and any credit al4
lowed under section 35, any health insurance pre5
miums which would (but for this paragraph) be
6 taken into account shall be reduced (but not below
7 zero) by the amount of the credit allowed under this
8 section (determined without regard to paragraphs
9 (1) and (2) of this subsection).
10 ‘‘(4) DENIAL OF CREDIT TO DEPENDENTS AND
11 NONPERMANENT RESIDENT ALIEN INDIVIDUALS.—
12 No credit shall be allowed under this section to any
13 individual who is—
14 ‘‘(A) not a citizen or lawful permanent
15 resident of the United States for the calendar
16 year in which the taxable year begins, or
17 ‘‘(B) a dependent with respect to another
18 taxpayer for a taxable year beginning in the
19 calendar year in which such individual’s taxable
20 year begins.
21 ‘‘(5) REGULATIONS.—The Secretary may pre22
scribe such regulations and other guidance as may
23 be necessary or appropriate to carry out this section,
24 section 6050W, and section 7529.’’.
25 (b) ADVANCE PAYMENT OF CREDIT.—
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1 (1) IN GENERAL.—Chapter 77 of the Internal
2 Revenue Code of 1986 (relating to miscellaneous
3 provisions) is amended by adding at the end the fol4
lowing:
5 ‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR HEALTH
6 INSURANCE COVERAGE.
7 ‘‘(a) GENERAL RULE.—Not later than January 1,
8 2016, the Secretary shall establish a program for making
9 payments to providers of qualified health insurance (as de10
fined in section 36B(e)) on behalf of taxpayers eligible for
11 the credit under section 36B.
12 ‘‘(b) LIMITATION.—The aggregate payments made
13 under this section with respect to any taxpayer, deter14
mined as of any time during any calendar year, shall not
15 exceed the monthly credit amounts determined with re16
spect to such taxpayer under section 36B for months dur17
ing such calendar year which have ended as of such time.
18 ‘‘(c) APPLICATION OF RULE THAT CREDITS IN EX19
CESS OF PREMIUMS ONLY PAYABLE TO A HEALTH SAV20
INGS ACCOUNT .—Under rules similar to the rules of sec21
tion 36B(g)(1), any amount otherwise payable on behalf
22 of the taxpayer under subsection (a) with respect to any
23 eligible coverage month which is in excess of the amount
24 of premiums paid by the taxpayer for coverage of the tax25
payer and the taxpayer’s qualifying family members under
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1 qualified health insurance for such month shall be payable
2 only to one or more health savings accounts of the tax3
payer or of any qualifying family member of the taxpayer.
4 ‘‘(d) CERTIFICATION PROCESS AND PROOF OF COV5
ERAGE.—The Secretary shall establish a process under
6 which individuals are certified as eligible for payment
7 under this section. Such process shall include an initial
8 application by the taxpayer to determine eligibility and
9 thereafter continued eligibility shall be determined, to the
10 maximum extent feasible, by the Secretary on the basis
11 of information provided under section 6050X.
12 ‘‘(e) DEFINITIONS.—For purposes of this section,
13 terms used in this section which are also used in section
14 36B shall have the same meaning as when used in section
15 36B.’’.
16 (2) INFORMATION REPORTING.—
17 (A) IN GENERAL.—Subpart B of part III
18 of subchapter A of chapter 61 of such Code (re19
lating to information concerning transactions
20 with other persons) is amended by adding at
21 the end the following new section:
22 ‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR HEALTH
23 INSURANCE COVERAGE.
24 ‘‘(a) REQUIREMENT OF REPORTING.—Every person
25 who provides qualified health insurance for any month of
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1 any calendar year with respect to any individual shall, at
2 such time as the Secretary may prescribe, make the return
3 described in subsection (b) with respect to each such indi4
vidual. With respect to any individual with respect to
5 whom payments under section 7529 are made by the Sec6
retary, the Secretary may require that reporting under
7 subsection (b) be made on a monthly basis.
8 ‘‘(b) FORM AND MANNER OF RETURNS.—A return
9 is described in this subsection if such return—
10 ‘‘(1) is in such form as the Secretary may pre11
scribe, and
12 ‘‘(2) contains, with respect to each policy of
13 qualified health insurance—
14 ‘‘(A) the name, address, and TIN of each
15 individual covered under such policy,
16 ‘‘(B) the premiums paid with respect to
17 such policy, and
18 ‘‘(C) such other information as the Sec19
retary may prescribe.
20 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID21
UALS WITH RESPECT TO WHOM INFORMATION IS RE22
QUIRED.—Every person required to make a return under
23 subsection (a) shall furnish to each individual whose name
24 is required to be set forth in such return a written state25
ment showing—
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1 ‘‘(1) the name and address of the person re2
quired to make such return and the phone number
3 of the information contact for such person, and
4 ‘‘(2) the information required to be shown on
5 the return with respect to such individual.
6 The written statement required under the preceding sen7
tence shall be furnished on or before January 31 of the
8 year following the calendar year to which such statement
9 relates.
10 ‘‘(d) DEFINITIONS.—For purposes of this section,
11 terms used in this section which are also used in section
12 36B shall have the same meaning as when used in section
13 36B.’’.
14 (B) ASSESSABLE PENALTIES.—
15 (i) Subparagraph (B) of section
16 6724(d)(1) of such Code, as amended by
17 section 2, is amended by striking ‘‘or’’ at
18 the end of clause (xxii), by striking ‘‘and’’
19 at the end of clause (xxiii) and inserting
20 ‘‘or’’, and by inserting after clause (xxiii)
21 the following new clause:
22 ‘‘(xxiv) section 6050X (relating to re23
turns relating to credit for health insur24
ance coverage), and’’.
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1 (ii) Paragraph (2) of section 6724(d)
2 of such Code, as amended by section 2, is
3 amended by striking ‘‘or’’ at the end of
4 subparagraph (EE), by striking the period
5 at the end of subparagraph (FF) and in6
serting ‘‘, or’’, and by adding after sub7
paragraph (FF) the following new sub8
paragraph:
9 ‘‘(GG) section 6050X (relating to returns
10 relating to credit for health insurance cov11
erage).’’.
12 (3) DISCLOSURE OF RETURN INFORMATION
13 FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT
14 AS PREMIUMS FOR QUALIFIED HEALTH INSUR15
ANCE.—
16 (A) IN GENERAL.—Subsection (l) of sec17
tion 6103 of such Code, as amended by section
18 2, is amended by adding at the end the fol19
lowing new paragraph:
20 ‘‘(21) DISCLOSURE OF RETURN INFORMATION
21 RELATED TO PAYMENTS OF THE HEALTH INSUR22
ANCE COVERAGE CREDIT.—The Secretary may, on
23 behalf of taxpayers eligible for the credit under sec24
tion 36B, disclose to a provider of qualified health
25 insurance (as defined in section 36(e)) or a trustee
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1 of a health savings account (and persons acting on
2 behalf of such provider or such trustee), return in3
formation with respect to any such taxpayer only to
4 the extent necessary (as prescribed by regulations
5 issued by the Secretary) to carry out sections
6 36B(g)(1) (relating to credit in excess of premiums
7 only payable to a health savings account) and 7529
8 (relating to advance payment of credit for health in9
surance coverage).’’.
10 (B) CONFIDENTIALITY OF INFORMA11
TION.—Paragraph (3) of section 6103(a) of
12 such Code, as amended by section 2, is amend13
ed by striking ‘‘or (20)’’ and inserting ‘‘(20), or
14 (21)’’.
15 (C) UNAUTHORIZED DISCLOSURE.—Para16
graph (2) of section 7213(a) of such Code, as
17 amended by section 2, is amended by striking
18 ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’.
19 (4) EFFECTIVE DATE.—The amendments made
20 by this section shall take effect on the date of the
21 enactment of this Act.
22 (c) CONFORMING AMENDMENTS.—
23 (1) Paragraph (2) of section 1324(b) of title
24 31, United States Code, as amended by section 2, is
25 amended by inserting ‘‘36B,’’ after ‘‘36A,’’.
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1 (2) The table of sections for subpart C of part
2 IV of subchapter A of chapter 1 of the Internal Rev3
enue Code of 1986, as amended by section 2, is
4 amended by inserting after the item relating to sec5
tion 36A the following new item:
‘‘Sec. 36B. Health insurance coverage.’’.
6 (4) The table of sections for subpart B of part
7 III of subchapter A of chapter 61 of such Code is
8 amended by adding at the end the following new
9 item:
‘‘Sec. 6050X. Returns relating to credit for health insurance coverage.’’.
10 (5) The table of sections for chapter 77 of such
11 Code is amended by adding at the end the following
12 new item:
‘‘Sec. 7529. Advance payment of credit for health insurance coverage.’’.
13 (d) EFFECTIVE DATE.—The amendments made by
14 this section shall apply to taxable years beginning after
15 December 31, 2015.
16 SEC. 102. ELECTION OF TAX CREDIT INSTEAD OF ALTER17
NATIVE GOVERNMENT OR GROUP PLAN BEN18
EFITS.
19 (a) IN GENERAL.—Notwithstanding any other provi20
sion of law, an individual who is otherwise eligible for ben21
efits under a health program (as defined in subsection (c))
22 may elect, in a form and manner specified by the Sec23
retary of Health and Human Services in consultation with
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1 the Secretary of the Treasury, to receive a tax credit de2
scribed in section 36B of the Internal Revenue Code of
3 1986 (which may be used for the purpose of health insur4
ance coverage) in lieu of receiving any benefits under such
5 program.
6 (b) EFFECTIVE DATE.—An election under subsection
7 (a) may first be made for calendar year 2016 and any
8 such election shall be effective for such period (not less
9 than one calendar year) as the Secretary of Health and
10 Human Services shall specify, in consultation with the
11 Secretary of the Treasury.
12 (c) HEALTH PROGRAM DEFINED.—For purposes of
13 this section, the term ‘‘health program’’ means any of the
14 following:
15 (1) MEDICARE.—The Medicare program under
16 part A of title XVIII of the Social Security Act.
17 (2) MEDICAID.—The Medicaid program under
18 title XIX of such Act (including such a program op19
erating under a Statewide waiver under section 1115
20 of such Act).
21 (3) SCHIP.—The State children’s health insur22
ance program under title XXI of such Act.
23 (4) TRICARE.—The TRICARE program
24 under chapter 55 of title 10, United States Code.
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1 (5) VETERANS BENEFITS.—Coverage for bene2
fits under chapter 17 of title 38, United States
3 Code.
4 (6) FEHBP.—Coverage under chapter 89 of
5 title 5, United States Code.
6 (7) SUBSIDIZED GROUP HEALTH PLANS.—Cov7
erage under a group health plan (within the meaning
8 of section 5000(b)(1)) which is subsidized by the
9 employer.
10 (d) OTHER SOCIAL SECURITY BENEFITS NOT
11 WAIVED.—An election to waive the benefits described in
12 subsection (c)(1) shall not result in the waiver of any other
13 benefits under the Social Security Act.
14 Subtitle B—Health Savings
15 Accounts
16 SEC. 111. REFUNDABLE TAX CREDIT FOR HEALTH SAVINGS
17 ACCOUNT CONTRIBUTIONS.
18 (a) IN GENERAL.—Subpart C of part IV of sub19
chapter A of chapter 1 of the Internal Revenue Code of
20 1986, as amended by the preceding provisions of this Act,
21 is amended by inserting after section 36B the following
22 new section:
23 ‘‘SEC. 36C. HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.
24 ‘‘(a) IN GENERAL.—In the case of an individual who
25 is allowed a deduction under section 223(a) for any tax-
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1 able year, there shall be allowed as a credit against the
2 tax imposed by subtitle A for such taxable year, the lesser
3 of—
4 ‘‘(1) the amount so allowed as a deduction, or
5 ‘‘(2) $1,000.
6 ‘‘(b) LIFETIME LIMITATION.—The credit allowed
7 under subsection (a) with respect to any individual shall
8 not exceed the excess (if any) of $1,000 over the aggregate
9 credits allowed with respect to such individual under sub10
section (a) for all prior taxable years.’’.
11 (b) CONFORMING AMENDMENTS.—
12 (1) Paragraph (2) of section 1324(b) of title
13 31, United States Code, as amended by the pre14
ceding provisions of this Act, is amended by insert15
ing ‘‘36B,’’ after ‘‘36A,’’.
16 (2) The table of sections for subpart C of part
17 IV of subchapter A of chapter 1 of the Internal Rev18
enue Code of 1986, as amended by the preceding
19 provisions of this Act, is amended by inserting after
20 the item relating to section 36A the following new
21 item:
‘‘Sec. 36B. Health insurance coverage.’’.
22 (c) CONFORMING AMENDMENTS.—
23 (1) Paragraph (2) of section 1324(b) of title
24 31, United States Code, as amended by the pre-
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1 ceding provisions of this Act, is amended by insert2
ing ‘‘36C,’’ after ‘‘36B,’’.
3 (2) The table of sections for subpart C of part
4 IV of subchapter A of chapter 1 of the Internal Rev5
enue Code of 1986, as amended by the preceding
6 provisions of this Act, is amended by inserting after
7 the item relating to section 36B the following new
8 item:
‘‘Sec. 36C. Health savings account contributions.’’.
9 (d) EFFECTIVE DATE.—The amendments made by
10 this section shall apply to taxable years beginning after
11 the date of the enactment of this Act.
12 SEC. 112. ALLOWING HSA ROLLOVER TO CHILD OR PARENT
13 OF ACCOUNT HOLDER.
14 (a) IN GENERAL.—Section 223(f)(8)(A) of the Inter15
nal Revenue Code of 1986 is amended—
16 (1) by inserting ‘‘child, parent, or grandparent’’
17 after ‘‘surviving spouse’’,
18 (2) by inserting ‘‘child, parent, or grandparent,
19 as the case may be,’’ after ‘‘the spouse’’,
20 (3) by inserting ‘‘, CHILD, PARENT, OR GRAND21
PARENT’’ after ‘‘SPOUSE’’ in the heading thereof,
22 and
23 (4) by adding at the end the following: ‘‘In the
24 case of a child who acquires such beneficiary’s inter25
est and with respect to whom a deduction under sec-
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1 tion 151 is allowable to another taxpayer for a tax2
able year beginning in the calendar year in which
3 such individual’s taxable year begins, such health
4 savings account shall be treated as a child health
5 savings account of the child.’’.
6 (b) EFFECTIVE DATE.—The amendments made by
7 this section shall apply to taxable years beginning after
8 the date of the enactment of this Act.
9 SEC. 113. MAXIMUM CONTRIBUTION LIMIT TO HSA COORDI10
NATED WITH RETIREMENT SAVINGS AC11
COUNT LIMITATION.
12 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A)
13 of the Internal Revenue Code of 1986 is amended by strik14
ing ‘‘$2,250’’ and inserting ‘‘the amount in effect under
15 section 219(b)(5)(A)’’.
16 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) of
17 such Code is amended by striking ‘‘$4,500’’ and inserting
18 ‘‘twice the amount in effect under subparagraph (A)’’.
19 (c) CONFORMING AMENDMENTS.—Section 223(g)(1)
20 of such Code is amended—
21 (1) in the matter preceding subparagraph (A),
22 by striking ‘‘subsections (b)(2) and (c)(2)(A)’’ and
23 inserting ‘‘subsection (c)(2)(A)’’,
24 (2) in subparagraph (B), by striking ‘‘by sub25
stituting’’ and all that follows through the end of
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1 clause (ii) and inserting ‘‘by substituting ‘calendar
2 year 2003’ for ‘calendar year 1992’ in subparagraph
3 (B) thereof.’’, and
4 (3) in the matter following subparagraph (B),
5 by striking ‘‘subsections (b)(2) and (c)(2)(A)’’ and
6 inserting ‘‘subsection (c)(2)(A)’’.
7 (d) EFFECTIVE DATE.—The amendments made by
8 this section shall apply to taxable years beginning after
9 the date of the enactment of this Act.
10 SEC. 114. TRANSFER OF REQUIRED MINIMUM DISTRIBU11
TION FROM RETIREMENT PLAN TO HEALTH
12 SAVINGS ACCOUNT.
13 (a) TRANSFER FROM RETIREMENT PLAN.—
14 (1) INDIVIDUAL RETIREMENT ACCOUNTS.—Sec15
tion 408(d) of the Internal Revenue Code of 1986
16 is amended by adding at the end the following new
17 paragraph:
18 ‘‘(10) REQUIRED MINIMUM DISTRIBUTION
19 TRANSFERRED TO HEALTH SAVINGS ACCOUNT.—
20 ‘‘(A) IN GENERAL.—In the case of an indi21
vidual who has attained the age of 701⁄2 and
22 who elects the application of this paragraph for
23 a taxable year, gross income of the individual
24 for the taxable year does not include a qualified
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1 HSA transfer to the extent such transfer is oth2
erwise includible in gross income.
3 ‘‘(B) QUALIFIED HSA TRANSFER.—For
4 purposes of this paragraph, the term ‘qualified
5 HSA transfer’ means any distribution from an
6 individual retirement plan—
7 ‘‘(i) to a health savings account of the
8 individual in a direct trustee-to-trustee
9 transfer,
10 ‘‘(ii) to the extent such distribution
11 does not exceed the required minimum dis12
tribution determined under section
13 401(a)(9) for the distribution calendar
14 year ending during the taxable year.
15 ‘‘(C) APPLICATION OF SECTION 72.—Not16
withstanding section 72, in determining the ex17
tent to which an amount is treated as otherwise
18 includible in gross for purposes of subparagraph
19 (A), the aggregate amount distributed from an
20 individual retirement plan shall be treated as
21 includible in gross income to the extent that
22 such amount does not exceed the aggregate
23 amount which would have been so includible if
24 all amounts from all individual retirement plans
25 were distributed. Proper adjustments shall be
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1 made in applying section 72 to other distribu2
tions in such taxable year and subsequent tax3
able years.
4 ‘‘(D) COORDINATION.—An election may
5 not be made under subparagraph (A) for a tax6
able year for which an election is in effect
7 under paragraph (9).’’.
8 (2) OTHER RETIREMENT PLANS.—Section 402
9 of such Code is amended by adding at the end the
10 following new subsection:
11 ‘‘(m) REQUIRED MINIMUM DISTRIBUTION TRANS12
FERRED TO HEALTH SAVINGS ACCOUNT.—
13 ‘‘(1) IN GENERAL.—In the case of an individual
14 who has attained the age of 701⁄2 and who elects the
15 application of this subsection for a taxable year,
16 gross income of the individual for the taxable year
17 does not include a qualified HSA transfer to the ex18
tent such transfer is otherwise includible in gross in19
come.
20 ‘‘(2) QUALIFIED HSA TRANSFER.—For pur21
poses of this subsection, the term ‘qualified HSA
22 transfer’ means any distribution from a retirement
23 plan—
24 ‘‘(A) to a health savings account of the in25
dividual in a direct trustee-to-trustee transfer,
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1 ‘‘(B) to the extent such distribution does
2 not exceed the required minimum distribution
3 determined under section 401(a)(9) for the dis4
tribution calendar year ending during the tax5
able year.
6 ‘‘(3) APPLICATION OF SECTION 72.—Notwith7
standing section 72, in determining the extent to
8 which an amount is treated as otherwise includible
9 in gross for purposes of paragraph (1), the aggre10
gate amount distributed from an individual retire11
ment plan shall be treated as includible in gross in12
come to the extent that such amount does not exceed
13 the aggregate amount which would have been so in14
cludible if all amounts from all individual retirement
15 plans were distributed. Proper adjustments shall be
16 made in applying section 72 to other distributions in
17 such taxable year and subsequent taxable years.
18 ‘‘(4) ELIGIBLE RETIREMENT PLAN.—For pur19
poses of this subsection, the term ‘eligible retirement
20 plan’ has the meaning given such term by subsection
21 (c)(8)(B) (determined without regard to clauses (i)
22 and (ii) thereof).’’.
23 (b) TRANSFER TO HEALTH SAVINGS ACCOUNT.—
24 (1) IN GENERAL.—Section 223(d)(1)(A) of
25 such Code is amended by striking ‘‘or’’ at the end
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1 of clause (i), by striking the period at the end of
2 clause (ii)(II) and inserting ‘‘, or’’, and by adding at
3 the end the following new clause:
4 ‘‘(iii) unless it is in a qualified HSA
5 transfer described in section 408(d)(10) or
6 402(m).’’.
7 (2) EXCISE TAX INAPPLICABLE TO QUALIFIED
8 HSA TRANSFER.—Section 4973(g)(1) of such Code
9 is amended by inserting ‘‘or in a qualified HSA
10 transfer described in section 408(d)(10) or 402(m)’’
11 after ‘‘or 223(f)(5)’’.
12 (c) EFFECTIVE DATE.—The amendments made by
13 this section shall apply to distributions made after the
14 date of the enactment of this Act.
15 SEC. 115. EQUIVALENT BANKRUPTCY PROTECTIONS FOR
16 HEALTH SAVINGS ACCOUNTS AS RETIRE17
MENT FUNDS.
18 (a) IN GENERAL.—Section 522 of title 11, United
19 States Code, is amended by adding at the end the fol20
lowing new subsection:
21 ‘‘(r) TREATMENT OF HEALTH SAVINGS AC22
COUNTS.—For purposes of this section, any health savings
23 account (as described in section 223 of the Internal Rev24
enue Code of 1986) shall be treated in the same manner
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1 as an individual retirement account described in section
2 408 of such Code.’’.
3 (b) EFFECTIVE DATE.—The amendment made by
4 this section shall apply to cases commencing under title
5 11, United States Code, after the date of the enactment
6 of this Act.
7 SEC. 116. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON8
TRIBUTIONS TO THE SAME HSA ACCOUNT.
9 (a) IN GENERAL.—Section 223(b)(3) of the Internal
10 Revenue Code of 1986 is amended by adding at the end
11 the following new subparagraph:
12 ‘‘(C) SPECIAL RULE WHERE BOTH
13 SPOUSES ARE ELIGIBLE INDIVIDUALS WITH 1
14 ACCOUNT.—If—
15 ‘‘(i) an individual and the individual’s
16 spouse have both attained age 55 before
17 the close of the taxable year, and
18 ‘‘(ii) the spouse is not an account ben19
eficiary of a health savings account as of
20 the close of such year,
21 the additional contribution amount shall be
22 twice the amount otherwise determined under
23 subparagraph (B).’’.
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1 (b) EFFECTIVE DATE.—The amendment made by
2 this section shall apply to taxable years beginning after
3 the date of the enactment of this Act.
4 SEC. 117. PROVISIONS RELATING TO MEDICARE.
5 (a) INDIVIDUALS OVER AGE 65 ONLY ENROLLED IN
6 MEDICARE PART A.—Section 223(b)(7) of the Internal
7 Revenue Code of 1986 is amended by adding at the end
8 the following: ‘‘This paragraph shall not apply to any indi9
vidual during any period for which the individual’s only
10 entitlement to such benefits is an entitlement to hospital
11 insurance benefits under part A of title XVIII of such Act
12 pursuant to an enrollment for such hospital insurance ben13
efits under section 226(a)(1) of such Act.’’.
14 (b) MEDICARE BENEFICIARIES PARTICIPATING IN
15 MEDICARE ADVANTAGE MSA MAY CONTRIBUTE THEIR
16 OWN MONEY TO THEIR MSA.—
17 (1) IN GENERAL.—Section 138(b) of such Code
18 is amended by striking paragraph (2) and by redes19
ignating paragraphs (3) and (4) as paragraphs (2)
20 and (3), respectively.
21 (2) CONFORMING AMENDMENT.—Section
22 138(c)(4) of such Code is amended by striking ‘‘and
23 paragraph (2)’’.
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1 (c) EFFECTIVE DATE.—The amendments made by
2 this section shall apply to taxable years beginning after
3 the date of the enactment of this Act.
4 SEC. 118. INDIVIDUALS ELIGIBLE FOR VETERANS BENE5
FITS FOR A SERVICE-CONNECTED DIS6
ABILITY.
7 (a) IN GENERAL.—Section 223(c)(1) of the Internal
8 Revenue Code of 1986 is amended by adding at the end
9 the following new subparagraph:
10 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI11
GIBLE FOR CERTAIN VETERANS BENEFITS.—
12 For purposes of subparagraph (A)(ii), an indi13
vidual shall not be treated as covered under a
14 health plan described in such subparagraph
15 merely because the individual receives periodic
16 hospital care or medical services for a service17
connected disability under any law administered
18 by the Secretary of Veterans Affairs but only if
19 the individual is not eligible to receive such care
20 or services for any condition other than a serv21
ice-connected disability.’’.
22 (b) EFFECTIVE DATE.—The amendment made by
23 this section shall apply to taxable years beginning after
24 the date of the enactment of this Act.
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1 SEC. 119. INDIVIDUALS ELIGIBLE FOR INDIAN HEALTH
2 SERVICE ASSISTANCE.
3 (a) IN GENERAL.—Section 223(c)(1) of the Internal
4 Revenue Code of 1986, as amended by the preceding pro5
visions of this Act, is amended by adding at the end the
6 following new subparagraph:
7 ‘‘(D) SPECIAL RULE FOR INDIVIDUALS EL8
IGIBLE FOR ASSISTANCE UNDER INDIAN
9 HEALTH SERVICE PROGRAMS.—For purposes of
10 subparagraph (A)(ii), an individual shall not be
11 treated as covered under a health plan de12
scribed in such subparagraph merely because
13 the individual receives hospital care or medical
14 services under a medical care program of the
15 Indian Health Service or of a tribal organiza16
tion.’’.
17 (b) EFFECTIVE DATE.—The amendment made by
18 this section shall apply to taxable years beginning after
19 the date of the enactment of this Act.
20 SEC. 120. INDIVIDUALS ELIGIBLE FOR TRICARE COVERAGE.
21 (a) IN GENERAL.—Section 223(c)(1) of the Internal
22 Revenue Code of 1986, as amended by the preceding pro23
visions of this Act, is amended by adding at the end the
24 following new subparagraph:
25 ‘‘(E) SPECIAL RULE FOR INDIVIDUALS EL26
IGIBLE FOR ASSISTANCE UNDER TRICARE.—For
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1 purposes of subparagraph (A)(ii), an individual
2 shall not be treated as covered under a health
3 plan described in such subparagraph merely be4
cause the individual is eligible to receive hos5
pital care, medical services, or prescription
6 drugs under TRICARE Extra or TRICARE
7 Standard and such individual is not enrolled in
8 TRICARE Prime.’’.
9 (b) EFFECTIVE DATE.—The amendment made by
10 this section shall apply to taxable years beginning after
11 the date of the enactment of this Act.
12 SEC. 121. FSA AND HRA INTERACTION WITH HSAS.
13 (a) ELIGIBLE INDIVIDUALS INCLUDE FSA AND HRA
14 PARTICIPANTS.—Section 223(c)(1)(B) of the Internal
15 Revenue Code of 1986 is amended—
16 (1) by striking ‘‘and’’ at the end of clause (ii),
17 (2) by striking the period at the end of clause
18 (iii) and inserting ‘‘, and’’, and
19 (3) by inserting after clause (iii) the following
20 new clause:
21 ‘‘(iv) coverage under a health flexible
22 spending arrangement or a health reim23
bursement arrangement in the plan year a
24 qualified HSA distribution as described in
25 section 106(e) is made on behalf of the in-
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1 dividual if after the qualified HSA dis2
tribution is made and for the remaining
3 duration of the plan year, the coverage
4 provided under the health flexible spending
5 arrangement or health reimbursement ar6
rangement is converted to—
7 ‘‘(I) coverage that does not pay
8 or reimburse any medical expense in9
curred before the minimum annual de10
ductible under paragraph (2)(A)(i)
11 (prorated for the period occurring
12 after the qualified HSA distribution is
13 made) is satisfied,
14 ‘‘(II) coverage that, after the
15 qualified HSA distribution is made,
16 does not pay or reimburse any med17
ical expense incurred after the quali18
fied HSA distribution is made other
19 than preventive care as defined in
20 paragraph (2)(C),
21 ‘‘(III) coverage that, after the
22 qualified HSA distribution is made,
23 pays or reimburses benefits for cov24
erage described in clause (ii) (but not
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1 through insurance or for long-term
2 care services),
3 ‘‘(IV) coverage that, after the
4 qualified HSA distribution is made,
5 pays or reimburses benefits for per6
mitted insurance or coverage de7
scribed in clause (ii) (but not for long8
term care services),
9 ‘‘(V) coverage that, after the
10 qualified HSA distribution is made,
11 pays or reimburses only those medical
12 expenses incurred after an individual’s
13 retirement (and no expenses incurred
14 before retirement), or
15 ‘‘(VI) coverage that, after the
16 qualified HSA distribution is made, is
17 suspended, pursuant to an election
18 made on or before the date the indi19
vidual elects a qualified HSA distribu20
tion or, if later, on the date of the in21
dividual enrolls in a high deductible
22 health plan, that does not pay or re23
imburse, at any time, any medical ex24
pense incurred during the suspension
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1 period except as defined in the pre2
ceding subclauses of this clause.’’.
3 (b) QUALIFIED HSA DISTRIBUTION SHALL NOT AF4
FECT FLEXIBLE SPENDING ARRANGEMENT.—Section
5 106(e)(1) of such Code is amended to read as follows:
6 ‘‘(1) IN GENERAL.—A plan shall not fail to be
7 treated as a health flexible spending arrangement
8 under this section, section 105, or section 125, or as
9 a health reimbursement arrangement under this sec10
tion or section 105, merely because such plan pro11
vides for a qualified HSA distribution.’’.
12 (c) FSA BALANCES AT YEAR END SHALL NOT FOR13
FEIT.—Section 125(d)(2) of such Code is amended by
14 adding at the end the following new subparagraph:
15 ‘‘(E) EXCEPTION FOR QUALIFIED HSA DIS16
TRIBUTIONS.—Subparagraph (A) shall not
17 apply to the extent that there is an amount re18
maining in a health flexible spending account at
19 the end of a plan year that an individual elects
20 to contribute to a health savings account pursu21
ant to a qualified HSA distribution (as defined
22 in section 106(e)(2)).’’.
23 (d) SIMPLIFICATION OF LIMITATIONS ON FSA AND
24 HRA ROLLOVERS.—Section 106(e)(2) of such Code is
25 amended to read as follows:
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1 ‘‘(2) QUALIFIED HSA DISTRIBUTION.—
2 ‘‘(A) IN GENERAL.—The term ‘qualified
3 HSA distribution’ means a distribution from a
4 health flexible spending arrangement or health
5 reimbursement arrangement to the extent that
6 such distribution does not exceed the lesser
7 of—
8 ‘‘(i) the balance in such arrangement
9 as of the date of such distribution, or
10 ‘‘(ii) the amount determined under
11 subparagraph (B).
12 Such term shall not include more than 1 dis13
tribution with respect to any arrangement.
14 ‘‘(B) DOLLAR LIMITATIONS.—
15 ‘‘(i) DISTRIBUTIONS FROM A HEALTH
16 FLEXIBLE SPENDING ARRANGEMENT.—A
17 qualified HSA distribution from a health
18 flexible spending arrangement shall not ex19
ceed the applicable amount.
20 ‘‘(ii) DISTRIBUTIONS FROM A HEALTH
21 REIMBURSEMENT ARRANGEMENT.—A
22 qualified HSA distribution from a health
23 reimbursement arrangement shall not ex24
ceed—
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1 ‘‘(I) the applicable amount di2
vided by 12, multiplied by
3 ‘‘(II) the number of months dur4
ing which the individual is a partici5
pant in the health reimbursement ar6
rangement.
7 ‘‘(iii) APPLICABLE AMOUNT.—For
8 purposes of this subparagraph, the applica9
ble amount is—
10 ‘‘(I) the dollar amount in effect
11 under section 223(b)(2)(A) in the case
12 of an eligible individual who has self13
only coverage under a high deductible
14 health plan at the time of such dis15
tribution, and
16 ‘‘(II) twice the dollar amount in
17 effect under subclause (I) in the case
18 of an eligible individual who has fam19
ily coverage under a high deductible
20 health plan at the time of such dis21
tribution.’’.
22 (e) ELIMINATION OF ADDITIONAL TAX FOR FAILURE
23 TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COV24
ERAGE.—Section 106(e) of such Code is amended—
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1 (1) by striking paragraph (3) and redesignating
2 paragraphs (4) and (5) as paragraphs (3) and (4),
3 respectively, and
4 (2) by striking subparagraph (A) of paragraph
5 (3), as so redesignated, and redesignating subpara6
graphs (B) and (C) of such paragraph as subpara7
graphs (A) and (B) thereof, respectively.
8 (f) LIMITED PURPOSE FSAS AND HRAS.—Section
9 106(e) of such Code, as amended by this section, is
10 amended by adding at the end the following new para11
graph:
12 ‘‘(5) LIMITED PURPOSE FSAS AND HRAS.—A
13 plan shall not fail to be a health flexible spending
14 arrangement or health reimbursement arrangement
15 under this section or section 105 merely because the
16 plan converts coverage for individuals who enroll in
17 a high deductible health plan described in section
18 223(c)(2) to coverage described in section
19 223(c)(1)(B)(iv). Coverage for such individuals may
20 be converted as of the date of enrollment in the high
21 deductible health plan, without regard to the period
22 of coverage under the health flexible spending ar23
rangement or health reimbursement arrangement,
24 and without requiring any change in coverage to in-
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42
1 dividuals who do not enroll in a high deductible
2 health plan.’’.
3 (g) DISCLAIMER OF DISQUALIFYING COVERAGE.—
4 Section 223(c)(1)(B) of such Code, as amended by this
5 section, is amended—
6 (1) by striking ‘‘and’’ at the end of clause (iii),
7 (2) by striking the period at the end of clause
8 (iv) and inserting ‘‘, and’’, and
9 (3) by inserting after clause (iv) the following
10 new clause:
11 ‘‘(v) any coverage (including prospec12
tive coverage) under a health plan that is
13 not a high deductible health plan which is
14 disclaimed in writing, at the time of the
15 creation or organization of the health sav16
ings account, including by execution of a
17 trust described in subsection (d)(1)
18 through a governing instrument that in19
cludes such a disclaimer, or by acceptance
20 of an amendment to such a trust that in21
cludes such a disclaimer.’’.
22 (h) EFFECTIVE DATE.—The amendments made by
23 this section shall apply to taxable years beginning after
24 the date of the enactment of this Act.
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43
1 SEC. 122. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES
2 INCURRED BEFORE ESTABLISHMENT OF AC3
COUNT.
4 (a) IN GENERAL.—Section 223(d)(2) of the Internal
5 Revenue Code of 1986 is amended by adding at the end
6 the following new subparagraph:
7 ‘‘(D) CERTAIN MEDICAL EXPENSES IN8
CURRED BEFORE ESTABLISHMENT OF ACCOUNT
9 TREATED AS QUALIFIED.—An expense shall not
10 fail to be treated as a qualified medical expense
11 solely because such expense was incurred before
12 the establishment of the health savings account
13 if such expense was incurred—
14 ‘‘(i) during either—
15 ‘‘(I) the taxable year in which the
16 health savings account was estab17
lished, or
18 ‘‘(II) the preceding taxable year
19 in the case of a health savings ac20
count established after the taxable
21 year in which such expense was in22
curred but before the time prescribed
23 by law for filing the return for such
24 taxable year (not including extensions
25 thereof), and
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1 ‘‘(ii) for medical care of an individual
2 during a period that such individual was
3 covered by a high deductible health plan
4 and met the requirements of subsection
5 (c)(1)(A)(ii) (after application of sub6
section (c)(1)(B)).’’.
7 (b) EFFECTIVE DATE.—The amendment made by
8 this section shall apply to taxable years beginning after
9 the date of the enactment of this Act.
10 SEC. 123. PREVENTIVE CARE PRESCRIPTION DRUG CLARI11
FICATION.
12 (a) CLARIFY USE OF DRUGS IN PREVENTIVE
13 CARE.—Section 223(c)(2)(C) of the Internal Revenue
14 Code of 1986 is amended by adding at the end the fol15
lowing: ‘‘Preventive care shall include prescription and
16 over-the-counter drugs and medicines which have the pri17
mary purpose of preventing the onset of, further deteriora18
tion from, or complications associated with chronic condi19
tions, illnesses, or diseases.’’.
20 (b) EFFECTIVE DATE.—The amendment made by
21 this section shall apply to taxable years beginning after
22 December 31, 2003.
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1 SEC. 124. ADMINISTRATIVE ERROR CORRECTION BEFORE
2 DUE DATE OF RETURN.
3 (a) IN GENERAL.—Section 223(f)(4) of the Internal
4 Revenue Code of 1986 is amended by adding at the end
5 the following new subparagraph:
6 ‘‘(D) EXCEPTION FOR ADMINISTRATIVE
7 ERRORS CORRECTED BEFORE DUE DATE OF RE8
TURN.—Subparagraph (A) shall not apply if
9 any payment or distribution is made to correct
10 an administrative, clerical or payroll contribu11
tion error and if—
12 ‘‘(i) such distribution is received by
13 the individual on or before the last day
14 prescribed by law (including extensions of
15 time) for filing such individual’s return for
16 such taxable year, and
17 ‘‘(ii) such distribution is accompanied
18 by the amount of net income attributable
19 to such contribution.
20 Any net income described in clause (ii) shall be
21 included in the gross income of the individual
22 for the taxable year in which it is received.’’.
23 (b) EFFECTIVE DATE.—The amendment made by
24 this section shall take effect on the date of the enactment
25 of this Act.
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46
1 SEC. 125. MEMBERS OF HEALTH CARE SHARING MIN2
ISTRIES ELIGIBLE TO ESTABLISH HEALTH
3 SAVINGS ACCOUNTS.
4 (a) IN GENERAL.—Section 223 of the Internal Rev5
enue Code of 1986, as amended by the preceding provi6
sions of this Act, is amended by adding at the end the
7 following new subsection:
8 ‘‘(j) APPLICATION TO HEALTH CARE SHARING MIN9
ISTRIES.—For purposes of this section, membership in a
10 health care sharing ministry (as defined in section
11 5000A(d)(2)(B)(ii)) shall be treated as coverage under a
12 high deductible health plan.’’.
13 (b) EFFECTIVE DATE.—The amendment made by
14 this section shall apply to taxable years beginning after
15 the date of the enactment of this Act.
16 SEC. 126. HIGH DEDUCTIBLE HEALTH PLANS RENAMED
17 HSA QUALIFIED PLANS.
18 (a) IN GENERAL.—Section 223 of the Internal Rev19
enue Code of 1986, as amended by this Act, is amended
20 by striking ‘‘high deductible health plan’’ each place it ap21
pears and inserting ‘‘HSA qualified health plan’’.
22 (b) CONFORMING AMENDMENTS.—
23 (1) Section 106(e) of such Code, as amended by
24 this Act, is amended by striking ‘‘high deductible
25 health plan’’ each place it appears and inserting
26 ‘‘HSA qualified health plan’’.
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1 (2) The heading for section 223(c)(2) of such
2 Code is amended by striking ‘‘HIGH DEDUCTIBLE
3 HEALTH PLAN’’ and inserting ‘‘HSA QUALIFIED
4 HEALTH PLAN’’.
5 (3) Section 408(d)(9) of such Code is amend6
ed—
7 (A) by striking ‘‘high deductible health
8 plan’’ each place it appears in subparagraph
9 (C) and inserting ‘‘HSA qualified health plan’’,
10 and
11 (B) by striking ‘‘HIGH DEDUCTIBLE
12 HEALTH PLAN’’ in the heading of subparagraph
13 (D) and inserting ‘‘HSA QUALIFIED HEALTH
14 PLAN’’.
15 SEC. 127. TREATMENT OF DIRECT PRIMARY CARE SERVICE
16 ARRANGEMENTS.
17 (a) IN GENERAL.—Section 223(c) of the Internal
18 Revenue Code of 1986 is amended by adding at the end
19 the following new paragraph:
20 ‘‘(6) TREATMENT OF DIRECT PRIMARY CARE
21 SERVICE ARRANGEMENTS.—An arrangement under
22 which an individual is provided coverage restricted to
23 primary care services in exchange for a fixed peri24
odic fee—
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1 ‘‘(A) shall not be treated as a health plan
2 for purposes of paragraph (1)(A)(ii), and
3 ‘‘(B) shall not be treated as insurance for
4 purposes of subsection (d)(2)(B).’’.
5 (b) EFFECTIVE DATE.—The amendment made by
6 this section shall apply to taxable years beginning after
7 the date of the enactment of this Act.
8 SEC. 128. CERTAIN PROVIDER FEES TO BE TREATED AS
9 MEDICAL CARE.
10 (a) IN GENERAL.—Section 213(d) of the Internal
11 Revenue Code of 1986 is amended by adding at the end
12 the following new paragraph:
13 ‘‘(12) PERIODIC PROVIDER FEES.—The term
14 ‘medical care’ shall include periodic fees paid to a
15 primary care physician for the right to receive med16
ical services on an as-needed basis.’’.
17 (b) EFFECTIVE DATE.—The amendment made by
18 this section shall apply to taxable years beginning after
19 the date of the enactment of this Act.
20 SEC. 129. CLARIFICATION OF TREATMENT OF CAPITATED
21 PRIMARY CARE PAYMENTS AS AMOUNTS
22 PAID FOR MEDICAL CARE.
23 (a) IN GENERAL.—Section 213(d) of the Internal
24 Revenue Code of 1986, as amended by the preceding pro-
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1 vision of this Act, is amended by adding at the end the
2 following new paragraph:
3 ‘‘(13) TREATMENT OF CAPITATED PRIMARY
4 CARE PAYMENTS.—Capitated primary care payments
5 shall be treated as amounts paid for medical care.’’.
6 (b) EFFECTIVE DATE.—The amendment made by
7 this section shall apply to taxable years beginning after
8 the date of the enactment of this Act.
9 Subtitle C—Other Provisions
10 SEC. 131. LIMITATION ON EMPLOYER-PROVIDED HEALTH
11 CARE COVERAGE.
12 (a) IN GENERAL.—Section 106 of the Internal Rev13
enue Code of 1986, as amended by the preceding provi14
sions of this Act, is amended by adding at the end the
15 following new subsection:
16 ‘‘(f) LIMITATION ON EMPLOYER-PROVIDED HEALTH
17 CARE COVERAGE.—
18 ‘‘(1) IN GENERAL.—The amount of any exclu19
sion under subsection (a) for any taxable year with
20 respect to—
21 ‘‘(A) any employer-provided coverage
22 under an accident or health plan which con23
stitutes medical care, and
24 ‘‘(B) any employer contribution to an Ar25
cher MSA or a health savings account which is
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1 treated by subsection (b) or (d) as employer2
provided coverage for medical expenses under
3 an accident or health plan,
4 shall not exceed $8,000 per employee for self-only
5 coverage and $20,000 for family coverage.
6 ‘‘(2) INFLATION ADJUSTMENT.—In the case of
7 any taxable year beginning in a calendar year after
8 2016, each dollar amount contained in paragraph
9 (1) shall be increased by an amount equal to—
10 ‘‘(A) such dollar amount, multiplied by
11 ‘‘(B) the cost-of-living adjustment deter12
mined under section 1(f)(3) for the calendar
13 year in which the taxable year begins, deter14
mined by substituting ‘calendar year 2015’ for
15 ‘calendar year 1992’ in subparagraph (B)
16 thereof.
17 Any increase determined under the preceding sen18
tence shall be rounded to the nearest multiple of
19 $50.
20 ‘‘(3) MEDICAL CARE DEFINED.—For purposes
21 of paragraph (1), the term ‘medical care’ has the
22 meaning given to such term in section 213(d) deter23
mined without regard to—
24 ‘‘(A) paragraph (1)(C) thereof, and
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1 ‘‘(B) so much of paragraph (1)(D) thereof
2 as relates to qualified long-term care insur3
ance.’’.
4 (b) EFFECTIVE DATE.—The amendment made by
5 this section shall apply to taxable years beginning after
6 December 31, 2015.
7 SEC. 132. LIMITATION ON ABORTION FUNDING.
8 No funds authorized under, or credits or deductions
9 allowed under the Internal Revenue Code of 1986 by rea10
son of, this Act (or any amendment made by this Act)
11 may be used to pay for any abortion or to cover any part
12 of the costs of any health plan that includes coverage of
13 abortion, except in the case where a woman suffers from
14 a physical disorder, physical injury, or physical illness that
15 would, as certified by a physician, place the woman in dan16
ger of death unless an abortion is performed, including
17 a life-endangering physical condition caused by or arising
18 from the pregnancy itself, or unless the pregnancy is the
19 result of an act of rape or incest.
20 SEC. 133. NO GOVERNMENT DISCRIMINATION AGAINST
21 CERTAIN HEALTH CARE ENTITIES.
22 (a) NON-DISCRIMINATION.—A Federal agency or
23 program, and any State or local government that receives
24 Federal financial assistance under this Act or any amend25
ment made by this Act (either directly or indirectly), may
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1 not subject any individual or institutional health care enti2
ty to discrimination on the basis that the health care enti3
ty does not provide, pay for, provide coverage of, or refer
4 for abortions.
5 (b) HEALTH CARE ENTITY DEFINED.—For purposes
6 of this section, the term ‘‘health care entity’’ includes an
7 individual physician or other health care professional, a
8 hospital, a provider-sponsored organization, a health
9 maintenance organization, a health insurance plan, or any
10 other kind of health care facility, organization, or plan.
11 (c) REMEDIES.—
12 (1) IN GENERAL.—The courts of the United
13 States shall have jurisdiction to prevent and redress
14 actual or threatened violations of this section by
15 issuing any form of legal or equitable relief, includ16
ing—
17 (A) injunctions prohibiting conduct that
18 violates this section; and
19 (B) orders preventing the disbursement of
20 all or a portion of Federal financial assistance
21 to a State or local government, or to a specific
22 offending agency or program of a State or local
23 government, until such time as the conduct pro24
hibited by this section has ceased.
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1 (2) COMMENCEMENT OF ACTION.—An action
2 under this subsection may be instituted by—
3 (A) any health care entity that has stand4
ing to complain of an actual or threatened vio5
lation of this section; or
6 (B) the Attorney General of the United
7 States.
8 (d) ADMINISTRATION.—The Secretary of Health and
9 Human Services shall designate the Director of the Office
10 for Civil Rights of the Department of Health and Human
11 Services—
12 (1) to receive complaints alleging a violation of
13 this section;
14 (2) subject to paragraph (3), to pursue the in15
vestigation of such complaints in coordination with
16 the Attorney General; and
17 (3) in the case of a complaint related to a Fed18
eral agency (other than with respect to the Depart19
ment of Health and Human Services) or program
20 administered through such other agency or any
21 State or local government receiving Federal financial
22 assistance through such other agency, to refer the
23 complaint to the appropriate office of such other
24 agency.
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1 SEC. 134. EQUAL EMPLOYER CONTRIBUTION RULE TO PRO2
MOTE CHOICE.
3 (a) IN GENERAL.—Section 5000 of the Internal Rev4
enue Code of 1986 is amended by adding at the end the
5 following new subsection:
6 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.—
7 ‘‘(1) IN GENERAL.—Subsection (a) shall not
8 apply in the case of a group health plan with respect
9 to which the requirements of paragraphs (2) and (3)
10 are met.
11 ‘‘(2) CONTRIBUTION ELECTION.—The require12
ment of this paragraph is met with respect to a
13 group health plan if any employee of an employer
14 (who but for this paragraph would be covered by
15 such plan) may elect to have the employer or em16
ployee organization pay an amount which is not less
17 than the contribution amount to any provider of
18 health insurance coverage (other than excepted bene19
fits as defined in section 9832(c)) which constitutes
20 medical care of the individual or individual’s spouse
21 or dependents in lieu of such group health plan cov22
erage otherwise provided or contributed to by the
23 employer with respect to such employee.
24 ‘‘(3) PRE-EXISTING CONDITIONS.—
25 ‘‘(A) IN GENERAL.—The requirement of
26 this paragraph is met with respect to health in-
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1 surance coverage provided to a participant or
2 beneficiary by any health insurance issuer if,
3 under such plan the requirements of section
4 9801 are met with respect to the participant or
5 beneficiary.
6 ‘‘(B) ENFORCEMENT WITH RESPECT TO
7 INDIVIDUAL ELECTION.—For purposes of sub8
paragraph (A), any health insurance coverage
9 with respect to the participant or beneficiary
10 shall be treated as health insurance coverage
11 under a group health plan to which section
12 9801 applies.
13 ‘‘(4) CONTRIBUTION AMOUNT.—For purposes
14 of this section, the term ‘contribution amount’
15 means, with respect to an individual under a group
16 health plan, the portion of the applicable premium of
17 such individual under such plan (as determined
18 under section 4980B(f)(4)) which is not paid by the
19 individual. In the case that the employer offers more
20 than one group health plan, the contribution amount
21 shall be the average amount of the applicable pre22
miums under such plans.
23 ‘‘(5) GROUP HEALTH PLAN.—For purpose of
24 this subsection, subsection (d) shall not apply.
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1 ‘‘(6) APPLICATION TO FEHBP.—Notwith2
standing any other provision of law, the Office of
3 Personnel Management shall carry out the health
4 benefits program under chapter 89 of title 5, United
5 States Code, consistent with the requirements of this
6 subsection.’’.
7 (b) REQUIREMENT OF EQUAL CONTRIBUTIONS TO
8 ALL FEHBP PLANS.—Section 8906 of title 5, United
9 States Code, is amended by adding at the end the fol10
lowing new subsection:
11 ‘‘(j) Notwithstanding the previous provisions of this
12 section the Office of Personnel Management shall revise
13 the amount of the Government contribution made under
14 this section in a manner so that—
15 ‘‘(1) the amount of such contribution does not
16 change based on the health benefits plan in which
17 the individual is enrolled; and
18 ‘‘(2) the aggregate amount of such contribu19
tions is estimated to be equal to the aggregate
20 amount of such contributions if this subsection did
21 not apply.’’.
22 (c) EMPLOYEE RETIREMENT INCOME SECURITY ACT
23 OF 1974 CONFORMING AMENDMENTS.—
24 (1) EXCEPTION FROM HIPAA REQUIREMENTS
25 FOR BENEFITS PROVIDED UNDER HEALTH CARE
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1 CONTRIBUTION ELECTION.—Section 732 of the Em2
ployee Retirement Income Security Act of 1974 (29
3 U.S.C. 1191a) is amended by adding at the end the
4 following new subsection:
5 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.—
6 ‘‘(1) IN GENERAL.—The requirements of this
7 part shall not apply in the case of health insurance
8 coverage (other than excepted benefits as defined in
9 section 9832(c) of the Internal Revenue Code of
10 1986)—
11 ‘‘(A) which is provided to a participant or
12 beneficiary by a health insurance issuer under
13 a group health plan, and
14 ‘‘(B) with respect to which the require15
ments of paragraphs (2) and (3) are met.
16 ‘‘(2) CONTRIBUTION ELECTION.—The require17
ment of this paragraph is met with respect to health
18 insurance coverage provided to a participant or ben19
eficiary by any health insurance issuer under a
20 group health plan if, under such plan—
21 ‘‘(A) the participant may elect such cov22
erage for any period of coverage in lieu of
23 health insurance coverage otherwise provided
24 under such plan for such period, and
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1 ‘‘(B) in the case of such an election, the
2 plan sponsor is required to pay to such issuer
3 for the elected coverage for such period an
4 amount which is not less than the contribution
5 amount for such health insurance coverage oth6
erwise provided under such plan for such pe7
riod.
8 ‘‘(3) PRE-EXISTING CONDITIONS.—
9 ‘‘(A) IN GENERAL.—The requirement of
10 this paragraph is met with respect to health in11
surance coverage provided to a participant or
12 beneficiary by any health insurance issuer if,
13 under such plan the requirements of section
14 701 are met with respect to the participant or
15 beneficiary.
16 ‘‘(B) ENFORCEMENT WITH RESPECT TO
17 INDIVIDUAL ELECTION.—For purposes of sub18
paragraph (A), any health insurance coverage
19 with respect to the participant or beneficiary
20 shall be treated as health insurance coverage
21 under a group health plan to which section 701
22 applies.
23 ‘‘(4) CONTRIBUTION AMOUNT.—
24 ‘‘(A) IN GENERAL.—For purposes of this
25 section, the term ‘contribution amount’ means,
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1 with respect to any period of health insurance
2 coverage offered to a participant or beneficiary,
3 the portion of the applicable premium of such
4 participant or beneficiary under such plan
5 which is not paid by such participant or bene6
ficiary. In the case that the employer offers
7 more than one group health plan, the contribu8
tion amount shall be the average amount of the
9 applicable premiums under such plans.
10 ‘‘(B) APPLICABLE PREMIUM.—For pur11
poses of subparagraph (A), the term ‘applicable
12 premium’ means, with respect to any period of
13 health insurance coverage of a participant or
14 beneficiary under a group health plan, the cost
15 to the plan for such period of such coverage for
16 similarly situated beneficiaries (without regard
17 to whether such cost is paid by the plan spon18
sor or the participant or beneficiary).’’.
19 (2) EXEMPTION FROM FIDUCIARY LIABILITY.—
20 Section 404 of such Act (29 U.S.C. 1104) is amend21
ed by adding at the end the following new sub22
section:
23 ‘‘(e) The plan sponsor of a group health plan (as de24
fined in section 733(a)) shall not be treated as breaching
25 any of the responsibilities, obligations, or duties imposed
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1 upon fiduciaries by this title in the case of any individual
2 who is a participant or beneficiary under such plan solely
3 because of the extent to which the plan sponsor provides,
4 in the case of such individual, some or all of such benefits
5 by means of payment of contribution amounts pursuant
6 to a contribution election under section 732(e), irrespec7
tive of the amount or type of benefits that would otherwise
8 be provided to such individual under such plan.’’.
9 (d) EXCEPTION FROM HIPAA REQUIREMENTS
10 UNDER IRC FOR BENEFITS PROVIDED UNDER HEALTH
11 CARE CONTRIBUTION ELECTION.—Section 9831 of the
12 Internal Revenue Code of 1986 (relating to general excep13
tions) is amended by adding at the end the following new
14 subsection:
15 ‘‘(d) HEALTH CARE CONTRIBUTION ELECTION.—
16 ‘‘(1) IN GENERAL.—The requirements of this
17 chapter shall not apply in the case of health insur18
ance coverage (other than excepted benefits as de19
fined in section 9832(c))—
20 ‘‘(A) which is provided to a participant or
21 beneficiary by a health insurance issuer under
22 a group health plan, and
23 ‘‘(B) with respect to which the require24
ments of paragraphs (2) and (3) are met.
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1 ‘‘(2) CONTRIBUTION ELECTION.—The require2
ment of this paragraph is met with respect to health
3 insurance coverage provided to a participant or ben4
eficiary by any health insurance issuer under a
5 group health plan if, under such plan—
6 ‘‘(A) the participant may elect such cov7
erage for any period of coverage in lieu of
8 health insurance coverage otherwise provided
9 under such plan for such period, and
10 ‘‘(B) in the case of such an election, the
11 plan sponsor is required to pay to such issuer
12 for the elected coverage for such period an
13 amount which is not less than the contribution
14 amount for such health insurance coverage oth15
erwise provided under such plan for such pe16
riod.
17 ‘‘(3) PRE-EXISTING CONDITIONS.—
18 ‘‘(A) IN GENERAL.—The requirement of
19 this paragraph is met with respect to health in20
surance coverage provided to a participant or
21 beneficiary by any health insurance issuer if,
22 under such plan the requirements of section
23 9801 are met with respect to the participant or
24 beneficiary.
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1 ‘‘(B) ENFORCEMENT WITH RESPECT TO
2 INDIVIDUAL ELECTION.—For purposes of sub3
paragraph (A), any health insurance coverage
4 with respect to the participant or beneficiary
5 shall be treated as health insurance coverage
6 under a group health plan to which section
7 9801 applies.
8 ‘‘(4) CONTRIBUTION AMOUNT.—
9 ‘‘(A) IN GENERAL.—For purposes of this
10 subsection, the term ‘contribution amount’
11 means, with respect to any period of health in12
surance coverage offered to a participant or
13 beneficiary, the portion of the applicable pre14
mium of such participant or beneficiary under
15 such plan which is not paid by such participant
16 or beneficiary. In the case that the employer of17
fers more than one group health plan, the con18
tribution amount shall be the average amount
19 of the applicable premiums under such plans.
20 ‘‘(B) APPLICABLE PREMIUM.—For pur21
poses of subparagraph (A), the term ‘applicable
22 premium’ means, with respect to any period of
23 health insurance coverage of a participant or
24 beneficiary under a group health plan, the cost
25 to the plan for such period of such coverage for
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63
1 similarly situated beneficiaries (without regard
2 to whether such cost is paid by the plan spon3
sor or the participant or beneficiary).’’.
4 (e) EXCEPTION FROM HIPAA REQUIREMENTS
5 UNDER THE PHSA FOR BENEFITS PROVIDED UNDER
6 HEALTH CARE CONTRIBUTION ELECTION.—Section 2721
7 of the Public Health Service Act (42 U.S.C. 300gg–21)
8 is amended—
9 (1) by redesignating subsection (e) as sub10
section (f); and
11 (2) by inserting after subsection (d) the fol12
lowing new subsection:
13 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.—
14 ‘‘(1) IN GENERAL.—The requirements of sub15
parts 1 through 3 shall not apply in the case of
16 health insurance coverage (other than excepted bene17
fits as defined in section 9832(c) of the Internal
18 Revenue Code of 1986)—
19 ‘‘(A) which is provided to a participant or
20 beneficiary by a health insurance issuer under
21 a group health plan, and
22 ‘‘(B) with respect to which the require23
ments of paragraphs (2) and (3) are met.
24 ‘‘(2) CONTRIBUTION ELECTION.—The require25
ment of this paragraph is met with respect to health
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1 insurance coverage provided to a participant or ben2
eficiary by any health insurance issuer under a
3 group health plan if, under such plan—
4 ‘‘(A) the participant may elect such cov5
erage for any period of coverage in lieu of
6 health insurance coverage otherwise provided
7 under such plan for such period, and
8 ‘‘(B) in the case of such an election, the
9 plan sponsor is required to pay to such issuer
10 for the elected coverage for such period an
11 amount which is not less than the contribution
12 amount for such health insurance coverage oth13
erwise provided under such plan for such pe14
riod.
15 ‘‘(3) PRE-EXISTING CONDITIONS.—
16 ‘‘(A) IN GENERAL.—The requirement of
17 this paragraph is met with respect to health in18
surance coverage provided to a participant or
19 beneficiary by any health insurance issuer if,
20 under such plan the requirements of section
21 2701 are met with respect to the participant or
22 beneficiary.
23 ‘‘(B) ENFORCEMENT WITH RESPECT TO
24 INDIVIDUAL ELECTION.—For purposes of sub25
paragraph (A), any health insurance coverage
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1 with respect to the participant or beneficiary
2 shall be treated as health insurance coverage
3 under a group health plan to which section
4 2701 applies.
5 ‘‘(4) CONTRIBUTION AMOUNT.—
6 ‘‘(A) IN GENERAL.—For purposes of this
7 section, the term ‘contribution amount’ means,
8 with respect to any period of health insurance
9 coverage offered to a participant or beneficiary,
10 the portion of the applicable premium of such
11 participant or beneficiary under such plan
12 which is not paid by such participant or bene13
ficiary. In the case that the employer offers
14 more than one group health plan, the contribu15
tion amount shall be the average amount of the
16 applicable premiums under such plans.
17 ‘‘(B) APPLICABLE PREMIUM.—For pur18
poses of subparagraph (A), the term ‘applicable
19 premium’ means, with respect to any period of
20 health insurance coverage of a participant or
21 beneficiary under a group health plan, the cost
22 to the plan for such period of such coverage for
23 similarly situated beneficiaries (without regard
24 to whether such cost is paid by the plan spon25
sor or the participant or beneficiary).’’.
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1 SEC. 135. LIMITATIONS ON STATE RESTRICTIONS ON EM2
PLOYER AUTO-ENROLLMENT.
3 (a) IN GENERAL.—No State shall establish a law
4 that prevents an employer that is allowed an exclusion
5 from gross income, a deduction, or a credit for Federal
6 income tax purposes for health benefits furnished to a par7
ticipant or beneficiary from instituting auto-enrollment
8 which meets the requirements of subsection (b) for cov9
erage of a participant or beneficiary under a group health
10 plan, or health insurance coverage offered in connection
11 with such a plan, so long as the participant or beneficiary
12 has the option of declining such coverage.
13 (b) AUTOMATIC ENROLLMENT FOR EMPLOYER14
SPONSORED HEALTH BENEFITS.—
15 (1) IN GENERAL.—The requirement of this sub16
section with respect to an employer and an employee
17 is that the employer automatically enroll such em18
ployee into the employment-based health benefits
19 plan for individual coverage under the plan option
20 with the lowest applicable employee premium.
21 (2) OPT-OUT.—In no case may an employer
22 automatically enroll an employee in a plan under
23 paragraph (1) if such employee makes an affirmative
24 election to opt-out of such plan or to elect coverage
25 under an employment-based health benefits plan of26
fered by such employer. An employer shall provide
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1 an employee with a 30-day period to make such an
2 affirmative election before the employer may auto3
matically enroll the employee in such a plan.
4 (3) NOTICE REQUIREMENTS.—
5 (A) IN GENERAL.—Each employer de6
scribed in paragraph (1) who automatically en7
rolls an employee into a plan as described in
8 such paragraph shall provide the employees,
9 within a reasonable period before the beginning
10 of each plan year (or, in the case of new em11
ployees, within a reasonable period before the
12 end of the enrollment period for such a new em13
ployee), written notice of the employees’ rights
14 and obligations relating to the automatic enroll15
ment requirement under such paragraph. Such
16 notice must be comprehensive and understood
17 by the average employee to whom the automatic
18 enrollment requirement applies.
19 (B) INCLUSION OF SPECIFIC INFORMA20
TION.—The written notice under subparagraph
21 (A) must explain an employee’s right to opt out
22 of being automatically enrolled in a plan and in
23 the case that more than one level of benefits or
24 employee premium level is offered by the em25
ployer involved, the notice must explain which
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1 level of benefits and employee premium level the
2 employee will be automatically enrolled in the
3 absence of an affirmative election by the em4
ployee.
5 (c) CONSTRUCTION.—Nothing in this section shall be
6 construed to supersede State law which establishes, imple7
ments, or continues in effect any standard or requirement
8 relating to employers in connection with payroll or the
9 sponsoring of employer-sponsored health insurance cov10
erage except to the extent that such standard or require11
ment prevents an employer from instituting the auto-en12
rollment described in subsection (a).
13 (d) NON-APPLICATION TO EXCEPTED BENEFITS.—
14 For purposes of this section, the term ‘‘group health plan’’
15 does not include excepted benefits (as defined in section
16 2781(c) of the Public Health Service Act (42 U.S.C.
17 300gg–91(c))).
18 SEC. 136. CREDIT FOR SMALL EMPLOYERS ADOPTING
19 AUTO-ENROLLMENT AND DEFINED CON20
TRIBUTION OPTIONS.
21 (a) IN GENERAL.—Subpart D of part IV of sub22
chapter A of chapter 1 of the Internal Revenue Code of
23 1986, as amended by section 2, is amended by adding at
24 the end the following new section:
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1 ‘‘SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBU2
TION OPTION FOR HEALTH BENEFITS PLANS
3 OF SMALL EMPLOYERS.
4 ‘‘(a) IN GENERAL.—For purposes of section 38, in
5 the case of a small employer, the health benefits plan im6
plementation credit determined under this section for the
7 taxable year is an amount equal to 100 percent of the
8 amount paid or incurred by the taxpayer during the tax9
able year for qualified health benefits expenses.
10 ‘‘(b) LIMITATION.—The credit determined under sub11
section (a) with respect to any taxpayer for any taxable
12 year shall not exceed the excess of—
13 ‘‘(1) $1,500, over
14 ‘‘(2) sum of the credits determined under sub15
section (a) with respect to such taxpayer for all pre16
ceding taxable years.
17 ‘‘(c) QUALIFIED HEALTH BENEFITS EXPENSES.—
18 For purposes of this section, the term ‘qualified health
19 benefits auto-enrollment expenses’ means, with respect to
20 any taxable year, amounts paid or incurred by the tax21
payer during such taxable year for—
22 ‘‘(1) establishing auto-enrollment which meets
23 the requirements of section 107 of the Empowering
24 Patients First Act of 2013 for coverage of a partici25
pant or beneficiary under a group health plan, or
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1 health insurance coverage offered in connection with
2 such a plan, and
3 ‘‘(2) implementing the employer contribution
4 option for health insurance coverage pursuant to
5 section 5000(e)(2).
6 ‘‘(d) QUALIFIED SMALL EMPLOYER.—For purposes
7 of this section, the term ‘qualified small employer’ means
8 any employer for any taxable year if the number of em9
ployees employed by such employer during such taxable
10 year does not exceed 50. All employers treated as a single
11 employer under section (a) or (b) of section 52 shall be
12 treated as a single employer for purposes of this section.
13 ‘‘(e) NO DOUBLE BENEFIT.—No deduction or credit
14 shall be allowed under any other provision of this chapter
15 with respect to the amount of the credit determined under
16 this section.
17 ‘‘(f) TERMINATION.—Subsection (a) shall not apply
18 to any taxable year beginning after the date which is 2
19 years after the date of the enactment of this section.’’.
20 (b) CREDIT TO BE PART OF GENERAL BUSINESS
21 CREDIT.—Subsection (b) of section 38 of such Code, as
22 amended by section 2, is amended by striking ‘‘plus’’ at
23 the end of paragraph (34), by striking the period at the
24 end of paragraph (35) and inserting ‘‘, plus’’, and by add25
ing at the end the following new paragraph:
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1 ‘‘(36) in the case of a small employer (as de2
fined in section 45R(d)), the health benefits plan im3
plementation credit determined under section
4 45R(a).’’.
5 (c) CLERICAL AMENDMENT.—The table of sections
6 for subpart D of part IV of subchapter A of chapter 1
7 of such Code, as amended by section 2, is amended by
8 inserting after the item relating to section 45Q the fol9
lowing new item:
‘‘Sec. 45R. Auto-enrollment and defined contribution option for health benefits
plans of small employers.’’.
10 (d) EFFECTIVE DATE.—The amendments made by
11 this section shall apply to taxable years beginning after
12 the date of the enactment of this Act.
13 TITLE II—HEALTH CARE ACCESS
14 AND AVAILABILITY
15 Subtitle A—Health Insurance Pool16
ing Mechanisms for Individuals
17 SEC. 201. FEDERAL GRANTS FOR STATE INSURANCE EX18
PENDITURES.
19 (a) IN GENERAL.—Subject to the succeeding provi20
sions of this section, each State shall receive from the Sec21
retary of Health and Human Services (in this subtitle re22
ferred to as the ‘‘Secretary’’) a grant for the State’s pro23
viding for the use, in connection with providing health ben24
efits coverage, of a qualifying high-risk pool or a reinsur-
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1 ance pool or other risk-adjustment mechanism used for
2 the purpose of subsidizing the purchase of private health
3 insurance.
4 (b) FUNDING AMOUNT.—
5 (1) IN GENERAL.—There are hereby appro6
priated, out of any funds in the Treasury not other7
wise appropriated, $1,000,000,000 for each of fiscal
8 years 2016, 2017, and 2018 for grants under this
9 section. Such amount shall be divided among the
10 States as determined by the Secretary.
11 (2) CONSTRUCTION.—Nothing in this section
12 shall be construed as preventing a State from using
13 funding under section 2745 of the Public Health
14 Service Act for purposes of funding reinsurance or
15 other risk mechanisms.
16 (c) LIMITATION.—Funding under subsection (a) may
17 only be used for the following:
18 (1) QUALIFYING HIGH-RISK POOLS.—
19 (A) CURRENT POOLS.—A qualifying high20
risk pool created before the date of the enact21
ment of this Act that only cover high-risk popu22
lations and individuals (and their spouse and
23 dependents) receiving a health care tax credit
24 under section 35 of the Internal Revenue Code
25 of 1986 for a limited period of time as deter-
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1 mined by the Secretary or under section 2741
2 of Public Health Service Act.
3 (B) NEW POOLS.—A qualifying high-risk
4 pool created on or after such date that only cov5
ers populations and individuals described in
6 subparagraph (A) if the pool—
7 (i) offers at least the option of one or
8 more high-deductible plan options, in com9
bination with a contribution into a health
10 savings account;
11 (ii) offers multiple competing health
12 plan options; and
13 (iii) covers only high-risk populations.
14 (2) RISK INSURANCE POOL OR OTHER RISK-AD15
JUSTMENT MECHANISMS.—
16 (A) CURRENT REINSURANCE.—A reinsur17
ance pool, or other risk-adjustment mechanism,
18 created before the date of the enactment of this
19 Act that only covers populations and individuals
20 described in paragraph (1)(A).
21 (B) NEW POOLS.—A reinsurance pool or
22 other risk-adjustment mechanism created on or
23 after such date that provides reinsurance only
24 covers populations and individuals described in
25 paragraph (1)(A) and only on a prospective
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1 basis under which a health insurance issuer
2 cedes covered lives to the pool in exchange for
3 payment of a reinsurance premium.
4 (3) TRANSITION.—Nothing in this section shall
5 be construed as preventing a State from using funds
6 available to transition from an existing high-risk
7 pool to a reinsurance pool.
8 (d) BONUS PAYMENTS.—With respect to any
9 amounts made available to the States under this section,
10 the Secretary shall set aside a portion of such amounts
11 that shall only be available for the following activities by
12 such States:
13 (1) Providing guaranteed availability of indi14
vidual health insurance coverage to certain individ15
uals with prior group coverage under part B of title
16 XXVII of the Public Health Service Act.
17 (2) A reduction in premium trends, actual pre18
miums, or other cost-sharing requirements.
19 (3) An expansion or broadening of the pool of
20 high-risk individuals eligible for coverage.
21 (4) States that adopt the Model Health Plan
22 for Uninsurable Individuals Act of the National As23
sociation of Insurance Commissioners (if and when
24 updated by such Association).
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1 The Secretary may request such Association to update
2 such Model Health Plan as needed by 2015.
3 (e) REQUIREMENTS FOR RECEIPT OF BONUS PAY4
MENTS.—The requirements of this subsection, for the
5 availability of bonus payments to a State under subsection
6 (d), are as follows, in the case of an individual who is cov7
ered under a high-risk pool or other pool or mechanism
8 described in subsection (b) operating in the State for
9 which funds under this section may be applied:
10 (1) LIMITATION ON ANNUAL PREMIUMS FOR
11 EACH INDIVIDUAL BASED ON ADJUSTED GROSS FAM12
ILY INCOME.—The premiums imposed for coverage
13 of each individual under health insurance coverage
14 offered through such pool or mechanism may not ex15
ceed (on an annual basis) the following:
16 (A) If the adjusted gross income (as de17
fined in section 62 of the Internal Revenue
18 Code of 1986) of all individuals in the individ19
ual’s family does not exceed the poverty line (as
20 defined in section 673(2) of the Community
21 Services Block Grant Act (42 U.S.C. 9902(2)),
22 including any revision required by such section)
23 applicable to a family of the size involved, 2
24 percent of such income.
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1 (B) If such adjusted gross income for all
2 individuals in the individual’s family exceeds
3 such applicable poverty line, the sum of—
4 (i) 2 percent of such applicable pov5
erty line; and
6 (ii) 10 percent of the amount of such
7 income that exceeds such applicable pov8
erty line.
9 (2) LIMITATION ON ANNUAL OUT-OF-POCKET
10 COSTS FOR EACH INDIVIDUAL.—There shall be a
11 limit on the annual out-of-pocket expenditures (in12
cluding annual premiums) for each individual for
13 coverage under such pool or mechanism equal to
14 twice the maximum allowable premiums for such in15
dividual permitted under paragraph (1).
16 (f) ADMINISTRATION.—The Secretary shall provide
17 for the administration of this section and may establish
18 such terms and conditions, including the requirement of
19 an application, as may be appropriate to carry out this
20 section.
21 (g) CONSTRUCTION.—Nothing in this section shall be
22 construed as requiring a State to operate a reinsurance
23 pool (or other risk-adjustment mechanism) under this sec24
tion or as preventing a State from operating such a pool
25 or mechanism through one or more private entities.
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1 (h) DEFINITIONS.—In this section:
2 (1) QUALIFYING HIGH-RISK POOL.—The term
3 ‘‘qualifying high-risk pool’’ means any qualified
4 high-risk pool (as defined in subsection (g)(1)(A) of
5 section 2745 of the Public Health Service Act) that
6 meets the conditions to receive a grant under section
7 (b)(1) of such section.
8 (2) REINSURANCE POOL OR OTHER RISK-AD9
JUSTMENT MECHANISM DEFINED.—The term ‘‘rein10
surance pool or other risk-adjustment mechanism’’
11 means any State-based risk spreading mechanism to
12 subsidize the purchase of private health insurance
13 for the high-risk population.
14 (3) HIGH-RISK POPULATION.—The term ‘‘high15
risk population’’ means—
16 (A) individuals who, by reason of the exist17
ence or history of a medical condition, are able
18 to acquire health coverage only at rates which
19 are at least 150 percent of the standard risk
20 rates for such coverage (in a non-community21
rated non-guaranteed issue State), and
22 (B) individuals who are provided health
23 coverage by a high-risk pool.
24 (4) STATE DEFINED.—The term ‘‘State’’ in25
cludes the District of Columbia, Puerto Rico, the
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1 Virgin Islands, Guam, American Samoa, and the
2 Northern Mariana Islands.
3 (i) EXTENDING FUNDING.—Section 2745(d)(2) of
4 the Public Health Service Act (42 U.S.C. 300gg–45(d)(2))
5 is amended—
6 (1) in the heading, by inserting ‘‘AND 2016
7 THROUGH 2018’’ after ‘‘2010’’; and
8 (2) by inserting ‘‘and for each of fiscal years
9 2016 through 2018’’ after ‘‘for each of fiscal years
10 2007 through 2010’’.
11 (j) SUNSET.—Funds made available under this sec12
tion shall not be used for the purpose of subsidizing the
13 purchase of private health insurance on or after October
14 1, 2018.
15 SEC. 202. POOL REFORM FOR INDIVIDUAL MEMBERSHIP
16 EXPANSION.
17 The Public Health Service Act, as amended by sec18
tion 2, is further amended by inserting after title XXX
19 the following new title:
20 ‘‘TITLE XXXI—POOL REFORM
21 FOR INDIVIDUAL MEMBER22
SHIP EXPANSION
23 ‘‘SEC. 3100. PURPOSE.
24 ‘‘The purpose of this title is to provide, through the
25 establishment of independent health pools (or IHPs), for
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1 the reform of, and expansion of enrollment in, health in2
surance coverage for individuals and small employers.
3 ‘‘SEC. 3101. DEFINITION OF INDEPENDENT HEALTH POOL
4 (IHP).
5 ‘‘(a) IN GENERAL.—For purposes of this title, the
6 terms ‘individual health pool’ and ‘IHP’ mean a legal non7
profit entity that meets the following requirements:
8 ‘‘(1) ORGANIZATION.—The IHP—
9 ‘‘(A) has been formed and maintained in
10 good faith for a purpose that includes the for11
mation of a risk pool in order to offer health in12
surance coverage to its members;
13 ‘‘(B) does not condition membership in the
14 IHP on any health status-related factor relating
15 to an individual (including an employee of an
16 employer or a dependent of an employee);
17 ‘‘(C) does not make health insurance cov18
erage offered through the IHP available other
19 than in connection with a member of the IHP;
20 ‘‘(D) is not a health insurance issuer; and
21 ‘‘(E) does not receive any consideration di22
rectly or indirectly from any health insurance
23 issuer in connection with the enrollment of any
24 individuals, or employees of employers, in any
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1 health insurance coverage, except in conjunction
2 with services offered through the IHP.
3 ‘‘(2) OFFERING HEALTH BENEFITS COV4
ERAGE.—
5 ‘‘(A) DIFFERENT GROUPS.—The IHP, in
6 conjunction with those health insurance issuers
7 that offer health benefits coverage through the
8 IHP, makes available health benefits coverage
9 in the manner described in subsection (b) to all
10 members of the IHP and the dependents of
11 such members (and, in the case of small em12
ployers, employees and their dependents) in the
13 manner described in subsection (c)(2) at rates
14 that are established by the health insurance
15 issuer on a policy or product specific basis and
16 that may vary for individuals covered through
17 an IHP.
18 ‘‘(B) NONDISCRIMINATION IN COVERAGE
19 OFFERED.—
20 ‘‘(i) IN GENERAL.—Subject to clause
21 (ii), the IHP may not offer health benefits
22 coverage to a member of an IHP unless
23 the same coverage is offered to all such
24 members of the IHP.
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1 ‘‘(ii) CONSTRUCTION.—Nothing in
2 this title shall be construed as requiring or
3 permitting a health insurance issuer to
4 provide coverage outside the service area of
5 the issuer, as approved under State law, or
6 preventing a health insurance issuer from
7 underwriting or from excluding or limiting
8 the coverage on any individual, subject to
9 the requirement of section 2741 (relating
10 to guaranteed availability of individual
11 health insurance coverage to certain indi12
viduals with prior group coverage).
13 ‘‘(C) NO ASSUMPTION OF INSURANCE RISK
14 BY IHP.—The IHP provides health benefits cov15
erage only through contracts with health insur16
ance issuers and does not assume insurance
17 risk with respect to such coverage.
18 ‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title
19 shall be construed as preventing the establishment
20 and operation of more than one IHP in a geographic
21 area or as limiting the number of IHPs that may
22 operate in any area.
23 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES
24 TO PURCHASERS.—The IHP may provide adminis25
trative services for members. Such services may in-
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1 clude accounting, billing, and enrollment informa2
tion.
3 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE4
MENTS.—
5 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC6
TION REQUIREMENTS.—Except as provided in sec7
tion 3102, any health benefits coverage offered
8 through an IHP—
9 ‘‘(A) shall be issued by a health insurance
10 issuer that meets all applicable State standards
11 relating to consumer protection;
12 ‘‘(B) shall be approved or otherwise per13
mitted to be offered under State law; and
14 ‘‘(C) may not impose any exclusion of a
15 specific disease from such coverage.
16 ‘‘(2) WELLNESS BONUSES FOR HEALTH PRO17
MOTION.—Nothing in this title shall be construed as
18 precluding a health insurance issuer offering health
19 benefits coverage through an IHP from establishing
20 premium discounts or rebates for members or from
21 modifying otherwise applicable copayments or
22 deductibles in return for adherence to programs of
23 health promotion and disease prevention so long as
24 such programs are agreed to in advance by the IHP
25 and comply with all other provisions of this title and
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1 do not discriminate among similarly situated mem2
bers.
3 ‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.—
4 ‘‘(1) MEMBERS.—
5 ‘‘(A) IN GENERAL.—Under rules estab6
lished to carry out this title, with respect to an
7 individual or small employer who is a member
8 of an IHP, the individual may enroll for health
9 benefits coverage (including coverage for de10
pendents of such individual) or employer may
11 enroll employees for health benefits coverage
12 (including coverage for dependents of such em13
ployees) offered by a health insurance issuer
14 through the IHP.
15 ‘‘(B) RULES FOR ENROLLMENT.—Nothing
16 in this paragraph shall preclude an IHP from
17 establishing rules of enrollment and reenroll18
ment of members. Such rules shall be applied
19 consistently to all members within the IHP and
20 shall not be based in any manner on health sta21
tus-related factors.
22 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con23
tract between an IHP and a health insurance issuer
24 shall provide, with respect to a member enrolled with
25 health benefits coverage offered by the issuer
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1 through the IHP, for the payment to the issuer of
2 the premiums (if any) collected by the IHP for
3 health insurance coverage offered by the issuer.
4 ‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE5
MENTS.
6 ‘‘(a) PREEMPTION OF STATE LAWS RESTRICTING
7 FORMATION OF IHPS.—Any State law or regulation relat8
ing to the composition or organization of an IHP is pre9
empted to the extent the law or regulation is inconsistent
10 with the provisions of this title.
11 ‘‘(b) PREEMPTION OF STATE REQUIREMENTS RE12
LATING TO HEALTH BENEFIT COVERAGE.—
13 ‘‘(1) BENEFIT REQUIREMENTS.—
14 ‘‘(A) IN GENERAL.—Subject to subpara15
graph (B), State laws are superseded, and shall
16 not apply to health benefits coverage made
17 available through an IHP, insofar as such laws
18 impose benefit requirements for such coverage,
19 including (but not limited to) requirements re20
lating to coverage of specific providers, specific
21 services or conditions, or the amount, duration,
22 or scope of benefits.
23 ‘‘(B) EXCEPTION FOR FEDERALLY IM24
POSED REQUIREMENTS AND FOR REQUIRE25
MENTS PROHIBITING DISEASE-SPECIFIC EXCLUVerDate
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1 SIONS.—Subparagraph (A) shall not apply to a
2 requirement to the extent the requirement—
3 ‘‘(i) implements title XXVII or other
4 Federal law; or
5 ‘‘(ii) prohibits imposition of an exclu6
sion of a specific disease from health bene7
fits coverage.
8 ‘‘(2) OTHER REQUIREMENTS PREVENTING OF9
FERING OF COVERAGE THROUGH AN IHP.—State
10 laws are superseded, and shall not apply to health
11 benefits coverage made available through an IHP,
12 insofar as such laws impose any other requirements
13 (including limitations on compensation arrange14
ments) that, directly or indirectly, preclude (or have
15 the effect of precluding) the offering of such cov16
erage through an IHP, if the IHP meets the re17
quirements of this title.
18 ‘‘(c) PREEMPTION OF STATE PREMIUM RATING RE19
QUIREMENTS.—State laws are superseded, and shall not
20 apply to the premiums imposed for health benefits cov21
erage made available through an IHP, insofar as such
22 laws impose restrictions on the variation of premiums
23 among such coverage offered to members of the IHP.
24 ‘‘SEC. 3103. DEFINITIONS.
25 ‘‘For purposes of this title:
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1 ‘‘(1) DEPENDENT.—The term ‘dependent’, as
2 applied to health insurance coverage offered by a
3 health insurance issuer licensed (or otherwise regu4
lated) in a State, shall have the meaning applied to
5 such term with respect to such coverage under the
6 laws of the State relating to such coverage and such
7 an issuer. Such term may include the spouse and
8 children of the individual involved.
9 ‘‘(2) HEALTH BENEFITS COVERAGE.—The term
10 ‘health benefits coverage’ has the meaning given the
11 term health insurance coverage in section
12 2791(b)(1), and does not include excepted benefits
13 (as defined in section 2791(c)).
14 ‘‘(3) HEALTH INSURANCE ISSUER.—The term
15 ‘health insurance issuer’ has the meaning given such
16 term in section 2791(b)(2).
17 ‘‘(4) HEALTH STATUS-RELATED FACTOR.—The
18 term ‘health status-related factor’ has the meaning
19 given such term in section 2791(d)(9).
20 ‘‘(5) MEMBER.—The term ‘member’ means,
21 with respect to an IHP, an individual or small em22
ployer who is a member of the legal entity described
23 in section 3101(a)(1) to which the IHP is offering
24 coverage.
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1 ‘‘(6) SMALL EMPLOYER.—The term ‘small em2
ployer’ has the meaning given such term in section
3 712(c)(1)(B) of the Employee Retirement and In4
come Security Act of 1974.’’.
5 Subtitle B—Small Business Health
6 Fairness
7 SEC. 211. SHORT TITLE.
8 This subtitle may be cited as the ‘‘Small Business
9 Health Fairness Act of 2015’’.
10 SEC. 212. RULES GOVERNING ASSOCIATION HEALTH
11 PLANS.
12 (a) IN GENERAL.—Subtitle B of title I of the Em13
ployee Retirement Income Security Act of 1974 is amend14
ed by adding after part 7 the following new part:
15 ‘‘PART 8—RULES GOVERNING ASSOCIATION
16 HEALTH PLANS
17 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS.
18 ‘‘(a) IN GENERAL.—For purposes of this part, the
19 term ‘association health plan’ means a group health plan
20 whose sponsor is (or is deemed under this part to be) de21
scribed in subsection (b).
22 ‘‘(b) SPONSORSHIP.—The sponsor of a group health
23 plan is described in this subsection if such sponsor—
24 ‘‘(1) is organized and maintained in good faith,
25 with a constitution and bylaws specifically stating its
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1 purpose and providing for periodic meetings on at
2 least an annual basis, as a bona fide trade associa3
tion, a bona fide industry association (including a
4 rural electric cooperative association or a rural tele5
phone cooperative association), a bona fide profes6
sional association, or a bona fide chamber of com7
merce (or similar bona fide business association, in8
cluding a corporation or similar organization that
9 operates on a cooperative basis (within the meaning
10 of section 1381 of the Internal Revenue Code of
11 1986)), for substantial purposes other than that of
12 obtaining or providing medical care;
13 ‘‘(2) is established as a permanent entity which
14 receives the active support of its members and re15
quires for membership payment on a periodic basis
16 of dues or payments necessary to maintain eligibility
17 for membership in the sponsor; and
18 ‘‘(3) does not condition membership, such dues
19 or payments, or coverage under the plan on the
20 basis of health status-related factors with respect to
21 the employees of its members (or affiliated mem22
bers), or the dependents of such employees, and does
23 not condition such dues or payments on the basis of
24 group health plan participation.
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1 Any sponsor consisting of an association of entities which
2 meet the requirements of paragraphs (1), (2), and (3)
3 shall be deemed to be a sponsor described in this sub4
section.
5 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH
6 PLANS.
7 ‘‘(a) IN GENERAL.—The applicable authority shall
8 prescribe by regulation a procedure under which, subject
9 to subsection (b), the applicable authority shall certify as10
sociation health plans which apply for certification as
11 meeting the requirements of this part.
12 ‘‘(b) STANDARDS.—Under the procedure prescribed
13 pursuant to subsection (a), in the case of an association
14 health plan that provides at least one benefit option which
15 does not consist of health insurance coverage, the applica16
ble authority shall certify such plan as meeting the re17
quirements of this part only if the applicable authority is
18 satisfied that the applicable requirements of this part are
19 met (or, upon the date on which the plan is to commence
20 operations, will be met) with respect to the plan.
21 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED
22 PLANS.—An association health plan with respect to which
23 certification under this part is in effect shall meet the ap24
plicable requirements of this part, effective on the date
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1 of certification (or, if later, on the date on which the plan
2 is to commence operations).
3 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI4
CATION.—The applicable authority may provide by regula5
tion for continued certification of association health plans
6 under this part.
7 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED
8 PLANS.—The applicable authority shall establish a class
9 certification procedure for association health plans under
10 which all benefits consist of health insurance coverage.
11 Under such procedure, the applicable authority shall pro12
vide for the granting of certification under this part to
13 the plans in each class of such association health plans
14 upon appropriate filing under such procedure in connec15
tion with plans in such class and payment of the pre16
scribed fee under section 807(a).
17 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION
18 HEALTH PLANS.—An association health plan which offers
19 one or more benefit options which do not consist of health
20 insurance coverage may be certified under this part only
21 if such plan consists of any of the following:
22 ‘‘(1) a plan which offered such coverage on the
23 date of the enactment of the Small Business Health
24 Fairness Act of 2015,
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1 ‘‘(2) a plan under which the sponsor does not
2 restrict membership to one or more trades and busi3
nesses or industries and whose eligible participating
4 employers represent a broad cross-section of trades
5 and businesses or industries, or
6 ‘‘(3) a plan whose eligible participating employ7
ers represent one or more trades or businesses, or
8 one or more industries, consisting of any of the fol9
lowing: agriculture; equipment and automobile deal10
erships; barbering and cosmetology; certified public
11 accounting practices; child care; construction; dance,
12 theatrical and orchestra productions; disinfecting
13 and pest control; financial services; fishing; food
14 service establishments; hospitals; labor organiza15
tions; logging; manufacturing (metals); mining; med16
ical and dental practices; medical laboratories; pro17
fessional consulting services; sanitary services; trans18
portation (local and freight); warehousing; whole19
saling/distributing; or any other trade or business or
20 industry which has been indicated as having average
21 or above-average risk or health claims experience by
22 reason of State rate filings, denials of coverage, pro23
posed premium rate levels, or other means dem24
onstrated by such plan in accordance with regula25
tions.
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1 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND
2 BOARDS OF TRUSTEES.
3 ‘‘(a) SPONSOR.—The requirements of this subsection
4 are met with respect to an association health plan if the
5 sponsor has met (or is deemed under this part to have
6 met) the requirements of section 801(b) for a continuous
7 period of not less than 3 years ending with the date of
8 the application for certification under this part.
9 ‘‘(b) BOARD OF TRUSTEES.—The requirements of
10 this subsection are met with respect to an association
11 health plan if the following requirements are met:
12 ‘‘(1) FISCAL CONTROL.—The plan is operated,
13 pursuant to a trust agreement, by a board of trust14
ees which has complete fiscal control over the plan
15 and which is responsible for all operations of the
16 plan.
17 ‘‘(2) RULES OF OPERATION AND FINANCIAL
18 CONTROLS.—The board of trustees has in effect
19 rules of operation and financial controls, based on a
20 3-year plan of operation, adequate to carry out the
21 terms of the plan and to meet all requirements of
22 this title applicable to the plan.
23 ‘‘(3) RULES GOVERNING RELATIONSHIP TO
24 PARTICIPATING EMPLOYERS AND TO CONTRAC25
TORS.—
26 ‘‘(A) BOARD MEMBERSHIP.—
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1 ‘‘(i) IN GENERAL.—Except as pro2
vided in clauses (ii) and (iii), the members
3 of the board of trustees are individuals se4
lected from individuals who are the owners,
5 officers, directors, or employees of the par6
ticipating employers or who are partners in
7 the participating employers and actively
8 participate in the business.
9 ‘‘(ii) LIMITATION.—
10 ‘‘(I) GENERAL RULE.—Except as
11 provided in subclauses (II) and (III),
12 no such member is an owner, officer,
13 director, or employee of, or partner in,
14 a contract administrator or other
15 service provider to the plan.
16 ‘‘(II) LIMITED EXCEPTION FOR
17 PROVIDERS OF SERVICES SOLELY ON
18 BEHALF OF THE SPONSOR.—Officers
19 or employees of a sponsor which is a
20 service provider (other than a contract
21 administrator) to the plan may be
22 members of the board if they con23
stitute not more than 25 percent of
24 the membership of the board and they
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1 do not provide services to the plan
2 other than on behalf of the sponsor.
3 ‘‘(III) TREATMENT OF PRO4
VIDERS OF MEDICAL CARE.—In the
5 case of a sponsor which is an associa6
tion whose membership consists pri7
marily of providers of medical care,
8 subclause (I) shall not apply in the
9 case of any service provider described
10 in subclause (I) who is a provider of
11 medical care under the plan.
12 ‘‘(iii) CERTAIN PLANS EXCLUDED.—
13 Clause (i) shall not apply to an association
14 health plan which is in existence on the
15 date of the enactment of the Small Busi16
ness Health Fairness Act of 2015.
17 ‘‘(B) SOLE AUTHORITY.—The board has
18 sole authority under the plan to approve appli19
cations for participation in the plan and to con20
tract with a service provider to administer the
21 day-to-day affairs of the plan.
22 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In
23 the case of a group health plan which is established and
24 maintained by a franchiser for a franchise network con25
sisting of its franchisees—
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1 ‘‘(1) the requirements of subsection (a) and sec2
tion 801(a) shall be deemed met if such require3
ments would otherwise be met if the franchiser were
4 deemed to be the sponsor referred to in section
5 801(b), such network were deemed to be an associa6
tion described in section 801(b), and each franchisee
7 were deemed to be a member (of the association and
8 the sponsor) referred to in section 801(b); and
9 ‘‘(2) the requirements of section 804(a)(1) shall
10 be deemed met.
11 The Secretary may by regulation define for purposes of
12 this subsection the terms ‘franchiser’, ‘franchise network’,
13 and ‘franchisee’.
14 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE15
MENTS.
16 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The
17 requirements of this subsection are met with respect to
18 an association health plan if, under the terms of the
19 plan—
20 ‘‘(1) each participating employer must be—
21 ‘‘(A) a member of the sponsor,
22 ‘‘(B) the sponsor, or
23 ‘‘(C) an affiliated member of the sponsor
24 with respect to which the requirements of sub25
section (b) are met,
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1 except that, in the case of a sponsor which is a pro2
fessional association or other individual-based asso3
ciation, if at least one of the officers, directors, or
4 employees of an employer, or at least one of the in5
dividuals who are partners in an employer and who
6 actively participates in the business, is a member or
7 such an affiliated member of the sponsor, partici8
pating employers may also include such employer;
9 and
10 ‘‘(2) all individuals commencing coverage under
11 the plan after certification under this part must
12 be—
13 ‘‘(A) active or retired owners (including
14 self-employed individuals), officers, directors, or
15 employees of, or partners in, participating em16
ployers; or
17 ‘‘(B) the beneficiaries of individuals de18
scribed in subparagraph (A).
19 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM20
PLOYEES.—In the case of an association health plan in
21 existence on the date of the enactment of the Small Busi22
ness Health Fairness Act of 2015, an affiliated member
23 of the sponsor of the plan may be offered coverage under
24 the plan as a participating employer only if—
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1 ‘‘(1) the affiliated member was an affiliated
2 member on the date of certification under this part;
3 or
4 ‘‘(2) during the 12-month period preceding the
5 date of the offering of such coverage, the affiliated
6 member has not maintained or contributed to a
7 group health plan with respect to any of its employ8
ees who would otherwise be eligible to participate in
9 such association health plan.
10 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re11
quirements of this subsection are met with respect to an
12 association health plan if, under the terms of the plan,
13 no participating employer may provide health insurance
14 coverage in the individual market for any employee not
15 covered under the plan which is similar to the coverage
16 contemporaneously provided to employees of the employer
17 under the plan, if such exclusion of the employee from cov18
erage under the plan is based on a health status-related
19 factor with respect to the employee and such employee
20 would, but for such exclusion on such basis, be eligible
21 for coverage under the plan.
22 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST
23 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI24
PATE.—The requirements of this subsection are met with
25 respect to an association health plan if—
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1 ‘‘(1) under the terms of the plan, all employers
2 meeting the preceding requirements of this section
3 are eligible to qualify as participating employers for
4 all geographically available coverage options, unless,
5 in the case of any such employer, participation or
6 contribution requirements of the type referred to in
7 section 2711 of the Public Health Service Act are
8 not met;
9 ‘‘(2) upon request, any employer eligible to par10
ticipate is furnished information regarding all cov11
erage options available under the plan; and
12 ‘‘(3) the applicable requirements of sections
13 701, 702, and 703 are met with respect to the plan.
14 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN
15 DOCUMENTS, CONTRIBUTION RATES, AND
16 BENEFIT OPTIONS.
17 ‘‘(a) IN GENERAL.—The requirements of this section
18 are met with respect to an association health plan if the
19 following requirements are met:
20 ‘‘(1) CONTENTS OF GOVERNING INSTRU21
MENTS.—The instruments governing the plan in22
clude a written instrument, meeting the require23
ments of an instrument required under section
24 402(a)(1), which—
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1 ‘‘(A) provides that the board of trustees
2 serves as the named fiduciary required for plans
3 under section 402(a)(1) and serves in the ca4
pacity of a plan administrator (referred to in
5 section 3(16)(A));
6 ‘‘(B) provides that the sponsor of the plan
7 is to serve as plan sponsor (referred to in sec8
tion 3(16)(B)); and
9 ‘‘(C) incorporates the requirements of sec10
tion 806.
11 ‘‘(2) CONTRIBUTION RATES MUST BE NON12
DISCRIMINATORY.—
13 ‘‘(A) The contribution rates for any par14
ticipating small employer do not vary on the
15 basis of any health status-related factor in rela16
tion to employees of such employer or their
17 beneficiaries and do not vary on the basis of the
18 type of business or industry in which such em19
ployer is engaged.
20 ‘‘(B) Nothing in this title or any other pro21
vision of law shall be construed to preclude an
22 association health plan, or a health insurance
23 issuer offering health insurance coverage in
24 connection with an association health plan,
25 from—
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1 ‘‘(i) setting contribution rates based
2 on the claims experience of the plan; or
3 ‘‘(ii) varying contribution rates for
4 small employers in a State to the extent
5 that such rates could vary using the same
6 methodology employed in such State for
7 regulating premium rates in the small
8 group market with respect to health insur9
ance coverage offered in connection with
10 bona fide associations (within the meaning
11 of section 2791(d)(3) of the Public Health
12 Service Act),
13 subject to the requirements of section 702(b)
14 relating to contribution rates.
15 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI16
VIDUALS WITH RESPECT TO CERTAIN PLANS.—If
17 any benefit option under the plan does not consist
18 of health insurance coverage, the plan has as of the
19 beginning of the plan year not fewer than 1,000 par20
ticipants and beneficiaries.
21 ‘‘(4) MARKETING REQUIREMENTS.—
22 ‘‘(A) IN GENERAL.—If a benefit option
23 which consists of health insurance coverage is
24 offered under the plan, State-licensed insurance
25 agents shall be used to distribute to small em-
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1 ployers coverage which does not consist of
2 health insurance coverage in a manner com3
parable to the manner in which such agents are
4 used to distribute health insurance coverage.
5 ‘‘(B) STATE-LICENSED INSURANCE
6 AGENTS.—For purposes of subparagraph (A),
7 the term ‘State-licensed insurance agents’
8 means one or more agents who are licensed in
9 a State and are subject to the laws of such
10 State relating to licensure, qualification, test11
ing, examination, and continuing education of
12 persons authorized to offer, sell, or solicit
13 health insurance coverage in such State.
14 ‘‘(5) REGULATORY REQUIREMENTS.—Such
15 other requirements as the applicable authority deter16
mines are necessary to carry out the purposes of this
17 part, which shall be prescribed by the applicable au18
thority by regulation.
19 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO
20 DESIGN BENEFIT OPTIONS.—Subject to section 514(d),
21 nothing in this part or any provision of State law (as de22
fined in section 514(c)(1)) shall be construed to preclude
23 an association health plan, or a health insurance issuer
24 offering health insurance coverage in connection with an
25 association health plan, from exercising its sole discretion
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1 in selecting the specific items and services consisting of
2 medical care to be included as benefits under such plan
3 or coverage, except (subject to section 514) in the case
4 of (1) any law to the extent that it is not preempted under
5 section 731(a)(1) with respect to matters governed by sec6
tion 711, 712, or 713, or (2) any law of the State with
7 which filing and approval of a policy type offered by the
8 plan was initially obtained to the extent that such law pro9
hibits an exclusion of a specific disease from such cov10
erage.
11 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS
12 FOR SOLVENCY FOR PLANS PROVIDING
13 HEALTH BENEFITS IN ADDITION TO HEALTH
14 INSURANCE COVERAGE.
15 ‘‘(a) IN GENERAL.—The requirements of this section
16 are met with respect to an association health plan if—
17 ‘‘(1) the benefits under the plan consist solely
18 of health insurance coverage; or
19 ‘‘(2) if the plan provides any additional benefit
20 options which do not consist of health insurance cov21
erage, the plan—
22 ‘‘(A) establishes and maintains reserves
23 with respect to such additional benefit options,
24 in amounts recommended by the qualified
25 health actuary, consisting of—
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1 ‘‘(i) a reserve sufficient for unearned
2 contributions;
3 ‘‘(ii) a reserve sufficient for benefit li4
abilities which have been incurred, which
5 have not been satisfied, and for which risk
6 of loss has not yet been transferred, and
7 for expected administrative costs with re8
spect to such benefit liabilities;
9 ‘‘(iii) a reserve sufficient for any other
10 obligations of the plan; and
11 ‘‘(iv) a reserve sufficient for a margin
12 of error and other fluctuations, taking into
13 account the specific circumstances of the
14 plan; and
15 ‘‘(B) establishes and maintains aggregate
16 and specific excess/stop loss insurance and sol17
vency indemnification, with respect to such ad18
ditional benefit options for which risk of loss
19 has not yet been transferred, as follows:
20 ‘‘(i) The plan shall secure aggregate
21 excess/stop loss insurance for the plan with
22 an attachment point which is not greater
23 than 125 percent of expected gross annual
24 claims. The applicable authority may by
25 regulation provide for upward adjustments
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1 in the amount of such percentage in speci2
fied circumstances in which the plan spe3
cifically provides for and maintains re4
serves in excess of the amounts required
5 under subparagraph (A).
6 ‘‘(ii) The plan shall secure specific ex7
cess/stop loss insurance for the plan with
8 an attachment point which is at least equal
9 to an amount recommended by the plan’s
10 qualified health actuary. The applicable
11 authority may by regulation provide for ad12
justments in the amount of such insurance
13 in specified circumstances in which the
14 plan specifically provides for and maintains
15 reserves in excess of the amounts required
16 under subparagraph (A).
17 ‘‘(iii) The plan shall secure indem18
nification insurance for any claims which
19 the plan is unable to satisfy by reason of
20 a plan termination.
21 Any person issuing to a plan insurance described in clause
22 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec23
retary of any failure of premium payment meriting can24
cellation of the policy prior to undertaking such a cancella25
tion. Any regulations prescribed by the applicable author-
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1 ity pursuant to clause (i) or (ii) of subparagraph (B) may
2 allow for such adjustments in the required levels of excess/
3 stop loss insurance as the qualified health actuary may
4 recommend, taking into account the specific circumstances
5 of the plan.
6 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS
7 RESERVES.—In the case of any association health plan de8
scribed in subsection (a)(2), the requirements of this sub9
section are met if the plan establishes and maintains sur10
plus in an amount at least equal to—
11 ‘‘(1) $500,000, or
12 ‘‘(2) such greater amount (but not greater than
13 $2,000,000) as may be set forth in regulations pre14
scribed by the applicable authority, considering the
15 level of aggregate and specific excess/stop loss insur16
ance provided with respect to such plan and other
17 factors related to solvency risk, such as the plan’s
18 projected levels of participation or claims, the nature
19 of the plan’s liabilities, and the types of assets avail20
able to assure that such liabilities are met.
21 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of
22 any association health plan described in subsection (a)(2),
23 the applicable authority may provide such additional re24
quirements relating to reserves, excess/stop loss insurance,
25 and indemnification insurance as the applicable authority
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1 considers appropriate. Such requirements may be provided
2 by regulation with respect to any such plan or any class
3 of such plans.
4 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR5
ANCE.—The applicable authority may provide for adjust6
ments to the levels of reserves otherwise required under
7 subsections (a) and (b) with respect to any plan or class
8 of plans to take into account excess/stop loss insurance
9 provided with respect to such plan or plans.
10 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The
11 applicable authority may permit an association health plan
12 described in subsection (a)(2) to substitute, for all or part
13 of the requirements of this section (except subsection
14 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar15
rangement, or other financial arrangement as the applica16
ble authority determines to be adequate to enable the plan
17 to fully meet all its financial obligations on a timely basis
18 and is otherwise no less protective of the interests of par19
ticipants and beneficiaries than the requirements for
20 which it is substituted. The applicable authority may take
21 into account, for purposes of this subsection, evidence pro22
vided by the plan or sponsor which demonstrates an as23
sumption of liability with respect to the plan. Such evi24
dence may be in the form of a contract of indemnification,
25 lien, bonding, insurance, letter of credit, recourse under
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1 applicable terms of the plan in the form of assessments
2 of participating employers, security, or other financial ar3
rangement.
4 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT
5 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.—
6 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO7
CIATION HEALTH PLAN FUND.—
8 ‘‘(A) IN GENERAL.—In the case of an as9
sociation health plan described in subsection
10 (a)(2), the requirements of this subsection are
11 met if the plan makes payments into the Asso12
ciation Health Plan Fund under this subpara13
graph when they are due. Such payments shall
14 consist of annual payments in the amount of
15 $5,000, and, in addition to such annual pay16
ments, such supplemental payments as the Sec17
retary may determine to be necessary under
18 paragraph (2). Payments under this paragraph
19 are payable to the Fund at the time determined
20 by the Secretary. Initial payments are due in
21 advance of certification under this part. Pay22
ments shall continue to accrue until a plan’s as23
sets are distributed pursuant to a termination
24 procedure.
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1 ‘‘(B) PENALTIES FOR FAILURE TO MAKE
2 PAYMENTS.—If any payment is not made by a
3 plan when it is due, a late payment charge of
4 not more than 100 percent of the payment
5 which was not timely paid shall be payable by
6 the plan to the Fund.
7 ‘‘(C) CONTINUED DUTY OF THE SEC8
RETARY.—The Secretary shall not cease to
9 carry out the provisions of paragraph (2) on ac10
count of the failure of a plan to pay any pay11
ment when due.
12 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE
13 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN14
DEMNIFICATION INSURANCE COVERAGE FOR CER15
TAIN PLANS.—In any case in which the applicable
16 authority determines that there is, or that there is
17 reason to believe that there will be: (A) a failure to
18 take necessary corrective actions under section
19 809(a) with respect to an association health plan de20
scribed in subsection (a)(2); or (B) a termination of
21 such a plan under section 809(b) or 810(b)(8) (and,
22 if the applicable authority is not the Secretary, cer23
tifies such determination to the Secretary), the Sec24
retary shall determine the amounts necessary to
25 make payments to an insurer (designated by the
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1 Secretary) to maintain in force excess/stop loss in2
surance coverage or indemnification insurance cov3
erage for such plan, if the Secretary determines that
4 there is a reasonable expectation that, without such
5 payments, claims would not be satisfied by reason of
6 termination of such coverage. The Secretary shall, to
7 the extent provided in advance in appropriation
8 Acts, pay such amounts so determined to the insurer
9 designated by the Secretary.
10 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.—
11 ‘‘(A) IN GENERAL.—There is established
12 on the books of the Treasury a fund to be
13 known as the ‘Association Health Plan Fund’.
14 The Fund shall be available for making pay15
ments pursuant to paragraph (2). The Fund
16 shall be credited with payments received pursu17
ant to paragraph (1)(A), penalties received pur18
suant to paragraph (1)(B), and earnings on in19
vestments of amounts of the Fund under sub20
paragraph (B).
21 ‘‘(B) INVESTMENT.—Whenever the Sec22
retary determines that the moneys of the fund
23 are in excess of current needs, the Secretary
24 may request the investment of such amounts as
25 the Secretary determines advisable by the Sec-
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1 retary of the Treasury in obligations issued or
2 guaranteed by the United States.
3 ‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes
4 of this section—
5 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR6
ANCE.—The term ‘aggregate excess/stop loss insur7
ance’ means, in connection with an association
8 health plan, a contract—
9 ‘‘(A) under which an insurer (meeting such
10 minimum standards as the applicable authority
11 may prescribe by regulation) provides for pay12
ment to the plan with respect to aggregate
13 claims under the plan in excess of an amount
14 or amounts specified in such contract;
15 ‘‘(B) which is guaranteed renewable; and
16 ‘‘(C) which allows for payment of pre17
miums by any third party on behalf of the in18
sured plan.
19 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR20
ANCE.—The term ‘specific excess/stop loss insur21
ance’ means, in connection with an association
22 health plan, a contract—
23 ‘‘(A) under which an insurer (meeting such
24 minimum standards as the applicable authority
25 may prescribe by regulation) provides for pay-
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1 ment to the plan with respect to claims under
2 the plan in connection with a covered individual
3 in excess of an amount or amounts specified in
4 such contract in connection with such covered
5 individual;
6 ‘‘(B) which is guaranteed renewable; and
7 ‘‘(C) which allows for payment of pre8
miums by any third party on behalf of the in9
sured plan.
10 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes
11 of this section, the term ‘indemnification insurance’
12 means, in connection with an association health plan, a
13 contract—
14 ‘‘(1) under which an insurer (meeting such min15
imum standards as the applicable authority may pre16
scribe by regulation) provides for payment to the
17 plan with respect to claims under the plan which the
18 plan is unable to satisfy by reason of a termination
19 pursuant to section 809(b) (relating to mandatory
20 termination);
21 ‘‘(2) which is guaranteed renewable and
22 noncancellable for any reason (except as the applica23
ble authority may prescribe by regulation); and
24 ‘‘(3) which allows for payment of premiums by
25 any third party on behalf of the insured plan.
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1 ‘‘(i) RESERVES.—For purposes of this section, the
2 term ‘reserves’ means, in connection with an association
3 health plan, plan assets which meet the fiduciary stand4
ards under part 4 and such additional requirements re5
garding liquidity as the applicable authority may prescribe
6 by regulation.
7 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.—
8 ‘‘(1) IN GENERAL.—Within 90 days after the
9 date of the enactment of the Small Business Health
10 Fairness Act of 2015, the applicable authority shall
11 establish a Solvency Standards Working Group. In
12 prescribing the initial regulations under this section,
13 the applicable authority shall take into account the
14 recommendations of such Working Group.
15 ‘‘(2) MEMBERSHIP.—The Working Group shall
16 consist of not more than 15 members appointed by
17 the applicable authority. The applicable authority
18 shall include among persons invited to membership
19 on the Working Group at least one of each of the
20 following:
21 ‘‘(A) A representative of the National As22
sociation of Insurance Commissioners.
23 ‘‘(B) A representative of the American
24 Academy of Actuaries.
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1 ‘‘(C) A representative of the State govern2
ments, or their interests.
3 ‘‘(D) A representative of existing self-in4
sured arrangements, or their interests.
5 ‘‘(E) A representative of associations of
6 the type referred to in section 801(b)(1), or
7 their interests.
8 ‘‘(F) A representative of multiemployer
9 plans that are group health plans, or their in10
terests.
11 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE12
LATED REQUIREMENTS.
13 ‘‘(a) FILING FEE.—Under the procedure prescribed
14 pursuant to section 802(a), an association health plan
15 shall pay to the applicable authority at the time of filing
16 an application for certification under this part a filing fee
17 in the amount of $5,000, which shall be available in the
18 case of the Secretary, to the extent provided in appropria19
tion Acts, for the sole purpose of administering the certifi20
cation procedures applicable with respect to association
21 health plans.
22 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA23
TION FOR CERTIFICATION.—An application for certifi24
cation under this part meets the requirements of this sec25
tion only if it includes, in a manner and form which shall
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1 be prescribed by the applicable authority by regulation, at
2 least the following information:
3 ‘‘(1) IDENTIFYING INFORMATION.—The names
4 and addresses of—
5 ‘‘(A) the sponsor; and
6 ‘‘(B) the members of the board of trustees
7 of the plan.
8 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO
9 BUSINESS.—The States in which participants and
10 beneficiaries under the plan are to be located and
11 the number of them expected to be located in each
12 such State.
13 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro14
vided by the board of trustees that the bonding re15
quirements of section 412 will be met as of the date
16 of the application or (if later) commencement of op17
erations.
18 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu19
ments governing the plan (including any bylaws and
20 trust agreements), the summary plan description,
21 and other material describing the benefits that will
22 be provided to participants and beneficiaries under
23 the plan.
24 ‘‘(5) AGREEMENTS WITH SERVICE PRO25
VIDERS.—A copy of any agreements between the
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1 plan and contract administrators and other service
2 providers.
3 ‘‘(6) FUNDING REPORT.—In the case of asso4
ciation health plans providing benefits options in ad5
dition to health insurance coverage, a report setting
6 forth information with respect to such additional
7 benefit options determined as of a date within the
8 120-day period ending with the date of the applica9
tion, including the following:
10 ‘‘(A) RESERVES.—A statement, certified
11 by the board of trustees of the plan, and a
12 statement of actuarial opinion, signed by a
13 qualified health actuary, that all applicable re14
quirements of section 806 are or will be met in
15 accordance with regulations which the applica16
ble authority shall prescribe.
17 ‘‘(B) ADEQUACY OF CONTRIBUTION
18 RATES.—A statement of actuarial opinion,
19 signed by a qualified health actuary, which sets
20 forth a description of the extent to which con21
tribution rates are adequate to provide for the
22 payment of all obligations and the maintenance
23 of required reserves under the plan for the 12-
24 month period beginning with such date within
25 such 120-day period, taking into account the
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1 expected coverage and experience of the plan. If
2 the contribution rates are not fully adequate,
3 the statement of actuarial opinion shall indicate
4 the extent to which the rates are inadequate
5 and the changes needed to ensure adequacy.
6 ‘‘(C) CURRENT AND PROJECTED VALUE OF
7 ASSETS AND LIABILITIES.—A statement of ac8
tuarial opinion signed by a qualified health ac9
tuary, which sets forth the current value of the
10 assets and liabilities accumulated under the
11 plan and a projection of the assets, liabilities,
12 income, and expenses of the plan for the 12-
13 month period referred to in subparagraph (B).
14 The income statement shall identify separately
15 the plan’s administrative expenses and claims.
16 ‘‘(D) COSTS OF COVERAGE TO BE
17 CHARGED AND OTHER EXPENSES.—A state18
ment of the costs of coverage to be charged, in19
cluding an itemization of amounts for adminis20
tration, reserves, and other expenses associated
21 with the operation of the plan.
22 ‘‘(E) OTHER INFORMATION.—Any other
23 information as may be determined by the appli24
cable authority, by regulation, as necessary to
25 carry out the purposes of this part.
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1 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH
2 STATES.—A certification granted under this part to an
3 association health plan shall not be effective unless written
4 notice of such certification is filed with the applicable
5 State authority of each State in which at least 25 percent
6 of the participants and beneficiaries under the plan are
7 located. For purposes of this subsection, an individual
8 shall be considered to be located in the State in which a
9 known address of such individual is located or in which
10 such individual is employed.
11 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case
12 of any association health plan certified under this part,
13 descriptions of material changes in any information which
14 was required to be submitted with the application for the
15 certification under this part shall be filed in such form
16 and manner as shall be prescribed by the applicable au17
thority by regulation. The applicable authority may re18
quire by regulation prior notice of material changes with
19 respect to specified matters which might serve as the basis
20 for suspension or revocation of the certification.
21 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS22
SOCIATION HEALTH PLANS.—An association health plan
23 certified under this part which provides benefit options in
24 addition to health insurance coverage for such plan year
25 shall meet the requirements of section 103 by filing an
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1 annual report under such section which shall include infor2
mation described in subsection (b)(6) with respect to the
3 plan year and, notwithstanding section 104(a)(1)(A), shall
4 be filed with the applicable authority not later than 90
5 days after the close of the plan year (or on such later date
6 as may be prescribed by the applicable authority). The ap7
plicable authority may require by regulation such interim
8 reports as it considers appropriate.
9 ‘‘(f) ENGAGEMENT OF QUALIFIED HEALTH ACTU10
ARY.—The board of trustees of each association health
11 plan which provides benefits options in addition to health
12 insurance coverage and which is applying for certification
13 under this part or is certified under this part shall engage,
14 on behalf of all participants and beneficiaries, a qualified
15 health actuary who shall be responsible for the preparation
16 of the materials comprising information necessary to be
17 submitted by a qualified health actuary under this part.
18 The qualified health actuary shall utilize such assumptions
19 and techniques as are necessary to enable such actuary
20 to form an opinion as to whether the contents of the mat21
ters reported under this part—
22 ‘‘(1) are in the aggregate reasonably related to
23 the experience of the plan and to reasonable expecta24
tions; and
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1 ‘‘(2) represent such actuary’s best estimate of
2 anticipated experience under the plan.
3 The opinion by the qualified health actuary shall be made
4 with respect to, and shall be made a part of, the annual
5 report.
6 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER7
MINATION.
8 ‘‘Except as provided in section 809(b), an association
9 health plan which is or has been certified under this part
10 may terminate (upon or at any time after cessation of ac11
cruals in benefit liabilities) only if the board of trustees,
12 not less than 60 days before the proposed termination
13 date—
14 ‘‘(1) provides to the participants and bene15
ficiaries a written notice of intent to terminate stat16
ing that such termination is intended and the pro17
posed termination date;
18 ‘‘(2) develops a plan for winding up the affairs
19 of the plan in connection with such termination in
20 a manner which will result in timely payment of all
21 benefits for which the plan is obligated; and
22 ‘‘(3) submits such plan in writing to the appli23
cable authority.
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1 Actions required under this section shall be taken in such
2 form and manner as may be prescribed by the applicable
3 authority by regulation.
4 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI5
NATION.
6 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE7
SERVES.—An association health plan which is certified
8 under this part and which provides benefits other than
9 health insurance coverage shall continue to meet the re10
quirements of section 806, irrespective of whether such
11 certification continues in effect. The board of trustees of
12 such plan shall determine quarterly whether the require13
ments of section 806 are met. In any case in which the
14 board determines that there is reason to believe that there
15 is or will be a failure to meet such requirements, or the
16 applicable authority makes such a determination and so
17 notifies the board, the board shall immediately notify the
18 qualified health actuary engaged by the plan, and such
19 actuary shall, not later than the end of the next following
20 month, make such recommendations to the board for cor21
rective action as the actuary determines necessary to en22
sure compliance with section 806. Not later than 30 days
23 after receiving from the actuary recommendations for cor24
rective actions, the board shall notify the applicable au25
thority (in such form and manner as the applicable au-
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1 thority may prescribe by regulation) of such recommenda2
tions of the actuary for corrective action, together with
3 a description of the actions (if any) that the board has
4 taken or plans to take in response to such recommenda5
tions. The board shall thereafter report to the applicable
6 authority, in such form and frequency as the applicable
7 authority may specify to the board, regarding corrective
8 action taken by the board until the requirements of section
9 806 are met.
10 ‘‘(b) MANDATORY TERMINATION.—In any case in
11 which—
12 ‘‘(1) the applicable authority has been notified
13 under subsection (a) (or by an issuer of excess/stop
14 loss insurance or indemnity insurance pursuant to
15 section 806(a)) of a failure of an association health
16 plan which is or has been certified under this part
17 and is described in section 806(a)(2) to meet the re18
quirements of section 806 and has not been notified
19 by the board of trustees of the plan that corrective
20 action has restored compliance with such require21
ments; and
22 ‘‘(2) the applicable authority determines that
23 there is a reasonable expectation that the plan will
24 continue to fail to meet the requirements of section
25 806,
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1 the board of trustees of the plan shall, at the direction
2 of the applicable authority, terminate the plan and, in the
3 course of the termination, take such actions as the appli4
cable authority may require, including satisfying any
5 claims referred to in section 806(a)(2)(B)(iii) and recov6
ering for the plan any liability under subsection
7 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure
8 that the affairs of the plan will be, to the maximum extent
9 possible, wound up in a manner which will result in timely
10 provision of all benefits for which the plan is obligated.
11 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL12
VENT ASSOCIATION HEALTH PLANS PRO13
VIDING HEALTH BENEFITS IN ADDITION TO
14 HEALTH INSURANCE COVERAGE.
15 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR
16 INSOLVENT PLANS.—Whenever the Secretary determines
17 that an association health plan which is or has been cer18
tified under this part and which is described in section
19 806(a)(2) will be unable to provide benefits when due or
20 is otherwise in a financially hazardous condition, as shall
21 be defined by the Secretary by regulation, the Secretary
22 shall, upon notice to the plan, apply to the appropriate
23 United States district court for appointment of the Sec24
retary as trustee to administer the plan for the duration
25 of the insolvency. The plan may appear as a party and
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1 other interested persons may intervene in the proceedings
2 at the discretion of the court. The court shall appoint such
3 Secretary trustee if the court determines that the trustee4
ship is necessary to protect the interests of the partici5
pants and beneficiaries or providers of medical care or to
6 avoid any unreasonable deterioration of the financial con7
dition of the plan. The trusteeship of such Secretary shall
8 continue until the conditions described in the first sen9
tence of this subsection are remedied or the plan is termi10
nated.
11 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon
12 appointment as trustee under subsection (a), shall have
13 the power—
14 ‘‘(1) to do any act authorized by the plan, this
15 title, or other applicable provisions of law to be done
16 by the plan administrator or any trustee of the plan;
17 ‘‘(2) to require the transfer of all (or any part)
18 of the assets and records of the plan to the Sec19
retary as trustee;
20 ‘‘(3) to invest any assets of the plan which the
21 Secretary holds in accordance with the provisions of
22 the plan, regulations prescribed by the Secretary,
23 and applicable provisions of law;
24 ‘‘(4) to require the sponsor, the plan adminis25
trator, any participating employer, and any employee
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1 organization representing plan participants to fur2
nish any information with respect to the plan which
3 the Secretary as trustee may reasonably need in
4 order to administer the plan;
5 ‘‘(5) to collect for the plan any amounts due the
6 plan and to recover reasonable expenses of the trust7
eeship;
8 ‘‘(6) to commence, prosecute, or defend on be9
half of the plan any suit or proceeding involving the
10 plan;
11 ‘‘(7) to issue, publish, or file such notices, state12
ments, and reports as may be required by the Sec13
retary by regulation or required by any order of the
14 court;
15 ‘‘(8) to terminate the plan (or provide for its
16 termination in accordance with section 809(b)) and
17 liquidate the plan assets, to restore the plan to the
18 responsibility of the sponsor, or to continue the
19 trusteeship;
20 ‘‘(9) to provide for the enrollment of plan par21
ticipants and beneficiaries under appropriate cov22
erage options; and
23 ‘‘(10) to do such other acts as may be nec24
essary to comply with this title or any order of the
25 court and to protect the interests of plan partici-
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1 pants and beneficiaries and providers of medical
2 care.
3 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac4
ticable after the Secretary’s appointment as trustee, the
5 Secretary shall give notice of such appointment to—
6 ‘‘(1) the sponsor and plan administrator;
7 ‘‘(2) each participant;
8 ‘‘(3) each participating employer; and
9 ‘‘(4) if applicable, each employee organization
10 which, for purposes of collective bargaining, rep11
resents plan participants.
12 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in13
consistent with the provisions of this title, or as may be
14 otherwise ordered by the court, the Secretary, upon ap15
pointment as trustee under this section, shall be subject
16 to the same duties as those of a trustee under section 704
17 of title 11, United States Code, and shall have the duties
18 of a fiduciary for purposes of this title.
19 ‘‘(e) OTHER PROCEEDINGS.—An application by the
20 Secretary under this subsection may be filed notwith21
standing the pendency in the same or any other court of
22 any bankruptcy, mortgage foreclosure, or equity receiver23
ship proceeding, or any proceeding to reorganize, conserve,
24 or liquidate such plan or its property, or any proceeding
25 to enforce a lien against property of the plan.
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1 ‘‘(f) JURISDICTION OF COURT.—
2 ‘‘(1) IN GENERAL.—Upon the filing of an appli3
cation for the appointment as trustee or the issuance
4 of a decree under this section, the court to which the
5 application is made shall have exclusive jurisdiction
6 of the plan involved and its property wherever lo7
cated with the powers, to the extent consistent with
8 the purposes of this section, of a court of the United
9 States having jurisdiction over cases under chapter
10 11 of title 11, United States Code. Pending an adju11
dication under this section such court shall stay, and
12 upon appointment by it of the Secretary as trustee,
13 such court shall continue the stay of, any pending
14 mortgage foreclosure, equity receivership, or other
15 proceeding to reorganize, conserve, or liquidate the
16 plan, the sponsor, or property of such plan or spon17
sor, and any other suit against any receiver, conser18
vator, or trustee of the plan, the sponsor, or prop19
erty of the plan or sponsor. Pending such adjudica20
tion and upon the appointment by it of the Sec21
retary as trustee, the court may stay any proceeding
22 to enforce a lien against property of the plan or the
23 sponsor or any other suit against the plan or the
24 sponsor.
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1 ‘‘(2) VENUE.—An action under this section
2 may be brought in the judicial district where the
3 sponsor or the plan administrator resides or does
4 business or where any asset of the plan is situated.
5 A district court in which such action is brought may
6 issue process with respect to such action in any
7 other judicial district.
8 ‘‘(g) PERSONNEL.—In accordance with regulations
9 which shall be prescribed by the Secretary, the Secretary
10 shall appoint, retain, and compensate accountants, actu11
aries, and other professional service personnel as may be
12 necessary in connection with the Secretary’s service as
13 trustee under this section.
14 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY.
15 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a
16 State may impose by law a contribution tax on an associa17
tion health plan described in section 806(a)(2), if the plan
18 commenced operations in such State after the date of the
19 enactment of the Small Business Health Fairness Act of
20 2015.
21 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec22
tion, the term ‘contribution tax’ imposed by a State on
23 an association health plan means any tax imposed by such
24 State if—
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1 ‘‘(1) such tax is computed by applying a rate to
2 the amount of premiums or contributions, with re3
spect to individuals covered under the plan who are
4 residents of such State, which are received by the
5 plan from participating employers located in such
6 State or from such individuals;
7 ‘‘(2) the rate of such tax does not exceed the
8 rate of any tax imposed by such State on premiums
9 or contributions received by insurers or health main10
tenance organizations for health insurance coverage
11 offered in such State in connection with a group
12 health plan;
13 ‘‘(3) such tax is otherwise nondiscriminatory;
14 and
15 ‘‘(4) the amount of any such tax assessed on
16 the plan is reduced by the amount of any tax or as17
sessment otherwise imposed by the State on pre18
miums, contributions, or both received by insurers or
19 health maintenance organizations for health insur20
ance coverage, aggregate excess/stop loss insurance
21 (as defined in section 806(g)(1)), specific excess/stop
22 loss insurance (as defined in section 806(g)(2)),
23 other insurance related to the provision of medical
24 care under the plan, or any combination thereof pro-
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1 vided by such insurers or health maintenance organi2
zations in such State in connection with such plan.
3 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
4 ‘‘(a) DEFINITIONS.—For purposes of this part—
5 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group
6 health plan’ has the meaning provided in section
7 733(a)(1) (after applying subsection (b) of this sec8
tion).
9 ‘‘(2) MEDICAL CARE.—The term ‘medical care’
10 has the meaning provided in section 733(a)(2).
11 ‘‘(3) HEALTH INSURANCE COVERAGE.—The
12 term ‘health insurance coverage’ has the meaning
13 provided in section 733(b)(1).
14 ‘‘(4) HEALTH INSURANCE ISSUER.—The term
15 ‘health insurance issuer’ has the meaning provided
16 in section 733(b)(2).
17 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap18
plicable authority’ means the Secretary, except that,
19 in connection with any exercise of the Secretary’s
20 authority regarding which the Secretary is required
21 under section 506(d) to consult with a State, such
22 term means the Secretary, in consultation with such
23 State.
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1 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The
2 term ‘health status-related factor’ has the meaning
3 provided in section 733(d)(2).
4 ‘‘(7) INDIVIDUAL MARKET.—
5 ‘‘(A) IN GENERAL.—The term ‘individual
6 market’ means the market for health insurance
7 coverage offered to individuals other than in
8 connection with a group health plan.
9 ‘‘(B) TREATMENT OF VERY SMALL
10 GROUPS.—
11 ‘‘(i) IN GENERAL.—Subject to clause
12 (ii), such term includes coverage offered in
13 connection with a group health plan that
14 has fewer than 2 participants as current
15 employees or participants described in sec16
tion 732(d)(3) on the first day of the plan
17 year.
18 ‘‘(ii) STATE EXCEPTION.—Clause (i)
19 shall not apply in the case of health insur20
ance coverage offered in a State if such
21 State regulates the coverage described in
22 such clause in the same manner and to the
23 same extent as coverage in the small group
24 market (as defined in section 2791(e)(5) of
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1 the Public Health Service Act) is regulated
2 by such State.
3 ‘‘(8) PARTICIPATING EMPLOYER.—The term
4 ‘participating employer’ means, in connection with
5 an association health plan, any employer, if any indi6
vidual who is an employee of such employer, a part7
ner in such employer, or a self-employed individual
8 who is such employer (or any dependent, as defined
9 under the terms of the plan, of such individual) is
10 or was covered under such plan in connection with
11 the status of such individual as such an employee,
12 partner, or self-employed individual in relation to the
13 plan.
14 ‘‘(9) APPLICABLE STATE AUTHORITY.—The
15 term ‘applicable State authority’ means, with respect
16 to a health insurance issuer in a State, the State in17
surance commissioner or official or officials des18
ignated by the State to enforce the requirements of
19 title XXVII of the Public Health Service Act for the
20 State involved with respect to such issuer.
21 ‘‘(10) QUALIFIED HEALTH ACTUARY.—The
22 term ‘qualified health actuary’ means an individual
23 who is a member of the American Academy of Actu24
aries with expertise in health care.
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1 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili2
ated member’ means, in connection with a sponsor—
3 ‘‘(A) a person who is otherwise eligible to
4 be a member of the sponsor but who elects an
5 affiliated status with the sponsor,
6 ‘‘(B) in the case of a sponsor with mem7
bers which consist of associations, a person who
8 is a member of any such association and elects
9 an affiliated status with the sponsor, or
10 ‘‘(C) in the case of an association health
11 plan in existence on the date of the enactment
12 of the Small Business Health Fairness Act of
13 2015, a person eligible to be a member of the
14 sponsor or one of its member associations.
15 ‘‘(12) LARGE EMPLOYER.—The term ‘large em16
ployer’ means, in connection with a group health
17 plan with respect to a plan year, an employer who
18 employed an average of at least 51 employees on
19 business days during the preceding calendar year
20 and who employs at least 2 employees on the first
21 day of the plan year.
22 ‘‘(13) SMALL EMPLOYER.—The term ‘small em23
ployer’ means, in connection with a group health
24 plan with respect to a plan year, an employer who
25 is not a large employer.
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1 ‘‘(b) RULES OF CONSTRUCTION.—
2 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur3
poses of determining whether a plan, fund, or pro4
gram is an employee welfare benefit plan which is an
5 association health plan, and for purposes of applying
6 this title in connection with such plan, fund, or pro7
gram so determined to be such an employee welfare
8 benefit plan—
9 ‘‘(A) in the case of a partnership, the term
10 ‘employer’ (as defined in section 3(5)) includes
11 the partnership in relation to the partners, and
12 the term ‘employee’ (as defined in section 3(6))
13 includes any partner in relation to the partner14
ship; and
15 ‘‘(B) in the case of a self-employed indi16
vidual, the term ‘employer’ (as defined in sec17
tion 3(5)) and the term ‘employee’ (as defined
18 in section 3(6)) shall include such individual.
19 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED
20 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the
21 case of any plan, fund, or program which was estab22
lished or is maintained for the purpose of providing
23 medical care (through the purchase of insurance or
24 otherwise) for employees (or their dependents) cov25
ered thereunder and which demonstrates to the Sec-
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1 retary that all requirements for certification under
2 this part would be met with respect to such plan,
3 fund, or program if such plan, fund, or program
4 were a group health plan, such plan, fund, or pro5
gram shall be treated for purposes of this title as an
6 employee welfare benefit plan on and after the date
7 of such demonstration.
8 ‘‘(3) EXCEPTION FOR CERTAIN BENEFITS.—
9 The requirements of this part shall not apply to a
10 group health plan in relation to its provision of ex11
cepted benefits, as defined in section 706(c).’’.
12 (b) CONFORMING AMENDMENTS TO PREEMPTION
13 RULES.—
14 (1) Section 514(b)(6) of such Act (29 U.S.C.
15 1144(b)(6)) is amended by adding at the end the
16 following new subparagraph:
17 ‘‘(E) The preceding subparagraphs of this paragraph
18 do not apply with respect to any State law in the case
19 of an association health plan which is certified under part
20 8.’’.
21 (2) Section 514 of such Act (29 U.S.C. 1144)
22 is amended—
23 (A) in subsection (b)(4), by striking ‘‘Sub24
section (a)’’ and inserting ‘‘Subsections (a) and
25 (d)’’;
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1 (B) in subsection (b)(5), by striking ‘‘sub2
section (a)’’ in subparagraph (A) and inserting
3 ‘‘subsection (a) of this section and subsections
4 (a)(2)(B) and (b) of section 805’’, and by strik5
ing ‘‘subsection (a)’’ in subparagraph (B) and
6 inserting ‘‘subsection (a) of this section or sub7
section (a)(2)(B) or (b) of section 805’’;
8 (C) by redesignating subsection (d) as sub9
section (e); and
10 (D) by inserting after subsection (c) the
11 following new subsection:
12 ‘‘(d)(1) Except as provided in subsection (b)(4), the
13 provisions of this title shall supersede any and all State
14 laws insofar as they may now or hereafter preclude, or
15 have the effect of precluding, a health insurance issuer
16 from offering health insurance coverage in connection with
17 an association health plan which is certified under part
18 8.
19 ‘‘(2) Except as provided in paragraphs (4) and (5)
20 of subsection (b) of this section—
21 ‘‘(A) In any case in which health insurance cov22
erage of any policy type is offered under an associa23
tion health plan certified under part 8 to a partici24
pating employer operating in such State, the provi25
sions of this title shall supersede any and all laws
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1 of such State insofar as they may preclude a health
2 insurance issuer from offering health insurance cov3
erage of the same policy type to other employers op4
erating in the State which are eligible for coverage
5 under such association health plan, whether or not
6 such other employers are participating employers in
7 such plan.
8 ‘‘(B) In any case in which health insurance cov9
erage of any policy type is offered in a State under
10 an association health plan certified under part 8 and
11 the filing, with the applicable State authority (as de12
fined in section 812(a)(9)), of the policy form in
13 connection with such policy type is approved by such
14 State authority, the provisions of this title shall su15
persede any and all laws of any other State in which
16 health insurance coverage of such type is offered, in17
sofar as they may preclude, upon the filing in the
18 same form and manner of such policy form with the
19 applicable State authority in such other State, the
20 approval of the filing in such other State.
21 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding
22 provisions of this subsection shall be construed, with re23
spect to health insurance issuers or health insurance cov24
erage, to supersede or impair the law of any State—
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1 ‘‘(A) providing solvency standards or similar
2 standards regarding the adequacy of insurer capital,
3 surplus, reserves, or contributions, or
4 ‘‘(B) relating to prompt payment of claims.
5 ‘‘(4) For additional provisions relating to association
6 health plans, see subsections (a)(2)(B) and (b) of section
7 805.
8 ‘‘(5) For purposes of this subsection, the term ‘asso9
ciation health plan’ has the meaning provided in section
10 801(a), and the terms ‘health insurance coverage’, ‘par11
ticipating employer’, and ‘health insurance issuer’ have
12 the meanings provided such terms in section 812, respec13
tively.’’.
14 (3) Section 514(b)(6)(A) of such Act (29
15 U.S.C. 1144(b)(6)(A)) is amended—
16 (A) in clause (i)(II), by striking ‘‘and’’ at
17 the end;
18 (B) in clause (ii), by inserting ‘‘and which
19 does not provide medical care (within the mean20
ing of section 733(a)(2)),’’ after ‘‘arrange21
ment,’’, and by striking ‘‘title.’’ and inserting
22 ‘‘title, and’’; and
23 (C) by adding at the end the following new
24 clause:
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1 ‘‘(iii) subject to subparagraph (E), in the case
2 of any other employee welfare benefit plan which is
3 a multiple employer welfare arrangement and which
4 provides medical care (within the meaning of section
5 733(a)(2)), any law of any State which regulates in6
surance may apply.’’.
7 (4) Section 514(e) of such Act (as redesignated
8 by paragraph (2)(C)) is amended—
9 (A) by striking ‘‘Nothing’’ and inserting
10 ‘‘(1) Except as provided in paragraph (2), noth11
ing’’; and
12 (B) by adding at the end the following new
13 paragraph:
14 ‘‘(2) Nothing in any other provision of law enacted
15 on or after the date of the enactment of the Small Busi16
ness Health Fairness Act of 2015 shall be construed to
17 alter, amend, modify, invalidate, impair, or supersede any
18 provision of this title, except by specific cross-reference to
19 the affected section.’’.
20 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act
21 (29 U.S.C. 102(16)(B)) is amended by adding at the end
22 the following new sentence: ‘‘Such term also includes a
23 person serving as the sponsor of an association health plan
24 under part 8.’’.
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1 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE2
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS
3 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b)
4 of such Act (29 U.S.C. 102(b)) is amended by adding at
5 the end the following: ‘‘An association health plan shall
6 include in its summary plan description, in connection
7 with each benefit option, a description of the form of sol8
vency or guarantee fund protection secured pursuant to
9 this Act or applicable State law, if any.’’.
10 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is
11 amended by inserting ‘‘or part 8’’ after ‘‘this part’’.
12 (f) REPORT TO THE CONGRESS REGARDING CERTIFI13
CATION OF SELF-INSURED ASSOCIATION HEALTH
14 PLANS.—Not later than January 1, 2016, the Secretary
15 of Labor shall report to the Committee on Education and
16 the Workforce of the House of Representatives and the
17 Committee on Health, Education, Labor, and Pensions of
18 the Senate the effect association health plans have had,
19 if any, on reducing the number of uninsured individuals.
20 (g) CLERICAL AMENDMENT.—The table of contents
21 in section 1 of the Employee Retirement Income Security
22 Act of 1974 is amended by inserting after the item relat23
ing to section 734 the following new items:
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS
‘‘801. Association health plans.
‘‘802. Certification of association health plans.
‘‘803. Requirements relating to sponsors and boards of trustees.
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‘‘804. Participation and coverage requirements.
‘‘805. Other requirements relating to plan documents, contribution rates, and
benefit options.
‘‘806. Maintenance of reserves and provisions for solvency for plans providing
health benefits in addition to health insurance coverage.
‘‘807. Requirements for application and related requirements.
‘‘808. Notice requirements for voluntary termination.
‘‘809. Corrective actions and mandatory termination.
‘‘810. Trusteeship by the Secretary of insolvent association health plans providing
health benefits in addition to health insurance coverage.
‘‘811. State assessment authority.
‘‘812. Definitions and rules of construction.’’.
1 SEC. 213. CLARIFICATION OF TREATMENT OF SINGLE EM2
PLOYER ARRANGEMENTS.
3 Section 3(40)(B) of the Employee Retirement Income
4 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend5
ed—
6 (1) in clause (i), by inserting after ‘‘control
7 group,’’ the following: ‘‘except that, in any case in
8 which the benefit referred to in subparagraph (A)
9 consists of medical care (as defined in section
10 812(a)(2)), two or more trades or businesses, wheth11
er or not incorporated, shall be deemed a single em12
ployer for any plan year of such plan, or any fiscal
13 year of such other arrangement, if such trades or
14 businesses are within the same control group during
15 such year or at any time during the preceding 1-year
16 period,’’;
17 (2) in clause (iii), by striking ‘‘(iii) the deter18
mination’’ and inserting the following:
19 ‘‘(iii)(I) in any case in which the benefit re20
ferred to in subparagraph (A) consists of medical
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1 care (as defined in section 812(a)(2)), the deter2
mination of whether a trade or business is under
3 ‘common control’ with another trade or business
4 shall be determined under regulations of the Sec5
retary applying principles consistent and coextensive
6 with the principles applied in determining whether
7 employees of two or more trades or businesses are
8 treated as employed by a single employer under sec9
tion 4001(b), except that, for purposes of this para10
graph, an interest of greater than 25 percent may
11 not be required as the minimum interest necessary
12 for common control, or
13 ‘‘(II) in any other case, the determination’’;
14 (3) by redesignating clauses (iv) and (v) as
15 clauses (v) and (vi), respectively; and
16 (4) by inserting after clause (iii) the following
17 new clause:
18 ‘‘(iv) in any case in which the benefit referred
19 to in subparagraph (A) consists of medical care (as
20 defined in section 812(a)(2)), in determining, after
21 the application of clause (i), whether benefits are
22 provided to employees of two or more employers, the
23 arrangement shall be treated as having only one par24
ticipating employer if, after the application of clause
25 (i), the number of individuals who are employees and
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1 former employees of any one participating employer
2 and who are covered under the arrangement is
3 greater than 75 percent of the aggregate number of
4 all individuals who are employees or former employ5
ees of participating employers and who are covered
6 under the arrangement,’’.
7 SEC. 214. ENFORCEMENT PROVISIONS RELATING TO ASSO8
CIATION HEALTH PLANS.
9 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL
10 MISREPRESENTATIONS.—Section 501 of the Employee
11 Retirement Income Security Act of 1974 (29 U.S.C. 1131)
12 is amended—
13 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and
14 (2) by adding at the end the following new sub15
section:
16 ‘‘(b) Any person who willfully falsely represents, to
17 any employee, any employee’s beneficiary, any employer,
18 the Secretary, or any State, a plan or other arrangement
19 established or maintained for the purpose of offering or
20 providing any benefit described in section 3(1) to employ21
ees or their beneficiaries as—
22 ‘‘(1) being an association health plan which has
23 been certified under part 8;
24 ‘‘(2) having been established or maintained
25 under or pursuant to one or more collective bar-
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1 gaining agreements which are reached pursuant to
2 collective bargaining described in section 8(d) of the
3 National Labor Relations Act (29 U.S.C. 158(d)) or
4 paragraph Fourth of section 2 of the Railway Labor
5 Act (45 U.S.C. 152, paragraph Fourth) or which are
6 reached pursuant to labor-management negotiations
7 under similar provisions of State public employee re8
lations laws; or
9 ‘‘(3) being a plan or arrangement described in
10 section 3(40)(A)(i),
11 shall, upon conviction, be imprisoned not more than 5
12 years, be fined under title 18, United States Code, or
13 both.’’.
14 (b) CEASE ACTIVITIES ORDERS.—Section 502 of
15 such Act (29 U.S.C. 1132) is amended by adding at the
16 end the following new subsection:
17 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE18
SIST ORDERS.—
19 ‘‘(1) IN GENERAL.—Subject to paragraph (2),
20 upon application by the Secretary showing the oper21
ation, promotion, or marketing of an association
22 health plan (or similar arrangement providing bene23
fits consisting of medical care (as defined in section
24 733(a)(2))) that—
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1 ‘‘(A) is not certified under part 8, is sub2
ject under section 514(b)(6) to the insurance
3 laws of any State in which the plan or arrange4
ment offers or provides benefits, and is not li5
censed, registered, or otherwise approved under
6 the insurance laws of such State; or
7 ‘‘(B) is an association health plan certified
8 under part 8 and is not operating in accordance
9 with the requirements under part 8 for such
10 certification,
11 a district court of the United States shall enter an
12 order requiring that the plan or arrangement cease
13 activities.
14 ‘‘(2) EXCEPTION.—Paragraph (1) shall not
15 apply in the case of an association health plan or
16 other arrangement if the plan or arrangement shows
17 that—
18 ‘‘(A) all benefits under it referred to in
19 paragraph (1) consist of health insurance cov20
erage; and
21 ‘‘(B) with respect to each State in which
22 the plan or arrangement offers or provides ben23
efits, the plan or arrangement is operating in
24 accordance with applicable State laws that are
25 not superseded under section 514.
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1 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The
2 court may grant such additional equitable relief, in3
cluding any relief available under this title, as it
4 deems necessary to protect the interests of the pub5
lic and of persons having claims for benefits against
6 the plan.’’.
7 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.—
8 Section 503 of such Act (29 U.S.C. 1133) is amended by
9 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’,
10 and by adding at the end the following new subsection:
11 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of
12 each association health plan which is or has been certified
13 under part 8 shall require the board of trustees or the
14 named fiduciary (as applicable) to ensure that the require15
ments of this section are met in connection with claims
16 filed under the plan.’’.
17 SEC. 215. COOPERATION BETWEEN FEDERAL AND STATE
18 AUTHORITIES.
19 Section 506 of the Employee Retirement Income Se20
curity Act of 1974 (29 U.S.C. 1136) is amended by adding
21 at the end the following new subsection:
22 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT
23 TO ASSOCIATION HEALTH PLANS.—
24 ‘‘(1) AGREEMENTS WITH STATES.—The Sec25
retary shall consult with the State recognized under
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1 paragraph (2) with respect to an association health
2 plan regarding the exercise of—
3 ‘‘(A) the Secretary’s authority under sec4
tions 502 and 504 to enforce the requirements
5 for certification under part 8; and
6 ‘‘(B) the Secretary’s authority to certify
7 association health plans under part 8 in accord8
ance with regulations of the Secretary applica9
ble to certification under part 8.
10 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE
11 STATE.—In carrying out paragraph (1), the Sec12
retary shall ensure that only one State will be recog13
nized, with respect to any particular association
14 health plan, as the State with which consultation is
15 required. In carrying out this paragraph—
16 ‘‘(A) in the case of a plan which provides
17 health insurance coverage (as defined in section
18 812(a)(3)), such State shall be the State with
19 which filing and approval of a policy type of20
fered by the plan was initially obtained, and
21 ‘‘(B) in any other case, the Secretary shall
22 take into account the places of residence of the
23 participants and beneficiaries under the plan
24 and the State in which the trust is main25
tained.’’.
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1 SEC. 216. EFFECTIVE DATE AND TRANSITIONAL AND
2 OTHER RULES.
3 (a) EFFECTIVE DATE.—The amendments made by
4 this subtitle shall take effect 1 year after the date of the
5 enactment of this Act. The Secretary of Labor shall first
6 issue all regulations necessary to carry out the amend7
ments made by this subtitle within 1 year after the date
8 of the enactment of this Act.
9 (b) TREATMENT OF CERTAIN EXISTING HEALTH
10 BENEFITS PROGRAMS.—
11 (1) IN GENERAL.—In any case in which, as of
12 the date of the enactment of this Act, an arrange13
ment is maintained in a State for the purpose of
14 providing benefits consisting of medical care for the
15 employees and beneficiaries of its participating em16
ployers, at least 200 participating employers make
17 contributions to such arrangement, such arrange18
ment has been in existence for at least 10 years, and
19 such arrangement is licensed under the laws of one
20 or more States to provide such benefits to its par21
ticipating employers, upon the filing with the appli22
cable authority (as defined in section 812(a)(5) of
23 the Employee Retirement Income Security Act of
24 1974 (as amended by this subtitle)) by the arrange25
ment of an application for certification of the ar-
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1 rangement under part 8 of subtitle B of title I of
2 such Act—
3 (A) such arrangement shall be deemed to
4 be a group health plan for purposes of title I
5 of such Act;
6 (B) the requirements of sections 801(a)
7 and 803(a) of the Employee Retirement Income
8 Security Act of 1974 shall be deemed met with
9 respect to such arrangement;
10 (C) the requirements of section 803(b) of
11 such Act shall be deemed met, if the arrange12
ment is operated by a board of directors
13 which—
14 (i) is elected by the participating em15
ployers, with each employer having one
16 vote; and
17 (ii) has complete fiscal control over
18 the arrangement and which is responsible
19 for all operations of the arrangement;
20 (D) the requirements of section 804(a) of
21 such Act shall be deemed met with respect to
22 such arrangement; and
23 (E) the arrangement may be certified by
24 any applicable authority with respect to its op-
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1 erations in any State only if it operates in such
2 State on the date of certification.
3 The provisions of this subsection shall cease to apply
4 with respect to any such arrangement at such time
5 after the date of the enactment of this Act as the
6 applicable requirements of this subsection are not
7 met with respect to such arrangement.
8 (2) DEFINITIONS.—For purposes of this sub9
section, the terms ‘‘group health plan’’, ‘‘medical
10 care’’, and ‘‘participating employer’’ shall have the
11 meanings provided in section 812 of the Employee
12 Retirement Income Security Act of 1974, except
13 that the reference in paragraph (7) of such section
14 to an ‘‘association health plan’’ shall be deemed a
15 reference to an arrangement referred to in this sub16
section.
17 Subtitle C—Health Insurance
18 Reforms
19 SEC. 221. REQUIREMENTS FOR INDIVIDUAL HEALTH INSUR20
ANCE.
21 (a) IN GENERAL.—Section 2741 of the Public Health
22 Service Act (42 U.S.C. 300gg-41), as restored and revived
23 by section 2 of this Act, is amended—
24 (1) in subsection (a)—
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1 (A) in the heading, by striking ‘‘to certain
2 individuals with prior group coverage’’;
3 (B) in paragraph (1), by striking ‘‘and sec4
tion 2744’’;
5 (C) in paragraph (1)(B), by inserting ‘‘un6
less such exclusion complies with paragraph
7 (2)’’ before the period; and
8 (D) by striking paragraph (2) and insert9
ing the following new paragraphs:
10 ‘‘(2) LIMITATION ON PREEXISTING CONDITION
11 EXCLUSION PERIOD.—
12 ‘‘(A) LIMITATION.—A health insurance
13 issuer offering health insurance coverage in the
14 individual market may not, with respect to an
15 enrollee in such coverage, impose any pre16
existing condition exclusion if such enrollee has
17 at least 18 months of continuous creditable cov18
erage (as defined in section 2701(c)(1)) imme19
diately preceding the enrollment date.
20 ‘‘(B) IMPOSITION OF EXCLUSION.—Not21
withstanding paragraph (1)(B), a health insur22
ance issuer offering health insurance coverage
23 in the individual market may, with respect to
24 an enrollee in such coverage who is not de-
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1 scribed in subparagraph (A), impose a pre2
existing condition exclusion only if—
3 ‘‘(i) such exclusion relates to a condi4
tion (whether physical or mental), regard5
less of the cause of the condition, for which
6 medical advice, diagnosis, care, or treat7
ment was recommended or received within
8 the 6-month period ending on the enroll9
ment date;
10 ‘‘(ii) such exclusion extends for a pe11
riod of not more than 18 months after the
12 enrollment date; and
13 ‘‘(iii) the period of any such pre14
existing condition exclusion is reduced by
15 the aggregate of the periods of creditable
16 coverage (if any, as defined in section
17 2701(c)(1)) applicable to the enrollee as of
18 the enrollment date.
19 ‘‘(C) PREMIUM SURCHARGE.—Notwith20
standing paragraph (6), with respect to an en21
rollee described in subparagraph (B), a health
22 insurance issuer may charge a premium for the
23 coverage involved that does not exceed 150 per24
cent of the applicable standard rate, for not to
25 exceed 24 months (or 36 months if the health
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1 insurance issuer does not impose any pre2
existing condition exclusion with respect to such
3 enrollee), reduced by the aggregate of the peri4
ods of creditable coverage (if any, as defined in
5 section 2701(c)(1)) applicable to the enrollee as
6 of the enrollment date. For purposes of this
7 subsection, the term ‘applicable standard rate’
8 means the standard premium rate that the
9 issuer charges for the coverage involved with re10
spect to an individual described in subpara11
graph (A) with the same rating characteristics
12 or rating factors as the enrollee described in
13 subparagraph (B), provided that any variations
14 in standard premium rates are based on the
15 uniform application of rating characteristics or
16 rating factors that are permitted by State law
17 and are not otherwise prohibited by paragraph
18 (6).
19 ‘‘(3) EXCEPTIONS.—Notwithstanding para20
graph (2), and subject to subparagraph (D), a
21 health insurance issuer offering health insurance
22 coverage in the individual market, may not impose
23 any of the following preexisting condition exclusion:
24 ‘‘(A) EXCLUSION NOT APPLICABLE TO
25 CERTAIN NEWBORNS.—In the case of an indi-
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1 vidual who, as of the last day of the 30-day pe2
riod beginning with the date of birth, is a de3
pendent of an enrollee in such coverage.
4 ‘‘(B) EXCLUSION NOT APPLICABLE TO
5 CERTAIN ADOPTED CHILDREN.—In the case of
6 a child who is adopted or placed for adoption
7 before attaining 18 years of age and who, as of
8 the last day of the 30-day period beginning on
9 the date of the adoption or placement for adop10
tion, is a dependent of an enrollee in such cov11
erage. The previous sentence shall not apply to
12 coverage before the date of such adoption or
13 placement for adoption.
14 ‘‘(C) EXCLUSION NOT APPLICABLE TO
15 PREGNANCY.—Relating to pregnancy as a pre16
existing condition.
17 ‘‘(D) LOSS IF BREAK IN COVERAGE.—Sub18
paragraphs (A) and (B) shall no longer apply
19 to an individual after the end of the first 63-
20 day period during all of which the individual
21 was not covered under any creditable coverage.
22 ‘‘(4) OPEN ENROLLMENT PERIODS.—A health
23 insurance issuer offering health insurance coverage
24 in the individual market may limit the applicability
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1 of the provisions of paragraph (1) to scheduled open
2 enrollment periods, provided that—
3 ‘‘(A) any such open enrollment period shall
4 not be less than 30 days;
5 ‘‘(B) any period between scheduled open
6 enrollment periods shall not exceed 24 months;
7 and
8 ‘‘(C) such limitation shall not apply to any
9 individual who qualifies for a special enrollment
10 period under paragraph (5).
11 ‘‘(5) SPECIAL ENROLLMENT PERIODS.—Subject
12 to subparagraphs (E) and (F), a health insurance
13 issuer offering health insurance coverage in the indi14
vidual market shall permit an individual who is an
15 eligible individual or a dependent to enroll in cov16
erage during a special enrollment period if the indi17
vidual experiences any of the following qualifying
18 events:
19 ‘‘(A) FOR DEPENDENT BENEFICIARIES.—
20 The individual becomes, by reason of marriage,
21 birth, adoption or placement for adoption, a de22
pendent of an individual enrolled in a plan of23
fered by the health insurance issuer and such
24 individual otherwise qualifies, under the terms
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1 of the plan, as eligible for coverage as a depend2
ent of such enrollee.
3 ‘‘(B) LOSS OF GROUP COVERAGE.—The in4
dividual loses coverage under a group health
5 plan as a result of—
6 ‘‘(i) loss of eligibility for the coverage
7 (including as a result of legal separation,
8 divorce, death, attaining an age at which
9 eligibility terminates, termination of em10
ployment, or reduction in the number of
11 hours of employment); or
12 ‘‘(ii) termination of the coverage by
13 the plan sponsor.
14 ‘‘(C) LOSS OF INDIVIDUAL COVERAGE.—
15 The individual loses individual market coverage
16 as a result of—
17 ‘‘(i) discontinuation of a plan as a re18
sult of a health insurance issuer ceasing to
19 offer coverage in the individual market in
20 accordance with section 2742(c)(2) (42
21 U.S.C. 300gg-42(c)(2)) of this title;
22 ‘‘(ii) expiration of COBRA, or other,
23 continuation coverage;
24 ‘‘(iii) ceasing to qualify, under the
25 terms of the coverage, as a dependent (in-
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1 cluding as a result of legal separation, di2
vorce, death, or attaining an age at which
3 eligibility terminates); and
4 ‘‘(iv) permanently moving outside the
5 State in which the coverage was issued, or
6 in the case of a network plan, outside the
7 plan’s service area.
8 ‘‘(D) LOSS OF ELIGIBILITY FOR A GOV9
ERNMENT COVERAGE PROGRAM.—The indi10
vidual loses coverage by ceasing to be eligible
11 for coverage under any of the following:
12 ‘‘(i) Part A or part B of title XVIII
13 of the Social Security Act (42 U.S.C.
14 1395c et seq., 1395j et seq.).
15 ‘‘(ii) Title XIX of the Social Security
16 Act (42 U.S.C. 1396 et seq.), other than
17 coverage consisting solely of benefits under
18 section 1928 (42 U.S.C. 1396s).
19 ‘‘(iii) Title XXI of the Social Security
20 Act (42 U.S.C. 1397aa et seq.).
21 ‘‘(iv) Chapter 55 of title 10.
22 ‘‘(v) Chapter 89 of title 5.
23 ‘‘(vi) A State health benefits risk pool.
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1 ‘‘(E) For purposes of this paragraph, loss
2 of coverage shall not include any of the fol3
lowing:
4 ‘‘(i) Voluntary termination of coverage
5 by an individual, except if such termination
6 is the result of circumstances described in
7 subparagraph (C)(iv).
8 ‘‘(ii) Termination of coverage by the
9 issuer or the plan sponsor of the coverage
10 for any reason described in paragraphs (1)
11 or (2) of section 2742(b) (300gg–42(b)) of
12 this title.
13 ‘‘(iii) Loss of any coverage that con14
sists solely of coverage of excepted benefits
15 (as defined in section 300gg–91(c) of this
16 title).
17 ‘‘(F) Any special enrollment period shall
18 not be less than 60 days and shall begin on the
19 date of the qualifying event.
20 ‘‘(6) STANDARD PREMIUM RATES.—With re21
spect to the premium rate charged by a health insur22
ance issuer for health insurance coverage offered in
23 the individual market, such rate, with respect to the
24 particular plan or coverage involved, shall not vary
25 based on any of the following health status-related
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1 factors in relation to an eligible individual or de2
pendent:
3 ‘‘(A) Health status.
4 ‘‘(B) Medical condition (including both
5 physical and mental illnesses).
6 ‘‘(C) Claims experience.
7 ‘‘(D) Receipt of health care.
8 ‘‘(E) Medical history.
9 ‘‘(F) Genetic information.
10 ‘‘(G) Evidence of insurability (including
11 conditions arising out of acts of domestic vio12
lence).
13 ‘‘(H) Disability.’’;
14 (2) by amending subsection (b) to read as fol15
lows:
16 ‘‘(b) DEFINITIONS.—For purposes of this section:
17 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible
18 individual’ means an individual who is eligible under
19 applicable State law to purchase individual health in20
surance coverage in the State.
21 ‘‘(2) DEPENDENT.—The term ‘dependent’
22 means an individual who, under the terms of the
23 coverage and applicable State law, qualifies to enroll
24 in such coverage as a dependent of an individual de25
scribed in paragraph (1).’’; and
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1 (3) by striking subsection (c) and redesignating
2 subsection (d) and the first subsection (e) as sub3
sections (c) and (d), respectively.
4 (b) CONFORMING AMENDMENT.—Section 2744 of the
5 Public Health Service Act (42 U.S.C. 300gg–44), as re6
stored and revived by section 2 of this Act, is repealed.
7 (c) EFFECTIVE DATE.—The amendments made by
8 this section shall apply with respect to health insurance
9 coverage offered for plan years beginning after the date
10 of the enactment of this Act.
11 TITLE III—INTERSTATE MARKET
12 FOR HEALTH INSURANCE
13 SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL
14 HEALTH INSURANCE COVERAGE.
15 (a) IN GENERAL.—Title XXVII of the Public Health
16 Service Act (42 U.S.C. 300gg et seq.), as restored by sec17
tion 2, is amended by adding at the end the following new
18 part:
19 ‘‘PART D—COOPERATIVE GOVERNING OF
20 INDIVIDUAL HEALTH INSURANCE COVERAGE
21 ‘‘SEC. 2795. DEFINITIONS.
22 ‘‘In this part:
23 ‘‘(1) PRIMARY STATE.—The term ‘primary
24 State’ means, with respect to individual health insur25
ance coverage offered by a health insurance issuer,
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1 the State designated by the issuer as the State
2 whose covered laws shall govern the health insurance
3 issuer in the sale of such coverage under this part.
4 An issuer, with respect to a particular policy, may
5 only designate one such State as its primary State
6 with respect to all such coverage it offers. Such an
7 issuer may not change the designated primary State
8 with respect to individual health insurance coverage
9 once the policy is issued, except that such a change
10 may be made upon renewal of the policy. With re11
spect to such designated State, the issuer is deemed
12 to be doing business in that State.
13 ‘‘(2) SECONDARY STATE.—The term ‘secondary
14 State’ means, with respect to individual health insur15
ance coverage offered by a health insurance issuer,
16 any State that is not the primary State. In the case
17 of a health insurance issuer that is selling a policy
18 in, or to a resident of, a secondary State, the issuer
19 is deemed to be doing business in that secondary
20 State.
21 ‘‘(3) HEALTH INSURANCE ISSUER.—The term
22 ‘health insurance issuer’ has the meaning given such
23 term in section 2791(b)(2), except that such an
24 issuer must be licensed in the primary State and be
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1 qualified to sell individual health insurance coverage
2 in that State.
3 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV4
ERAGE.—The term ‘individual health insurance cov5
erage’ means health insurance coverage offered in
6 the individual market, as defined in section
7 2791(e)(1), but does not include excepted benefits
8 described in section 2791(c).
9 ‘‘(5) APPLICABLE STATE AUTHORITY.—The
10 term ‘applicable State authority’ means, with respect
11 to a health insurance issuer in a State, the State in12
surance commissioner or official or officials des13
ignated by the State to enforce the requirements of
14 this title for the State with respect to the issuer.
15 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The
16 term ‘hazardous financial condition’ means that,
17 based on its present or reasonably anticipated finan18
cial condition, a health insurance issuer is unlikely
19 to be able—
20 ‘‘(A) to meet obligations to policyholders
21 with respect to known claims and reasonably
22 anticipated claims; or
23 ‘‘(B) to pay other obligations in the normal
24 course of business.
25 ‘‘(7) COVERED LAWS.—
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1 ‘‘(A) IN GENERAL.—The term ‘covered
2 laws’ means the laws, rules, regulations, agree3
ments, and orders governing the insurance busi4
ness pertaining to—
5 ‘‘(i) individual health insurance cov6
erage issued by a health insurance issuer;
7 ‘‘(ii) the offer, sale, rating (including
8 medical underwriting), renewal, and
9 issuance of individual health insurance cov10
erage to an individual;
11 ‘‘(iii) the provision to an individual in
12 relation to individual health insurance cov13
erage of health care and insurance related
14 services;
15 ‘‘(iv) the provision to an individual in
16 relation to individual health insurance cov17
erage of management, operations, and in18
vestment activities of a health insurance
19 issuer; and
20 ‘‘(v) the provision to an individual in
21 relation to individual health insurance cov22
erage of loss control and claims adminis23
tration for a health insurance issuer with
24 respect to liability for which the issuer pro25
vides insurance.
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1 ‘‘(B) EXCEPTION.—Such term does not in2
clude any law, rule, regulation, agreement, or
3 order governing the use of care or cost manage4
ment techniques, including any requirement re5
lated to provider contracting, network access or
6 adequacy, health care data collection, or quality
7 assurance.
8 ‘‘(8) STATE.—The term ‘State’ means only the
9 50 States and the District of Columbia.
10 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC11
TICES.—The term ‘unfair claims settlement prac12
tices’ means only the following practices:
13 ‘‘(A) Knowingly misrepresenting to claim14
ants and insured individuals relevant facts or
15 policy provisions relating to coverage at issue.
16 ‘‘(B) Failing to acknowledge with reason17
able promptness pertinent communications with
18 respect to claims arising under policies.
19 ‘‘(C) Failing to adopt and implement rea20
sonable standards for the prompt investigation
21 and settlement of claims arising under policies.
22 ‘‘(D) Failing to effectuate prompt, fair,
23 and equitable settlement of claims submitted in
24 which liability has become reasonably clear.
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1 ‘‘(E) Refusing to pay claims without con2
ducting a reasonable investigation.
3 ‘‘(F) Failing to affirm or deny coverage of
4 claims within a reasonable period of time after
5 having completed an investigation related to
6 those claims.
7 ‘‘(G) A pattern or practice of compelling
8 insured individuals or their beneficiaries to in9
stitute suits to recover amounts due under its
10 policies by offering substantially less than the
11 amounts ultimately recovered in suits brought
12 by them.
13 ‘‘(H) A pattern or practice of attempting
14 to settle or settling claims for less than the
15 amount that a reasonable person would believe
16 the insured individual or his or her beneficiary
17 was entitled by reference to written or printed
18 advertising material accompanying or made
19 part of an application.
20 ‘‘(I) Attempting to settle or settling claims
21 on the basis of an application that was materi22
ally altered without notice to, or knowledge or
23 consent of, the insured.
24 ‘‘(J) Failing to provide forms necessary to
25 present claims within 15 calendar days of a re-
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1 quests with reasonable explanations regarding
2 their use.
3 ‘‘(K) Attempting to cancel a policy in less
4 time than that prescribed in the policy or by the
5 law of the primary State.
6 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud
7 and abuse’ means an act or omission committed by
8 a person who, knowingly and with intent to defraud,
9 commits, or conceals any material information con10
cerning, one or more of the following:
11 ‘‘(A) Presenting, causing to be presented
12 or preparing with knowledge or belief that it
13 will be presented to or by an insurer, a rein14
surer, broker or its agent, false information as
15 part of, in support of or concerning a fact ma16
terial to one or more of the following:
17 ‘‘(i) An application for the issuance or
18 renewal of an insurance policy or reinsur19
ance contract.
20 ‘‘(ii) The rating of an insurance policy
21 or reinsurance contract.
22 ‘‘(iii) A claim for payment or benefit
23 pursuant to an insurance policy or reinsur24
ance contract.
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1 ‘‘(iv) Premiums paid on an insurance
2 policy or reinsurance contract.
3 ‘‘(v) Payments made in accordance
4 with the terms of an insurance policy or
5 reinsurance contract.
6 ‘‘(vi) A document filed with the com7
missioner or the chief insurance regulatory
8 official of another jurisdiction.
9 ‘‘(vii) The financial condition of an in10
surer or reinsurer.
11 ‘‘(viii) The formation, acquisition,
12 merger, reconsolidation, dissolution or
13 withdrawal from one or more lines of in14
surance or reinsurance in all or part of a
15 State by an insurer or reinsurer.
16 ‘‘(ix) The issuance of written evidence
17 of insurance.
18 ‘‘(x) The reinstatement of an insur19
ance policy.
20 ‘‘(B) Solicitation or acceptance of new or
21 renewal insurance risks on behalf of an insurer,
22 reinsurer, or other person engaged in the busi23
ness of insurance by a person who knows or
24 should know that the insurer or other person
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1 responsible for the risk is insolvent at the time
2 of the transaction.
3 ‘‘(C) Transaction of the business of insur4
ance in violation of laws requiring a license, cer5
tificate of authority or other legal authority for
6 the transaction of the business of insurance.
7 ‘‘(D) Attempt to commit, aiding or abet8
ting in the commission of, or conspiracy to com9
mit the acts or omissions specified in this para10
graph.
11 ‘‘SEC. 2796. APPLICATION OF LAW.
12 ‘‘(a) IN GENERAL.—The covered laws of the primary
13 State shall apply to individual health insurance coverage
14 offered by a health insurance issuer in the primary State
15 and in any secondary State, but only if the coverage and
16 issuer comply with the conditions of this section with re17
spect to the offering of coverage in any secondary State.
18 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC19
ONDARY STATE.—Except as provided in this section, a
20 health insurance issuer with respect to its offer, sale, rat21
ing (including medical underwriting), renewal, and
22 issuance of individual health insurance coverage in any
23 secondary State is exempt from any covered laws of the
24 secondary State (and any rules, regulations, agreements,
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1 or orders sought or issued by such State under or related
2 to such covered laws) to the extent that such laws would—
3 ‘‘(1) make unlawful, or regulate, directly or in4
directly, the operation of the health insurance issuer
5 operating in the secondary State, except that any
6 secondary State may require such an issuer—
7 ‘‘(A) to pay, on a nondiscriminatory basis,
8 applicable premium and other taxes (including
9 high-risk pool assessments) which are levied on
10 insurers and surplus lines insurers, brokers, or
11 policyholders under the laws of the State;
12 ‘‘(B) to register with and designate the
13 State insurance commissioner as its agent solely
14 for the purpose of receiving service of legal doc15
uments or process;
16 ‘‘(C) to submit to an examination of its fi17
nancial condition by the State insurance com18
missioner in any State in which the issuer is
19 doing business to determine the issuer’s finan20
cial condition, if—
21 ‘‘(i) the State insurance commissioner
22 of the primary State has not done an ex23
amination within the period recommended
24 by the National Association of Insurance
25 Commissioners; and
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1 ‘‘(ii) any such examination is con2
ducted in accordance with the examiners’
3 handbook of the National Association of
4 Insurance Commissioners and is coordi5
nated to avoid unjustified duplication and
6 unjustified repetition;
7 ‘‘(D) to comply with a lawful order
8 issued—
9 ‘‘(i) in a delinquency proceeding com10
menced by the State insurance commis11
sioner if there has been a finding of finan12
cial impairment under subparagraph (C);
13 or
14 ‘‘(ii) in a voluntary dissolution pro15
ceeding;
16 ‘‘(E) to comply with an injunction issued
17 by a court of competent jurisdiction, upon a pe18
tition by the State insurance commissioner al19
leging that the issuer is in hazardous financial
20 condition;
21 ‘‘(F) to participate, on a nondiscriminatory
22 basis, in any insurance insolvency guaranty as23
sociation or similar association to which a
24 health insurance issuer in the State is required
25 to belong;
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1 ‘‘(G) to comply with any State law regard2
ing fraud and abuse (as defined in section
3 2795(10)), except that if the State seeks an in4
junction regarding the conduct described in this
5 subparagraph, such injunction must be obtained
6 from a court of competent jurisdiction;
7 ‘‘(H) to comply with any State law regard8
ing unfair claims settlement practices (as de9
fined in section 2795(9)); or
10 ‘‘(I) to comply with the applicable require11
ments for independent review under section
12 2798 with respect to coverage offered in the
13 State;
14 ‘‘(2) require any individual health insurance
15 coverage issued by the issuer to be countersigned by
16 an insurance agent or broker residing in that Sec17
ondary State; or
18 ‘‘(3) otherwise discriminate against the issuer
19 issuing insurance in both the primary State and in
20 any secondary State.
21 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A
22 health insurance issuer shall provide the following notice,
23 in 12-point bold type, in any insurance coverage offered
24 in a secondary State under this part by such a health in25
surance issuer and at renewal of the policy, with the 5
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1 blank spaces therein being appropriately filled with the
2 name of the health insurance issuer, the name of primary
3 State, the name of the secondary State, the name of the
4 secondary State, and the name of the secondary State, re5
spectively, for the coverage concerned:
This policy is issued by lllll 6 and is governed by
the laws and regulations of the State of lllll7 , and
8 it has met all the laws of that State as determined by
9 that State’s Department of Insurance. This policy may be
10 less expensive than others because it is not subject to all
11 of the insurance laws and regulations of the State of
lllll12 , including coverage of some services or benefits
mandated by the law of the State of lllll13 . Ad14
ditionally, this policy is not subject to all of the consumer
15 protection laws or restrictions on rate changes of the State
of lllll16 . As with all insurance products, before pur17
chasing this policy, you should carefully review the policy
18 and determine what health care services the policy covers
19 and what benefits it provides, including any exclusions,
20 limitations, or conditions for such services or benefits.
21 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS
22 AND PREMIUM INCREASES.—
23 ‘‘(1) IN GENERAL.—For purposes of this sec24
tion, a health insurance issuer that provides indi25
vidual health insurance coverage to an individual
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1 under this part in a primary or secondary State may
2 not upon renewal—
3 ‘‘(A) move or reclassify the individual in4
sured under the health insurance coverage from
5 the class such individual is in at the time of
6 issue of the contract based on the health-status
7 related factors of the individual; or
8 ‘‘(B) increase the premiums assessed the
9 individual for such coverage based on a health
10 status-related factor or change of a health sta11
tus-related factor or the past or prospective
12 claim experience of the insured individual.
13 ‘‘(2) CONSTRUCTION.—Nothing in paragraph
14 (1) shall be construed to prohibit a health insurance
15 issuer—
16 ‘‘(A) from terminating or discontinuing
17 coverage or a class of coverage in accordance
18 with subsections (b) and (c) of section 2742;
19 ‘‘(B) from raising premium rates for all
20 policy holders within a class based on claims ex21
perience;
22 ‘‘(C) from changing premiums or offering
23 discounted premiums to individuals who engage
24 in wellness activities at intervals prescribed by
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173
1 the issuer, if such premium changes or incen2
tives—
3 ‘‘(i) are disclosed to the consumer in
4 the insurance contract;
5 ‘‘(ii) are based on specific wellness ac6
tivities that are not applicable to all indi7
viduals; and
8 ‘‘(iii) are not obtainable by all individ9
uals to whom coverage is offered;
10 ‘‘(D) from reinstating lapsed coverage; or
11 ‘‘(E) from retroactively adjusting the rates
12 charged an insured individual if the initial rates
13 were set based on material misrepresentation by
14 the individual at the time of issue.
15 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY
16 STATE.—A health insurance issuer may not offer for sale
17 individual health insurance coverage in a secondary State
18 unless that coverage is currently offered for sale in the
19 primary State.
20 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR
21 HEALTH INSURANCE ISSUERS.—Any State may require
22 that a person acting, or offering to act, as an agent or
23 broker for a health insurance issuer with respect to the
24 offering of individual health insurance coverage obtain a
25 license from that State, with commissions or other com-
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174
1 pensation subject to the provisions of the laws of that
2 State, except that a State may not impose any qualifica3
tion or requirement which discriminates against a non4
resident agent or broker.
5 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN6
SURANCE COMMISSIONER.—Each health insurance issuer
7 issuing individual health insurance coverage in both pri8
mary and secondary States shall submit—
9 ‘‘(1) to the insurance commissioner of each
10 State in which it intends to offer such coverage, be11
fore it may offer individual health insurance cov12
erage in such State—
13 ‘‘(A) a copy of the plan of operation or fea14
sibility study or any similar statement of the
15 policy being offered and its coverage (which
16 shall include the name of its primary State and
17 its principal place of business);
18 ‘‘(B) written notice of any change in its
19 designation of its primary State; and
20 ‘‘(C) written notice from the issuer of the
21 issuer’s compliance with all the laws of the pri22
mary State; and
23 ‘‘(2) to the insurance commissioner of each sec24
ondary State in which it offers individual health in25
surance coverage, a copy of the issuer’s quarterly fi-
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1 nancial statement submitted to the primary State,
2 which statement shall be certified by an independent
3 public accountant and contain a statement of opin4
ion on loss and loss adjustment expense reserves
5 made by—
6 ‘‘(A) a member of the American Academy
7 of Actuaries; or
8 ‘‘(B) a qualified loss reserve specialist.
9 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.—
10 Nothing in this section shall be construed to affect the
11 authority of any Federal or State court to enjoin—
12 ‘‘(1) the solicitation or sale of individual health
13 insurance coverage by a health insurance issuer to
14 any person or group who is not eligible for such in15
surance; or
16 ‘‘(2) the solicitation or sale of individual health
17 insurance coverage that violates the requirements of
18 the law of a secondary State which are described in
19 subparagraphs (A) through (H) of section
20 2796(b)(1).
21 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD22
MINISTRATIVE ACTION.—Nothing in this section shall be
23 construed to affect the authority of any State to enjoin
24 conduct in violation of that State’s laws described in sec25
tion 2796(b)(1).
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1 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.—
2 ‘‘(1) IN GENERAL.—Subject to the provisions of
3 subsection (b)(1)(G) (relating to injunctions) and
4 paragraph (2), nothing in this section shall be con5
strued to affect the authority of any State to make
6 use of any of its powers to enforce the laws of such
7 State with respect to which a health insurance issuer
8 is not exempt under subsection (b).
9 ‘‘(2) COURTS OF COMPETENT JURISDICTION.—
10 If a State seeks an injunction regarding the conduct
11 described in paragraphs (1) and (2) of subsection
12 (h), such injunction must be obtained from a Fed13
eral or State court of competent jurisdiction.
14 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this
15 section shall affect the authority of any State to bring ac16
tion in any Federal or State court.
17 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in
18 this section shall be construed to affect the applicability
19 of State laws generally applicable to persons or corpora20
tions.
21 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO
22 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a
23 health insurance issuer is offering coverage in a primary
24 State that does not accommodate residents of secondary
25 States or does not provide a working mechanism for resi-
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1 dents of a secondary State, and the issuer is offering cov2
erage under this part in such secondary State which has
3 not adopted a qualified high-risk pool as its acceptable al4
ternative mechanism (as defined in section 2744(c)(2)),
5 the issuer shall, with respect to any individual health in6
surance coverage offered in a secondary State under this
7 part, comply with the guaranteed availability requirements
8 for eligible individuals in section 2741.
9 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR
10 BEFORE ISSUER MAY SELL INTO SECONDARY
11 STATES.
12 ‘‘A health insurance issuer may not offer, sell, or
13 issue individual health insurance coverage in a secondary
14 State if the State insurance commissioner does not use
15 a risk-based capital formula for the determination of cap16
ital and surplus requirements for all health insurance
17 issuers.
18 ‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC19
ONDARY STATE.
20 ‘‘Effective beginning two years after the date of en21
actment of this part, an individual in a State may not
22 buy individual health insurance coverage in a secondary
23 State if the premium for individual health insurance in
24 the primary State (with respect to the individual) exceeds
25 the national average premium by 10 percent or more.
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1 ‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE2
DURES.
3 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur4
ance issuer may not offer, sell, or issue individual health
5 insurance coverage in a secondary State under the provi6
sions of this title unless—
7 ‘‘(1) both the secondary State and the primary
8 State have legislation or regulations in place estab9
lishing an independent review process for individuals
10 who are covered by individual health insurance cov11
erage; or
12 ‘‘(2) in any case in which the requirements of
13 paragraph (1) are not met with respect to the either
14 of such States, the issuer provides an independent
15 review mechanism substantially identical (as deter16
mined by the applicable State authority of such
17 State) to that prescribed in the ‘Health Carrier Ex18
ternal Review Model Act’ of the National Association
19 of Insurance Commissioners for all individuals who
20 purchase insurance coverage under the terms of this
21 part, except that, under such mechanism, the review
22 is conducted by an independent medical reviewer, or
23 a panel of such reviewers, with respect to whom the
24 requirements of subsection (b) are met.
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1 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL
2 REVIEWERS.—In the case of any independent review
3 mechanism referred to in subsection (a)(2)—
4 ‘‘(1) IN GENERAL.—In referring a denial of a
5 claim to an independent medical reviewer, or to any
6 panel of such reviewers, to conduct independent
7 medical review, the issuer shall ensure that—
8 ‘‘(A) each independent medical reviewer
9 meets the qualifications described in paragraphs
10 (2) and (3);
11 ‘‘(B) with respect to each review, each re12
viewer meets the requirements of paragraph (4)
13 and the reviewer, or at least 1 reviewer on the
14 panel, meets the requirements described in
15 paragraph (5); and
16 ‘‘(C) compensation provided by the issuer
17 to each reviewer is consistent with paragraph
18 (6).
19 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde20
pendent medical reviewer shall be a physician
21 (allopathic or osteopathic) or health care profes22
sional who—
23 ‘‘(A) is appropriately credentialed or li24
censed in one or more States to deliver health
25 care services; and
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1 ‘‘(B) typically treats the condition, makes
2 the diagnosis, or provides the type of treatment
3 under review.
4 ‘‘(3) INDEPENDENCE.—
5 ‘‘(A) IN GENERAL.—Subject to subpara6
graph (B), each independent medical reviewer
7 in a case shall—
8 ‘‘(i) not be a related party (as defined
9 in paragraph (7));
10 ‘‘(ii) not have a material familial, fi11
nancial, or professional relationship with
12 such a party; and
13 ‘‘(iii) not otherwise have a conflict of
14 interest with such a party (as determined
15 under regulations).
16 ‘‘(B) EXCEPTION.—Nothing in subpara17
graph (A) shall be construed to—
18 ‘‘(i) prohibit an individual, solely on
19 the basis of affiliation with the issuer,
20 from serving as an independent medical re21
viewer if—
22 ‘‘(I) a non-affiliated individual is
23 not reasonably available;
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1 ‘‘(II) the affiliated individual is
2 not involved in the provision of items
3 or services in the case under review;
4 ‘‘(III) the fact of such an affili5
ation is disclosed to the issuer and the
6 enrollee (or authorized representative)
7 and neither party objects; and
8 ‘‘(IV) the affiliated individual is
9 not an employee of the issuer and
10 does not provide services exclusively or
11 primarily to or on behalf of the issuer;
12 ‘‘(ii) prohibit an individual who has
13 staff privileges at the institution where the
14 treatment involved takes place from serv15
ing as an independent medical reviewer
16 merely on the basis of such affiliation if
17 the affiliation is disclosed to the issuer and
18 the enrollee (or authorized representative),
19 and neither party objects; or
20 ‘‘(iii) prohibit receipt of compensation
21 by an independent medical reviewer from
22 an entity if the compensation is provided
23 consistent with paragraph (6).
24 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL
25 IN SAME FIELD.—
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1 ‘‘(A) IN GENERAL.—In a case involving
2 treatment, or the provision of items or serv3
ices—
4 ‘‘(i) by a physician, a reviewer shall be
5 a practicing physician (allopathic or osteo6
pathic) of the same or similar specialty, as
7 a physician who, acting within the appro8
priate scope of practice within the State in
9 which the service is provided or rendered,
10 typically treats the condition, makes the
11 diagnosis, or provides the type of treat12
ment under review; or
13 ‘‘(ii) by a non-physician health care
14 professional, the reviewer, or at least 1
15 member of the review panel, shall be a
16 practicing non-physician health care pro17
fessional of the same or similar specialty
18 as the non-physician health care profes19
sional who, acting within the appropriate
20 scope of practice within the State in which
21 the service is provided or rendered, typi22
cally treats the condition, makes the diag23
nosis, or provides the type of treatment
24 under review.
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1 ‘‘(B) PRACTICING DEFINED.—For pur2
poses of this paragraph, the term ‘practicing’
3 means, with respect to an individual who is a
4 physician or other health care professional, that
5 the individual provides health care services to
6 individual patients on average at least 2 days
7 per week.
8 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an
9 external review relating to a child, a reviewer shall
10 have expertise under paragraph (2) in pediatrics.
11 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA12
TION.—Compensation provided by the issuer to an
13 independent medical reviewer in connection with a
14 review under this section shall—
15 ‘‘(A) not exceed a reasonable level; and
16 ‘‘(B) not be contingent on the decision ren17
dered by the reviewer.
18 ‘‘(7) RELATED PARTY DEFINED.—For purposes
19 of this section, the term ‘related party’ means, with
20 respect to a denial of a claim under a coverage relat21
ing to an enrollee, any of the following:
22 ‘‘(A) The issuer involved, or any fiduciary,
23 officer, director, or employee of the issuer.
24 ‘‘(B) The enrollee (or authorized represent25
ative).
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1 ‘‘(C) The health care professional that pro2
vides the items or services involved in the de3
nial.
4 ‘‘(D) The institution at which the items or
5 services (or treatment) involved in the denial
6 are provided.
7 ‘‘(E) The manufacturer of any drug or
8 other item that is included in the items or serv9
ices involved in the denial.
10 ‘‘(F) Any other party determined under
11 any regulations to have a substantial interest in
12 the denial involved.
13 ‘‘(8) DEFINITIONS.—For purposes of this sub14
section:
15 ‘‘(A) ENROLLEE.—The term ‘enrollee’
16 means, with respect to health insurance cov17
erage offered by a health insurance issuer, an
18 individual enrolled with the issuer to receive
19 such coverage.
20 ‘‘(B) HEALTH CARE PROFESSIONAL.—The
21 term ‘health care professional’ means an indi22
vidual who is licensed, accredited, or certified
23 under State law to provide specified health care
24 services and who is operating within the scope
25 of such licensure, accreditation, or certification.
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1 ‘‘SEC. 2800. ENFORCEMENT.
2 ‘‘(a) IN GENERAL.—Subject to subsection (b), with
3 respect to specific individual health insurance coverage the
4 primary State for such coverage has sole jurisdiction to
5 enforce the primary State’s covered laws in the primary
6 State and any secondary State.
7 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in
8 subsection (a) shall be construed to affect the authority
9 of a secondary State to enforce its laws as set forth in
10 the exception specified in section 2796(b)(1).
11 ‘‘(c) COURT INTERPRETATION.—In reviewing action
12 initiated by the applicable secondary State authority, the
13 court of competent jurisdiction shall apply the covered
14 laws of the primary State.
15 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case
16 of individual health insurance coverage offered in a sec17
ondary State that fails to comply with the covered laws
18 of the primary State, the applicable State authority of the
19 secondary State may notify the applicable State authority
20 of the primary State.’’.
21 (b) EFFECTIVE DATE.—The amendment made by
22 subsection (a) shall apply to individual health insurance
23 coverage offered, issued, or sold after the date that is one
24 year after the date of the enactment of this Act.
25 (c) GAO ONGOING STUDY AND REPORTS.—
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1 (1) STUDY.—The Comptroller General of the
2 United States shall conduct an ongoing study con3
cerning the effect of the amendment made by sub4
section (a) on—
5 (A) the number of uninsured and under-in6
sured;
7 (B) the availability and cost of health in8
surance policies for individuals with pre-existing
9 medical conditions;
10 (C) the availability and cost of health in11
surance policies generally;
12 (D) the elimination or reduction of dif13
ferent types of benefits under health insurance
14 policies offered in different States; and
15 (E) cases of fraud or abuse relating to
16 health insurance coverage offered under such
17 amendment and the resolution of such cases.
18 (2) ANNUAL REPORTS.—The Comptroller Gen19
eral shall submit to Congress an annual report, after
20 the end of each of the 5 years following the effective
21 date of the amendment made by subsection (a), on
22 the ongoing study conducted under paragraph (1).
23 (d) SEVERABILITY.—If any provision of the section
24 or the application of such provision to any person or cir25
cumstance is held to be unconstitutional, the remainder
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1 of this section and the application of the provisions of such
2 to any other person or circumstance shall not be affected.
3 TITLE IV—LAWSUIT ABUSE
4 REFORMS
5 SEC. 401. CHANGE IN BURDEN OF PROOF BASED ON COM6
PLIANCE WITH CLINICAL PRACTICE GUIDE7
LINES.
8 (a) SELECTION AND ISSUANCE OF CLINICAL PRAC9
TICES GUIDELINES.—
10 (1) IN GENERAL.—The Secretary of Health and
11 Human Services (in this section referred to as the
12 ‘‘Secretary’’) shall provide for the selection and
13 issuance of clinical practice guidelines for treatment
14 of medical conditions (each in this subsection re15
ferred to as a ‘‘guideline’’) in accordance with para16
graphs (2) and (3).
17 (2) DEVELOPMENT PROCESS.—Not later than
18 90 days after the date of enactment of this title, the
19 Secretary shall enter into a contract with a qualified
20 physician consensus-building organization (such as
21 the Physician Consortium for Performance Improve22
ment), in concert and agreement with physician spe23
cialty organizations, to develop guidelines. The con24
tract shall require that the organization submit
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1 guidelines to the agency not later than 18 months
2 after the date of the enactment of this title.
3 (3) ISSUANCE.—
4 (A) IN GENERAL.—Not later than 2 years
5 after the date of the enactment of this title, the
6 Secretary shall, after notice and opportunity for
7 public comment, make a rule that provides for
8 the issuance of the guidelines submitted under
9 paragraph (2).
10 (B) LIMITATION.—The Secretary may not
11 make a rule that includes guidelines other than
12 those submitted under paragraph (2).
13 (C) DISSEMINATION.—The Secretary shall
14 post such guidelines on the public Internet Web
15 page of the Department of Health and Human
16 Services.
17 (4) MAINTENANCE.—Not later than 4 years
18 after the date of enactment of this title, and every
19 2 years thereafter, the Secretary shall review the
20 guidelines and shall, as necessary, enter into con21
tracts similar to the contract described in paragraph
22 (2), and issue guidelines in a manner similar to the
23 issuance of guidelines under paragraph (3).
24 (b) USE.—
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1 (1) USE BY DEFENDANT TO CHANGE THE BUR2
DEN OF PROOF.—If a defendant in a health care
3 lawsuit relating to treatment of an individual estab4
lishes by a preponderance of the evidence that the
5 treatment was provided in a manner consistent with
6 an applicable guideline issued under subsection (a),
7 the defendant may not be held liable unless the
8 plaintiff establishes the liability of the defendant by
9 clear and convincing evidence.
10 (2) LIMITATION ON INTRODUCTION AS EVI11
DENCE AGAINST A DEFENDANT.—Guidelines issued
12 under subsection (a) may not be introduced as evi13
dence of negligence or deviation in the standard of
14 care in any health care lawsuit unless they have pre15
viously been introduced by the defendant.
16 (3) NO PRESUMPTION OF NEGLIGENCE AGAINST
17 A DEFENDANT.—There shall be no presumption of
18 negligence with respect to treatment if a health care
19 provider provides the treatment in a manner incon20
sistent with such guidelines.
21 (c) CONSTRUCTION.—Nothing in this section shall be
22 construed as preventing a State from—
23 (1) replacing their current medical malpractice
24 rules with rules that rely, as a defense, upon a
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1 health care provider’s compliance with a guideline
2 issued under subsection (a); or
3 (2) applying additional guidelines or limitations
4 on liability that are in addition to, but not in lieu
5 of, the guidelines issued under subsection (a).
6 SEC. 402. STATE GRANTS TO CREATE EXPERT PANELS AND
7 ADMINISTRATIVE HEALTH CARE TRIBUNALS.
8 Part P of title III of the Public Health Service Act
9 (42 U.S.C. 280g et seq.) is amended by adding at the end
10 the following:
11 ‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE
12 HEALTH CARE TRIBUNALS.
13 ‘‘(a) IN GENERAL.—The Secretary may award grants
14 to States for the development, implementation, and eval15
uation of administrative health care tribunals that comply
16 with this section, for the resolution of disputes concerning
17 injuries allegedly caused by health care providers.
18 ‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.—
19 To be eligible to receive a grant under this section, a State
20 shall submit to the Secretary an application at such time,
21 in such manner, and containing such information as may
22 be required by the Secretary. A grant shall be awarded
23 under this section on such terms and conditions as the
24 Secretary determines appropriate.
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1 ‘‘(c) REPRESENTATION BY COUNSEL.—A State that
2 receives a grant under this section may not preclude any
3 party to a dispute before an administrative health care tri4
bunal operated under such grant from obtaining legal rep5
resentation during any review by the expert panel under
6 subsection (d), the administrative health care tribunal
7 under subsection (e), or a State court under subsection
8 (f).
9 ‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER
10 GUIDELINES.—
11 ‘‘(1) IN GENERAL.—If, in any health care liabil12
ity action against a health care provider, the health
13 care provider alleges, in any response to the claim14
ant’s filing, that the health care provider adhered to
15 an applicable practice guideline in the provision of
16 health care items or services to the claimant, then
17 further proceedings on the health care liability ac18
tion shall be suspended prior to discovery pro19
ceedings, until the completion of a review of the ac20
tion by an independent expert panel in accordance
21 with this subsection.
22 ‘‘(2) COMPOSITION.—
23 ‘‘(A) IN GENERAL.—The members of each
24 expert panel under this subsection shall be ap25
pointed by the head of the State agency respon-
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1 sible for health. Each expert panel shall be
2 composed of no fewer than 3 members and not
3 more than 5 members. At least one-half of such
4 members shall be medical experts (either physi5
cians or health care professionals).
6 ‘‘(B) LICENSURE AND EXPERTISE.—Each
7 physician or health care professional appointed
8 to an expert panel under subparagraph (A)
9 shall—
10 ‘‘(i) be appropriately credentialed or
11 licensed in one or more States to deliver
12 health care services; and
13 ‘‘(ii) typically treat the condition,
14 make the diagnosis, or provide the type of
15 treatment that is under review.
16 ‘‘(C) INDEPENDENCE.—
17 ‘‘(i) IN GENERAL.—Subject to clause
18 (ii), each individual appointed to an expert
19 panel under this paragraph shall—
20 ‘‘(I) not have a material familial,
21 financial, or professional relationship
22 with a party involved in the dispute
23 reviewed by the panel; and
24 ‘‘(II) not otherwise have a con25
flict of interest with such a party.
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1 ‘‘(ii) EXCEPTION.—Nothing in clause
2 (i) shall be construed to prohibit an indi3
vidual who has staff privileges at an insti4
tution where the treatment involved in the
5 dispute was provided from serving as a
6 member of an expert panel merely on the
7 basis of such affiliation, if the affiliation is
8 disclosed to the parties and neither party
9 objects.
10 ‘‘(D) PRACTICING HEALTH CARE PROFES11
SIONAL IN SAME FIELD.—
12 ‘‘(i) IN GENERAL.—In a dispute be13
fore an expert panel that involves treat14
ment, or the provision of items or serv15
ices—
16 ‘‘(I) by a physician, the medical
17 experts on the expert panel shall be
18 practicing physicians (allopathic or os19
teopathic) of the same or similar spe20
cialty as a physician who typically
21 treats the condition, makes the diag22
nosis, or provides the type of treat23
ment under review; or
24 ‘‘(II) by a health care profes25
sional other than a physician, at least
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1 two medical experts on the expert
2 panel shall be practicing physicians
3 (allopathic or osteopathic) of the same
4 or similar specialty as the health care
5 professional who typically treats the
6 condition, makes the diagnosis, or
7 provides the type of treatment under
8 review, and, if determined appropriate
9 by the State agency, an additional
10 medical expert shall be a practicing
11 health care professional (other than
12 such a physician) of such a same or
13 similar specialty.
14 ‘‘(ii) PRACTICING DEFINED.—In this
15 paragraph, the term ‘practicing’ means,
16 with respect to an individual who is a phy17
sician or other health care professional,
18 that the individual provides health care
19 services to individual patients on average
20 at least 2 days a week.
21 ‘‘(E) PEDIATRIC EXPERTISE.—In the case
22 of dispute relating to a child, at least 1 medical
23 expert on the expert panel shall have expertise
24 described in subparagraph (D)(i) in pediatrics.
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1 ‘‘(F) NO CIVIL LIABILITY FOR MEM2
BERS.—No civil action shall be brought in any
3 court against any member of an expert panel
4 for any act done, failure to act, or statement or
5 opinion made, within the scope of individual’s
6 as a member of the expert panel
7 ‘‘(3) DETERMINATION.—
8 ‘‘(A) IN GENERAL.—After a review under
9 paragraph (1), an expert panel shall make a de10
termination as to the liability of the parties in11
volved and compensation.
12 ‘‘(B) CONSIDERATIONS IN MAKING DETER13
MINATIONS.—In making a determination under
14 this subsection as to the liability of parties in15
volved and compensation, the following shall
16 apply:
17 ‘‘(i) TREATMENT OF CLINICAL PRAC18
TICE GUIDELINES.—An expert panel shall
19 acknowledge the ability of physicians to de20
part from the recommendations in clinical
21 practice guidelines, when appropriate, in
22 the care of individual patients.
23 ‘‘(ii) LIMITATION.—An expert panel
24 shall not make a finding of negligence
25 from the mere fact that a treatment or
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1 procedure was unsuccessful or failed to
2 bring the best result.
3 ‘‘(4) EARLY OFFER.—If the parties to a dispute
4 before an expert panel under this subsection accept
5 the determination of the expert panel concerning li6
ability and compensation, such compensation shall
7 be paid to the claimant and the claimant shall agree
8 to forgo any further action against the health care
9 providers involved.
10 ‘‘(5) FAILURE TO ACCEPT.—If any party de11
cides not to accept the expert panel’s determination,
12 the matter shall be referred to an administrative
13 health care tribunal created pursuant to this section.
14 ‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.—
15 ‘‘(1) IN GENERAL.—Upon the failure of any
16 party to accept the determination of an expert panel
17 under subsection (d), the parties shall have the right
18 to request a hearing concerning the liability or com19
pensation involved by an administrative health care
20 tribunal established by the State involved.
21 ‘‘(2) REQUIREMENTS.—In establishing an ad22
ministrative health care tribunal under this section,
23 a State shall—
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1 ‘‘(A) ensure that such tribunals are pre2
sided over by special judges with health care ex3
pertise;
4 ‘‘(B) provide authority to such judges to
5 make binding rulings, rendered in written deci6
sions, on standards of care, causation, com7
pensation, and related issues with reliance on
8 independent expert witnesses commissioned by
9 the tribunal;
10 ‘‘(C) establish gross negligence as the legal
11 standard for the tribunal; and
12 ‘‘(D) allow the admission into evidence of
13 the recommendation made by the expert panel
14 under subsection (d).
15 ‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION
16 OF ADMINISTRATIVE REMEDIES.—
17 ‘‘(1) RIGHT TO FILE.—If any party to a dispute
18 before a health care tribunal under subsection (e) is
19 not satisfied with the determinations of the tribunal,
20 the party shall have the right to file their claim in
21 a State court of competent jurisdiction.
22 ‘‘(2) FORFEIT OF AWARDS.—Any party filing
23 an action in a State court in accordance with para24
graph (1) shall forfeit any compensation award
25 made under subsection (e).
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1 ‘‘(3) ADMISSIBILITY.—The determinations of
2 the expert panel and the administrative health care
3 tribunal pursuant to subsections (d) and (e) with re4
spect to a State court proceeding under paragraph
5 (1) shall be admissible into evidence in any such
6 State court proceeding.
7 ‘‘(4) TREATMENT OF CERTAIN EXPERT PANEL
8 AND ADMINISTRATIVE HEALTH CARE TRIBUNAL
9 FINDINGS.—
10 ‘‘(A) WORK PRODUCT.—No finding by an
11 expert panel under subsection (d) or adminis12
trative health care tribunal under subsection (e)
13 that the defendant applicable eligible profes14
sional breached the standard of care as set
15 forth under the prescribed practice guidelines
16 shall constitute negligence per se or conclusive
17 evidence of liability.
18 ‘‘(B) FINDING RELATING TO CLINICAL
19 PRACTICE GUIDELINES.—If an administrative
20 health care tribunal did not make a finding
21 under subsection (e) that there was an applica22
ble clinical practice guideline that the defendant
23 adhered to, with respect to the State court pro24
ceeding under paragraph (1) the State court
25 may issue summary judgment in favor of the
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1 defendant health care professional unless the
2 claimant is able to show otherwise by clear and
3 convincing evidence. If an administrative health
4 care tribunal made a finding under subsection
5 (e) that there was an applicable clinical practice
6 guideline that the defendant adhered to, with
7 respect to a State court proceeding under para8
graph (1) the State court shall issue summary
9 judgment in favor of the applicable health care
10 professional unless the claimant is able to show
11 otherwise by clear and convincing evidence.
12 ‘‘(C) FINDING RELATING TO STANDARD OF
13 CARE.—Any finding an expert panel or adminis14
trative health care tribunal under subsection (d)
15 or (e), respectively, that the defendant did not
16 breach the standard of care as set forth under
17 the prescribed clinical practice guidelines or
18 that the defendant’s failure to conform to the
19 required standard was neither the cause in fact
20 nor the proximate cause of the plaintiff’s injury
21 or that the plaintiff did not incur any damages
22 as a result shall be given deference by the State
23 court involved and shall entitle the defendant to
24 summary judgment unless the plaintiff is able
25 to show by clear and convincing evidence that
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1 the expert panel or health care tribunal, respec2
tively, was in error and that there is a genuine
3 issue as to a material fact in the case.
4 ‘‘(g) DEFINITION.—In this section, the term ‘health
5 care provider’ means any person or entity required by
6 State or Federal laws or regulations to be licensed, reg7
istered, or certified to provide health care services, and
8 being either so licensed, registered, or certified, or exempt9
ed from such requirement by other statute or regulation.
10 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There
11 are authorized to be appropriated for any fiscal year such
12 sums as may be necessary for purposes of making grants
13 to States under this section.’’.
14 SEC. 403. PAYMENT OF DAMAGES AND RECOVERY OF
15 COSTS IN HEALTH CARE LAWSUITS.
16 (a) AUTHORIZATION OF PAYMENT OF FUTURE DAM17
AGES TO CLAIMANTS IN HEALTH CARE LAWSUITS.—In
18 any health care lawsuit, if an award of future damages,
19 without reduction to present value, equaling or exceeding
20 $50,000 is made against a party with sufficient insurance
21 or other assets to fund a periodic payment of such a judg22
ment, the court shall, at the request of any party, enter
23 a judgment ordering that the future damages be paid by
24 periodic payments, in accordance with the Uniform Peri25
odic Payment of Judgments Act promulgated by the Na-
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1 tional Conference of Commissioners on Uniform State
2 Laws.
3 (b) RECOVERY OF COSTS; PAYMENT OF AWARD.—
4 In any health care lawsuit, the court may supervise the
5 arrangements for payment of damages to protect against
6 conflicts of interest that may have the effect of reducing
7 the amount of damages awarded that are actually paid
8 to claimants. In particular, in any health care lawsuit in
9 which the attorney for a party claims a financial stake
10 in the outcome by virtue of a contingent fee, the court
11 shall have the power to restrict the payment of a claim12
ant’s damage recovery to such attorney, and to redirect
13 such damages to the claimant based upon the interests
14 of justice and principles of equity
15 (c) APPLICABILITY.—This section applies to all ac16
tions which have not been first set for trial or retrial be17
fore the effective date of this title.
18 (d) STATUTE OF LIMITATIONS.—Except in the case
19 of a State law that provides for a shorter period of time,
20 the time for the commencement of a health care lawsuit
21 shall be no more than 3 years after the date of manifesta22
tion of injury or 1 year after the claimant discovers, or
23 through the use of reasonable diligence should have discov24
ered, the injury, whichever occurs first. In no event shall
25 the time for commencement of a health care lawsuit exceed
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1 3 years after the date of manifestation of injury unless
2 tolled for any of the following—
3 (1) upon proof of fraud;
4 (2) intentional concealment; or
5 (3) the presence of a foreign body, which has no
6 therapeutic or diagnostic purpose or effect, in the
7 person of the injured person.
8 Except in the case of a State law that provides for a short9
er period of time, actions by a minor shall be commenced
10 within 3 years from the date of the alleged manifestation
11 of injury except that actions by a minor under the full
12 age of 6 years shall be commenced within 3 years of mani13
festation of injury or prior to the minor’s 8th birthday,
14 whichever provides a longer period. Such time limitation
15 shall be tolled for minors for any period during which a
16 parent or guardian and a health care provider or health
17 care organization have committed fraud or collusion in the
18 failure to bring an action on behalf of the injured minor.
19 (e) FAIR SHARE RULE.—In any health care lawsuit,
20 each party shall be liable for that party’s several share
21 of any damages only and not for the share of any other
22 person. Each party shall be liable only for the amount of
23 damages allocated to such party in direct proportion to
24 such party’s percentage of responsibility. Whenever a
25 judgment of liability is rendered as to any party, a sepa-
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1 rate judgment shall be rendered against each such party
2 for the amount allocated to such party. For purposes of
3 this section, the trier of fact shall determine the propor4
tion of responsibility of each party for the claimant’s
5 harm.
6 (f) APOLOGIES.—In any health care lawsuit, if a
7 claimant receives any expression of regret for any act per8
taining to conduct giving rise to the health care lawsuit,
9 such expression of regret, notwithstanding any applicable
10 rule of evidence may not be admitted into evidence in the
11 health care lawsuit.
12 SEC. 404. DEFINITIONS.
13 In this title:
14 (1) ALTERNATIVE DISPUTE RESOLUTION SYS15
TEM; ADR.—The term ‘‘alternative dispute resolution
16 system’’ or ‘‘ADR’’ means a system that provides
17 for the resolution of health care lawsuits in a man18
ner other than through a civil action brought in a
19 State or Federal court.
20 (2) CLAIMANT.—The term ‘‘claimant’’ means
21 any person who brings a health care lawsuit, includ22
ing a person who asserts or claims a right to legal
23 or equitable contribution, indemnity, or subrogation,
24 arising out of a health care liability claim or action,
25 and any person on whose behalf such a claim is as-
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1 serted or such an action is brought, whether de2
ceased, incompetent, or a minor.
3 (3) FEDERAL TAX BENEFIT.—A claimant shall
4 be treated as receiving a Federal tax benefit with re5
spect to payment for items or services if—
6 (A) such payment is compensation by in7
surance—
8 (i) which constitutes medical care, and
9 (ii) with respect to the payment of
10 premiums for which the claimant, or the
11 employer of the claimant, was allowed an
12 exclusion from gross income, a deduction,
13 or a credit for Federal income tax pur14
poses,
15 (B) a deduction was allowed with respect
16 to such payment for Federal income tax pur17
poses, or
18 (C) such payment was from an Archer
19 MSA (as defined in section 220(d) of the Inter20
nal Revenue Code of 1986), a health savings
21 account (as defined in section 223(d) of such
22 Code), a flexible spending arrangement (as de23
fined in section 106(c)(2) of such Code), or a
24 health reimbursement arrangement which is
25 treated as employer-provided coverage under an
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1 accident or health plan for purposes of section
2 106 of such Code.
3 (4) HEALTH CARE LAWSUIT.—The term
4 ‘‘health care lawsuit’’ means any health care liability
5 claim concerning the provision of health care goods
6 or services brought in a Federal court or in a State
7 court or pursuant to an alternative dispute resolu8
tion system, if such claim concerns items or services
9 for which coverage is provided under title XVIII,
10 XIX, or XXI of the Social Security Act or for which
11 the claimant receives a Federal tax benefit, against
12 a health care provider, a health care organization, or
13 the manufacturer, distributor, supplier, marketer,
14 promoter, or seller of a medical product, regardless
15 of the theory of liability on which the claim is based,
16 or the number of claimants, plaintiffs, defendants,
17 or other parties, or the number of claims or causes
18 of action, in which the claimant alleges a health care
19 liability claim. Such term does not include a claim
20 or action which is based on criminal liability; which
21 seeks civil fines or penalties paid to Federal govern22
ment; or which is grounded in antitrust.
23 (5) HEALTH CARE LIABILITY ACTION.—The
24 term ‘‘health care liability action’’ means a civil ac25
tion brought in a State or Federal court or pursuant
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1 to an alternative dispute resolution system, against
2 a health care provider, a health care organization, or
3 the manufacturer, distributor, supplier, marketer,
4 promoter, or seller of a medical product, regardless
5 of the theory of liability on which the claim is based,
6 or the number of plaintiffs, defendants, or other par7
ties, or the number of causes of action, in which the
8 claimant alleges a health care liability claim.
9 (6) HEALTH CARE LIABILITY CLAIM.—The
10 term ‘‘health care liability claim’’ means a demand
11 by any person, whether or not pursuant to ADR,
12 against a health care provider, health care organiza13
tion, or the manufacturer, distributor, supplier, mar14
keter, promoter, or seller of a medical product, in15
cluding, but not limited to, third-party claims, cross16
claims, counter-claims, or contribution claims, which
17 are based upon the provision of, use of, or payment
18 for (or the failure to provide, use, or pay for) health
19 care services or medical products, regardless of the
20 theory of liability on which the claim is based, or the
21 number of plaintiffs, defendants, or other parties, or
22 the number of causes of action.
23 (7) HEALTH CARE ORGANIZATION.—The term
24 ‘‘health care organization’’ means any person or en25
tity which is obligated to provide or pay for health
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1 benefits under any health plan, including any person
2 or entity acting under a contract or arrangement
3 with a health care organization to provide or admin4
ister any health benefit.
5 (8) HEALTH CARE PROVIDER.—The term
6 ‘‘health care provider’’ means any person or entity
7 required by State or Federal laws or regulations to
8 be licensed, registered, or certified to provide health
9 care services, and being either so licensed, reg10
istered, or certified, or exempted from such require11
ment by other statute or regulation.
12 (9) HEALTH CARE GOODS OR SERVICES.—The
13 term ‘‘health care goods or services’’ means any
14 goods or services provided by a health care organiza15
tion, provider, or by any individual working under
16 the supervision of a health care provider, that relates
17 to the diagnosis, prevention, or treatment of any
18 human disease or impairment, or the assessment or
19 care of the health of human beings.
20 (10) MEDICAL PRODUCT.—The term ‘‘medical
21 product’’ means a drug, device, or biological product
22 intended for humans, and the terms ‘‘drug’’, ‘‘de23
vice’’, and ‘‘biological product’’ have the meanings
24 given such terms in sections 201(g)(1) and 201(h)
25 of the Federal Food, Drug and Cosmetic Act (21
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1 U.S.C. 321(g)(1) and (h)) and section 351(a) of the
2 Public Health Service Act (42 U.S.C. 262(a)), re3
spectively, including any component or raw material
4 used therein, but excluding health care services.
5 (11) MEDICAL TREATMENT.—The term ‘‘med6
ical treatment’’ means the provision of any goods or
7 services by a health care provider or by any indi8
vidual working under the supervision of a health
9 care provider, that relates to the diagnosis, preven10
tion, or treatment of any human disease or impair11
ment, or the assessment or care of the health of
12 human beings.
13 (12) RECOVERY.—The term ‘‘recovery’’ means
14 the net sum recovered after deducting any disburse15
ments or costs incurred in connection with prosecu16
tion or settlement of the claim, including all costs
17 paid or advanced by any person. Costs of health care
18 incurred by the plaintiff and the attorneys’ office
19 overhead costs or charges for legal services are not
20 deductible disbursements or costs for such purpose.
21 (13) STATE.—The term ‘‘State’’ means each of
22 the several States, the District of Columbia, the
23 Commonwealth of Puerto Rico, the Virgin Islands,
24 Guam, American Samoa, the Northern Mariana Is25
lands, the Trust Territory of the Pacific Islands, and
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1 any other territory or possession of the United
2 States, or any political subdivision thereof.
3 SEC. 405. EFFECT ON OTHER LAWS.
4 (a) VACCINE INJURY.—
5 (1) To the extent that title XXI of the Public
6 Health Service Act establishes a Federal rule of law
7 applicable to a civil action brought for a vaccine-re8
lated injury or death—
9 (A) this title does not affect the application
10 of the rule of law to such an action; and
11 (B) any rule of law prescribed by this title
12 in conflict with a rule of law of such title XXI
13 shall not apply to such action.
14 (2) If there is an aspect of a civil action
15 brought for a vaccine-related injury or death to
16 which a Federal rule of law under title XXI of the
17 Public Health Service Act does not apply, then this
18 title or otherwise applicable law (as determined
19 under this title) will apply to such aspect of such ac20
tion.
21 (b) OTHER FEDERAL LAW.—Except as provided in
22 this section, nothing in this title shall be deemed to affect
23 any defense available to a defendant in a health care law24
suit or action under any other provision of Federal law.
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1 SEC. 406. APPLICABILITY; EFFECTIVE DATE.
2 This title shall apply to any health care lawsuit
3 brought in a Federal or State court, or subject to an alter4
native dispute resolution system, that is initiated on or
5 after the date of the enactment of this title, except that
6 any health care lawsuit arising from an injury occurring
7 prior to the date of the enactment of this title shall be
8 governed by the applicable statute of limitations provisions
9 in effect at the time the injury occurred.
10 TITLE V—WELLNESS AND
11 PREVENTION
12 SEC. 501. PROVIDING FINANCIAL INCENTIVES FOR TREAT13
MENT COMPLIANCE.
14 (a) LIMITATION ON EXCEPTION FOR WELLNESS
15 PROGRAMS UNDER HIPAA DISCRIMINATION RULES.—
16 (1) EMPLOYEE RETIREMENT INCOME SECURITY
17 ACT OF 1974 AMENDMENT.—Section 702(b)(2) of the
18 Employee Retirement Income Security Act of 1974
19 (29 U.S.C. 1182(b)(2)) is amended by adding after
20 and below subparagraph (B) the following:
21 ‘‘In applying subparagraph (B), a group health plan
22 (or a health insurance issuer with respect to health
23 insurance coverage) may vary premiums and cost24
sharing by up to 50 percent of the value of the bene25
fits under the plan (or coverage) based on participa-
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1 tion (or lack of participation) in a standards-based
2 wellness program.’’.
3 (2) PHSA AMENDMENT.—Section 2702(b)(2)
4 of the Public Health Service Act (42 U.S.C. 300gg–
5 1(b)(2)) is amended by adding after and below sub6
paragraph (B) the following:
7 ‘‘In applying subparagraph (B), a group health plan
8 (or a health insurance issuer with respect to health
9 insurance coverage) may vary premiums and cost10
sharing by up to 50 percent of the value of the bene11
fits under the plan (or coverage) based on participa12
tion (or lack of participation) in a standards-based
13 wellness program.’’.
14 (3) IRC AMENDMENT.—Section 9802(b)(2) of
15 the Internal Revenue Code of 1986 is amended by
16 adding after and below subparagraph (B) the fol17
lowing:
18 ‘‘In applying subparagraph (B), a group health plan
19 may vary premiums and cost-sharing by up to 50
20 percent of the value of the benefits under the plan
21 based on participation (or lack of participation) in a
22 standards-based wellness program.’’.
23 (b) EFFECTIVE DATE.—The amendments made by
24 subsection (a) shall apply to plan years beginning more
25 than 1 year after the date of the enactment of this Act.
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1 TITLE VI—TRANSPARENCY AND
2 INSURANCE REFORM MEASURES
3 SEC. 601. RECEIPT AND RESPONSE TO REQUESTS FOR
4 CLAIM INFORMATION.
5 (a) IN GENERAL.—Title XXVII of the Public Health
6 Service Act is amended by inserting after section 2713 the
7 following new section:
8 ‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR
9 CLAIM INFORMATION.
10 ‘‘(a) REQUIREMENT.—
11 ‘‘(1) IN GENERAL.—In the case of health insur12
ance coverage offered in connection with a group
13 health plan, not later than the 30th day after the
14 date a health insurance issuer receives a written re15
quest for a written report of claim information from
16 the plan, plan sponsor, or plan administrator, the
17 health insurance issuer shall provide the requesting
18 party the report, subject to the succeeding provisions
19 of this section.
20 ‘‘(2) EXCEPTION.—The health insurance issuer
21 is not obligated to provide a report under this sub22
section regarding a particular employer or group
23 health plan more than twice in any 12-month period
24 and is not obligated to provide such a report in the
25 case of an employer with fewer than 50 employees.
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1 ‘‘(3) DEADLINE.—A plan, plan sponsor, or plan
2 administrator must request a report under this sub3
section before or on the second anniversary of the
4 date of termination of coverage under a group health
5 plan issued by the health insurance issuer.
6 ‘‘(b) FORM OF REPORT; INFORMATION TO BE IN7
CLUDED.—
8 ‘‘(1) IN GENERAL.—A health insurance issuer
9 shall provide the report of claim information under
10 subsection (a)—
11 ‘‘(A) in a written report;
12 ‘‘(B) through an electronic file transmitted
13 by secure electronic mail or a file transfer pro14
tocol site; or
15 ‘‘(C) by making the required information
16 available through a secure Web site or Web por17
tal accessible by the requesting plan, plan spon18
sor, or plan administrator.
19 ‘‘(2) INFORMATION TO BE INCLUDED.—A re20
port of claim information provided under subsection
21 (a) shall contain all information available to the
22 health insurance issuer that is responsive to the re23
quest made under such subsection, including, subject
24 to subsection (c), protected health information, for
25 the 36-month period preceding the date of the report
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1 or the period specified by subparagraphs (D), (E),
2 and (F) of paragraph (3), if applicable, or for the
3 entire period of coverage, whichever period is short4
er.
5 ‘‘(3) REQUIRED INFORMATION.—Subject to
6 subsection (c), a report provided under subsection
7 (a) shall include the following:
8 ‘‘(A) Aggregate paid claims experience by
9 month, including claims experience for medical,
10 dental, and pharmacy benefits, as applicable.
11 ‘‘(B) Total premium paid by month.
12 ‘‘(C) Total number of covered employees
13 on a monthly basis by coverage tier, including
14 whether coverage was for—
15 ‘‘(i) an employee only;
16 ‘‘(ii) an employee with dependents
17 only;
18 ‘‘(iii) an employee with a spouse only;
19 or
20 ‘‘(iv) an employee with a spouse and
21 dependents.
22 ‘‘(D) The total dollar amount of claims
23 pending as of the date of the report.
24 ‘‘(E) A separate description and individual
25 claims report for any individual whose total
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1 paid claims exceed $15,000 during the 12-
2 month period preceding the date of the report,
3 including the following information related to
4 the claims for that individual—
5 ‘‘(i) a unique identifying number,
6 characteristic, or code for the individual;
7 ‘‘(ii) the amounts paid;
8 ‘‘(iii) dates of service; and
9 ‘‘(iv) applicable procedure codes and
10 diagnosis codes.
11 ‘‘(F) For claims that are not part of the
12 information described in a previous subpara13
graph, a statement describing precertification
14 requests for hospital stays of 5 days or longer
15 that were made during the 30-day period pre16
ceding the date of the report.
17 ‘‘(c) LIMITATIONS ON DISCLOSURE.—
18 ‘‘(1) IN GENERAL.—A health insurance issuer
19 may not disclose protected health information in a
20 report of claim information provided under this sec21
tion if the health insurance issuer is prohibited from
22 disclosing that information under another State or
23 Federal law that imposes more stringent privacy re24
strictions than those imposed under Federal law
25 under the HIPAA privacy regulations. To withhold
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1 information in accordance with this subsection, the
2 health insurance issuer must—
3 ‘‘(A) notify the plan, plan sponsor, or plan
4 administrator requesting the report that infor5
mation is being withheld; and
6 ‘‘(B) provide to the plan, plan sponsor, or
7 plan administrator a list of categories of claim
8 information that the health insurance issuer has
9 determined are subject to the more stringent
10 privacy restrictions under another State or Fed11
eral law.
12 ‘‘(2) PROTECTION.—A plan sponsor is entitled
13 to receive protected health information under sub14
paragraph (E) and (F) of subsection (b)(3) and sub15
section (d) only after an appropriately authorized
16 representative of the plan sponsor makes to the
17 health insurance issuer a certification substantially
18 similar to the following certification: ‘I hereby certify
19 that the plan documents comply with the require20
ments of section 164.504(f)(2) of title 45, Code of
21 Federal Regulations, and that the plan sponsor will
22 safeguard and limit the use and disclosure of pro23
tected health information that the plan sponsor may
24 receive from the group health plan to perform the
25 plan administration functions.’.
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1 ‘‘(3) RESULTS.—A plan sponsor that does not
2 provide the certification required by paragraph (2) is
3 not entitled to receive the protected health informa4
tion described by subparagraphs (E) and (F) of sub5
section (b)(3) and subsection (d), but is entitled to
6 receive a report of claim information that includes
7 the information described by subparagraphs (A)
8 through (D) of subsection (b)(3).
9 ‘‘(4) INFORMATION.—In the case of a request
10 made under subsection (a) after the date of termi11
nation of coverage, the report must contain all infor12
mation available to the health insurance issuer as of
13 the date of the report that is responsive to the re14
quest, including protected health information, and
15 including the information described by subsection
16 (b)(3), for the period described by subsection (b)(2)
17 preceding the date of termination of coverage or for
18 the entire policy period, whichever period is shorter.
19 Notwithstanding this subsection, the report may not
20 include the protected health information described
21 by subparagraphs (E) and (F) of subsection (b)(3)
22 unless a certification has been provided in accord23
ance with paragraph (2).
24 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.—
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1 ‘‘(1) REVIEW.—On receipt of the report re2
quired by subsection (a), the plan, plan sponsor, or
3 plan administrator may review the report and, not
4 later than the 10th day after the date the report is
5 received, may make a written request to the health
6 insurance issuer for additional information in ac7
cordance with this subsection for specified individ8
uals.
9 ‘‘(2) REQUEST.—With respect to a request for
10 additional information concerning specified individ11
uals for whom claims information has been provided
12 under subsection (b)(3)(E), the health insurance
13 issuer shall provide additional information on the
14 prognosis or recovery if available and, for individuals
15 in active case management, the most recent case
16 management information, including any future ex17
pected costs and treatment plan, that relate to the
18 claims for that individual.
19 ‘‘(3) RESPONSE.—The health insurance issuer
20 must respond to the request for additional informa21
tion under this subsection not later than the 15th
22 day after the date of such request unless the re23
questing plan, plan sponsor, or plan administrator
24 agrees to a request for additional time.
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1 ‘‘(4) LIMITATION.—The health insurance issuer
2 is not required to produce the report described by
3 this subsection unless a certification has been pro4
vided in accordance with subsection (c)(2).
5 ‘‘(5) COMPLIANCE WITH SECTION DOES NOT
6 CREATE LIABILITY.—A health insurance issuer that
7 releases information, including protected health in8
formation, in accordance with this subsection has
9 not violated a standard of care and is not liable for
10 civil damages resulting from, and is not subject to
11 criminal prosecution for, releasing that information.
12 ‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this
13 section is meant to limit States from enacting additional
14 laws in addition to the provisions of this section, but not
15 in lieu of such provisions.
16 ‘‘(f) DEFINITIONS.—In this section:
17 ‘‘(1) The terms ‘employer’, ‘plan administrator’,
18 and ‘plan sponsor’ have the meanings given such
19 terms in section 3 of the Employee Retirement In20
come Security Act of 1974.
21 ‘‘(2) The term ‘HIPAA privacy regulations’ has
22 the meaning given such term in section 1180(b)(3)
23 of the Social Security Act.
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1 ‘‘(3) The term ‘protected health information’
2 has the meaning given such term under the HIPAA
3 privacy regulations.’’.
4 (b) EFFECTIVE DATE.—The amendment made by
5 subsection (a) shall take effect on the date of the enact6
ment of this Act.
7 TITLE VII—QUALITY
8 SEC. 701. PROHIBITION ON CERTAIN USES OF DATA OB9
TAINED FROM COMPARATIVE EFFECTIVE10
NESS RESEARCH OR FROM PATIENT-CEN11
TERED OUTCOMES RESEARCH; ACCOUNTING
12 FOR PERSONALIZED MEDICINE AND DIF13
FERENCES IN PATIENT TREATMENT RE14
SPONSE.
15 (a) IN GENERAL.—Notwithstanding any other provi16
sion of law, the Secretary of Health and Human Serv17
ices—
18 (1) shall not use data obtained from the con19
duct of comparative effectiveness research or pa20
tient-centered outcomes research, including such re21
search that is conducted or supported using funds
22 appropriated under the American Recovery and Re23
investment Act of 2009 (Public Law 111–5), to deny
24 coverage of an item or service under a Federal
25 health care program (as defined in section 1128B(f)
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1 of the Social Security Act (42 U.S.C. 1320a–7b(f)));
2 and
3 (2) shall ensure that comparative effectiveness
4 research and patient-centered outcomes research
5 conducted or supported by the Federal Government
6 accounts for factors contributing to differences in
7 the treatment response and treatment preferences of
8 patients, including patient-reported outcomes,
9 genomics and personalized medicine, the unique
10 needs of health disparity populations, and indirect
11 patient benefits.
12 (b) CONSULTATION AND APPROVAL REQUIRED.—
13 Nothing the Federal Coordinating Council for Compara14
tive Effectiveness Research finds can be released in final
15 form until after consultation with and approved by rel16
evant physician specialty organizations.
17 (c) RULE OF CONSTRUCTION.—Nothing in this sec18
tion shall be construed as affecting the authority of the
19 Commissioner of Food and Drugs under the Federal
20 Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)
21 or the Public Health Service Act (42 U.S.C. 201 et seq.).
22 SEC. 702. ESTABLISHMENT OF PERFORMANCE-BASED
23 QUALITY MEASURES.
24 Not later than January 1, 2016, the Secretary of
25 Health and Human Services shall submit to Congress a
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1 proposal for a formalized process for the development of
2 performance-based quality measures that could be applied
3 to physicians’ services under the Medicare program under
4 title XVIII of the Social Security Act (42 U.S.C. 1395
5 et seq.). Such proposal shall be in concert and agreement
6 with the Physician Consortium for Performance Improve7
ment and shall only utilize measures agreed upon by each
8 physician specialty organization.
9 TITLE VIII—STATE
10 TRANSPARENCY PLAN PORTAL
11 SEC. 801. PROVIDING INFORMATION ON HEALTH COV12
ERAGE OPTIONS AND HEALTH CARE PRO13
VIDERS.
14 (a) STATE-BASED PORTAL.—A State (by itself or
15 jointly with other States) may contract with a private enti16
ty to establish a Health Plan and Provider Portal Web
17 site (referred to in this section as a ‘‘plan portal’’) for
18 the purposes of providing standardized information—
19 (1) on health insurance plans that have been
20 certified to be available for purchase in that State;
21 and
22 (2) on price and quality information on health
23 care providers (including physicians, hospitals, and
24 other health care institutions).
25 (b) PROHIBITIONS.—
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1 (1) DIRECT ENROLLMENT.—A plan portal may
2 not directly enroll individuals in health insurance
3 plans or under a State Medicaid plan or a State
4 children’s health insurance plan.
5 (2) CONFLICTS OF INTEREST.—
6 (A) COMPANIES.—A health insurance
7 issuer offering a health insurance plan through
8 a plan portal may not—
9 (i) be the private entity developing
10 and maintaining a plan portal under this
11 section; or
12 (ii) have an ownership interest in such
13 private entity or in the plan portal.
14 (B) INDIVIDUALS.—An individual em15
ployed by a health insurance issuer offering a
16 health insurance plan through a plan portal
17 may not serve as a director or officer for—
18 (i) the private entity developing and
19 maintaining a plan portal under this sec20
tion; or
21 (ii) the plan portal.
22 (c) CONSTRUCTION.—Nothing in this section shall be
23 construed to prohibit health insurance brokers and agents
24 from—
25 (1) utilizing the plan portal for any purpose; or
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1 (2) marketing or offering health insurance
2 products.
3 (d) STATE DEFINED.—In this section, the term
4 ‘‘State’’ has the meaning given such term for purposes of
5 title XIX of the Social Security Act.
6 (e) HEALTH INSURANCE PLANS.—For purposes of
7 this section, the term ‘‘health insurance plan’’ does not
8 include coverage of excepted benefits, as defined in section
9 2791(c) of the Public Health Service Act (42 U.S.C.
10 300gg–91(c)).
11 TITLE IX—PATIENT FREEDOM
12 OF CHOICE
13 SEC. 901. GUARANTEEING FREEDOM OF CHOICE AND CON14
TRACTING FOR PATIENTS UNDER MEDICARE.
15 (a) IN GENERAL.—Section 1802 of the Social Secu16
rity Act (42 U.S.C. 1395a) is amended to read as follows:
17 ‘‘FREEDOM OF CHOICE AND CONTRACTING BY PATIENT
18 GUARANTEED
19 ‘‘SEC. 1802. (a) BASIC FREEDOM OF CHOICE.—Any
20 individual entitled to insurance benefits under this title
21 may obtain health services from any institution, agency,
22 or person qualified to participate under this title if such
23 institution, agency, or person undertakes to provide that
24 individual such services.
25 ‘‘(b) FREEDOM TO CONTRACT BY MEDICARE BENE26
FICIARIES.—
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1 ‘‘(1) IN GENERAL.—Subject to the provisions of
2 this subsection, nothing in this title shall prohibit a
3 Medicare beneficiary from entering into a contract
4 with an eligible professional (whether or not the pro5
fessional is a participating or non-participating phy6
sician or practitioner) for any item or service cov7
ered under this title.
8 ‘‘(2) SUBMISSION OF CLAIMS.—Any Medicare
9 beneficiary that enters into a contract under this
10 section with an eligible professional shall be per11
mitted to submit a claim for payment under this
12 title for services furnished by such professional, and
13 such payment shall be made in the amount that
14 would otherwise apply to such professional under
15 this title except that where such professional is con16
sidered to be non-participating, payment shall be
17 paid as if the professional were participating. Pay18
ment made under this title for any item or service
19 provided under the contract shall not render the pro20
fessional a participating or non-participating physi21
cian or practitioner, and as such, requirements of
22 this title that may otherwise apply to a participating
23 or non-participating physician or practitioner would
24 not apply with respect to any items or services fur25
nished under the contract.
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1 ‘‘(3) BENEFICIARY PROTECTIONS.—
2 ‘‘(A) IN GENERAL.—Paragraph (1) shall
3 not apply to any contract unless—
4 ‘‘(i) the contract is in writing, is
5 signed by the Medicare beneficiary and the
6 eligible professional, and establishes all
7 terms of the contract (including specific
8 payment for items and services covered by
9 the contract) before any item or service is
10 provided pursuant to the contract, and the
11 beneficiary shall be held harmless for any
12 subsequent payment charged for an item
13 or service in excess of the amount estab14
lished under the contract during the period
15 the contract is in effect;
16 ‘‘(ii) the contract contains the items
17 described in subparagraph (B); and
18 ‘‘(iii) the contract is not entered into
19 at a time when the Medicare beneficiary is
20 facing an emergency medical condition or
21 urgent health care situation.
22 ‘‘(B) ITEMS REQUIRED TO BE INCLUDED
23 IN CONTRACT.—Any contract to provide items
24 and services to which paragraph (1) applies
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1 shall clearly indicate to the Medicare beneficiary
2 that by signing such contract the beneficiary—
3 ‘‘(i) agrees to be responsible for pay4
ment to such eligible professional for such
5 items or services under the terms of and
6 amounts established under the contract;
7 ‘‘(ii) agrees to be responsible for sub8
mitting claims under this title to the Sec9
retary, and to any other supplemental in10
surance plan that may provide supple11
mental insurance, for such items or serv12
ices furnished under the contract if such
13 items or services are covered by this title,
14 unless otherwise provided in the contract
15 under subparagraph (C)(i); and
16 ‘‘(iii) acknowledges that no limits or
17 other payment incentives that may other18
wise apply under this title (such as the
19 limits under subsection (g) of section 1848
20 or incentives under subsection (a)(5), (m),
21 (q), and (p) of such section) shall apply to
22 amounts that may be charged, or paid to
23 a beneficiary for, such items or services.
24 Such contract shall also clearly indicate whether
25 the eligible professional is excluded from par-
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1 ticipation under the Medicare program under
2 section 1128.
3 ‘‘(C) BENEFICIARY ELECTIONS UNDER
4 THE CONTRACT.—Any Medicare beneficiary
5 that enters into a contract under this section
6 may elect to negotiate, as a term of the con7
tract, a provision under which—
8 ‘‘(i) the eligible professional shall file
9 claims on behalf of the beneficiary with the
10 Secretary and any supplemental insurance
11 plan for items or services furnished under
12 the contract if such items or services are
13 covered under this title or under the plan;
14 and
15 ‘‘(ii) the beneficiary assigns payment
16 to the eligible professional for any claims
17 filed by, or on behalf of, the beneficiary
18 with the Secretary and any supplemental
19 insurance plan for items or services fur20
nished under the contract.
21 ‘‘(D) EXCLUSION OF DUAL ELIGIBLE INDI22
VIDUALS.—Paragraph (1) shall not apply to
23 any contract if a beneficiary who is eligible for
24 medical assistance under title XIX is a party to
25 the contract.
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1 ‘‘(4) LIMITATION ON ACTUAL CHARGE AND
2 CLAIM SUBMISSION REQUIREMENT NOT APPLICA3
BLE.—Section 1848(g) shall not apply with respect
4 to any item or service provided to a Medicare bene5
ficiary under a contract described in paragraph (1).
6 ‘‘(5) CONSTRUCTION.—Nothing in this section
7 shall be construed—
8 ‘‘(A) to prohibit any eligible professional
9 from maintaining an election and acting as a
10 participating or non-participating physician or
11 practitioner with respect to any patient not cov12
ered under a contract established under this
13 section; and
14 ‘‘(B) as changing the items and services
15 for which an eligible professional may bill under
16 this title.
17 ‘‘(6) DEFINITIONS.—In this subsection:
18 ‘‘(A) MEDICARE BENEFICIARY.—The term
19 ‘Medicare beneficiary’ means an individual who
20 is entitled to benefits under part A or enrolled
21 under part B.
22 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term
23 ‘eligible professional’ has the meaning given
24 such term in section 1848(k)(3)(B).
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1 ‘‘(C) EMERGENCY MEDICAL CONDITION.—
2 The term ‘emergency medical condition’ means
3 a medical condition manifesting itself by acute
4 symptoms of sufficient severity (including se5
vere pain) such that a prudent layperson, with
6 an average knowledge of health and medicine,
7 could reasonably expect the absence of imme8
diate medical attention to result in—
9 ‘‘(i) serious jeopardy to the health of
10 the individual or, in the case of a pregnant
11 woman, the health of the woman or her
12 unborn child;
13 ‘‘(ii) serious impairment to bodily
14 functions; or
15 ‘‘(iii) serious dysfunction of any bodily
16 organ or part.
17 ‘‘(D) URGENT HEALTH CARE SITUA18
TION.—The term ‘urgent health care situation’
19 means services furnished to an individual who
20 requires services to be furnished within 12
21 hours in order to avoid the likely onset of an
22 emergency medical condition.’’.
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1 SEC. 902. PREEMPTION OF STATE LAWS LIMITING
2 CHARGES FOR ELIGIBLE PROFESSIONAL
3 SERVICES.
4 (a) IN GENERAL.—No State may impose a limit on
5 the amount of charges for services, furnished by an eligible
6 professional (as defined in subsection (k)(3)(B) of section
7 1848 of the Social Security Act, 42 U.S.C. 1395w–4), for
8 which payment is made under such section, and any such
9 limit is hereby preempted.
10 (b) STATE.—In this section, the term ‘‘State’’ in11
cludes the District of Columbia, Puerto Rico, the Virgin
12 Islands, Guam, and American Samoa.
13 SEC. 903. HEALTH CARE PROVIDER LICENSURE CANNOT BE
14 CONDITIONED ON PARTICIPATION IN A
15 HEALTH PLAN.
16 (a) IN GENERAL.—The Secretary of Health and
17 Human Services and any State (as a condition of receiving
18 Federal financial participation under title XIX of the So19
cial Security Act) may not require any health care pro20
vider to participate in any health plan as a condition of
21 licensure of the provider in any State.
22 (b) DEFINITIONS.—In this section:
23 (1) HEALTH PLAN.—The term ‘‘health plan’’
24 has the meaning given such term in section 1171(5)
25 of the Social Security Act (42 U.S.C. 1320d(5)).
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1 (2) HEALTH CARE PROVIDER.—The term
2 ‘‘health care provider’’ means any person or entity
3 that is required by State or Federal laws or regula4
tions to be licensed, registered, or certified to pro5
vide health care services and is so licensed, reg6
istered, or certified, or exempted from such require7
ment by other statute or regulation.
8 (3) STATE.—The term ‘‘State’’ has the mean9
ing given such term for purposes of title XIX of the
10 Social Security Act.
11 SEC. 904. BAD DEBT DEDUCTION FOR DOCTORS TO PAR12
TIALLY OFFSET THE COST OF PROVIDING UN13
COMPENSATED CARE REQUIRED TO BE PRO14
VIDED UNDER AMENDMENTS MADE BY THE
15 EMERGENCY MEDICAL TREATMENT AND
16 LABOR ACT.
17 (a) IN GENERAL.—Section 166 of the Internal Rev18
enue Code of 1986 (relating to bad debts) is amended by
19 redesignating subsection (f) as subsection (g) and by in20
serting after subsection (e) the following new subsection:
21 ‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR22
TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED
23 CARE REQUIRED TO BE PROVIDED.—
24 ‘‘(1) AMOUNT OF DEDUCTION.—
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1 ‘‘(A) IN GENERAL.—For purposes of sub2
section (a), the basis for determining the
3 amount of any deduction for an eligible
4 EMTALA debt shall be treated as being equal
5 to the Medicare payment amount.
6 ‘‘(B) MEDICARE PAYMENT AMOUNT.—For
7 purposes of subparagraph (A), the Medicare
8 payment amount with respect to an eligible
9 EMTALA debt is the fee schedule amount es10
tablished under section 1848 of the Social Secu11
rity Act for the physicians’ service (to which
12 such debt relates) as if the service were pro13
vided to an individual enrolled under part B of
14 title XVIII of such Act.
15 ‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes
16 of this section, the term ‘eligible EMTALA debt’
17 means any debt if—
18 ‘‘(A) such debt arose as a result of physi19
cians’ services—
20 ‘‘(i) which were performed in an
21 EMTALA hospital by a board-certified
22 physician (whether as part of medical
23 screening or necessary stabilizing treat24
ment and whether as an emergency depart-
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1 ment physician, as an on-call physician, or
2 otherwise), and
3 ‘‘(ii) which were required to be pro4
vided under section 1867 of the Social Se5
curity Act (42 U.S.C. 1395dd), and
6 ‘‘(B) such debt is owed—
7 ‘‘(i) to such physician, or
8 ‘‘(ii) to an entity if—
9 ‘‘(I) such entity is a corporation
10 and the sole shareholder of such cor11
poration is such physician, or
12 ‘‘(II) such entity is a partnership
13 and any deduction under this sub14
section with respect to such debt is al15
located to such physician or to an en16
tity described in subclause (I).
17 ‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur18
poses of this subsection, the term ‘board-certified
19 physician’ means any physician (as defined in sec20
tion 1861(r) of the Social Security Act (42 U.S.C.
21 1395x(r))) who is certified by the American Board
22 of Emergency Medicine or other appropriate medical
23 specialty board for the specialty in which the physi24
cian practices, or who meets comparable require25
ments, as identified by the Secretary of the Treasury
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1 in consultation with Secretary of Health and Human
2 Services.
3 ‘‘(4) OTHER DEFINITIONS.—For purposes of
4 this subsection—
5 ‘‘(A) EMTALA HOSPITAL.—The term
6 ‘EMTALA hospital’ means any hospital having
7 a hospital emergency department which is re8
quired to comply with section 1867 of the So9
cial Security Act (42 U.S.C. 1395dd) (relating
10 to examination and treatment for emergency
11 medical conditions and women in labor).
12 ‘‘(B) PHYSICIANS’ SERVICES.—The term
13 ‘physicians’ services’ has the meaning given
14 such term in section 1861(q) of the Social Se15
curity Act (42 U.S.C. 1395x(q)).’’.
16 (b) EFFECTIVE DATE.—The amendments made by
17 this section shall apply to debts arising from services per18
formed in taxable years beginning after the date of the
19 enactment of this Act.
20 SEC. 905. RIGHT OF CONTRACT WITH HEALTH CARE PRO21
VIDERS.
22 (a) IN GENERAL.—The Secretary of Health and
23 Human Services shall not preclude an enrollee, partici24
pant, or beneficiary in a health benefits plan from entering
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1 into any contract or arrangement for health care with any
2 health care provider.
3 (b) HEALTH BENEFITS PLAN DEFINED.—
4 (1) IN GENERAL.—In this section, subject to
5 paragraph (2), the term ‘‘health benefits plan’’
6 means any of the following:
7 (A) Group health plan (as defined in sec8
tion 2791 of the Public Health Service Act).
9 (B) Health insurance coverage (as defined
10 in section 2791 of such Act).
11 (C) A health benefits plan under chapter
12 89 of title 5, United States Code.
13 (2) EXCLUSION OF MEDICAID AND TRICARE.—
14 Such term does not include a health plan partici15
pating in—
16 (A) the Medicaid program under title XIX
17 of the Social Security Act; or
18 (B) the TRICARE program under chapter
19 55 of title 10, United States Code.
20 (c) HEALTH CARE PROVIDER DEFINED.—In this
21 section, the term ‘‘health care provider’’ means—
22 (1) a physician, as defined in paragraphs (1),
23 (2), (3), and (4) of section 1861(r) of the Social Se24
curity Act (42 U.S.C. 1395x(r)); and
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1 (2) a health care practitioner described in sec2
tion 1842(b)(18)(C) of such Act (42 U.S.C.
3 1395u(b)(18)(C)).
4 TITLE X—QUALITY HEALTH
5 CARE COALITION
6 SEC. 1001. QUALITY HEALTH CARE COALITION.
7 (a) APPLICATION OF THE FEDERAL ANTITRUST
8 LAWS TO HEALTH CARE PROFESSIONALS NEGOTIATING
9 WITH HEALTH PLANS.—
10 (1) IN GENERAL.—Any health care profes11
sionals who are engaged in negotiations with a
12 health plan regarding the terms of any contract
13 under which the professionals provide health care
14 items or services for which benefits are provided
15 under such plan shall, in connection with such nego16
tiations, be exempt from the Federal antitrust laws.
17 (2) LIMITATION.—
18 (A) NO NEW RIGHT FOR COLLECTIVE CES19
SATION OF SERVICE.—The exemption provided
20 in paragraph (1) shall not confer any new right
21 to participate in any collective cessation of serv22
ice to patients not already permitted by existing
23 law.
24 (B) NO CHANGE IN NATIONAL LABOR RE25
LATIONS ACT.—This section applies only to
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1 health care professionals excluded from the Na2
tional Labor Relations Act. Nothing in this sec3
tion shall be construed as changing or amend4
ing any provision of the National Labor Rela5
tions Act, or as affecting the status of any
6 group of persons under that Act.
7 (3) NO APPLICATION TO FEDERAL PRO8
GRAMS.—Nothing in this section shall apply to nego9
tiations between health care professionals and health
10 plans pertaining to benefits provided under any of
11 the following:
12 (A) The Medicare Program under title
13 XVIII of the Social Security Act (42 U.S.C.
14 1395 et seq.).
15 (B) The Medicaid program under title XIX
16 of the Social Security Act (42 U.S.C. 1396 et
17 seq.).
18 (C) The SCHIP program under title XXI
19 of the Social Security Act (42 U.S.C. 1397aa et
20 seq.).
21 (D) Chapter 55 of title 10, United States
22 Code (relating to medical and dental care for
23 members of the uniformed services).
24 (E) Chapter 17 of title 38, United States
25 Code (relating to Veterans’ medical care).
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1 (F) Chapter 89 of title 5, United States
2 Code (relating to the Federal employees’ health
3 benefits program).
4 (G) The Indian Health Care Improvement
5 Act (25 U.S.C. 1601 et seq.).
6 (b) DEFINITIONS.—In this section, the following defi7
nitions shall apply:
8 (1) ANTITRUST LAWS.—The term ‘‘antitrust
9 laws’’—
10 (A) has the meaning given it in subsection
11 (a) of the first section of the Clayton Act (15
12 U.S.C. 12(a)), except that such term includes
13 section 5 of the Federal Trade Commission Act
14 (15 U.S.C. 45) to the extent such section ap15
plies to unfair methods of competition; and
16 (B) includes any State law similar to the
17 laws referred to in subparagraph (A).
18 (2) GROUP HEALTH PLAN.—The term ‘‘group
19 health plan’’ means an employee welfare benefit plan
20 to the extent that the plan provides medical care (in21
cluding items and services paid for as medical care)
22 to employees or their dependents (as defined under
23 the terms of the plan) directly or through insurance,
24 reimbursement, or otherwise.
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1 (3) GROUP HEALTH PLAN, HEALTH INSURANCE
2 ISSUER.—The terms ‘‘group health plan’’ and
3 ‘‘health insurance issuer’’ include a third-party ad4
ministrator or other person acting for or on behalf
5 of such plan or issuer.
6 (4) HEALTH CARE SERVICES.—The term
7 ‘‘health care services’’ means any services for which
8 payment may be made under a health plan, includ9
ing services related to the delivery or administration
10 of such services.
11 (5) HEALTH CARE PROFESSIONAL.—The term
12 ‘‘health care professional’’ means any individual or
13 entity that provides health care items or services,
14 treatment, assistance with activities of daily living,
15 or medications to patients and who, to the extent re16
quired by State or Federal law, possesses specialized
17 training that confers expertise in the provision of
18 such items or services, treatment, assistance, or
19 medications.
20 (6) HEALTH INSURANCE COVERAGE.—The term
21 ‘‘health insurance coverage’’ means benefits con22
sisting of medical care (provided directly, through
23 insurance or reimbursement, or otherwise and in24
cluding items and services paid for as medical care)
25 under any hospital or medical service policy or cer-
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1 tificate, hospital or medical service plan contract, or
2 health maintenance organization contract offered by
3 a health insurance issuer.
4 (7) HEALTH INSURANCE ISSUER.—The term
5 ‘‘health insurance issuer’’ means an insurance com6
pany, insurance service, or insurance organization
7 (including a health maintenance organization) that
8 is licensed to engage in the business of insurance in
9 a State and that is subject to State law regulating
10 insurance. Such term does not include a group
11 health plan.
12 (8) HEALTH MAINTENANCE ORGANIZATION.—
13 The term ‘‘health maintenance organization’’
14 means—
15 (A) a federally qualified health mainte16
nance organization (as defined in section
17 1301(a) of the Public Health Service Act (42
18 U.S.C. 300e(a)));
19 (B) an organization recognized under State
20 law as a health maintenance organization; or
21 (C) a similar organization regulated under
22 State law for solvency in the same manner and
23 to the same extent as such a health mainte24
nance organization.
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1 (9) HEALTH PLAN.—The term ‘‘health plan’’
2 means a group health plan or a health insurance
3 issuer that is offering health insurance coverage.
4 (10) MEDICAL CARE.—The term ‘‘medical
5 care’’ means amounts paid for—
6 (A) the diagnosis, cure, mitigation, treat7
ment, or prevention of disease, or amounts paid
8 for the purpose of affecting any structure or
9 function of the body; and
10 (B) transportation primarily for and essen11
tial to receiving items and services referred to
12 in subparagraph (A).
13 (11) PERSON.—The term ‘‘person’’ includes a
14 State or unit of local government.
15 (12) STATE.—The term ‘‘State’’ includes the
16 several States, the District of Columbia, Puerto
17 Rico, the Virgin Islands of the United States, Guam,
18 American Samoa, and the Commonwealth of the
19 Northern Mariana Islands.
20 (c) EFFECTIVE DATE.—This section shall take effect
21 on the date of the enactment of this Act and shall not
22 apply with respect to conduct occurring before such date.
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