HR 2047 IH
106th CONGRESS
1st Session
H. R. 2047
To amend title I of the Employee Retirement Income Security Act of
1974 to improve access and choice for entrepreneurs with small businesses with
respect to medical care for their employees.
IN THE HOUSE OF REPRESENTATIVES
June 8, 1999
Mr. TALENT (for himself and Mr. DOOLEY of California) introduced the
following bill; which was referred to the Committee on Education and the
Workforce
A BILL
To amend title I of the Employee Retirement Income Security Act of
1974 to improve access and choice for entrepreneurs with small businesses with
respect to medical care for their employees.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Small Business Access and Choice for
Entrepreneurs Act of 1999'.
SEC. 2. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) IN GENERAL- Subtitle B of title I of the Employee Retirement Income
Security Act of 1974 is amended by adding after part 7 the following new
part:
`Part 8--Rules Governing Association Health Plans
`SEC. 801. ASSOCIATION HEALTH PLANS.
`(a) IN GENERAL- For purposes of this part, the term `association health
plan' means a group health plan--
`(1) whose sponsor is (or is deemed under this part to be) described in
subsection (b); and
`(2) under which at least one option of health insurance coverage
offered by a health insurance issuer (which may include, among other
options, managed care options, point of service options, and preferred
provider options) is provided to participants and beneficiaries, unless, for
any plan year, such coverage remains unavailable to the plan despite good
faith efforts exercised by the plan to secure such coverage.
`(b) SPONSORSHIP- The sponsor of a group health plan is described in this
subsection if such sponsor--
`(1) is organized and maintained in good faith, with a constitution and
bylaws specifically stating its purpose and providing for periodic meetings
on at least an annual basis, as a bona fide trade association, a bona fide
industry association (including a rural electric cooperative association or
a rural telephone cooperative association), a bona fide professional
association, or a bona fide chamber of commerce (or similar bona fide
business association, including a corporation or similar organization that
operates on a cooperative basis (within the meaning of section 1381 of the
Internal Revenue Code of 1986)), for substantial purposes other than that of
obtaining or providing medical care;
`(2) is established as a permanent entity which receives the active
support of its members and collects from its members on a periodic basis
dues or payments necessary to maintain eligibility for membership in the
sponsor; and
`(3) does not condition membership, such dues or payments, or coverage
under the plan on the basis of health status-related factors with respect to
the employees of its members (or affiliated members), or the dependents of
such employees, and does not condition such dues or payments on the basis of
group health plan participation.
Any sponsor consisting of an association of entities which meet the
requirements of paragraphs (1), (2), and (3) shall be deemed to be a sponsor
described in this subsection.
`SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.
`(a) IN GENERAL- The applicable authority shall prescribe by regulation,
through negotiated rulemaking, a procedure under which, subject to subsection
(b), the applicable authority shall certify association health plans which
apply for certification as meeting the requirements of this part.
`(b) STANDARDS- Under the procedure prescribed pursuant to subsection (a),
in the case of an association health plan that provides at least one benefit
option which does not consist of health insurance coverage, the applicable
authority shall certify such plan as meeting the requirements of this part
only if the applicable authority is satisfied that--
`(1) such certification--
`(A) is administratively feasible;
`(B) is not adverse to the interests of the individuals covered under
the plan; and
`(C) is protective of the rights and benefits of the individuals
covered under the plan; and
`(2) the applicable requirements of this part are met (or, upon the date
on which the plan is to commence operations, will be met) with respect to
the plan.
`(c) REQUIREMENTS APPLICABLE TO CERTIFIED PLANS- An association health
plan with respect to which certification under this part is in effect shall
meet the applicable requirements of this part, effective on the date of
certification (or, if later, on the date on which the plan is to commence
operations).
`(d) REQUIREMENTS FOR CONTINUED CERTIFICATION- The applicable authority
may provide by regulation, through negotiated rulemaking, for continued
certification of association health plans under this part.
`(e) CLASS CERTIFICATION FOR FULLY INSURED PLANS- The applicable authority
shall establish a class certification procedure for association health plans
under which all benefits consist of health insurance coverage. Under such
procedure, the applicable authority shall provide for the granting of
certification under this part to the plans in each class of such association
health plans upon appropriate filing under such procedure in connection with
plans in such class and payment of the prescribed fee under section 807(a).
`(f) CERTIFICATION OF SELF-INSURED ASSOCIATION HEALTH PLANS- An
association health plan which offers one or more benefit options which do not
consist of health insurance coverage may be certified under this part only if
such plan consists of any of the following:
`(1) a plan which offered such coverage on the date of the enactment of
the Small Business Access and Choice for Entrepreneurs Act of 1999,
`(2) a plan under which the sponsor does not restrict membership to one
or more trades and businesses or industries and whose eligible participating
employers represent a broad cross-section of trades and businesses or
industries, or
`(3) a plan whose eligible participating employers represent one or more
trades or businesses, or one or more industries, which have been indicated
as having average or above-average health insurance risk or health claims
experience by reason of State rate filings, denials of coverage, proposed
premium rate levels, and other means demonstrated by such plan in accordance
with regulations which the Secretary shall prescribe through negotiated
rulemaking, including (but not limited to) the following: agriculture;
automobile dealerships; barbering and cosmetology; child care; construction;
dance, theatrical, and orchestra productions; disinfecting and pest control;
eating and drinking establishments; fishing; hospitals; labor organizations;
logging; manufacturing (metals); mining; medical and dental practices;
medical laboratories; sanitary services; transportation (local and freight);
and warehousing.
`SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
`(a) SPONSOR- The requirements of this subsection are met with respect to
an association health plan if the sponsor has met (or is deemed under this
part to have met) the requirements of section 801(b) for a continuous period
of not less than 3 years ending with the date of the application for
certification under this part.
`(b) BOARD OF TRUSTEES- The requirements of this subsection are met with
respect to an association health plan if the following requirements are
met:
`(1) FISCAL CONTROL- The plan is operated, pursuant to a trust
agreement, by a board of trustees which has complete fiscal control over the
plan and which is responsible for all operations of the plan.
`(2) RULES OF OPERATION AND FINANCIAL CONTROLS- The board of trustees
has in effect rules of operation and financial controls, based on a 3-year
plan of operation, adequate to carry out the terms of the plan and to meet
all requirements of this title applicable to the plan.
`(3) RULES GOVERNING RELATIONSHIP TO PARTICIPATING EMPLOYERS AND TO
CONTRACTORS-
`(A) IN GENERAL- Except as provided in subparagraphs (B) and (C), the
members of the board of trustees are individuals selected from individuals
who are the owners, officers, directors, or employees of the participating
employers or who are partners in the participating employers and actively
participate in the business.
`(i) GENERAL RULE- Except as provided in clauses (ii) and (iii), no
such member is an owner, officer, director, or employee of, or partner
in, a contract administrator or other service provider to the
plan.
`(ii) LIMITED EXCEPTION FOR PROVIDERS OF SERVICES SOLELY ON BEHALF
OF THE SPONSOR- Officers or employees of a sponsor which is a service
provider (other than a contract administrator) to the plan may be
members of the board if they constitute not more than 25 percent of the
membership of the board and they do not provide services to the plan
other than on behalf of the sponsor.
`(iii) TREATMENT OF PROVIDERS OF MEDICAL CARE- In the case of a
sponsor which is an association whose membership consists primarily of
providers of medical care, clause (i) shall not apply in the case of any
service provider described in subparagraph (A) who is a provider of
medical care under the plan.
`(C) CERTAIN PLANS EXCLUDED- Subparagraph (A) shall not apply to an
association health plan which is in existence on the date of the enactment
of the Small Business Access and Choice for Entrepreneurs Act of
1999.
`(D) SOLE AUTHORITY- The board has sole authority under the plan to
approve applications for participation in the plan and to contract with a
service provider to administer the day-to-day affairs of the
plan.
`(c) TREATMENT OF FRANCHISE NETWORKS- In the case of a group health plan
which is established and maintained by a franchiser for a franchise network
consisting of its franchisees--
`(1) the requirements of subsection (a) and section 801(a)(1) shall be
deemed met if such requirements would otherwise be met if the franchiser
were deemed to be the sponsor referred to in section 801(b), such network
were deemed to be an association described in section 801(b), and each
franchisee were deemed to be a member (of the association and the sponsor)
referred to in section 801(b); and
`(2) the requirements of section 804(a)(1) shall be deemed met.
The Secretary may by regulation, through negotiated rulemaking, define for
purposes of this subsection the terms `franchiser', `franchise network', and
'franchisee'.
`(d) CERTAIN COLLECTIVELY BARGAINED PLANS-
`(1) IN GENERAL- In the case of a group health plan described in
paragraph (2)--
`(A) the requirements of subsection (a) and section 801(a)(1) shall be
deemed met;
`(B) the joint board of trustees shall be deemed a board of trustees
with respect to which the requirements of subsection (b) are met;
and
`(C) the requirements of section 804 shall be deemed met.
`(2) REQUIREMENTS- A group health plan is described in this paragraph
if--
`(A) the plan is a multiemployer plan; or
`(B) the plan is in existence on April 1, 1997, and would be described
in section 3(40)(A)(i) but solely for the failure to meet the requirements
of section 3(40)(C)(ii).
`SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
`(a) COVERED EMPLOYERS AND INDIVIDUALS- The requirements of this
subsection are met with respect to an association health plan if, under the
terms of the plan--
`(1) each participating employer must be--
`(A) a member of the sponsor,
`(C) an affiliated member of the sponsor with respect to which the
requirements of subsection (b) are met,
except that, in the case of a sponsor which is a professional
association or other individual-based association, if at least one of the
officers, directors, or employees of an employer, or at least one of the
individuals who are partners in an employer and who actively participates in
the business, is a member or such an affiliated member of the sponsor,
participating employers may also include such employer; and
`(2) all individuals commencing coverage under the plan after
certification under this part must be--
`(A) active or retired owners (including self-employed individuals),
officers, directors, or employees of, or partners in, participating
employers; or
`(B) the beneficiaries of individuals described in subparagraph
(A).
`(b) COVERAGE OF PREVIOUSLY UNINSURED EMPLOYEES- In the case of an
association health plan in existence on the date of the enactment of the Small
Business Access and Choice for Entrepreneurs Act of 1999, an affiliated member
of the sponsor of the plan may be offered coverage under the plan as a
participating employer only if--
`(1) the affiliated member was an affiliated member on the date of
certification under this part; or
`(2) during the 12-month period preceding the date of the offering of
such coverage, the affiliated member has not maintained or contributed to a
group health plan with respect to any of its employees who would otherwise
be eligible to participate in such association health plan.
`(c) INDIVIDUAL MARKET UNAFFECTED- The requirements of this subsection are
met with respect to an association health plan if, under the terms of the
plan, no participating employer may provide health insurance coverage in the
individual market for any employee not covered under the plan which is similar
to the coverage contemporaneously provided to employees of the employer under
the plan, if such exclusion of the employee from coverage under the plan is
based on a health status-related factor with respect to the employee and such
employee would, but for such exclusion on such basis, be eligible for coverage
under the plan.
`(d) PROHIBITION OF DISCRIMINATION AGAINST EMPLOYERS AND EMPLOYEES
ELIGIBLE TO PARTICIPATE- The requirements of this subsection are met with
respect to an association health plan if--
`(1) under the terms of the plan, all employers meeting the preceding
requirements of this section are eligible to qualify as participating
employers for all geographically available coverage options, unless, in the
case of any such employer, participation or contribution requirements of the
type referred to in section 2711 of the Public Health Service Act are not
met;
`(2) upon request, any employer eligible to participate is furnished
information regarding all coverage options available under the plan;
and
`(3) the applicable requirements of sections 701, 702, and 703 are met
with respect to the plan.
`SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION
RATES, AND BENEFIT OPTIONS.
`(a) IN GENERAL- The requirements of this section are met with respect to
an association health plan if the following requirements are met:
`(1) CONTENTS OF GOVERNING INSTRUMENTS- The instruments governing the
plan include a written instrument, meeting the requirements of an instrument
required under section 402(a)(1), which--
`(A) provides that the board of trustees serves as the named fiduciary
required for plans under section 402(a)(1) and serves in the capacity of a
plan administrator (referred to in section 3(16)(A));
`(B) provides that the sponsor of the plan is to serve as plan sponsor
(referred to in section 3(16)(B)); and
`(C) incorporates the requirements of section 806.
`(2) CONTRIBUTION RATES MUST BE NONDISCRIMINATORY-
`(A) The contribution rates for any participating small employer do
not vary on the basis of the claims experience of such employer and do not
vary on the basis of the type of business or industry in which such
employer is engaged.
`(B) Nothing in this title or any other provision of law shall be
construed to preclude an association health plan, or a health insurance
issuer offering health insurance coverage in connection with an
association health plan, from--
`(i) setting contribution rates based on the claims experience of
the plan; or
`(ii) varying contribution rates for small employers in a State to
the extent that such rates could vary using the same methodology
employed in such State for regulating premium rates in the small group
market with respect to health insurance coverage offered in connection
with bona fide associations (within the meaning of section 2791(d)(3) of
the Public Health Service Act),
subject to the requirements of section 702(b) relating to contribution
rates.
`(3) FLOOR FOR NUMBER OF COVERED INDIVIDUALS WITH RESPECT TO CERTAIN
PLANS- If any benefit option under the plan does not consist of health
insurance coverage, the plan has as of the beginning of the plan year not
fewer than 1,000 participants and beneficiaries.
`(4) MARKETING REQUIREMENTS-
`(A) IN GENERAL- If a benefit option which consists of health
insurance coverage is offered under the plan, State-licensed insurance
agents shall be used to distribute to small employers coverage which does
not consist of health insurance coverage in a manner comparable to the
manner in which such agents are used to distribute health insurance
coverage.
`(B) STATE-LICENSED INSURANCE AGENTS- For purposes of subparagraph
(A), the term `State-licensed insurance agents' means one or more agents
who are licensed in a State and are subject to the laws of such State
relating to licensure, qualification, testing, examination, and continuing
education of persons authorized to offer, sell, or solicit health
insurance coverage in such State.
`(5) REGULATORY REQUIREMENTS- Such other requirements as the applicable
authority determines are necessary to carry out the purposes of this part,
which shall be prescribed by the applicable authority by regulation through
negotiated rulemaking.
`(b) ABILITY OF ASSOCIATION HEALTH PLANS TO DESIGN BENEFIT OPTIONS-
Subject to section 514(d), nothing in this part or any provision of State law
(as defined in section 514(c)(1)) shall be construed to preclude an
association health plan, or a health insurance issuer offering health
insurance coverage in connection with an association health plan, from
exercising its sole discretion in selecting the specific items and services
consisting of medical care to be included as benefits under such plan or
coverage, except (subject to section 514) in the case of any law to the extent
that it (1) prohibits an exclusion of a specific disease from such coverage,
or (2) is not preempted under section 731(a)(1) with respect to matters
governed by section 711 or 712.
`SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR PLANS
PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE.
`(a) IN GENERAL- The requirements of this section are met with respect to
an association health plan if--
`(1) the benefits under the plan consist solely of health insurance
coverage; or
`(2) if the plan provides any additional benefit options which do not
consist of health insurance coverage, the plan--
`(A) establishes and maintains reserves with respect to such
additional benefit options, in amounts recommended by the qualified
actuary, consisting of--
`(i) a reserve sufficient for unearned contributions;
`(ii) a reserve sufficient for benefit liabilities which have been
incurred, which have not been satisfied, and for which risk of loss has
not yet been transferred, and for expected administrative costs with
respect to such benefit liabilities;
`(iii) a reserve sufficient for any other obligations of the plan;
and
`(iv) a reserve sufficient for a margin of error and other
fluctuations, taking into account the specific circumstances of the
plan; and
`(B) establishes and maintains aggregate and specific excess/stop loss
insurance and solvency indemnification, with respect to such additional
benefit options for which risk of loss has not yet been transferred, as
follows:
`(i) The plan shall secure aggregate excess/stop loss insurance for
the plan with an attachment point which is not greater than 125 percent
of expected gross annual claims. The applicable authority may by
regulation, through negotiated rulemaking, provide for upward
adjustments in the amount of such percentage in specified circumstances
in which the plan specifically provides for and maintains reserves in
excess of the amounts required under subparagraph (A).
`(ii) The plan shall secure specific excess/stop loss insurance for
the plan with an attachment point which is at least equal to an amount
recommended by the plan's qualified actuary (but not more than
$175,000). The applicable authority may by regulation, through
negotiated rulemaking, provide for adjustments in the amount of such
insurance in specified circumstances in which the plan specifically
provides for and maintains reserves in excess of the amounts required
under subparagraph (A).
`(iii) The plan shall secure indemnification insurance for any
claims which the plan is unable to satisfy by reason of a plan
termination.
Any regulations prescribed by the applicable authority pursuant to clause
(i) or (ii) of subparagraph (B) may allow for such adjustments in the required
levels of excess/stop loss insurance as the qualified actuary may recommend,
taking into account the specific circumstances of the plan.
`(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS RESERVES- In the case of any
association health plan described in subsection (a)(2), the requirements of
this subsection are met if the plan establishes and maintains surplus in an
amount at least equal to--
`(2) such greater amount (but not greater than $2,000,000) as may be set
forth in regulations prescribed by the applicable authority through
negotiated rulemaking, based on the level of aggregate and specific
excess/stop loss insurance provided with respect to such plan.
`(c) ADDITIONAL REQUIREMENTS- In the case of any association health plan
described in subsection (a)(2), the applicable authority may provide such
additional requirements relating to reserves and excess/stop loss insurance as
the applicable authority considers appropriate. Such requirements may be
provided by regulation, through negotiated rulemaking, with respect to any
such plan or any class of such plans.
`(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSURANCE- The applicable authority
may provide for adjustments to the levels of reserves otherwise required under
subsections (a) and (b) with respect to any plan or class of plans to take
into account excess/stop loss insurance provided with respect to such plan or
plans.
`(e) ALTERNATIVE MEANS OF COMPLIANCE- The applicable authority may permit
an association health plan described in subsection (a)(2) to substitute, for
all or part of the requirements of this section (except subsection
(a)(2)(B)(iii)), such security, guarantee, hold-harmless arrangement, or other
financial arrangement as the applicable authority determines to be adequate to
enable the plan to fully meet all its financial obligations on a timely basis
and is otherwise no less protective of the interests of participants and
beneficiaries than the requirements for which it is substituted. The
applicable authority may take into account, for purposes of this subsection,
evidence provided by the plan or sponsor which demonstrates an assumption of
liability with respect to the plan. Such evidence may be in the form of a
contract of indemnification, lien, bonding, insurance, letter of credit,
recourse under applicable terms of the plan in the form of assessments of
participating employers, security, or other financial arrangement.
`(f) MEASURES TO ENSURE CONTINUED PAYMENT OF BENEFITS BY CERTAIN PLANS IN
DISTRESS-
`(1) PAYMENTS BY CERTAIN PLANS TO ASSOCIATION HEALTH PLAN FUND-
`(A) IN GENERAL- In the case of an association health plan described
in subsection (a)(2), the requirements of this subsection are met if the
plan makes payments into the Association Health Plan Fund under this
subparagraph when they are due. Such payments shall consist of annual
payments in the amount of $5,000, and, in addition to such annual
payments, such supplemental payments as the Secretary may determine to be
necessary under paragraph (2). Payments under this paragraph are payable
to the Fund at the time determined by the Secretary. Initial payments are
due in advance of certification under this part. Payments shall continue
to accrue until a plan's assets are distributed pursuant to a termination
procedure.
`(B) PENALTIES FOR FAILURE TO MAKE PAYMENTS- If any payment is not
made by a plan when it is due, a late payment charge of not more than 100
percent of the payment which was not timely paid shall be payable by the
plan to the Fund.
`(C) CONTINUED DUTY OF THE SECRETARY- The Secretary shall not cease to
carry out the provisions of paragraph (2) on account of the failure of a
plan to pay any payment when due.
`(2) PAYMENTS BY SECRETARY TO CONTINUE EXCESS/STOP LOSS INSURANCE
COVERAGE AND INDEMNIFICATION INSURANCE COVERAGE FOR CERTAIN PLANS- In any
case in which the applicable authority determines that there is, or that
there is reason to believe that there will be: (A) a failure to take
necessary corrective actions under section 809(a) with respect to an
association health plan described in subsection (a)(2); or (B) a termination
of such a plan under section 809(b) or 810(b)(8) (and, if the applicable
authority is not the Secretary, certifies such determination to the
Secretary), the Secretary shall determine the amounts necessary to make
payments to an insurer (designated by the Secretary) to maintain in force
excess/stop loss insurance coverage or indemnification insurance coverage
for such plan, if the Secretary determines that there is a reasonable
expectation that, without such payments, claims would not be satisfied by
reason of termination of such coverage. The Secretary shall, to the extent
provided in advance in appropriation Acts, pay such amounts so determined to
the insurer designated by the Secretary.
`(3) ASSOCIATION HEALTH PLAN FUND-
`(A) IN GENERAL- There is established on the books of the Treasury a
fund to be known as the `Association Health Plan Fund'. The Fund shall be
available for making payments pursuant to paragraph (2). The Fund shall be
credited with payments received pursuant to paragraph (1)(A), penalties
received pursuant to paragraph (1)(B); and earnings on investments of
amounts of the Fund under subparagraph (B).
`(B) INVESTMENT- Whenever the Secretary determines that the moneys of
the fund are in excess of current needs, the Secretary may request the
investment of such amounts as the Secretary determines advisable by the
Secretary of the Treasury in obligations issued or guaranteed by the
United States.
`(g) EXCESS/STOP LOSS INSURANCE- For purposes of this section--
`(1) AGGREGATE EXCESS/STOP LOSS INSURANCE- The term `aggregate
excess/stop loss insurance' means, in connection with an association health
plan, a contract--
`(A) under which an insurer (meeting such minimum standards as the
applicable authority may prescribe by regulation through negotiated
rulemaking) provides for payment to the plan with respect to aggregate
claims under the plan in excess of an amount or amounts specified in such
contract;
`(B) which is guaranteed renewable; and
`(C) which allows for payment of premiums by any third party on behalf
of the insured plan.
`(2) SPECIFIC EXCESS/STOP LOSS INSURANCE- The term `specific excess/stop
loss insurance' means, in connection with an association health plan, a
contract--
`(A) under which an insurer (meeting such minimum standards as the
applicable authority may prescribe by regulation through negotiated
rulemaking) provides for payment to the plan with respect to claims under
the plan in connection with a covered individual in excess of an amount or
amounts specified in such contract in connection with such covered
individual;
`(B) which is guaranteed renewable; and
`(C) which allows for payment of premiums by any third party on behalf
of the insured plan.
`(h) INDEMNIFICATION INSURANCE- For purposes of this section, the term
`indemnification insurance' means, in connection with an association health
plan, a contract--
`(1) under which an insurer (meeting such minimum standards as the
applicable authority may prescribe through negotiated rulemaking) provides
for payment to the plan with respect to claims under the plan which the plan
is unable to satisfy by reason of a termination pursuant to section 809(b)
(relating to mandatory termination);
`(2) which is guaranteed renewable and noncancellable for any reason
(except as the applicable authority may prescribe by regulation through
negotiated rulemaking); and
`(3) which allows for payment of premiums by any third party on behalf
of the insured plan.
`(i) RESERVES- For purposes of this section, the term `reserves' means, in
connection with an association health plan, plan assets which meet the
fiduciary standards under part 4 and such additional requirements regarding
liquidity as the applicable authority may prescribe through negotiated
rulemaking.
`(j) SOLVENCY STANDARDS WORKING GROUP-
`(1) IN GENERAL- Within 90 days after the date of the enactment of the
Small Business Access and Choice for Entrepreneurs Act of 1999, the
applicable authority shall establish a Solvency Standards Working Group. In
prescribing the initial regulations under this section, the applicable
authority shall take into account the recommendations of such Working
Group.
`(2) MEMBERSHIP- The Working Group shall consist of not more than 15
members appointed by the applicable authority. The applicable authority
shall include among persons invited to membership on the Working Group at
least one of each of the following:
`(A) a representative of the National Association of Insurance
Commissioners;
`(B) a representative of the American Academy of Actuaries;
`(C) a representative of the State governments, or their
interests;
`(D) a representative of existing self-insured arrangements, or their
interests;
`(E) a representative of associations of the type referred to in
section 801(b)(1), or their interests; and
`(F) a representative of multiemployer plans that are group health
plans, or their interests.
`SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
`(a) FILING FEE- Under the procedure prescribed pursuant to section
802(a), an association health plan shall pay to the applicable authority at
the time of filing an application for certification under this part a filing
fee in the amount of $5,000, which shall be available in the case of the
Secretary, to the extent provided in appropriation Acts, for the sole purpose
of administering the certification procedures applicable with respect to
association health plans.
`(b) INFORMATION TO BE INCLUDED IN APPLICATION FOR CERTIFICATION- An
application for certification under this part meets the requirements of this
section only if it includes, in a manner and form which shall be prescribed by
the applicable authority through negotiated rulemaking, at least the following
information:
`(1) IDENTIFYING INFORMATION- The names and addresses of--
`(B) the members of the board of trustees of the plan.
`(2) STATES IN WHICH PLAN INTENDS TO DO BUSINESS- The States in which
participants and beneficiaries under the plan are to be located and the
number of them expected to be located in each such State.
`(3) BONDING REQUIREMENTS- Evidence provided by the board of trustees
that the bonding requirements of section 412 will be met as of the date of
the application or (if later) commencement of operations.
`(4) PLAN DOCUMENTS- A copy of the documents governing the plan
(including any bylaws and trust agreements), the summary plan description,
and other material describing the benefits that will be provided to
participants and beneficiaries under the plan.
`(5) AGREEMENTS WITH SERVICE PROVIDERS- A copy of any agreements between
the plan and contract administrators and other service providers.
`(6) FUNDING REPORT- In the case of association health plans providing
benefits options in addition to health insurance coverage, a report setting
forth information with respect to such additional benefit options determined
as of a date within the 120-day period ending with the date of the
application, including the following:
`(A) RESERVES- A statement, certified by the board of trustees of the
plan, and a statement of actuarial opinion, signed by a qualified actuary,
that all applicable requirements of section 806 are or will be met in
accordance with regulations which the applicable authority shall prescribe
through negotiated rulemaking.
`(B) ADEQUACY OF CONTRIBUTION RATES- A statement of actuarial opinion,
signed by a qualified actuary, which sets forth a description of the
extent to which contribution rates are adequate to provide for the payment
of all obligations and the maintenance of required reserves under the plan
for the 12-month period beginning with such date within such 120-day
period, taking into account the expected coverage and experience of the
plan. If the contribution rates are not fully adequate, the statement of
actuarial opinion shall indicate the extent to which the rates are
inadequate and the changes needed to ensure adequacy.
`(C) CURRENT AND PROJECTED VALUE OF ASSETS AND LIABILITIES- A
statement of actuarial opinion signed by a qualified actuary, which sets
forth the current value of the assets and liabilities accumulated under
the plan and a projection of the assets, liabilities, income, and expenses
of the plan for the 12-month period referred to in subparagraph (B). The
income statement shall identify separately the plan's administrative
expenses and claims.
`(D) COSTS OF COVERAGE TO BE CHARGED AND OTHER EXPENSES- A statement
of the costs of coverage to be charged, including an itemization of
amounts for administration, reserves, and other expenses associated with
the operation of the plan.
`(E) OTHER INFORMATION- Any other information as may be determined by
the applicable authority, by regulation through negotiated rulemaking, as
necessary to carry out the purposes of this part.
`(c) FILING NOTICE OF CERTIFICATION WITH STATES- A certification granted
under this part to an association health plan shall not be effective unless
written notice of such certification is filed with the applicable State
authority of each State in which at least 25 percent of the participants and
beneficiaries under the plan are located. For purposes of this subsection, an
individual shall be considered to be located in the State in which a known
address of such individual is located or in which such individual is
employed.
`(d) NOTICE OF MATERIAL CHANGES- In the case of any association health
plan certified under this part, descriptions of material changes in any
information which was required to be submitted with the application for the
certification under this part shall be filed in such form and manner as shall
be prescribed by the applicable authority by regulation through negotiated
rulemaking. The applicable authority may require by regulation, through
negotiated rulemaking, prior notice of material changes with respect to
specified matters which might serve as the basis for suspension or revocation
of the certification.
`(e) REPORTING REQUIREMENTS FOR CERTAIN ASSOCIATION HEALTH PLANS- An
association health plan certified under this part which provides benefit
options in addition to health insurance coverage for such plan year shall meet
the requirements of section 103 by filing an annual report under such section
which shall include information described in subsection (b)(6) with respect to
the plan year and, notwithstanding section 104(a)(1)(A), shall be filed with
the applicable authority not later than 90 days after the close of the plan
year (or on such later date as may be prescribed by the applicable authority).
The applicable authority may require by regulation through negotiated
rulemaking such interim reports as it considers appropriate.
`(f) ENGAGEMENT OF QUALIFIED ACTUARY- The board of trustees of each
association health plan which provides benefits options in addition to health
insurance coverage and which is applying for certification under this part or
is certified under this part shall engage, on behalf of all participants and
beneficiaries, a qualified actuary who shall be responsible for the
preparation of the materials comprising information necessary to be submitted
by a qualified actuary under this part. The qualified actuary shall utilize
such assumptions and techniques as are necessary to enable such actuary to
form an opinion as to whether the contents of the matters reported under this
part--
`(1) are in the aggregate reasonably related to the experience of the
plan and to reasonable expectations; and
`(2) represent such actuary's best estimate of anticipated experience
under the plan.
The opinion by the qualified actuary shall be made with respect to, and
shall be made a part of, the annual report.
`SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
`Except as provided in section 809(b), an association health plan which is
or has been certified under this part may terminate (upon or at any time after
cessation of accruals in benefit liabilities) only if the board of
trustees--
`(1) not less than 60 days before the proposed termination date,
provides to the participants and beneficiaries a written notice of intent to
terminate stating that such termination is intended and the proposed
termination date;
`(2) develops a plan for winding up the affairs of the plan in
connection with such termination in a manner which will result in timely
payment of all benefits for which the plan is obligated; and
`(3) submits such plan in writing to the applicable authority.
Actions required under this section shall be taken in such form and manner
as may be prescribed by the applicable authority by regulation through
negotiated rulemaking.
`SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
`(a) ACTIONS TO AVOID DEPLETION OF RESERVES- An association health plan
which is certified under this part and which provides benefits other than
health insurance coverage shall continue to meet the requirements of section
806, irrespective of whether such certification continues in effect. The board
of trustees of such plan shall determine quarterly whether the requirements of
section 806 are met. In any case in which the board determines that there is
reason to believe that there is or will be a failure to meet such
requirements, or the applicable authority makes such a determination and so
notifies the board, the board shall immediately notify the qualified actuary
engaged by the plan, and such actuary shall, not later than the end of the
next following month, make such recommendations to the board for corrective
action as the actuary determines necessary to ensure compliance with section
806. Not later than 30 days after receiving from the actuary recommendations
for corrective actions, the board shall notify the applicable authority (in
such form and manner as the applicable authority may prescribe by regulation
through negotiated rulemaking) of such recommendations of the actuary for
corrective action, together with a description of the actions (if any) that
the board has taken or plans to take in response to such recommendations. The
board shall thereafter report to the applicable authority, in such form and
frequency as the applicable authority may specify to the board, regarding
corrective action taken by the board until the requirements of section 806 are
met.
`(b) MANDATORY TERMINATION- In any case in which--
`(1) the applicable authority has been notified under subsection (a) of
a failure of an association health plan which is or has been certified under
this part and is described in section 806(a)(2) to meet the requirements of
section 806 and has not been notified by the board of trustees of the plan
that corrective action has restored compliance with such requirements;
and
`(2) the applicable authority determines that there is a reasonable
expectation that the plan will continue to fail to meet the requirements of
section 806,
the board of trustees of the plan shall, at the direction of the
applicable authority, terminate the plan and, in the course of the
termination, take such actions as the applicable authority may require,
including satisfying any claims referred to in section 806(a)(2)(B)(iii) and
recovering for the plan any liability under subsection (a)(2)(B)(iii) or (e)
of section 806, as necessary to ensure that the affairs of the plan will be,
to the maximum extent possible, wound up in a manner which will result in
timely provision of all benefits for which the plan is obligated.
`SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION HEALTH
PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE.
`(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR INSOLVENT PLANS- Whenever the
Secretary determines that an association health plan which is or has been
certified under this part and which is described in section 806(a)(2) will be
unable to provide benefits when due or is otherwise in a financially hazardous
condition, as shall be defined by the Secretary by regulation through
negotiated rulemaking, the Secretary shall, upon notice to the plan, apply to
the appropriate United States district court for appointment of the Secretary
as trustee to administer the plan for the duration of the insolvency. The plan
may appear as a party and other interested persons may intervene in the
proceedings at the discretion of the court. The court shall appoint such
Secretary trustee if the court determines that the trusteeship is necessary to
protect the interests of the participants and beneficiaries or providers of
medical care or to avoid any unreasonable deterioration of the financial
condition of the plan. The trusteeship of such Secretary shall continue until
the conditions described in the first sentence of this subsection are remedied
or the plan is terminated.
`(b) POWERS AS TRUSTEE- The Secretary, upon appointment as trustee under
subsection (a), shall have the power--
`(1) to do any act authorized by the plan, this title, or other
applicable provisions of law to be done by the plan administrator or any
trustee of the plan;
`(2) to require the transfer of all (or any part) of the assets and
records of the plan to the Secretary as trustee;
`(3) to invest any assets of the plan which the Secretary holds in
accordance with the provisions of the plan, regulations prescribed by the
Secretary through negotiated rulemaking, and applicable provisions of
law;
`(4) to require the sponsor, the plan administrator, any participating
employer, and any employee organization representing plan participants to
furnish any information with respect to the plan which the Secretary as
trustee may reasonably need in order to administer the plan;
`(5) to collect for the plan any amounts due the plan and to recover
reasonable expenses of the trusteeship;
`(6) to commence, prosecute, or defend on behalf of the plan any suit or
proceeding involving the plan;
`(7) to issue, publish, or file such notices, statements, and reports as
may be required by the Secretary by regulation through negotiated rulemaking
or required by any order of the court;
`(8) to terminate the plan (or provide for its termination accordance
with section 809(b)) and liquidate the plan assets, to restore the plan to
the responsibility of the sponsor, or to continue the trusteeship;
`(9) to provide for the enrollment of plan participants and
beneficiaries under appropriate coverage options; and
`(10) to do such other acts as may be necessary to comply with this
title or any order of the court and to protect the interests of plan
participants and beneficiaries and providers of medical care.
`(c) NOTICE OF APPOINTMENT- As soon as practicable after the Secretary's
appointment as trustee, the Secretary shall give notice of such appointment
to--
`(1) the sponsor and plan administrator;
`(3) each participating employer; and
`(4) if applicable, each employee organization which, for purposes of
collective bargaining, represents plan participants.
`(d) ADDITIONAL DUTIES- Except to the extent inconsistent with the
provisions of this title, or as may be otherwise ordered by the court, the
Secretary, upon appointment as trustee under this section, shall be subject to
the same duties as those of a trustee under section 704 of title 11, United
States Code, and shall have the duties of a fiduciary for purposes of this
title.
`(e) OTHER PROCEEDINGS- An application by the Secretary under this
subsection may be filed notwithstanding the pendency in the same or any other
court of any bankruptcy, mortgage foreclosure, or equity receivership
proceeding, or any proceeding to reorganize, conserve, or liquidate such plan
or its property, or any proceeding to enforce a lien against property of the
plan.
`(f) JURISDICTION OF COURT-
`(1) IN GENERAL- Upon the filing of an application for the appointment
as trustee or the issuance of a decree under this section, the court to
which the application is made shall have exclusive jurisdiction of the plan
involved and its property wherever located with the powers, to the extent
consistent with the purposes of this section, of a court of the United
States having jurisdiction over cases under chapter 11 of title 11, United
States Code. Pending an adjudication under this section such court shall
stay, and upon appointment by it of the Secretary as trustee, such court
shall continue the stay of, any pending mortgage foreclosure, equity
receivership, or other proceeding to reorganize, conserve, or liquidate the
plan, the sponsor, or property of such plan or sponsor, and any other suit
against any receiver, conservator, or trustee of the plan, the sponsor, or
property of the plan or sponsor. Pending such adjudication and upon the
appointment by it of the Secretary as trustee, the court may stay any
proceeding to enforce a lien against property of the plan or the sponsor or
any other suit against the plan or the sponsor.
`(2) VENUE- An action under this section may be brought in the judicial
district where the sponsor or the plan administrator resides or does
business or where any asset of the plan is situated. A district court in
which such action is brought may issue process with respect to such action
in any other judicial district.
`(g) PERSONNEL- In accordance with regulations which shall be prescribed
by the Secretary through negotiated rulemaking, the Secretary shall appoint,
retain, and compensate accountants, actuaries, and other professional service
personnel as may be necessary in connection with the Secretary's service as
trustee under this section.
`SEC. 811. STATE ASSESSMENT AUTHORITY.
`(a) IN GENERAL- Notwithstanding section 514, a State may impose by law a
contribution tax on an association health plan described in section 806(a)(2),
if the plan commenced operations in such State after the date of the enactment
of the Small Business Access and Choice for Entrepreneurs Act of 1999.
`(b) CONTRIBUTION TAX- For purposes of this section, the term
`contribution tax' imposed by a State on an association health plan means any
tax imposed by such State if--
`(1) such tax is computed by applying a rate to the amount of premiums
or contributions, with respect to individuals covered under the plan who are
residents of such State, which are received by the plan from participating
employers located in such State or from such individuals;
`(2) the rate of such tax does not exceed the rate of any tax imposed by
such State on premiums or contributions received by insurers or health
maintenance organizations for health insurance coverage offered in such
State in connection with a group health plan;
`(3) such tax is otherwise nondiscriminatory; and
`(4) the amount of any such tax assessed on the plan is reduced by the
amount of any tax or assessment otherwise imposed by the State on premiums,
contributions, or both received by insurers or health maintenance
organizations for health insurance coverage, aggregate excess/stop loss
insurance (as defined in section 806(g)(1)), specific excess/stop loss
insurance (as defined in section 806(g)(2)), other insurance related to the
provision of medical care under the plan, or any combination thereof
provided by such insurers or health maintenance organizations in such State
in connection with such plan.
`SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
`(a) DEFINITIONS- For purposes of this part--
`(1) GROUP HEALTH PLAN- The term `group health plan' has the meaning
provided in section 733(a)(1) (after applying subsection (b) of this
section).
`(2) MEDICAL CARE- The term `medical care' has the meaning provided in
section 733(a)(2).
`(3) HEALTH INSURANCE COVERAGE- The term `health insurance coverage' has
the meaning provided in section 733(b)(1).
`(4) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the
meaning provided in section 733(b)(2).
`(5) APPLICABLE AUTHORITY-
`(A) IN GENERAL- Except as provided in subparagraph (B), the term
`applicable authority' means, in connection with an association health
plan--
`(i) the State recognized pursuant to subsection (c) of section 506
as the State to which authority has been delegated in connection with
such plan; or
`(ii) if there if no State referred to in clause (i), the
Secretary.
`(i) JOINT AUTHORITIES- Where such term appears in section 808(3),
section 807(e) (in the first instance), section 809(a) (in the second
instance), section 809(a) (in the fourth instance), and section
809(b)(1), such term means, in connection with an association health
plan, the Secretary and the State referred to in subparagraph (A)(i) (if
any) in connection with such plan.
`(ii) REGULATORY AUTHORITIES- Where such term appears in section
802(a) (in the first instance), section 802(d), section 802(e), section
803(d), section 805(a)(5), section 806(a)(2), section 806(b), section
806(c), section 806(d), paragraphs (1)(A) and (2)(A) of section 806(g),
section 806(h), section 806(i), section 806(j), section 807(a) (in the
second instance), section 807(b), section 807(d), section 807(e) (in the
second instance), section 808 (in the matter after paragraph (3)), and
section 809(a) (in the third instance), such term means, in connection
with an association health plan, the Secretary.
`(6) HEALTH STATUS-RELATED FACTOR- The term `health status-related
factor' has the meaning provided in section 733(d)(2).
`(A) IN GENERAL- The term `individual market' means the market for
health insurance coverage offered to individuals other than in connection
with a group health plan.
`(B) TREATMENT OF VERY SMALL GROUPS-
`(i) IN GENERAL- Subject to clause (ii), such term includes coverage
offered in connection with a group health plan that has fewer than 2
participants as current employees or participants described in section
732(d)(3) on the first day of the plan year.
`(ii) STATE EXCEPTION- Clause (i) shall not apply in the case of
health insurance coverage offered in a State if such State regulates the
coverage described in such clause in the same manner and to the same
extent as coverage in the small group market (as defined in section
2791(e)(5) of the Public Health Service Act) is regulated by such
State.
`(8) PARTICIPATING EMPLOYER- The term `participating employer' means, in
connection with an association health plan, any employer, if any individual
who is an employee of such employer, a partner in such employer, or a
self-employed individual who is such employer (or any dependent, as defined
under the terms of the plan, of such individual) is or was covered under
such plan in connection with the status of such individual as such an
employee, partner, or self-employed individual in relation to the
plan.
`(9) APPLICABLE STATE AUTHORITY- The term `applicable State authority'
means, with respect to a health insurance issuer in a State, the State
insurance commissioner or official or officials designated by the State to
enforce the requirements of title XXVII of the Public Health Service Act for
the State involved with respect to such issuer.
`(10) QUALIFIED ACTUARY- The term `qualified actuary' means an
individual who is a member of the American Academy of Actuaries or meets
such reasonable standards and qualifications as the Secretary may provide by
regulation through negotiated rulemaking.
`(11) AFFILIATED MEMBER- The term `affiliated member' means, in
connection with a sponsor--
`(A) a person who is otherwise eligible to be a member of the sponsor
but who elects an affiliated status with the sponsor,
`(B) in the case of a sponsor with members which consist of
associations, a person who is a member of any such association and elects
an affiliated status with the sponsor, or
`(C) in the case of an association health plan in existence on the
date of the enactment of the Small Business Access and Choice for
Entrepreneurs Act of 1999, a person eligible to be a member of the sponsor
or one of its member associations.
`(12) LARGE EMPLOYER- The term `large employer' means, in connection
with a group health plan with respect to a plan year, an employer who
employed an average of at least 51 employees on business days during the
preceding calendar year and who employs at least 2 employees on the first
day of the plan year.
`(13) SMALL EMPLOYER- The term `small employer' means, in connection
with a group health plan with respect to a plan year, an employer who is not
a large employer.
`(b) RULES OF CONSTRUCTION-
`(1) EMPLOYERS AND EMPLOYEES- For purposes of determining whether a
plan, fund, or program is an employee welfare benefit plan which is an
association health plan, and for purposes of applying this title in
connection with such plan, fund, or program so determined to be such an
employee welfare benefit plan--
`(A) in the case of a partnership, the term `employer' (as defined in
section (3)(5)) includes the partnership in relation to the partners, and
the term `employee' (as defined in section (3)(6)) includes any partner in
relation to the partnership; and
`(B) in the case of a self-employed individual, the term `employer'
(as defined in section 3(5)) and the term `employee' (as defined in
section 3(6)) shall include such individual.
`(2) PLANS, FUNDS, AND PROGRAMS TREATED AS EMPLOYEE WELFARE BENEFIT
PLANS- In the case of any plan, fund, or program which was established or is
maintained for the purpose of providing medical care (through the purchase
of insurance or otherwise) for employees (or their dependents) covered
thereunder and which demonstrates to the Secretary that all requirements for
certification under this part would be met with respect to such plan, fund,
or program if such plan, fund, or program were a group health plan, such
plan, fund, or program shall be treated for purposes of this title as an
employee welfare benefit plan on and after the date of such
demonstration.'.
(b) CONFORMING AMENDMENTS TO PREEMPTION RULES-
(1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is amended by
adding at the end the following new subparagraph:
`(E) The preceding subparagraphs of this paragraph do not apply with
respect to any State law in the case of an association health plan which is
certified under part 8.'.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (b)(4), by striking `Subsection (a)' and inserting
`Subsections (a) and (d)';
(B) in subsection (b)(5), by striking `subsection (a)' in subparagraph
(A) and inserting `subsection (a) of this section and subsections
(a)(2)(B) and (b) of section 805', and by striking `subsection (a)' in
subparagraph (B) and inserting `subsection (a) of this section or
subsection (a)(2)(B) or (b) of section 805';
(C) by redesignating subsection (d) as subsection (e); and
(D) by inserting after subsection (c) the following new
subsection:
`(d)(1) Except as provided in subsection (b)(4), the provisions of this
title shall supersede any and all State laws insofar as they may now or
hereafter preclude, or have the effect of precluding, a health insurance
issuer from offering health insurance coverage in connection with an
association health plan which is certified under part 8.
`(2) Except as provided in paragraphs (4) and (5) of subsection (b) of
this section--
`(A) In any case in which health insurance coverage of any policy type
is offered under an association health plan certified under part 8 to a
participating employer operating in such State, the provisions of this title
shall supersede any and all laws of such State insofar as they may preclude
a health insurance issuer from offering health insurance coverage of the
same policy type to other employers operating in the State which are
eligible for coverage under such association health plan, whether or not
such other employers are participating employers in such plan.
`(B) In any case in which health insurance coverage of any policy type
is offered under an association health plan in a State and the filing, with
the applicable State authority, of the policy form in connection with such
policy type is approved by such State authority, the provisions of this
title shall supersede any and all laws of any other State in which health
insurance coverage of such type is offered, insofar as they may preclude,
upon the filing in the same form and manner of such policy form with the
applicable State authority in such other State, the approval of the filing
in such other State.
`(3) For additional provisions relating to association health plans, see
subsections (a)(2)(B) and (b) of section 805.
`(4) For purposes of this subsection, the term `association health plan'
has the meaning provided in section 801(a), and the terms `health insurance
coverage', `participating employer', and `health insurance issuer' have the
meanings provided such terms in section 811, respectively.'.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) is
amended--
(A) in clause (i)(II), by striking `and' at the end;
(B) in clause (ii), by inserting `and which does not provide medical
care (within the meaning of section 733(a)(2)),' after `arrangement,', and
by striking `title.' and inserting `title, and'; and
(C) by adding at the end the following new clause:
`(iii) subject to subparagraph (E), in the case of any other employee
welfare benefit plan which is a multiple employer welfare arrangement and
which provides medical care (within the meaning of section 733(a)(2)), any
law of any State which regulates insurance may apply.'.
(4) Section 514(e) of such Act (as redesignated by paragraph (2)(C)) is
amended--
(A) by striking `Nothing' and inserting `(1) Except as provided in
paragraph (2), nothing'; and
(B) by adding at the end the following new paragraph:
`(2) Nothing in any other provision of law enacted on or after the date of
the enactment of the Small Business Access and Choice for Entrepreneurs Act of
1999 shall be construed to alter, amend, modify, invalidate, impair, or
supersede any provision of this title, except by specific cross-reference to
the affected section.'.
(c) PLAN SPONSOR- Section 3(16)(B) of such Act (29 U.S.C. 102(16)(B)) is
amended by adding at the end the following new sentence: `Such term also
includes a person serving as the sponsor of an association health plan under
part 8.'.
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RELATED TO SELF-INSURED AND FULLY
INSURED OPTIONS UNDER ASSOCIATION HEALTH PLANS- Section 102(b) of such Act (29
U.S.C. 102(b)) is amended by adding at the end the following: `An association
health plan shall include in its summary plan description, in connection with
each benefit option, a description of the form of solvency or guarantee fund
protection secured pursuant to this Act or applicable State law, if any.'.
(e) SAVINGS CLAUSE- Section 731(c) of such Act is amended by inserting `or
part 8' after `this part'.
(f) REPORT TO THE CONGRESS REGARDING CERTIFICATION OF SELF-INSURED
ASSOCIATION HEALTH PLANS- Not later than January 1, 2004, the Secretary of
Labor shall report to the Committee on Education and the Workforce of the
House of Representatives and the Committee on Health, Education, Labor, and
Pensions of the Senate the effect association health plans have had, if any,
on reducing the number of uninsured individuals.
(g) CLERICAL AMENDMENT- The table of contents in section 1 of the Employee
Retirement Income Security Act of 1974 is amended by inserting after the item
relating to section 734 the following new items:
`Part 8--Rules Governing Association Health Plans
`Sec. 801. Association health plans.
`Sec. 802. Certification of association health plans.
`Sec. 803. Requirements relating to sponsors and boards of
trustees.
`Sec. 804. Participation and coverage requirements.
`Sec. 805. Other requirements relating to plan documents, contribution
rates, and benefit options.
`Sec. 806. Maintenance of reserves and provisions for solvency for plans
providing health benefits in addition to health insurance coverage.
`Sec. 807. Requirements for application and related requirements.
`Sec. 808. Notice requirements for voluntary termination.
`Sec. 809. Corrective actions and mandatory termination.
`Sec. 810. Trusteeship by the Secretary of insolvent association health
plans providing health benefits in addition to health insurance
coverage.
`Sec. 811. State assessment authority.
`Sec. 812. Definitions and rules of construction.'.
SEC. 3. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting `for any plan year of any such plan, or
any fiscal year of any such other arrangement;' after `single employer', and
by inserting `during such year or at any time during the preceding 1-year
period' after `control group';
(A) by striking `common control shall not be based on an interest of
less than 25 percent' and inserting `an interest of greater than 25
percent may not be required as the minimum interest necessary for common
control'; and
(B) by striking `similar to' and inserting `consistent and coextensive
with';
(3) by redesignating clauses (iv) and (v) as clauses (v) and (vi),
respectively; and
(4) by inserting after clause (iii) the following new clause:
`(iv) in determining, after the application of clause (i), whether
benefits are provided to employees of two or more employers, the arrangement
shall be treated as having only one participating employer if, after the
application of clause (i), the number of individuals who are employees and
former employees of any one participating employer and who are covered under
the arrangement is greater than 75 percent of the aggregate number of all
individuals who are employees or former employees of participating employers
and who are covered under the arrangement;'.
SEC. 4. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED
ARRANGEMENTS.
(a) IN GENERAL- Section 3(40)(A)(i) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to read as
follows:
`(i)(I) under or pursuant to one or more collective bargaining
agreements which are reached pursuant to collective bargaining described in
section 8(d) of the National Labor Relations Act (29 U.S.C. 158(d)) or
paragraph Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152,
paragraph Fourth) or which are reached pursuant to labor-management
negotiations under similar provisions of State public employee relations
laws, and (II) in accordance with subparagraphs (C), (D), and (E);'.
(b) LIMITATIONS- Section 3(40) of such Act (29 U.S.C. 1002(40)) is amended
by adding at the end the following new subparagraphs:
`(C) For purposes of subparagraph (A)(i)(II), a plan or other arrangement
shall be treated as established or maintained in accordance with this
subparagraph only if the following requirements are met:
`(i) The plan or other arrangement, and the employee organization or any
other entity sponsoring the plan or other arrangement, do not--
`(I) utilize the services of any licensed insurance agent or broker
for soliciting or enrolling employers or individuals as participating
employers or covered individuals under the plan or other arrangement;
or
`(II) pay any type of compensation to a person, other than a full time
employee of the employee organization (or a member of the organization to
the extent provided in regulations prescribed by the Secretary through
negotiated rulemaking), that is related either to the volume or number of
employers or individuals solicited or enrolled as participating employers
or covered individuals under the plan or other arrangement, or to the
dollar amount or size of the contributions made by participating employers
or covered individuals to the plan or other arrangement;
except to the extent that the services used by the plan, arrangement,
organization, or other entity consist solely of preparation of documents
necessary for compliance with the reporting and disclosure requirements of
part 1 or administrative, investment, or consulting services unrelated to
solicitation or enrollment of covered individuals.
`(ii) As of the end of the preceding plan year, the number of covered
individuals under the plan or other arrangement who are neither--
`(I) employed within a bargaining unit covered by any of the
collective bargaining agreements with a participating employer (nor
covered on the basis of an individual's employment in such a bargaining
unit); nor
`(II) present employees (or former employees who were covered while
employed) of the sponsoring employee organization, of an employer who is
or was a party to any of the collective bargaining agreements, or of the
plan or other arrangement or a related plan or arrangement (nor covered on
the basis of such present or former employment);
does not exceed 15 percent of the total number of individuals who are
covered under the plan or arrangement and who are present or former
employees who are or were covered under the plan or arrangement pursuant to
a collective bargaining agreement with a participating employer. The
requirements of the preceding provisions of this clause shall be treated as
satisfied if, as of the end of the preceding plan year, such covered
individuals are comprised solely of individuals who were covered individuals
under the plan or other arrangement as of the date of the enactment of the
Small Business Access and Choice for Entrepreneurs Act of 1999 and, as of
the end of the preceding plan year, the number of such covered individuals
does not exceed 25 percent of the total number of present and former
employees enrolled under the plan or other arrangement.
`(iii) The employee organization or other entity sponsoring the plan or
other arrangement certifies to the Secretary each year, in a form and manner
which shall be prescribed by the Secretary through negotiated rulemaking
that the plan or other arrangement meets the requirements of clauses (i) and
(ii).
`(D) For purposes of subparagraph (A)(i)(II), a plan or arrangement shall
be treated as established or maintained in accordance with this subparagraph
only if--
`(i) all of the benefits provided under the plan or arrangement consist
of health insurance coverage; or
`(ii)(I) the plan or arrangement is a multiemployer plan; and
`(II) the requirements of clause (B) of the proviso to clause (5) of
section 302(c) of the Labor Management Relations Act, 1947 (29 U.S.C.
186(c)) are met with respect to such plan or other arrangement.
`(E) For purposes of subparagraph (A)(i)(II), a plan or arrangement shall
be treated as established or maintained in accordance with this subparagraph
only if--
`(i) the plan or arrangement is in effect as of the date of the
enactment of the Small Business Access and Choice for Entrepreneurs Act of
1999; or
`(ii) the employee organization or other entity sponsoring the plan or
arrangement--
`(I) has been in existence for at least 3 years; or
`(II) demonstrates to the satisfaction of the Secretary that the
requirements of subparagraphs (C) and (D) are met with respect to the plan
or other arrangement.'.
(c) CONFORMING AMENDMENTS TO DEFINITIONS OF PARTICIPANT AND BENEFICIARY-
Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended by adding at the end
the following new sentence: `Such term includes an individual who is a covered
individual described in paragraph (40)(C)(ii).'.
SEC. 5. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL MISREPRESENTATIONS- Section 501
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1131) is
amended--
(1) by inserting `(a)' after `SEC. 501.'; and
(2) by adding at the end the following new subsection:
`(b) Any person who willfully falsely represents, to any employee, any
employee's beneficiary, any employer, the Secretary, or any State, a plan or
other arrangement established or maintained for the purpose of offering or
providing any benefit described in section 3(1) to employees or their
beneficiaries as--
`(1) being an association health plan which has been certified under
part 8;
`(2) having been established or maintained under or pursuant to one or
more collective bargaining agreements which are reached pursuant to
collective bargaining described in section 8(d) of the National Labor
Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 2 of the
Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which are reached
pursuant to labor-management negotiations under similar provisions of State
public employee relations laws; or
`(3) being a plan or arrangement with respect to which the requirements
of subparagraph (C), (D), or (E) of section 3(40) are met;
shall, upon conviction, be imprisoned not more than 5 years, be fined
under title 18, United States Code, or both.'.
(b) CEASE ACTIVITIES ORDERS- Section 502 of such Act (29 U.S.C. 1132) is
amended by adding at the end the following new subsection:
`(n)(1) Subject to paragraph (2), upon application by the Secretary
showing the operation, promotion, or marketing of an association health plan
(or similar arrangement providing benefits consisting of medical care (as
defined in section 733(a)(2))) that--
`(A) is not certified under part 8, is subject under section 514(b)(6)
to the insurance laws of any State in which the plan or arrangement offers
or provides benefits, and is not licensed, registered, or otherwise approved
under the insurance laws of such State; or
`(B) is an association health plan certified under part 8 and is not
operating in accordance with the requirements under part 8 for such
certification,
a district court of the United States shall enter an order requiring that
the plan or arrangement cease activities.
`(2) Paragraph (1) shall not apply in the case of an association health
plan or other arrangement if the plan or arrangement shows that--
`(A) all benefits under it referred to in paragraph (1) consist of
health insurance coverage; and
`(B) with respect to each State in which the plan or arrangement offers
or provides benefits, the plan or arrangement is operating in accordance
with applicable State laws that are not superseded under section 514.
`(3) The court may grant such additional equitable relief, including any
relief available under this title, as it deems necessary to protect the
interests of the public and of persons having claims for benefits against the
plan.'.
(c) RESPONSIBILITY FOR CLAIMS PROCEDURE- Section 503 of such Act (29
U.S.C. 1133) (as amended by title I) is amended by adding at the end the
following new subsection:
`(c) ASSOCIATION HEALTH PLANS- The terms of each association health plan
which is or has been certified under part 8 shall require the board of
trustees or the named fiduciary (as applicable) to ensure that the
requirements of this section are met in connection with claims filed under the
plan.'.
SEC. 6. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1136) is amended by adding at the end the following new subsection:
`(c) RESPONSIBILITY OF STATES WITH RESPECT TO ASSOCIATION HEALTH PLANS-
`(1) AGREEMENTS WITH STATES- A State may enter into an agreement with
the Secretary for delegation to the State of some or all of--
`(A) the Secretary's authority under sections 502 and 504 to enforce
the requirements for certification under part 8;
`(B) the Secretary's authority to certify association health plans
under part 8 in accordance with regulations of the Secretary applicable to
certification under part 8; or
`(C) any combination of the Secretary's authority authorized to be
delegated under subparagraphs (A) and (B).
`(2) DELEGATIONS- Any department, agency, or instrumentality of a State
to which authority is delegated pursuant to an agreement entered into under
this paragraph may, if authorized under State law and to the extent
consistent with such agreement, exercise the powers of the Secretary under
this title which relate to such authority.
`(3) RECOGNITION OF PRIMARY DOMICILE STATE- In entering into any
agreement with a State under subparagraph (A), the Secretary shall ensure
that, as a result of such agreement and all other agreements entered into
under subparagraph (A), only one State will be recognized, with respect to
any particular association health plan, as the State to which all authority
has been delegated pursuant to such agreements in connection with such plan.
In carrying out this paragraph, the Secretary shall take into account the
places of residence of the participants and beneficiaries under the plan and
the State in which the trust is maintained.'.
SEC. 7. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) EFFECTIVE DATE- The amendments made by sections 2, 5, and 6 shall take
effect on January 1, 2001. The amendments made by sections 3 and 4 shall take
effect on the date of the enactment of this Act. The Secretary of Labor shall
first issue all regulations necessary to carry out the amendments made by this
subtitle before January 1, 2001. Such regulations shall be issued through
negotiated rulemaking.
(b) EXCEPTION- Section 801(a)(2) of the Employee Retirement Income
Security Act of 1974 (added by section 2) does not apply in connection with an
association health plan (certified under part 8 of subtitle B of title I of
such Act) existing on the date of the enactment of this Act, if no benefits
provided thereunder as of the date of the enactment of this Act consist of
health insurance coverage (as defined in section 733(b)(1) of such Act).
(c) TREATMENT OF CERTAIN EXISTING HEALTH BENEFITS PROGRAMS-
(1) IN GENERAL- In any case in which, as of the date of the enactment of
this Act, an arrangement is maintained in a State for the purpose of
providing benefits consisting of medical care for the employees and
beneficiaries of its participating employers, at least 200 participating
employers make contributions to such arrangement, such arrangement has been
in existence for at least 10 years, and such arrangement is licensed under
the laws of one or more States to provide such benefits to its participating
employers, upon the filing with the applicable authority (as defined in
section 812(a)(5) of the Employee Retirement Income Security Act of 1974 (as
amended by this Act)) by the arrangement of an application for certification
of the arrangement under part 8 of subtitle B of title I of such Act--
(A) such arrangement shall be deemed to be a group health plan for
purposes of title I of such Act;
(B) the requirements of sections 801(a)(1) and 803(a)(1) of the
Employee Retirement Income Security Act of 1974 shall be deemed met with
respect to such arrangement;
(C) the requirements of section 803(b) of such Act shall be deemed
met, if the arrangement is operated by a board of directors
which--
(i) is elected by the participating employers, with each employer
having one vote; and
(ii) has complete fiscal control over the arrangement and which is
responsible for all operations of the arrangement;
(D) the requirements of section 804(a) of such Act shall be deemed met
with respect to such arrangement; and
(E) the arrangement may be certified by any applicable authority with
respect to its operations in any State only if it operates in such State
on the date of certification.
The provisions of this subsection shall cease to apply with respect to
any such arrangement at such time after the date of the enactment of this
Act as the applicable requirements of this subsection are not met with
respect to such arrangement.
(2) DEFINITIONS- For purposes of this subsection, the terms `group
health plan', `medical care', and `participating employer' shall have the
meanings provided in section 812 of the Employee Retirement Income Security
Act of 1974, except that the reference in paragraph (7) of such section to
an `association health plan' shall be deemed a reference to an arrangement
referred to in this subsection.
END