S.Amdt. 3899

1. Replaces the bill's text with a full substitute

   Replaces the full textEverything after the enacting clause

   In S. 1955 · Reported to Senate

   SECTION 1. SHORT TITLE[struck: ; TABLE OF CONTENTS; PURPOSE].

   [struck: (a) Short Title.--]This Act may be cited as the "[struck: Health Insurance Marketplace Modernization and Affordability ][inserted: Small Employers Health Benefits Program ]Act of 2006".

   Struck: (b) Table of Contents.--The table of contents is as follows:

   Struck: Sec. 1. Short title; table of contents; purposes.

   Struck: TITLE I--SMALL BUSINESS HEALTH PLANS

   Struck: Sec. 101. Rules governing small business health plans.

   Show 168 more struck paragraphsShow less

   Struck: Sec. 102. Cooperation between Federal and State authorities.

   Struck: Sec. 103. Effective date and transitional and other rules.

   Struck: TITLE II--MARKET RELIEF

   Struck: Sec. 201. Market relief.

   Struck: TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

   Struck: Sec. 301. Health Insurance Standards Harmonization.

   Struck: (c) Purposes.--It is the purpose of this Act to--

   Struck: (1) make more affordable health insurance options available to small businesses, working families, and all Americans;

   Struck: (2) assure effective State regulatory protection of the interests of health insurance consumers; and

   Struck: (3) create a more efficient and affordable health insurance marketplace through collaborative development of uniform regulatory standards.

   Struck: TITLE I--SMALL BUSINESS HEALTH PLANS

   Struck: SEC. 101. RULES GOVERNING SMALL BUSINESS HEALTH PLANS.

   Struck: (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:

   Struck: "PART 8--RULES GOVERNING SMALL BUSINESS HEALTH PLANS

   Struck: "SEC. 801. SMALL BUSINESS HEALTH PLANS.

   Struck: "(a) In General.--For purposes of this part, the term 'small business health plan' means a fully insured group health plan whose sponsor is (or is deemed under this part to be) described in subsection (b).

   Struck: "(b) Sponsorship.--The sponsor of a group health plan is described in this subsection if such sponsor--

   Struck: "(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 medical care;

   Struck: "(2) is established as a permanent entity which receives the active support of its members and requires for membership payment on a periodic basis of dues or payments necessary to maintain eligibility for membership;

   Struck: "(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; and

   Struck: "(4) does not condition membership on the basis of a minimum group size. Any sponsor consisting of an association of entities which meet the requirements of paragraphs (1), (2), (3), and (4) shall be deemed to be a sponsor described in this subsection.

   Struck: "SEC. 802. CERTIFICATION OF SMALL BUSINESS HEALTH PLANS.

   Struck: "(a) In General.--Not later than 6 months after the date of enactment of this part, the applicable authority shall prescribe by interim final rule a procedure under which the applicable authority shall certify small business health plans which apply for certification as meeting the requirements of this part.

   Struck: "(b) Requirements Applicable to Certified Plans.--A small business 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).

   Struck: "(c) Requirements for Continued Certification.--The applicable authority may provide by regulation for continued certification of small business health plans under this part. Such regulation shall provide for the revocation of a certification if the applicable authority finds that the small business health plan involved is failing to comply with the requirements of this part.

   Struck: "(d) Expedited and Deemed Certification.--

   Struck: "(1) In general.--If the Secretary fails to act on an application for certification under this section within 90 days of receipt of such application, the applying small business health plan shall be deemed certified until such time as the Secretary may deny for cause the application for certification.

   Struck: "(2) Civil penalty.--The Secretary may assess a civil penalty against the board of trustees and plan sponsor (jointly and severally) of a small business health plan that is deemed certified under paragraph (1) of up to $500,000 in the event the Secretary determines that the application for certification of such small business health plan was willfully or with gross negligence incomplete or inaccurate.

   Struck: "SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

   Struck: "(a) Sponsor.--The requirements of this subsection are met with respect to a small business 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.

   Struck: "(b) Board of Trustees.--The requirements of this subsection are met with respect to a small business health plan if the following requirements are met:

   Struck: "(1) Fiscal control.--The plan is operated, pursuant to a plan document, by a board of trustees which pursuant to a trust agreement has complete fiscal control over the plan and which is responsible for all operations of the plan.

   Struck: "(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.

   Struck: "(3) Rules governing relationship to participating employers and to contractors.--

   Struck: "(A) Board membership.--

   Struck: "(i) In general.--Except as provided in clauses (ii) and (iii), the members of the board of trustees are individuals selected from individuals who are the owners, officers, directors, or employees of the participating employers or who are partners in the participating employers and actively participate in the business.

   Struck: "(ii) Limitation.--

   Struck: "(I) General rule.--Except as provided in subclauses (II) and (III), no such member is an owner, officer, director, or employee of, or partner in, a contract administrator or other service provider to the plan.

   Struck: "(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.

   Struck: "(III) Treatment of providers of medical care.--In the case of a sponsor which is an association whose membership consists primarily of providers of medical care, subclause (I) shall not apply in the case of any service provider described in subclause (I) who is a provider of medical care under the plan.

   Struck: "(iii) Certain plans excluded.--Clause (i) shall not apply to a small business health plan which is in existence on the date of the enactment of the Health Insurance Marketplace Modernization and Affordability Act of 2006.

   Struck: "(B) Sole authority.--The board has sole authority under the plan to approve applications for participation in the plan and to contract with insurers.

   Struck: "(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--

   Struck: "(1) the requirements of subsection (a) and section 801(a) shall be deemed met if such requirements would otherwise be met if the franchiser were deemed to be the sponsor referred to in section 801(b), such network were deemed to be an association described in section 801(b), and each franchisee were deemed to be a member (of the association and the sponsor) referred to in section 801(b); and

   Struck: "(2) the requirements of section 804(a)(1) shall be deemed met. The Secretary may by regulation define for purposes of this subsection the terms 'franchiser', 'franchise network', and 'franchisee'.

   Struck: "SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

   Struck: "(a) Covered Employers and Individuals.--The requirements of this subsection are met with respect to a small business health plan if, under the terms of the plan--

   Struck: "(1) each participating employer must be--

   Struck: "(A) a member of the sponsor;

   Struck: "(B) the sponsor; or

   Struck: "(C) an affiliated member of the sponsor, 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

   Struck: "(2) all individuals commencing coverage under the plan after certification under this part must be--

   Struck: "(A) active or retired owners (including self- employed individuals), officers, directors, or employees of, or partners in, participating employers; or

   Struck: "(B) the dependents of individuals described in subparagraph (A).

   Struck: "(b) Individual Market Unaffected.--The requirements of this subsection are met with respect to a small business 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.

   Struck: "(c) Prohibition of Discrimination Against Employers and Employees Eligible to Participate.--The requirements of this subsection are met with respect to a small business health plan if--

   Struck: "(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;

   Struck: "(2) information regarding all coverage options available under the plan is made readily available to any employer eligible to participate; and

   Struck: "(3) the applicable requirements of sections 701, 702, and 703 are met with respect to the plan.

   Struck: "SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION RATES, AND BENEFIT OPTIONS.

   Struck: "(a) In General.--The requirements of this section are met with respect to a small business health plan if the following requirements are met:

   Struck: "(1) Contents of governing instruments.--

   Struck: "(A) In general.--The instruments governing the plan include a written instrument, meeting the requirements of an instrument required under section 402(a)(1), which--

   Struck: "(i) 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)); and

   Struck: "(ii) provides that the sponsor of the plan is to serve as plan sponsor (referred to in section 3(16)(B)).

   Struck: "(B) Description of material provisions.--The terms of the health insurance coverage (including the terms of any individual certificates that may be offered to individuals in connection with such coverage) describe the material benefit and rating, and other provisions set forth in this section and such material provisions are included in the summary plan description.

   Struck: "(2) Contribution rates must be nondiscriminatory.--

   Struck: "(A) In general.--The contribution rates for any participating small employer shall not vary on the basis of any health status-related factor in relation to employees of such employer or their beneficiaries and shall not vary on the basis of the type of business or industry in which such employer is engaged.

   Struck: "(B) Effect of title.--Nothing in this title or any other provision of law shall be construed to preclude a health insurance issuer offering health insurance coverage in connection with a small business health plan, and at the request of such small business health plan, from--

   Struck: "(i) setting contribution rates for the small business health plan based on the claims experience of the plan so long as any variation in such rates complies with the requirements of clause (ii), except that small business health plans shall not be subject to paragraphs (1)(A) and (3) of section 2911(b) of the Public Health Service Act; or

   Struck: "(ii) varying contribution rates for participating employers in a small business health plan in a State to the extent that such rates could vary using the same methodology employed in such State for regulating small group premium rates, subject to the terms of part I of subtitle A of title XXIX of the Public Health Service Act (relating to rating requirements), as added by title II of the Health Insurance Marketplace Modernization and Affordability Act of 2006.

   Struck: "(3) Exceptions regarding self-employed and large employers.--

   Struck: "(A) Self employed.--

   Struck: "(i) In general.--Small business health plans with participating employers who are self-employed individuals (and their dependents) shall enroll such self-employed participating employers in accordance with rating rules that do not violate the rating rules for self-employed individuals in the State in which such self-employed participating employers are located.

   Struck: "(ii) Guarantee issue.--Small business health plans with participating employers who are self-employed individuals (and their dependents) may decline to guarantee issue to such participating employers in States in which guarantee issue is not otherwise required for the self-employed in that State.

   Struck: "(B) Large employers.--Small business health plans with participating employers that are larger than small employers (as defined in section 808(a)(10)) shall enroll such large participating employers in accordance with rating rules that do not violate the rating rules for large employers in the State in which such large participating employers are located.

   Struck: "(4) 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.

   Struck: "(b) Ability of Small Business Health Plans to Design Benefit Options.--Nothing in this part or any provision of State law (as defined in section 514(c)(1)) shall be construed to preclude a small business health plan or a health insurance issuer offering health insurance coverage in connection with a small business health plan from exercising its sole discretion in selecting the specific benefits and services consisting of medical care to be included as benefits under such plan or coverage, except that such benefits and services must meet the terms and specifications of part II of subtitle A of title XXIX of the Public Health Service Act (relating to lower cost plans), as added by title II of the Health Insurance Marketplace Modernization and Affordability Act of 2006.

   Struck: "(c) Domicile and Non-Domicile States.--

   Struck: "(1) Domicile state.--Coverage shall be issued to a small business health plan in the State in which the sponsor's principal place of business is located.

   Struck: "(2) Non-domicile states.--With respect to a State (other than the domicile State) in which participating employers of a small business health plan are located but in which the insurer of the small business health plan in the domicile State is not yet licensed, the following shall apply:

   Struck: "(A) Temporary preemption.--If, upon the expiration of the 90-day period following the submission of a licensure application by such insurer (that includes a certified copy of an approved licensure application as submitted by such insurer in the domicile State) to such State, such State has not approved or denied such application, such State's health insurance licensure laws shall be temporarily preempted and the insurer shall be permitted to operate in such State, subject to the following terms:

   Struck: "(i) Application of non-domicile state law.--Except with respect to licensure and with respect to the terms of subtitle A of title XXIX of the Public Health Service Act (relating to rating and benefits as added by the Health Insurance Marketplace Modernization and Affordability Act of 2006), the laws and authority of the non-domicile State shall remain in full force and effect.

   Struck: "(ii) Revocation of preemption.--The preemption of a non-domicile State's health insurance licensure laws pursuant to this subparagraph, shall be terminated upon the occurrence of either of the following:

   Struck: "(I) Approval or denial of application.--The approval of denial of an insurer's licensure application, following the laws and regulations of the non-domicile State with respect to licensure.

   Struck: "(II) Determination of material violation.--A determination by a non- domicile State that an insurer operating in a non-domicile State pursuant to the preemption provided for in this subparagraph is in material violation of the insurance laws (other than licensure and with respect to the terms of subtitle A of title XXIX of the Public Health Service Act (relating to rating and benefits added by the Health Insurance Marketplace Modernization and Affordability Act of 2006)) of such State.

   Struck: "(B) No prohibition on promotion.--Nothing in this paragraph shall be construed to prohibit a small business health plan or an insurer from promoting coverage prior to the expiration of the 90-day period provided for in subparagraph (A), except that no enrollment or collection of contributions shall occur before the expiration of such 90-day period.

   Struck: "(C) Licensure.--Except with respect to the application of the temporary preemption provision of this paragraph, nothing in this part shall be construed to limit the requirement that insurers issuing coverage to small business health plans shall be licensed in each State in which the small business health plans operate.

   Struck: "(D) Servicing by licensed insurers.-- Notwithstanding subparagraph (C), the requirements of this subsection may also be satisfied if the participating employers of a small business health plan are serviced by a licensed insurer in that State, even where such insurer is not the insurer of such small business health plan in the State in which such small business health plan is domiciled.

   Struck: "SEC. 806. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

   Struck: "(a) Filing Fee.--Under the procedure prescribed pursuant to section 802(a), a small business 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 small business health plans.

   Struck: "(b) Information to Be Included in Application for Certification.--An application for certification under this part meets the requirements of this section only if it includes, in a manner and form which shall be prescribed by the applicable authority by regulation, at least the following information:

   Struck: "(1) Identifying information.--The names and addresses of--

   Struck: "(A) the sponsor; and

   Struck: "(B) the members of the board of trustees of the plan.

   Struck: "(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.

   Struck: "(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.

   Struck: "(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.

   Struck: "(5) Agreements with service providers.--A copy of any agreements between the plan, health insurance issuer, and contract administrators and other service providers.

   Struck: "(c) Filing Notice of Certification With States.--A certification granted under this part to a small business health plan shall not be effective unless written notice of such certification is filed with the applicable State authority of each State in which the small business health plans operate.

   Struck: "(d) Notice of Material Changes.--In the case of any small business health plan certified under this part, descriptions of material changes in any information which was required to be submitted with the application for the certification under this part shall be filed in such form and manner as shall be prescribed by the applicable authority by regulation. The applicable authority may require by regulation prior notice of material changes with respect to specified matters which might serve as the basis for suspension or revocation of the certification.

   Struck: "SEC. 807. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

   Struck: "A small business health plan which is or has been certified under this part may terminate (upon or at any time after cessation of accruals in benefit liabilities) only if the board of trustees, not less than 60 days before the proposed termination date--

   Struck: "(1) provides to the participants and beneficiaries a written notice of intent to terminate stating that such termination is intended and the proposed termination date;

   Struck: "(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

   Struck: "(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.

   Struck: "SEC. 808. DEFINITIONS AND RULES OF CONSTRUCTION.

   Struck: "(a) Definitions.--For purposes of this part--

   Struck: "(1) Affiliated member.--The term 'affiliated member' means, in connection with a sponsor--

   Struck: "(A) a person who is otherwise eligible to be a member of the sponsor but who elects an affiliated status with the sponsor, or

   Struck: "(B) in the case of a sponsor with members which consist of associations, a person who is a member or employee of any such association and elects an affiliated status with the sponsor.

   Struck: "(2) Applicable authority.--The term 'applicable authority' means the Secretary of Labor, except that, in connection with any exercise of the Secretary's authority with respect to which the Secretary is required under section 506(d) to consult with a State, such term means the Secretary, in consultation with such State.

   Struck: "(3) 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.

   Struck: "(4) Group health plan.--The term 'group health plan' has the meaning provided in section 733(a)(1) (after applying subsection (b) of this section).

   Struck: "(5) Health insurance coverage.--The term 'health insurance coverage' has the meaning provided in section 733(b)(1), except that such term shall not include excepted benefits (as defined in section 733(c)).

   Struck: "(6) Health insurance issuer.--The term 'health insurance issuer' has the meaning provided in section 733(b)(2).

   Struck: "(7) Individual market.--

   Struck: "(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.

   Struck: "(B) Treatment of very small groups.--

   Struck: "(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.

   Struck: "(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.

   Struck: "(8) Medical care.--The term 'medical care' has the meaning provided in section 733(a)(2).

   Struck: "(9) Participating employer.--The term 'participating employer' means, in connection with a small business 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.

   Struck: "(10) Small employer.--The term 'small employer' means, in connection with a group health plan with respect to a plan year, a small employer as defined in section 2791(e)(4).

   Struck: "(11) Trade association and professional association.--The terms 'trade association' and 'professional association' mean an entity that meets the requirements of section 1.501(c)(6)-1 of title 26, Code of Federal Regulations (as in effect on the date of enactment of this Act).

   Struck: "(b) Rule of Construction.--For purposes of determining whether a plan, fund, or program is an employee welfare benefit plan which is a small business 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--

   Struck: "(1) 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

   Struck: "(2) 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.

   Struck: "(c) Renewal.--Notwithstanding any provision of law to the contrary, a participating employer in a small business health plan shall not be deemed to be a plan sponsor in applying requirements relating to coverage renewal.

   Struck: "(d) Health Savings Accounts.--Nothing in this part shall be construed to inhibit the development of health savings accounts pursuant to section 223 of the Internal Revenue Code of 1986.".

   Struck: (b) Conforming Amendments to Preemption Rules.--

   Struck: (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:

   Struck: "(E) The preceding subparagraphs of this paragraph do not apply with respect to any State law in the case of a small business health plan which is certified under part 8.".

   Struck: (2) Section 514 of such Act (29 U.S.C. 1144) is amended--

   Struck: (A) in subsection (b)(4), by striking "Subsection (a)" and inserting "Subsections (a) and (d)";

   Struck: (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";

   Struck: (C) by redesignating subsection (d) as subsection (e); and

   Struck: (D) by inserting after subsection (c) the following new subsection:

   Struck: "(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 a health insurance issuer from offering health insurance coverage in connection with a small business health plan which is certified under part 8.

   Struck: "(2) In any case in which health insurance coverage of any policy type is offered under a small business 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 establish rating and benefit requirements that would otherwise apply to such coverage, provided the requirements of subtitle A of title XXIX of the Public Health Service Act (as added by title II of the Health Insurance Marketplace Modernization and Affordability Act of 2006) (concerning health plan rating and benefits) are met.".

   Struck: (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 a small business health plan under part 8.".

   Struck: (d) Savings Clause.--Section 731(c) of such Act is amended by inserting "or part 8" after "this part".

   Struck: (e) 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:

   Struck: "Part 8--Rules Governing Small Business Health Plans

   Struck: "801. Small business health plans. "802. Certification of small business health plans. "803. Requirements relating to sponsors and boards of trustees. "804. Participation and coverage requirements. "805. Other requirements relating to plan documents, contribution rates, and benefit options. "806. Requirements for application and related requirements. "807. Notice requirements for voluntary termination. "808. Definitions and rules of construction.".

   Struck: SEC. 102. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

   Struck: 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:

   Struck: "(d) Consultation With States With Respect to Small Business Health Plans.--

   Struck: "(1) Agreements with states.--The Secretary shall consult with the State recognized under paragraph (2) with respect to a small business health plan regarding the exercise of--

   Struck: "(A) the Secretary's authority under sections 502 and 504 to enforce the requirements for certification under part 8; and

   Struck: "(B) the Secretary's authority to certify small business health plans under part 8 in accordance with regulations of the Secretary applicable to certification under part 8.

   Struck: "(2) Recognition of domicile state.--In carrying out paragraph (1), the Secretary shall ensure that only one State will be recognized, with respect to any particular small business health plan, as the State with which consultation is required. In carrying out this paragraph such State shall be the domicile State, as defined in section 805(c).".

   Struck: SEC. 103. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

   Struck: (a) Effective Date.--The amendments made by this title shall take effect 12 months after the date of the enactment of this Act. The Secretary of Labor shall first issue all regulations necessary to carry out the amendments made by this title within 6 months after the date of the enactment of this Act.

   Struck: (b) Treatment of Certain Existing Health Benefits Programs.--

   Struck: (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 808(a)(2) of the Employee Retirement Income Security Act of 1974 (as amended by this subtitle)) by the arrangement of an application for certification of the arrangement under part 8 of subtitle B of title I of such Act--

   Struck: (A) such arrangement shall be deemed to be a group health plan for purposes of title I of such Act;

   Struck: (B) the requirements of sections 801(a) and 803(a) of the Employee Retirement Income Security Act of 1974 shall be deemed met with respect to such arrangement;

   Struck: (C) the requirements of section 803(b) of such Act shall be deemed met, if the arrangement is operated by a board of trustees which--

   Struck: (i) is elected by the participating employers, with each employer having one vote; and

   Struck: (ii) has complete fiscal control over the arrangement and which is responsible for all operations of the arrangement;

   Struck: (D) the requirements of section 804(a) of such Act shall be deemed met with respect to such arrangement; and

   Struck: (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 or at such time that the arrangement provides coverage to participants and beneficiaries in any State other than the States in which coverage is provided on such date of enactment.

   Struck: (2) Definitions.--For purposes of this subsection, the terms "group health plan", "medical care", and "participating employer" shall have the meanings provided in section 808 of the Employee Retirement Income Security Act of 1974, except that the reference in paragraph (7) of such section to an "small business health plan" shall be deemed a reference to an arrangement referred to in this subsection.

   Struck: TITLE II--MARKET RELIEF

   Struck: SEC. 201. MARKET RELIEF.

   Struck: The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding at the end the following:

   Struck: "TITLE XXIX--HEALTH CARE INSURANCE MARKETPLACE MODERNIZATION

   [struck: "]SEC. [struck: 2901][inserted: 2]. [struck: GENERAL INSURANCE ]DEFINITIONS.

   [struck: "][inserted: (a) ]In [inserted: General.--In ]this [struck: title][inserted: Act], the terms [struck: 'health insurance coverage', '][inserted: "member of family", "]health [struck: insurance issuer', 'group health plan'][inserted: benefits plan", "carrier", "employee organizations"], and [struck: 'individual health insurance' shall ][inserted: "dependent" ]have the meanings given such terms in section [struck: 2791][inserted: 8901 of title 5, United States Code].

   Struck: "Subtitle A--Market Relief

   Struck: "PART I--RATING REQUIREMENTS

   Struck: "SEC. 2911. DEFINITIONS.

   Struck: "(a) General Definitions.--In this part:

   Show 227 more struck paragraphsShow less

   Struck: "(1) Adopting state.--The term 'adopting State' means a State that, with respect to the small group market, has enacted either the Model Small Group Rating Rules or, if applicable to such State, the Transitional Model Small Group Rating Rules, each in their entirety and as the exclusive laws of the State that relate to rating in the small group insurance market.

   Struck: "(2) 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 insurance laws of such State.

   Struck: "(3) Base premium rate.--The term 'base premium rate' means, for each class of business with respect to a rating period, the lowest premium rate charged or that could have been charged under a rating system for that class of business by the small employer carrier to small employers with similar case characteristics for health benefit plans with the same or similar coverage "(4) Eligible insurer.--The term 'eligible insurer' means a health insurance issuer that is licensed in a State and that--

   Struck: "(A) notifies the Secretary, not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage consistent with the Model Small Group Rating Rules or, as applicable, transitional small group rating rules in a State;

   Struck: "(B) notifies the insurance department of a nonadopting State (or other State agency), not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer small group health insurance coverage in that State consistent with the Model Small Group Rating Rules, and provides with such notice a copy of any insurance policy that it intends to offer in the State, its most recent annual and quarterly financial reports, and any other information required to be filed with the insurance department of the State (or other State agency); and

   Struck: "(C) includes in the terms of the health insurance coverage offered in nonadopting States (including in the terms of any individual certificates that may be offered to individuals in connection with such group health coverage) and filed with the State pursuant to subparagraph (B), a description in the insurer's contract of the Model Small Group Rating Rules and an affirmation that such Rules are included in the terms of such contract.

   Struck: "(5) Health insurance coverage.--The term 'health insurance coverage' means any coverage issued in the small group health insurance market, except that such term shall not include excepted benefits (as defined in section 2791(c)).

   Struck: "(6) Index rate.--The term 'index rate' means for each class of business with respect to the rating period for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate.

   Struck: "(7) Model small group rating rules.--The term ' Model Small Group Rating Rules' means the rules set forth in subsection (b).

   Struck: "(8) Nonadopting state.--The term 'nonadopting State' means a State that is not an adopting State.

   Struck: "(9) Small group insurance market.--The term 'small group insurance market' shall have the meaning given the term 'small group market' in section 2791(e)(5).

   Struck: "(10) State law.--The term 'State law' means all laws, decisions, rules, regulations, or other State actions (including actions by a State agency) having the effect of law, of any State.

   Struck: "(b) Definition Relating to Model Small Group Rating Rules.--The term 'Model Small Group Rating Rules' means adapted rating rules drawn from the Adopted Small Employer Health Insurance Availability Model Act of 1993 of the National Association of Insurance Commissioners consisting of the following:

   Struck: "(1) Premium rates.--Premium rates for health benefit plans to which this title applies shall be subject to the following provisions relating to premiums:

   Struck: "(A) Index rate.--The index rate for a rating period for any class of business shall not exceed the index rate for any other class of business by more than 20 percent.

   Struck: "(B) Class of businesses.--With respect to a class of business, the premium rates charged during a rating period to small employers with similar case characteristics for the same or similar coverage or the rates that could be charged to such employers under the rating system for that class of business, shall not vary from the index rate by more than 25 percent of the index rate under subparagraph (A).

   Struck: "(C) Increases for new rating periods.--The percentage increase in the premium rate charged to a small employer for a new rating period may not exceed the sum of the following:

   Struck: "(i) The percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period. In the case of a health benefit plan into which the small employer carrier is no longer enrolling new small employers, the small employer carrier shall use the percentage change in the base premium rate, except that such change shall not exceed, on a percentage basis, the change in the new business premium rate for the most similar health benefit plan into which the small employer carrier is actively enrolling new small employers.

   Struck: "(ii) Any adjustment, not to exceed 15 percent annually and adjusted pro rata for rating periods of less then 1 year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer as determined from the small employer carrier's rate manual for the class of business involved.

   Struck: "(iii) Any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the small employer carrier's rate manual for the class of business.

   Struck: "(D) Uniform application of adjustments.-- Adjustments in premium rates for claim experience, health status, or duration of coverage shall not be charged to individual employees or dependents. Any such adjustment shall be applied uniformly to the rates charged for all employees and dependents of the small employer.

   Struck: "(E) Use of industry as a case characteristic.--A small employer carrier may utilize industry as a case characteristic in establishing premium rates, so long as the highest rate factor associated with any industry classification does not exceed the lowest rate factor associated with any industry classification by more than 15 percent.

   Struck: "(F) Consistent application of factors.--Small employer carriers shall apply rating factors, including case characteristics, consistently with respect to all small employers in a class of business. Rating factors shall produce premiums for identical groups which differ only by the amounts attributable to plan design and do not reflect differences due to the nature of the groups assumed to select particular health benefit plans.

   Struck: "(G) Treatment of plans as having same rating period.--A small employer carrier shall treat all health benefit plans issued or renewed in the same calendar month as having the same rating period.

   Struck: "(H) Restricted network provisions.--For purposes of this subsection, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain a similar provision if the restriction of benefits to network providers results in substantial differences in claims costs.

   Struck: "(I) Prohibition on use of certain case characteristics.--The small employer carrier shall not use case characteristics other than age, gender, industry, geographic area, family composition, group size, and participation in wellness programs without prior approval of the applicable State authority.

   Struck: "(J) Require compliance.--Premium rates for small business health benefit plans shall comply with the requirements of this subsection notwithstanding any assessments paid or payable by a small employer carrier as required by a State's small employer carrier reinsurance program.

   Struck: "(2) Establishment of separate class of business.--Subject to paragraph (3), a small employer carrier may establish a separate class of business only to reflect substantial differences in expected claims experience or administrative costs related to the following:

   Struck: "(A) The small employer carrier uses more than one type of system for the marketing and sale of health benefit plans to small employers.

   Struck: "(B) The small employer carrier has acquired a class of business from another small employer carrier.

   Struck: "(C) The small employer carrier provides coverage to one or more association groups that meet the requirements of this title.

   Struck: "(3) Limitation.--A small employer carrier may establish up to 9 separate classes of business under paragraph (2), excluding those classes of business related to association groups under this title.

   Struck: "(4) Additional groupings.--The applicable State authority may approve the establishment of additional distinct groupings by small employer carriers upon the submission of an application to the applicable State authority and a finding by the applicable State authority that such action would enhance the efficiency and fairness of the small employer insurance marketplace.

   Struck: "(5) Limitation on transfers.--A small employer carrier shall not transfer a small employer involuntarily into or out of a class of business. A small employer carrier shall not offer to transfer a small employer into or out of a class of business unless such offer is made to transfer all small employers in the class of business without regard to case characteristics, claim experience, health status or duration of coverage since issue.

   Struck: "(6) Suspension of the rules.--The applicable State authority may suspend, for a specified period, the application of paragraph (1) to the premium rates applicable to one or more small employers included within a class of business of a small employer carrier for one or more rating periods upon a filing by the small employer carrier and a finding by the applicable State authority either that the suspension is reasonable when considering the financial condition of the small employer carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.

   Struck: "SEC. 2912. RATING RULES.

   Struck: "(a) Implementation of Model Small Group Rating Rules.--Not later than 6 months after the enactment of this title, the Secretary shall promulgate regulations implementing the Model Small Group Rating Rules pursuant to section 2911(b).

   Struck: "(b) Transitional Model Small Group Rating Rules.--

   Struck: "(1) In general.--Not later than 6 months after the date of enactment of this title and to the extent necessary to provide for a graduated transition to the Model Small Group Rating Rules, the Secretary, in consultation with the NAIC, shall promulgate Transitional Model Small Group Rating Rules in accordance with this subsection, which shall be applicable with respect to certain non-adopting States for a period of not to exceed 5 years from the date of the promulgation of the Model Small Group Rating Rules pursuant to subsection (a). After the expiration of such 5-year period, the transitional model small group rating rules shall expire, and the Model Small Group Rating Rules shall then apply with respect to all non-adopting States pursuant to the provisions of this part.

   Struck: "(2) Premium variation during transition.--

   Struck: "(A) Transition states.--During the transition period described in paragraph (1), small group health insurance coverage offered in a non-adopting State that had in place premium rating band requirements or premium limits that varied by less than 12.5 percent from the index rate within a class of business on the date of enactment of this title, shall not be subject to the premium variation provision of section 2911(b)(1) of the Model Small Group Rating Rules and shall instead be subject to the Transitional Model Small Group Rating Rules as promulgated by the Secretary pursuant to paragraph (1).

   Struck: "(B) Non-transition states.--During the transition period described in paragraph (1), and thereafter, small group health insurance coverage offered in a non- adopting State that had in place premium rating band requirements or premium limits that varied by more than 12.5 percent from the index rate within a class of business on the date of enactment of this title, shall not be subject to the Transitional Model Small Group Rating Rules as promulgated by the Secretary pursuant to paragraph (1), and instead shall be subject to the Model Small Group Rating Rules effective beginning with the first plan year or calendar year following the promulgation of such Rules, at the election of the eligible insurer.

   Struck: "(3) Transitioning of old business.--In developing the transitional model small group rating rules under paragraph (1), the Secretary shall, after consultation with the National Association of Insurance Commissioners and representatives of insurers operating in the small group health insurance market, promulgate special transition standards and timelines with respect to independent rating classes for old and new business, to the extent reasonably necessary to protect health insurance consumers and to ensure a stable and fair transition for old and new market entrants.

   Struck: "(4) Other transitional authority.--In developing the Transitional Model Small Group Rating Rules under paragraph (1), the Secretary shall provide for the application of the Transitional Model Small Group Rating Rules in transition States as the Secretary may determine necessary for a an effective transition.

   Struck: "(c) Market Re-Entry.--

   Struck: "(1) In general.--Notwithstanding any other provision of law, a health insurance issuer that has voluntarily withdrawn from providing coverage in the small group market prior to the date of enactment of the Health Insurance Marketplace Modernization and Affordability Act of 2006 shall not be excluded from re-entering such market on a date that is more than 180 days after such date of enactment.

   Struck: "(2) Termination.--The provision of this subsection shall terminate on the date that is 24 months after the date of enactment of the Health Insurance Marketplace Modernization and Affordability Act of 2006.

   Struck: "SEC. 2913. APPLICATION AND PREEMPTION.

   Struck: "(a) Superseding of State Law.--

   Struck: "(1) In general.--This part shall supersede any and all State laws of a non-adopting State insofar as such State laws (whether enacted prior to or after the date of enactment of this subtitle) relate to rating in the small group insurance market as applied to an eligible insurer, or small group health insurance coverage issued by an eligible insurer, including with respect to coverage issued to a small employer through a small business health plan, in a State.

   Struck: "(2) Nonadopting states.--This part shall supersede any and all State laws of a nonadopting State insofar as such State laws (whether enacted prior to or after the date of enactment of this subtitle)--

   Struck: "(A) prohibit an eligible insurer from offering, marketing, or implementing small group health insurance coverage consistent with the Model Small Group Rating Rules or transitional model small group rating rules; or

   Struck: "(B) have the effect of retaliating against or otherwise punishing in any respect an eligible insurer for offering, marketing, or implementing small group health insurance coverage consistent with the Model Small Group Rating Rules or transitional model small group rating rules.

   Struck: "(b) Savings Clause and Construction.--

   Struck: "(1) Nonapplication to adopting states.--Subsection (a) shall not apply with respect to adopting states.

   Struck: "(2) Nonapplication to certain insurers.--Subsection (a) shall not apply with respect to insurers that do not qualify as eligible insurers that offer small group health insurance coverage in a nonadopting State.

   Struck: "(3) Nonapplication where obtaining relief under state law.--Subsection (a)(1) shall not supercede any State law in a nonadopting State to the extent necessary to permit individuals or the insurance department of the State (or other State agency) to obtain relief under State law to require an eligible insurer to comply with the Model Small Group Rating Rules or transitional model small group rating rules.

   Struck: "(4) No effect on preemption.--In no case shall this part be construed to limit or affect in any manner the preemptive scope of sections 502 and 514 of the Employee Retirement Income Security Act of 1974. In no case shall this part be construed to create any cause of action under Federal or State law or enlarge or affect any remedy available under the Employee Retirement Income Security Act of 1974 "(c) Effective Date.--This section shall apply, at the election of the eligible insurer, beginning in the first plan year or the first calendar year following the issuance of the final rules by the Secretary under the Model Small Group Rating Rules or, as applicable, the Transitional Model Small Group Rating Rules, but in no event earlier than the date that is 12 months after the date of enactment of this title.

   Struck: "SEC. 2914. CIVIL ACTIONS AND JURISDICTION.

   Struck: "(a) In General.--The courts of the United States shall have exclusive jurisdiction over civil actions involving the interpretation of this part.

   Struck: "(b) Actions.--An eligible insurer may bring an action in the district courts of the United States for injunctive or other equitable relief against any officials or agents of a nonadopting State in connection with any conduct or action, or proposed conduct or action, by such officials or agents which violates, or which would if undertaken violate, section 2913.

   Struck: "(c) Direct Filing in Court of Appeals.--At the election of the eligible insurer, an action may be brought under subsection (b) directly in the United States Court of Appeals for the circuit in which the nonadopting State is located by the filing of a petition for review in such Court.

   Struck: "(d) Expedited Review.--

   Struck: "(1) District court.--In the case of an action brought in a district court of the United States under subsection (b), such court shall complete such action, including the issuance of a judgment, prior to the end of the 120-day period beginning on the date on which such action is filed, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(2) Court of appeals.--In the case of an action brought directly in a United States Court of Appeal under subsection (c), or in the case of an appeal of an action brought in a district court under subsection (b), such Court shall complete all action on the petition, including the issuance of a judgment, prior to the end of the 60-day period beginning on the date on which such petition is filed with the Court, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(e) Standard of Review.--A court in an action filed under this section, shall render a judgment based on a review of the merits of all questions presented in such action and shall not defer to any conduct or action, or proposed conduct or action, of a nonadopting State.

   Struck: "SEC. 2915. ONGOING REVIEW.

   Struck: "Not later than 5 years after the date on which the Model Small Group Rating Rules are issued under this part, and every 5 years thereafter, the Secretary, in consultation with the National Association of Insurance Commissioners, shall prepare and submit to the appropriate committees of Congress a report that assesses the effect of the Model Small Group Rating Rules on access, cost, and market functioning in the small group market. Such report may, if the Secretary, in consultation with the National Association of Insurance Commissioners, determines such is appropriate for improving access, costs, and market functioning, contain legislative proposals for recommended modification to such Model Small Group Rating Rules.

   Struck: "PART II--AFFORDABLE PLANS

   Struck: "SEC. 2921. DEFINITIONS.

   Struck: "In this part:

   Struck: "(1) Adopting state.--The term 'adopting State' means a State that has enacted the Benefit Choice Standards in their entirety and as the exclusive laws of the State that relate to benefit, service, and provider mandates in the group and individual insurance markets.

   Struck: "(2) Benefit choice standards.--The term 'Benefit Choice Standards' means the Standards issued under section 2922.

   Struck: "(3) Eligible insurer.--The term 'eligible insurer' means a health insurance issuer that is licensed in a nonadopting State and that--

   Struck: "(A) notifies the Secretary, not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage consistent with the Benefit Choice Standards in a nonadopting State;

   Struck: "(B) notifies the insurance department of a nonadopting State (or other State agency), not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage in that State consistent with the Benefit Choice Standards, and provides with such notice a copy of any insurance policy that it intends to offer in the State, its most recent annual and quarterly financial reports, and any other information required to be filed with the insurance department of the State (or other State agency) by the Secretary in regulations; and

   Struck: "(C) includes in the terms of the health insurance coverage offered in nonadopting States (including in the terms of any individual certificates that may be offered to individuals in connection with such group health coverage) and filed with the State pursuant to subparagraph (B), a description in the insurer's contract of the Benefit Choice Standards and that adherence to such Standards is included as a term of such contract.

   Struck: "(4) Health insurance coverage.--The term 'health insurance coverage' means any coverage issued in the group or individual health insurance markets, except that such term shall not include excepted benefits (as defined in section 2791(c)).

   Struck: "(5) Nonadopting state.--The term 'nonadopting State' means a State that is not an adopting State.

   Struck: "(6) Small group insurance market.--The term 'small group insurance market' shall have the meaning given the term 'small group market' in section 2791(e)(5).

   Struck: "(7) State law.--The term 'State law' means all laws, decisions, rules, regulations, or other State actions (including actions by a State agency) having the effect of law, of any State.

   Struck: "SEC. 2922. OFFERING AFFORDABLE PLANS.

   Struck: "(a) Benefit Choice Options.--

   Struck: "(1) Development.--Not later than 6 months after the date of enactment of this title, the Secretary shall issue, by interim final rule, Benefit Choice Standards that implement the standards provided for in this part.

   Struck: "(2) Basic options.--The Benefit Choice Standards shall provide that a health insurance issuer in a State, may offer a coverage plan or plan in the small group market, individual market, large group market, or through a small business health plan, that does not comply with one or more mandates regarding covered benefits, services, or category of provider as may be in effect in such State with respect to such market or markets (either prior to or following the date of enactment of this title), if such issuer also offers in such market or markets an enhanced option as provided for in paragraph (3).

   Struck: "(3) Enhanced option.--A health insurance issuer issuing a basic option as provided for in paragraph (2) shall also offer to purchasers (including, with respect to a small business health plan, the participating employers of such plan) an enhanced option, which shall at a minimum include such covered benefits, services, and categories of providers as are covered by a State employee coverage plan in one of the 5 most populous States as are in effect in the calendar year in which such enhanced option is offered.

   Struck: "(4) Publication of benefits.--Not later than 3 months after the date of enactment of this title, and on the first day of every calendar year thereafter, the Secretary shall publish in the Federal Register such covered benefits, services, and categories of providers covered in that calendar year by the State employee coverage plans in the 5 most populous States.

   Struck: "(b) Effective Dates.--

   Struck: "(1) Small business health plans.--With respect to health insurance provided to participating employers of small business health plans, the requirements of this part (concerning lower cost plans) shall apply beginning on the date that is 12 months after the date of enactment of this title.

   Struck: "(2) Non-association coverage.--With respect to health insurance provided to groups or individuals other than participating employers of small business health plans, the requirements of this part shall apply beginning on the date that is 15 months after the date of enactment of this title.

   Struck: "SEC. 2923. APPLICATION AND PREEMPTION.

   Struck: "(a) Superceding of State Law.--

   Struck: "(1) In general.--This part shall supersede any and all State laws insofar as such laws relate to mandates relating to covered benefits, services, or categories of provider in the health insurance market as applied to an eligible insurer, or health insurance coverage issued by an eligible insurer, including with respect to coverage issued to a small business health plan, in a nonadopting State.

   Struck: "(2) Nonadopting states.--This part shall supersede any and all State laws of a nonadopting State (whether enacted prior to or after the date of enactment of this title) insofar as such laws--

   Struck: "(A) prohibit an eligible insurer from offering, marketing, or implementing health insurance coverage consistent with the Benefit Choice Standards, as provided for in section 2922(a); or

   Struck: "(B) have the effect of retaliating against or otherwise punishing in any respect an eligible insurer for offering, marketing, or implementing health insurance coverage consistent with the Benefit Choice Standards.

   Struck: "(b) Savings Clause and Construction.--

   Struck: "(1) Nonapplication to adopting states.--Subsection (a) shall not apply with respect to adopting States.

   Struck: "(2) Nonapplication to certain insurers.--Subsection (a) shall not apply with respect to insurers that do not qualify as eligible insurers who offer health insurance coverage in a nonadopting State.

   Struck: "(3) Nonapplication where obtaining relief under state law.--Subsection (a)(1) shall not supercede any State law of a nonadopting State to the extent necessary to permit individuals or the insurance department of the State (or other State agency) to obtain relief under State law to require an eligible insurer to comply with the Benefit Choice Standards.

   Struck: "(4) No effect on preemption.--In no case shall this part be construed to limit or affect in any manner the preemptive scope of sections 502 and 514 of the Employee Retirement Income Security Act of 1974. In no case shall this part be construed to create any cause of action under Federal or State law or enlarge or affect any remedy available under the Employee Retirement Income Security Act of 1974

   Struck: "SEC. 2924. CIVIL ACTIONS AND JURISDICTION.

   Struck: "(a) In General.--The courts of the United States shall have exclusive jurisdiction over civil actions involving the interpretation of this part.

   Struck: "(b) Actions.--An eligible insurer may bring an action in the district courts of the United States for injunctive or other equitable relief against any officials or agents of a nonadopting State in connection with any conduct or action, or proposed conduct or action, by such officials or agents which violates, or which would if undertaken violate, section 2923.

   Struck: "(c) Direct Filing in Court of Appeals.--At the election of the eligible insurer, an action may be brought under subsection (b) directly in the United States Court of Appeals for the circuit in which the nonadopting State is located by the filing of a petition for review in such Court.

   Struck: "(d) Expedited Review.--

   Struck: "(1) District court.--In the case of an action brought in a district court of the United States under subsection (b), such court shall complete such action, including the issuance of a judgment, prior to the end of the 120-day period beginning on the date on which such action is filed, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(2) Court of appeals.--In the case of an action brought directly in a United States Court of Appeal under subsection (c), or in the case of an appeal of an action brought in a district court under subsection (b), such Court shall complete all action on the petition, including the issuance of a judgment, prior to the end of the 60-day period beginning on the date on which such petition is filed with the Court, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(e) Standard of Review.--A court in an action filed under this section, shall render a judgment based on a review of the merits of all questions presented in such action and shall not defer to any conduct or action, or proposed conduct or action, of a nonadopting State.

   Struck: "SEC. 2925. RULES OF CONSTRUCTION.

   Struck: "(a) In General.--Notwithstanding any other provision of Federal or State law, a health insurance issuer in an adopting State or an eligible insurer in a non-adopting State may amend its existing policies to be consistent with the terms of this subtitle (concerning rating and benefits).

   Struck: "(b) Health Savings Accounts.--Nothing in this subtitle shall be construed to inhibit the development of health savings accounts pursuant to section 223 of the Internal Revenue Code of 1986.".

   Struck: TITLE III--HARMONIZATION OF HEALTH INSURANCE STANDARDS

   Struck: SEC. 301. HEALTH INSURANCE STANDARDS HARMONIZATION.

   Struck: Title XXIX of the Public Health Service Act (as added by section 201) is amended by adding at the end the following:

   Struck: "Subtitle B--Standards Harmonization

   Struck: "SEC. 2931. DEFINITIONS.

   Struck: "In this subtitle:

   Struck: "(1) Adopting state.--The term 'adopting State' means a State that has enacted the harmonized standards adopted under this subtitle in their entirety and as the exclusive laws of the State that relate to the harmonized standards.

   Struck: "(2) Eligible insurer.--The term 'eligible insurer' means a health insurance issuer that is licensed in a nonadopting State and that--

   Struck: "(A) notifies the Secretary, not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage consistent with the harmonized standards in a nonadopting State;

   Struck: "(B) notifies the insurance department of a nonadopting State (or other State agency), not later than 30 days prior to the offering of coverage described in this subparagraph, that the issuer intends to offer health insurance coverage in that State consistent with the harmonized standards published pursuant to section 2932(d), and provides with such notice a copy of any insurance policy that it intends to offer in the State, its most recent annual and quarterly financial reports, and any other information required to be filed with the insurance department of the State (or other State agency) by the Secretary in regulations; and

   Struck: "(C) includes in the terms of the health insurance coverage offered in nonadopting States (including in the terms of any individual certificates that may be offered to individuals in connection with such health coverage) and filed with the State pursuant to subparagraph (B), a description of the harmonized standards published pursuant to section 2932(g)(2) and an affirmation that such standards are a term of the contract.

   Struck: "(3) Harmonized standards.--The term 'harmonized standards' means the standards certified by the Secretary under section 2932(d).

   Struck: "(4) Health insurance coverage.--The term 'health insurance coverage' means any coverage issued in the health insurance market, except that such term shall not include excepted benefits (as defined in section 2791(c).

   Struck: "(5) Nonadopting state.--The term 'nonadopting State' means a State that fails to enact, within 18 months of the date on which the Secretary certifies the harmonized standards under this subtitle, the harmonized standards in their entirety and as the exclusive laws of the State that relate to the harmonized standards.

   Struck: "(6) State law.--The term 'State law' means all laws, decisions, rules, regulations, or other State actions (including actions by a State agency) having the effect of law, of any State.

   Struck: "SEC. 2932. HARMONIZED STANDARDS.

   Struck: "(a) Board.--

   Struck: "(1) Establishment.--Not later than 3 months after the date of enactment of this title, the Secretary, in consultation with the NAIC, shall establish the Health Insurance Consensus Standards Board (referred to in this subtitle as the 'Board') to develop recommendations that harmonize inconsistent State health insurance laws in accordance with the procedures described in subsection (b).

   Struck: "(2) Composition.--

   Struck: "(A) In general.--The Board shall be composed of the following voting members to be appointed by the Secretary after considering the recommendations of professional organizations representing the entities and constituencies described in this paragraph:

   Struck: "(i) Four State insurance commissioners as recommended by the National Association of Insurance Commissioners, of which 2 shall be Democrats and 2 shall be Republicans, and of which one shall be designated as the chairperson and one shall be designated as the vice chairperson.

   Struck: "(ii) Four representatives of State government, two of which shall be governors of States and two of which shall be State legislators, and two of which shall be Democrats and two of which shall be Republicans.

   Struck: "(iii) Four representatives of health insurers, of which one shall represent insurers that offer coverage in the small group market, one shall represent insurers that offer coverage in the large group market, one shall represent insurers that offer coverage in the individual market, and one shall represent carriers operating in a regional market.

   Struck: "(iv) Two representatives of insurance agents and brokers.

   Struck: "(v) Two independent representatives of the American Academy of Actuaries who have familiarity with the actuarial methods applicable to health insurance.

   Struck: "(B) Ex officio member.--A representative of the Secretary shall serve as an ex officio member of the Board.

   Struck: "(3) Advisory panel.--The Secretary shall establish an advisory panel to provide advice to the Board, and shall appoint its members after considering the recommendations of professional organizations representing the entities and constituencies identified in this paragraph:

   Struck: "(A) Two representatives of small business health plans.

   Struck: "(B) Two representatives of employers, of which one shall represent small employers and one shall represent large employers.

   Struck: "(C) Two representatives of consumer organizations.

   Struck: "(D) Two representatives of health care providers.

   Struck: "(4) Qualifications.--The membership of the Board shall include individuals with national recognition for their expertise in health finance and economics, actuarial science, health plans, providers of health services, and other related fields, who provide a mix of different professionals, broad geographic representation, and a balance between urban and rural representatives.

   Struck: "(5) Ethical disclosure.--The Secretary shall establish a system for public disclosure by members of the Board of financial and other potential conflicts of interest relating to such members. Members of the Board shall be treated as employees of Congress for purposes of applying title I of the Ethics in Government Act of 1978 (Public Law 95-521).

   Struck: "(6) Director and staff.--Subject to such review as the Secretary deems necessary to assure the efficient administration of the Board, the chair and vice-chair of the Board may--

   Struck: "(A) employ and fix the compensation of an Executive Director (subject to the approval of the Comptroller General) and such other personnel as may be necessary to carry out its duties (without regard to the provisions of title 5, United States Code, governing appointments in the competitive service);

   Struck: "(B) seek such assistance and support as may be required in the performance of its duties from appropriate Federal departments and agencies;

   Struck: "(C) enter into contracts or make other arrangements, as may be necessary for the conduct of the work of the Board (without regard to section 3709 of the Revised Statutes (41 U.S.C. 5));

   Struck: "(D) make advance, progress, and other payments which relate to the work of the Board;

   Struck: "(E) provide transportation and subsistence for persons serving without compensation; and

   Struck: "(F) prescribe such rules as it deems necessary with respect to the internal organization and operation of the Board.

   Struck: "(7) Terms.--The members of the Board shall serve for the duration of the Board. Vacancies in the Board shall be filled as needed in a manner consistent with the composition described in paragraph (2).

   Struck: "(b) Development of Harmonized Standards.--

   Struck: "(1) In general.--In accordance with the process described in subsection (c), the Board shall identify and recommend nationally harmonized standards for each of the following process categories:

   Struck: "(A) Form filing and rate filing.--Form and rate filing standards shall be established which promote speed to market and include the following defined areas for States that require such filings:

   Struck: "(i) Procedures for form and rate filing pursuant to a streamlined administrative filing process.

   Struck: "(ii) Timeframes for filings to be reviewed by a State if review is required before they are deemed approved.

   Struck: "(iii) Timeframes for an eligible insurer to respond to State requests following its review.

   Struck: "(iv) A process for an eligible insurer to self-certify.

   Struck: "(v) State development of form and rate filing templates that include only non- preempted State law and Federal law requirements for eligible insurers with timely updates.

   Struck: "(vi) Procedures for the resubmission of forms and rates.

   Struck: "(vii) Disapproval rationale of a form or rate filing based on material omissions or violations of non-preempted State law or Federal law with violations cited and explained.

   Struck: "(viii) For States that may require a hearing, a rationale for hearings based on violations of non-preempted State law or insurer requests.

   Struck: "(B) Market conduct review.--Market conduct review standards shall be developed which provide for the following:

   Struck: "(i) Mandatory participation in national databases.

   Struck: "(ii) The confidentiality of examination materials.

   Struck: "(iii) The identification of the State agency with primary responsibility for examinations.

   Struck: "(iv) Consultation and verification of complaint data with the eligible insurer prior to State actions.

   Struck: "(v) Consistency of reporting requirements with the recordkeeping and administrative practices of the eligible insurer.

   Struck: "(vi) Examinations that seek to correct material errors and harmful business practices rather than infrequent errors.

   Struck: "(vii) Transparency and publishing of the State's examination standards.

   Struck: "(viii) Coordination of market conduct analysis.

   Struck: "(ix) Coordination and nonduplication between State examinations of the same eligible insurer.

   Struck: "(x) Rationale and protocols to be met before a full examination is conducted.

   Struck: "(xi) Requirements on examiners prior to beginning examinations such as budget planning and work plans.

   Struck: "(xii) Consideration of methods to limit examiners' fees such as caps, competitive bidding, or other alternatives.

   Struck: "(xiii) Reasonable fines and penalties for material errors and harmful business practices.

   Struck: "(C) Prompt payment of claims.--The Board shall establish prompt payment standards for eligible insurers based on standards similar to those applicable to the Social Security Act as set forth in section 1842(c)(2) of such Act (42 U.S.C. 1395u(c)(2)). Such prompt payment standards shall be consistent with the timing and notice requirements of the claims procedure rules to be specified under subparagraph (D), and shall include appropriate exceptions such as for fraud, nonpayment of premiums, or late submission of claims.

   Struck: "(D) Internal review.--The Board shall establish standards for claims procedures for eligible insurers that are consistent with the requirements relating to initial claims for benefits and appeals of claims for benefits under the Employee Retirement Income Security Act of 1974 as set forth in section 503 of such Act (29 U.S.C. 1133) and the regulations thereunder.

   Struck: "(2) Recommendations.--The Board shall recommend harmonized standards for each element of the categories described in subparagraph (A) through (D) of paragraph (1) within each such market. Notwithstanding the previous sentence, the Board shall not recommend any harmonized standards that disrupt, expand, or duplicate the benefit, service, or provider mandate standards provided in the Benefit Choice Standards pursuant to section 2922(a).

   Struck: "(c) Process for Identifying Harmonized Standards.--

   Struck: "(1) In general.--The Board shall develop recommendations to harmonize inconsistent State insurance laws with respect to each of the process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   Struck: "(2) Requirements.--In adopting standards under this section, the Board shall consider the following:

   Struck: "(A) Any model acts or regulations of the National Association of Insurance Commissioners in each of the process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   Struck: "(B) Substantially similar standards followed by a plurality of States, as reflected in existing State laws, relating to the specific process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   Struck: "(C) Any Federal law requirement related to specific process categories described in subparagraphs (A) through (D) of subsection (b)(1).

   Struck: "(D) In the case of the adoption of any standard that differs substantially from those referred to in subparagraphs (A), (B), or (C), the Board shall provide evidence to the Secretary that such standard is necessary to protect health insurance consumers or promote speed to market or administrative efficiency.

   Struck: "(E) The criteria specified in clauses (i) through (iii) of subsection (d)(2)(B).

   Struck: "(d) Recommendations and Certification by Secretary.--

   Struck: "(1) Recommendations.--Not later than 18 months after the date on which all members of the Board are selected under subsection (a), the Board shall recommend to the Secretary the certification of the harmonized standards identified pursuant to subsection (c).

   Struck: "(2) Certification.--

   Struck: "(A) In general.--Not later than 120 days after receipt of the Board's recommendations under paragraph (1), the Secretary shall certify the recommended harmonized standards as provided for in subparagraph (B), and issue such standards in the form of an interim final regulation.

   Struck: "(B) Certification process.--The Secretary shall establish a process for certifying the recommended harmonized standard, by category, as recommended by the Board under this section. Such process shall--

   Struck: "(i) ensure that the certified standards for a particular process area achieve regulatory harmonization with respect to health plans on a national basis;

   Struck: "(ii) ensure that the approved standards are the minimum necessary, with regard to substance and quantity of requirements, to protect health insurance consumers and maintain a competitive regulatory environment; and

   Struck: "(iii) ensure that the approved standards will not limit the range of group health plan designs and insurance products, such as catastrophic coverage only plans, health savings accounts, and health maintenance organizations, that might otherwise be available to consumers.

   Struck: "(3) Effective date.--The standards certified by the Secretary under paragraph (2) shall be effective on the date that is 18 months after the date on which the Secretary certifies the harmonized standards.

   Struck: "(e) Termination.--The Board shall terminate and be dissolved after making the recommendations to the Secretary pursuant to subsection (d)(1).

   Struck: "(f) Ongoing Review.--Not earlier than 3 years after the termination of the Board under subsection (e), and not earlier than every 3 years thereafter, the Secretary, in consultation with the National Association of Insurance Commissioners and the entities and constituencies represented on the Board and the Advisory Panel, shall prepare and submit to the appropriate committees of Congress a report that assesses the effect of the harmonized standards on access, cost, and health insurance market functioning. The Secretary may, based on such report and applying the process established for certification under subsection (d)(2)(B), in consultation with the National Association of Insurance Commissioners and the entities and constituencies represented on the Board and the Advisory Panel, update the harmonized standards through notice and comment rulemaking.

   Struck: "(g) Publication.--

   Struck: "(1) Listing.--The Secretary shall maintain an up to date listing of all harmonized standards certified under this section on the Internet website of the Department of Health and Human Services.

   Struck: "(2) Sample contract language.--The Secretary shall publish on the Internet website of the Department of Health and Human Services sample contract language that incorporates the harmonized standards certified under this section, which may be used by insurers seeking to qualify as an eligible insurer. The types of harmonized standards that shall be included in sample contract language are the standards that are relevant to the contractual bargain between the insurer and insured.

   Struck: "(h) State Adoption and Enforcement.--Not later than 18 months after the certification by the Secretary of harmonized standards under this section, the States may adopt such harmonized standards (and become an adopting State) and, in which case, shall enforce the harmonized standards pursuant to State law.

   Struck: "SEC. 2933. APPLICATION AND PREEMPTION.

   Struck: "(a) Superceding of State Law.--

   Struck: "(1) In general.--The harmonized standards certified under this subtitle shall supersede any and all State laws of a non- adopting State insofar as such State laws relate to the areas of harmonized standards as applied to an eligible insurer, or health insurance coverage issued by a eligible insurer, including with respect to coverage issued to a small business health plan, in a nonadopting State.

   Struck: "(2) Nonadopting states.--This subtitle shall supersede any and all State laws of a nonadopting State (whether enacted prior to or after the date of enactment of this title) insofar as they may--

   Struck: "(A) prohibit an eligible insurer from offering, marketing, or implementing health insurance coverage consistent with the harmonized standards; or

   Struck: "(B) have the effect of retaliating against or otherwise punishing in any respect an eligible insurer for offering, marketing, or implementing health insurance coverage consistent with the harmonized standards under this subtitle.

   Struck: "(b) Savings Clause and Construction.--

   Struck: "(1) Nonapplication to adopting states.--Subsection (a) shall not apply with respect to adopting States.

   Struck: "(2) Nonapplication to certain insurers.--Subsection (a) shall not apply with respect to insurers that do not qualify as eligible insurers who offer health insurance coverage in a nonadopting State.

   Struck: "(3) Nonapplication where obtaining relief under state law.--Subsection (a)(1) shall not supercede any State law of a nonadopting State to the extent necessary to permit individuals or the insurance department of the State (or other State agency) to obtain relief under State law to require an eligible insurer to comply with the harmonized standards under this subtitle.

   Struck: "(4) No effect on preemption.--In no case shall this subtitle be construed to limit or affect in any manner the preemptive scope of sections 502 and 514 of the Employee Retirement Income Security Act of 1974. In no case shall this subtitle be construed to create any cause of action under Federal or State law or enlarge or affect any remedy available under the Employee Retirement Income Security Act of 1974.

   Struck: "(c) Effective Date.--This section shall apply beginning on the date that is 18 months after the date on harmonized standards are certified by the Secretary under this subtitle.

   Struck: "SEC. 2934. CIVIL ACTIONS AND JURISDICTION.

   Struck: "(a) In General.--The district courts of the United States shall have exclusive jurisdiction over civil actions involving the interpretation of this subtitle.

   Struck: "(b) Actions.--An eligible insurer may bring an action in the district courts of the United States for injunctive or other equitable relief against any officials or agents of a nonadopting State in connection with any conduct or action, or proposed conduct or action, by such officials or agents which violates, or which would if undertaken violate, section 2933.

   Struck: "(c) Direct Filing in Court of Appeals.--At the election of the eligible insurer, an action may be brought under subsection (b) directly in the United States Court of Appeals for the circuit in which the nonadopting State is located by the filing of a petition for review in such Court.

   Struck: "(d) Expedited Review.--

   Struck: "(1) District court.--In the case of an action brought in a district court of the United States under subsection (b), such court shall complete such action, including the issuance of a judgment, prior to the end of the 120-day period beginning on the date on which such action is filed, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(2) Court of appeals.--In the case of an action brought directly in a United States Court of Appeal under subsection (c), or in the case of an appeal of an action brought in a district court under subsection (b), such Court shall complete all action on the petition, including the issuance of a judgment, prior to the end of the 60-day period beginning on the date on which such petition is filed with the Court, unless all parties to such proceeding agree to an extension of such period.

   Struck: "(e) Standard of Review.--A court in an action filed under this section, shall render a judgment based on a review of the merits of all questions presented in such action and shall not defer to any conduct or action, or proposed conduct or action, of a nonadopting State.

   Struck: "SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE OF CONSTRUCTION.

   Struck: "(a) Authorization of Appropriations.--There are authorized to be appropriated such sums as may be necessary to carry out this subtitle.

   Struck: "(b) Health Savings Accounts.--Nothing in this subtitle shall be construed to inhibit the development of health savings accounts pursuant to section 223 of the Internal Revenue Code of 1986.".

   Inserted: (b) Other Terms.--In this Act:

   Inserted: (1) Employee.--The term "employee" has the meaning given such term under section 3(6) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(6)). Such term shall not include an employee of the Federal Government.

   Inserted: (2) Employer.--The term "employer" has the meaning given such term under section 3(5) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(5)), except that such term shall include only employers who employed an average of at least 1 but not more than 100 employees on business days during the year preceding the date of application. Such term shall not include the Federal Government.

   Inserted: (3) Health status-related factor.--The term "health status-related factor" has the meaning given such term in section 2791(d)(9) of the Public Health Service Act (42 U.S.C. 300gg-91(d)(9)).

   Inserted: (4) Office.--The term "Office" means the Office of Personnel Management.

   Inserted: (5) Participating employer.--The term "participating employer" means an employer that--

   Inserted: (A) elects to provide health insurance coverage under this Act to its employees; and

   Inserted: (B) is not offering other comprehensive health insurance coverage to such employees.

   Inserted: (c) Application of Certain Rules in Determination of Employer Size.--For purposes of subsection (b)(2):

   Inserted: (1) Application of aggregation rule for employers.--All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer.

   Inserted: (2) Employers not in existence in preceding year.--In the case of an employer which was not in existence for the full year prior to the date on which the employer applies to participate, the determination of whether such employer meets the requirements of subsection (b)(2) shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the employer's first full year.

   Inserted: (3) Predecessors.--Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.

   Show 186 more inserted paragraphsShow less

   Inserted: (d) Waiver and Continuation of Participation.--

   Inserted: (1) Waiver.--The Office may waive the limitations relating to the size of an employer which may participate in the health insurance program established under this Act on a case by case basis if the Office determines that such employer makes a compelling case for such a waiver. In making determinations under this paragraph, the Office may consider the effects of the employment of temporary and seasonal workers and other factors.

   Inserted: (2) Continuation of participation.--An employer participating in the program under this Act that experiences an increase in the number of employees so that such employer has in excess of 100 employees, may not be excluded from participation solely as a result of such increase in employees.

   Inserted: (e) Treatment of Health Benefits Plan as Group Health Plan.--A health benefits plan offered under this Act shall be treated as a group health plan for purposes of applying the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) except to the extent that a provision of this Act expressly provides otherwise.

   Inserted: SEC. 3. HEALTH INSURANCE COVERAGE FOR NON-FEDERAL EMPLOYEES.

   Inserted: (a) Administration.--The Office shall administer a health insurance program for non-Federal employees and employers in accordance with this Act.

   Inserted: (b) Regulations.--Except as provided under this Act, the Office shall prescribe regulations to apply the provisions of chapter 89 of title 5, United States Code, to the greatest extent practicable to participating carriers, employers, and employees covered under this Act.

   Inserted: (c) Limitations.--In no event shall the enactment of this Act result in--

   Inserted: (1) any increase in the level of individual or Federal Government contributions required under chapter 89 of title 5, United States Code, including copayments or deductibles;

   Inserted: (2) any decrease in the types of benefits offered under such chapter 89; or

   Inserted: (3) any other change that would adversely affect the coverage afforded under such chapter 89 to employees and annuitants and members of family under that chapter.

   Inserted: (d) Enrollment.--The Office shall develop methods to facilitate enrollment under this Act, including the use of the Internet.

   Inserted: (e) Contracts for Administration.--The Office may enter into contracts for the performance of appropriate administrative functions under this Act.

   Inserted: (f) Separate Risk Pool.--In the administration of this Act, the Office shall ensure that covered employees under this Act are in a risk pool that is separate from the risk pool maintained for covered individuals under chapter 89 of title 5, United States Code.

   Inserted: (g) Rule of Construction.--Nothing in this Act shall be construed to require a carrier that is participating in the program under chapter 89 of title 5, United States Code, to provide health benefits plan coverage under this Act.

   Inserted: SEC. 4. CONTRACT REQUIREMENT.

   Inserted: (a) In General.--The Office may enter into contracts with qualified carriers offering health benefits plans of the type described in section 8903 or 8903a of title 5, United States Code, without regard to section 5 of title 41, United States Code, or other statutes requiring competitive bidding, to provide health insurance coverage to employees of participating employers under this Act. Each contract shall be for a uniform term of at least 1 year, but may be made automatically renewable from term to term in the absence of notice of termination by either party. In entering into such contracts, the Office shall ensure that health benefits coverage is provided for individuals only, individuals with one or more children, married individuals without children, and married individuals with one or more children.

   Inserted: (b) Eligibility.--A carrier shall be eligible to enter into a contract under subsection (a) if such carrier--

   Inserted: (1) is licensed to offer health benefits plan coverage in each State in which the plan is offered; and

   Inserted: (2) meets such other requirements as determined appropriate by the Office.

   Inserted: (c) Statement of Benefits.--

   Inserted: (1) In general.--Each contract under this Act shall contain a detailed statement of benefits offered and shall include information concerning such maximums, limitations, exclusions, and other definitions of benefits as the Office considers necessary or desirable.

   Inserted: (2) Ensuring a range of plans.--The Office shall ensure that a range of health benefits plans are available to participating employers under this Act.

   Inserted: (3) Participating plans.--The Office shall not prohibit the offering of any health benefits plan to a participating employer if such plan is eligible to participate in the Federal Employees Health Benefits Program.

   Inserted: (4) Nationwide plan.--With respect to all nationwide plans, the Office shall develop a benefit package that shall be offered in the case of a contract for a health benefit plan that is to be offered on a nationwide basis that meets all State benefit mandates.

   Inserted: (d) Standards.--The minimum standards prescribed for health benefits plans under section 8902(e) of title 5, United States Code, and for carriers offering plans, shall apply to plans and carriers under this Act. Approval of a plan may be withdrawn by the Office only after notice and opportunity for hearing to the carrier concerned without regard to subchapter II of chapter 5 and chapter 7 of title 5, United States Code.

   Inserted: (e) Conversion.--

   Inserted: (1) In general.--A contract may not be made or a plan approved under this section if the carrier under such contract or plan does not offer to each enrollee whose enrollment in the plan is ended, except by a cancellation of enrollment, a temporary extension of coverage during which the individual may exercise the option to convert, without evidence of good health, to a nongroup contract providing health benefits. An enrollee who exercises this option shall pay the full periodic charges of the nongroup contract.

   Inserted: (2) Noncancellable.--The benefits and coverage made available under paragraph (1) may not be canceled by the carrier except for fraud, over-insurance, or nonpayment of periodic charges.

   Inserted: (f) Requirement of Payment for or Provision of Health Service.--Each contract entered into under this Act shall require the carrier to agree to pay for or provide a health service or supply in an individual case if the Office finds that the employee, annuitant, family member, former spouse, or person having continued coverage under section 8905a of title 5, United States Code, is entitled thereto under the terms of the contract.

   Inserted: SEC. 5. ELIGIBILITY.

   Inserted: An individual shall be eligible to enroll in a plan under this Act if such individual--

   Inserted: (1) is an employee of an employer described in section 2(b)(2), or is a self employed individual as defined in section 401(c)(1)(B) of the Internal Revenue Code of 1986; and

   Inserted: (2) is not otherwise enrolled or eligible for enrollment in a plan under chapter 89 of title 5, United States Code.

   Inserted: SEC. 6. ALTERNATIVE CONDITIONS TO FEDERAL EMPLOYEE PLANS.

   Inserted: (a) Treatment of Employee.--For purposes of enrollment in a health benefits plan under this Act, an individual who had coverage under a health insurance plan and is not a qualified beneficiary as defined under section 4980B(g)(1) of the Internal Revenue Code of 1986 shall be treated in a similar manner as an individual who begins employment as an employee under chapter 89 of title 5, United States Code.

   Inserted: (b) Preexisting Condition Exclusions.--

   Inserted: (1) In general.--Each contract under this Act may include a preexisting condition exclusion as defined under section 9801(b)(1) of the Internal Revenue Code of 1986.

   Inserted: (2) Exclusion period.--A preexisting condition exclusion under this subsection shall provide for coverage of a preexisting condition to begin not later than 6 months after the date on which the coverage of the individual under a health benefits plan commences, reduced by the aggregate 1 day for each day that the individual was covered under a health insurance plan immediately preceding the date the individual submitted an application for coverage under this Act. This provision shall be applied notwithstanding the applicable provision for the reduction of the exclusion period provided for in section 701(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181(a)(3)).

   Inserted: (c) Rates and Premiums.--

   Inserted: (1) In general.--Rates charged and premiums paid for a health benefits plan under this Act--

   Inserted: (A) shall be determined in accordance with this subsection;

   Inserted: (B) may be annually adjusted subject to paragraph (3);

   Inserted: (C) shall be negotiated in the same manner as rates and premiums are negotiated under such chapter 89; and

   Inserted: (D) shall be adjusted to cover the administrative costs of the Office under this Act.

   Inserted: (2) Determinations.--In determining rates and premiums under this Act, the following provisions shall apply:

   Inserted: (A) In general.--A carrier that enters into a contract under this Act shall determine that amount of premiums to assess for coverage under a health benefits plan based on an community rate that may be annually adjusted--

   Inserted: (i) for the geographic area involved if the adjustment is based on geographical divisions that are not smaller than a metropolitan statistical area and the carrier provides evidence of geographic variation in cost of services;

   Inserted: (ii) based on whether such coverage is for an individual, two adults, one adult and one or more children, or a family; and

   Inserted: (iii) based on the age of covered individuals (subject to subparagraph (C)).

   Inserted: (B) Limitation.--Premium rates charged for coverage under this Act shall not vary based on health-status related factors, gender, class of business, or claims experience

   Inserted: (C) Age adjustments.--

   Inserted: (i) In general.--With respect to subparagraph (A)(iii), in making adjustments based on age, the Office shall establish no more than 5 age brackets to be used by the carrier in establishing rates. The rates for any age bracket may not vary by more than 50 percent above or below the community rate on the basis of attained age. Age-related premiums may not vary within age brackets.

   Inserted: (ii) Age 65 and older.--With respect to subparagraph (A)(iii), a carrier may develop separate rates for covered individuals who are 65 years of age or older for whom medicare is the primary payor for health benefits coverage which is not covered under medicare.

   Inserted: "(3) Readjustments.--Any readjustment in rates charged or premiums paid for a health benefits plan under this Act shall be made in advance of the contract term in which they will apply and on a basis which, in the judgment of the Office, is consistent with the practice of the Office for the Federal Employees Health Benefits Program.

   Inserted: (d) Termination and Reenrollment.--If an individual who is enrolled in a health benefits plan under this Act terminates the enrollment, the individual shall not be eligible for reenrollment until the first open enrollment period following the expiration of 6 months after the date of such termination.

   Inserted: (e) Continued Applicability of State Law.--

   Inserted: (1) Health insurance or plans.--

   Inserted: (A) Plans.--With respect to a contract entered into under this Act under which a carrier will offer health benefits plan coverage, State mandated benefit laws in effect in the State in which the plan is offered shall continue to apply.

   Inserted: (B) Rating rules.--The rating requirements under subparagraphs (A) and (B) of subsection (c)(2) shall supercede State rating rules for qualified plans under this Act, except with respect to States that provide a rating variance with respect to age that is less than the Federal limit or that provide for some form of community rating.

   Inserted: (2) Limitation.--Nothing in this subsection shall be construed to preempt--

   Inserted: (A) any State or local law or regulation except those laws and regulations described in subparagraph (B) of paragraph (1);

   Inserted: (B) any State grievance, claims, and appeals procedure law, except to the extent that such law is preempted under section 514 of the Employee Retirement Income Security Act of 1974; and

   Inserted: (C) State network adequacy laws.

   Inserted: (f) Rule of Construction.--Nothing in this Act shall be construed to limit the application of the service-charge system used by the Office for determining profits for participating carriers under chapter 89 of title 5, United States Code.

   Inserted: SEC. 7. ENCOURAGING PARTICIPATION BY CARRIERS THROUGH ADJUSTMENTS FOR RISK.

   Inserted: (a) Application of Risk Corridors.--

   Inserted: (1) In general.--This section shall only apply to carriers with respect to health benefits plans offered under this Act during any of calendar years 2007 through 2009.

   Inserted: (2) Notification of costs under the plan.--In the case of a carrier that offers a health benefits plan under this Act in any of calendar years 2007 through 2009, the carrier shall notify the Office, before such date in the succeeding year as the Office specifies, of the total amount of costs incurred in providing benefits under the health benefits plan for the year involved and the portion of such costs that is attributable to administrative expenses.

   Inserted: (3) Allowable costs defined.--For purposes of this section, the term "allowable costs" means, with respect to a health benefits plan offered by a carrier under this Act, for a year, the total amount of costs described in paragraph (2) for the plan and year, reduced by the portion of such costs attributable to administrative expenses incurred in providing the benefits described in such paragraph.

   Inserted: (b) Adjustment of Payment.--

   Inserted: (1) No adjustment if allowable costs within 3 percent of target amount.--If the allowable costs for the carrier with respect to the health benefits plan involved for a calendar year are at least 97 percent, but do not exceed 103 percent, of the target amount for the plan and year involved, there shall be no payment adjustment under this section for the plan and year.

   Inserted: (2) Increase in payment if allowable costs above 103 percent of target amount.--

   Inserted: (A) Costs between 103 and 108 percent of target amount.--If the allowable costs for the carrier with respect to the health benefits plan involved for the year are greater than 103 percent, but not greater than 108 percent, of the target amount for the plan and year, the Office shall reimburse the carrier for such excess costs through payment to the carrier of an amount equal to 75 percent of the difference between such allowable costs and 103 percent of such target amount.

   Inserted: (B) Costs above 108 percent of target amount.--If the allowable costs for the carrier with respect to the health benefits plan involved for the year are greater than 108 percent of the target amount for the plan and year, the Office shall reimburse the carrier for such excess costs through payment to the carrier in an amount equal to the sum of--

   Inserted: (i) 3.75 percent of such target amount; and

   Inserted: (ii) 90 percent of the difference between such allowable costs and 108 percent of such target amount.

   Inserted: (3) Reduction in payment if allowable costs below 97 percent of target amount.--

   Inserted: (A) Costs between 92 and 97 percent of target amount.--If the allowable costs for the carrier with respect to the health benefits plan involved for the year are less than 97 percent, but greater than or equal to 92 percent, of the target amount for the plan and year, the carrier shall be required to pay into the contingency reserve fund maintained under section 8909(b)(2) of title 5, United States Code, an amount equal to 75 percent of the difference between 97 percent of the target amount and such allowable costs.

   Inserted: (B) Costs below 92 percent of target amount.--If the allowable costs for the carrier with respect to the health benefits plan involved for the year are less than 92 percent of the target amount for the plan and year, the carrier shall be required to pay into the stabilization fund under section 8909(b)(2) of title 5, United States Code, an amount equal to the sum of--

   Inserted: (i) 3.75 percent of such target amount; and

   Inserted: (ii) 90 percent of the difference between 92 percent of such target amount and such allowable costs.

   Inserted: (4) Target amount described.--

   Inserted: (A) In general.--For purposes of this subsection, the term "target amount" means, with respect to a health benefits plan offered by a carrier under this Act in any of calendar years 2007 through 2011, an amount equal to--

   Inserted: (i) the total of the monthly premiums estimated by the carrier and approved by the Office to be paid for enrollees in the plan under this Act for the calendar year involved; reduced by

   Inserted: (ii) the amount of administrative expenses that the carrier estimates, and the Office approves, will be incurred by the carrier with respect to the plan for such calendar year.

   Inserted: (B) Submission of target amount.--Not later than December 31, 2006, and each December 31 thereafter through calendar year 2010, a carrier shall submit to the Office a description of the target amount for such carrier with respect to health benefits plans provided by the carrier under this Act.

   Inserted: (c) Disclosure of Information.--

   Inserted: (1) In general.--Each contract under this Act shall provide--

   Inserted: (A) that a carrier offering a health benefits plan under this Act shall provide the Office with such information as the Office determines is necessary to carry out this subsection including the notification of costs under subsection (a)(2) and the target amount under subsection (b)(4)(B); and

   Inserted: (B) that the Office has the right to inspect and audit any books and records of the organization that pertain to the information regarding costs provided to the Office under such subsections.

   Inserted: (2) Restriction on use of information.--Information disclosed or obtained pursuant to the provisions of this subsection may be used by officers, employees, and contractors of the Office only for the purposes of, and to the extent necessary in, carrying out this section.

   Inserted: SEC. 8. ENCOURAGING PARTICIPATION BY CARRIERS THROUGH REINSURANCE.

   Inserted: (a) Establishment.--The Office shall establish a reinsurance fund to provide payments to carriers that experience one or more catastrophic claims during a year for health benefits provided to individuals enrolled in a health benefits plan under this Act.

   Inserted: (b) Eligibility for Payments.--To be eligible for a payment from the reinsurance fund for a plan year, a carrier under this Act shall submit to the Office an application that contains--

   Inserted: (1) a certification by the carrier that the carrier paid for at least one episode of care during the year for covered health benefits for an individual in an amount that is in excess of $50,000; and

   Inserted: (2) such other information determined appropriate by the Office.

   Inserted: (c) Payment.--

   Inserted: (1) In general.--The amount of a payment from the reinsurance fund to a carrier under this section for a catastrophic episode of care shall be determined by the Office but shall not exceed an amount equal to 80 percent of the applicable catastrophic claim amount.

   Inserted: (2) Applicable catastrophic claim amount.--For purposes of paragraph (1), the applicable catastrophic episode of care amount shall be equal to the difference between--

   Inserted: (A) the amount of the catastrophic claim; and

   Inserted: (B) $50,000.

   Inserted: (3) Limitation.--In determining the amount of a payment under paragraph (1), if the amount of the catastrophic claim exceeds the amount that would be paid for the healthcare items or services involved under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), the Office shall use the amount that would be paid under such title XVIII for purposes of paragraph (2)(A).

   Inserted: (d) Definition.--In this section, the term "catastrophic claim" means a claim submitted to a carrier, by or on behalf of an enrollee in a health benefits plan under this Act, that is in excess of $50,000.

   Inserted: (e) Termination of Fund.--The reinsurance fund established under subsection (a) shall terminate on the date that is 2 years after the date on which the first contract period becomes effective under this Act.

   Inserted: SEC. 9. CONTINGENCY RESERVE FUND.

   Inserted: Beginning on October 1, 2010, the Office may use amounts appropriated under section 14(a) that remain unobligated to establish a contingency reserve fund to provide assistance to carriers offering health benefits plans under this Act that experience unanticipated financial hardships (as determined by the Office).

   Inserted: SEC. 10. EMPLOYER PARTICIPATION.

   Inserted: (a) Regulations.--The Office shall prescribe regulations providing for employer participation under this Act, including the offering of health benefits plans under this Act to employees.

   Inserted: (b) Enrollment and Offering of Other Coverage.--

   Inserted: (1) Enrollment.--A participating employer shall ensure that each eligible employee has an opportunity to enroll in a plan under this Act.

   Inserted: (2) Prohibition on offering other comprehensive health benefit coverage.--A participating employer may not offer a health insurance plan providing comprehensive health benefit coverage to employees other than a health benefits plan that--

   Inserted: (A) meets the requirements described in section 4(a); and

   Inserted: (B) is offered only through the enrollment process established by the Office under section 3.

   Inserted: (3) Offer of supplemental coverage options.--

   Inserted: (A) In general.--A participating employer may offer supplementary coverage options to employees.

   Inserted: (B) Definition.--In subparagraph (A), the term "supplementary coverage" means benefits described as "excepted benefits" under section 2791(c) of the Public Health Service Act (42 U.S.C. 300gg-91(c)).

   Inserted: (c) Rule of Construction.--Except as provided in section 15, nothing in this Act shall be construed to require that an employer make premium contributions on behalf of employees.

   Inserted: SEC. 11. ADMINISTRATION THROUGH REGIONAL ADMINISTRATIVE ENTITIES.

   Inserted: (a) In General.--In order to provide for the administration of the benefits under this Act with maximum efficiency and convenience for participating employers and health care providers and other individuals and entities providing services to such employers, the Office is authorized to enter into contracts with eligible entities to perform, on a regional basis, one or more of the following:

   Inserted: (1) Collect and maintain all information relating to individuals, families, and employers participating in the program under this Act in the region served.

   Inserted: (2) Receive, disburse, and account for payments of premiums to participating employers by individuals in the region served, and for payments by participating employers to carriers.

   Inserted: (3) Serve as a channel of communication between carriers, participating employers, and individuals relating to the administration of this Act.

   Inserted: (4) Otherwise carry out such activities for the administration of this Act, in such manner, as may be provided for in the contract entered into under this section.

   Inserted: (5) The processing of grievances and appeals.

   Inserted: (b) Application.--To be eligible to receive a contract under subsection (a), an entity shall prepare and submit to the Office an application at such time, in such manner, and containing such information as the Office may require.

   Inserted: (c) Process.--

   Inserted: (1) Competitive bidding.--All contracts under this section shall be awarded through a competitive bidding process on a bi-annual basis.

   Inserted: (2) Requirement.--No contract shall be entered into with any entity under this section unless the Office finds that such entity will perform its obligations under the contract efficiently and effectively and will meet such requirements as to financial responsibility, legal authority, and other matters as the Office finds pertinent.

   Inserted: (3) Publication of standards and criteria.--The Office shall publish in the Federal Register standards and criteria for the efficient and effective performance of contract obligations under this section, and opportunity shall be provided for public comment prior to implementation. In establishing such standards and criteria, the Office shall provide for a system to measure an entity's performance of responsibilities.

   Inserted: (4) Term.--Each contract under this section shall be for a term of at least 1 year, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term, except that the Office may terminate any such contract at any time (after such reasonable notice and opportunity for hearing to the entity involved as the Office may provide in regulations) if the Office finds that the entity has failed substantially to carry out the contract or is carrying out the contract in a manner inconsistent with the efficient and effective administration of the program established by this Act.

   Inserted: (d) Terms of Contract.--A contract entered into under this section shall include--

   Inserted: (1) a description of the duties of the contracting entity;

   Inserted: (2) an assurance that the entity will furnish to the Office such timely information and reports as the Office determines appropriate;

   Inserted: (3) an assurance that the entity will maintain such records and afford such access thereto as the Office finds necessary to assure the correctness and verification of the information and reports under paragraph (2) and otherwise to carry out the purposes of this Act;

   Inserted: (4) an assurance that the entity shall comply with such confidentiality and privacy protection guidelines and procedures as the Office may require; and

   Inserted: (5) such other terms and conditions not inconsistent with this section as the Office may find necessary or appropriate.

   Inserted: SEC. 12. COORDINATION WITH SOCIAL SECURITY BENEFITS.

   Inserted: Benefits under this Act shall, with respect to an individual who is entitled to benefits under part A of title XVIII of the Social Security Act, be offered (for use in coordination with those medicare benefits) to the same extent and in the same manner as if coverage were under chapter 89 of title 5, United States Code.

   Inserted: SEC. 13. PUBLIC EDUCATION CAMPAIGN.

   Inserted: (a) In General.--In carrying out this Act, the Office shall develop and implement an educational campaign to provide information to employers and the general public concerning the health insurance program developed under this Act.

   Inserted: (b) Annual Progress Reports.--Not later than 1 year and 2 years after the implementation of the campaign under subsection (a), the Office shall submit to the appropriate committees of Congress a report that describes the activities of the Office under subsection (a), including a determination by the office of the percentage of employers with knowledge of the health benefits programs provided for under this Act.

   Inserted: (c) Public Education Campaign.--There is authorized to be appropriated to carry out this section, such sums as may be necessary for each of fiscal years 2007 and 2008.

   Inserted: SEC. 14. APPROPRIATIONS.

   Inserted: There are authorized to be appropriated to the Office, such sums as may be necessary in each fiscal year for the development and administration of the program under this Act.

   Inserted: SEC. 15. REFUNDABLE CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH INSURANCE EXPENSES.

   Inserted: (a) In General.--Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 36 as section 37 and inserting after section 35 the following new section:

   Inserted: "SEC. 36. SMALL BUSINESS EMPLOYEE HEALTH INSURANCE EXPENSES.

   Inserted: "(a) Determination of Amount.--In the case of a qualified small employer, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of--

   Inserted: "(1) the expense amount described in subsection (b), and

   Inserted: "(2) the expense amount described in subsection (c), paid by the taxpayer during the taxable year.

   Inserted: "(b) Subsection (b) Expense Amount.--For purposes of this section--

   Inserted: "(1) In general.--The expense amount described in this subsection is the applicable percentage of the amount of qualified employee health insurance expenses of each qualified employee.

   Inserted: "(2) Applicable percentage.--For purposes of paragraph (1)--

   Inserted: "(A) In general.--The applicable percentage is equal to--

   Inserted: "(i) 25 percent in the case of self-only coverage,

   Inserted: "(ii) 35 percent in the case of family coverage (as defined in section 220(c)(5)), and

   Inserted: "(iii) 30 percent in the case of coverage for two adults or one adult and one or more children.

   Inserted: "(B) Bonus for payment of greater percentage of premiums.--The applicable percentage otherwise specified in subparagraph (A) shall be increased by 5 percentage points for each additional 10 percent of the qualified employee health insurance expenses of each qualified employee exceeding 60 percent which are paid by the qualified small employer.

   Inserted: "(c) Subsection (c) Expense Amount.--For purposes of this section--

   Inserted: "(1) In general.--The expense amount described in this subsection is, with respect to the first credit year of a qualified small employer which is an eligible employer, 10 percent of the qualified employee health insurance expenses of each qualified employee.

   Inserted: "(2) First credit year.--For purposes of paragraph (1), the term 'first credit year' means the taxable year which includes the date that the health insurance coverage to which the qualified employee health insurance expenses relate becomes effective.

   Inserted: "(d) Limitation Based on Wages.-- With respect to a qualified employee whose wages at an annual rate during the taxable year exceed $25,000, the percentage which would (but for this section) be taken into account as the percentage for purposes of subsection (b)(2) or (c)(1) for the taxable year shall be reduced by an amount equal to the product of such percentage and the percentage that such qualified employee's wages in excess of $25,000 bears to $5,000.

   Inserted: "(e) Definitions.--For purposes of this section--

   Inserted: "(1) Qualified small employer.--The term 'qualified small employer' means any employer (as defined in section 2(b)(2) of the Small Employers Health Benefits Program Act of 2006) which--

   Inserted: "(A) is a participating employer (as defined in section 2(b)(5) of such Act),

   Inserted: "(B) pays or incurs at least 60 percent of the qualified employee health insurance expenses of each qualified employee for self-only coverage, and

   Inserted: "(C) pays or incurs at least 50 percent of the qualified employee health insurance expenses of each qualified employee for all other categories of coverage.

   Inserted: "(2) Qualified employee health insurance expenses.--

   Inserted: "(A) In general.--The term 'qualified employee health insurance expenses' means any amount paid by an employer for health insurance coverage under such Act to the extent such amount is attributable to coverage provided to any employee while such employee is a qualified employee.

   Inserted: "(B) Exception for amounts paid under salary reduction arrangements.--No amount paid or incurred for health insurance coverage pursuant to a salary reduction arrangement shall be taken into account under subparagraph (A).

   Inserted: "(3) Qualified employee.--

   Inserted: "(A) Definition.--

   Inserted: "(i) In general.--The term 'qualified employee' means, with respect to any period, an employee (as defined in section 2(b)(1) of such Act) of an employer if the total amount of wages paid or incurred by such employer to such employee at an annual rate during the taxable year exceeds $5,000 but does not exceed $30,000.

   Inserted: "(ii) Annual adjustment.--For each taxable year after 2007, the dollar amounts specified for the preceding taxable year (after the application of this subparagraph) shall be increased by the same percentage as the average percentage increase in premiums under the Federal Employees Health Benefits Program under chapter 89 of title 5, United States Code for the calendar year in which such taxable year begins over the preceding calendar year.

   Inserted: "(B) Wages.--The term 'wages' has the meaning given such term by section 3121(a) (determined without regard to any dollar limitation contained in such section).

   Inserted: "(f) Certain Rules Made Applicable.--For purposes of this section, rules similar to the rules of section 52 shall apply.

   Inserted: "(g) Credits for Nonprofit Organizations.--Any credit which would be allowable under subsection (a) with respect to a qualified small business if such qualified small business were not exempt from tax under this chapter shall be treated as a credit allowable under this subpart to such qualified small business.".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting before the period ", or from section 36 of such Code".

   Inserted: (2) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the last item and inserting the following new items:

   Inserted: "Sec. 36. Small business employee health insurance expenses.

   Inserted: "Sec. 37. Overpayments of tax.".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2006.

   Inserted: SEC. 16. EFFECTIVE DATE.

   Inserted: Except as provided in section 10(e), this Act shall take effect on the date of enactment of this Act and shall apply to contracts that take effect with respect to calendar year 2007 and each calendar year thereafter.

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