,,ii #aaeth ,,congress #ast ,session ,s4 #ahah ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,september #ad1 #bjag,mr4 ,enzi introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to provide health care options for small businesses4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,health ,plans ,act of #bjag4 #b4 ,small business health plans 7a7 ,in general ,notwithstanding any other provision of law1 with respect to small business health plans-- 7#a7 multiple1 unaffiliated small employers may pool their employees for the purpose of purchasing health insurance coverage for such employees in the large group market2 7#b7 health insurance issuers may offer health plans in the large group market to employees of the small employers described in paragraph 7#a72 and 7#c7 privately administered health insurance exchanges may offer health plans in the large group market to a pool of employees of multiple1 unaffiliated small employers4 7b7 ,multistate participation ,notwithstanding any other provision of law1 pools of employees described in subsection 7a77#a7 may include employers and employees from multiple ,states4 7c7 ,tax treatment of small business health plans ,a small business health plan 7as defined in section #hja7;a7 of the ,employee ,retirement ,income ,security ,act of #aigd7 shall be treated-- 7#a7 as a group health plan 7as defined in section #bgia of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #cjj;gg-#ia77 for purposes of applying title ,,xxvii of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #cjj;gg et seq47 and title ,,xxii of such ,act 7#db ,u4,s4,c4 #cjj;bb-#a72 7#b7 as a group health plan 7as defined in section #ejjj7;b77#a7 of the ,internal ,revenue ,code of #aihf7 for purposes of applying sections #dihj;,b and #ejjj and chapter #ajj of the ,internal ,revenue ,code of #aihf2 and 7#c7 as a group health plan 7as defined in section #gcc7;a77#a7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aaia;b7a77#a777 for purposes of applying parts #f and #g of title ,i of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aafa et seq474 7d7 ,small business health plans ,subtitle ,b of title ,i of the ,employee ,retirement ,income ,security ,act of #aigd is amended by adding at the end the following new part3 #h ,rules governing small business health plans #hja4 ,small business health plans 7a7 ,in general ,for purposes of this part1 the term small business health plan means a fully insured group health plan whose sponsor is described in subsection 7b74 7b7 ,plan sponsor ,the sponsor of a group health plan is described in this subsection if such plan sponsor-- 7#a7 receives certification by the ,secretary as a qualified sponsor and files a notice of certification with the ,state in which it operates2 7#b7 is organized and maintained in good faith1 with a constitution and bylaws specifically stating its purpose and providing for periodic meetings on at least an annual basis2 7#c7 is established as a permanent entity2 7#d7 is established for a purpose other than providing health benefits to its members1 such as a bona fide trade association or a consortium of such associations1 a franchise1 or a section #ggje professional employer organization2 and 7#e7 does not condition membership on the basis of a minimum group size4 #hjb4 ,certification of small business health plans 7a7 ,in general ,not later than #f months after the date of enactment of this part1 the ,secretary shall prescribe by interim final rule a procedure under which the ,secretary will certify a qualified sponsor of a small business health plan4 7b7 ,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 part1 effective on the date of certification 7or1 if later1 on the date on which the plan is to commence operations74 7c7 ,requirements for continued certification ,the ,secretary may provide by regulation for continued certification of small business health plans under this part4 ,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 part4 7d7 ,oversight of ,certified ,plans ,the ,secretary shall determine whether any person has violated1 or is about to violate1 any provision of this part1 including by conducting periodic reviews of certified small business health plans in accordance with section #ejd1 and applying the requirements of sections #eah1 #eai1 and #ebj4 7e7 ,expedited and deemed certification 7#a7 ,in general ,if the ,secretary fails to act on an application for certification under this section within #ahj days of receipt of such application1 the applying small business health plan shall be deemed certified until such time as the ,secretary may deny for cause the application for certification4 7#b7 ,civil penalty ,the ,secretary may assess a civil penalty against the board of trustees1 plan administrator1 and plan sponsor 7jointly and severally7 of a small business health plan that is deemed certified under paragraph 7#a7 of up to #ejj1jjj 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 inaccurate4 #hjc4 ,requirements relating to sponsors and boards of trustees 7a7 ,sponsor ,the requirements of this subsection are met with respect to a small business health plan if the sponsor has met 7or is deemed under this part to have met7 the requirements of section #hja7;b74 7b7 ,board of trustees or plan administrator ,the requirements of this subsection with respect to a small business health plan are as follows3 7#a7 ,fiscal control ,the plan is operated1 pursuant to a plan document1 by a board of trustees or plan administrator which has complete fiscal control over the plan and which is responsible for all operations of the plan4 7#b7 ,rules of operation and financial controls ,the board of trustees or plan administrator has in effect rules of operation and financial controls1 based on a #c-year plan of operation1 adequate to carry out the terms of the plan and to meet all requirements of this title applicable to the plan4 7#c7 ,rules governing relationship to participating employers and to contractors 7,a7 ,board membership 7i7 ,in general ,with respect to a plan operated by a board of trustees1 except as provided in clauses 7ii7 and 7iii71 the members of the board of trustees are individuals selected from individuals who are the owners1 officers1 directors1 or employees of the participating employers or who are partners in the participating employers and actively participate in the business4 7ii7 ,limitation 7,i7 ,general rule ,except as provided in subclauses 7,,ii7 and 7,,iii71 no such member is an owner1 officer1 director1 or employee of1 or partner in1 a contract administrator or other service provider to the plan4 7,,ii7 ,limited exception for providers of services solely on behalf of the sponsor ,officers or employees of a sponsor which is a service provider 7other than a contract administrator7 to the plan may be members of the board if they constitute not more than #be percent of the membership of the board and they do not provide services to the plan other than on behalf of the sponsor4 7,,iii7 ,treatment of providers of medical care ,in the case of a sponsor which is an association whose membership consists primarily of providers of medical care1 subclause 7,i7 shall not apply in the case of any service provider described in subclause 7,i7 who is a provider of medical care under the plan4 7iii7 ,certain plans excluded ,clause 7i7 shall not apply to a small business health plan that is in existence on the date of the enactment of this ,act4 7,b7 ,plan administrator ,the requirements of this section are met with respect to section #ggje professional employer organizations if the requirements of subsections 7a7 and 7b7 of section #hjd have been met4 7,c7 ,sole authority ,the board or plan administrator has sole authority under the plan to approve applications for participation in the plan and to contract with insurers4 7c7 ,treatment of franchises ,in the case of a group health plan that is established and maintained by a franchisor for the benefit of the employees of the franchisor and its franchisees1 by multiple franchisors for the benefit of the employees of such franchisors and their franchisees1 or by multiple franchisees for the benefit of the employees of such franchisees-- 7#a7 the requirements of subsection 7a7 and section #hja7;a7 shall be deemed met if such requirements would otherwise be met if all franchisors or franchisees establishing and maintaining such plan1 as applicable1 were deemed to be the sponsor described in section #hja7;b7 and each employee of such franchisors or franchisees1 as applicable1 were deemed to be a member of the sponsor described in section #hja7;b72 7#b7 the requirements of section #hjd7;a77#a7 shall be deemed met2 and 7#c7 the establishment and maintenance of such a group health plan shall not cause any one or more franchisor or franchisee employers participating in such a group health plan to be treated as the employer1 co-employer1 or joint employer of the employees of another participating franchisor or franchisee employer for any purpose4 #hjd4 ,participation and coverage requirements 7a7 ,covered employers and individuals ,the requirements of this subsection are met with respect to a small business health plan if1 under the terms of the plan-- 7#a7 each participating employer must be-- 7,a7 a member of the sponsor2 7,b7 the sponsor2 or 7,c7 an affiliated member of the sponsor1 except that1 in the case of a sponsor which is a professional association or other individual-based association1 if at least one of the officers1 directors1 or employees of an employer1 or at least one of the individuals who are partners in an employer and who actively participates in the business1 is a member or such an affiliated member of the sponsor1 participating employers may also include such employer2 and 7#b7 all individuals commencing coverage under the plan after certification under this part must be-- 7,a7 active or retired owners 7including self-employed individuals71 officers1 directors1 or employees of1 or partners in1 participating employers2 or 7,b7 the dependents of individuals described in subparagraph 7,a74 7b7 ,individual market unaffected ,the requirements of this subsection are met with respect to a small business health plan if1 under the terms of the plan1 no participating employer may provide health insurance coverage in the individual market for any employee not covered under the plan1 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 would1 but for such exclusion on such basis1 be eligible for coverage under the plan4 7c7 ,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-- 7#a7 under the terms of the plan1 all employers meeting the requirements of subsections 7a7 and 7b7 are eligible to qualify as participating employers for all geographically available coverage options1 unless1 in the case of any such employer1 participation or contribution requirements of the type referred to in section #bgje of the ,public ,health ,service ,act are not met2 7#b7 information regarding all coverage options available under the plan is made readily available to any employer eligible to participate2 and 7#c7 the applicable requirements of sections #gja1 #gjb1 and #gjc are met with respect to the plan4 #hje4 ,other requirements relating to plan documents1 contribution rates1 and benefit options 7a7 ,in general ,the requirements of this section are met with respect to a small business health plan if the following requirements are met3 7#a7 ,contents of governing instruments 7,a7 ,in general ,the instruments governing the plan include a written instrument which-- 7i7 provides that the board of trustees or plan administrator serves as the named fiduciary required for plans under section #djb7;a77#a7 and serves in the capacity of a plan administrator 7referred to in section #c7af77;,a772 and 7ii7 provides that the sponsor of the plan is to serve as plan sponsor 7referred to in section #c7af77;,b774 7,b7 ,description of material provisions ,the terms of the health insurance coverage 7including the terms of any individual certificates that may be offered to individuals in connection with such coverage71 if any1 describe the material benefit and rating1 and other provisions set forth in this section and such material provisions are included in the summary plan description4 7#b7 ,contribution rates must be nondiscriminatory ,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 engaged1 subject to the terms of this title4 7#c7 ,exceptions regarding self-employed and large employers 7,a7 ,self-employed ,small business health plans with participating employers who are self-employed individuals 7and their dependents7 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 located4 7,b7 ,large employers ,small business health plans with participating employers that are larger than small employers 7as defined in section #hji7;a77 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 located4 7#d7 ,regulatory requirements ,such other requirements as the ,secretary determines are necessary to carry out the purposes of this part1 which shall be prescribed by the ,secretary by regulation4 7b7 ,domicile and non-,domicile ,states 7#a7 ,domicile ,state ,coverage shall be issued by a health insurance issuer to a small business health plan in the ,state in which the sponsor's principal place of business is located4 7#b7 ,non-domicile ,states ,with respect to a ,state 7other than the domicile ,state7 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 licensed1 the following shall apply3 7,a7 ,temporary preemption ,if1 upon the expiration of the #ahj-;day period following the submission of a licensure application by such insurer 7that includes a certified copy of an approved licensure application as submitted by such insurer in the domicile ,state7 to such ,state1 such ,state has not approved or denied such application1 such ,state's health insurance licensure laws shall be temporarily preempted and the insurer shall be permitted to operate in such ,state1 subject to the following terms3 7i7 ,application of non-domicile ,state law ,except with respect to licensure1 the laws and authority of the non-domicile ,state shall remain in full force and effect4 7ii7 ,revocation of preemption ,the preemption of a non-domicile ,state's health insurance licensure laws pursuant to this subparagraph1 shall be terminated upon the occurrence of either of the following3 7,i7 ,approval or denial of application ,the approval or denial of an insurer's licensure application1 following the laws and regulations of the non-domicile ,state with respect to licensure4 7,,ii7 ,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 7other than licensure of such ,state74 7,b7 ,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 #ahj-;day period provided for in subparagraph 7,a71 except that no enrollment or collection of contributions shall occur before the expiration of such #ahj-;day period4 7,c7 ,licensure ,except with respect to the application of the temporary preemption provision of this paragraph1 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 operate4 7,d7 ,servicing by licensed insurers ,notwithstanding subparagraph 7,c71 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 ,state1 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 domiciled4 #hjf4 ,requirements for application and related requirements 7a7 ,filing fee ,under the procedure prescribed pursuant to section #hjb7;a71 a small business health plan shall pay to the ,secretary at the time of filing an application for certification under this part a filing fee in the amount of #e1jjj which shall be made available to the ,secretary1 for the sole purpose of administering the certification procedures applicable with respect to small business health plans4 7b7 ,information ,to be included in application for certification ,an application for certification under this part meets the requirements of this section only if it includes1 in a manner and form which shall be prescribed by the applicable authority by regulation1 at least the following information3 7#a7 ,identifying information ,the names and addresses of-- 7,a7 the sponsor2 and 7,b7 the members of the board of trustees or the plan administrator of the plan4 7#b7 ,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 participants and beneficiaries expected to be located in each such ,state4 7#c7 ,bonding requirements ,evidence provided by the board of trustees that the bonding requirements of section #dab will be met as of the date of the application or 7if later7 commencement of operations4 7#d7 ,plan documents ,a copy of the documents governing the plan 7including any bylaws and trust agreements71 the summary plan description1 and other material describing the benefits that will be provided to participants and beneficiaries under the plan4 7#e7 ,agreements with service providers ,a copy of any agreements between the plan1 health insurance issuer1 and contract administrators and other service providers4 7c7 ,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 operate4 7d7 ,notice of material changes ,in the case of any small business health plan certified under this part1 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 regulation4 ,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 certification4 #hjg4 ,notice requirements for voluntary termination 7a7 ,in general ,a small business health plan which is or has been certified under this part may terminate 7upon or at any time after cessation of accruals in benefit liabilities7 only if the board of trustees1 or the plan administrator1 not less than #fj days before the proposed termination date-- 7#a7 provides to the participants and beneficiaries a written notice of intent to terminate stating that such termination is intended and the proposed termination date2 7#b7 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 obligated2 and 7#c7 submits such plan in writing to the applicable authority4 7b7 ,regulations ,actions required under this section shall be taken in such form and manner as may be prescribed by the applicable authority by regulation4 #hjh4 ,implementation and application authority by ,secretary ,the ,secretary shall1 through promulgation and implementation of such regulations as the ,secretary may reasonably determine necessary or appropriate1 and in consultation with a balanced spectrum of effected entities and persons1 modify the implementation and application of this part to accommodate with minimum disruption such changes to ,state or ,federal law provided in this part and the 7and the amendments made by such ,act7 or in regulations issued thereto4 #hji4 ,definitions and rules of construction 7a7 ,definitions ,for purposes of this part3 7#a7 ,affiliated member ,the term affiliated member means1 in connection with a sponsor-- 7,a7 a person who is otherwise eligible to be a member of the sponsor but who elects an affiliated status with the sponsor1 or 7,b7 in the case of a sponsor with members which consist of associations1 a person who is a member or employee of any such association and elects an affiliated status with the sponsor4 7#b7 ,applicable ,state authority ,the term applicable ,state authority means1 with respect to a health insurance issuer in a ,state1 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 issuer4 7#c7 ,franchisor2 franchisee ,the terms franchisor and franchisee have the meanings given such terms for purposes of sections #dcf4b7;a7 through #dcf4b7;c7 of title #af1 ,code of ,federal ,regulations 7including any such amendments to such regulation after the date of enactment of this part74 7#d7 ,group health plan ,the term group health plan has the meaning provided in section #gcc7;a77#a74 7#e7 ,health insurance coverage ,the term health insurance coverage has the meaning provided in section #gcc7;b77#a71 except that such term shall not include excepted benefits 7as defined in section #gcc7;c774 7#f7 ,health insurance issuer ,the term health insurance issuer has the meaning provided in section #gcc7;b77#b74 7#g7 ,individual market 7,a7 ,in general ,the term individual market means the market for health insurance coverage offered to individuals other than in connection with a group health plan4 7,b7 ,treatment of very small groups 7i7 ,in general ,subject to clause 7ii71 the term individual market includes coverage offered in connection with a group health plan that has fewer than #b participants as current employees or participants described in section #gcb7;d77#c7 on the first day of the plan year4 7ii7 ,state exception ,clause 7i7 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 7as defined in section #bgia7;e77#e7 of the ,public ,health ,service ,act7 is regulated by such ,state4 7#h7 ,medical care ,the term medical care has the meaning provided in section #gcc7;a77#b74 7#i7 ,participating employer ,the term participating employer means1 in connection with a small business health plan1 any employer1 if any individual who is an employee of such employer1 a partner in such employer1 or a self-employed individual who is such employer 7or any dependent1 as defined under the terms of the plan1 of such individual7 is or was covered under such plan in connection with the status of such individual as such an employee1 partner1 or self-employed individual in relation to the plan4 7#aj7 ,section #ggje professional employer organization ,the term section #ggje professional employer organization means an organization providing services for a customer pursuant to a contract meeting the conditions of subparagraphs 7,a7 through 7,e7 of subsection 7e77#b7 of section #ggje of the ,internal ,revenue ,code of #aihf1 without regard to subsection 7a7 of such section4 ,such term includes an entity that is part of a controlled group or is under common control with respect to a section #ggje professional employer organization 7within the meaning of section #dad of such ,code74 ,solely for purposes of this part1 references in this part to member shall include such a customer of a section #ggje professional employer organization except as applied to references to member or members in paragraph 7#a7 of this subsection 7relating to the definition of affiliated member74 7#aa7 ,small employer ,the term small employer1 in connection with a group health plan with respect to a plan year1 has the meaning given the term small business concern in the ,small ,business ,act4 7b7 ,rule of construction ,for purposes of determining whether a plan1 fund1 or program is an employee welfare benefit plan which is a small business health plan1 and for purposes of applying this title in connection with such plan1 fund1 or program so determined to be such an employee welfare benefit plan-- 7#a7 in the case of a partnership1 the term employer 7as defined in section #c7e77 includes the partnership in relation to the partners1 and the term employee 7as defined in section #c7f77 includes any partner in relation to the partnership2 and 7#b7 in the case of a self-employed individual1 the term employer 7as defined in section #c7e77 and the term employee 7as defined in section #c7f77 shall include such individual4 7c7 ,renewal ,notwithstanding any provision of law to the contrary1 a participating employer in a small business health plan shall not be deemed to be a plan sponsor in applying requirements relating to coverage renewal4 4 7e7 ,conforming amendments to preemption rules 7#a7 ,section #ead7;b77#f7 of such ,act 7#bi ,u4,s4,c4 #aadd7;b77#f77 is amended by adding at the end the following new subparagraph3 7,e7 ,subparagraphs 7,a7 through 7,d7 do not apply with respect to any ,state law in the case of a small business health plan which is certified under part #h4 4 7#b7 ,section #ead of such ,act 7#bi ,u4,s4,c4 #aadd7 is amended-- 7,a7 in subsection 7b77#d71 by striking ,subsection 7a7 and inserting ,subsections 7a7 and 7d72 7,b7 in subsection 7b77#e7-- 7i7 in subparagraph 7,a71 by striking subsection 7a7 and inserting subsection 7a7 of this section and subsections 7a77#b77;,b7 and 7b7 of section #hjd2 and 7ii7 in subparagraph 7,b71 by striking subsection 7a7 and inserting subsection 7a7 of this section or subsection 7a77#b77;,b7 or 7b7 of section #hje2 7,c7 by redesignating subsection 7d7 as subsection 7e72 and 7,d7 by inserting after subsection 7c7 the following new subsection3 7d7 ,except as provided in subsection 7b77#d71 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 to a small business health plan sponsor that is certified under part #h4 4 7f7 ,plan sponsor ,section #c7af77;,b7 of such ,act 7#bi ,u4,s4,c4 #ajb7af77;,b77 is amended by adding at the end the following new sentence3 ,such term also includes a person serving as the sponsor of a small business health plan under part #h44 7g7 ,savings clause ,section #gca7;c7 of such ,act is amended by inserting or part #h after this part4 7h7 ,clerical amendment ,the table of contents in section #a of the ,employee ,retirement ,income ,security ,act of #aigd is amended by inserting after the item relating to section #gcd the following new items3 ,part #h--,rules governing small business health plans#hja4 ,small business health plans4#hjb4 ,certification of small business health plans4#hjc4 ,requirements relating to sponsors and boards of trustees4#hjd4 ,participation and coverage requirements4#hje4 ,other requirements relating to plan documents1 contribution rates1 and benefit options4#hjf4 ,requirements for application and related requirements4#hjg4 ,notice requirements for voluntary termination4#hjh4 ,implementation and application authority by ,secretary4#hji4 ,definitions and rules of construction4 4 #c4 ,cooperation between ,federal and ,state authorities ,section #ejf of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aacf7 is amended by adding at the end the following new subsection3 7d7 ,consultation with ,states with respect to small business health plans 7#a7 ,agreements with ,states ,the ,secretary shall consult with the ,state recognized under paragraph 7#b7 with respect to a small business health plan regarding the exercise of-- 7,a7 the ,secretary's authority under sections #ejb and #ejd to enforce the requirements for certification under part #h2 and 7,b7 the ,secretary's authority to certify small business health plans under part #h in accordance with regulations of the ,secretary applicable to certification under part #h4 7#b7 ,recognition of domicile ,state ,in carrying out paragraph 7#a71 the ,secretary shall ensure that only one ,state will be recognized1 with respect to any particular small business health plan1 as the ,state with which consultation is required4 ,in carrying out this paragraph such ,state shall be the domicile ,state1 as defined in section #hje7;b74 4 #d4 ,effective date and transitional and other rules 7a7 ,effective date ,the amendments made by this ,act shall take effect #a year after the date of the enactment of this ,act4 ,the ,secretary of ,labor shall first issue all regulations necessary to carry out the amendments made by this ,act within #f months after the date of the enactment of this ,act4