< Back to H.R. 995 (104th Congress, 1995–1996)

Text of the ERISA Targeted Health Insurance Reform Act of 1996

This bill was introduced on March 6, 1996, in a previous session of Congress, but was not enacted. The text of the bill below is as of Mar 29, 1996 (Reported by House Committee).

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HR 995 RH

Union Calendar No. 248

104th CONGRESS

2d Session

H. R. 995

[Report No. 104-498, Part I]

To amend the Employee Retirement Income Security Act of 1974 to provide new portability, participation, solvency, claims, and other consumer protections and freedoms for workers in a mobile workforce; to increase purchasing power for employers and employees by removing barriers to the voluntary formation of multiple employer health plans and fully-insured multiple employer arrangements; to increase health plan competition providing more affordable choice of coverage by removing restrictive State laws relating to provider health networks, employer health coalitions, and insured plans and the offering of medisave plans; to expand access to fully-insured coverage for employees of small employers through fair rating standards and open markets, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

February 21, 1995

Mr. FAWELL (for himself, Mr. GOODLING, Mr. ARMEY, Mr. PETRI, Mrs. ROUKEMA, Mr. BALLENGER, Mr. HOEKSTRA, Mr. MCKEON, Mrs. MEYERS of Kansas, Mr. TALENT, Mr. GREENWOOD, Mr. HUTCHINSON, Mr. KNOLLENBERG, Mr. GRAHAM, Mr. WELDON of Florida, and Mr. MCINTOSH) introduced the following bill; which was referred to the Committee on Economic and Educational Opportunity and, in addition, to the Committee on Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

March 21, 1995

Additional sponsors: Mr. CUNNINGHAM, Mr. WELLER, Mr. MCHUGH, and Mr. Calvert

March 25, 1996

Reported from the Committee on Economic and Educational Opportunities with amendments

[Strike out all after the enacting clause and insert the part printed in italic]

March 25, 1996

Referral to the Committee on Commerce extended for a period ending not later than March 29, 1996

March 29, 1996

Additional sponsors: Mr. PICKETT, Mr. GALLEGLY, Mr. COOLEY of Oregon, Mr. ENGLISH of Pennsylvania, Mr. PORTER, Mr. SOUDER, Mr. RIGGS, Mr. SOLOMON, Mr. FLANAGAN, Mr. SHAYS, Mr. LEACH, Mr. SAXTON, Ms. LOFGREN, Mr. LIPINSKI, Mr. BARTON of Texas, Mr. CANADY of Florida, Mr. DEAL of Georgia, Mr. HYDE, Mr. WELDON of Pennsylvania, Mr. POSHARD, Mr. TRAFICANT, Mr. BOEHLERT, Mr. ROYCE, Mr. DICKEY, Mr. PACKARD, Mr. NEY, Mr. UPTON, Mr. NORWOOD, Mr. GUNDERSON, Mr. SAM JOHNSON of Texas, and Mr. Quinn

Deleted sponsor: Mr. ALLARD (added March 22, 1995; deleted May 16, 1995)

March 29, 1996

Committee on Commerce discharged; committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

[For text of introduced bill, see copy of bill as introduced on February 21, 1995]


A BILL

To amend the Employee Retirement Income Security Act of 1974 to provide new portability, participation, solvency, claims, and other consumer protections and freedoms for workers in a mobile workforce; to increase purchasing power for employers and employees by removing barriers to the voluntary formation of multiple employer health plans and fully-insured multiple employer arrangements; to increase health plan competition providing more affordable choice of coverage by removing restrictive State laws relating to provider health networks, employer health coalitions, and insured plans and the offering of medisave plans; to expand access to fully-insured coverage for employees of small employers through fair rating standards and open markets, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘ERISA Targeted Health Insurance Reform Act of 1996’.

TABLE OF CONTENTS

TITLE I--INCREASED AVAILABILITY AND CONTINUITY OF GROUP HEALTH PLAN COVERAGE FOR EMPLOYEES AND THEIR FAMILIES

      Sec. 101. Definition of group health plan.

      Sec. 102. Access to, and continuity of, group health plan coverage.

‘Part 8--Access to, and Continuity of, Group Health Plan Coverage

‘Sec. 800. Definitions and special rules.

‘SUBPART A--PREEXISTING CONDITION LIMITATIONS, PORTABILITY, AND RENEWABILITY

‘Sec. 801. Limitations on preexisting condition exclusions.

‘Sec. 802. Portability.

‘Sec. 803. Requirements for renewability of coverage.

‘Sec. 804. Group health plan enrollment requirements.’.

      Sec. 103. Effective date.

TITLE II--REQUIREMENTS FOR INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS OFFERING HEALTH INSURANCE COVERAGE TO GROUP HEALTH PLANS OF SMALL EMPLOYERS

      Sec. 201. ERISA requirements for insurers and health maintenance organizations offering health insurance coverage to group health plans of small employers

‘SUBPART B--REQUIREMENTS FOR INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS OFFERING HEALTH INSURANCE COVERAGE TO GROUP HEALTH PLANS OF SMALL EMPLOYERS

‘Sec. 811. Definitions.

‘Sec. 812. Requirements for insurers and health maintenance organizations in the small group market who offer general coverage.

      Sec. 202. Effective date.

TITLE III--ENCOURAGEMENT OF MULTIPLE EMPLOYER HEALTH PLANS, VOLUNTARY HEALTH INSURANCE ASSOCIATIONS, AND OTHER FULLY INSURED ARRANGEMENTS; PREEMPTION

      Sec. 301. Scope of State regulation; clarification of preemption rules relating to voluntary health insurance associations and other fully insured arrangements.

      Sec. 302. Clarification of duty of the Secretary of Labor to implement provisions of current law providing for exemptions from State regulation of multiple employer health plans.

‘Part 7--Rules Governing State Regulation of Multiple Employer Health Plans

‘Sec. 701. Definitions.

‘Sec. 702. Multiple employer health plans eligible for relief from certain restrictions on preemption of State law

‘Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations.

      Sec. 303. Clarification of scope of preemption rules.

      Sec. 304. Clarification of treatment of single employer arrangements.

      Sec. 305. Clarification of treatment of certain collectively bargained arrangements.

      Sec. 306. Treatment of church plans.

      Sec. 307. Enforcement provisions relating to multiple employer welfare arrangements.

      Sec. 308. Cooperation between Federal and State authorities.

      Sec. 309. Filing requirements for multiple employer welfare arrangements offering health benefits.

      Sec. 310. Single annual filing for all participating employers.

      Sec. 311. Effective date; transitional rule.

      Sec. 312. Rule of construction.

TITLE I--INCREASED AVAILABILITY AND CONTINUITY OF GROUP HEALTH PLAN COVERAGE FOR EMPLOYEES AND THEIR FAMILIES

SEC. 101. DEFINITION OF GROUP HEALTH PLAN.

Title I

    (a) IN GENERAL- Section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) is amended by adding at the end the following new paragraph:

    ‘(42) Except as otherwise provided in this title, the term ‘group health plan’ means an employee welfare benefit plan to the extent that the plan provides medical care (within the meaning of section 607(1)) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise.’.

    (b) INCLUSION OF CERTAIN PARTNERS AND SELF-EMPLOYED SPONSORS IN DEFINITION OF PARTICIPANT- Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended--

      (1) by inserting ‘(A)’ after ‘(7)’; and

      (2) by adding at the end the following new paragraph:

    ‘(B) In the case of a group health plan, such term includes--

      ‘(i) in connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership, or

      ‘(ii) in connection with a group health plan maintained by a self-employed individual (under which one or more employees are participants), the self-employed individual,

    if such individual is or may become eligible to receive a benefit under the plan or such individual’s beneficiaries may be eligible to receive any such benefit.’.

SEC. 102. ACCESS TO, AND CONTINUITY OF, GROUP HEALTH PLAN COVERAGE.

    (a) IN GENERAL- Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following:

‘PART 8--ACCESS TO, AND CONTINUITY OF, GROUP HEALTH PLAN COVERAGE

‘SEC. 800. DEFINITIONS AND SPECIAL RULES.

    ‘(a) IN GENERAL- For purposes of this part:

      ‘(1) EMPLOYER- The term ‘employer’ shall have the meaning applicable under section 3(5), except that such term includes the partnership in relation to any partner.

      ‘(2) FULLY INSURED- The term ‘fully insured’ shall have the meaning applicable under section 701(1).

      ‘(3) HEALTH INSURANCE COVERAGE-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘health insurance coverage’ means any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization group contract offered by an insurer or a health maintenance organization, to the extent of the benefits under such policy, certificate, or contract consisting of medical care, provided directly, through insurance or reimbursement, or otherwise.

        ‘(B) EXCEPTION- Such term does not include coverage under any separate policy, certificate, or contract only for one or more of any of the following:

          ‘(i) Coverage for accident, dental, vision, disability income, on-site medical clinics, employee assistance programs, or long-term care insurance, or any combination thereof.

          ‘(ii) Medicare supplemental health insurance (within the meaning of section 1882(g)(1) of the Social Security Act (42 U.S.C. 1395ss(g)(1))) and similar supplemental coverage provided under a group health plan.

          ‘(iii) Coverage issued as a supplement to liability insurance.

          ‘(iv) Liability insurance, including general liability insurance and automobile liability insurance.

          ‘(v) Worker’s compensation or similar insurance.

          ‘(vi) Automobile medical-payment insurance.

          ‘(vii) Coverage consisting of benefit payments made on a periodic basis for a specified disease or illness or period of hospitalization, without regard to the costs incurred or services rendered during the period to which the payments relate.

          ‘(viii) Such other purpose as the Secretary may prescribe by regulation.

      ‘(4) HEALTH MAINTENANCE ORGANIZATION- The term ‘health maintenance organization’ means a Federally qualified health maintenance organization (as defined in section 1301(a) of the Public Health Service Act (42 U.S.C. 300e(a))), an organization recognized under State law as a health maintenance organization, or a similar organization regulated under State law for solvency in the same manner and to the same extent as such a health maintenance organization.

      ‘(5) INSURER- The term ‘insurer’ means an insurance company, insurance service, or insurance organization licensed to engage in the business of insurance in a State.

      ‘(6) MEDICAL CARE- The term ‘medical care’ means medical care within the meaning of section 607(1).

      ‘(7) NETWORK PLAN- The term ‘network plan’ means an arrangement of an insurer or a health maintenance organization under which the financing and delivery of medical care are provided, in whole or in part, through a defined set of providers under contract with the insurer or health maintenance organization.

    ‘(b) COVERAGE- This part shall apply in the case of a group health plan for any plan year only if such group health plan has two or more participants as current employees on the first day of such plan year.

    ‘(c) SPECIAL RULES PROVIDING FOR TREATMENT AS GROUP HEALTH PLAN-

      ‘(1) An employee welfare benefit plan shall be treated as a group health plan under this part only with respect to medical care (within the meaning of section 607(1))) which is provided under the plan and which does not consist of coverage excluded from the definition of health insurance coverage under subsection (a)(3)(B).

      ‘(2) Any plan, fund, or program which would not be (but for this paragraph) an employee welfare benefit plan and which is established or maintained by a partnership, to the extent that such plan, fund, or program provides medical care (within the meaning of section 607(1)) to present or former partners in the partnership or to their dependents (as defined under the terms of the plan, fund, or program), directly or through insurance, reimbursement, or otherwise, shall be treated (subject to paragraph (1)) as an employee welfare benefit plan which is a group health plan.

‘Subpart A--Preexisting Condition Limitations, Portability, and Renewability

‘SEC. 801. LIMITATIONS ON PREEXISTING CONDITION EXCLUSIONS.

    ‘(a) TIME CONSTRAINTS ON LIMITATIONS OR EXCLUSIONS BASED ON PREEXISTING CONDITIONS-

      ‘(1) IN GENERAL- A group health plan, and an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, may provide a limitation on, or exclusion of, the benefits of a participant or beneficiary otherwise available under the terms of the plan based on a preexisting condition only if the limitation or exclusion does not extend beyond--

        ‘(A) in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, 12 months after the effective date of such coverage, or

        ‘(B) in the case of a participant or beneficiary whose initial coverage commences pursuant to an election made after the period in which the election may first be made, 18 months after the effective date of such coverage.

      ‘(2) PREEXISTING CONDITION- For purposes of paragraph (1), the term ‘preexisting condition’ means a medical condition which was diagnosed, or which was treated--

        ‘(A) in the case of a participant or beneficiary described in paragraph (1)(A), within the 6-month period preceding the effective date of the coverage of such participant or beneficiary (as determined by disregarding any applicable waiting period), or

        ‘(B) in the case of a participant or beneficiary described in paragraph (1)(B), within the 12-month period preceding the effective date of the coverage of such participant or beneficiary (as determined by disregarding any applicable waiting period).’.

    ‘(c) NO COVERAGE OF SPECIFIC TREATMENT, PROCEDURES, OR CLASSES REQUIRED- Nothing in this part may be construed to require the coverage of any specific procedure, treatment, or service as part of a group health plan or health insurance coverage under this Act or through regulation.

    ‘(d) APPLICATION OF RULES BY CERTAIN HEALTH MAINTENANCE ORGANIZATIONS- A health maintenance organization that offers health insurance coverage shall not be considered as failing to meet the requirements of section 1301 of the Public Health Service Act notwithstanding that it provides for an exclusion of the coverage based on a preexisting condition consistent with the provisions of this subpart, so long as such exclusion is applied in a manner and to an extent consistent with the provisions of this subpart.

    ‘(e) ELIGIBILITY PERIOD IMPOSED BY HEALTH MAINTENANCE ORGANIZATIONS AS ALTERNATIVE TO PREEXISTING CONDITION LIMITATION- A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not use the preexisting condition limitations allowed under this section and section 802 with respect to any particular coverage option may impose an eligibility period for such coverage option, but only if such period does not exceed--

      ‘(1) 90 days, in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, or

      ‘(2) 180 days, in the case of a participant or beneficiary whose initial coverage commences after the date on which such participant or beneficiary first becomes eligible for coverage.

    For purposes of this subsection, the term ‘eligibility period’ means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. Any such eligibility period shall be treated for purposes of this subpart as a waiting period under the plan and shall run concurrently with any other applicable waiting period under the plan.

‘SEC. 802. PORTABILITY.

    ‘(a) IN GENERAL- Each group health plan, and each insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, shall provide that if a participant or beneficiary is in a period of continuous coverage (as defined in subsection (e)) as of a date upon which coverage takes effect under the plan, any period of limitation on, or exclusion of, covered benefits in connection with a preexisting condition (as permitted under section 801) shall be reduced by 1 month for each month in the period of continuous coverage.

    ‘(b) CONSTRUCTION- Nothing in this section shall be construed to prohibit a limitation on, or exclusion of, any benefit of a participant or beneficiary otherwise available under the terms of the plan based on a preexisting condition, subject to the limits in section 801(a), if such benefit was not previously provided under the group health plan or health insurance coverage (or coverage consisting of medical care under title XIX of the Social Security Act) under which the individual was covered at the end of the period of continuous coverage referred to in subsection (a).

    ‘(c) DOCUMENTATION- A participant or beneficiary may be treated by a group health plan, or by an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, as not being in a period of continuous coverage if, upon the request of the plan or of the insurer or health maintenance organization (as the case may be), the participant or beneficiary does not present satisfactory documentation of such period of continuous coverage. The Secretary may prescribe regulations defining standards for satisfactory documentation for purposes of this subsection.

    ‘(d) NO PREEXISTING CONDITION FOR NEWBORNS AND ADOPTED CHILDREN- For purposes of this subpart--

      ‘(1) NEWBORNS- A child who, within the 30-day period beginning with the date of birth, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or coverage consisting of medical care under title XIX of the Social Security Act) and remains thereafter in a period of continuous coverage shall not be considered, beginning at the time of birth, to have any preexisting condition.

      ‘(2) ADOPTED CHILDREN- An adopted child or a child placed for adoption (within the meaning of section 609(c)(3)(B)) who, within the 30-day period beginning on the date of adoption or placement, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or coverage providing medical care under title XIX of the Social Security Act) and remains thereafter in a period of continuous coverage shall not be considered, beginning at the time of adoption or placement, to have any preexisting condition.

    ‘(e) PERIOD OF CONTINUOUS COVERAGE- For purposes of this subpart, the term ‘period of continuous coverage’ means the period--

      ‘(1) beginning on the date an individual becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or coverage consisting of medical care under title XIX of the Social Security Act), and

      ‘(2) ending on the date the individual does not have such coverage for a continuous period of more than 60 days.

‘SEC. 803. REQUIREMENTS FOR RENEWABILITY OF COVERAGE.

    ‘(a) MULTIEMPLOYER PLANS, MULTIPLE EMPLOYER HEALTH PLANS, AND MULTIPLE EMPLOYER WELFARE ARRANGEMENTS- A group health plan which is a multiemployer plan or a multiple employer health plan (as defined in section 701(4)), and a multiple employer welfare arrangement (to the extent to which benefits under the arrangement consist of medical care and are fully insured), may not deny an employer whose employees are covered under such a plan or arrangement continued access to the same or different coverage under the terms of such a plan or arrangement, other than--

      ‘(1) for nonpayment of contributions,

      ‘(2) for fraud or other intentional misrepresentation by the employer,

      ‘(3) for noncompliance with material plan or arrangement provisions,

      ‘(4) because the plan or arrangement is ceasing to offer any coverage in a geographic area,

      ‘(5) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement,

      ‘(6) in the case of a plan or arrangement to which subparagraph (C), (D), or (E) of section 3(40) applies, to the extent necessary to meet the requirements of such subparagraph, or

      ‘(7) in the case of a multiple employer health plan (as defined in section 701(4)), for failure to meet the requirements under part 7 for exemption under section 514(b)(6)(B).

    Nothing in this subsection shall be construed to preclude any such plan or arrangement from establishing employer contribution requirements or group participation requirements not otherwise prohibited by this Act.

    ‘(b) INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS-

      ‘(1) IN GENERAL- In any case in which an insurer or a health maintenance organization is providing health insurance coverage in connection with a group health plan, the insurer or health maintenance organization may not deny an employer whose employees are covered under such plan continued access to health insurance coverage provided by such insurer or health maintenance organization, other than--

        ‘(A) for nonpayment of premiums or contributions in accordance with the terms of the health insurance coverage,

        ‘(B) for any act or practice constituting fraud or other intentional misrepresentation under the terms of the health insurance coverage,

        ‘(C) for noncompliance with material plan provisions relating to participation or employer contributions, or

        ‘(D) subject to paragraph (3), because the insurer or health maintenance organization is ceasing to offer any such coverage in a State, or, in the case of a network plan (as defined in section 800(a)(7)), in a geographic area.

      ‘(2) DISCONTINUANCE OF OFFERED HEALTH INSURANCE COVERAGE- In any case in which a policy, certificate, or contract referred to in section 800(a)(3) is no longer being offered in connection with group health plans by an insurer or health maintenance organization, health insurance coverage as defined by such policy, certificate, or contract may be discontinued by the insurer or health maintenance organization in connection with any group health plan upon the offer to the plan sponsor of an option to purchase any other health insurance coverage currently being offered in connection with group health plans, if the offer of such option is made uniformly in connection with group health plans.

      ‘(3) NOTICE REQUIREMENT FOR MARKET EXIT- Paragraph (1)(D) shall not apply to an insurer or health maintenance organization ceasing to offer coverage unless the insurer provides notice of such termination to employers and individuals covered at least 180 days before the date of termination of coverage.

      ‘(4) Exception to requirement for renewability of coverage by reason of failure by plan to meet certain minimum participation rules-

        ‘(A) IN GENERAL- Paragraph (1) shall not apply in the case of any group health plan with respect to which participation rules of an insurer or health maintenance organization which are described in subparagraph (B) are not met.

        ‘(B) PARTICIPATION RULES- For purposes of subparagraph (A), participation rules (if any) of an insurer or health maintenance organization shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules.

‘SEC. 804. GROUP HEALTH PLAN ENROLLMENT REQUIREMENTS.

    ‘(a) ENROLLMENT PERIODS-

      ‘(1) ANNUAL PERIOD- A group health plan shall provide for at least one annual open enrollment period (of not less than 30 days) each year during which--

        ‘(A) employees who are eligible for coverage under the terms of the plan who are not otherwise covered may elect to be covered under at least one benefit option, and

        ‘(B) if family coverage is available, employees who are covered but who do not have family coverage may elect family coverage.

      ‘(2) ENROLLMENT OF ELIGIBLE INDIVIDUALS WHO LOSE OTHER COVERAGE- A group health plan shall permit an uncovered employee who is otherwise eligible for coverage under the terms of the plan (or an uncovered dependent, as defined under the terms of the plan, of such an employee, if family coverage is available) to enroll for coverage under the plan under at least one benefit option if--

        ‘(A) the employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual,

        ‘(B) the employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment,

        ‘(C) the employee or dependent lost coverage under a group health plan or health insurance coverage (as a result of loss of eligibility for the coverage, termination of employment, or reduction in the number of hours of employment), and

        ‘(D) the employee requests such enrollment within 30 days after termination of such coverage.

    ‘(b) DEPENDENTS-

      ‘(1) IN GENERAL- If a group health plan makes family coverage available, the plan may not require, as a condition of coverage of a beneficiary of a participant in the plan, a waiting period applicable to the coverage of a beneficiary who is a newborn or an adopted child or child placed for adoption (within the meaning of section 609(c)(3)(B)), at the time of adoption or placement, or a spouse, at the time of marriage, if the participant has met any waiting period applicable to that participant.

      ‘(2) TIMELY ENROLLMENT-

        ‘(A) IN GENERAL- Enrollment of a participant’s beneficiary described in paragraph (1) shall be considered to be timely if a request for enrollment is made either--

          ‘(i) within 30 days of the date of the marriage with such a beneficiary who is the spouse of the participant, or within 30 days of the date of the birth, adoption, or placement for adoption of such a beneficiary who is a child of the participant, if family coverage is available as of such date, or

          ‘(ii) within 30 days of the date family coverage is first made available.

        ‘(B) COVERAGE- If available coverage includes family coverage and enrollment is made under such coverage on a timely basis under subparagraph (A)(i), the coverage shall become effective not later than the first day of the first month beginning 15 days after the date the completed request for enrollment is received.

    ‘(c) DENIAL OF ENROLLMENT BASED ON PREEXISTING CONDITION PROHIBITED- A group health plan, and an insurer or health maintenance organization providing health insurance coverage in connection with a group health plan, may not exclude an employee or his or her beneficiary from enrollment under the plan on the basis of a preexisting condition (as defined in section 801(a)(2), but regardless of the period within which the condition was diagnosed or treated).’.

    (b) TREATMENT OF GOVERNMENTAL PLANS-

      (1) COVERAGE- Section 4(b)(1) of such Act (29 U.S.C. 1003(b)(1)) is amended by inserting ‘except with respect to sections 801 and 802,’ after ‘(1)’.

      (2) VOLUNTARY ELECTION WITH RESPECT TO GOVERNMENTAL PLANS- Section 4 of such Act is amended further by adding at the end the following new subsection:

    ‘(c) If the plan sponsor of a governmental plan which is a group health plan to which sections 801 and 802 apply makes an election under this paragraph for any specified period (in such form and manner as the Secretary may by regulations prescribe), then the provisions of sections 801 and 802 shall not apply to such governmental plans for such period as if the exception in subsection (b)(1) relating to sections 801 and 802 did not apply with respect to such plan for such period.’.

      (3) INAPPLICABILITY OF PORTABILITY TO PARTICIPANTS OF NON-ELECTING PLANS- Section 802 of such Act (as added by subsection (a) of this section) is amended by adding at the end the following new subsection:

    ‘(f) INAPPLICABILITY OF PORTABILITY TO PARTICIPANTS OF NON-ELECTING PLANS- A group health plan shall not be treated as failing to meet the requirements of this section solely because, in determining whether there is a period of continuous coverage, the plan disregards coverage under any other group health plan that is a governmental plan or church plan which is not subject to this section or section 801.’.

    (c) ENFORCEMENT WITH RESPECT TO INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS- Section 502 of such Act (29 U.S.C. 1132) is amended--

      (1) in subsection (a)(6), by striking ‘subsection (c)(2) or (i) or (l)’ and inserting ‘paragraph (2) or (5) of subsection (c) or subsection (i) or (l)’; and

      (2) by adding at the end of subsection (c) the following new paragraph:

    ‘(5) The Secretary shall enforce under this part the requirements of section 801, 802, or 803 with respect to any entity which is an insurer or health maintenance organization and which is subject to regulation by any State permitted under section 514 only if the Secretary determines--

      ‘(A)(i) with respect to section 801 or 802, that such State has not provided for effective enforcement of State laws which govern the same matters as are governed by such section 801 or 802, respectively (as described in section 514(c)) and which are not superceded by reason of section 514(c), or

      ‘(ii) with respect to section 803, that such State has not provided for effective enforcement of State laws which govern the same matters as are governed by such section 803, and which require compliance by such entity with at least the same requirements as those provided under such section 803, and

      ‘(B) that such entity has failed to comply with the requirements of such section which are applicable to such entity.’.

    (d) PREEMPTION OF DIFFERING STATE LAWS- Section 514 of such Act (29 U.S.C. 1144) is amended--

      (1) in subsection (b)(2)(A), by inserting ‘and subsection (c)’ after ‘subparagraph (B)’;

      (2) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and

      (3) by inserting after subsection (b) the following new subsection:

    ‘(c)(1) The provisions of sections 801 and 802 shall supersede any and all State laws in relation to any group health plan to which such sections apply insofar as the requirements of such laws may now or hereafter--

      ‘(A) relate to insurers or health maintenance organizations offering health insurance coverage in connection with group health plans,

      ‘(B) govern the same matters as are governed by such sections 801 and 802, and

      ‘(C) provide requirements which differ from the requirements of such sections 801 and 802.

    ‘(2) Nothing in this subsection shall be construed to supercede any law of any State to the extent that such law provides for the enforcement of laws which are not superceded under paragraph (1).

    ‘(3) For purposes of this subsection, terms used in this subsection which are defined in section 800 shall have the meanings provided in such section.’.

    (e) GOOD FAITH COMPLIANCE WITH REQUIREMENT- A group health plan (within the meaning of section 3(42) of the Employee Retirement Income Security Act of 1974), an insurer (within the meaning of section 800(a)(5) of such Act), or a health maintenance organization (within the

meaning of section 800(a)(4) of such Act) that complies in good faith with an applicable requirement of subpart A of part 8 of title I of such Act before the date a regulation has been published and becomes effective to carry out such requirement shall be considered to be in compliance with such regulation.

    (f) CONFORMING AMENDMENT- Section 607(1) of such Act (29 U.S.C. 1167(1)) is amended--

      (1) by striking ‘The term’ and inserting the following:

        ‘(A) IN GENERAL- The term’;

      (2) by striking ‘(as defined’ and all that follows through ‘1986)’; and

      (3) by adding at the end the following new subparagraph:

        ‘(B) MEDICAL CARE- For purposes of this paragraph, the term ‘medical care’ means--

          ‘(i) amounts paid for, or items or services in the form of, the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for, or items or services provided for, the purpose of affecting any structure or function of the body,

          ‘(ii) amounts paid for, or services in the form of, transportation primarily for and essential to medical care referred to in clause (i), and

          ‘(iii) amounts paid for insurance covering medical care referred to in clauses (i) and (ii).’.

    (g) CLERICAL AMENDMENT- The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 is amended by inserting after the item relating to section 609 the following new items:

‘Part 8--Access to, and Continuity of, Group health plan coverage

      ‘Sec. 800. Definitions and special rules.

‘subpart a--preexisting condition limitations, portability, and renewability

      ‘Sec. 801. Limitations on preexisting condition exclusions.

      ‘Sec. 802. Portability.

      ‘Sec. 803. Requirements for renewability of coverage.

      ‘Sec. 804. Group health plan enrollment requirements.’.

SEC. 103. EFFECTIVE DATE.

    The amendments made by this title shall apply with respect to plan years beginning after 18 months after the month in which this Act is enacted.

TITLE II--REQUIREMENTS FOR INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS OFFERING HEALTH INSURANCE COVERAGE TO GROUP HEALTH PLANS OF SMALL EMPLOYERS

SEC. 201. ERISA REQUIREMENTS FOR INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS OFFERING HEALTH INSURANCE COVERAGE TO GROUP HEALTH PLANS OF SMALL EMPLOYERS

Title II

    (a) IN GENERAL- Part 8 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (as added by the preceding provisions of this title) is amended by adding at the end the following:

‘Subpart B--Requirements for Insurers and Health Maintenance Organizations Offering Health Insurance Coverage to Group Health Plans of Small Employers

‘SEC. 811. DEFINITIONS.

    ‘Except as otherwise specifically provided, for purposes of this subpart:

      ‘(1) ELIGIBLE INDIVIDUAL- The term ‘eligible individual’ means, with respect to an insurer or health maintenance organization that offers general coverage to any small employer in connection with a group health plan, such an individual in relation to the employer as shall be determined--

        ‘(A) in accordance with the terms of such plan,

        ‘(B) as provided by the insurer or health maintenance organization under rules of the insurer or health maintenance organization which are uniformly applicable, and

        ‘(C) in accordance with all applicable State laws governing such insurer or health maintenance organization.

      ‘(2) GENERAL COVERAGE- The term ‘general coverage’ means health insurance coverage that--

        ‘(A) is offered at a particular time in the small group market, and

        ‘(B) is not made available solely in connection with any trade, industry, or professional association.

      ‘(3) SMALL EMPLOYER- The term ‘small employer’ means, in connection with a group health plan with respect to a calendar year, an employer who employs at least 2 but fewer than 51 employees on a typical business day in the year. For purposes

of this paragraph, two or more trades or businesses, whether or not incorporated, shall be deemed a single employer if such trades or businesses are within the same control group (within the meaning of section 3(40)(B)(ii)).

      ‘(4) SMALL GROUP MARKET- The term ‘small group market’ means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) on the basis of employment or other relationship with respect to a small employer.

      ‘(5) STATE- The term ‘State’ means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.

‘SEC. 812. REQUIREMENTS FOR INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS IN THE SMALL GROUP MARKET WHO OFFER GENERAL COVERAGE.

    ‘(a) ISSUANCE OF COVERAGE- Subject to the succeeding subsections of this section, each insurer or health maintenance organization that offers general coverage in connection with a group health plan in the small group market in a State--

      ‘(1) must accept every small employer in the State that applies for such coverage; and

      ‘(2) must accept for enrollment under such coverage every eligible individual (as defined in section 811(1)) who applies for enrollment on a timely basis (consistent with section 804) and may not place any restriction which is inconsistent with section 804 on the eligibility of an individual to enroll so long as such individual is an eligible individual.

    ‘(b) TREATMENT OF CERTAIN PREVIOUSLY SELF-INSURED EMPLOYERS-

      ‘(1) IN GENERAL- An insurer or health maintenance organization may elect not to make general coverage available to group health plans of previously self-insured small employers (described in paragraph (2)), but only if such election is made in a uniform manner for all such employers. The exclusion, pursuant to such an election, of such a group health plan from availability of general coverage shall not apply after the end of the 1-year period (or such uniform, shorter period as the insurer or organization may specify) beginning on the last date no such coverage was provided by such employer.

      ‘(2) PREVIOUS SELF-INSURED EMPLOYER DESCRIBED- A previously self-insured small employer described in this paragraph is a small employer that has provided medical care (referred to in section 800(a)(6)) to employees other than through health insurance coverage to which this subpart applies.

    ‘(c) CONSTRUCTION WITH RESPECT TO COVERAGE OFFERED IN CONNECTION WITH ASSOCIATIONS- Nothing in subsection (a) shall be construed as requiring that the general coverage made available by an insurer or health maintenance organization in the small group market in a State in connection with any trade, industry, or professional association be the same as the general coverage offered in the State in the small group market not in connection with such an association.

    ‘(d) SPECIAL RULES FOR NETWORK PLANS AND HEALTH MAINTENANCE ORGANIZATIONS-

      ‘(1) IN GENERAL- In the case of an insurer that offers health insurance coverage in connection with a group health plan in the small group market through a network plan (as defined in section 800(a)(7)) and in the case of a health maintenance organization that offers health insurance coverage in connection with such a plan, the insurer or organization may--

        ‘(A) limit the employers that may apply for such coverage to those with eligible individuals residing in the service area for such plan or organization;

        ‘(B) limit the individuals who may be enrolled under such coverage to those who reside in the service area for such plan or organization; and

        ‘(C) within the service area of such plan or organization, deny such coverage to such employers if the insurer or organization demonstrates that--

          ‘(i) it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to existing group contract holders and enrollees, and

          ‘(ii) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees or the health status of their employees.

      ‘(2) 180-DAY SUSPENSION UPON DENIAL OF COVERAGE- An insurer or health maintenance organization, upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1)(C) may not offer

coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied.

    ‘(e) SPECIAL RULE FOR FINANCIAL CAPACITY LIMITS-

      ‘(1) IN GENERAL- An insurer or health maintenance organization may deny health insurance coverage in connection with a group health plan in the small group market if the insurer or organization demonstrates to the appropriate enforcing authority (subject to section 502(c)(5)) that--

        ‘(A) it does not have the financial reserves necessary to underwrite additional coverage, and

        ‘(B) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees or the health status of their employees.

      ‘(2) 180-DAY SUSPENSION UPON DENIAL OF COVERAGE- An insurer or health maintenance organization, upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1) may not offer coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied.

    ‘(f) Exception to Requirement for Issuance of Coverage by Reason of Failure by Plan To Meet Certain Minimum Participation Rules-

      ‘(1) IN GENERAL- Subsection (a) shall not apply in the case of any group health plan with respect to which participation rules of an insurer or health maintenance organization which are described in paragraph (2) are not met.

      ‘(2) PARTICIPATION RULES- For purposes of paragraph (1), participation rules (if any) of an insurer or health maintenance organization shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules.

      ‘(3) SPECIAL RULE FOR COVERAGE IN CONNECTION WITH CERTAIN ASSOCIATIONS- In the case of health insurance coverage in connection with any trade, industry, or professional association, the insurer or health maintenance organization may not provide for a minimum participation requirement with respect to eligible individuals who are employees of an employer.’.

    (b) ENFORCEMENT WITH RESPECT TO INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS- Section 502(c)(5) of such Act (as added by section 102(c)) is amended--

      (1) by striking ‘or 803’ and inserting ‘803, or 812’; and

      (2) in subparagraph (A)(ii), by striking ‘section 803’ each place it appears and inserting ‘section 803 or 812, respectively’.

    (c) GOOD FAITH COMPLIANCE WITH REQUIREMENT- An insurer (within the meaning of section 800(a)(5) of the Employee Retirement Income Security Act of 1974) or a health maintenance organization (within the meaning of section 800(a)(6) of such Act) that complies in good faith with an applicable requirement of subpart B of part 8 of title I of such Act before the date a regulation has been published and becomes effective to carry out such requirement shall be considered to be in compliance with such regulation.

    (d) CLERICAL AMENDMENT- The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 is amended by inserting after the items relating to part 8 (added by section 1001(b)) the following new items:

‘subpart b--requirements for insurers and health maintenance organizations offering health insurance coverage to group health plans of small employers

      ‘Sec. 811. Definitions.

      ‘Sec. 812. Requirements for insurers and health maintenance organizations in the small group market who offer general coverage.’.

SEC. 202. EFFECTIVE DATE.

    The requirements of section 812 of the Employee Retirement Income Security Act of 1974 (added by this title) shall apply with respect to insurers and health maintenance organizations as of 18 months after the month in which this Act is enacted.

TITLE III--ENCOURAGEMENT OF MULTIPLE EMPLOYER HEALTH PLANS, VOLUNTARY HEALTH INSURANCE ASSOCIATIONS, AND OTHER FULLY INSURED ARRANGEMENTS; PREEMPTION

SEC. 301. SCOPE OF STATE REGULATION; CLARIFICATION OF PREEMPTION RULES RELATING TO VOLUNTARY HEALTH INSURANCE ASSOCIATIONS AND OTHER FULLY INSURED ARRANGEMENTS.

Title III

    (a) SCOPE OF STATE REGULATION- Section 514(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) (as added by section 102(d)) is amended--

      (1) by redesignating paragraph (3) as paragraph (4);

      (2) by inserting after paragraph (2) the following new paragraphs:

    ‘(3)(A) The provisions of this title shall supersede any and all State laws insofar as they may now or hereafter require--

      ‘(i) health insurance coverage in connection with a group health plan to include specific items or services consisting of medical care, or

      ‘(ii) an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan to include in such health insurance coverage specific items or services consisting of medical care;

    except to the extent that such State laws prohibit an exclusion for a specific disease in such health insurance coverage.

    ‘(B) Notwithstanding subparagraph (A), a State may require an insurer or health maintenance organization offering health insurance coverage in the small group market (as defined in section 811(4)) in connection with a group health plan to offer under such coverage specific items or services consisting of medical care, but only with respect to not more than 2 different policies or contracts of health insurance coverage.’.

    (b) PREEMPTION OF STATE FICTITIOUS GROUP LAWS- Section 514(c) of such Act (as amended by subsection (a)) is further amended by redesignating paragraph (4) as paragraph (5) and inserting after paragraph (3) the following new paragraph:

    ‘(4) The provisions of this title shall supercede any and all State laws insofar as they may now or hereafter prohibit--

      ‘(A) two or more employers from obtaining or offering coverage under a multiple employer welfare arrangement under which all benefits consist of medical care and are fully insured, or

      ‘(B) an insurer or health maintenance organization from offering coverage described in subparagraph (A).’.

    (c) CLARIFICATION OF PREEMPTION RULES RELATING TO VOLUNTARY HEALTH INSURANCE ASSOCIATIONS- Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is amended by adding at the end the following new subparagraphs:

    ‘(E)(i) The provisions of this title shall supercede any and all State laws which regulate insurance insofar as they may now or hereafter preclude an insurer or health maintenance organization offering health insurance coverage in connection with employee welfare benefit plans which are voluntary health insurance associations from setting premium rates based on the claims experience of each voluntary health insurance association, if such claims experience is defined as the claims experience of all employers of each association taken as a whole (without varying the premium rates of any particular employer on the basis of the claims experience of such employer).

    ‘(ii) Subsection (c)(3)(B) shall not apply in the case of an employee welfare benefit plan which is a voluntary health insurance association.

    ‘(iii) For purposes of this subparagraph, the term ‘voluntary health insurance association’ means a multiple employer welfare arrangement--

      ‘(I) under which benefits include medical care (within the meaning of section 607(1)),

      ‘(II) under which all benefits consisting of such medical care are fully insured, and

      ‘(III) which is maintained by a qualified association.

    ‘(iv) For purposes of clause (iii)(III), the term ‘qualified association’ means an association which consists of employers who together employ at least 200 employees who are eligible individuals, but only if the sponsor of the association--

      ‘(I) is, and has been (together with its immediate predecessor, if any) for a continuous period of not less than 3 years, organized and maintained in good faith, with a constitution and bylaws specifically stating its purpose, as a trade association, an industry association, a professional association, or a chamber of commerce (or similar business group), for substantial purposes other than that of obtaining or providing medical care (within the meaning of section 607(1)), and

      ‘(II) is established as a permanent entity which receives the active support of its members.

    ‘(F) For purposes of this paragraph, the terms ‘fully insured’, ‘health insurance coverage’, ‘health maintenance organization’, and ‘insurer’ have the meanings given such terms in section 800(a).’.

SEC. 302. CLARIFICATION OF DUTY OF THE SECRETARY OF LABOR TO IMPLEMENT PROVISIONS OF CURRENT LAW PROVIDING FOR EXEMPTIONS FROM STATE REGULATION OF MULTIPLE EMPLOYER HEALTH PLANS.

    (a) RULES GOVERNING STATE REGULATION OF MULTIPLE EMPLOYER HEALTH PLANS- Subtitle B of title I of the Employee Retirement Income Security Act of 1974 (as amended by the preceding provisions of this title) is amended by inserting after part 6 the following new part:

‘PART 7--RULES GOVERNING STATE REGULATION OF MULTIPLE EMPLOYER HEALTH PLANS

‘SEC. 701. DEFINITIONS.

    ‘For purposes of this part--

      ‘(1) FULLY INSURED- A particular benefit under a group health plan or a multiple employer welfare arrangement is ‘fully insured’ if such benefit (irrespective of any recourse available against other parties) is provided in a manner so that such benefit constitutes insurance regulated by the law of any State (within the meaning of section 514(b)(2)).

      ‘(2) INSURER- The term ‘insurer’ means an insurance company, insurance service, or insurance organization, licensed to engage in the business of insurance by a State.

      ‘(3) MEDICAL CARE- The term ‘medical care’ means medical care within the meaning of section 607(1).

      ‘(4) MULTIPLE EMPLOYER HEALTH PLAN- The term ‘multiple employer health plan’ means a multiple employer welfare arrangement which provides medical care and which has been granted an exemption under section 514(b)(6)(B).

      ‘(5) PARTICIPATING EMPLOYER- The term ‘participating employer’ means, in connection with a multiple employer welfare arrangement, any employer if any of its employees, or any of the individuals who are dependents (as defined under the terms of the arrangement) of its employees, are or were covered under such arrangement in connection with the employment of the employees.

      ‘(6) SPONSOR- The term ‘sponsor’ means, in connection with a multiple employer welfare arrangement, the association or other entity which establishes or maintains the arrangement.

      ‘(7) STATE INSURANCE COMMISSIONER- The term ‘State insurance commissioner’ means the insurance commissioner (or similar official) of a State.

‘SEC. 702. MULTIPLE EMPLOYER HEALTH PLANS ELIGIBLE FOR RELIEF FROM CERTAIN RESTRICTIONS ON PREEMPTION OF STATE LAW.

    ‘(a) TREATMENT AS EMPLOYEE WELFARE BENEFIT PLAN WHICH IS A GROUP HEALTH PLAN-

      ‘(1) IN GENERAL- A multiple employer welfare arrangement--

        ‘(A) under which the benefits consist solely of medical care (disregarding such incidental benefits as the Secretary shall specify by regulation), and

        ‘(B) under which some or all benefits are not fully insured,

      shall be treated for purposes of subtitle A and the other parts of this subtitle as an employee welfare benefit plan which is a group health plan if an exception is granted to the arrangement under section 514(b)(6)(B) in accordance with this part.

      ‘(2) EXCEPTION- In the case of a multiple employer welfare arrangement which would be described in section 3(40)(A)(i) but solely for the failure to meet the requirements of section 3(40)(C)(ii), paragraph (1) shall apply with respect to such arrangement, but only with respect to benefits provided thereunder which constitute medical care.

    ‘(b) TREATMENT UNDER PREEMPTION RULES-

      ‘(1) IN GENERAL- The Secretary shall prescribe regulations described in section 514(b)(6)(B)(i), applicable to multiple employer welfare arrangements described in subparagraphs (A) and (B) of subsection (a)(1), providing a procedure for granting exemptions from section 514(b)(6)(A)(ii) with respect to such arrangements. Under such regulations, any such arrangement treated under subsection (a) as an employee welfare benefit plan shall be deemed to be an arrangement described in section 514(b)(6)(B)(ii).

      ‘(2) STANDARDS- Under the procedure prescribed pursuant to paragraph (1), the Secretary shall grant an arrangement described in subsection (a) an exemption described in subsection (a) only if the Secretary finds that--

        ‘(A) such exemption--

          ‘(i) is administratively feasible,

          ‘(ii) is not adverse to the interests of the individuals covered under the arrangement,

          ‘(iii) is protective of the rights and benefits of the individuals covered under the arrangement, and

        ‘(B) under such arrangement--

          ‘(i) the requirements of section 703(a) are met,

          ‘(ii) reserves are maintained in an amount of not less than $100,000 which consist of at least a reserve sufficient--

            ‘(I) for unearned contributions,

            ‘(II) for benefit liabilities which have been incurred, which have not been satisfied, and for which risk of loss has not yet been transferred (to the extent that the arrangement does not maintain such security, guarantee, hold-harmless arrangement, or other financial arrangement as the Secretary determines to be adequate), and

            ‘(III) for expected administrative costs with respect to such benefit liabilities,

          ‘(iii) the arrangement will provide such timely notice of material changes as the Secretary shall specify in the regulations referred to in paragraph (1), the arrangement will meet such other financial, actuarial, and other reporting requirements as shall be specified in such regulations, the arrangement is maintained by persons who are not disqualified persons as defined in such regulations, and the arrangement will terminate upon failure to meet requirements which shall be specified in such regulations.

      ‘(3) FILING FEE- Under the procedure prescribed pursuant to paragraph (1), a multiple employer welfare arrangement shall pay to the Secretary at the time of filing an application for an exemption referred to in subsection (a) a filing fee in the amount of $5,000, which shall be available, to the extent provided in appropriation Acts, to the Secretary for the sole purpose of administering the exemption procedures applicable with respect to such arrangement.

      ‘(4) CLASS EXEMPTION TREATMENT FOR EXISTING LARGE ARRANGEMENTS- Under the procedure prescribed pursuant to paragraph (1), if--

        ‘(A) at the time of application for an exemption under section 514(b)(6)(B) with respect to an arrangement which has been in existence as of the date of the enactment of the ERISA Targeted Health Insurance Reform Act of 1996 for at least 3 years, either (A) the arrangement covers at least 1,000 participants and beneficiaries, or (B) with respect to the arrangement there are at least 2,000 employees of eligible participating employers,

        ‘(B) a complete application for the exemption with respect to the arrangement has been filed and is pending, and

        ‘(C) the application meets such requirements (if any) as the Secretary may provide with respect to class exemptions under this subsection,

      the exemption shall be treated as having been granted with respect to the arrangement unless and until the Secretary provides appropriate notice that the exemption has been denied.

    ‘(c) FILING NOTICE OF EXEMPTION WITH STATES- An exemption granted under section 514(b)(6)(B) to a multiple employer welfare arrangement shall not be effective unless written notice of such exemption is filed with the State insurance commissioner of each State in which at least 5 percent of the individuals covered under the arrangement are located. For purposes of this subsection, an individual shall be considered to be located in the State in which a known address of such individual is located or in which such individual is employed. The Secretary may by regulation provide in specified cases for the application of the preceding sentence with lesser percentages in lieu of such 5 percent amount.’.

‘SEC. 703. REQUIREMENTS RELATING TO SPONSORS, BOARDS OF TRUSTEES, AND PLAN OPERATIONS.

    ‘(a) IN GENERAL- A complete application for an exemption under section 514(b)(6)(B) shall include information which the Secretary determines to be complete and accurate and sufficient to demonstrate that the following requirements are met with respect to the arrangement:

      ‘(1) SPONSOR- The sponsor is, and has been (together with its immediate predecessor, if any) for a continuous period of not less than 3 years before the date of the application, organized and maintained in good faith, with a constitution and bylaws specifically stating its purpose, as a trade association, an industry association, a professional association, or a chamber of commerce (or similar business group,

including a corporation or similar organization that operates on a cooperative basis (within the meaning of section 1381 of the Internal Revenue Code of 1986)), for substantial purposes other than that of obtaining or providing medical care (referred to in section 3(42)), and the applicant demonstrates to the satisfaction of the Secretary that the sponsor is established as a permanent entity which receives the active support of its members.

      ‘(2) BOARD OF TRUSTEES- The arrangement is operated, pursuant to a trust agreement, by a board of trustees which has complete fiscal control over the arrangement and which is responsible for all operations of the arrangement, and 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 arrangement and to meet all requirements of this title applicable to the arrangement. 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. No such member is an owner, officer, director, or employee of, or partner in, a contract administrator or other service provider to the arrangement, except that officers or employees of a sponsor which is a service provider (other than a contract administrator) to the arrangement 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 arrangement other than on behalf of the sponsor. The board has sole authority to approve applications for participation in the arrangement and to contract with a service provider to administer the day-to-day affairs of the arrangement.

      ‘(3) COVERED PERSONS- The instruments governing the arrangement include a written instrument which provides that, effective upon the granting of the exemption to the arrangement--

        ‘(A) all participating employers must be members or affiliated members 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 affiliated member of the sponsor, participating employers may also include such employer,

        ‘(B) all individuals thereafter commencing coverage under the arrangement must be--

          ‘(i) active or retired owners (including self-employed individuals), officers, directors, or employees of, or partners in, participating employers, or

          ‘(ii) the beneficiaries of individuals described in clause (i), and

        ‘(C) no participating employer may provide health insurance coverage in the individual market for any employee not covered under the arrangement which is similar to the coverage contemporaneously provided to employees of the employer under the arrangement, if such exclusion of the employee from coverage under the arrangement is based in whole or in part on the health status of the employee and such employee would, but for such exclusion on such basis, be eligible for coverage under the arrangement.

      ‘(4) INCLUSION OF ELIGIBLE EMPLOYERS AND EMPLOYEES- No employer described in paragraph (3) is excluded as a participating employer, no employee of a participating employer is ineligible for coverage offered under the plan in a geographic area with respect to the employee, and no individual who would otherwise be eligible for coverage under the arrangement in connection with such an employer is excluded as a plan participant, based on--

        ‘(A) enrollment criteria more restrictive than those required under section 804 with respect to group health plans, or

        ‘(B) a minimum participation requirement of the type referred to in section 812(f)(3).

      ‘(5) RESTRICTION ON VARIATIONS OF PREMIUM RATES- Premium rates under the arrangement with respect any particular employer do not vary on the basis of the claims experience of such employer.

    ‘(b) TREATMENT OF FRANCHISE NETWORKS- In the case of a multiple employer welfare arrangement which is established and maintained by a franchisor for a franchise network consisting of its franchisees, the requirements of subsection (a)(1) shall be treated as met with respect to such network in any case in which such requirements would be met if the franchisor were deemed to be the sponsor referred to in subsection (a)(1), such network were deemed to be an association described in subsection (a)(1), and each franchisee were deemed to be a member (of the association and the sponsor) referred to in subsection (a)(1).

    ‘(c) CERTAIN COLLECTIVELY BARGAINED ARRANGEMENTS- In the case of a multiple employer welfare arrangement in existence on February 1, 1995, which would be described in section 3(40)(A)(i) but solely for the failure to meet the requirements of section 3(40)(C)(ii) or (to the extent provided in regulations of the Secretary) solely for the failure to meet the requirements of subparagraph (D) or (F) of section 3(40)--

      ‘(1) subsection (a)(1) shall not apply, and

      ‘(2) the joint board of trustees shall be considered the board of trustees required under subsection (a)(2).

    ‘(d) CERTAIN ARRANGEMENTS NOT MEETING SINGLE EMPLOYER REQUIREMENT-

      ‘(1) IN GENERAL- In any case in which the majority of the employees covered under a multiple employer welfare arrangement are employees of a single employer (within the meaning of clauses (i) and (ii) of section 3(40)(B)), if all other employees covered under the arrangement are employed by employers who are related to such single employer--

        ‘(A) subsection (a)(1) shall be treated as satisfied if the sponsor of the arrangement is the person who would be the plan sponsor if the related employers were disregarded in determining whether the requirements of section 3(40)(B) are met, and

        ‘(B) subsection (a)(2) shall be treated as satisfied if the board of trustees is the named fiduciary in connection with the arrangement.

      ‘(2) RELATED EMPLOYERS- For purposes of paragraph (1), employers are ‘related’ if there is among all such employers a common ownership interest or a substantial commonality of business operations based on common suppliers or customers.’.

    (b) CONFORMING AMENDMENTS TO PREEMPTION RULES-

      (1) Section 514(b)(6)(A)(i) of such Act (29 U.S.C. 1144(b)(6)(A)(i)) is amended by striking ‘is fully insured’ and inserting ‘under which all benefits are fully insured’, and by inserting ‘and which is not described in section 702(a)(1)’ after ‘subparagraph (B)’.

      (2) Section 514(b)(6)(B) of such Act (29 U.S.C. 1144(b)(6)(B)) is amended--

        (A) by inserting ‘(i)’ after ‘(B)’;

        (B) by striking ‘which are not fully insured’ and inserting ‘under which any benefit is not fully insured’; and

        (C) by striking ‘Any such exemption’ and inserting:

    ‘(ii) Subject to part 7, any exemption under clause (i)’.

    (c) CONFORMING AMENDMENT TO DEFINITION OF PLAN SPONSOR- Section 3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is amended by adding at the end the following new sentence: ‘Such term also includes the sponsor (as defined in section 701(6)) of a multiple employer welfare arrangement which is or has been a multiple employer health plan (as defined in section 701(4)).’.

    (d) CLERICAL AMENDMENT- The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 (as amended by section 102(g)) is amended by inserting after the item relating to section 609 the following new items:

‘Part 7--Rules Governing State Regulation of Multiple Employer Health Plans

      ‘Sec. 701. Definitions.

      ‘Sec. 702. Multiple employer health plans eligible for relief from certain restrictions on preemption of State law

      ‘Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations.’.

SEC. 303. CLARIFICATION OF SCOPE OF PREEMPTION RULES.

    (a) IN GENERAL- Section 514(b)(6)(A)(ii) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)(ii)) is amended by inserting ‘, but only, in the case of an arrangement which does not provide medical care (within the meaning of section 607(1)),’ before ‘to the extent not inconsistent with the preceding sections of this title’.

    (b) CROSS-REFERENCE- Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) (as amended by section 301) is amended by adding at the end the following new subparagraph:

    ‘(G) For additional rules relating to exemption from subparagraph (A)(ii) of multiple employer health plans, see part 7.’.

SEC. 304. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amended--

      (1) in clause (i), by inserting ‘for any plan year of any such plan, or any fiscal year of any such other arrangement,’ after ‘single employer’, and by inserting ‘during such year or at any time during the preceding 1-year period’ after ‘control group’;

      (2) in clause (iii)--

        (A) by striking ‘common control shall not be based on an interest of less than 25 percent’ and inserting ‘an interest of greater than 25

percent may not be required as the minimum interest necessary for common control’; and

        (B) by striking ‘similar to’ and inserting ‘consistent and coextensive with’;

      (3) by redesignating clauses (iv) and (v) as clauses (v) and (vi), respectively; and

      (4) by inserting after clause (iii) the following new clause:

      ‘(iv) in determining, after the application of clause (i), whether benefits are provided to employees of two or more employers, the arrangement shall be treated as having only 1 participating employer if, after the application of clause (i), the number of individuals who are employees and former employees of any one participating employer and who are covered under the arrangement is greater than 75 percent of the aggregate number of all individuals who are employees or former employees of participating employers and who are covered under the arrangement,’.

SEC. 305. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED ARRANGEMENTS.

    (a) IN GENERAL- Section 3(40)(A)(i) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to read as follows:

      ‘(i)(I) under or pursuant to one or more collective bargaining agreements which are reached pursuant to collective bargaining described in section 8(d) of the National Labor Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which are reached pursuant to labor-management negotiations under similar provisions of State public employee relations laws, and (II) in accordance with subparagraphs (C), (D), and (E),’.

    (b) LIMITATIONS- Section 3(40) of such Act (29 U.S.C. 1002(40)) is amended by adding at the end the following new subparagraphs:

    ‘(C) A plan or other arrangement is established or maintained in accordance with this subparagraph only if the following requirements are met:

      ‘(i) The plan or other arrangement, and the employee organization or any other entity sponsoring the plan or other arrangement, do not--

        ‘(I) utilize the services of any licensed insurance agent or broker for soliciting or enrolling employers or individuals as participating employers or covered individuals under the plan or other arrangement, or

        ‘(II) pay a commission or any other type of compensation to a person, other than a full time employee of the employee organization (or a member of the organization to the extent provided in regulations of the Secretary), that is related either to the volume or number of employers or individuals solicited or enrolled as participating employers or covered individuals under the plan or other arrangement, or to the dollar amount or size of the contributions made by participating employers or covered individuals to the plan or other arrangement,

      except to the extent that the services used by the plan, arrangement, organization, or other entity consist solely of preparation of documents necessary for compliance with the reporting and disclosure requirements of part 1 or administrative, investment, or consulting services unrelated to solicitation or enrollment of covered individuals.

      ‘(ii) As of the end of the preceding plan year, the number of covered individuals under the plan or other arrangement who are identified to the plan or arrangement and who are neither--

        ‘(I) employed within a bargaining unit covered by any of the collective bargaining agreements with a participating employer (nor covered on the basis of an individual’s employment in such a bargaining unit), nor

        ‘(II) present employees (or former employees who were covered while employed) of the sponsoring employee organization, of an employer who is or was a party to any of the collective bargaining agreements, or of the plan or other arrangement or a related plan or arrangement (nor covered on the basis of such present or former employment),

      does not exceed 15 percent of the total number of individuals who are covered under the plan or arrangement and who are present or former employees who are or were covered under the plan or arrangement pursuant to a collective bargaining agreement with a participating employer. The requirements of the preceding provisions of this clause shall be treated as satisfied if, as of the end of the preceding plan year, such covered individuals are comprised solely of individuals who were covered individuals under the plan or other arrangement as of the date of the enactment of the ERISA Targeted Health Insurance Reform Act of 1996 and, as of the end of the preceding plan year, the number of such covered individuals does not

exceed 25 percent of the total number of present and former employees enrolled under the plan or other arrangement.

      ‘(iii) The employee organization or other entity sponsoring the plan or other arrangement certifies to the Secretary each year, in a form and manner which shall be prescribed in regulations of the Secretary that the plan or other arrangement meets the requirements of clauses (i) and (ii).

    ‘(D) A plan or arrangement is established or maintained in accordance with this subparagraph only if--

      ‘(i) all of the benefits provided under the plan or arrangement are fully insured (as defined in section 701(2)), or

      ‘(ii)(I) the plan or arrangement is a multiemployer plan, and

      ‘(II) the requirements of clause (B) of the proviso to clause (5) of section 302(c) of the Labor Management Relations Act, 1947 (29 U.S.C. 186(c)) are met with respect to such plan or other arrangement.

    ‘(E) A plan or arrangement is established or maintained in accordance with this subparagraph only if--

      ‘(i) the plan or arrangement is in effect as of the date of the enactment of the ERISA Targeted Health Insurance Reform Act of 1996, or

      ‘(ii) the employee organization or other entity sponsoring the plan or arrangement--

        ‘(I) has been in existence for at least 3 years or is affiliated with another employee organization which has been in existence for at least 3 years, or

        ‘(II) demonstrates to the satisfaction of the Secretary that the requirements of subparagraphs (C) and (D) are met with respect to the plan or other arrangement.’.

    (c) CONFORMING AMENDMENTS TO DEFINITIONS OF PARTICIPANT AND BENEFICIARY- Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended by adding at the end the following new sentence: ‘Such term includes an individual who is a covered individual described in paragraph (40)(C)(ii).’.

SEC. 306. TREATMENT OF CHURCH PLANS.

    (a) SPECIAL RULES FOR CHURCH PLANS-

      (1) IN GENERAL- Part 7 of subtitle B of title I of such Act (as added and amended by the preceding provisions of this Act) is amended by adding at the end the following new section:

‘SEC. 704. SPECIAL RULES FOR CHURCH PLANS.

    ‘(a) ELECTION FOR CHURCH PLANS-

      ‘(1) IN GENERAL- Notwithstanding section 4(b)(2), if the church or convention or association of churches which maintains a church plan covered under this section makes an election with respect to such plan under this subsection (in such form and manner as the Secretary may by regulations prescribe), then, subject to this section, the provisions of this part (and other provisions of this title to the extent that they apply to group health plans which are multiple employer welfare arrangements) shall apply to such church plan, with respect to benefits provided under such plan consisting of medical care, as if--

        ‘(A) section 4(b)(2) did not contain an exclusion for church plans, and

        ‘(B) such plan were an arrangement eligible to apply for an exemption under this part.

      ‘(2) ELECTION IRREVOCABLE- An election under this subsection with respect to any church plan shall be binding with respect to such plan, and, once made, shall be irrevocable.

    ‘(b) COVERED CHURCH PLANS- A church plan is covered under this section if such plan provides benefits which include medical care and some or all of such benefits are not fully insured.

    ‘(c) SPONSOR AND BOARD OF TRUSTEES- For purposes of this part, in the case of a church plan to which this part applies pursuant to an election under subsection (a), in treating such plan as if it were a multiple employer welfare arrangement under this part--

      ‘(1) the church, convention or association of churches, or other organization described in section 3(33)(C)(i) which is the entity maintaining the plan shall be treated as the sponsor referred to in section 703(a)(1), and the requirements of section 703(a)(1) shall be deemed satisfied with respect to the sponsor, and

      ‘(2) the board of trustees, board of directors, or other similar governing body of such sponsor shall be treated as the board of trustees referred to in section 703(a)(2), and the requirements of section 703(a)(2) shall be deemed satisfied with respect to the board of trustees.

    ‘(d) DEEMED SATISFACTION OF TRUST REQUIREMENTS- The requirements of section 403 shall not be treated as not satisfied with respect to a church plan to which this part applies pursuant to an election under subsection (a) solely because assets of the plan are held by an organization described in section 3(33)(C)(i), if--

      ‘(1) such organization is incorporated separately from the church or convention or association of churches involved, and

      ‘(2) such assets with respect to medical care are separately accounted for.

    ‘(e) DEEMED SATISFACTION OF EXCLUSIVE BENEFIT REQUIREMENTS- The requirements of section 404 shall not be treated as not satisfied with respect to a church plan to which this part applies pursuant to an election under subsection (a) solely because assets of the plan which are in excess of reserves required for exemption under section 514(b)(6)(B) are held in a fund in which such assets are pooled with assets of other church plans, if the assets held by such fund may not, under the terms of the plan and the terms governing such fund, be used for, or diverted to, any purpose other than for the exclusive benefit of the participants and beneficiaries of the church plans whose assets are pooled in such fund.

    ‘(f) INAPPLICABILITY OF CERTAIN PROVISIONS-

      ‘(1) PROHIBITED TRANSACTIONS- Section 406 shall not apply to a church plan by reason of an election under subsection (a).

      ‘(2) CONTINUATION COVERAGE- Section 601 shall not apply to a church plan by reason of an election under subsection (a).’.

    (b) CONFORMING AMENDMENTS-

      (1) Section 4(b)(2) of such Act (29 U.S.C. 1003(b)(2)) is amended by inserting before the semicolon the following: ‘, except with respect to provisions made applicable under any election made under section 704(a) of this Act’.

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

        (A) in subsection (a), by inserting ‘(including a church plan which is not exempt under section 4(b)(2) by reason of an election under section 704)’ before the period in the first sentence; and

        (B) in subsection (b)(2)(B), by inserting ‘and including a church plan which is not exempt under section 4(b)(2) by reason of an election under section 704’ after ‘death benefits’.

    (c) CLERICAL AMENDMENT- The table of contents in section 1 of such Act (as amended by the preceding provisions of this title) is further amended by inserting after the item relating to section 703 the following new item:

      ‘Sec. 704. Special rules for church plans.’.

SEC. 307. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE EMPLOYER WELFARE ARRANGEMENTS.

    (a) ENFORCEMENT OF FILING REQUIREMENTS- Section 502 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) (as amended by sections 102(c)) is further amended--

      (1) in subsection (a)(6), by striking ‘paragraph (2) or (5)’ and inserting ‘paragraph (2), (5), or (6)’; and

      (2) by adding at the end of subsection (c) the following new paragraph:

    ‘(6) The Secretary may assess a civil penalty against any person of up to $1,000 a day from the date of such person’s failure or refusal to file the information required to be filed with the Secretary under section 101(g).’.

    (b) ACTIONS BY STATES IN FEDERAL COURT- Section 502(a) of such Act (29 U.S.C. 1132(a)) is amended--

      (1) in paragraph (8), by striking ‘or’ at the end;

      (2) in paragraph (9), by striking the period and inserting ‘, or’; and

      (3) by adding at the end the following:

      ‘(10) by a State official having authority under the law of such State to enforce the laws of such State regulating insurance, to enjoin any act or practice which violates any requirement under part 7 for an exemption under section 514(b)(6)(B) which such State has the power to enforce pursuant to section 506(c)(1).’.

    (c) CRIMINAL PENALTIES FOR CERTAIN WILLFUL MISREPRESENTATIONS- Section 501 of such Act (29 U.S.C. 1131) is amended--

      (1) by inserting ‘(a)’ after ‘SEC. 501.’; and

      (2) by adding at the end the following new subsection:

    ‘(b) Any person who, either willfully or with willful blindness, falsely represents, to any employee, any employee’s beneficiary, any employer, the Secretary, or any State, an arrangement established or maintained for the purpose of offering or providing any benefit described in section 3(1) to employees or their beneficiaries as--

      ‘(1) being a multiple employer welfare arrangement to which an exemption has been granted under section 514(b)(6)(B),

      ‘(2) having been established or maintained under or pursuant to one or more collective bargaining agreements which are reached pursuant to collective bargaining described in section 8(d) of the National Labor Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which are reached pursuant to labor-management negotiations under similar provisions of State public employee relations laws, or

      ‘(3) being a plan or arrangement with respect to which the requirements of subparagraph (C), (D), or (E) of section 3(40) are met,

    shall, upon conviction, be imprisoned not more than five years, be fined under title 18, United States Code, or both.’.

    (d) CEASE ACTIVITIES ORDERS- Section 502 of such Act (29 U.S.C. 1132) is amended by adding at the end the following new subsection:

    ‘(n)(1) Subject to paragraph (2), upon application by the Secretary showing the operation, promotion, or marketing of a multiple employer welfare arrangement providing benefits consisting of medical care (within the meaning of section 607(1)) that--

      ‘(A) is not licensed, registered, or otherwise approved under the insurance laws of the States in which the arrangement offers or provides benefits, and

      ‘(B) if there is in effect with respect to such arrangement an exemption under section 514(b)(6)(B), is not operating in accordance with the requirements under part 7 for such an exemption,

    a district court of the United States shall enter an order requiring that the arrangement cease activities.

    ‘(2) Paragraph (1) shall not apply in the case of a multiple employer welfare arrangement if the arrangement shows that--

      ‘(A) all benefits under it referred to in paragraph (1) are fully insured, within the meaning of section 701(1), and

      ‘(B) with respect to each State in which the arrangement offers or provides benefits, the arrangement is operating in accordance with applicable State insurance laws that are not superseded under section 514.

    ‘(3) The court may grant such additional equitable relief, including any relief available under this title, as it deems necessary to protect the interests of the public and of persons having claims for benefits against the arrangement.’.

    (e) RESPONSIBILITY FOR CLAIMS PROCEDURE- Section 503 of such Act (29 U.S.C. 1133) is amended by adding at the end (after and below paragraph (2)) the following new sentence: ‘The terms of each multiple employer health plan (within the meaning of section 701(4)) shall require the board of trustees or the named fiduciary (as applicable) to ensure that the requirements of this section are met in connection with claims filed under the plan.’.

SEC. 308. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1136) is amended by adding at the end the following new subsection:

    ‘(c) RESPONSIBILITY WITH RESPECT TO MULTIPLE EMPLOYER WELFARE ARRANGEMENTS-

      ‘(1) STATE ENFORCEMENT-

        ‘(A) AGREEMENTS WITH STATES- A State may enter into an agreement with the Secretary for delegation to the State of some or all of the Secretary’s authority under sections 502 and 504 to enforce the requirements under part 7 for an exemption under section 514(b)(6)(B). The Secretary shall enter into the agreement if the Secretary determines that the delegation provided for therein would not result in a lower level or quality of enforcement of the provisions of this title.

        ‘(B) DELEGATIONS- Any department, agency, or instrumentality of a State to which authority is delegated pursuant to an agreement entered into under this paragraph may, if authorized under State law and to the extent consistent with such agreement, exercise the powers of the Secretary under this title which relate to such authority.

        ‘(C) CONCURRENT AUTHORITY OF THE SECRETARY- If the Secretary delegates authority to a State in an agreement entered into under subparagraph (A), the Secretary may continue to exercise such authority concurrently with the State.

        ‘(D) RECOGNITION OF PRIMARY DOMICILE STATE- In entering into any agreement with a State under subparagraph (A), the Secretary shall ensure that, as a result of such agreement and all other agreements entered into under subparagraph (A), only one State will be recognized, with respect to any particular multiple employer welfare arrangement, as the primary domicile State to which authority has been delegated pursuant to such agreements.

      ‘(2) ASSISTANCE TO STATES- The Secretary shall--

        ‘(A) provide enforcement assistance to the States with respect to multiple employer welfare arrangements, including, but not limited to, coordinating Federal and State efforts through the establishment of cooperative agreements with

appropriate State agencies under which the Pension and Welfare Benefits Administration keeps the States informed of the status of its cases and makes available to the States information obtained by it,

        ‘(B) provide continuing technical assistance to the States with respect to issues involving multiple employer welfare arrangements and this Act,

        ‘(C) make readily available to the States timely and complete responses to requests for advisory opinions on issues described in subparagraph (B), and

        ‘(D) distribute copies of all advisory opinions described in subparagraph (C) to the State insurance commissioner of each State.’.

SEC. 309. FILING AND DISCLOSURE REQUIREMENTS FOR MULTIPLE EMPLOYER WELFARE ARRANGEMENTS OFFERING HEALTH BENEFITS.

    Section 101 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021) is amended--

      (1) by redesignating subsection (g) as subsection (i); and

      (2) by inserting after subsection (f) the following new subsections:

    ‘(g) REGISTRATION OF MULTIPLE EMPLOYER WELFARE ARRANGEMENTS- (1) Each multiple employer welfare arrangement shall file with the Secretary a registration statement described in paragraph (2) within 60 days before commencing operations (in the case of an arrangement commencing operations on or after January 1, 1997) and no later than February 15 of each year (in the case of an arrangement in operation since the beginning of such year), unless, as of the date by which such filing otherwise must be made, such arrangement provides no benefits consisting of medical care (within the meaning of section 607(1))).

    ‘(2) Each registration statement--

      ‘(A) shall be filed in such form, and contain such information concerning the multiple employer welfare arrangement and any persons involved in its operation (including whether coverage under the arrangement is fully insured), as shall be provided in regulations which shall be prescribed by the Secretary, and

      ‘(B) if any benefits under the arrangement consisting of medical care (within the meaning of section 607(1)) are not fully insured, shall contain a certification that copies of such registration statement have been transmitted by certified mail to--

        ‘(i) in the case of an arrangement which is a multiple employer health plan (as defined in section 701(4)), the State insurance commissioner of the domicile State of such arrangement, or

        ‘(ii) in the case of an arrangement which is not a multiple employer health plan, the State insurance commissioner of each State in which the arrangement is located.

    ‘(3) The person or persons responsible for filing the annual registration statement are--

      ‘(A) the trustee or trustees so designated by the terms of the instrument under which the multiple employer welfare arrangement is established or maintained, or

      ‘(B) in the case of a multiple employer welfare arrangement for which the trustee or trustees cannot be identified, or upon the failure of the trustee or trustees of an arrangement to file, the person or persons actually responsible for the acquisition, disposition, control, or management of the cash or property of the arrangement, irrespective of whether such acquisition, disposition, control, or management is exercised directly by such person or persons or through an agent designated by such person or persons.

    ‘(4) Any agreement entered into under section 506(c) with a State as the primary domicile State with respect to any multiple employer welfare arrangement shall provide for simultaneous filings of reports required under this subsection with the Secretary and with the State insurance commissioner of such State.

    ‘(5) For purposes of this subsection, the term ‘domicile State’ means, in connection with a multiple employer welfare arrangement, the State in which, according to the application for an exemption under this 514(b)(6)(B), most individuals to be covered under the arrangement are located, except that, in any case in which information contained in the latest annual report of the arrangement filed under this part indicates that most individuals covered under the arrangement are located in a different State, such term means such different State.

    ‘(6) The Secretary may exempt from the requirements of this subsection such class of multiple employer welfare arrangements as the Secretary deems appropriate.

    ‘(h) FILING REQUIREMENTS FOR MULTIPLE EMPLOYER WELFARE ARRANGEMENTS-

      ‘(1) IN GENERAL- A multiple employer welfare arrangement which provides benefits consisting of medical care (within the meaning of section 607(1)) shall issue to each participating employer--

        ‘(A) a document equivalent to the summary plan description required of plans under this part,

        ‘(B) information describing the contribution rates applicable to participating employers, and

        ‘(C) a statement indicating--

          ‘(i) that the arrangement is not a licensed insurer under the laws of any State,

          ‘(ii) the extent to which any benefits under the arrangement are fully insured,

          ‘(iii) if any benefits under the arrangement are not fully insured, whether the arrangement has been granted an exemption under section 514(b)(6)(B) (or whether such an exemption has ceased to be effective).

      ‘(2) TIME FOR DISCLOSURE- Such information shall be issued to employers within such reasonable period of time before becoming participating employers as may be prescribed in regulations of the Secretary.’.

SEC. 310. SINGLE ANNUAL FILING FOR ALL PARTICIPATING EMPLOYERS.

    (a) IN GENERAL- Section 110 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1030) is amended by adding at the end the following new subsection:

    ‘(c) The Secretary shall prescribe by regulation or otherwise an alternative method providing for the filing of a single annual report (as referred to in section 104(a)(1)(A)) with respect to all employers who are participating employers under a multiple employer welfare arrangement under which all coverage consists of medical care (within the meaning of section 607(1)) and is fully insured (as defined in section 701(1)).’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act. The Secretary of Labor shall prescribe the alternative method referred to in section 110(c) of the Employee Retirement Income Security Act of 1974, as added by such amendment, within 90 days after the date of the enactment of this Act.

SEC. 311. EFFECTIVE DATE; TRANSITIONAL RULE.

    (a) EFFECTIVE DATE- The amendments made by this title shall take effect on the earlier of--

      (1) the date on which the Secretary of Labor issues all regulations necessary to carry out the amendments made by this title, or

      (2) July 1, 1997.

    The Secretary shall issue all regulations necessary to carry out the amendments made by this title before July 1, 1997.

    (b) TRANSITIONAL RULE- If the sponsor of a multiple employer welfare arrangement which, as of the effective date specified in subsection (a), provides benefits consisting of medical care (within the meaning of section 607(1) of the Employee Retirement Income Security Act of 1974) files with the Secretary of Labor an application for an exemption under section 514(b)(6)(B) of such Act within 180 days after such date and the Secretary has not, as of 90 days after receipt of such application, found such application to be materially deficient, section 514(b)(6)(A) of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply with respect to such arrangement during the period following such date and ending on the earlier of--

      (1) the date on which the Secretary denies the application under the amendments made by this title or determines, in the Secretary’s sole discretion, that such exclusion from coverage under the provisions of such section 514(b)(6)(A) of such arrangement would be detrimental to the interests of individuals covered under such arrangement, or

      (2) 18 months after such effective date.

SEC. 312. RULE OF CONSTRUCTION.

    Nothing in this Act or any amendment made thereby may be construed to require the coverage of any specific procedure, treatment, or service as part of a group health plan or health insurance coverage under this Act or through regulation.

Amend the title so as to read: ‘A bill to amend the Employee Retirement Income Security Act of 1974 to provide new portability, enrollment, and other consumer protections and freedoms for workers in a mobile workforce, to increase purchasing power for employers and employees by removing barriers to the voluntary formation of multiple employer health plans and fully-insured multiple employer arrangements, and to expand access to fully-insured coverage for employees of small employers through open markets, and for other purposes.’.