[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 995 Reported in House (RH)]

                                                 Union Calendar No. 248

104th CONGRESS

  2d Session

                               H. R. 995

                      [Report No. 104-498, Part I]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                             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
                                                 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

   ``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 
     ``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.''.