[House Report 115-43]
[From the U.S. Government Publishing Office]


115th Congress    }                                   {         Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                   {         115-43

======================================================================



 
               SMALL BUSINESS HEALTH FAIRNESS ACT OF 2017

                                _______
                                

 March 17, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Ms. Foxx, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1101]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 1101) to amend title I of the Employee 
Retirement Income Security Act of 1974 to improve access and 
choice for entrepreneurs with small businesses with respect to 
medical care for their employees, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Small Business 
Health Fairness Act of 2017''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Rules governing association health plans.
Sec. 3. Clarification of treatment of single employer arrangements.
Sec. 4. Enforcement provisions relating to association health plans.
Sec. 5. Cooperation between Federal and State authorities.
Sec. 6. Effective date and transitional and other rules.

SEC. 2. RULES GOVERNING ASSOCIATION HEALTH PLANS.

  (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

           ``PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS

``SEC. 801. ASSOCIATION HEALTH PLANS.

  ``(a) In General.--For purposes of this part, the term `association 
health plan' means a group health plan whose sponsor is (or is deemed 
under this part to be) described in subsection (b).
  ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
          ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining or providing medical care;
          ``(2) is established as a permanent entity which receives the 
        active support of its members and requires for membership 
        payment on a periodic basis of dues or payments necessary to 
        maintain eligibility for membership in the sponsor; and
          ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), and (3) shall be deemed to be a 
sponsor described in this subsection.

``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

  ``(a) In General.--The applicable authority shall prescribe by 
regulation a procedure under which, subject to subsection (b), the 
applicable authority shall certify association health plans which apply 
for certification as meeting the requirements of this part.
  ``(b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), in the case of an association health plan that provides 
at least one benefit option which does not consist of health insurance 
coverage, the applicable authority shall certify such plan as meeting 
the requirements of this part only if the applicable authority is 
satisfied that the applicable requirements of this part are met (or, 
upon the date on which the plan is to commence operations, will be met) 
with respect to the plan.
  ``(c) Requirements Applicable to Certified Plans.--An association 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
  ``(d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification of 
association health plans under this part.
  ``(e) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for 
association health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such association health plans upon appropriate 
filing under such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).
  ``(f) Certification of Self-Insured Association Health Plans.--An 
association health plan which offers one or more benefit options which 
do not consist of health insurance coverage may be certified under this 
part only if such plan consists of any of the following:
          ``(1) A plan which offered such coverage on the date of the 
        enactment of the Small Business Health Fairness Act of 2017.
          ``(2) A plan under which the sponsor does not restrict 
        membership to one or more trades and businesses or industries 
        and whose eligible participating employers represent a broad 
        cross-section of trades and businesses or industries.
          ``(3) A plan whose eligible participating employers represent 
        one or more trades or businesses, or one or more industries, 
        consisting of any of the following: agriculture; equipment and 
        automobile dealerships; barbering and cosmetology; certified 
        public accounting practices; child care; construction; dance, 
        theatrical and orchestra productions; disinfecting and pest 
        control; financial services; fishing; food service 
        establishments; hospitals; labor organizations; logging; 
        manufacturing (metals); mining; medical and dental practices; 
        medical laboratories; professional consulting services; 
        sanitary services; transportation (local and freight); 
        warehousing; wholesaling/distributing; or any other trade or 
        business or industry which has been indicated as having average 
        or above-average risk or health claims experience by reason of 
        State rate filings, denials of coverage, proposed premium rate 
        levels, or other means demonstrated by such plan in accordance 
        with regulations.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

  ``(a) Sponsor.--The requirements of this subsection are met with 
respect to an association health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
  ``(b) Board of Trustees.--The requirements of this subsection are met 
with respect to an association health plan if the following 
requirements are met:
          ``(1) Fiscal control.--The plan is operated, pursuant to a 
        trust agreement, by a board of trustees which has complete 
        fiscal control over the plan and which is responsible for all 
        operations of the plan.
          ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
          ``(3) Rules governing relationship to participating employers 
        and to contractors.--
                  ``(A) Board membership.--
                          ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), the members of the 
                        board of trustees are individuals selected from 
                        individuals who are the owners, officers, 
                        directors, or employees of the participating 
                        employers or who are partners in the 
                        participating employers and actively 
                        participate in the business.
                          ``(ii) Limitation.--
                                  ``(I) General rule.--Except as 
                                provided in subclauses (II) and (III), 
                                no such member is an owner, officer, 
                                director, or employee of, or partner 
                                in, a contract administrator or other 
                                service provider to the plan.
                                  ``(II) Limited exception for 
                                providers of services solely on behalf 
                                of the sponsor.--Officers or employees 
                                of a sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may be 
                                members of the board if they constitute 
                                not more than 25 percent of the 
                                membership of the board and they do not 
                                provide services to the plan other than 
                                on behalf of the sponsor.
                                  ``(III) Treatment of providers of 
                                medical care.--In the case of a sponsor 
                                which is an association whose 
                                membership consists primarily of 
                                providers of medical care, subclause 
                                (I) shall not apply in the case of any 
                                service provider described in subclause 
                                (I) who is a provider of medical care 
                                under the plan.
                          ``(iii) Certain plans excluded.--Clause (i) 
                        shall not apply to an association health plan 
                        which is in existence on the date of the 
                        enactment of the Small Business Health Fairness 
                        Act of 2017.
                  ``(B) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with a 
                service provider to administer the day-to-day affairs 
                of the plan.
  ``(c) Treatment of Franchise Networks.--In the case of a group health 
plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
          ``(1) the requirements of subsection (a) and section 801(a) 
        shall be deemed met if such requirements would otherwise be met 
        if the franchiser were deemed to be the sponsor referred to in 
        section 801(b), such network were deemed to be an association 
        described in section 801(b), and each franchisee were deemed to 
        be a member (of the association and the sponsor) referred to in 
        section 801(b); and
          ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
The Secretary may by regulation define for purposes of this subsection 
the terms `franchiser', `franchise network', and `franchisee'.

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

  ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan--
          ``(1) each participating employer must be--
                  ``(A) a member of the sponsor,
                  ``(B) the sponsor, or
                  ``(C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection (b) are 
                met,
        except that, in the case of a sponsor which is a professional 
        association or other individual-based association, if at least 
        one of the officers, directors, or employees of an employer, or 
        at least one of the individuals who are partners in an employer 
        and who actively participates in the business, is a member or 
        such an affiliated member of the sponsor, participating 
        employers may also include such employer; and
          ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                  ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                  ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
  ``(b) Coverage of Previously Uninsured Employees.--In the case of an 
association health plan in existence on the date of the enactment of 
the Small Business Health Fairness Act of 2017, an affiliated member of 
the sponsor of the plan may be offered coverage under the plan as a 
participating employer only if--
          ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
          ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such association health plan.
  ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan, no participating employer may provide health 
insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
  ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to an association health plan if--
          ``(1) under the terms of the plan, all employers meeting the 
        preceding requirements of this section are eligible to qualify 
        as participating employers for all geographically available 
        coverage options, unless, in the case of any such employer, 
        participation or contribution requirements of the type referred 
        to in section 2711 of the Public Health Service Act are not 
        met;
          ``(2) upon request, any employer eligible to participate is 
        furnished information regarding all coverage options available 
        under the plan; and
          ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
                    RATES, AND BENEFIT OPTIONS.

  ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if the following requirements are 
met:
          ``(1) Contents of governing instruments.--The instruments 
        governing the plan include a written instrument, meeting the 
        requirements of an instrument required under section 402(a)(1), 
        which--
                  ``(A) provides that the board of trustees serves as 
                the named fiduciary required for plans under section 
                402(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A));
                  ``(B) provides that the sponsor of the plan is to 
                serve as plan sponsor (referred to in section 
                3(16)(B)); and
                  ``(C) incorporates the requirements of section 806.
          ``(2) Contribution rates must be nondiscriminatory.--
                  ``(A) The contribution rates for any participating 
                small employer do not vary on the basis of any health 
                status-related factor in relation to employees of such 
                employer or their beneficiaries and do not vary on the 
                basis of the type of business or industry in which such 
                employer is engaged.
                  ``(B) Nothing in this title or any other provision of 
                law shall be construed to preclude an association 
                health plan, or a health insurance issuer offering 
                health insurance coverage in connection with an 
                association health plan, from--
                          ``(i) setting contribution rates based on the 
                        claims experience of the plan; or
                          ``(ii) varying contribution rates for small 
                        employers in a State to the extent that such 
                        rates could vary using the same methodology 
                        employed in such State for regulating premium 
                        rates in the small group market with respect to 
                        health insurance coverage offered in connection 
                        with bona fide associations (within the meaning 
                        of section 2791(d)(3) of the Public Health 
                        Service Act),
                subject to the requirements of section 702(b) relating 
                to contribution rates.
          ``(3) Floor for number of covered individuals with respect to 
        certain plans.--If any benefit option under the plan does not 
        consist of health insurance coverage, the plan has as of the 
        beginning of the plan year not fewer than 1,000 participants 
        and beneficiaries.
          ``(4) Marketing requirements.--
                  ``(A) In general.--If a benefit option which consists 
                of health insurance coverage is offered under the plan, 
                State-licensed insurance agents shall be used to 
                distribute to small employers coverage which does not 
                consist of health insurance coverage in a manner 
                comparable to the manner in which such agents are used 
                to distribute health insurance coverage.
                  ``(B) State-licensed insurance agents.--For purposes 
                of subparagraph (A), the term `State-licensed insurance 
                agents' means one or more agents who are licensed in a 
                State and are subject to the laws of such State 
                relating to licensure, qualification, testing, 
                examination, and continuing education of persons 
                authorized to offer, sell, or solicit health insurance 
                coverage in such State.
          ``(5) Regulatory requirements.--Such other requirements as 
        the applicable authority determines are necessary to carry out 
        the purposes of this part, which shall be prescribed by the 
        applicable authority by regulation.
  ``(b) Ability of Association Health Plans To Design Benefit 
Options.--Subject to section 514(d), nothing in this part or any 
provision of State law (as defined in section 514(c)(1)) shall be 
construed to preclude an association health plan, or a health insurance 
issuer offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion in 
selecting the specific items and services consisting of medical care to 
be included as benefits under such plan or coverage, except (subject to 
section 514) in the case of (1) any law to the extent that it is not 
preempted under section 731(a)(1) with respect to matters governed by 
section 711, 712, or 713, or (2) any law of the State with which filing 
and approval of a policy type offered by the plan was initially 
obtained to the extent that such law prohibits an exclusion of a 
specific disease from such coverage.

``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR 
                    PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO 
                    HEALTH INSURANCE COVERAGE.

  ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if--
          ``(1) the benefits under the plan consist solely of health 
        insurance coverage; or
          ``(2) if the plan provides any additional benefit options 
        which do not consist of health insurance coverage, the plan--
                  ``(A) establishes and maintains reserves with respect 
                to such additional benefit options, in amounts 
                recommended by the qualified actuary, consisting of--
                          ``(i) a reserve sufficient for unearned 
                        contributions;
                          ``(ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, which 
                        have not been satisfied, and for which risk of 
                        loss has not yet been transferred, and for 
                        expected administrative costs with respect to 
                        such benefit liabilities;
                          ``(iii) a reserve sufficient for any other 
                        obligations of the plan; and
                          ``(iv) a reserve sufficient for a margin of 
                        error and other fluctuations, taking into 
                        account the specific circumstances of the plan; 
                        and
                  ``(B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and solvency 
                indemnification, with respect to such additional 
                benefit options for which risk of loss has not yet been 
                transferred, as follows:
                          ``(i) The plan shall secure aggregate excess/
                        stop loss insurance for the plan with an 
                        attachment point which is not greater than 125 
                        percent of expected gross annual claims. The 
                        applicable authority may by regulation provide 
                        for upward adjustments in the amount of such 
                        percentage in specified circumstances in which 
                        the plan specifically provides for and 
                        maintains reserves in excess of the amounts 
                        required under subparagraph (A).
                          ``(ii) The plan shall secure specific excess/
                        stop loss insurance for the plan with an 
                        attachment point which is at least equal to an 
                        amount recommended by the plan's qualified 
                        actuary. The applicable authority may by 
                        regulation provide for adjustments in the 
                        amount of such insurance in specified 
                        circumstances in which the plan specifically 
                        provides for and maintains reserves in excess 
                        of the amounts required under subparagraph (A).
                          ``(iii) The plan shall secure indemnification 
                        insurance for any claims which the plan is 
                        unable to satisfy by reason of a plan 
                        termination.
Any person issuing to a plan insurance described in clause (i), (ii), 
or (iii) of subparagraph (B) shall notify the Secretary of any failure 
of premium payment meriting cancellation of the policy prior to 
undertaking such a cancellation. Any regulations prescribed by the 
applicable authority pursuant to clause (i) or (ii) of subparagraph (B) 
may allow for such adjustments in the required levels of excess/stop 
loss insurance as the qualified actuary may recommend, taking into 
account the specific circumstances of the plan.
  ``(b) Minimum Surplus in Addition to Claims Reserves.--In the case of 
any association health plan described in subsection (a)(2), the 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to--
          ``(1) $500,000, or
          ``(2) such greater amount (but not greater than $2,000,000) 
        as may be set forth in regulations prescribed by the applicable 
        authority, considering the level of aggregate and specific 
        excess/stop loss insurance provided with respect to such plan 
        and other factors related to solvency risk, such as the plan's 
        projected levels of participation or claims, the nature of the 
        plan's liabilities, and the types of assets available to assure 
        that such liabilities are met.
  ``(c) Additional Requirements.--In the case of any association health 
plan described in subsection (a)(2), the applicable authority may 
provide such additional requirements relating to reserves, excess/stop 
loss insurance, and indemnification insurance as the applicable 
authority considers appropriate. Such requirements may be provided by 
regulation with respect to any such plan or any class of such plans.
  ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable 
authority may provide for adjustments to the levels of reserves 
otherwise required under subsections (a) and (b) with respect to any 
plan or class of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans.
  ``(e) Alternative Means of Compliance.--The applicable authority may 
permit an association health plan described in subsection (a)(2) to 
substitute, for all or part of the requirements of this section (except 
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable authority 
determines to be adequate to enable the plan to fully meet all its 
financial obligations on a timely basis and is otherwise no less 
protective of the interests of participants and beneficiaries than the 
requirements for which it is substituted. The applicable authority may 
take into account, for purposes of this subsection, evidence provided 
by the plan or sponsor which demonstrates an assumption of liability 
with respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter of 
credit, recourse under applicable terms of the plan in the form of 
assessments of participating employers, security, or other financial 
arrangement.
  ``(f) Measures To Ensure Continued Payment of Benefits by Certain 
Plans in Distress.--
          ``(1) Payments by certain plans to association health plan 
        fund.--
                  ``(A) In general.--In the case of an association 
                health plan described in subsection (a)(2), the 
                requirements of this subsection are met if the plan 
                makes payments into the Association Health Plan Fund 
                under this subparagraph when they are due. Such 
                payments shall consist of annual payments in the amount 
                of $5,000, and, in addition to such annual payments, 
                such supplemental payments as the Secretary may 
                determine to be necessary under paragraph (2). Payments 
                under this paragraph are payable to the Fund at the 
                time determined by the Secretary. Initial payments are 
                due in advance of certification under this part. 
                Payments shall continue to accrue until a plan's assets 
                are distributed pursuant to a termination procedure.
                  ``(B) Penalties for failure to make payments.--If any 
                payment is not made by a plan when it is due, a late 
                payment charge of not more than 100 percent of the 
                payment which was not timely paid shall be payable by 
                the plan to the Fund.
                  ``(C) Continued duty of the secretary.--The Secretary 
                shall not cease to carry out the provisions of 
                paragraph (2) on account of the failure of a plan to 
                pay any payment when due.
          ``(2) Payments by secretary to continue excess/stop loss 
        insurance coverage and indemnification insurance coverage for 
        certain plans.--In any case in which the applicable authority 
        determines that there is, or that there is reason to believe 
        that there will be: (A) A failure to take necessary corrective 
        actions under section 809(a) with respect to an association 
        health plan described in subsection (a)(2); or (B) a 
        termination of such a plan under section 809(b) or 810(b)(8) 
        (and, if the applicable authority is not the Secretary, 
        certifies such determination to the Secretary), the Secretary 
        shall determine the amounts necessary to make payments to an 
        insurer (designated by the Secretary) to maintain in force 
        excess/stop loss insurance coverage or indemnification 
        insurance coverage for such plan, if the Secretary determines 
        that there is a reasonable expectation that, without such 
        payments, claims would not be satisfied by reason of 
        termination of such coverage. The Secretary shall, to the 
        extent provided in advance in appropriation Acts, pay such 
        amounts so determined to the insurer designated by the 
        Secretary.
          ``(3) Association health plan fund.--
                  ``(A) In general.--There is established on the books 
                of the Treasury a fund to be known as the `Association 
                Health Plan Fund'. The Fund shall be available for 
                making payments pursuant to paragraph (2). The Fund 
                shall be credited with payments received pursuant to 
                paragraph (1)(A), penalties received pursuant to 
                paragraph (1)(B); and earnings on investments of 
                amounts of the Fund under subparagraph (B).
                  ``(B) Investment.--Whenever the Secretary determines 
                that the moneys of the fund are in excess of current 
                needs, the Secretary may request the investment of such 
                amounts as the Secretary determines advisable by the 
                Secretary of the Treasury in obligations issued or 
                guaranteed by the United States.
  ``(g) Excess/Stop Loss Insurance.--For purposes of this section--
          ``(1) Aggregate excess/stop loss insurance.--The term 
        `aggregate excess/stop loss insurance' means, in connection 
        with an association health plan, a contract--
                  ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation) provides for payment to the plan with 
                respect to aggregate claims under the plan in excess of 
                an amount or amounts specified in such contract;
                  ``(B) which is guaranteed renewable; and
                  ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
          ``(2) Specific excess/stop loss insurance.--The term 
        `specific excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                  ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation) provides for payment to the plan with 
                respect to claims under the plan in connection with a 
                covered individual in excess of an amount or amounts 
                specified in such contract in connection with such 
                covered individual;
                  ``(B) which is guaranteed renewable; and
                  ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
  ``(h) Indemnification Insurance.--For purposes of this section, the 
term `indemnification insurance' means, in connection with an 
association health plan, a contract--
          ``(1) under which an insurer (meeting such minimum standards 
        as the applicable authority may prescribe by regulation) 
        provides for payment to the plan with respect to claims under 
        the plan which the plan is unable to satisfy by reason of a 
        termination pursuant to section 809(b) (relating to mandatory 
        termination);
          ``(2) which is guaranteed renewable and noncancellable for 
        any reason (except as the applicable authority may prescribe by 
        regulation); and
          ``(3) which allows for payment of premiums by any third party 
        on behalf of the insured plan.
  ``(i) Reserves.--For purposes of this section, the term `reserves' 
means, in connection with an association health plan, plan assets which 
meet the fiduciary standards under part 4 and such additional 
requirements regarding liquidity as the applicable authority may 
prescribe by regulation.
  ``(j) Solvency Standards Working Group.--
          ``(1) In general.--Within 90 days after the date of the 
        enactment of the Small Business Health Fairness Act of 2017, 
        the applicable authority shall establish a Solvency Standards 
        Working Group. In prescribing the initial regulations under 
        this section, the applicable authority shall take into account 
        the recommendations of such Working Group.
          ``(2) Membership.--The Working Group shall consist of not 
        more than 15 members appointed by the applicable authority. The 
        applicable authority shall include among persons invited to 
        membership on the Working Group at least one of each of the 
        following:
                  ``(A) A representative of the National Association of 
                Insurance Commissioners.
                  ``(B) A representative of the American Academy of 
                Actuaries.
                  ``(C) A representative of the State governments, or 
                their interests.
                  ``(D) A representative of existing self-insured 
                arrangements, or their interests.
                  ``(E) A representative of associations of the type 
                referred to in section 801(b)(1), or their interests.
                  ``(F) A representative of multiemployer plans that 
                are group health plans, or their interests.

``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

  ``(a) Filing Fee.--Under the procedure prescribed pursuant to section 
802(a), an association health plan shall pay to the applicable 
authority at the time of filing an application for certification under 
this part a filing fee in the amount of $5,000, which shall be 
available in the case of the Secretary, to the extent provided in 
appropriation Acts, for the sole purpose of administering the 
certification procedures applicable with respect to association health 
plans.
  ``(b) Information To Be Included in Application for Certification.--
An application for certification under this part meets the requirements 
of this section only if it includes, in a manner and form which shall 
be prescribed by the applicable authority by regulation, at least the 
following information:
          ``(1) Identifying information.--The names and addresses of--
                  ``(A) the sponsor; and
                  ``(B) the members of the board of trustees of the 
                plan.
          ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
          ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
          ``(4) Plan documents.--A copy of the documents governing the 
        plan (including any bylaws and trust agreements), the summary 
        plan description, and other material describing the benefits 
        that will be provided to participants and beneficiaries under 
        the plan.
          ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators and 
        other service providers.
          ``(6) Funding report.--In the case of association health 
        plans providing benefits options in addition to health 
        insurance coverage, a report setting forth information with 
        respect to such additional benefit options determined as of a 
        date within the 120-day period ending with the date of the 
        application, including the following:
                  ``(A) Reserves.--A statement, certified by the board 
                of trustees of the plan, and a statement of actuarial 
                opinion, signed by a qualified actuary, that all 
                applicable requirements of section 806 are or will be 
                met in accordance with regulations which the applicable 
                authority shall prescribe.
                  ``(B) Adequacy of contribution rates.--A statement of 
                actuarial opinion, signed by a qualified actuary, which 
                sets forth a description of the extent to which 
                contribution rates are adequate to provide for the 
                payment of all obligations and the maintenance of 
                required reserves under the plan for the 12-month 
                period beginning with such date within such 120-day 
                period, taking into account the expected coverage and 
                experience of the plan. If the contribution rates are 
                not fully adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates are 
                inadequate and the changes needed to ensure adequacy.
                  ``(C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion signed 
                by a qualified actuary, which sets forth the current 
                value of the assets and liabilities accumulated under 
                the plan and a projection of the assets, liabilities, 
                income, and expenses of the plan for the 12-month 
                period referred to in subparagraph (B). The income 
                statement shall identify separately the plan's 
                administrative expenses and claims.
                  ``(D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage to be 
                charged, including an itemization of amounts for 
                administration, reserves, and other expenses associated 
                with the operation of the plan.
                  ``(E) Other information.--Any other information as 
                may be determined by the applicable authority, by 
                regulation, as necessary to carry out the purposes of 
                this part.
  ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to an association health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
  ``(d) Notice of Material Changes.--In the case of any association 
health plan certified under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the certification under this part shall be filed in 
such form and manner as shall be prescribed by the applicable authority 
by regulation. The applicable authority may require by regulation prior 
notice of material changes with respect to specified matters which 
might serve as the basis for suspension or revocation of the 
certification.
  ``(e) Reporting Requirements for Certain Association Health Plans.--
An association health plan certified under this part which provides 
benefit options in addition to health insurance coverage for such plan 
year shall meet the requirements of section 103 by filing an annual 
report under such section which shall include information described in 
subsection (b)(6) with respect to the plan year and, notwithstanding 
section 104(a)(1)(A), shall be filed with the applicable authority not 
later than 90 days after the close of the plan year (or on such later 
date as may be prescribed by the applicable authority). The applicable 
authority may require by regulation such interim reports as it 
considers appropriate.
  ``(f) Engagement of Qualified Actuary.--The board of trustees of each 
association health plan which provides benefits options in addition to 
health insurance coverage and which is applying for certification under 
this part or is certified under this part shall engage, on behalf of 
all participants and beneficiaries, a qualified actuary who shall be 
responsible for the preparation of the materials comprising information 
necessary to be submitted by a qualified actuary under this part. The 
qualified actuary shall utilize such assumptions and techniques as are 
necessary to enable such actuary to form an opinion as to whether the 
contents of the matters reported under this part--
          ``(1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; and
          ``(2) represent such actuary's best estimate of anticipated 
        experience under the plan.
The opinion by the qualified actuary shall be made with respect to, and 
shall be made a part of, the annual report.

``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

  ``Except as provided in section 809(b), an association health plan 
which is or has been certified under this part may terminate (upon or 
at any time after cessation of accruals in benefit liabilities) only if 
the board of trustees, not less than 60 days before the proposed 
termination date--
          ``(1) provides to the participants and beneficiaries a 
        written notice of intent to terminate stating that such 
        termination is intended and the proposed termination date;
          ``(2) develops a plan for winding up the affairs of the plan 
        in connection with such termination in a manner which will 
        result in timely payment of all benefits for which the plan is 
        obligated; and
          ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed by the applicable authority by regulation.

``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

  ``(a) Actions To Avoid Depletion of Reserves.--An association health 
plan which is certified under this part and which provides benefits 
other than health insurance coverage shall continue to meet the 
requirements of section 806, irrespective of whether such certification 
continues in effect. The board of trustees of such plan shall determine 
quarterly whether the requirements of section 806 are met. In any case 
in which the board determines that there is reason to believe that 
there is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so notifies the 
board, the board shall immediately notify the qualified actuary engaged 
by the plan, and such actuary shall, not later than the end of the next 
following month, make such recommendations to the board for corrective 
action as the actuary determines necessary to ensure compliance with 
section 806. Not later than 30 days after receiving from the actuary 
recommendations for corrective actions, the board shall notify the 
applicable authority (in such form and manner as the applicable 
authority may prescribe by regulation) of such recommendations of the 
actuary for corrective action, together with a description of the 
actions (if any) that the board has taken or plans to take in response 
to such recommendations. The board shall thereafter report to the 
applicable authority, in such form and frequency as the applicable 
authority may specify to the board, regarding corrective action taken 
by the board until the requirements of section 806 are met.
  ``(b) Mandatory Termination.--In any case in which--
          ``(1) the applicable authority has been notified under 
        subsection (a) (or by an issuer of excess/stop loss insurance 
        or indemnity insurance pursuant to section 806(a)) of a failure 
        of an association health plan which is or has been certified 
        under this part and is described in section 806(a)(2) to meet 
        the requirements of section 806 and has not been notified by 
        the board of trustees of the plan that corrective action has 
        restored compliance with such requirements; and
          ``(2) the applicable authority determines that there is a 
        reasonable expectation that the plan will continue to fail to 
        meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of the 
applicable authority, terminate the plan and, in the course of the 
termination, take such actions as the applicable authority may require, 
including satisfying any claims referred to in section 
806(a)(2)(B)(iii) and recovering for the plan any liability under 
subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent possible, 
wound up in a manner which will result in timely provision of all 
benefits for which the plan is obligated.

``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION 
                    HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION 
                    TO HEALTH INSURANCE COVERAGE.

  ``(a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary determines that an association health plan which 
is or has been certified under this part and which is described in 
section 806(a)(2) will be unable to provide benefits when due or is 
otherwise in a financially hazardous condition, as shall be defined by 
the Secretary by regulation, the Secretary shall, upon notice to the 
plan, apply to the appropriate United States district court for 
appointment of the Secretary as trustee to administer the plan for the 
duration of the insolvency. The plan may appear as a party and other 
interested persons may intervene in the proceedings at the discretion 
of the court. The court shall appoint such Secretary trustee if the 
court determines that the trusteeship is necessary to protect the 
interests of the participants and beneficiaries or providers of medical 
care or to avoid any unreasonable deterioration of the financial 
condition of the plan. The trusteeship of such Secretary shall continue 
until the conditions described in the first sentence of this subsection 
are remedied or the plan is terminated.
  ``(b) Powers as Trustee.--The Secretary, upon appointment as trustee 
under subsection (a), shall have the power--
          ``(1) to do any act authorized by the plan, this title, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan;
          ``(2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee;
          ``(3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations prescribed by the Secretary, and applicable 
        provisions of law;
          ``(4) to require the sponsor, the plan administrator, any 
        participating employer, and any employee organization 
        representing plan participants to furnish any information with 
        respect to the plan which the Secretary as trustee may 
        reasonably need in order to administer the plan;
          ``(5) to collect for the plan any amounts due the plan and to 
        recover reasonable expenses of the trusteeship;
          ``(6) to commence, prosecute, or defend on behalf of the plan 
        any suit or proceeding involving the plan;
          ``(7) to issue, publish, or file such notices, statements, 
        and reports as may be required by the Secretary by regulation 
        or required by any order of the court;
          ``(8) to terminate the plan (or provide for its termination 
        in accordance with section 809(b)) and liquidate the plan 
        assets, to restore the plan to the responsibility of the 
        sponsor, or to continue the trusteeship;
          ``(9) to provide for the enrollment of plan participants and 
        beneficiaries under appropriate coverage options; and
          ``(10) to do such other acts as may be necessary to comply 
        with this title or any order of the court and to protect the 
        interests of plan participants and beneficiaries and providers 
        of medical care.
  ``(c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
          ``(1) the sponsor and plan administrator;
          ``(2) each participant;
          ``(3) each participating employer; and
          ``(4) if applicable, each employee organization which, for 
        purposes of collective bargaining, represents plan 
        participants.
  ``(d) Additional Duties.--Except to the extent inconsistent with the 
provisions of this title, or as may be otherwise ordered by the court, 
the Secretary, upon appointment as trustee under this section, shall be 
subject to the same duties as those of a trustee under section 704 of 
title 11, United States Code, and shall have the duties of a fiduciary 
for purposes of this title.
  ``(e) Other Proceedings.--An application by the Secretary under this 
subsection may be filed notwithstanding the pendency in the same or any 
other court of any bankruptcy, mortgage foreclosure, or equity 
receivership proceeding, or any proceeding to reorganize, conserve, or 
liquidate such plan or its property, or any proceeding to enforce a 
lien against property of the plan.
  ``(f) Jurisdiction of Court.--
          ``(1) In general.--Upon the filing of an application for the 
        appointment as trustee or the issuance of a decree under this 
        section, the court to which the application is made shall have 
        exclusive jurisdiction of the plan involved and its property 
        wherever located with the powers, to the extent consistent with 
        the purposes of this section, of a court of the United States 
        having jurisdiction over cases under chapter 11 of title 11, 
        United States Code. Pending an adjudication under this section 
        such court shall stay, and upon appointment by it of the 
        Secretary as trustee, such court shall continue the stay of, 
        any pending mortgage foreclosure, equity receivership, or other 
        proceeding to reorganize, conserve, or liquidate the plan, the 
        sponsor, or property of such plan or sponsor, and any other 
        suit against any receiver, conservator, or trustee of the plan, 
        the sponsor, or property of the plan or sponsor. Pending such 
        adjudication and upon the appointment by it of the Secretary as 
        trustee, the court may stay any proceeding to enforce a lien 
        against property of the plan or the sponsor or any other suit 
        against the plan or the sponsor.
          ``(2) Venue.--An action under this section may be brought in 
        the judicial district where the sponsor or the plan 
        administrator resides or does business or where any asset of 
        the plan is situated. A district court in which such action is 
        brought may issue process with respect to such action in any 
        other judicial district.
  ``(g) Personnel.--In accordance with regulations which shall be 
prescribed by the Secretary, the Secretary shall appoint, retain, and 
compensate accountants, actuaries, and other professional service 
personnel as may be necessary in connection with the Secretary's 
service as trustee under this section.

``SEC. 811. STATE ASSESSMENT AUTHORITY.

  ``(a) In General.--Notwithstanding section 514, a State may impose by 
law a contribution tax on an association health plan described in 
section 806(a)(2), if the plan commenced operations in such State after 
the date of the enactment of the Small Business Health Fairness Act of 
2017.
  ``(b) Contribution Tax.--For purposes of this section, the term 
`contribution tax' imposed by a State on an association health plan 
means any tax imposed by such State if--
          ``(1) such tax is computed by applying a rate to the amount 
        of premiums or contributions, with respect to individuals 
        covered under the plan who are residents of such State, which 
        are received by the plan from participating employers located 
        in such State or from such individuals;
          ``(2) the rate of such tax does not exceed the rate of any 
        tax imposed by such State on premiums or contributions received 
        by insurers or health maintenance organizations for health 
        insurance coverage offered in such State in connection with a 
        group health plan;
          ``(3) such tax is otherwise nondiscriminatory; and
          ``(4) the amount of any such tax assessed on the plan is 
        reduced by the amount of any tax or assessment otherwise 
        imposed by the State on premiums, contributions, or both 
        received by insurers or health maintenance organizations for 
        health insurance coverage, aggregate excess/stop loss insurance 
        (as defined in section 806(g)(1)), specific excess/stop loss 
        insurance (as defined in section 806(g)(2)), other insurance 
        related to the provision of medical care under the plan, or any 
        combination thereof provided by such insurers or health 
        maintenance organizations in such State in connection with such 
        plan.

``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

  ``(a) Definitions.--For purposes of this part--
          ``(1) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
          ``(2) Medical care.--The term `medical care' has the meaning 
        provided in section 733(a)(2).
          ``(3) Health insurance coverage.--The term `health insurance 
        coverage' has the meaning provided in section 733(b)(1).
          ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
          ``(5) Applicable authority.--The term `applicable authority' 
        means the Secretary, except that, in connection with any 
        exercise of the Secretary's authority regarding which the 
        Secretary is required under section 506(d) to consult with a 
        State, such term means the Secretary, in consultation with such 
        State.
          ``(6) Health status-related factor.--The term `health status-
        related factor' has the meaning provided in section 733(d)(2).
          ``(7) Individual market.--
                  ``(A) In general.--The term `individual market' means 
                the market for health insurance coverage offered to 
                individuals other than in connection with a group 
                health plan.
                  ``(B) Treatment of very small groups.--
                          ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 2 participants as current employees 
                        or participants described in section 732(d)(3) 
                        on the first day of the plan year.
                          ``(ii) State exception.--Clause (i) shall not 
                        apply in the case of health insurance coverage 
                        offered in a State if such State regulates the 
                        coverage described in such clause in the same 
                        manner and to the same extent as coverage in 
                        the small group market (as defined in section 
                        2791(e)(5) of the Public Health Service Act) is 
                        regulated by such State.
          ``(8) Participating employer.--The term `participating 
        employer' means, in connection with an association health plan, 
        any employer, if any individual who is an employee of such 
        employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
          ``(9) Applicable state authority.--The term `applicable State 
        authority' means, with respect to a health insurance issuer in 
        a State, the State insurance commissioner or official or 
        officials designated by the State to enforce the requirements 
        of title XXVII of the Public Health Service Act for the State 
        involved with respect to such issuer.
          ``(10) Qualified actuary.--The term `qualified actuary' means 
        an individual who is a member of the American Academy of 
        Actuaries.
          ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                  ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor,
                  ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member of 
                any such association and elects an affiliated status 
                with the sponsor, or
                  ``(C) in the case of an association health plan in 
                existence on the date of the enactment of the Small 
                Business Health Fairness Act of 2017, a person eligible 
                to be a member of the sponsor or one of its member 
                associations.
          ``(12) Large employer.--The term `large employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who employed an average of at least 51 
        employees on business days during the preceding calendar year 
        and who employs at least 2 employees on the first day of the 
        plan year.
          ``(13) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who is not a large employer.
  ``(b) Rules of Construction.--
          ``(1) Employers and employees.--For purposes of determining 
        whether a plan, fund, or program is an employee welfare benefit 
        plan which is an association health plan, and for purposes of 
        applying this title in connection with such plan, fund, or 
        program so determined to be such an employee welfare benefit 
        plan--
                  ``(A) in the case of a partnership, the term 
                `employer' (as defined in section 3(5)) includes the 
                partnership in relation to the partners, and the term 
                `employee' (as defined in section 3(6)) includes any 
                partner in relation to the partnership; and
                  ``(B) in the case of a self-employed individual, the 
                term `employer' (as defined in section 3(5)) and the 
                term `employee' (as defined in section 3(6)) shall 
                include such individual.
          ``(2) Plans, funds, and programs treated as employee welfare 
        benefit plans.--In the case of any plan, fund, or program which 
        was established or is maintained for the purpose of providing 
        medical care (through the purchase of insurance or otherwise) 
        for employees (or their dependents) covered thereunder and 
        which demonstrates to the Secretary that all requirements for 
        certification under this part would be met with respect to such 
        plan, fund, or program if such plan, fund, or program were a 
        group health plan, such plan, fund, or program shall be treated 
        for purposes of this title as an employee welfare benefit plan 
        on and after the date of such demonstration.''.
  (b) Conforming Amendments to Preemption Rules.--
          (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
  ``(E) The preceding subparagraphs of this paragraph do not apply with 
respect to any State law in the case of an association health plan 
which is certified under part 8.''.
          (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                  (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (f)'';
                  (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805''; and
                  (C) by adding at the end the following new 
                subsection:
  ``(f)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude, or have the effect of precluding, a health 
insurance issuer from offering health insurance coverage in connection 
with an association health plan which is certified under part 8.
  ``(2) Except as provided in paragraphs (4) and (5) of subsection (b) 
of this section--
          ``(A) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan 
        certified under part 8 to a participating employer operating in 
        such State, the provisions of this title shall supersede any 
        and all laws of such State insofar as they may preclude a 
        health insurance issuer from offering health insurance coverage 
        of the same policy type to other employers operating in the 
        State which are eligible for coverage under such association 
        health plan, whether or not such other employers are 
        participating employers in such plan.
          ``(B) In any case in which health insurance coverage of any 
        policy type is offered in a State under an association health 
        plan certified under part 8 and the filing, with the applicable 
        State authority (as defined in section 812(a)(9)), of the 
        policy form in connection with such policy type is approved by 
        such State authority, the provisions of this title shall 
        supersede any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as they may 
        preclude, upon the filing in the same form and manner of such 
        policy form with the applicable State authority in such other 
        State, the approval of the filing in such other State.
  ``(3) Nothing in subsection (b)(6)(E) or the preceding provisions of 
this subsection shall be construed, with respect to health insurance 
issuers or health insurance coverage, to supersede or impair the law of 
any State--
          ``(A) providing solvency standards or similar standards 
        regarding the adequacy of insurer capital, surplus, reserves, 
        or contributions, or
          ``(B) relating to prompt payment of claims.
  ``(4) For additional provisions relating to association health plans, 
see subsections (a)(2)(B) and (b) of section 805.
  ``(5) For purposes of this subsection, the term `association health 
plan' has the meaning provided in section 801(a), and the terms `health 
insurance coverage', `participating employer', and `health insurance 
issuer' have the meanings provided such terms in section 812, 
respectively.''.
          (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                  (A) in clause (i)(II), by striking ``and'' at the 
                end;
                  (B) in clause (ii), by inserting ``and which does not 
                provide medical care (within the meaning of section 
                733(a)(2)),'' after ``arrangement,'', and by striking 
                ``title.'' and inserting ``title, and''; and
                  (C) by adding at the end the following new clause:
          ``(iii) subject to subparagraph (E), in the case of any other 
        employee welfare benefit plan which is a multiple employer 
        welfare arrangement and which provides medical care (within the 
        meaning of section 733(a)(2)), any law of any State which 
        regulates insurance may apply.''.
          (4) Section 514(d) of such Act (29 U.S.C. 1144(d)) is 
        amended--
                  (A) by striking ``Nothing'' and inserting ``(1) 
                Except as provided in paragraph (2), nothing''; and
                  (B) by adding at the end the following new paragraph:
  ``(2) Nothing in any other provision of law enacted on or after the 
date of the enactment of the Small Business Health Fairness Act of 2017 
shall be construed to alter, amend, modify, invalidate, impair, or 
supersede any provision of this title, except by specific cross-
reference to the affected section.''.
  (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of an 
association health plan under part 8.''.
  (d) Disclosure of Solvency Protections Related to Self-Insured and 
Fully Insured Options Under Association Health Plans.--Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the 
following: ``An association health plan shall include in its summary 
plan description, in connection with each benefit option, a description 
of the form of solvency or guarantee fund protection secured pursuant 
to this Act or applicable State law, if any.''.
  (e) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
  (f) Report to the Congress Regarding Certification of Self-Insured 
Association Health Plans.--Not later than January 1, 2022, the 
Secretary of Labor shall report to the Committee on Education and the 
Workforce of the House of Representatives and the Committee on Health, 
Education, Labor, and Pensions of the Senate the effect association 
health plans have had, if any, on reducing the number of uninsured 
individuals.
  (g) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

           ``Part 8. Rules Governing Association Health Plans

``801. Association health plans.
``802. Certification of association health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
rates, and benefit options.
``806. Maintenance of reserves and provisions for solvency for plans 
providing health benefits in addition to health insurance coverage.
``807. Requirements for application and related requirements.
``808. Notice requirements for voluntary termination.
``809. Corrective actions and mandatory termination.
``810. Trusteeship by the Secretary of insolvent association health 
plans providing health benefits in addition to health insurance 
coverage.
``811. State assessment authority.
``812. Definitions and rules of construction.''.

SEC. 3. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

  Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
          (1) in clause (i), by inserting after ``control group,'' the 
        following: ``except that, in any case in which the benefit 
        referred to in subparagraph (A) consists of medical care (as 
        defined in section 812(a)(2)), two or more trades or 
        businesses, whether or not incorporated, shall be deemed a 
        single employer for any plan year of such plan, or any fiscal 
        year of such other arrangement, if such trades or businesses 
        are within the same control group during such year or at any 
        time during the preceding 1-year period,'';
          (2) in clause (iii), by striking ``(iii) the determination'' 
        and inserting the following:
          ``(iii)(I) in any case in which the benefit referred to in 
        subparagraph (A) consists of medical care (as defined in 
        section 812(a)(2)), the determination of whether a trade or 
        business is under `common control' with another trade or 
        business shall be determined under regulations of the Secretary 
        applying principles consistent and coextensive with the 
        principles applied in determining whether employees of two or 
        more trades or businesses are treated as employed by a single 
        employer under section 4001(b), except that, for purposes of 
        this paragraph, an interest of greater than 25 percent may not 
        be required as the minimum interest necessary for common 
        control, or
          ``(II) in any other case, the determination'';
          (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 any case in which the benefit referred to in 
        subparagraph (A) consists of medical care (as defined in 
        section 812(a)(2)), in determining, after the application of 
        clause (i), whether benefits are provided to employees of two 
        or more employers, the arrangement shall be treated as having 
        only one participating employer if, after the application of 
        clause (i), the number of individuals who are employees and 
        former employees of any one participating employer and who are 
        covered under the arrangement is greater than 75 percent of the 
        aggregate number of all individuals who are employees or former 
        employees of participating employers and who are covered under 
        the arrangement,''.

SEC. 4. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.

  (a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1131) is amended by adding at the end the following new 
subsection:
  ``(c) Any person who willfully falsely represents, to any employee, 
any employee's beneficiary, any employer, the Secretary, or any State, 
a plan or other arrangement established or maintained for the purpose 
of offering or providing any benefit described in section 3(1) to 
employees or their beneficiaries as--
          ``(1) being an association health plan which has been 
        certified under part 8;
          ``(2) having been established or maintained under or pursuant 
        to one or more collective bargaining agreements which are 
        reached pursuant to collective bargaining described in section 
        8(d) of the National Labor Relations Act (29 U.S.C. 158(d)) or 
        paragraph Fourth of section 2 of the Railway Labor Act (45 
        U.S.C. 152, paragraph Fourth) or which are reached pursuant to 
        labor-management negotiations under similar provisions of State 
        public employee relations laws; or
          ``(3) being a plan or arrangement described in section 
        3(40)(A)(i),
shall, upon conviction, be imprisoned not more than 5 years, be fined 
under title 18, United States Code, or both.''.
  (b) Cease Activities Orders.--Section 502 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1132) is amended by adding at 
the end the following new subsection:
  ``(n) Association Health Plan Cease and Desist Orders.--
          ``(1) In general.--Subject to paragraph (2), upon application 
        by the Secretary showing the operation, promotion, or marketing 
        of an association health plan (or similar arrangement providing 
        benefits consisting of medical care (as defined in section 
        733(a)(2))) that--
                  ``(A) is not certified under part 8, is subject under 
                section 514(b)(6) to the insurance laws of any State in 
                which the plan or arrangement offers or provides 
                benefits, and is not licensed, registered, or otherwise 
                approved under the insurance laws of such State; or
                  ``(B) is an association health plan certified under 
                part 8 and is not operating in accordance with the 
                requirements under part 8 for such certification,
        a district court of the United States shall enter an order 
        requiring that the plan or arrangement cease activities.
          ``(2) Exception.--Paragraph (1) shall not apply in the case 
        of an association health plan or other arrangement if the plan 
        or arrangement shows that--
                  ``(A) all benefits under it referred to in paragraph 
                (1) consist of health insurance coverage; and
                  ``(B) with respect to each State in which the plan or 
                arrangement offers or provides benefits, the plan or 
                arrangement is operating in accordance with applicable 
                State laws that are not superseded under section 514.
          ``(3) Additional equitable relief.--The court may grant such 
        additional equitable relief, including any relief available 
        under this title, as it deems necessary to protect the 
        interests of the public and of persons having claims for 
        benefits against the plan.''.
  (c) Responsibility for Claims Procedure.--Section 503 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1133) is amended by 
inserting ``(a) In General.--'' before ``In accordance'', and by adding 
at the end the following new subsection:
  ``(b) Association Health Plans.--The terms of each association health 
plan which is or has been certified under part 8 shall require the 
board of trustees or the named fiduciary (as applicable) to ensure that 
the requirements of this section are met in connection with claims 
filed under the plan.''.

SEC. 5. 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:
  ``(d) Consultation With States With Respect to Association Health 
Plans.--
          ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to 
        an association health plan regarding the exercise of--
                  ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                  ``(B) the Secretary's authority to certify 
                association health plans under part 8 in accordance 
                with regulations of the Secretary applicable to 
                certification under part 8.
          ``(2) Recognition of primary domicile state.--In carrying out 
        paragraph (1), the Secretary shall ensure that only one State 
        will be recognized, with respect to any particular association 
        health plan, as the State with which consultation is required. 
        In carrying out this paragraph--
                  ``(A) in the case of a plan which provides health 
                insurance coverage (as defined in section 812(a)(3)), 
                such State shall be the State with which filing and 
                approval of a policy type offered by the plan was 
                initially obtained, and
                  ``(B) in any other case, the Secretary shall take 
                into account the places of residence of the 
                participants and beneficiaries under the plan and the 
                State in which the trust is maintained.''.

SEC. 6. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

  (a) Effective Date.--The amendments made by this Act shall take 
effect 1 year after the date of the enactment of this Act. The 
Secretary of Labor shall first issue all regulations necessary to carry 
out the amendments made by this Act within 1 year after the date of the 
enactment of this Act.
  (b) Treatment of Certain Existing Health Benefits Programs.--
          (1) In general.--In any case in which, as of the date of the 
        enactment of this Act, an arrangement is maintained in a State 
        for the purpose of providing benefits consisting of medical 
        care for the employees and beneficiaries of its participating 
        employers, at least 200 participating employers make 
        contributions to such arrangement, such arrangement has been in 
        existence for at least 10 years, and such arrangement is 
        licensed under the laws of one or more States to provide such 
        benefits to its participating employers, upon the filing with 
        the applicable authority (as defined in section 812(a)(5) of 
        the Employee Retirement Income Security Act of 1974 (as amended 
        by this subtitle)) by the arrangement of an application for 
        certification of the arrangement under part 8 of subtitle B of 
        title I of such Act--
                  (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                  (B) the requirements of sections 801(a) and 803(a) of 
                the Employee Retirement Income Security Act of 1974 
                shall be deemed met with respect to such arrangement;
                  (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of directors which--
                          (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                          (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                  (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                  (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement.
          (2) Definitions.--For purposes of this subsection, the terms 
        ``group health plan'', ``medical care'', and ``participating 
        employer'' shall have the meanings provided in section 812 of 
        the Employee Retirement Income Security Act of 1974, except 
        that the reference in paragraph (7) of such section to an 
        ``association health plan'' shall be deemed a reference to an 
        arrangement referred to in this subsection.

                                Purpose

    H.R. 1101, the Small Business Health Fairness Act of 2017, 
amends the Employee Retirement Income Security Act of 1974 
(ERISA)\1\ to improve access to affordable health coverage 
options for workers employed by small businesses. The bill 
amends Title I of ERISA to authorize the creation of 
association health plans (AHPs). The legislation allows small 
businesses to band together across state lines through bona 
fide trade or professional associations to purchase health 
insurance for their workers, thus increasing their bargaining 
power with plans and providers and placing them on a more level 
playing field with larger companies and unions. H.R. 1101 frees 
small businesses from costly state mandated benefit packages, 
spreads risk among a larger group, and lowers overhead costs, 
enabling employers to offer more affordable health care 
coverage to their workers.
---------------------------------------------------------------------------
    \1\U.S.C. Sec. 1001 et seq. (1974) [hereinafter ERISA].
---------------------------------------------------------------------------

                            Committee Action


                             109TH CONGRESS

Introduction of H.R. 525, Small Business Health Fairness Act

    On February 2, 2005, Rep. Sam Johnson (R-TX), then-Chairman 
of the Employer-Employee Relations Subcommittee of the 
Committee on Education and the Workforce (Committee), 
introduced the Small Business Health Fairness Act (H.R. 
525),\2\ along with 53 bipartisan original cosponsors, 
including then-Chairman of the Committee, John Boehner (R-OH) 
and Reps. Nydia Velazquez (D-NY) and Albert Wynn (D-MD).
---------------------------------------------------------------------------
    \2\H.R. 525, 109th Cong. (2005).
---------------------------------------------------------------------------

Committee Passes H.R. 525, Small Business Health Fairness Act

    On March 16, 2005, the Committee ordered H.R. 525, without 
amendment, favorably reported to the House of Representatives 
by a vote of 25 to 22.\3\ On April 13, 2005, the Committee 
filed its committee report, which detailed the history of the 
need for the legislation and prior committee action.\4\ On July 
26, 2015, H.R. 525 passed the full House by a vote of 263 to 
165.
---------------------------------------------------------------------------
    \3\H.R. 525, Small Business Health Fairness Act: Markup Before the 
H. Comm. on Educ. and the Workforce, 109th Cong. (Feb. 2, 2005).
    \4\H. Rept. 109-41, (2005).
---------------------------------------------------------------------------

                             111TH CONGRESS

Full Committee markup of H.R. 3200, America's Affordable Health Choices 
        Act of 2009

    Between July 15-17, 2009, the Committee met to mark up H.R. 
3200, the America's Affordable Health Choices Act of 2009.\5\ 
During the markup, Rep. Howard P. ``Buck'' McKeon (R-CA) 
offered an amendment to create a new title at the end of 
Division A of H.R. 3200, titled Title IV--Small Business Health 
Fairness. The amendment included rules governing AHPs, the 
treatment of single employer arrangements, enforcement 
provisions, and other provisions related to AHPs. The amendment 
was defeated by a vote of 21 to 27.
---------------------------------------------------------------------------
    \5\H.R. 3200, 111th Cong. (2009). H.R. 3200 was the House precursor 
to the law known as the Affordable Care Act (See infra note 8).
---------------------------------------------------------------------------

Passage of Affordable Health Care for America Act

    On November 7, 2009, the House passed H.R. 3962, the 
Affordable Health Care for America Act.\6\ During the debate, 
former-Speaker John Boehner (R-OH) included the AHP legislative 
text in the Republican motion to recommit.\7\
---------------------------------------------------------------------------
    \6\H.R. 3962, 111th Cong. (2009).
    \7\H. Amend. 510 to H.R. 3962, 111th Cong. (2009).
---------------------------------------------------------------------------

Passage of the Affordable Care Act

    On March 21, 2010, the U.S. House of Representatives passed 
the Patient Protection and Affordable Care Act (PPACA) by a 
vote of 219 to 212 to resolve differences with the Senate. The 
bill was signed by President Obama on March 23, 2010.\8\ On 
March 25, 2010, the U.S. House of Representatives passed the 
Health Care and Education Reconciliation Act of 2010 by a vote 
of 220 to 207 to resolve differences with the Senate. This bill 
was signed into law by President Obama on March 30, 2010.\9\ 
Collectively, the two bills are known as the Affordable Care 
Act (ACA or Obamacare).\10\ The ACA did not include AHP 
legislative text.
---------------------------------------------------------------------------
    \8\Patient Protection and Affordable Care Act, Pub. L. No. 111-148 
(2010).
    \9\Health and Education Reconciliation Act, Pub. L. No. 111-152 
(2010).
    \10\Patient Protection and Affordable Care Act, Pub. L. No. 111-148 
(2010), and Health and Education Reconciliation Act, Pub. L. No. 111-
152 (2010) [hereinafter Affordable Care Act, Obamacare, or ACA].
---------------------------------------------------------------------------

                             112TH CONGRESS

Full Committee hearing on examining The Impact of the Health Care Law 
        on the Economy, Employers, and the Workforce

    On February 9, 2011, the Committee held a hearing entitled 
``The Impact of the Health Care Law on the Economy, Employers, 
and the Workforce.'' This was the Committee's first hearing to 
investigate Obamacare and hear directly from job creators about 
how the 2010 law affects their ability to expand their business 
and hire new workers. The witnesses before the Committee were 
Dr. Paul Howard, Senior Fellow, Manhattan Institute, New York, 
New York; Ms. Gail Johnson, President and CEO, Rainbow Station, 
Inc., Glenn Allen, Virginia; Dr. Paul Van de Water, Senior 
Fellow, Center on Budget and Policy Priorities, Washington, 
D.C.; and Mr. Neil Trautwein, Vice President and Employee 
Benefits Policy Counsel, National Retail Federation, 
Washington, D.C.

Subcommittee hearing examining The Pressures of Rising Costs on 
        Employer Provided Health Care

    On March 10, 2011, the Subcommittee on Health, Employment, 
Labor, and Pensions (HELP) held a hearing entitled ``The 
Pressures of Rising Costs on Employer Provided Health Care'' to 
examine how increased health care costs are creating 
uncertainty for employers, including an examination of the 
impact of ACA on employer coverage. The witnesses were Mr. Tom 
Miller, Resident Fellow, American Enterprise Institute, 
Washington, D.C.; Mr. Brett Parker, Vice Chairman and Chief 
Financial Officer, Bowlmor Lanes, New York, New York; Mr. John 
Houser, Owner, Hawthorne Auto, Portland, Oregon; and Mr. J. 
Michael Brewer, President, Lockton Benefit Group, Lockton 
Companies, LLC, Kansas City, Missouri.

Subcommittee hearing examining Barriers to Lower Health Care Costs for 
        Workers and Employers

    On May 31, 2012, the HELP Subcommittee held a hearing 
entitled ``Barriers to Lower Health Care Costs for Workers and 
Employers'' to examine rising health care costs facing 
employers and employees, including the destructive impact of 
ACA. The witnesses were Mr. Ed Fensholt, Senior Vice President, 
Lockton Companies, LLC, Kansas City, Missouri; Mr. Roy Ramthun, 
President, HAS Consulting Services, Washington, D.C.; Ms. Jody 
Hall, Founder and Owner, Cupcake Royale, Seattle, Washington; 
and Mr. Bill Streitberger, Vice President of Human Resources, 
Red Robin, Greenwood Village, Colorado.

                             113TH CONGRESS

Joint Subcommittee hearing regarding The Employer Mandate: Examining 
        the Delay and Its Effect on Workplaces

    On July 23, 2013, the HELP Subcommittee and the Workforce 
Protections Subcommittee jointly held a hearing entitled ``The 
Employer Mandate: Examining the Delay and Its Effect on 
Workplaces'' to review the impact of the Obama administration's 
decision to delay the employer mandate. Witnesses before the 
subcommittees were Ms. Grace-Marie Turner, President, Galen 
Institute, Alexandria, Virginia; Mr. Jamie T. Richardson, Vice 
President, White Castle System, Inc., Columbus, Ohio; Mr. Ron 
Pollack, Executive Director, Families USA, Washington, D.C.; 
and Dr. Douglas Holtz-Eakin, President, American Action Forum, 
Washington, D.C.

Subcommittee hearing regarding Health Care Challenges Facing Kentucky's 
        Workers and Job Creators

    On August 27, 2013, the HELP Subcommittee held a field 
hearing entitled ``Health Care Challenges Facing Kentucky's 
Workers and Job Creators,'' which included an examination of 
the harmful impact of ACA on Kentucky's employers and their 
employees. Witnesses before the subcommittee were Mr. Tim 
Kanaly, Owner and President, Gary Force Honda, Bowling Green, 
Kentucky; Mr. Joe Bologna, Owner, Joe Bologna's--Italian 
Restaurant & Pizzeria, Lexington, Kentucky; Ms. Carrie Banahan, 
Executive Director, Office of the Kentucky Health Benefit 
Exchange, Frankfort, Kentucky; Mr. John Humkey, President, 
Employee Benefit Associates, Inc., Lexington, Kentucky; Ms. 
Janey Moores, President and CEO, BJM & Associates, Inc., 
Lexington, Kentucky; Mr. Donnie Meadows, Vice President of 
Human Resources, K-VA-T Food Stores, Inc., Abingdon, VA; Ms. 
Debbie Basham, Southwest Breast Cancer Awareness Group, 
Louisville, Kentucky; and Mr. John McPhearson, CEO, 
Lectrodryer, Richmond, Kentucky.

                             114TH CONGRESS

Subcommittee hearing on Five Years of Broken Promises: How the 
        President's Health Care Law is Affecting America's Workplaces

    On April 14, 2015, the HELP Subcommittee held a hearing 
entitled ``Five Years of Broken Promises: How the President's 
Health Care Law is Affecting America's Workplaces,'' which 
examined the continuing negative impact of ACA on employer-
sponsored health coverage. Witnesses before the subcommittee 
were the Honorable Tevi Troy, Ph.D., President, American Health 
Policy Institute, Washington, D.C.; Mr. Rutland Paal, Jr., 
President, Rutland Beard Floral Group, Scotch Plains, New 
Jersey; Michael Brev, President, Brev Corp. t/a Hobby 
Works, WingTOTE Manufacturing, LLC, Laurel, Maryland; 
and Ms. Sally Roberts, Human Resources Director, Morris 
Communications Company, LLC, Augusta, Georgia.

                             115TH CONGRESS

Full Committee hearing on Rescuing Americans from the Failed Health 
        Care Law and Advancing Patient-Centered Solutions

    On February 1, 2017, the Committee held a hearing entitled 
``Rescuing Americans from the Failed Health Care Law and 
Advancing Patient-Centered Solutions,'' which examined failures 
of the ACA. Witnesses before the Committee were Mr. Scott 
Bollenbacher, CPA, Managing Partner, Bollenbacher & Associates, 
LLC, Portland, Indiana; Mr. Joe Eddy, President and Chief 
Executive Officer, Eagle Manufacturing Company, Wellsburg, West 
Virginia; Ms. Angela Schlaack, St. Joseph, Michigan; and Dr. 
Tevi Troy, Chief Executive Officer, American Health Policy 
Institute, Washington, D.C.

Introduction of H.R. 1101, Small Business Health Fairness Act of 2017

    On February 16, 2017, Rep. Sam Johnson (R-TX) introduced 
the Small Business Health Fairness Act of 2017 (H.R. 1101) 
along with HELP Subcommittee Chairman Tim Walberg (R-MI).\11\ 
As Congress works to provide Americans with a patient-centered 
health care system, H.R. 1101 reduces burdens on small 
businesses in order to promote a healthy workforce and enable 
employers to offer more affordable health care coverage to 
employees.
---------------------------------------------------------------------------
    \11\H.R. 1101, 115th Cong. (2017).
---------------------------------------------------------------------------

Full Committee hearing on Legislative Proposals to Improve Health Care 
        Coverage and Provide Lower Costs for Families

    On March 1, 2017, the Committee held a hearing entitled 
``Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families,'' which examined H.R. 1101, 
among other proposals. Witnesses before the Committee were Mr. 
Jon B. Hurst, President, Retailers Association of 
Massachusetts, Boston, Massachusetts; Ms. Allison R. Klausner, 
J.D., Principal, Government Relations Leader, Conduent, 
Secaucus, New Jersey; Ms. Lydia Mitts, Associate Director of 
Affordability Initiatives, Families USA, Washington, D.C.; and 
Mr. Jay Ritchie, Executive Vice President, Tokio Marine HHC, 
Kennesaw, Georgia.

Committee passes H.R. 1101, Small Business Health Fairness Act of 2017

    On March 8, 2017, the Committee considered H.R. 1101, the 
Small Business Health Fairness Act of 2017.\12\ HELP 
Subcommittee Chairman Walberg offered an amendment in the 
nature of a substitute, making technical changes to the 
introduced bill. The Committee voted to adopt the amendment in 
the nature of a substitute by voice vote. Rep. Susan Davis (D-
CA) offered an amendment to prevent the bill from taking effect 
under certain circumstances. The amendment failed by a vote of 
17 to 22. The Committee favorably reported H.R. 1101, as 
amended, to the House of Representatives by a vote of 22 to 17.
---------------------------------------------------------------------------
    \12\H.R. 1101, Small Business Health Fairness Act of 2017: Markup 
Before the H. Comm. on Educ. and the Workforce, 115th Cong. (Mar. 8, 
2017).
---------------------------------------------------------------------------

                                Summary

    On February 16, 2017, Rep. Sam Johnson (R-TX) and HELP 
Subcommittee Chairman Walberg introduced H.R. 1101, the Small 
Business Health Fairness Act. H.R. 1101 amends the Employee 
Retirement Income Security Act of 1974 (ERISA) to allow for the 
establishment of AHPs. H.R. 1101 allows small businesses to 
join together across state lines through bona fide trade 
associations to become larger purchasers of health insurance. 
The bill puts small businesses on an equal playing field with 
unions and larger corporations, enabling them to have greater 
ability to negotiate lower health care costs for their 
employees. In turn, this makes it easier for small businesses 
to offer their employees access to quality, affordable health 
care coverage.
    More specifically, H.R. 1101 relieves small businesses that 
form AHPs from costly state-mandated benefit laws that often 
make coverage prohibitively expensive, thus lowering the costs 
of health insurance and making it possible for small firms to 
offer coverage. H.R. 1101 establishes a class certification for 
fully-insured AHPs prescribed by the Secretary of Labor. 
Likewise, self-funded AHPs must meet certain criteria to insure 
the businesses covered will be of average health risk to avoid 
pulling healthy individuals from the small group market (to 
avoid cherry picking). The legislation also contains 
protections to ensure self-funded AHPs meet and maintain 
solvency standards (e.g., maintaining at minimum $500,000 in 
surplus reserves), which will be reviewed quarterly by the 
AHP's board of trustees to determine they are being met. Self-
funded AHPs also will be required to obtain stop-loss and 
indemnification insurance coverage. Additionally, H.R. 1101 
allows small business owners to have the option to provide 
coverage to their employees by driving down costs and lowering 
barriers to access.

                            Committee Views


Background on Employer-sponsored insurance coverage

    Since World War II, employers have offered health care 
benefits as a way to recruit and retain talent and ensure a 
healthy and productive workforce. Employer-sponsored insurance 
is one of the primary means by which Americans obtain health 
care coverage. According to the Kaiser Family Foundation, more 
than 150 million Americans, or 55.5 percent of working 
Americans, are covered by a health benefit plan offered by 
their employer.\13\ A report by the American Health Policy 
Institute found that employers spent $578.6 billion in 2012 
providing health coverage for 168.6 million employees, 
retirees, and dependents.\14\ Almost all firms with at least 
200 or more employees offer health benefits, and just over half 
of smaller firms with 3-199 employees offer health 
benefits.\15\
---------------------------------------------------------------------------
    \13\Kaiser Family Found., Employer Health Benefits Survey (2016), 
http://files.kff.org/attachment/Report-Employer-Health-Benefits-2016-
Annual-Survey.
    \14\Troy, T., and Wilson, D.M., Health Coverage Cost Per Covered 
Life: Government vs. Employment-Sponsored Programs, American Health 
Policy Institute (2014), http://www.americanhealthpolicy.org/Content/
documents/resources/AHPI_STUDY_Cost_Per_Covered_Life.pdf.
    \15\Kaiser Family Found., supra note 11.
---------------------------------------------------------------------------
    Employer-provided health benefits are regulated by a number 
of laws, including ERISA as amended by the ACA. The Department 
of Labor (DOL) implements and enforces ERISA. By virtue of its 
jurisdiction over ERISA, the Committee has jurisdiction over 
employer-provided health coverage.
    Small and large employers offer health care coverage to 
employees in self-funded arrangements (self-insurance) or 
purchase fully-insured plans. ERISA regulates both fully-
insured and self-insured plans, but only self-insured plans are 
exempt from a patchwork of benefit mandates imposed under state 
insurance law. Employers sponsoring self-insured plans are not 
subject to the same requirements under the ACA as those with 
fully-insured plans. Therefore, employer-provided plans have 
different requirements and costs depending on funding 
arrangements. Last year, approximately 61 percent of workers 
with coverage were enrolled in a self-funded plan, up from 49 
percent in 2000 and 54 percent in 2005.\16\
---------------------------------------------------------------------------
    \16\Id.
---------------------------------------------------------------------------

Obamacare has failed, proving the need for a better way of providing 
        access to affordable, quality health care

    The ACA attempted to expand access to health insurance 
through a complicated structure of federal subsidies, Medicaid 
expansion, and new rules governing health insurance markets. 
The law has severely damaged America's health care system and 
is collapsing under its own weight. For example, President 
Obama famously promised the ACA would ``lower premiums by up to 
$2,500 for a typical family per year,'' yet the evidence 
suggests otherwise.\17\ Additionally, small businesses and 
their employees have been ``badly hurt by the cost increases of 
the ACA''\18\ as the law did nothing to address the 
affordability of coverage crisis small businesses had been 
struggling with for years.\19\
---------------------------------------------------------------------------
    \17\Jess Henig & Lori Robertson, Obama's Inflated Health `Savings', 
FactCheck.org (Jun. 16, 2008), http://www.factcheck.org/2008/06/obamas-
inflated-health-savings/.
    \18\Rescuing Americans from the Failed Health Care Law and 
Advancing Patient-Centered Solutions: Hearing Before the H. Comm. on 
Educ. and the Workforce, 115th Cong. (2017). (Statement of Scott 
Bollenbacher, Managing Partner, Bollenbacher & Assoc's., LLC).
    \19\Statement on the Small Business Health Care Crisis: Possible 
Solutions, U.S. Chamber of Commerce (Feb. 5, 2003), https://
www.uschamber.com/testimony/statement-small-business-health-care-
crisis-possible-solutions (Statement of the U.S. Chamber of Commerce 
before the S. Comm. on Small Bus. & Entrepreneurship).
---------------------------------------------------------------------------
    The ACA placed additional mandates and administrative 
burdens on employers, increasing the cost of insurance coverage 
and making it more difficult to hire workers and grow their 
businesses. According to a recent study by the American Action 
Forum, roughly 300,000 small business jobs were lost and 10,000 
small businesses closed as a result of ACA's costs and 
regulations.\20\
---------------------------------------------------------------------------
    \20\Gitis, B. and Batkins, S., Update: Obamacare's Impact on Small 
Business Wages and Employment, AMERICAN ACTION FORUM, (2017), https://
www.americanactionforum.org/research/update-obamacares-impact-small-
business-wages-employment/.
---------------------------------------------------------------------------
    Since 2008, approximately 36 percent of small businesses 
with fewer than 10 employees have stopped offering coverage, 
leaving workers with even fewer health care options.\21\ In 
2015, the offer rate for businesses with fewer than 50 
employees dropped to 29 percent, compared with 39 percent in 
2010 when ACA passed.\22\ Due to their size and economies of 
scale, large businesses and labor organizations have the 
ability to negotiate on behalf of their employees for high-
quality health care at more affordable costs. By offering a 
qualified group health plan under ERISA, these large employers 
and labor organizations are also exempt from myriad state rules 
and regulations on health insurance. Small businesses, however, 
do not have the same bargaining power as larger businesses and 
are unable to band together to increase their bargaining power 
in the health insurance marketplace.
---------------------------------------------------------------------------
    \21\Paul Fronstin, Fewer Small Employers Offering Health Coverage; 
Large Employers Holding Steady, EBRI Educ. and Research Fund (Jul. 
2016), https://www.ebri.org/pdf/notespdf/EBRI_Notes_07-No8-
July16.Small-ERs.pdf.
    \22\2015 Medical Expenditure Panel Survey-Insurance Component: 
Table I.A.2, Agency for Healthcare and Quality, Center for Financing, 
Access and Costs Trends (2015), https://meps.ahrq.gov/data_stats/
summ_tables/insr/national/series_1/2015/tia2.pdf; 2010 Medical 
Expenditure Panel Survey-Insurance Component: Table I.A.2, Agency for 
Healthcare and Quality, Center for Financing, Access and Costs Trends 
(2010), https://meps.ahrq.gov/data_stats/summ_tables/insr/national/
series_1/2010/tia2.pdf.
---------------------------------------------------------------------------
    According to a National Federation of Independent Business 
(NFIB) study, 52 percent of small business employers that do 
not currently offer coverage cite the cost of health insurance 
coverage as the top reason for not offering their employees 
coverage.\23\ In testimony before the Committee, on behalf of 
the National Retail Federation, Mr. Jon Hurst, President of the 
Retailers Association of Massachusetts, noted just how 
significantly the ACA hurt small businesses, saying:

        Under the Affordable Care Act (ACA) our nation's small 
        businesses and their employees have been relegated to a 
        second class consumer status versus their large, self-
        funded, ERISA exempt competitors when it comes to 
        access and affordability of health insurance coverage. 
        . . . The ACA, in mandating the purchase of health 
        insurance coverage yet failing to provide consumer 
        equitable treatment under the law in terms of access 
        and pricing[,] is not only unfair it is 
        discriminatory.\24\
---------------------------------------------------------------------------
    \23\Holly Wade, Small Business's Introduction to the Affordable 
Care Act Part III, NFIB Research Found. (Nov. 2015), http://
www.nfib.com/assets/nfib-aca-study-2015.pdf.
    \24\Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families: Hearing Before the H. Comm. On Educ. 
and the Workforce, 115th Cong. (2017). (Statement of Jon Hurst, 
President, Retailers Association of Massachusetts).

    One significant factor contributing to the high cost of 
health care for small employers is their inability to band 
together in order to unlock the financial benefits of small 
business pooling arrangements. These cost-saving benefits--
economies of scale, freedom from state regulation, and 
increased administrative efficiencies--would help small 
employers access coverage at a more affordable price and 
decrease the number of uninsured individuals who work in small 
businesses.\25\ That is particularly important because the 
percentage of smaller firms that offer coverage has fallen from 
57 percent to 53 percent since 2011.\26\
---------------------------------------------------------------------------
    \25\According to 2010 Census data, smaller firms (less than 500 
employees) were almost twice as likely to be uninsured than larger 
firms (more than 500 employees), with 36 percent of the uninsured 
working population being employed at a firm with 10 or fewer employees. 
Small Bus. Admin., What is the level of availability and coverage of 
health insurance in small firms? (2012), https://www.sba.gov/sites/
default/files/Health-Insurance.pdf.
    \26\Kaiser Family Found., supra note 11.
---------------------------------------------------------------------------
    To address the damage to small businesses caused by the 
ACA, Mr. Hurst added, ``the solution to this problem is to 
provide small businesses more flexibility . . . to look outside 
the traditional markets available to them to secure their 
coverage,''\27\ namely the ability to pool together through 
industry or professional organizations to offer health 
insurance coverage to their employees.
---------------------------------------------------------------------------
    \27\Id.
---------------------------------------------------------------------------
    In June 2016, House Republicans released ``A Better Way,'' 
which included a step-by-step approach to give every American 
access to quality, affordable health care. This consensus plan 
is the basis for repealing and replacing Obamacare in the 115th 
Congress. The Committee has jurisdiction over three components 
of ``A Better Way'': preserving the option for employers of all 
sizes to self-insure; eliminating resulting roadblocks to 
employee wellness programs; and, amending ERISA to allow small 
businesses to band together in AHPs to increase their 
purchasing power and negotiate better health coverage prices. 
These three components were the focus of a Committee 
legislative hearing, as part of broader Republican efforts to 
replace the ACA.

The need for small business pooling

    More specifically, AHPs will give small businesses another 
option for offering health insurance coverage. In a letter to 
Rep. Johnson and HELP Subcommittee Chairman Walberg, 34 groups 
representing small businesses affirmed the potential benefits 
of AHPs, saying:

        We believe AHPs will help lower the cost of health 
        insurance by allowing small business owners the same 
        opportunities that larger businesses now experience. 
        AHPs will allow small business owners to band together 
        across state lines through their membership in bona 
        fide trade or professional association to purchase 
        health coverage. Establishing health insurance benefits 
        through associations will make coverage more affordable 
        by spreading risk among a much larger group, 
        strengthening negotiating power with plans and 
        providers, and reducing administrative costs.\28\
---------------------------------------------------------------------------
    \28\Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families: Hearing Before the H. Comm. On Educ. 
and the Workforce, 115th Cong. (2017). (Letter from Coalition of AHP 
supporters entered into the record by HELP Subcommittee Chairman 
Walberg).

    Mr. Hurst agreed, noting these pooling arrangements would 
level the playing field for small businesses in relation to 
larger businesses and unions, while providing additional 
benefits beyond health insurance.\29\ In August 2010, 
Massachusetts enacted Chapter 288 of the Acts of 2010,\30\ 
establishing small business group purchasing cooperatives 
similar to association health plans. During the Committee's 
hearing examining H.R. 1101, Mr. Hurst testified that the 
Retailers Association of Massachusetts Health Insurance 
Cooperative ``is outperforming similarly sized large groups in 
terms of overall claims experience and is below several small 
group benchmarks''\31\ and covers more lives than those covered 
by the Massachusetts Health Connector, the state's ACA 
exchange, at no cost to the taxpayer. Mr. Hurst's testimony 
underscores the fact that small businesses want pooling as an 
option to purchase health insurance coverage. This is not 
surprising, because as Mr. Hurst explained:
---------------------------------------------------------------------------
    \29\Hurst, supra note 22.
    \30\Mass. Gen. Laws ch. 3, Sec. 38C (2017) https://
malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter288.
    \31\Hurst, supra note 22.

        Employment-based group coverage can be distinguished 
        from public pools because employees come to the 
        business to work rather than seek coverage, as opposed 
        to public pool[s, like the ACA exchanges,] where the 
        sole objective is to obtain coverage. The difference in 
        presentation of risk, though subtle, is important. 
        Private, employment-based group plans work better and 
        provide more affordable coverage.\32\
---------------------------------------------------------------------------
    \32\Id.

    A key element of H.R. 1101 is that AHPs would have the 
ability to self-fund, which in turn would allow small 
businesses to band together across state lines to offer 
coverage. Self-insuring also allows employers to offer plans 
designed to meet the needs of their employees, while 
controlling costs. These plans provide excellent, well-
regulated benefits. As Mr. Jay Ritchie, Executive Vice 
President of Tokio Marine HCC Stop-Loss Group and the current 
Chairman of the Board of the Self-Insurance Institute of 
America, Inc. recently testified, ``Self-insurance plans are 
regulated by no less than 10 federal laws, including [ERISA] 
and [HIPAA].''\33\ Larger businesses and unions that self-fund 
are regulated under these rules, and prohibiting AHPs from 
self-funding would punish small businesses and deny them the 
same protections. Further, there is no data to substantiate 
critics' claims that self-funded AHPs will have any effect on 
the fully-insured small group market or ACA's Small Business 
Health Options Program Exchanges.\34\
---------------------------------------------------------------------------
    \33\Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families: Hearing Before the H. Comm. On Educ. 
and the Workforce, 115th Cong. (2017). (Statement of Jay Ritchie, Exec. 
Vice President, Tokio Marine HHC).
    \34\Id.
---------------------------------------------------------------------------
    Some states already allow pooling arrangements within their 
state. Association Health Plans not certified under Part 8 of 
ERISA remain subject to all federal and state laws otherwise 
applicable to such plans, and the provisions of the Act are not 
intended to modify the application or interpretation of such 
laws to such plans.

Support for creating options and flexibility for small businesses

    Because this legislation benefits both employers and 
working families, the legislation is endorsed by a broad swath 
of groups representing job creators, including: National 
Federation of Independent Businesses, U.S. Chamber of Commerce, 
American Association of Advertising Agencies, Air Conditioning 
Contractors of America, American Council of Engineering 
Companies, American Farm Bureau Federation, American Foundry 
Society, American Hotel & Lodging Association, American Rental 
Association, American Society of Association Executives, 
Associated Builders and Contractors, Associated General 
Contractors, Auto Care Association, Electronic Security 
Association, Far West Equipment Dealers Association, Farm 
Equipment Manufacturers Association, FASTSIGNS International, 
Inc., Heating, Air-Conditioning & Refrigeration Distributors 
International, International Franchise Association, 
Manufacturers Education and Training Alliance of CT, National 
Association of Chemical Distributors, National Association of 
Home Builders, National Association of Manufacturers, National 
Association of REALTORS', National Association of 
Wholesaler-Distributors, National Restaurant Association, 
National Retail Federation, National Roofing Contractors 
Association, National Tooling and Machining Association, 
National Utility Contractors Association, North American Die 
Casting Association, Precision Machined Products Association, 
Precision Metalforming Association, Self-Insurance Institute of 
America, Inc., Small Business & Entrepreneurship Council, and 
the Western Equipment Dealers Association.

                               Conclusion

    H.R. 1101, the Small Business Health Fairness Act, makes it 
easier for small businesses to promote a healthy workforce and 
offer more affordable health care coverage. By allowing small 
businesses to join together in AHPs, the bill puts smaller 
businesses on a more level playing field with larger companies 
and unions, and it increases their bargaining power with 
insurance providers. More importantly, it provides smaller 
employers--many of whom have limited resources--with a greater 
opportunity to offer their workers quality and affordable 
health care coverage. If enacted, H.R. 1101 will empower small 
businesses to provide quality health care coverage at a lower 
cost for their employees.

                           Section-by-Section

    The following is a section-by-section analysis of the 
Amendment in the Nature of a Substitute offered by HELP 
Subcommittee Chairman Walberg and reported favorably by the 
Committee.

Section 1. Short title; Table of Contents

    Section 1 provides the short title is the ``Small Business 
Health Fairness Act of 2017.''

Section 2. Rules governing association health plans

    Section 2 amends Subtitle B of Title I of ERISA to add a 
new Part 8 (Rules Governing Association Health Plans), after 
part 7:
          Section 801. Provides that a sponsor of an AHP must 
        be a bona fide trade, industry, or professional 
        association; chamber of commerce; or similar 
        organization established for substantial purposes other 
        than that of obtaining or providing medical care. The 
        sponsor must be a permanent entity receiving membership 
        payment on a periodic basis that does not condition 
        membership, dues, or coverage under the health plan on 
        the basis of health status.
          Section 802. Requires the Secretary of Labor 
        (Secretary) to promulgate regulations to certify AHPs 
        and maintain certification. For AHPs that purchase a 
        fully-insured group health plan from an insurance 
        company, the Secretary will establish a class 
        certification. For those that will offer a self-insured 
        health benefit, the bill establishes several criteria 
        in order to insure the businesses covered will be of 
        average health risk, to avoid pulling only healthy 
        individuals from the small employer market (cherry-
        picking). To be certified, a self-funded AHP must have 
        one of the following: (1) offered such self-funded 
        coverage on the date of enactment, (2) represent a 
        broad cross-section of trades and businesses or 
        industries, or (3) represent one or more trades with 
        average or above average health insurance risk or 
        health claims experience.
          Section 803. Establishes additional eligibility 
        requirements for AHPs. Applicants must demonstrate the 
        sponsor of the AHP has been in existence for a 
        continuous period of at least three years for 
        substantial purposes other than providing coverage 
        under a group health plan. AHPs must be operated, 
        pursuant to a trust agreement, by a board of trustees, 
        which serves as the plan sponsor and is the fiduciary 
        of the plan. The board of trustees must have complete 
        fiscal control and be responsible for all operations of 
        the plan. The board of trustees must consist of 
        individuals who are owners, officers, directors or 
        employees of the employers who participate in the plan.
          Section 804. Requires all employers participating in 
        the AHP to be members or affiliated members of the 
        sponsor. All individuals under the plan must be active 
        or retired employees, owners, officers, directors, 
        partners or their beneficiaries. This applies to 
        partnerships and self-employed individuals. Expressly 
        prohibits discrimination by requiring (1) all employers 
        that are association members are eligible for 
        participation; (2) all geographically available 
        coverage options are made available upon request to 
        eligible employers; and (3) eligible individuals cannot 
        be excluded from enrolling because of health status. 
        The bill also stipulates that no participating employer 
        may exclude an employee by purchasing an individual 
        policy of health insurance coverage for such person 
        based on his or her health status.
          Section 805. Requires contribution rates for any 
        particular employer comply with the Health Insurance 
        Portability and Accountability Act (HIPAA), which 
        prohibits group health plans from excluding high-risk 
        individuals based on high claims experience. Thus, it 
        will not be possible for AHPs to cherry pick because 
        sick or high-risk groups or individuals cannot be 
        denied coverage. Contribution rates can only vary to 
        the extent already allowed under the relevant state 
        community rating insurance law. State-licensed health 
        insurance agents must be used to distribute health 
        insurance coverage provided to small employers under an 
        AHP, and must also be used to distribute self-insured 
        benefits to small employers through an AHP, if the AHP 
        also offers fully-insured plans. In addition, AHPs must 
        be allowed to design benefit options. Specifically, the 
        bill mandates that no provision of state law shall 
        preclude an AHP or health insurance issuer from 
        exercising its discretion in designing the items and 
        services of medical care to be included as health 
        insurance coverage under the plan.
          Section 806. Establishes capital reserve requirements 
        (unearned contributions, benefit liabilities, expected 
        administrative costs, any other obligations) for self-
        insured AHP's and requires them to obtain both specific 
        and aggregate stop loss coverage and solvency 
        indemnification insurance. In addition, the AHP must 
        maintain minimum surplus reserves of at least $500,000, 
        and the Secretary may increase the surplus reserve 
        minimum to $2 million. Establishes an Association 
        Health Plan Fund, managed by the Department of Labor, 
        to guarantee that indemnification insurance is always 
        available, and penalties apply if payments are not 
        made. All certified AHPs would be required to pay 
        $5,000 into the fund annually. The measure requires the 
        Secretary to establish a Solvency Standards Working 
        Group within 90 days of enactment to recommend initial 
        regulations.
          Section 807. Sets forth additional criteria that AHPs 
        must meet to qualify for certification. The Secretary 
        shall grant certification to a plan only if (1) a 
        complete application has been filed, accompanied by the 
        filing fee of $5,000; and (2) all other terms of the 
        certification are met (including financial, actuarial, 
        reporting, participation, and such other requirements 
        as may be specified by the Secretary as a condition of 
        the certification). AHPs also are required to file 
        their certification with the applicable state authority 
        of each state in which at least 25 percent of the 
        participants and beneficiaries under the plan are 
        located.
          Section 808. Requires that, except as provided in 
        section 809, an AHP may voluntarily terminate only if 
        the board of trustees provides 60 days advance written 
        notice to participants and beneficiaries and submits to 
        the applicable authority a plan providing for timely 
        payment of all benefit obligations.
          Section 809. Requires that the board of trustees of a 
        self-insured AHP must determine quarterly whether the 
        capital reserve requirements under section 806 are met. 
        If not, in consultation with the qualified actuary, the 
        board must develop a plan to ensure compliance and 
        report such information to the Secretary.
          Section 810. Sets forth procedures whereby the 
        Secretary may become the trustee of insolvent AHPs. 
        Whenever the Secretary determines an AHP will not be 
        able to provide benefits, or is otherwise in financial 
        distress, the Secretary must act as trustee to 
        administer the plan for the duration of insolvency.
          Section 811. Allows a state to assess newly certified 
        AHPs a contribution tax to the same extent they tax 
        health insurance plans. This will enable states to 
        maintain the revenue source for funding state 
        priorities such as high-risk insurance pools.
          Section 812. Defines the following terms: group 
        health plan, medical care, health insurance coverage, 
        health insurance issuer, applicable authority, health 
        status-related factor, individual market, treatment of 
        very small groups, participating employer, applicable 
        state authority, qualified actuary, affiliated member, 
        large employer, and small employer. Also, clarifies the 
        treatment of ERISA's preemption rules with regard to 
        AHPs. For certified AHPs, state law is preempted to the 
        extent that it would preclude an AHP from existing in a 
        state. In addition, state law is also preempted in 
        order to allow health insurance issuers to offer health 
        insurance coverage of the same policy type as offered 
        in connection with a particular AHP to eligible 
        employers, regardless of whether such employers are 
        members of the particular association. Health insurance 
        coverage policy forms filed and approved in a 
        particular state in connection with an insurer's 
        offering under an AHP are deemed to be approved in any 
        other state in which such coverage is offered when the 
        insurer provides a complete filing in the same form and 
        manner to the authority in the other state. Not later 
        than January 1, 2022, the Secretary shall report to 
        Congress regarding the effect AHPs have had, if any, on 
        reducing the number of uninsured individuals.

Section 3. Clarification of treatment of single employer arrangements

    Section 3 amends the definition of multiple employer 
welfare arrangement and control group with regard to the 
treatment of single employer arrangements and collectively 
bargained arrangements.

Section 4. Enforcement provisions relating to association health plans

    Section 4 amends ERISA to establish enforcement provisions 
relating to AHPs and multiple employer welfare arrangements 
(MEWAs). Establishes criminal penalties for willful 
misrepresentation as a certified AHP, or as a collectively-
bargained plan, or as a MEWA established pursuant to a 
collective bargaining agreement; authorizes DOL to issue cease 
activity orders against fraudulent health plans; and outlines 
the responsibility of the board of trustees for meeting the 
required claims procedures.

Section 5. Cooperation between federal and state authorities

    Section 5 amends section 506 of ERISA (relating to 
coordination and responsibility of agencies enforcing ERISA and 
related laws) to require the Secretary to consult with state 
insurance departments with regard to the Secretary's authority 
under sections 502 and 504 to enforce provisions applicable to 
certified AHPs.

Section 6. Effective date and transitional and other rules

    Section 6 provides the amendments made by this Act shall 
take effect one year after the date of enactment. Requires the 
Secretary to issue regulations to carry out the amendments made 
by this Act within one year after the date of enactment. Deems 
certain requirements of this legislation met for previously 
existing AHPs meeting certain stringent requirements.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 1101 improves access to affordable health coverage 
options for workers employed by small businesses.

                       Unfunded Mandate Statement

    With respect to the requirements of Section 423 of the 
Congressional Budget and Impoundment Control Act (as amended by 
Section 101(a)(2) of the Unfunded Mandate Reform Act, P.L. 104-
4), the Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether the provisions of the reported bill include unfunded 
mandates.

                           Earmark Statement

    H.R. 1101 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 1101 is to improve access to affordable health 
coverage options for workers employed by small businesses.

                    Duplication of Federal Programs

    No provision of H.R. 1101 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The committee estimates that enacting H.R. 1101 does not 
specifically direct the completion of any specific rule makings 
within the meaning of 5 U.S.C. 551.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

   New Budget Authority and CBO Cost Estimate Committee Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has requested 
but not received a cost estimate for this bill from the 
Director of Congressional Budget Office. The Committee has 
requested but not received from the Director of the 
Congressional Budget Office a statement as to whether this bill 
contains any new budget authority, spending authority, credit 
authority, or an increase or decrease in revenues or tax 
expenditures.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974


                   SHORT TITLE AND TABLE OF CONTENTS

  Section 1. This Act may be cited as the ``Employee Retirement 
Income Security Act of 1974''.

     * * * * * * *

             TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

     * * * * * * *

                    Subtitle B--Regulatory Provisions

     * * * * * * *

                 Part 7--Group Health Plan Requirements

     * * * * * * *

                      Subpart C--General Provisions

     * * * * * * *

            Part 8. Rules Governing Association Health Plans

801. Association health plans.
802. Certification of association health plans.
803. Requirements relating to sponsors and boards of trustees.
804. Participation and coverage requirements.
805. Other requirements relating to plan documents, contribution rates, 
          and benefit options.
806. Maintenance of reserves and provisions for solvency for plans 
          providing health benefits in addition to health insurance 
          coverage.
807. Requirements for application and related requirements.
808. Notice requirements for voluntary termination.
809. Corrective actions and mandatory termination.
810. Trusteeship by the Secretary of insolvent association health plans 
          providing health benefits in addition to health insurance 
          coverage.
811. State assessment authority.
812. Definitions and rules of construction.

           *       *       *       *       *       *       *


             TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS


Subtitle A--General Provisions

           *       *       *       *       *       *       *



                              DEFINITIONS

  Sec. 3. For purposes of this title:
  (1) The terms ``employee welfare benefit plan'' and ``welfare 
plan'' mean any plan, fund, or program which was heretofore or 
is hereafter established or maintained by an employer or by an 
employee organization, or by both, to the extent that such 
plan, fund, or program was established or is maintained for the 
purpose of providing for its participants or their 
beneficiaries, through the purchase of insurance or otherwise, 
(A) medical, surgical, or hospital care or benefits, or 
benefits in the event of sickness, accident, disability, death 
or unemployment, or vacation benefits, apprenticeship or other 
training programs, or day care centers, scholarship funds, or 
prepaid legal services, or (B) any benefit described in section 
302(c) of the Labor Management Relations Act, 1947 (other than 
pensions on retirement or death, and insurance to provide such 
pensions).
  (2)(A) Except as provided in subparagraph (B), the terms 
``employee pension benefit plan'' and ``pension plan'' mean any 
plan, fund, or program which was heretofore or is hereafter 
established or maintained by an employer or by an employee 
organization, or by both, to the extent that by its express 
terms or as a result of surrounding circumstances such plan, 
fund, or program--
          (i) provides retirement income to employees, or
          (ii) results in a deferral of income by employees for 
        periods extending to the termination of covered 
        employment or beyond,
regardless of the method of calculating the contributions made 
to the plan, the method of calculating the benefits under the 
plan or the method of distributing benefits from the plan. A 
distribution from a plan, fund, or program shall not be treated 
as made in a form other than retirement income or as a 
distribution prior to termination of covered employment solely 
because such distribution is made to an employee who has 
attained age 62 and who is not separated from employment at the 
time of such distribution.
  (B) The Secretary may by regulation prescribe rules 
consistent with the standards and purposes of this Act 
providing one or more exempt categories under which--
          (i) severance pay arrangements, and
          (ii) supplemental retirement income payments, under 
        which the pension benefits of retirees or their 
        beneficiaries are supplemented to take into account 
        some portion or all of the increases in the cost of 
        living (as determined by the Secretary of Labor) since 
        retirement,
shall, for purposes of this title, be treated as welfare plans 
rather than pension plans. In the case of any arrangement or 
payment a principal effect of which is the evasion of the 
standards or purposes of this Act applicable to pension plans, 
such arrangement or payment shall be treated as a pension plan. 
An applicable voluntary early retirement incentive plan (as 
defined in section 457(e)(11)(D)(ii) of the Internal Revenue 
Code of 1986) making payments or supplements described in 
section 457(e)(11)(D)(i) of such Code, and an applicable 
employment retention plan (as defined in section 457(f)(4)(C) 
of such Code) making payments of benefits described in section 
457(f)(4)(A) of such Code, shall, for purposes of this title, 
be treated as a welfare plan (and not a pension plan) with 
respect to such payments and supplements.
  (3) The term ``employee benefit plan'' or ``plan'' means an 
employee welfare benefit plan or an employee pension benefit 
plan or a plan which is both an employee welfare benefit plan 
and an employee pension benefit plan.
  (4) The term ``employee organization'' means any labor union 
or any organization of any kind, or any agency or employee 
representation committee, association, group, or plan, in which 
employees participate and which exists for the purpose, in 
whole or in part, of dealing with employers concerning an 
employee benefit plan, or other matters incidental to 
employment relationships; or any employees' beneficiary 
association organized for the purpose in whole or in part, of 
establishing such a plan.
  (5) The term ``employer'' means any person acting directly as 
an employer, or indirectly in the interest of an employer, in 
relation to an employee benefit plan; and includes a group or 
association of employers acting for an employer in such 
capacity.
  (6) The term ``employee'' means any individual employed by an 
employer.
  (7) The term ``participant'' means any employee or former 
employee of an employer, or any member or former member of an 
employee organization, who is or may become eligible to receive 
a benefit of any type from an employee benefit plan which 
covers employees of such employer or members of such 
organization, or whose beneficiaries may be eligible to receive 
any such benefit.
  (8) The term ``beneficiary'' means a person designated by a 
participant, or by the terms of an employee benefit plan, who 
is or may become entitled to a benefit thereunder.
  (9) The term ``person'' means an individual, partnership, 
joint venture, corporation, mutual company, joint-stock 
company, trust, estate, unincorporated organization, 
association, or employee organization.
  (10) The term ``State'' includes any State of the United 
States, the District of Columbia, Puerto Rico, the Virgin 
Islands, American Samoa, Guam, Wake Island, and the Canal Zone. 
The term ``United States'' when used in the geographic sense 
means the States and the Outer Continental Shelf lands defined 
in the Outer Continental Shelf Lands Act (43 U.S.C. 1331-1343).
  (11) The term ``commerce'' means trade, traffic, commerce, 
transportation, or communication between any State and any 
place outside thereof.
  (12) The term ``industry or activity affecting commerce'' 
means any activity, business, or industry in commerce or in 
which a labor dispute would hinder or obstruct commerce or the 
free flow of commerce, and includes any activity or industry 
``affecting commerce'' within the meaning of the Labor 
Management Relations Act, 1947, or the Railway Labor Act.
  (13) The term ``Secretary'' means the Secretary of Labor.
  (14) The term ``party in interest'' means, as to an employee 
benefit plan--
          (A) any fiduciary (including, but not limited to, any 
        administrator, officer, trustee, or custodian), 
        counsel, or employee of such employee benefit plan;
          (B) a person providing services to such plan;
          (C) an employer any of whose employees are covered by 
        such plan;
          (D) an employee organization any of whose members are 
        covered by such plan;
          (E) an owner, direct or indirect, of 50 percent or 
        more of--
                  (i) the combined voting power of all classes 
                of stock entitled to vote or the total value of 
                shares of all classes of stock of a 
                corporation,
                  (ii) the capital interest or the profits 
                interest of a partnership, or
                  (iii) the beneficial interest of a trust or 
                unincorporated enterprise,
        which is an employer or an employee organization 
        described in subparagraph (C) or (D);
          (F) a relative (as defined in paragraph (15)) of any 
        individual described in subparagraph (A), (B), (C), or 
        (E);
          (G) a corporation, partnership, or trust or estate of 
        which (or in which) 50 percent or more of--
                  (i) the combined voting power of all classes 
                of stock entitled to vote or the total value of 
                shares of all classes of stock of such 
                corporation,
                  (ii) the capital interest or profits interest 
                of such partnership, or
                  (iii) the beneficial interest of such trust 
                or estate,
        is owned directly or indirectly, or held by persons 
        described in subparagraph (A), (B), (C), (D), or (E);
          (H) an employee, officer, director (or an individual 
        having powers or responsibilities similar to those of 
        officers or directors), or a 10 percent or more 
        shareholder directly or indirectly, of a person 
        described in subparagraph (B), (C), (D), (E), or (G), 
        or of the employee benefit plan; or
          (I) a 10 percent or more (directly or indirectly in 
        capital or profits) partner or joint venturer of a 
        person described in subparagraph (B), (C), (D), (E), or 
        (G).
The Secretary, after consultation and coordination with the 
Secretary of the Treasury, may by regulation prescribe a 
percentage lower than 50 percent for subparagraph (E) and (G) 
and lower than 10 percent for subparagraph (H) or (I). The 
Secretary may prescribe regulations for determining the 
ownership (direct or indirect) of profits and beneficial 
interests, and the manner in which indirect stockholdings are 
taken into account. Any person who is a party in interest with 
respect to a plan to which a trust described in section 
501(c)(22) of the Internal Revenue Code of 1986 is permitted to 
make payments under section 4223 shall be treated as a party in 
interest with respect to such trust.
  (15) The term ``relative'' means a spouse, ancestor, lineal 
descendant, or spouse of a lineal descendant.
  (16)(A) The term ``administrator'' means--
          (i) the person specifically so designated by the 
        terms of the instrument under which the plan is 
        operated;
          (ii) if an administrator is not so designated, the 
        plan sponsor; or
          (iii) in the case of a plan for which an 
        administrator is not designated and a plan sponsor 
        cannot be identified, such other person as the 
        Secretary may by regulation prescribe.
  (B) The term ``plan sponsor'' means (i) the employer in the 
case of an employee benefit plan established or maintained by a 
single employer, (ii) the employee organization in the case of 
a plan established or maintained by an employee organization, 
or (iii) in the case of a plan established or maintained by two 
or more employers or jointly by one or more employers and one 
or more employee organizations, the association, committee, 
joint board of trustees, or other similar group of 
representatives of the parties who establish or maintain the 
plan. Such term also includes a person serving as the sponsor 
of an association health plan under part 8.
  (17) The term ``separate account'' means an account 
established or maintained by an insurance company under which 
income, gains, and losses, whether or not realized, from assets 
allocated to such account, are, in accordance with the 
applicable contract, credited to or charged against such 
account without regard to other income, gains, or losses of the 
insurance company.
  (18) The term ``adequate consideration'' when used in part 4 
of subtitle B means (A) in the case of a security for which 
there is a generally recognized market, either (i) the price of 
the security prevailing on a national securities exchange which 
is registered under section 6 of the Securities Exchange Act of 
1934, or (ii) if the security is not traded on such a national 
securities exchange, a price not less favorable to the plan 
than the offering price for the security as established by the 
current bid and asked prices quoted by persons independent of 
the issuer and of any party in interest; and (B) in the case of 
an asset other than a security for which there is a generally 
recognized market, the fair market value of the asset as 
determined in good faith by the trustee or named fiduciary 
pursuant to the terms of the plan and in accordance with 
regulations promulgated by the Secretary.
  (19) The term ``nonforfeitable'' when used with respect to a 
pension benefit or right means a claim obtained by a 
participant or his beneficiary to that part of an immediate or 
deferred benefit under a pension plan which arises from the 
participant's service, which is unconditional, and which is 
legally enforceable against the plan. For purposes of this 
paragraph, a right to an accrued benefit derived from employer 
contributions shall not be treated as forfeitable merely 
because the plan contains a provision described in section 
203(a)(3).
  (20) The term ``security'' has the same meaning as such term 
has under section 2(1) of the Securities Act of 1933 (15 U.S.C. 
77b(1)).
  (21)(A) Except as otherwise provided in subparagraph (B), a 
person is a fiduciary with respect to a plan to the extent (i) 
he exercises any discretionary authority or discretionary 
control respecting management of such plan or exercises any 
authority or control respecting management or disposition of 
its assets, (ii) he renders investment advice for a fee or 
other compensation, direct or indirect, with respect to any 
moneys or other property of such plan, or has any authority or 
responsibility to do so, or (iii) he has any discretionary 
authority or discretionary responsibility in the administration 
of such plan. Such term includes any person designated under 
section 405(c)(1)(B).
  (B) If any money or other property of an employee benefit 
plan is invested in securities issued by an investment company 
registered under the Investment Company Act of 1940, such 
investment shall not by itself cause such investment company or 
such investment company's investment adviser or principal 
underwriter to be deemed to be a fiduciary or a party in 
interest as those terms are defined in this title, except 
insofar as such investment company or its investment adviser or 
principal underwriter acts in connection with an employee 
benefit plan covering employees of the investment company, the 
investment adviser, or its principal underwriter. Nothing 
contained in this subparagraph shall limit the duties imposed 
on such investment company, investment adviser, or principal 
underwriter by any other law.
  (22) The term ``normal retirement benefit'' means the greater 
of the early retirement benefit under the plan, or the benefit 
under the plan commencing at normal retirement age. The normal 
retirement benefit shall be determined without regard to--
          (A) medical benefits, and
          (B) disability benefits not in excess of the 
        qualified disability benefit.
For purposes of this paragraph, a qualified disability benefit 
is a disability benefit provided by a plan which does not 
exceed the benefit which would be provided for the participant 
if he separated from the service at normal retirement age. For 
purposes of this paragraph, the early retirement benefit under 
a plan shall be determined without regard to any benefit under 
the plan which the Secretary of the Treasury finds to be a 
benefit described in section 204(b)(1)(G).
  (23) The term ``accrued benefit'' means--
          (A) in the case of a defined benefit plan, the 
        individual's accrued benefit determined under the plan 
        and, except as provided in section 204(c)(3), expressed 
        in the form of an annual benefit commencing at normal 
        retirement age, or
          (B) in the case of a plan which is an individual 
        account plan, the balance of the individual's account.
The accrued benefit of an employee shall not be less than the 
amount determined under section 204(c)(2)(B) with respect to 
the employee's accumulated contribution.
  (24) The term ``normal retirement age'' means the earlier 
of--
          (A) the time a plan participant attains normal 
        retirement age under the plan, or
          (B) the later of--
                  (i) the time a plan participant attains age 
                65, or
                  (ii) the 5th anniversary of the time a plan 
                participant commenced participation in the 
                plan.
  (25) The term ``vested liabilities'' means the present value 
of the immediate or deferred benefits available at normal 
retirement age for participants and their beneficiaries which 
are nonforfeitable.
  (26) The term ``current value'' means fair market value where 
available and otherwise the fair value as determined in good 
faith by a trustee or a named fiduciary (as defined in section 
402(a)(2)) pursuant to the terms of the plan and in accordance 
with regulations of the Secretary, assuming an orderly 
liquidation at the time of such determination.
  (27) The term ``present value'', with respect to a liability, 
means the value adjusted to reflect anticipated events. Such 
adjustments shall conform to such regulations as the Secretary 
of the Treasury may prescribe.
  (28) The term ``normal service cost'' or ``normal cost'' 
means the annual cost of future pension benefits and 
administrative expenses assigned, under an actuarial cost 
method, to years subsequent to a particular valuation date of a 
pension plan. The Secretary of the Treasury may prescribe 
regulations to carry out this paragraph.
  (29) The term ``accrued liability'' means the excess of the 
present value, as of a particular valuation date of a pension 
plan, of the projected future benefit costs and administrative 
expenses for all plan participants and beneficiaries over the 
present value of future contributions for the normal cost of 
all applicable plan participants and beneficiaries. The 
Secretary of the Treasury may prescribe regulations to carry 
out this paragraph.
  (30) The term ``unfunded accrued liability'' means the excess 
of the accrued liability, under an actuarial cost method which 
so provides, over the present value of the assets of a pension 
plan. The Secretary of the Treasury may prescribe regulations 
to carry out this paragraph.
  (31) The term ``advance funding actuarial cost method'' or 
``actuarial cost method'' means a recognized actuarial 
technique utilized for establishing the amount and incidence of 
the annual actuarial cost of pension plan benefits and 
expenses. Acceptable actuarial cost methods shall include the 
accrued benefit cost method (unit credit method), the entry age 
normal cost method, the individual level premium cost method, 
the aggregate cost method, the attained age normal cost method, 
and the frozen initial liability cost method. The terminal 
funding cost method and the current funding (pay-as-you-go) 
cost method are not acceptable actuarial cost methods. The 
Secretary of the Treasury shall issue regulations to further 
define acceptable actuarial cost methods.
  (32) The term ``governmental plan'' means a plan established 
or maintained for its employees by the Government of the United 
States, by the government of any State or political subdivision 
thereof, or by any agency or instrumentality of any of the 
foregoing. The term ``governmental plan'' also includes any 
plan to which the Railroad Retirement Act of 1935 or 1937 
applies, and which is financed by contributions required under 
that Act and any plan of an international organization which is 
exempt from taxation under the provisions of the International 
Organizations Immunities Act (59 Stat. 669). The term 
``governmental plan'' includes a plan which is established and 
maintained by an Indian tribal government (as defined in 
section 7701(a)(40) of the Internal Revenue Code of 1986), a 
subdivision of an Indian tribal government (determined in 
accordance with section 7871(d) of such Code), or an agency or 
instrumentality of either, and all of the participants of which 
are employees of such entity substantially all of whose 
services as such an employee are in the performance of 
essential governmental functions but not in the performance of 
commercial activities (whether or not an essential government 
function)
  (33)(A) The term ``church plan'' means a plan established and 
maintained (to the extent required in clause (ii) of 
subparagraph (B)) for its employees (or their beneficiaries) by 
a church or by a convention or association of churches which is 
exempt from tax under section 501 of the Internal Revenue Code 
of 1986.
  (B) The term ``church plan'' does not include a plan--
          (i) which is established and maintained primarily for 
        the benefit of employees (or their beneficiaries) of 
        such church or convention or association of churches 
        who are employed in connection with one or more 
        unrelated trades or businesses (within the meaning of 
        section 513 of the Internal Revenue Code of 1986), or
          (ii) if less than substantially all of the 
        individuals included in the plan are individuals 
        described in subparagraph (A) or in clause (ii) of 
        subparagraph (C) (or their beneficiaries).
  (C) For purposes of this paragraph--
          (i) A plan established and maintained for its 
        employees (or their beneficiaries) by a church or by a 
        convention or association of churches includes a plan 
        maintained by an organization, whether a civil law 
        corporation or otherwise, the principal purpose or 
        function of which is the administration or funding of a 
        plan or program for the provision of retirement 
        benefits or welfare benefits, or both, for the 
        employees of a church or a convention or association of 
        churches, if such organization is controlled by or 
        associated with a church or a convention or association 
        of churches.
          (ii) The term employee of a church or a convention or 
        association of churches includes--
                  (I) a duly ordained, commissioned, or 
                licensed minister of a church in the exercise 
                of his ministry, regardless of the source of 
                his compensation;
                  (II) an employee of an organization, whether 
                a civil law corporation or otherwise, which is 
                exempt from tax under section 501 of the 
                Internal Revenue Code of 1986 and which is 
                controlled by or associated with a church or a 
                convention or association of churches; and
                  (III) an individual described in clause (v).
          (iii) A church or a convention or association of 
        churches which is exempt from tax under section 501 of 
        the Internal Revenue Code of 1986 shall be deemed the 
        employer of any individual included as an employee 
        under clause (ii).
          (iv) An organization, whether a civil law corporation 
        or otherwise, is associated with a church or a 
        convention or association of churches if it shares 
        common religious bonds and convictions with that church 
        or convention or association of churches.
          (v) If an employee who is included in a church plan 
        separates from the service of a church or a convention 
        or association of churches or an organization, whether 
        a civil law corporation or otherwise, which is exempt 
        from tax under section 501 of the Internal Revenue Code 
        of 1986 and which is controlled by or associated with a 
        church or a convention or association of churches, the 
        church plan shall not fail to meet the requirements of 
        this paragraph merely because the plan--
                  (I) retains the employee's accrued benefit or 
                account for the payment of benefits to the 
                employee or his beneficiaries pursuant to the 
                terms of the plan; or
                  (II) receives contributions on the employee's 
                behalf after the employee's separation from 
                such service, but only for a period of 5 years 
                after such separation, unless the employee is 
                disabled (within the meaning of the disability 
                provisions of the church plan or, if there are 
                no such provisions in the church plan, within 
                the meaning of section 72(m)(7) of the Internal 
                Revenue Code of 1986) at the time of such 
                separation from service.
  (D)(i) If a plan established and maintained for its employees 
(or their beneficiaries) by a church or by a convention or 
association of churches which is exempt from tax under section 
501 of the Internal Revenue Code of 1986 fails to meet one or 
more of the requirements of this paragraph and corrects its 
failure to meet such requirements within the correction period, 
the plan shall be deemed to meet the requirements of this 
paragraph for the year in which the correction was made and for 
all prior years.
  (ii) If a correction is not made within the correction 
period, the plan shall be deemed not to meet the requirements 
of this paragraph beginning with the date on which the earliest 
failure to meet one or more of such requirements occurred.
  (iii) For purposes of this subparagraph, the term 
``correction period'' means--
          (I) the period ending 270 days after the date of 
        mailing by the Secretary of the Treasury of a notice of 
        default with respect to the plan's failure to meet one 
        or more of the requirements of this paragraph; or
          (II) any period set by a court of competent 
        jurisdiction after a final determination that the plan 
        fails to meet such requirements, or, if the court does 
        not specify such period, any reasonable period 
        determined by the Secretary of the Treasury on the 
        basis of all the facts and circumstances, but in any 
        event not less than 270 days after the determination 
        has become final; or
          (III) any additional period which the Secretary of 
        the Treasury determines is reasonable or necessary for 
        the correction of the default,
whichever has the latest ending date.
  (34) The term ``individual account plan'' or ``defined 
contribution plan'' means a pension plan which provides for an 
individual account for each participant and for benefits based 
solely upon the amount contributed to the participant's 
account, and any income, expenses, gains and losses, and any 
forfeitures of accounts of other participants which may be 
allocated to such participant's account.
  (35) The term ``defined benefit plan'' means a pension plan 
other than an individual account plan; except that a pension 
plan which is not an individual account plan and which provides 
a benefit derived from employer contributions which is based 
partly on the balance of the separate account of a 
participant--
          (A) for the purposes of section 202, shall be treated 
        as an individual account plan, and
          (B) for the purposes of paragraph (23) of this 
        section and section 204, shall be treated as an 
        individual account plan to the extent benefits are 
        based upon the separate account of a participant and as 
        a defined benefit plan with respect to the remaining 
        portion of benefits under the plan.
  (36) The term ``excess benefit plan'' means a plan maintained 
by an employer solely for the purpose of providing benefits for 
certain employees in excess of the limitations on contributions 
and benefits imposed by section 415 of the Internal Revenue 
Code of 1986 on plans to which that section applies, without 
regard to whether the plan is funded. To the extent that a 
separable part of a plan (as determined by the Secretary of 
Labor) maintained by an employer is maintained for such 
purpose, that part shall be treated as a separate plan which is 
an excess benefit plan.
  (37)(A) The term ``multiemployer plan'' means a plan--
          (i) to which more than one employer is required to 
        contribute,
          (ii) which is maintained pursuant to one or more 
        collective bargaining agreements between one or more 
        employee organizations and more than one employer, and
          (iii) which satisfies such other requirements as the 
        Secretary may prescribe by regulation.
  (B) For purposes of this paragraph, all trades or businesses 
(whether or not incorporated) which are under common control 
within the meaning of section 4001(b)(1) are considered a 
single employer.
  (C) Notwithstanding subparagraph (A), a plan is a 
multiemployer plan on and after its termination date if the 
plan was a multiemployer plan under this paragraph for the plan 
year preceding its termination date.
  (D) For purposes of this title, notwithstanding the preceding 
provisions of this paragraph, for any plan year which began 
before the date of the enactment of the Multiemployer Pension 
Plan Amendments Act of 1980, the term ``multiemployer plan'' 
means a plan described in section 3(37) of this Act as in 
effect immediately before such date.
  (E) Within one year after the date of the enactment of the 
Multiemployer Pension Plan Amendments Act of 1980, a 
multiemployer plan may irrevocably elect, pursuant to 
procedures established by the corporation and subject to the 
provisions of sections 4403(b) and (c), that the plan shall not 
be treated as a multiemployer plan for all purposes under this 
Act or the Internal Revenue Code of 1954 if for each of the 
last 3 plan years ending prior to the effective date of the 
Multiemployer Pension Plan Amendments Act of 1980--
          (i) the plan was not a multiemployer plan because the 
        plan was not a plan described in section 3(37)(A)(iii) 
        of this Act and section 414(f)(1)(C) of the Internal 
        Revenue Code of 1954 (as such provisions were in effect 
        on the day before the date of the enactment of the 
        Multiemployer Pension Plan Amendments Act of 1980 ); 
        and
          (ii) the plan had been identified as a plan that was 
        not a multiemployer plan in substantially all its 
        filings with the corporation, the Secretary of Labor 
        and the Secretary of the Treasury.
  (F)(i) For purposes of this title a qualified football 
coaches plan--
          (I) shall be treated as a multiemployer plan to the 
        extent not inconsistent with the purposes of this 
        subparagraph; and
          (II) notwithstanding section 401(k)(4)(B) of the 
        Internal Revenue Code of 1986, may include a qualified 
        cash and deferred arrangement.
  (ii) For purposes of this subparagraph, the term ``qualified 
football coaches plan'' means any defined contribution plan 
which is established and maintained by an organization--
          (I) which is described in section 501(c) of such 
        Code;
          (II) the membership of which consists entirely of 
        individuals who primarily coach football as full-time 
        employees of 4-year colleges or universities described 
        in section 170(b)(1)(A)(ii) of such Code; and
          (III) which was in existence on September 18, 1986.
          (G)(i) Within 1 year after the enactment of the 
        Pension Protection Act of 2006--
                  (I) an election under subparagraph (E) may be 
                revoked, pursuant to procedures prescribed by 
                the Pension Benefit Guaranty Corporation, if, 
                for each of the 3 plan years prior to the date 
                of the enactment of that Act, the plan would 
                have been a multiemployer plan but for the 
                election under subparagraph (E), and
                  (II) a plan that meets the criteria in 
                clauses (i) and (ii) of subparagraph (A) of 
                this paragraph or that is described in clause 
                (vi) may, pursuant to procedures prescribed by 
                the Pension Benefit Guaranty Corporation, elect 
                to be a multiemployer plan, if--
                          (aa) for each of the 3 plan years 
                        immediately preceding the first plan 
                        year for which the election under this 
                        paragraph is effective with respect to 
                        the plan, the plan has met those 
                        criteria or is so described,
                          (bb) substantially all of the plan's 
                        employer contributions for each of 
                        those plan years were made or required 
                        to be made by organizations that were 
                        exempt from tax under section 501 of 
                        the Internal Revenue Code of 1986, and
                          (cc) the plan was established prior 
                        to September 2, 1974.
          (ii) An election under this subparagraph shall be 
        effective for all purposes under this Act and under the 
        Internal Revenue Code of 1986, starting with any plan 
        year beginning on or after January 1, 1999, and ending 
        before January 1, 2008, as designated by the plan in 
        the election made under clause (i)(II).
          (iii) Once made, an election under this subparagraph 
        shall be irrevocable, except that a plan described in 
        clause (i)(II) shall cease to be a multiemployer plan 
        as of the plan year beginning immediately after the 
        first plan year for which the majority of its employer 
        contributions were made or required to be made by 
        organizations that were not exempt from tax under 
        section 501 of the Internal Revenue Code of 1986.
          (iv) The fact that a plan makes an election under 
        clause (i)(II) does not imply that the plan was not a 
        multiemployer plan prior to the date of the election or 
        would not be a multiemployer plan without regard to the 
        election.
          (v)(I) No later than 30 days before an election is 
        made under this subparagraph, the plan administrator 
        shall provide notice of the pending election to each 
        plan participant and beneficiary, each labor 
        organization representing such participants or 
        beneficiaries, and each employer that has an obligation 
        to contribute to the plan, describing the principal 
        differences between the guarantee programs under title 
        IV and the benefit restrictions under this title for 
        single employer and multiemployer plans, along with 
        such other information as the plan administrator 
        chooses to include.
          (II) Within 180 days after the date of enactment of 
        the Pension Protection Act of 2006, the Secretary shall 
        prescribe a model notice under this clause.
          (III) A plan administrator's failure to provide the 
        notice required under this subparagraph shall be 
        treated for purposes of section 502(c)(2) as a failure 
        or refusal by the plan administrator to file the annual 
        report required to be filed with the Secretary under 
        section 101(b)(1).
          (vi) A plan is described in this clause if it is a 
        plan sponsored by an organization which is described in 
        section 501(c)(5) of the Internal Revenue Code of 1986 
        and exempt from tax under section 501(a) of such Code 
        and which was established in Chicago, Illinois, on 
        August 12, 1881.
  (vii) For purposes of this Act and the Internal Revenue Code 
of 1986, a plan making an election under this subparagraph 
shall be treated as maintained pursuant to a collective 
bargaining agreement if a collective bargaining agreement, 
expressly or otherwise, provides for or permits employer 
contributions to the plan by one or more employers that are 
signatory to such agreement, or participation in the plan by 
one or more employees of an employer that is signatory to such 
agreement, regardless of whether the plan was created, 
established, or maintained for such employees by virtue of 
another document that is not a collective bargaining agreement.
  (38) The term ``investment manager'' means any fiduciary 
(other than a trustee or named fiduciary, as defined in section 
402(a)(2))--
          (A) who has the power to manage, acquire, or dispose 
        of any asset of a plan;
          (B) who (i) is registered as an investment adviser 
        under the Investment Advisers Act of 1940; (ii) is not 
        registered as an investment adviser under such Act by 
        reason of paragraph (1) of section 203A(a) of such Act, 
        is registered as an investment adviser under the laws 
        of the State (referred to in such paragraph (1)) in 
        which it maintains its principal office and place of 
        business, and, at the time the fiduciary last filed the 
        registration form most recently filed by the fiduciary 
        with such State in order to maintain the fiduciary's 
        registration under the laws of such State, also filed a 
        copy of such form with the Secretary; (iii) is a bank, 
        as defined in that Act; or (iv) is an insurance company 
        qualified to perform services described in subparagraph 
        (A) under the laws of more than one State; and
          (C) has acknowledged in writing that he is a 
        fiduciary with respect to the plan.
  (39) The terms ``plan year'' and ``fiscal year of the plan'' 
mean, with respect to a plan, the calendar, policy, or fiscal 
year on which the records of the plan are kept.
  (40)(A) The term ``multiple employer welfare arrangement'' 
means an employee welfare benefit plan, or any other 
arrangement (other than an employee welfare benefit plan), 
which is established or maintained for the purpose of offering 
or providing any benefit described in paragraph (1) to the 
employees of two or more employers (including one or more self-
employed individuals), or to their beneficiaries, except that 
such term does not include any such plan or other arrangement 
which is established or maintained--
          (i) under or pursuant to one or more agreements which 
        the Secretary finds to be collective bargaining 
        agreements,
          (ii) by a rural electric cooperative, or
          (iii) by a rural telephone cooperative association.
  (B) For purposes of this paragraph--
          (i) 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, 
        except that, in any case in which the benefit referred 
        to in subparagraph (A) consists of medical care (as 
        defined in section 812(a)(2)), two or more trades or 
        businesses, whether or not incorporated, shall be 
        deemed a single employer for any plan year of such 
        plan, or any fiscal year of such other arrangement, if 
        such trades or businesses are within the same control 
        group during such year or at any time during the 
        preceding 1-year period,
          (ii) the term ``control group'' means a group of 
        trades or businesses under common control,
          [(iii) the determination]
          (iii)(I) in any case in which the benefit referred to 
        in subparagraph (A) consists of medical care (as 
        defined in section 812(a)(2)), the determination of 
        whether a trade or business is under ``common control'' 
        with another trade or business shall be determined 
        under regulations of the Secretary applying principles 
        consistent and coextensive with the principles applied 
        in determining whether employees of two or more trades 
        or businesses are treated as employed by a single 
        employer under section 4001(b), except that, for 
        purposes of this paragraph, an interest of greater than 
        25 percent may not be required as the minimum interest 
        necessary for common control, or
          (II) in any other case, the determination of whether 
        a trade or business is under ``common control'' with 
        another trade or business shall be determined under 
        regulations of the Secretary applying principles 
        similar to the principles applied in determining 
        whether employees of two or more trades or businesses 
        are treated as employed by a single employer under 
        section 4001(b), except that, for purposes of this 
        paragraph, common control shall not be based on an 
        interest of less than 25 percent,
          (iv) in any case in which the benefit referred to in 
        subparagraph (A) consists of medical care (as defined 
        in section 812(a)(2)), in determining, after the 
        application of clause (i), whether benefits are 
        provided to employees of two or more employers, the 
        arrangement shall be treated as having only one 
        participating employer if, after the application of 
        clause (i), the number of individuals who are employees 
        and former employees of any one participating employer 
        and who are covered under the arrangement is greater 
        than 75 percent of the aggregate number of all 
        individuals who are employees or former employees of 
        participating employers and who are covered under the 
        arrangement,
          [(iv)] (v) the term ``rural electric cooperative'' 
        means--
                  (I) any organization which is exempt from tax 
                under section 501(a) of the Internal Revenue 
                Code of 1986 and which is engaged primarily in 
                providing electric service on a mutual or 
                cooperative basis, and
                  (II) any organization described in paragraph 
                (4) or (6) of section 501(c) of the Internal 
                Revenue Code of 1986 which is exempt from tax 
                under section 501(a) of such Code and at least 
                80 percent of the members of which are 
                organizations described in subclause (I), and
          [(v)] (vi) the term ``rural telephone cooperative 
        association'' means an organization described in 
        paragraph (4) or (6) of section 501(c) of the Internal 
        Revenue Code of 1986 which is exempt from tax under 
        section 501(a) of such Code and at least 80 percent of 
        the members of which are organizations engaged 
        primarily in providing telephone service to rural areas 
        of the United States on a mutual, cooperative, or other 
        basis.
  (41) Single-employer plan.--The term ``single-employer plan'' 
means an employee benefit plan other than a multiemployer plan.
  (41) The term ``single-employer plan'' means a plan which is 
not a multiemployer plan.
  (42) the term ``plan assets'' means plan assets as defined by 
such regulations as the Secretary may prescribe, except that 
under such regulations the assets of any entity shall not be 
treated as plan assets if, immediately after the most recent 
acquisition of any equity interest in the entity, less than 25 
percent of the total value of each class of equity interest in 
the entity is held by benefit plan investors. For purposes of 
determinations pursuant to this paragraph, the value of any 
equity interest held by a person (other than such a benefit 
plan investor) who has discretionary authority or control with 
respect to the assets of the entity or any person who provides 
investment advice for a fee (direct or indirect) with respect 
to such assets, or any affiliate of such a person, shall be 
disregarded for purposes of calculating the 25 percent 
threshold. An entity shall be considered to hold plan assets 
only to the extent of the percentage of the equity interest 
held by benefit plan investors. For purposes of this paragraph, 
the term ``benefit plan investor'' means an employee benefit 
plan subject to part 4, any plan to which section 4975 of the 
Internal Revenue Code of 1986 applies, and any entity whose 
underlying assets include plan assets by reason of a plan's 
investment in such entity.

           *       *       *       *       *       *       *


                   Subtitle B--Regulatory Provisions


Part 1--Reporting and Disclosure

           *       *       *       *       *       *       *



                        summary plan description

  Sec. 102. (a) A summary plan description of any employee 
benefit plan shall be furnished to participants and 
beneficiaries as provided in section 104(b). The summary plan 
description shall include the information described in 
subsection (b), shall be written in a manner calculated to be 
understood by the average plan participant, and shall be 
sufficiently accurate and comprehensive to reasonably apprise 
such participants and beneficiaries of their rights and 
obligations under the plan. A summary of any material 
modification in the terms of the plan and any change in the 
information required under subsection (b) shall be written in a 
manner calculated to be understood by the average plan 
participant and shall be furnished in accordance with section 
104(b)(1).
  (b) The summary plan description shall contain the following 
information: The name and type of administration of the plan; 
in the case of a group health plan (as defined in section 
733(a)(1)), whether a health insurance issuer (as defined in 
section 733(b)(2)) is responsible for the financing or 
administration (including payment of claims) of the plan and 
(if so) the name and address of such issuer; the name and 
address of the person designated as agent for the service of 
legal process, if such person is not the administrator; the 
name and address of the administrator; names, titles, and 
addresses of any trustee or trustees (if they are persons 
different from the administrator); a description of the 
relevant provisions of any applicable collective bargaining 
agreement; the plan's requirements respecting eligibility for 
participation and benefits; a description of the provisions 
providing for nonforfeitable pension benefits; circumstances 
which may result in disqualification, ineligibility, or denial 
or loss of benefits; the source of financing of the plan and 
the identity of any organization through which benefits are 
provided; the date of the end of the plan year and whether the 
records of the plan are kept on a calendar, policy, or fiscal 
year basis; the procedures to be followed in presenting claims 
for benefits under the plan including the office at the 
Department of Labor through which participants and 
beneficiaries may seek assistance or information regarding 
their rights under this Act and the Health Insurance 
Portability and Accountability Act of 1996 with respect to 
health benefits that are offered through a group health plan 
(as defined in section 733(a)(1)), the remedies available under 
the plan for the redress of claims which are denied in whole or 
in part (including procedures required under section 503 of 
this Act), and if the employer so elects for purposes of 
complying with section 701(f)(3)(B)(i), the model notice 
applicable to the State in which the participants and 
beneficiaries reside. An association health plan shall include 
in its summary plan description, in connection with each 
benefit option, a description of the form of solvency or 
guarantee fund protection secured pursuant to this Act or 
applicable State law, if any.

           *       *       *       *       *       *       *


                 Part 5--Administration and Enforcement


                           CRIMINAL PENALTIES

  Sec. 501. (a) Any person who willfully violates any provision 
of part 1 of this subtitle, or any regulation or order issued 
under any such provision, shall upon conviction be fined not 
more than $100,000 or imprisoned not more than 10 years, or 
both; except that in the case of such violation by a person not 
an individual, the fine imposed upon such person shall be a 
fine not exceeding $500,000.
  (b) Any person that violates section 519 shall upon 
conviction be imprisoned not more than 10 years or fined under 
title 18, United States Code, or both.
  (c) Any person who willfully falsely represents, to any 
employee, any employee's beneficiary, any employer, the 
Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employees or 
their beneficiaries as--
          (1) being an association health plan which has been 
        certified under part 8;
          (2) having been established or maintained under or 
        pursuant to one or more collective bargaining 
        agreements which are reached pursuant to collective 
        bargaining described in section 8(d) of the National 
        Labor Relations Act (29 U.S.C. 158(d)) or paragraph 
        Fourth of section 2 of the Railway Labor Act (45 U.S.C. 
        152, paragraph Fourth) or which are reached pursuant to 
        labor-management negotiations under similar provisions 
        of State public employee relations laws; or
          (3) being a plan or arrangement described in section 
        3(40)(A)(i),
shall, upon conviction, be imprisoned not more than 5 years, be 
fined under title 18, United States Code, or both.

                           civil enforcement

  Sec. 502. (a) A civil action may be brought--
          (1) by a participant or beneficiary--
                  (A) for the relief provided for in subsection 
                (c) of this section, or
                  (B) to recover benefits due to him under the 
                terms of his plan, to enforce his rights under 
                the terms of the plan, or to clarify his rights 
                to future benefits under the terms of the plan;
          (2) by the Secretary, or by a participant, 
        beneficiary or fiduciary for appropriate relief under 
        section 409;
          (3) by a participant, beneficiary, or fiduciary (A) 
        to enjoin any act or practice which violates any 
        provision of this title or the terms of the plan, or 
        (B) to obtain other appropriate equitable relief (i) to 
        redress such violations or (ii) to enforce any 
        provisions of this title or the terms of the plan;
          (4) by the Secretary, or by a participant, or 
        beneficiary for appropriate relief in the case of a 
        violation of 105(c);
          (5) except as otherwise provided in subsection (b), 
        by the Secretary (A) to enjoin any act or practice 
        which violates any provision of this title, or (B) to 
        obtain other appropriate equitable relief (i) to 
        redress such violation or (ii) to enforce any provision 
        of this title;
          (6) by the Secretary to collect any civil penalty 
        under paragraph (2), (4), (5), (6), (7), (8), or (9) of 
        subsection (c) or under subsection (i) or (l);
          (7) by a State to enforce compliance with a qualified 
        medical child support order (as defined in section 
        609(a)(2)(A));
          (8) by the Secretary, or by an employer or other 
        person referred to in section 101(f)(1), (A) to enjoin 
        any act or practice which violates subsection (f) of 
        section 101, or (B) to obtain appropriate equitable 
        relief (i) to redress such violation or (ii) to enforce 
        such subsection;
          (9) in the event that the purchase of an insurance 
        contract or insurance annuity in connection with 
        termination of an individual's status as a participant 
        covered under a pension plan with respect to all or any 
        portion of the participant's pension benefit under such 
        plan constitutes a violation of part 4 of this title or 
        the terms of the plan, by the Secretary, by any 
        individual who was a participant or beneficiary at the 
        time of the alleged violation, or by a fiduciary, to 
        obtain appropriate relief, including the posting of 
        security if necessary, to assure receipt by the 
        participant or beneficiary of the amounts provided or 
        to be provided by such insurance contract or annuity, 
        plus reasonable prejudgment interest on such amounts;
          (10) in the case of a multiemployer plan that has 
        been certified by the actuary to be in endangered or 
        critical status under section 305, if the plan 
        sponsor--
                  (A) has not adopted a funding improvement or 
                rehabilitation plan under that section by the 
                deadline established in such section, or
                  (B) fails to update or comply with the terms 
                of the funding improvement or rehabilitation 
                plan in accordance with the requirements of 
                such section,
        by an employer that has an obligation to contribute 
        with respect to the multiemployer plan or an employee 
        organization that represents active participants in the 
        multiemployer plan, for an order compelling the plan 
        sponsor to adopt a funding improvement or 
        rehabilitation plan or to update or comply with the 
        terms of the funding improvement or rehabilitation plan 
        in accordance with the requirements of such section and 
        the funding improvement or rehabilitation plan; or
          (11) in the case of a multiemployer plan, by an 
        employee representative, or any employer that has an 
        obligation to contribute to the plan, (A) to enjoin any 
        act or practice which violates subsection (k) of 
        section 101 (or, in the case of an employer, subsection 
        (l) of such section), or (B) to obtain appropriate 
        equitable relief (i) to redress such violation or (ii) 
        to enforce such subsection.
  (b)(1) In the case of a plan which is qualified under section 
401(a), 403(a), or 405(a) of the Internal Revenue Code of 1986 
(or with respect to which an application to so qualify has been 
filed and has not been finally determined) the Secretary may 
exercise his authority under subsection (a)(5) with respect to 
a violation of, or the enforcement of, parts 2 and 3 of this 
subtitle (relating to participation, vesting, and funding), 
only if--
          (A) requested by the Secretary of the Treasury, or
          (B) one or more participants, beneficiaries, or 
        fiduciaries, of such plan request in writing (in such 
        manner as the Secretary shall prescribe by regulation) 
        that he exercise such authority on their behalf. In the 
        case of such a request under this paragraph he may 
        exercise such authority only if he determines that such 
        violation affects, or such enforcement is necessary to 
        protect, claims of participants or beneficiaries to 
        benefits under the plan.
  (2) The Secretary shall not initiate an action to enforce 
section 515.
  (3) Except as provided in subsections (c)(9) and (a)(6) (with 
respect to collecting civil penalties under subsection (c)(9)), 
the Secretary is not authorized to enforce under this part any 
requirement of part 7 against a health insurance issuer 
offering health insurance coverage in connection with a group 
health plan (as defined in section 706(a)(1)). Nothing in this 
paragraph shall affect the authority of the Secretary to issue 
regulations to carry out such part.
  (c)(1) Any administrator (A) who fails to meet the 
requirements of paragraph (1) or (4) of section 606, section 
101(e)(1), section 101(f), or section 105(a) with respect to a 
participant or beneficiary, or (B) who fails or refuses to 
comply with a request for any information which such 
administrator is required by this title to furnish to a 
participant or beneficiary (unless such failure or refusal 
results from matters reasonably beyond the control of the 
administrator) by mailing the material requested to the last 
known address of the requesting participant or beneficiary 
within 30 days after such request may in the court's discretion 
be personally liable to such participant or beneficiary in the 
amount of up to $100 a day from the date of such failure or 
refusal, and the court may in its discretion order such other 
relief as it deems proper. For purposes of this paragraph, each 
violation described in subparagraph (A) with respect to any 
single participant, and each violation described in 
subparagraph (B) with respect to any single participant or 
beneficiary, shall be treated as a separate violation.
  (2) The Secretary may assess a civil penalty against any plan 
administrator of up to $1,000 a day from the date of such plan 
administrator's failure or refusal to file the annual report 
required to be filed with the Secretary under section 
101(b)(1). For purposes of this paragraph, an annual report 
that has been rejected under section 104(a)(4) for failure to 
provide material information shall not be treated as having 
been filed with the Secretary.
  (3) Any employer maintaining a plan who fails to meet the 
notice requirement of section 101(d) with respect to any 
participant or beneficiary or who fails to meet the 
requirements of section 101(e)(2) with respect to any person or 
who fails to meet the requirements of section 302(d)(12)(E) 
with respect to any person may in the court's discretion be 
liable to such participant or beneficiary or to such person in 
the amount of up to $100 a day from the date of such failure, 
and the court may in its discretion order such other relief as 
it deems proper.
  (4) The Secretary may assess a civil penalty of not more than 
$1,000 a day for each violation by any person of subsection 
(j), (k), or (l) of section 101 or section 514(e)(3).
  (5) The Secretary may assess a civil penalty against any 
person of up to $1,000 a day from the date of the person's 
failure or refusal to file the information required to be filed 
by such person with the Secretary under regulations prescribed 
pursuant to section 101(g).
  (6) If, within 30 days of a request by the Secretary to a 
plan administrator for documents under section 104(a)(6), the 
plan administrator fails to furnish the material requested to 
the Secretary, the Secretary may assess a civil penalty against 
the plan administrator of up to $100 a day from the date of 
such failure (but in no event in excess of $1,000 per request). 
No penalty shall be imposed under this paragraph for any 
failure resulting from matters reasonably beyond the control of 
the plan administrator.
  (7) The Secretary may assess a civil penalty against a plan 
administrator of up to $100 a day from the date of the plan 
administrator's failure or refusal to provide notice to 
participants and beneficiaries in accordance with subsection 
(i) or (m) of section 101. For purposes of this paragraph, each 
violation with respect to any single participant or beneficiary 
shall be treated as a separate violation.
          (8) The Secretary may assess against any plan sponsor 
        of a multiemployer plan a civil penalty of not more 
        than $1,100 per day--
                  (A) for each violation by such sponsor of the 
                requirement under section 305 to adopt by the 
                deadline established in that section a funding 
                improvement plan or rehabilitation plan with 
                respect to a multiemployer plan which is in 
                endangered or critical status, or
                  (B) in the case of a plan in endangered 
                status which is not in seriously endangered 
                status, for failure by the plan to meet the 
                applicable benchmarks under section 305 by the 
                end of the funding improvement period with 
                respect to the plan.
  (9)(A) The Secretary may assess a civil penalty against any 
employer of up to $100 a day from the date of the employer's 
failure to meet the notice requirement of section 
701(f)(3)(B)(i)(I). For purposes of this subparagraph, each 
violation with respect to any single employee shall be treated 
as a separate violation.
  (B) The Secretary may assess a civil penalty against any plan 
administrator of up to $100 a day from the date of the plan 
administrator's failure to timely provide to any State the 
information required to be disclosed under section 
701(f)(3)(B)(ii). For purposes of this subparagraph, each 
violation with respect to any single participant or beneficiary 
shall be treated as a separate violation.
          (10) Secretarial enforcement authority relating to 
        use of genetic information.--
                  (A) General rule.--The Secretary may impose a 
                penalty against any plan sponsor of a group 
                health plan, or any health insurance issuer 
                offering health insurance coverage in 
                connection with the plan, for any failure by 
                such sponsor or issuer to meet the requirements 
                of subsection (a)(1)(F), (b)(3), (c), or (d) of 
                section 702 or section 701 or 702(b)(1) with 
                respect to genetic information, in connection 
                with the plan.
                  (B) Amount.--
                          (i) In general.--The amount of the 
                        penalty imposed by subparagraph (A) 
                        shall be $100 for each day in the 
                        noncompliance period with respect to 
                        each participant or beneficiary to whom 
                        such failure relates.
                          (ii) Noncompliance period.--For 
                        purposes of this paragraph, the term 
                        ``noncompliance period'' means, with 
                        respect to any failure, the period--
                                  (I) beginning on the date 
                                such failure first occurs; and
                                  (II) ending on the date the 
                                failure is corrected.
                  (C) Minimum penalties where failure 
                discovered.--Notwithstanding clauses (i) and 
                (ii) of subparagraph (D):
                          (i) In general.--In the case of 1 or 
                        more failures with respect to a 
                        participant or beneficiary--
                                  (I) which are not corrected 
                                before the date on which the 
                                plan receives a notice from the 
                                Secretary of such violation; 
                                and
                                  (II) which occurred or 
                                continued during the period 
                                involved;
                        the amount of penalty imposed by 
                        subparagraph (A) by reason of such 
                        failures with respect to such 
                        participant or beneficiary shall not be 
                        less than $2,500.
                          (ii) Higher minimum penalty where 
                        violations are more than de minimis.--
                        To the extent violations for which any 
                        person is liable under this paragraph 
                        for any year are more than de minimis, 
                        clause (i) shall be applied by 
                        substituting ``$15,000'' for ``$2,500'' 
                        with respect to such person.
                  (D) Limitations.--
                          (i) Penalty not to apply where 
                        failure not discovered exercising 
                        reasonable diligence.--No penalty shall 
                        be imposed by subparagraph (A) on any 
                        failure during any period for which it 
                        is established to the satisfaction of 
                        the Secretary that the person otherwise 
                        liable for such penalty did not know, 
                        and exercising reasonable diligence 
                        would not have known, that such failure 
                        existed.
                          (ii) Penalty not to apply to failures 
                        corrected within certain periods.--No 
                        penalty shall be imposed by 
                        subparagraph (A) on any failure if--
                                  (I) such failure was due to 
                                reasonable cause and not to 
                                willful neglect; and
                                  (II) such failure is 
                                corrected during the 30-day 
                                period beginning on the first 
                                date the person otherwise 
                                liable for such penalty knew, 
                                or exercising reasonable 
                                diligence would have known, 
                                that such failure existed.
                          (iii) Overall limitation for 
                        unintentional failures.--In the case of 
                        failures which are due to reasonable 
                        cause and not to willful neglect, the 
                        penalty imposed by subparagraph (A) for 
                        failures shall not exceed the amount 
                        equal to the lesser of--
                                  (I) 10 percent of the 
                                aggregate amount paid or 
                                incurred by the plan sponsor 
                                (or predecessor plan sponsor) 
                                during the preceding taxable 
                                year for group health plans; or
                                  (II) $500,000.
                  (E) Waiver by secretary.--In the case of a 
                failure which is due to reasonable cause and 
                not to willful neglect, the Secretary may waive 
                part or all of the penalty imposed by 
                subparagraph (A) to the extent that the payment 
                of such penalty would be excessive relative to 
                the failure involved.
                  (F) Definitions.--Terms used in this 
                paragraph which are defined in section 733 
                shall have the meanings provided such terms in 
                such section.
  (11) The Secretary and the Secretary of Health and Human 
Services shall maintain such ongoing consultation as may be 
necessary and appropriate to coordinate enforcement under this 
subsection with enforcement under section 1144(c)(8) of the 
Social Security Act.
          (12) The Secretary may assess a civil penalty against 
        any sponsor of a CSEC plan of up to $100 a day from the 
        date of the plan sponsor's failure to comply with the 
        requirements of section 306(j)(3) to establish or 
        update a funding restoration plan.
  (d)(1) An employee benefit plan may sue or be sued under this 
title as an entity. Service of summons, subpena, or other legal 
process of a court upon a trustee or an administrator of an 
employee benefit plan in his capacity as such shall constitute 
service upon the employee benefit plan. In a case where a plan 
has not designated in the summary plan description of the plan 
an individual as agent for the service of legal process, 
service upon the Secretary shall constitute such service. The 
Secretary, not later than 15 days after receipt of service 
under the preceding sentence, shall notify the administrator or 
any trustee of the plan of receipt of such service.
  (2) Any money judgment under this title against an employee 
benefit plan shall be enforceable only against the plan as an 
entity and shall not be enforceable against any other person 
unless liability against such person is established in his 
individual capacity under this title.
  (e)(1) Except for actions under subsection (a)(1)(B) of this 
section, the district courts of the United States shall have 
exclusive jurisdiction of civil actions under this title 
brought by the Secretary or by a participant, beneficiary, 
fiduciary, or any person referred to in section 101(f)(1). 
State courts of competent jurisdiction and district courts of 
the United States shall have concurrent jurisdiction of actions 
under paragraphs (1)(B) and (7) of subsection (a) of this 
section.
  (2) Where an action under this title is brought in a district 
court of the United States, it may be brought in the district 
where the plan is administered, where the breach took place, or 
where a defendant resides or may be found, and process may be 
served in any other district where a defendant resides or may 
be found.
  (f) The district courts of the United States shall have 
jurisdiction, without respect to the amount in controversy or 
the citizenship of the parties, to grant the relief provided 
for in subsection (a) of this section in any action.
  (g)(1) In any action under this title (other than an action 
described in paragraph (2)) by a participant, beneficiary, or 
fiduciary, the court in its discretion may allow a reasonable 
attorney's fee and costs of action to either party.
  (2) In any action under this title by a fiduciary for or on 
behalf of a plan to enforce section 515 in which a judgment in 
favor of the plan is awarded, the court shall award the plan--
          (A) the unpaid contributions,
          (B) interest on the unpaid contributions,
          (C) an amount equal to the greater of--
                  (i) interest on the unpaid contributions, or
                  (ii) liquidated damages provided for under 
                the plan in an amount not in excess of 20 
                percent (or such higher percentage as may be 
                permitted under Federal or State law) of the 
                amount determined by the court under 
                subparagraph (A),
          (D) reasonable attorney's fees and costs of the 
        action, to be paid by the defendant, and
          (E) such other legal or equitable relief as the court 
        deems appropriate.
For purposes of this paragraph, interest on unpaid 
contributions shall be determined by using the rate provided 
under the plan, or, if none, the rate prescribed under section 
6621 of the Internal Revenue Code of 1986.
  (h) A copy of the complaint in any action under this title by 
a participant, beneficiary, or fiduciary (other than an action 
brought by one or more participants or beneficiaries under 
subsection (a)(1)(B) which is solely for the purpose of 
recovering benefits due such participants under the terms of 
the plan) shall be served upon the Secretary and the Secretary 
of the Treasury by certified mail. Either Secretary shall have 
the right in his discretion to intervene in any action, except 
that the Secretary of the Treasury may not intervene in any 
action under part 4 of this subtitle. If the Secretary brings 
an action under subsection (a) on behalf of a participant or 
beneficiary, he shall notify the Secretary of the Treasury.
  (i) In the case of a transaction prohibited by section 406 by 
a party in interest with respect to a plan to which this part 
applies, the Secretary may assess a civil penalty against such 
party in interest. The amount of such penalty may not exceed 5 
percent of the amount involved in each such transaction (as 
defined in section 4975(f)(4) of the Internal Revenue Code of 
1986) for each year or part thereof during which the prohibited 
transaction continues, except that, if the transaction is not 
corrected (in such manner as the Secretary shall prescribe in 
regulations which shall be consistent with section 4975(f)(5) 
of such Code) within 90 days after notice from the Secretary 
(or such longer period as the Secretary may permit), such 
penalty may be in an amount not more than 100 percent of the 
amount involved. This subsection shall not apply to a 
transaction with respect to a plan described in section 
4975(e)(1) of such Code.
  (j) In all civil actions under this title, attorneys 
appointed by the Secretary may represent the Secretary (except 
as provided in section 518(a) of title 28, United States Code), 
but all such litigation shall be subject to the direction and 
control of the Attorney General.
  (k) Suits by an administrator, fiduciary, participant, or 
beneficiary of an employee benefit plan to review a final order 
of the Secretary, to restrain the Secretary from taking any 
action contrary to the provisions of this Act, or to compel him 
to take action required under this title, may be brought in the 
district court of the United States for the district where the 
plan has its principal office, or in the United States District 
Court for the District of Columbia.
  (l)(1) In the case of--
          (A) any breach of fiduciary responsibility under (or 
        other violation of) part 4 by a fiduciary, or
          (B) any knowing participation in such a breach or 
        violation by any other person,
the Secretary shall assess a civil penalty against such 
fiduciary or other person in an amount equal to 20 percent of 
the applicable recovery amount.
  (2) For purposes of paragraph (1), the term ``applicable 
recovery amount'' means any amount which is recovered from a 
fiduciary or other person with respect to a breach or violation 
described in paragraph (1)--
          (A) pursuant to any settlement agreement with the 
        Secretary, or
          (B) ordered by a court to be paid by such fiduciary 
        or other person to a plan or its participants and 
        beneficiaries in a judicial proceeding instituted by 
        the Secretary under subsection (a)(2) or (a)(5).
  (3) The Secretary may, in the Secretary's sole discretion, 
waive or reduce the penalty under paragraph (1) if the 
Secretary determines in writing that--
          (A) the fiduciary or other person acted reasonably 
        and in good faith, or
          (B) it is reasonable to expect that the fiduciary or 
        other person will not be able to restore all losses to 
        the plan (or to provide the relief ordered pursuant to 
        subsection (a)(9)) without severe financial hardship 
        unless such waiver or reduction is granted.
  (4) The penalty imposed on a fiduciary or other person under 
this subsection with respect to any transaction shall be 
reduced by the amount of any penalty or tax imposed on such 
fiduciary or other person with respect to such transaction 
under subsection (i) of this section and section 4975 of the 
Internal Revenue Code of 1986.
  (m) In the case of a distribution to a pension plan 
participant or beneficiary in violation of section 206(e) by a 
plan fiduciary, the Secretary shall assess a penalty against 
such fiduciary in an amount equal to the value of the 
distribution. Such penalty shall not exceed $10,000 for each 
such distribution.
  (n) Association Health Plan Cease and Desist Orders.--
          (1) In general.--Subject to paragraph (2), upon 
        application by the Secretary showing the operation, 
        promotion, or marketing of an association health plan 
        (or similar arrangement providing benefits consisting 
        of medical care (as defined in section 733(a)(2))) 
        that--
                  (A) is not certified under part 8, is subject 
                under section 514(b)(6) to the insurance laws 
                of any State in which the plan or arrangement 
                offers or provides benefits, and is not 
                licensed, registered, or otherwise approved 
                under the insurance laws of such State; or
                  (B) is an association health plan certified 
                under part 8 and is not operating in accordance 
                with the requirements under part 8 for such 
                certification,
        a district court of the United States shall enter an 
        order requiring that the plan or arrangement cease 
        activities.
          (2) Exception.--Paragraph (1) shall not apply in the 
        case of an association health plan or other arrangement 
        if the plan or arrangement shows that--
                  (A) all benefits under it referred to in 
                paragraph (1) consist of health insurance 
                coverage; and
                  (B) with respect to each State in which the 
                plan or arrangement offers or provides 
                benefits, the plan or arrangement is operating 
                in accordance with applicable State laws that 
                are not superseded under section 514.
          (3) Additional equitable relief.--The court may grant 
        such additional equitable relief, including any relief 
        available under this title, as it deems necessary to 
        protect the interests of the public and of persons 
        having claims for benefits against the plan.

                            CLAIMS PROCEDURE

  Sec. 503. (a) In General._In accordance with regulations of 
the Secretary, every employee benefit plan shall--
          (1) provide adequate notice in writing to any 
        participant or beneficiary whose claim for benefits 
        under the plan has been denied, setting forth the 
        specific reasons for such denial, written in a manner 
        calculated to be understood by the participant, and
          (2) afford a reasonable opportunity to any 
        participant whose claim for benefits has been denied 
        for a full and fair review by the appropriate named 
        fiduciary of the decision denying the claim.
  (b) Association Health Plans.--The terms of each association 
health plan which is or has been certified under part 8 shall 
require the board of trustees or the named fiduciary (as 
applicable) to ensure that the requirements of this section are 
met in connection with claims filed under the plan.

           *       *       *       *       *       *       *


    COORDINATION AND RESPONSIBILITY OF AGENCIES ENFORCING EMPLOYEE 
        RETIREMENT INCOME SECURITY ACT AND RELATED FEDERAL LAWS

  Sec. 506. (a) Coordination With Other Agencies and 
Departments.--In order to avoid unnecessary expense and 
duplication of functions among Government agencies, the 
Secretary may make such arrangements or agreements for 
cooperation or mutual assistance in the performance of his 
functions under this title and the functions of any such agency 
as he may find to be practicable and consistent with law. The 
Secretary may utilize, on a reimbursable or other basis, the 
facilities or services of any department, agency, or 
establishment of the United States or of any State or political 
subdivision of a State, including the services of any of its 
employees, with the lawful consent of such department, agency, 
or establishment; and each department, agency, or establishment 
of the United States is authorized and directed to cooperate 
with the Secretary and, to the extent permitted by law, to 
provide such information and facilities as he may request for 
his assistance in the performance of his functions under this 
title. The Attorney General or his representative shall receive 
from the Secretary for appropriate action such evidence 
developed in the performance of his functions under this title 
as may be found to warrant consideration for criminal 
prosecution under the provisions of this title or other Federal 
law.
  (b) Responsibility for Detecting and Investigating Civil and 
Criminal Violations of Employee Retirement Income Security Act 
and Related Federal Laws.--The Secretary shall have the 
responsibility and authority to detect and investigate and 
refer, where appropriate, civil and criminal violations related 
to the provisions of this title and other related Federal laws, 
including the detection, investigation, and appropriate 
referrals of related violations of title 18 of the United 
States Code. Nothing in this subsection shall be construed to 
preclude other appropriate Federal agencies from detecting and 
investigating civil and criminal violations of this title and 
other related Federal laws.
  (c) Coordination of Enforcement With States With Respect to 
Certain Arrangements.--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 in connection with multiple employer 
welfare arrangements, providing medical care (within the 
meaning of section 733(a)(2)), which are not group health 
plans.
  (d) Consultation With States With Respect to Association 
Health Plans.--
          (1) Agreements with states.--The Secretary shall 
        consult with the State recognized under paragraph (2) 
        with respect to an association health plan regarding 
        the exercise of--
                  (A) the Secretary's authority under sections 
                502 and 504 to enforce the requirements for 
                certification under part 8; and
                  (B) the Secretary's authority to certify 
                association health plans under part 8 in 
                accordance with regulations of the Secretary 
                applicable to certification under part 8.
          (2) Recognition of primary domicile state.--In 
        carrying out paragraph (1), the Secretary shall ensure 
        that only one State will be recognized, with respect to 
        any particular association health plan, as the State 
        with which consultation is required. In carrying out 
        this paragraph--
                  (A) in the case of a plan which provides 
                health insurance coverage (as defined in 
                section 812(a)(3)), such State shall be the 
                State with which filing and approval of a 
                policy type offered by the plan was initially 
                obtained, and
                  (B) in any other case, the Secretary shall 
                take into account the places of residence of 
                the participants and beneficiaries under the 
                plan and the State in which the trust is 
                maintained.

           *       *       *       *       *       *       *


                          EFFECT ON OTHER LAWS

  Sec. 514. (a) Except as provided in subsection (b) of this 
section, the provisions of this title and title IV shall 
supersede any and all State laws insofar as they may now or 
hereafter relate to any employee benefit plan described in 
section 4(a) and not exempt under section 4(b). This section 
shall take effect on January 1, 1975.
  (b)(1) This section shall not apply with respect to any cause 
of action which arose, or any act or omission which occurred, 
before January 1, 1975.
  (2)(A) Except as provided in subparagraph (B), nothing in 
this title shall be construed to exempt or relieve any person 
from any law of any State which regulates insurance, banking, 
or securities.
  (B) Neither an employee benefit plan described in section 
4(a), which is not exempt under section 4(b) (other than a plan 
established primarily for the purpose of providing death 
benefits), nor any trust established under such a plan, shall 
be deemed to be an insurance company or other insurer, bank, 
trust company, or investment company or to be engaged in the 
business of insurance or banking for purposes of any law of any 
State purporting to regulate insurance companies, insurance 
contracts, banks, trust companies, or investment companies.
  (3) Nothing in this section shall be construed to prohibit 
use by the Secretary of services or facilities of a State 
agency as permitted under section 506 of this Act.
  (4) [Subsection (a)] Subsections (a) and (f) shall not apply 
to any generally applicable criminal law of a State.
  (5)(A) Except as provided in subparagraph (B), [subsection 
(a)] subsection (a) of this section and subsections (a)(2)(B) 
and (b) of section 805 shall not apply to the Hawaii Prepaid 
Health Care Act (Haw. Rev. Stat. Sec. Sec. 393-1 through 393-
51).
  (B) Nothing in subparagraph (A) shall be construed to exempt 
from [subsection (a)] subsection (a) of this section or 
subsection (a)(2)(B) or (b) of section 805--
          (i) any State tax law relating to employee benefit 
        plans, or
          (ii) any amendment of the Hawaii Prepaid Health Care 
        Act enacted after September 2, 1974, to the extent it 
        provides for more than the effective administration of 
        such Act as in effect on such date.
  (C) Notwithstanding subparagraph (A), parts 1 and 4 of this 
subtitle, and the preceding sections of this part to the extent 
they govern matters which are governed by the provisions of 
such parts 1 and 4, shall supersede the Hawaii Prepaid Health 
Care Act (as in effect on or after the date of the enactment of 
this paragraph ), but the Secretary may enter into cooperative 
arrangements under this paragraph and section 506 with 
officials of the State of Hawaii to assist them in effectuating 
the policies of provisions of such Act which are superseded by 
such parts 1 and 4 and the preceding sections of this part.
  (6)(A) Notwithstanding any other provision of this section--
          (i) in the case of an employee welfare benefit plan 
        which is a multiple employer welfare arrangement and is 
        fully insured (or which is a multiple employer welfare 
        arrangement subject to an exemption under subparagraph 
        (B)), any law of any State which regulates insurance 
        may apply to such arrangement to the extent that such 
        law provides--
                  (I) standards, requiring the maintenance of 
                specified levels of reserves and specified 
                levels of contributions, which any such plan, 
                or any trust established under such a plan, 
                must meet in order to be considered under such 
                law able to pay benefits in full when due, and
                  (II) provisions to enforce such standards, 
                [and]
          (ii) in the case of any other employee welfare 
        benefit plan which is a multiple employer welfare 
        arrangement, and which does not provide medical care 
        (within the meaning of section 733(a)(2)), in addition 
        to this title, any law of any State which regulates 
        insurance may apply to the extent not inconsistent with 
        the preceding sections of this [title.] title, and
          (iii) subject to subparagraph (E), in the case of any 
        other employee welfare benefit plan which is a multiple 
        employer welfare arrangement and which provides medical 
        care (within the meaning of section 733(a)(2)), any law 
        of any State which regulates insurance may apply.
  (B) The Secretary may, under regulations which may be 
prescribed by the Secretary, exempt from subparagraph (A)(ii), 
individually or by class, multiple employer welfare 
arrangements which are not fully insured. Any such exemption 
may be granted with respect to any arrangement or class of 
arrangements only if such arrangement or each arrangement which 
is a member of such class meets the requirements of section 
3(1) and section 4 necessary to be considered an employee 
welfare benefit plan to which this title applies.
  (C) Nothing in subparagraph (A) shall affect the manner or 
extent to which the provisions of this title apply to an 
employee welfare benefit plan which is not a multiple employer 
welfare arrangement and which is a plan, fund, or program 
participating in, subscribing to, or otherwise using a multiple 
employer welfare arrangement to fund or administer benefits to 
such plan's participants and beneficiaries.
  (D) For purposes of this paragraph, a multiple employer 
welfare arrangement shall be considered fully insured only if 
the terms of the arrangement provide for benefits the amount of 
all of which the Secretary determines are guaranteed under a 
contract, or policy of insurance, issued by an insurance 
company, insurance service, or insurance organization, 
qualified to conduct business in a State.
  (E) The preceding subparagraphs of this paragraph do not 
apply with respect to any State law in the case of an 
association health plan which is certified under part 8.
  (7) Subsection (a) shall not apply to qualified domestic 
relations orders (within the meaning of section 
206(d)(3)(B)(i)), qualified medical child support orders 
(within the meaning of section 609(a)(2)(A)), and the 
provisions of law referred to in section 609(a)(2)(B)(ii) to 
the extent they apply to qualified medical child support 
orders.
  (8) Subsection (a) of this section shall not be construed to 
preclude any State cause of action--
          (A) with respect to which the State exercises its 
        acquired rights under section 609(b)(3) with respect to 
        a group health plan (as defined in section 607(1)), or
          (B) for recoupment of payment with respect to items 
        or services pursuant to a State plan for medical 
        assistance approved under title XIX of the Social 
        Security Act which would not have been payable if such 
        acquired rights had been executed before payment with 
        respect to such items or services by the group health 
        plan.
  (9) For additional provisions relating to group health plans, 
see section 731.
  (c) For purposes of this section:
          (1) The term ``State law'' includes all laws, 
        decisions, rules, regulations, or other State action 
        having the effect of law, of any State. A law of the 
        United States applicable only to the District of 
        Columbia shall be treated as a State law rather than a 
        law of the United States.
          (2) The term ``State'' includes a State, any 
        political subdivisions thereof, or any agency or 
        instrumentality of either, which purports to regulate, 
        directly or indirectly, the terms and conditions of 
        employee benefit plans covered by this title.
  (d) [Nothing] (1) Except as provided in paragraph (2), 
nothing in this title shall be construed to alter, amend, 
modify, invalidate, impair, or supersede any law of the United 
States (except as provided in sections 111 and 507(b)) or any 
rule or regulation issued under any such law.
  (2) Nothing in any other provision of law enacted on or after 
the date of the enactment of the Small Business Health Fairness 
Act of 2017 shall be construed to alter, amend, modify, 
invalidate, impair, or supersede any provision of this title, 
except by specific cross-reference to the affected section.
  (e)(1) Notwithstanding any other provision of this section, 
this title shall supersede any law of a State which would 
directly or indirectly prohibit or restrict the inclusion in 
any plan of an automatic contribution arrangement. The 
Secretary may prescribe regulations which would establish 
minimum standards that such an arrangement would be required to 
satisfy in order for this subsection to apply in the case of 
such arrangement.
  (2) For purposes of this subsection, the term ``automatic 
contribution arrangement'' means an arrangement--
          (A) under which a participant may elect to have the 
        plan sponsor make payments as contributions under the 
        plan on behalf of the participant, or to the 
        participant directly in cash,
          (B) under which a participant is treated as having 
        elected to have the plan sponsor make such 
        contributions in an amount equal to a uniform 
        percentage of compensation provided under the plan 
        until the participant specifically elects not to have 
        such contributions made (or specifically elects to have 
        such contributions made at a different percentage), and
          (C) under which such contributions are invested in 
        accordance with regulations prescribed by the Secretary 
        under section 404(c)(5).
  (3)(A) The plan administrator of an automatic contribution 
arrangement shall, within a reasonable period before such plan 
year, provide to each participant to whom the arrangement 
applies for such plan year notice of the participant's rights 
and obligations under the arrangement which--
          (i) is sufficiently accurate and comprehensive to 
        apprise the participant of such rights and obligations, 
        and
          (ii) is written in a manner calculated to be 
        understood by the average participant to whom the 
        arrangement applies.
  (B) A notice shall not be treated as meeting the requirements 
of subparagraph (A) with respect to a participant unless--
          (i) the notice includes an explanation of the 
        participant's right under the arrangement not to have 
        elective contributions made on the participant's behalf 
        (or to elect to have such contributions made at a 
        different percentage),
          (ii) the participant has a reasonable period of time, 
        after receipt of the notice described in clause (i) and 
        before the first elective contribution is made, to make 
        such election, and
          (iii) the notice explains how contributions made 
        under the arrangement will be invested in the absence 
        of any investment election by the participant.
  (f)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State laws 
insofar as they may now or hereafter preclude, or have the 
effect of precluding, a health insurance issuer from offering 
health insurance coverage in connection with an association 
health plan which is certified under part 8.
  (2) Except as provided in paragraphs (4) and (5) of 
subsection (b) of this section--
          (A) In any case in which health insurance coverage of 
        any policy type is offered under an association health 
        plan certified under part 8 to a participating employer 
        operating in such State, the provisions of this title 
        shall supersede any and all laws of such State insofar 
        as they may preclude a health insurance issuer from 
        offering health insurance coverage of the same policy 
        type to other employers operating in the State which 
        are eligible for coverage under such association health 
        plan, whether or not such other employers are 
        participating employers in such plan.
          (B) In any case in which health insurance coverage of 
        any policy type is offered in a State under an 
        association health plan certified under part 8 and the 
        filing, with the applicable State authority (as defined 
        in section 812(a)(9)), of the policy form in connection 
        with such policy type is approved by such State 
        authority, the provisions of this title shall supersede 
        any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as 
        they may preclude, upon the filing in the same form and 
        manner of such policy form with the applicable State 
        authority in such other State, the approval of the 
        filing in such other State.
  (3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with respect 
to health insurance issuers or health insurance coverage, to 
supersede or impair the law of any State--
          (A) providing solvency standards or similar standards 
        regarding the adequacy of insurer capital, surplus, 
        reserves, or contributions, or
          (B) relating to prompt payment of claims.
  (4) For additional provisions relating to association health 
plans, see subsections (a)(2)(B) and (b) of section 805.
  (5) For purposes of this subsection, the term ``association 
health plan'' has the meaning provided in section 801(a), and 
the terms ``health insurance coverage'', ``participating 
employer'', and ``health insurance issuer'' have the meanings 
provided such terms in section 812, respectively.

           *       *       *       *       *       *       *


Part 7--Group Health Plan Requirements

           *       *       *       *       *       *       *



                     Subpart C--General Provisions


SEC. 731. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

  (a) Continued Applicability of State Law With Respect to 
Health Insurance Issuers.--
          (1) In General.--Subject to paragraph (2) and except 
        as provided in subsection (b), this part shall not be 
        construed to supersede any provision of State law which 
        establishes, implements, or continues in effect any 
        standard or requirement solely relating to health 
        insurance issuers in connection with group health 
        insurance coverage except to the extent that such 
        standard or requirement prevents the application of a 
        requirement of this part.
          (2) Continued preemption with respect to group health 
        plans.--Nothing in this part shall be construed to 
        affect or modify the provisions of section 514 with 
        respect to group health plans.
  (b) Special Rules in Case of Portability Requirements.--
          (1) In general.--Subject to paragraph (2), the 
        provisions of this part relating to health insurance 
        coverage offered by a health insurance issuer supersede 
        any provision of State law which establishes, 
        implements, or continues in effect a standard or 
        requirement applicable to imposition of a preexisting 
        condition exclusion specifically governed by section 
        701 which differs from the standards or requirements 
        specified in such section.
          (2) Exceptions.--Only in relation to health insurance 
        coverage offered by a health insurance issuer, the 
        provisions of this part do not supersede any provision 
        of State law to the extent that such provision--
                  (A) substitutes for the reference to ``6-
                month period'' in section 701(a)(1) a reference 
                to any shorter period of time;
                  (B) substitutes for the reference to ``12 
                months'' and ``18 months'' in section 701(a)(2) 
                a reference to any shorter period of time;
                  (C) substitutes for the references to ``63 
                days'' in sections 701 (c)(2)(A) and (d)(4)(A) 
                a reference to any greater number of days;
                  (D) substitutes for the reference to ``30-day 
                period'' in sections 701 (b)(2) and (d)(1) a 
                reference to any greater period;
                  (E) prohibits the imposition of any 
                preexisting condition exclusion in cases not 
                described in section 701(d) or expands the 
                exceptions described in such section;
                  (F) requires special enrollment periods in 
                addition to those required under section 
                701(f); or
                  (G) reduces the maximum period permitted in 
                an affiliation period under section 
                701(g)(1)(B).
  (c) Rules of Construction.--Except as provided in section 
711, nothing in this part or part 8 shall be construed as 
requiring a group health plan or health insurance coverage to 
provide specific benefits under the terms of such plan or 
coverage.
  (d) Definitions.--For purposes of this section--
          (1) State law.--The term ``State law'' includes all 
        laws, decisions, rules, regulations, or other State 
        action having the effect of law, of any State. A law of 
        the United States applicable only to the District of 
        Columbia shall be treated as a State law rather than a 
        law of the United States.
          (2) State.--The term ``State'' includes a State, the 
        Northern Mariana Islands, any political subdivisions of 
        a State or such Islands, or any agency or 
        instrumentality of either.

           *       *       *       *       *       *       *


            PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS

SEC. 801. ASSOCIATION HEALTH PLANS.

  (a) In General.--For purposes of this part, the term 
``association health plan'' means a group health plan whose 
sponsor is (or is deemed under this part to be) described in 
subsection (b).
  (b) Sponsorship.--The sponsor of a group health plan is 
described in this subsection if such sponsor--
          (1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its 
        purpose and providing for periodic meetings on at least 
        an annual basis, as a bona fide trade association, a 
        bona fide industry association (including a rural 
        electric cooperative association or a rural telephone 
        cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or 
        similar bona fide business association, including a 
        corporation or similar organization that operates on a 
        cooperative basis (within the meaning of section 1381 
        of the Internal Revenue Code of 1986)), for substantial 
        purposes other than that of obtaining or providing 
        medical care;
          (2) is established as a permanent entity which 
        receives the active support of its members and requires 
        for membership payment on a periodic basis of dues or 
        payments necessary to maintain eligibility for 
        membership in the sponsor; and
          (3) does not condition membership, such dues or 
        payments, or coverage under the plan on the basis of 
        health status-related factors with respect to the 
        employees of its members (or affiliated members), or 
        the dependents of such employees, and does not 
        condition such dues or payments on the basis of group 
        health plan participation.
Any sponsor consisting of an association of entities which meet 
the requirements of paragraphs (1), (2), and (3) shall be 
deemed to be a sponsor described in this subsection.

SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

  (a) In General.--The applicable authority shall prescribe by 
regulation a procedure under which, subject to subsection (b), 
the applicable authority shall certify association health plans 
which apply for certification as meeting the requirements of 
this part.
  (b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), in the case of an association health plan that 
provides at least one benefit option which does not consist of 
health insurance coverage, the applicable authority shall 
certify such plan as meeting the requirements of this part only 
if the applicable authority is satisfied that the applicable 
requirements of this part are met (or, upon the date on which 
the plan is to commence operations, will be met) with respect 
to the plan.
  (c) Requirements Applicable to Certified Plans.--An 
association health plan with respect to which certification 
under this part is in effect shall meet the applicable 
requirements of this part, effective on the date of 
certification (or, if later, on the date on which the plan is 
to commence operations).
  (d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification 
of association health plans under this part.
  (e) Class Certification for Fully Insured Plans.--The 
applicable authority shall establish a class certification 
procedure for association health plans under which all benefits 
consist of health insurance coverage. Under such procedure, the 
applicable authority shall provide for the granting of 
certification under this part to the plans in each class of 
such association health plans upon appropriate filing under 
such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).
  (f) Certification of Self-insured Association Health Plans.--
An association health plan which offers one or more benefit 
options which do not consist of health insurance coverage may 
be certified under this part only if such plan consists of any 
of the following:
          (1) A plan which offered such coverage on the date of 
        the enactment of the Small Business Health Fairness Act 
        of 2017.
          (2) A plan under which the sponsor does not restrict 
        membership to one or more trades and businesses or 
        industries and whose eligible participating employers 
        represent a broad cross-section of trades and 
        businesses or industries.
          (3) A plan whose eligible participating employers 
        represent one or more trades or businesses, or one or 
        more industries, consisting of any of the following: 
        agriculture; equipment and automobile dealerships; 
        barbering and cosmetology; certified public accounting 
        practices; child care; construction; dance, theatrical 
        and orchestra productions; disinfecting and pest 
        control; financial services; fishing; food service 
        establishments; hospitals; labor organizations; 
        logging; manufacturing (metals); mining; medical and 
        dental practices; medical laboratories; professional 
        consulting services; sanitary services; transportation 
        (local and freight); warehousing; wholesaling/
        distributing; or any other trade or business or 
        industry which has been indicated as having average or 
        above-average risk or health claims experience by 
        reason of State rate filings, denials of coverage, 
        proposed premium rate levels, or other means 
        demonstrated by such plan in accordance with 
        regulations.

SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

  (a) Sponsor.--The requirements of this subsection are met 
with respect to an association health plan if the sponsor has 
met (or is deemed under this part to have met) the requirements 
of section 801(b) for a continuous period of not less than 3 
years ending with the date of the application for certification 
under this part.
  (b) Board of Trustees.--The requirements of this subsection 
are met with respect to an association health plan if the 
following requirements are met:
          (1) Fiscal control.--The plan is operated, pursuant 
        to a trust agreement, by a board of trustees which has 
        complete fiscal control over the plan and which is 
        responsible for all operations of the plan.
          (2) Rules of operation and financial controls.--The 
        board of trustees has in effect rules of operation and 
        financial controls, based on a 3-year plan of 
        operation, adequate to carry out the terms of the plan 
        and to meet all requirements of this title applicable 
        to the plan.
          (3) Rules governing relationship to participating 
        employers and to contractors.--
                  (A) Board membership.--
                          (i) In general.--Except as provided 
                        in clauses (ii) and (iii), the members 
                        of the board of trustees are 
                        individuals selected from individuals 
                        who are the owners, officers, 
                        directors, or employees of the 
                        participating employers or who are 
                        partners in the participating employers 
                        and actively participate in the 
                        business.
                          (ii) Limitation.--
                                  (I) General rule.--Except as 
                                provided in subclauses (II) and 
                                (III), no such member is an 
                                owner, officer, director, or 
                                employee of, or partner in, a 
                                contract administrator or other 
                                service provider to the plan.
                                  (II) Limited exception for 
                                providers of services solely on 
                                behalf of the sponsor.--
                                Officers or employees of a 
                                sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may 
                                be members of the board if they 
                                constitute not more than 25 
                                percent of the membership of 
                                the board and they do not 
                                provide services to the plan 
                                other than on behalf of the 
                                sponsor.
                                  (III) Treatment of providers 
                                of medical care.--In the case 
                                of a sponsor which is an 
                                association whose membership 
                                consists primarily of providers 
                                of medical care, subclause (I) 
                                shall not apply in the case of 
                                any service provider described 
                                in subclause (I) who is a 
                                provider of medical care under 
                                the plan.
                          (iii) Certain plans excluded.--Clause 
                        (i) shall not apply to an association 
                        health plan which is in existence on 
                        the date of the enactment of the Small 
                        Business Health Fairness Act of 2017.
                  (B) Sole authority.--The board has sole 
                authority under the plan to approve 
                applications for participation in the plan and 
                to contract with a service provider to 
                administer the day-to-day affairs of the plan.
  (c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser 
for a franchise network consisting of its franchisees--
          (1) the requirements of subsection (a) and section 
        801(a) shall be deemed met if such requirements would 
        otherwise be met if the franchiser were deemed to be 
        the sponsor referred to in section 801(b), such network 
        were deemed to be an association described in section 
        801(b), and each franchisee were deemed to be a member 
        (of the association and the sponsor) referred to in 
        section 801(b); and
          (2) the requirements of section 804(a)(1) shall be 
        deemed met.
The Secretary may by regulation define for purposes of this 
subsection the terms ``franchiser'', ``franchise network'', and 
``franchisee''.

SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

  (a) Covered Employers and Individuals.--The requirements of 
this subsection are met with respect to an association health 
plan if, under the terms of the plan--
          (1) each participating employer must be--
                  (A) a member of the sponsor,
                  (B) the sponsor, or
                  (C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection 
                (b) are met,
        except that, in the case of a sponsor which is a 
        professional association or other individual-based 
        association, if at least one of the officers, 
        directors, or employees of an employer, or at least one 
        of the individuals who are partners in an employer and 
        who actively participates in the business, is a member 
        or such an affiliated member of the sponsor, 
        participating employers may also include such employer; 
        and
          (2) all individuals commencing coverage under the 
        plan after certification under this part must be--
                  (A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating 
                employers; or
                  (B) the beneficiaries of individuals 
                described in subparagraph (A).
  (b) Coverage of Previously Uninsured Employees.--In the case 
of an association health plan in existence on the date of the 
enactment of the Small Business Health Fairness Act of 2017, an 
affiliated member of the sponsor of the plan may be offered 
coverage under the plan as a participating employer only if--
          (1) the affiliated member was an affiliated member on 
        the date of certification under this part; or
          (2) during the 12-month period preceding the date of 
        the offering of such coverage, the affiliated member 
        has not maintained or contributed to a group health 
        plan with respect to any of its employees who would 
        otherwise be eligible to participate in such 
        association health plan.
  (c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan 
if, under the terms of the plan, no participating employer may 
provide health insurance coverage in the individual market for 
any employee not covered under the plan which is similar to the 
coverage contemporaneously provided to employees of the 
employer under the plan, if such exclusion of the employee from 
coverage under the plan is based on a health status-related 
factor with respect to the employee and such employee would, 
but for such exclusion on such basis, be eligible for coverage 
under the plan.
  (d) Prohibition of Discrimination Against Employers and 
Employees Eligible to Participate.--The requirements of this 
subsection are met with respect to an association health plan 
if--
          (1) under the terms of the plan, all employers 
        meeting the preceding requirements of this section are 
        eligible to qualify as participating employers for all 
        geographically available coverage options, unless, in 
        the case of any such employer, participation or 
        contribution requirements of the type referred to in 
        section 2711 of the Public Health Service Act are not 
        met;
          (2) upon request, any employer eligible to 
        participate is furnished information regarding all 
        coverage options available under the plan; and
          (3) the applicable requirements of sections 701, 702, 
        and 703 are met with respect to the plan.

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

  (a) In General.--The requirements of this section are met 
with respect to an association health plan if the following 
requirements are met:
          (1) Contents of governing instruments.--The 
        instruments governing the plan include a written 
        instrument, meeting the requirements of an instrument 
        required under section 402(a)(1), which--
                  (A) provides that the board of trustees 
                serves as the named fiduciary required for 
                plans under section 402(a)(1) and serves in the 
                capacity of a plan administrator (referred to 
                in section 3(16)(A));
                  (B) provides that the sponsor of the plan is 
                to serve as plan sponsor (referred to in 
                section 3(16)(B)); and
                  (C) incorporates the requirements of section 
                806.
          (2) Contribution rates must be nondiscriminatory.--
                  (A) The contribution rates for any 
                participating small employer do not vary on the 
                basis of any health status-related factor in 
                relation to employees of such employer or their 
                beneficiaries and do not vary on the basis of 
                the type of business or industry in which such 
                employer is engaged.
                  (B) Nothing in this title or any other 
                provision of law shall be construed to preclude 
                an association health plan, or a health 
                insurance issuer offering health insurance 
                coverage in connection with an association 
                health plan, from--
                          (i) setting contribution rates based 
                        on the claims experience of the plan; 
                        or
                          (ii) varying contribution rates for 
                        small employers in a State to the 
                        extent that such rates could vary using 
                        the same methodology employed in such 
                        State for regulating premium rates in 
                        the small group market with respect to 
                        health insurance coverage offered in 
                        connection with bona fide associations 
                        (within the meaning of section 
                        2791(d)(3) of the Public Health Service 
                        Act),
                subject to the requirements of section 702(b) 
                relating to contribution rates.
          (3) Floor for number of covered individuals with 
        respect to certain plans.--If any benefit option under 
        the plan does not consist of health insurance coverage, 
        the plan has as of the beginning of the plan year not 
        fewer than 1,000 participants and beneficiaries.
          (4) Marketing requirements.--
                  (A) In general.--If a benefit option which 
                consists of health insurance coverage is 
                offered under the plan, State-licensed 
                insurance agents shall be used to distribute to 
                small employers coverage which does not consist 
                of health insurance coverage in a manner 
                comparable to the manner in which such agents 
                are used to distribute health insurance 
                coverage.
                  (B) State-licensed insurance agents.--For 
                purposes of subparagraph (A), the term ``State-
                licensed insurance agents'' means one or more 
                agents who are licensed in a State and are 
                subject to the laws of such State relating to 
                licensure, qualification, testing, examination, 
                and continuing education of persons authorized 
                to offer, sell, or solicit health insurance 
                coverage in such State.
          (5) Regulatory requirements.--Such other requirements 
        as the applicable authority determines are necessary to 
        carry out the purposes of this part, which shall be 
        prescribed by the applicable authority by regulation.
  (b) Ability of Association Health Plans to Design Benefit 
Options.--Subject to section 514(d), nothing in this part or 
any provision of State law (as defined in section 514(c)(1)) 
shall be construed to preclude an association health plan, or a 
health insurance issuer offering health insurance coverage in 
connection with an association health plan, from exercising its 
sole discretion in selecting the specific items and services 
consisting of medical care to be included as benefits under 
such plan or coverage, except (subject to section 514) in the 
case of (1) any law to the extent that it is not preempted 
under section 731(a)(1) with respect to matters governed by 
section 711, 712, or 713, or (2) any law of the State with 
which filing and approval of a policy type offered by the plan 
was initially obtained to the extent that such law prohibits an 
exclusion of a specific disease from such coverage.

SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR PLANS 
                    PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH 
                    INSURANCE COVERAGE.

  (a) In General.--The requirements of this section are met 
with respect to an association health plan if--
          (1) the benefits under the plan consist solely of 
        health insurance coverage; or
          (2) if the plan provides any additional benefit 
        options which do not consist of health insurance 
        coverage, the plan--
                  (A) establishes and maintains reserves with 
                respect to such additional benefit options, in 
                amounts recommended by the qualified actuary, 
                consisting of--
                          (i) a reserve sufficient for unearned 
                        contributions;
                          (ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, 
                        which have not been satisfied, and for 
                        which risk of loss has not yet been 
                        transferred, and for expected 
                        administrative costs with respect to 
                        such benefit liabilities;
                          (iii) a reserve sufficient for any 
                        other obligations of the plan; and
                          (iv) a reserve sufficient for a 
                        margin of error and other fluctuations, 
                        taking into account the specific 
                        circumstances of the plan; and
                  (B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and 
                solvency indemnification, with respect to such 
                additional benefit options for which risk of 
                loss has not yet been transferred, as follows:
                          (i) The plan shall secure aggregate 
                        excess/stop loss insurance for the plan 
                        with an attachment point which is not 
                        greater than 125 percent of expected 
                        gross annual claims. The applicable 
                        authority may by regulation provide for 
                        upward adjustments in the amount of 
                        such percentage in specified 
                        circumstances in which the plan 
                        specifically provides for and maintains 
                        reserves in excess of the amounts 
                        required under subparagraph (A).
                          (ii) The plan shall secure specific 
                        excess/stop loss insurance for the plan 
                        with an attachment point which is at 
                        least equal to an amount recommended by 
                        the plan's qualified actuary. The 
                        applicable authority may by regulation 
                        provide for adjustments in the amount 
                        of such insurance in specified 
                        circumstances in which the plan 
                        specifically provides for and maintains 
                        reserves in excess of the amounts 
                        required under subparagraph (A).
                          (iii) The plan shall secure 
                        indemnification insurance for any 
                        claims which the plan is unable to 
                        satisfy by reason of a plan 
                        termination.
Any person issuing to a plan insurance described in clause (i), 
(ii), or (iii) of subparagraph (B) shall notify the Secretary 
of any failure of premium payment meriting cancellation of the 
policy prior to undertaking such a cancellation. Any 
regulations prescribed by the applicable authority pursuant to 
clause (i) or (ii) of subparagraph (B) may allow for such 
adjustments in the required levels of excess/stop loss 
insurance as the qualified actuary may recommend, taking into 
account the specific circumstances of the plan.
  (b) Minimum Surplus in Addition to Claims Reserves.--In the 
case of any association health plan described in subsection 
(a)(2), the requirements of this subsection are met if the plan 
establishes and maintains surplus in an amount at least equal 
to--
          (1) $500,000, or
          (2) such greater amount (but not greater than 
        $2,000,000) as may be set forth in regulations 
        prescribed by the applicable authority, considering the 
        level of aggregate and specific excess/stop loss 
        insurance provided with respect to such plan and other 
        factors related to solvency risk, such as the plan's 
        projected levels of participation or claims, the nature 
        of the plan's liabilities, and the types of assets 
        available to assure that such liabilities are met.
  (c) Additional Requirements.--In the case of any association 
health plan described in subsection (a)(2), the applicable 
authority may provide such additional requirements relating to 
reserves, excess/stop loss insurance, and indemnification 
insurance as the applicable authority considers appropriate. 
Such requirements may be provided by regulation with respect to 
any such plan or any class of such plans.
  (d) Adjustments for Excess/Stop Loss Insurance.--The 
applicable authority may provide for adjustments to the levels 
of reserves otherwise required under subsections (a) and (b) 
with respect to any plan or class of plans to take into account 
excess/stop loss insurance provided with respect to such plan 
or plans.
  (e) Alternative Means of Compliance.--The applicable 
authority may permit an association health plan described in 
subsection (a)(2) to substitute, for all or part of the 
requirements of this section (except subsection 
(a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable 
authority determines to be adequate to enable the plan to fully 
meet all its financial obligations on a timely basis and is 
otherwise no less protective of the interests of participants 
and beneficiaries than the requirements for which it is 
substituted. The applicable authority may take into account, 
for purposes of this subsection, evidence provided by the plan 
or sponsor which demonstrates an assumption of liability with 
respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter 
of credit, recourse under applicable terms of the plan in the 
form of assessments of participating employers, security, or 
other financial arrangement.
  (f) Measures to Ensure Continued Payment of Benefits by 
Certain Plans in Distress.--
          (1) Payments by certain plans to association health 
        plan fund.--
                  (A) In general.--In the case of an 
                association health plan described in subsection 
                (a)(2), the requirements of this subsection are 
                met if the plan makes payments into the 
                Association Health Plan Fund under this 
                subparagraph when they are due. Such payments 
                shall consist of annual payments in the amount 
                of $5,000, and, in addition to such annual 
                payments, such supplemental payments as the 
                Secretary may determine to be necessary under 
                paragraph (2). Payments under this paragraph 
                are payable to the Fund at the time determined 
                by the Secretary. Initial payments are due in 
                advance of certification under this part. 
                Payments shall continue to accrue until a 
                plan's assets are distributed pursuant to a 
                termination procedure.
                  (B) Penalties for failure to make payments.--
                If any payment is not made by a plan when it is 
                due, a late payment charge of not more than 100 
                percent of the payment which was not timely 
                paid shall be payable by the plan to the Fund.
                  (C) Continued duty of the secretary.--The 
                Secretary shall not cease to carry out the 
                provisions of paragraph (2) on account of the 
                failure of a plan to pay any payment when due.
          (2) Payments by secretary to continue excess/stop 
        loss insurance coverage and indemnification insurance 
        coverage for certain plans.--In any case in which the 
        applicable authority determines that there is, or that 
        there is reason to believe that there will be: (A) A 
        failure to take necessary corrective actions under 
        section 809(a) with respect to an association health 
        plan described in subsection (a)(2); or (B) a 
        termination of such a plan under section 809(b) or 
        810(b)(8) (and, if the applicable authority is not the 
        Secretary, certifies such determination to the 
        Secretary), the Secretary shall determine the amounts 
        necessary to make payments to an insurer (designated by 
        the Secretary) to maintain in force excess/stop loss 
        insurance coverage or indemnification insurance 
        coverage for such plan, if the Secretary determines 
        that there is a reasonable expectation that, without 
        such payments, claims would not be satisfied by reason 
        of termination of such coverage. The Secretary shall, 
        to the extent provided in advance in appropriation 
        Acts, pay such amounts so determined to the insurer 
        designated by the Secretary.
          (3) Association health plan fund.--
                  (A) In general.--There is established on the 
                books of the Treasury a fund to be known as the 
                ``Association Health Plan Fund''. The Fund 
                shall be available for making payments pursuant 
                to paragraph (2). The Fund shall be credited 
                with payments received pursuant to paragraph 
                (1)(A), penalties received pursuant to 
                paragraph (1)(B); and earnings on investments 
                of amounts of the Fund under subparagraph (B).
                  (B) Investment.--Whenever the Secretary 
                determines that the moneys of the fund are in 
                excess of current needs, the Secretary may 
                request the investment of such amounts as the 
                Secretary determines advisable by the Secretary 
                of the Treasury in obligations issued or 
                guaranteed by the United States.
  (g) Excess/Stop Loss Insurance.--For purposes of this 
section--
          (1) Aggregate excess/stop loss insurance.--The term 
        ``aggregate excess/stop loss insurance'' means, in 
        connection with an association health plan, a 
        contract--
                  (A) under which an insurer (meeting such 
                minimum standards as the applicable authority 
                may prescribe by regulation) provides for 
                payment to the plan with respect to aggregate 
                claims under the plan in excess of an amount or 
                amounts specified in such contract;
                  (B) which is guaranteed renewable; and
                  (C) which allows for payment of premiums by 
                any third party on behalf of the insured plan.
          (2) Specific excess/stop loss insurance.--The term 
        ``specific excess/stop loss insurance'' means, in 
        connection with an association health plan, a 
        contract--
                  (A) under which an insurer (meeting such 
                minimum standards as the applicable authority 
                may prescribe by regulation) provides for 
                payment to the plan with respect to claims 
                under the plan in connection with a covered 
                individual in excess of an amount or amounts 
                specified in such contract in connection with 
                such covered individual;
                  (B) which is guaranteed renewable; and
                  (C) which allows for payment of premiums by 
                any third party on behalf of the insured plan.
  (h) Indemnification Insurance.--For purposes of this section, 
the term ``indemnification insurance'' means, in connection 
with an association health plan, a contract--
          (1) under which an insurer (meeting such minimum 
        standards as the applicable authority may prescribe by 
        regulation) provides for payment to the plan with 
        respect to claims under the plan which the plan is 
        unable to satisfy by reason of a termination pursuant 
        to section 809(b) (relating to mandatory termination);
          (2) which is guaranteed renewable and noncancellable 
        for any reason (except as the applicable authority may 
        prescribe by regulation); and
          (3) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
  (i) Reserves.--For purposes of this section, the term 
``reserves'' means, in connection with an association health 
plan, plan assets which meet the fiduciary standards under part 
4 and such additional requirements regarding liquidity as the 
applicable authority may prescribe by regulation.
  (j) Solvency Standards Working Group.--
          (1) In general.--Within 90 days after the date of the 
        enactment of the Small Business Health Fairness Act of 
        2017, the applicable authority shall establish a 
        Solvency Standards Working Group. In prescribing the 
        initial regulations under this section, the applicable 
        authority shall take into account the recommendations 
        of such Working Group.
          (2) Membership.--The Working Group shall consist of 
        not more than 15 members appointed by the applicable 
        authority. The applicable authority shall include among 
        persons invited to membership on the Working Group at 
        least one of each of the following:
                  (A) A representative of the National 
                Association of Insurance Commissioners.
                  (B) A representative of the American Academy 
                of Actuaries.
                  (C) A representative of the State 
                governments, or their interests.
                  (D) A representative of existing self-insured 
                arrangements, or their interests.
                  (E) A representative of associations of the 
                type referred to in section 801(b)(1), or their 
                interests.
                  (F) A representative of multiemployer plans 
                that are group health plans, or their 
                interests.

SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

  (a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), an association health plan shall pay to the 
applicable authority at the time of filing an application for 
certification under this part a filing fee in the amount of 
$5,000, which shall be available in the case of the Secretary, 
to the extent provided in appropriation Acts, for the sole 
purpose of administering the certification procedures 
applicable with respect to association health plans.
  (b) Information to Be Included in Application for 
Certification.--An application for certification under this 
part meets the requirements of this section only if it 
includes, in a manner and form which shall be prescribed by the 
applicable authority by regulation, at least the following 
information:
          (1) Identifying information.--The names and addresses 
        of--
                  (A) the sponsor; and
                  (B) the members of the board of trustees of 
                the plan.
          (2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under 
        the plan are to be located and the number of them 
        expected to be located in each such State.
          (3) Bonding requirements.--Evidence provided by the 
        board of trustees that the bonding requirements of 
        section 412 will be met as of the date of the 
        application or (if later) commencement of operations.
          (4) Plan documents.--A copy of the documents 
        governing the plan (including any bylaws and trust 
        agreements), the summary plan description, and other 
        material describing the benefits that will be provided 
        to participants and beneficiaries under the plan.
          (5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators 
        and other service providers.
          (6) Funding report.--In the case of association 
        health plans providing benefits options in addition to 
        health insurance coverage, a report setting forth 
        information with respect to such additional benefit 
        options determined as of a date within the 120-day 
        period ending with the date of the application, 
        including the following:
                  (A) Reserves.--A statement, certified by the 
                board of trustees of the plan, and a statement 
                of actuarial opinion, signed by a qualified 
                actuary, that all applicable requirements of 
                section 806 are or will be met in accordance 
                with regulations which the applicable authority 
                shall prescribe.
                  (B) Adequacy of contribution rates.--A 
                statement of actuarial opinion, signed by a 
                qualified actuary, which sets forth a 
                description of the extent to which contribution 
                rates are adequate to provide for the payment 
                of all obligations and the maintenance of 
                required reserves under the plan for the 12-
                month period beginning with such date within 
                such 120-day period, taking into account the 
                expected coverage and experience of the plan. 
                If the contribution rates are not fully 
                adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates 
                are inadequate and the changes needed to ensure 
                adequacy.
                  (C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion 
                signed by a qualified actuary, which sets forth 
                the current value of the assets and liabilities 
                accumulated under the plan and a projection of 
                the assets, liabilities, income, and expenses 
                of the plan for the 12-month period referred to 
                in subparagraph (B). The income statement shall 
                identify separately the plan's administrative 
                expenses and claims.
                  (D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage 
                to be charged, including an itemization of 
                amounts for administration, reserves, and other 
                expenses associated with the operation of the 
                plan.
                  (E) Other information.--Any other information 
                as may be determined by the applicable 
                authority, by regulation, as necessary to carry 
                out the purposes of this part.
  (c) Filing Notice of Certification With States.--A 
certification granted under this part to an association health 
plan shall not be effective unless written notice of such 
certification is filed with the applicable State authority of 
each State in which at least 25 percent of the participants and 
beneficiaries under the plan are located. For purposes of this 
subsection, an individual shall be considered to be located in 
the State in which a known address of such individual is 
located or in which such individual is employed.
  (d) Notice of Material Changes.--In the case of any 
association health plan certified under this part, descriptions 
of material changes in any information which was required to be 
submitted with the application for the certification under this 
part shall be filed in such form and manner as shall be 
prescribed by the applicable authority by regulation. The 
applicable authority may require by regulation prior notice of 
material changes with respect to specified matters which might 
serve as the basis for suspension or revocation of the 
certification.
  (e) Reporting Requirements for Certain Association Health 
Plans.--An association health plan certified under this part 
which provides benefit options in addition to health insurance 
coverage for such plan year shall meet the requirements of 
section 103 by filing an annual report under such section which 
shall include information described in subsection (b)(6) with 
respect to the plan year and, notwithstanding section 
104(a)(1)(A), shall be filed with the applicable authority not 
later than 90 days after the close of the plan year (or on such 
later date as may be prescribed by the applicable authority). 
The applicable authority may require by regulation such interim 
reports as it considers appropriate.
  (f) Engagement of Qualified Actuary.--The board of trustees 
of each association health plan which provides benefits options 
in addition to health insurance coverage and which is applying 
for certification under this part or is certified under this 
part shall engage, on behalf of all participants and 
beneficiaries, a qualified actuary who shall be responsible for 
the preparation of the materials comprising information 
necessary to be submitted by a qualified actuary under this 
part. The qualified actuary shall utilize such assumptions and 
techniques as are necessary to enable such actuary to form an 
opinion as to whether the contents of the matters reported 
under this part--
          (1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; 
        and
          (2) represent such actuary's best estimate of 
        anticipated experience under the plan.
The opinion by the qualified actuary shall be made with respect 
to, and shall be made a part of, the annual report.

SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

  Except as provided in section 809(b), an association health 
plan which is or has been certified under this part may 
terminate (upon or at any time after cessation of accruals in 
benefit liabilities) only if the board of trustees, not less 
than 60 days before the proposed termination date--
          (1) provides to the participants and beneficiaries a 
        written notice of intent to terminate stating that such 
        termination is intended and the proposed termination 
        date;
          (2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner 
        which will result in timely payment of all benefits for 
        which the plan is obligated; and
          (3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form 
and manner as may be prescribed by the applicable authority by 
regulation.

SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

  (a) Actions to Avoid Depletion of Reserves.--An association 
health plan which is certified under this part and which 
provides benefits other than health insurance coverage shall 
continue to meet the requirements of section 806, irrespective 
of whether such certification continues in effect. The board of 
trustees of such plan shall determine quarterly whether the 
requirements of section 806 are met. In any case in which the 
board determines that there is reason to believe that there is 
or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so notifies 
the board, the board shall immediately notify the qualified 
actuary engaged by the plan, and such actuary shall, not later 
than the end of the next following month, make such 
recommendations to the board for corrective action as the 
actuary determines necessary to ensure compliance with section 
806. Not later than 30 days after receiving from the actuary 
recommendations for corrective actions, the board shall notify 
the applicable authority (in such form and manner as the 
applicable authority may prescribe by regulation) of such 
recommendations of the actuary for corrective action, together 
with a description of the actions (if any) that the board has 
taken or plans to take in response to such recommendations. The 
board shall thereafter report to the applicable authority, in 
such form and frequency as the applicable authority may specify 
to the board, regarding corrective action taken by the board 
until the requirements of section 806 are met.
  (b) Mandatory Termination.--In any case in which--
          (1) the applicable authority has been notified under 
        subsection (a) (or by an issuer of excess/stop loss 
        insurance or indemnity insurance pursuant to section 
        806(a)) of a failure of an association health plan 
        which is or has been certified under this part and is 
        described in section 806(a)(2) to meet the requirements 
        of section 806 and has not been notified by the board 
        of trustees of the plan that corrective action has 
        restored compliance with such requirements; and
          (2) the applicable authority determines that there is 
        a reasonable expectation that the plan will continue to 
        fail to meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of 
the applicable authority, terminate the plan and, in the course 
of the termination, take such actions as the applicable 
authority may require, including satisfying any claims referred 
to in section 806(a)(2)(B)(iii) and recovering for the plan any 
liability under subsection (a)(2)(B)(iii) or (e) of section 
806, as necessary to ensure that the affairs of the plan will 
be, to the maximum extent possible, wound up in a manner which 
will result in timely provision of all benefits for which the 
plan is obligated.

SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION HEALTH 
                    PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO 
                    HEALTH INSURANCE COVERAGE.

  (a) Appointment of Secretary as Trustee for Insolvent 
Plans.--Whenever the Secretary determines that an association 
health plan which is or has been certified under this part and 
which is described in section 806(a)(2) will be unable to 
provide benefits when due or is otherwise in a financially 
hazardous condition, as shall be defined by the Secretary by 
regulation, the Secretary shall, upon notice to the plan, apply 
to the appropriate United States district court for appointment 
of the Secretary as trustee to administer the plan for the 
duration of the insolvency. The plan may appear as a party and 
other interested persons may intervene in the proceedings at 
the discretion of the court. The court shall appoint such 
Secretary trustee if the court determines that the trusteeship 
is necessary to protect the interests of the participants and 
beneficiaries or providers of medical care or to avoid any 
unreasonable deterioration of the financial condition of the 
plan. The trusteeship of such Secretary shall continue until 
the conditions described in the first sentence of this 
subsection are remedied or the plan is terminated.
  (b) Powers as Trustee.--The Secretary, upon appointment as 
trustee under subsection (a), shall have the power--
          (1) to do any act authorized by the plan, this title, 
        or other applicable provisions of law to be done by the 
        plan administrator or any trustee of the plan;
          (2) to require the transfer of all (or any part) of 
        the assets and records of the plan to the Secretary as 
        trustee;
          (3) to invest any assets of the plan which the 
        Secretary holds in accordance with the provisions of 
        the plan, regulations prescribed by the Secretary, and 
        applicable provisions of law;
          (4) to require the sponsor, the plan administrator, 
        any participating employer, and any employee 
        organization representing plan participants to furnish 
        any information with respect to the plan which the 
        Secretary as trustee may reasonably need in order to 
        administer the plan;
          (5) to collect for the plan any amounts due the plan 
        and to recover reasonable expenses of the trusteeship;
          (6) to commence, prosecute, or defend on behalf of 
        the plan any suit or proceeding involving the plan;
          (7) to issue, publish, or file such notices, 
        statements, and reports as may be required by the 
        Secretary by regulation or required by any order of the 
        court;
          (8) to terminate the plan (or provide for its 
        termination in accordance with section 809(b)) and 
        liquidate the plan assets, to restore the plan to the 
        responsibility of the sponsor, or to continue the 
        trusteeship;
          (9) to provide for the enrollment of plan 
        participants and beneficiaries under appropriate 
        coverage options; and
          (10) to do such other acts as may be necessary to 
        comply with this title or any order of the court and to 
        protect the interests of plan participants and 
        beneficiaries and providers of medical care.
  (c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give 
notice of such appointment to--
          (1) the sponsor and plan administrator;
          (2) each participant;
          (3) each participating employer; and
          (4) if applicable, each employee organization which, 
        for purposes of collective bargaining, represents plan 
        participants.
  (d) Additional Duties.--Except to the extent inconsistent 
with the provisions of this title, or as may be otherwise 
ordered by the court, the Secretary, upon appointment as 
trustee under this section, shall be subject to the same duties 
as those of a trustee under section 704 of title 11, United 
States Code, and shall have the duties of a fiduciary for 
purposes of this title.
  (e) Other Proceedings.--An application by the Secretary under 
this subsection may be filed notwithstanding the pendency in 
the same or any other court of any bankruptcy, mortgage 
foreclosure, or equity receivership proceeding, or any 
proceeding to reorganize, conserve, or liquidate such plan or 
its property, or any proceeding to enforce a lien against 
property of the plan.
  (f) Jurisdiction of Court.--
          (1) In general.--Upon the filing of an application 
        for the appointment as trustee or the issuance of a 
        decree under this section, the court to which the 
        application is made shall have exclusive jurisdiction 
        of the plan involved and its property wherever located 
        with the powers, to the extent consistent with the 
        purposes of this section, of a court of the United 
        States having jurisdiction over cases under chapter 11 
        of title 11, United States Code. Pending an 
        adjudication under this section such court shall stay, 
        and upon appointment by it of the Secretary as trustee, 
        such court shall continue the stay of, any pending 
        mortgage foreclosure, equity receivership, or other 
        proceeding to reorganize, conserve, or liquidate the 
        plan, the sponsor, or property of such plan or sponsor, 
        and any other suit against any receiver, conservator, 
        or trustee of the plan, the sponsor, or property of the 
        plan or sponsor. Pending such adjudication and upon the 
        appointment by it of the Secretary as trustee, the 
        court may stay any proceeding to enforce a lien against 
        property of the plan or the sponsor or any other suit 
        against the plan or the sponsor.
          (2) Venue.--An action under this section may be 
        brought in the judicial district where the sponsor or 
        the plan administrator resides or does business or 
        where any asset of the plan is situated. A district 
        court in which such action is brought may issue process 
        with respect to such action in any other judicial 
        district.
  (g) Personnel.--In accordance with regulations which shall be 
prescribed by the Secretary, the Secretary shall appoint, 
retain, and compensate accountants, actuaries, and other 
professional service personnel as may be necessary in 
connection with the Secretary's service as trustee under this 
section.

SEC. 811. STATE ASSESSMENT AUTHORITY.

  (a) In General.--Notwithstanding section 514, a State may 
impose by law a contribution tax on an association health plan 
described in section 806(a)(2), if the plan commenced 
operations in such State after the date of the enactment of the 
Small Business Health Fairness Act of 2017.
  (b) Contribution Tax.--For purposes of this section, the term 
``contribution tax'' imposed by a State on an association 
health plan means any tax imposed by such State if--
          (1) such tax is computed by applying a rate to the 
        amount of premiums or contributions, with respect to 
        individuals covered under the plan who are residents of 
        such State, which are received by the plan from 
        participating employers located in such State or from 
        such individuals;
          (2) the rate of such tax does not exceed the rate of 
        any tax imposed by such State on premiums or 
        contributions received by insurers or health 
        maintenance organizations for health insurance coverage 
        offered in such State in connection with a group health 
        plan;
          (3) such tax is otherwise nondiscriminatory; and
          (4) the amount of any such tax assessed on the plan 
        is reduced by the amount of any tax or assessment 
        otherwise imposed by the State on premiums, 
        contributions, or both received by insurers or health 
        maintenance organizations for health insurance 
        coverage, aggregate excess/stop loss insurance (as 
        defined in section 806(g)(1)), specific excess/stop 
        loss insurance (as defined in section 806(g)(2)), other 
        insurance related to the provision of medical care 
        under the plan, or any combination thereof provided by 
        such insurers or health maintenance organizations in 
        such State in connection with such plan.

SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

  (a) Definitions.--For purposes of this part--
          (1) Group health plan.--The term ``group health 
        plan'' has the meaning provided in section 733(a)(1) 
        (after applying subsection (b) of this section).
          (2) Medical care.--The term ``medical care'' has the 
        meaning provided in section 733(a)(2).
          (3) Health insurance coverage.--The term ``health 
        insurance coverage'' has the meaning provided in 
        section 733(b)(1).
          (4) Health insurance issuer.--The term ``health 
        insurance issuer'' has the meaning provided in section 
        733(b)(2).
          (5) Applicable authority.--The term ``applicable 
        authority'' means the Secretary, except that, in 
        connection with any exercise of the Secretary's 
        authority regarding which the Secretary is required 
        under section 506(d) to consult with a State, such term 
        means the Secretary, in consultation with such State.
          (6) Health status-related factor.--The term ``health 
        status-related factor'' has the meaning provided in 
        section 733(d)(2).
          (7) Individual market.--
                  (A) In general.--The term ``individual 
                market'' means the market for health insurance 
                coverage offered to individuals other than in 
                connection with a group health plan.
                  (B) Treatment of very small groups.--
                          (i) In general.--Subject to clause 
                        (ii), such term includes coverage 
                        offered in connection with a group 
                        health plan that has fewer than 2 
                        participants as current employees or 
                        participants described in section 
                        732(d)(3) on the first day of the plan 
                        year.
                          (ii) State exception.--Clause (i) 
                        shall not apply in the case of health 
                        insurance coverage offered in a State 
                        if such State regulates the coverage 
                        described in such clause in the same 
                        manner and to the same extent as 
                        coverage in the small group market (as 
                        defined in section 2791(e)(5) of the 
                        Public Health Service Act ) is 
                        regulated by such State.
          (8) Participating employer.--The term ``participating 
        employer'' means, in connection with an association 
        health plan, any employer, if any individual who is an 
        employee of such employer, a partner in such employer, 
        or a self-employed individual who is such employer (or 
        any dependent, as defined under the terms of the plan, 
        of such individual) is or was covered under such plan 
        in connection with the status of such individual as 
        such an employee, partner, or self-employed individual 
        in relation to the plan.
          (9) Applicable state authority.--The term 
        ``applicable State authority'' means, with respect to a 
        health insurance issuer in a State, the State insurance 
        commissioner or official or officials designated by the 
        State to enforce the requirements of title XXVII of the 
        Public Health Service Act for the State involved with 
        respect to such issuer.
          (10) Qualified actuary.--The term ``qualified 
        actuary'' means an individual who is a member of the 
        American Academy of Actuaries.
          (11) Affiliated member.--The term ``affiliated 
        member'' means, in connection with a sponsor--
                  (A) a person who is otherwise eligible to be 
                a member of the sponsor but who elects an 
                affiliated status with the sponsor,
                  (B) in the case of a sponsor with members 
                which consist of associations, a person who is 
                a member of any such association and elects an 
                affiliated status with the sponsor, or
                  (C) in the case of an association health plan 
                in existence on the date of the enactment of 
                the Small Business Health Fairness Act of 2017, 
                a person eligible to be a member of the sponsor 
                or one of its member associations.
          (12) Large employer.--The term ``large employer'' 
        means, in connection with a group health plan with 
        respect to a plan year, an employer who employed an 
        average of at least 51 employees on business days 
        during the preceding calendar year and who employs at 
        least 2 employees on the first day of the plan year.
          (13) Small employer.--The term ``small employer'' 
        means, in connection with a group health plan with 
        respect to a plan year, an employer who is not a large 
        employer.
  (b) Rules of Construction.--
          (1) Employers and employees.--For purposes of 
        determining whether a plan, fund, or program is an 
        employee welfare benefit plan which is an association 
        health plan, and for purposes of applying this title in 
        connection with such plan, fund, or program so 
        determined to be such an employee welfare benefit 
        plan--
                  (A) in the case of a partnership, the term 
                ``employer'' (as defined in section 3(5)) 
                includes the partnership in relation to the 
                partners, and the term ``employee'' (as defined 
                in section 3(6)) includes any partner in 
                relation to the partnership; and
                  (B) in the case of a self-employed 
                individual, the term ``employer'' (as defined 
                in section 3(5)) and the term ``employee'' (as 
                defined in section 3(6)) shall include such 
                individual.
          (2) Plans, funds, and programs treated as employee 
        welfare benefit plans.--In the case of any plan, fund, 
        or program which was established or is maintained for 
        the purpose of providing medical care (through the 
        purchase of insurance or otherwise) for employees (or 
        their dependents) covered thereunder and which 
        demonstrates to the Secretary that all requirements for 
        certification under this part would be met with respect 
        to such plan, fund, or program if such plan, fund, or 
        program were a group health plan, such plan, fund, or 
        program shall be treated for purposes of this title as 
        an employee welfare benefit plan on and after the date 
        of such demonstration.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

                              Introduction

    Committee Democrats oppose H.R. 1101, the Small Business 
Health Fairness Act because it puts comprehensive and 
affordable coverage for small businesses and their employees at 
risk. Committee Democrats were also concerned about the 
Majority's insistence on considering health-related legislation 
while two other Committees (Energy and Commerce and Ways and 
Means) simultaneously considered legislation to gut the 
Affordable Care Act (ACA).

         Before the Affordable Care Act Workers Had Few Options

    Before the ACA, employer-provided coverage was shrinking 
and costs were increasing dramatically. From 1999 to 2010, the 
cost of premiums for employer-provided health insurance 
increased by 138%.\1\ Additionally, workers often had limited 
options for affordable health insurance. Those who were 
employed were often locked in to their employment for fear of 
losing their health insurance, even if they wanted to retire, 
work part-time, or start a new business, due to inadequate 
coverage options outside the employer-sponsored system. Workers 
with pre-existing conditions were particularly disadvantaged, 
since they could be charged higher rates or denied coverage 
altogether in the individual market. Even those with 
comprehensive and affordable job-based health insurance saw 
higher premiums due to the high number of uninsured. Estimates 
show that every American family with insurance had to pay a 
hidden tax of roughly $1,000 for the cost of caring for people 
without insurance.\2\
---------------------------------------------------------------------------
    \1\Kaiser Family Foundation, Snapshots: Employer Health Insurance 
Costs and Worker Compensation, (February 27, 2011) available at: http:/
/kff.org/health-costs/issue-brief/snapshots-employer-health-insurance-
costs-and-worker-compensation/.
    \2\Families USA, Hidden Tax: Americans Pay a Premium, (2009) 
available at: http://familiesusa.org/sites/default/files/
product_documents/hidden-health-tax.pdf.
---------------------------------------------------------------------------
    Businesses were also struggling before the ACA. 
Historically, small businesses were charged more for the same 
benefits compared to large employers. Small businesses 
employing women or workers with chronic or high-cost illnesses 
were charged higher insurance rates in many states. Therefore, 
a single sick or older employee could make health insurance 
unaffordable. Because small employers have fewer employees to 
spread risk across than larger employers, premiums varied 
dramatically from year to year due to changes in workers' 
health status.

     Progress of the ACA Helps Small Businesses & Working Families

    The ACA took steps to level the playing field. The ACA 
added reforms to ensure that one small business with an older 
or sick employee or owner is not disadvantaged compared to 
other small businesses. The medical loss ratio provision of the 
ACA requires insurance, including plans that cover small 
businesses, to spend at least 80% of premiums on health care 
claims and quality improvement, ensuring that premium dollars 
go toward the actual health costs of covering the small 
business and its employees, and not just profits. Further, the 
ACA created more options for employers and workers through the 
creation of the Small Business Health Options Program (SHOP) 
and included a tax credit to defray the cost of health 
insurance for their employees.
    The ACA also establishes several safeguards for workers and 
families. Thanks to the ACA, most insurance plans must now 
provide coverage without cost sharing for certain preventive 
health services, including pap smears and mammograms for women, 
well-child visits, flu shots, and more. Early estimates after 
the ACA's passage showed that there were around 129 million 
Americans with a pre-existing condition, 82 million of whom 
were enrolled in employer-based coverage.\3\ For these millions 
of American workers, the ACA means that losing a job does not 
mean losing health insurance coverage. ``Job lock'' has been 
reduced, allowing workers to structure their careers in ways 
that make sense for them. This is particularly important for 
young workers, who are very often in school or making the early 
career choices that have a long-term impact on their careers. 
This is also important for entrepreneurs who want to start 
their own business.
---------------------------------------------------------------------------
    \3\Department of Health and Human Services, At Risk: Pre-Existing 
Conditions Could Affect 1 in 2 Americans: 129 Million People Could be 
Denied Affordable Coverage Without Health Reform, (November 1, 2011) 
available at: https://aspe.hhs.gov/sites/default/files/pdf/76376/
index.pdf.
---------------------------------------------------------------------------

The Republican Replacement Plan Threatens the Health Insurance Security 
                          of American Families

    Two days prior to the Committee's consideration of the 
three bills, Republicans released their ACA replacement plan, 
the American Health Care Act. The Ways and Means and Energy and 
Commerce Committees moved the bill forward through the 
Committee process, despite the fact that the Congressional 
Budget Office had not yet released estimates on the 
legislation's impact on coverage or cost. Committee Democrats 
expressed their concern about the lack of transparency in 
moving the bill forward and also further expressed concern that 
the markup in the Education and the Workforce Committee 
occurred simultaneous to this process--essentially forcing the 
Committee to consider legislation that represents a moving 
target.
    The American Health Care Act is an inadequate and 
unacceptable replacement plan. The legislation eliminates the 
ACA premium tax credits that millions of Americans depend on to 
pay for health coverage, in favor of a completely inadequate 
flat tax credit that leaves working families totally exposed to 
premium increases. The tax credits provided by the Affordable 
Care Act are based on income and are also tied to the cost of 
insurance premiums. In general, the lower an individual's 
income, the larger the tax credit and the more expensive the 
premium, the larger the credit. Therefore, the tax credit 
adapts to address the situation of the individual. However, 
under the Republican's plan, the credits range from $2,000 to 
$4,000 depending on age, but do not take into account income or 
the cost of a typical plan in the area.
    In addition, the bill dismantles Medicaid as we know it, 
endangering the health of 70 million Americans who rely on 
Medicaid, including seniors with long-term care needs, 
Americans with disabilities, pregnant women, and vulnerable 
children. Further, under the Republican bill, American workers 
could see their premiums and deductibles skyrocket. Also, the 
American public will have fewer protections--including losing 
the full protection of the ACA's prohibition against insurers 
discriminating against people with pre-existing conditions 
under all circumstances. While Republicans increase health 
costs for many working families, they give tax breaks to the 
wealthy.
    Older Americans will be forced to pay premiums five times 
higher than what others pay for health coverage, undoing the 
current limitation that stipulates that older individuals can 
only be charged three times more than young enrollees are 
charged. The Republican bill also shortens the life of the 
Medicare Trust Fund.\4\ Additionally, the bill includes a 
provision to defund Planned Parenthood for a year, threatening 
the health care of millions of women and men throughout the 
country.
---------------------------------------------------------------------------
    \4\Center on Budget and Policy Priorities, House Republican Health 
Plan Would Weaken Medicare, (March 14, 2017) available at: http://
www.cbpp.org/blog/house-republican-health-plan-would-weaken-medicare.
---------------------------------------------------------------------------
    The Congressional Budget Office's analysis of the 
proposal--released after Committee consideration--verified that 
24 million more would be uninsured by 2026 under the Republican 
health care plan.\5\ The report also showed that seven million 
fewer individuals would be enrolled in employer-sponsored 
insurance.\6\ Further, the report demonstrated that millions 
would be worse off under the Republican plan and that millions 
more will end up paying more for less coverage.
---------------------------------------------------------------------------
    \5\Congressional Budget Office, Cost Estimate of the American 
Health Care Act, (March 13, 2017) available at: https://www.cbo.gov/
sites/default/files/115th-congress-2017-2018/costestimate/
americanhealthcareact_0.pdf.
    \6\Id.
---------------------------------------------------------------------------
    For these abovementioned reasons, hospitals, providers, 
consumer groups and advocacy groups are opposing Republicans' 
attempts to cause irreparable harm to the health and financial 
security of Americans. AARP stated that, ``. . . [the] bill 
would weaken Medicare's fiscal sustainability, dramatically 
increase health care costs for Americans aged 50-64, and put at 
risk the health care of millions of children and adults with 
disabilities, and poor seniors who depend on the Medicaid 
program for long-term services and supports and other 
benefits.''\7\ The AFL-CIO maintained that, ``The reality is, 
this isn't a healthcare plan at all. It's a massive transfer of 
wealth from working people to Wall Street.''\8\ The Consortium 
for Citizens with Disabilities stated that, ``[it is] simply 
unconscionable to pay for the repeal of the Affordable Care Act 
(ACA) by cutting services for low income individuals with 
disabilities, adults, older adults, and children.''\9\ Due to 
its glaring shortcomings, the American Hospital Association has 
stated that it, ``. . . cannot support The American Health Care 
Act in its current form.''\10\
---------------------------------------------------------------------------
    \7\AARP, Letter to Chairmen and Ranking Members of the Energy and 
Commerce and Ways and Means Committees, (March 7, 2017) available at: 
http://www.aarp.org/content/dam/aarp/politics/advocacy/2017/03/aarp-
letter-to-congress-on-american-healthcare-act-march-07-2017.pdf.
    \8\AFL-CIO, Press release: GOP Healthcare Plan Taxes Workers and 
Destroys Care, (March 7, 2017) available at: http://www.aflcio.org/
Press-Room/Press-Releases/GOP-Healthcare-Plan-Taxes-Workers-and-
Destroys-Care.
    \9\Consortium for Citizens with Disabilities, Statement: CCD 
Responds To American Health Care Act, (March 8, 2017) available at: 
http://www.c-c-d.org/fichiers/House-statement-3-8-final.pdf.
    \10\American Hospital Association, Letter to Congress, (March 7, 
2017) available at: http://www.aha.org/advocacy-issues/letter/2017/
170307-let-aha-house-ahca.pdf.
---------------------------------------------------------------------------

    H.R. 1101 Will Create Market Fragmentation and Threaten Benefits

    Part of the Republican's repeal and replace effort is 
centered around expanding association health plans (AHPs). 
Association health plans are groups of small employer groups or 
individuals that band together to obtain health insurance. 
Proponents argue that AHPs would expand access and drive down 
costs, resulting in more health coverage options. However, 
there are likely to be winners and losers under this approach 
and many workers and employers will be left out in the cold.
    Association health plans are not a new idea. In fact, they 
have been studied at length, including in a 2000 CBO report 
that found that they would have almost no impact in increasing 
health coverage.\11\ Instead, they are likely to exacerbate 
adverse selection and shift costs on to workers. Although AHPs 
would be offered in competition with other small group and 
individual market plans, they would operate under different 
rules. This would fragment the market as lower-cost groups and 
individuals would move to establish an AHP, and higher-cost 
groups and individuals would remain stuck in traditional 
insurance plans. Such adverse selection would result in higher 
premiums in non-AHP plans. Ultimately, higher-cost (sicker or 
older) groups could find it more difficult to obtain 
coverage.\12\
---------------------------------------------------------------------------
    \11\Congressional Budget Office, Increasing Small-Firm Health 
Insurance Coverage Through Association Health Plans and HealthMarts, 
(January 2000) available at: https://www.cbo.gov/sites/default/files/
106th-congress-1999-2000/reports/healthins.pdf.
    \12\The American Academy of Actuaries, Issue Brief: Association 
Health Plans, (February 2017) available at: http://www.actuary.org/
content/association-health-plans-0.
---------------------------------------------------------------------------
    With the passage of the ACA, health insurance sold through 
an association to individuals and small employers generally 
must meet the same insurance standards of coverage sold in the 
individual and small group market. The Small Business Fairness 
Act, introduced by Representatives Johnson and Walberg, 
essentially unravels these protections and allows association 
health plans to play by different rules. For example, they can 
evade state-mandated benefits and consumer protections. 
Therefore, those in an AHP may lose out on certain benefits and 
they may not be aware of that fact. While AHPs may save money 
if they do not have to bear the costs of these consumer 
protections, AHP enrollees are likely to incur substantial 
costs for non-covered services down the road when it is too 
late for recourse.\13\
---------------------------------------------------------------------------
    \13\Id.
---------------------------------------------------------------------------
    Committee Democrats have concerns about the impact that 
association health plans will have on businesses and workers. 
The legislation is opposed by a number of consumer and advocacy 
groups, including the Main Street Alliance and the National 
Association of Insurance Commissioners. Further, the American 
Academy of Actuaries outlined in its comment letter to 
Chairwoman Foxx and Ranking Member Scott that, ``the bill as 
currently written will likely have unintended consequences . . 
. \14\
---------------------------------------------------------------------------
    \14\American Academy of Actuaries, Letter to Chairwoman Foxx and 
Ranking Member Scott Re: Markup of H.R. 1101, the Small Business Health 
Fairness Act of 2017, (March 8, 2017).
---------------------------------------------------------------------------

   H.R. 1101 Gambles With the Financial Security of Both Workers and 
                               Employers

    There are grave concerns around the solvency of association 
health plans. The history of multiple employer welfare 
arrangements (MEWAs) offers insight into the financial 
challenges that AHPs could face. In 2001, Sunkist Growers, 
Inc., a licensed MEWA in California covering 23,000 people, 
became insolvent.\15\ When New Jersey's Coalition of Automotive 
Retailers, a longstanding MEWA that covered 20,000 people, 
became insolvent in 2002, it had $15 million in outstanding 
medical bills.\16\ For years, self-funded MEWAs had no clear 
regulatory authority and multiple MEWA bankruptcies resulted. 
Recognizing that it was both appropriate and necessary for 
states to be able to establish, apply, and enforce state 
insurance laws with respect to MEWAs, Congress amended ERISA in 
1983 to provide an exception to ERISA's broad preemption 
provisions by specifically allowing for state regulation of 
MEWAs. Unfortunately, HR 1101 prohibits state regulation of 
AHPs, so if the bill is enacted, AHPs will not be covered by 
state regulations which generally govern consumer protections 
and solvency requirements.\17\
---------------------------------------------------------------------------
    \15\The Commonwealth Fund, MEWAs: The Threat of Plan Insolvency and 
Other Challenges, (March 2004) available at: http://
www.commonwealthfund.org/usr_doc/kofman_mewas.pdf.
    \16\Id.
    \17\United States Department of Labor, MEWAs--Multiple Employer 
Welfare Arrangements under the Employee Retirement Income Security Act 
(ERISA): A Guide to Federal and State Regulation, (August 2013) 
available at: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/
our-activities/enforcement/healthcare-fraud/mewa-under-erisa-a-guide-
to-federal-and-state-regulation.pdf; Amendments enacted as part of 
Public Law 97-473, available at: https://www.gpo.gov/fdsys/pkg/STATUTE-
96/pdf/STATUTE-96-Pg2605.pdf.
---------------------------------------------------------------------------
    H.R. 1101 allows AHPs to form under limited regulation and 
oversight, hearkening back to the time when MEWAs also enjoyed 
limited regulation and gambled with the financial security of 
both workers and employers. AHPs threaten both employers and 
workers and have been soundly dismissed as doing little to 
actually improve coverage or decrease costs in a sustainable 
way.

                  Committee Consideration of H.R. 1101

    During Committee consideration, Representative Wilson 
offered an amendment that expressed a sense of Congress that 
any health care insurance legislation should build on the 
current progress of the ACA with CBO's analysis that 
demonstrates improvements in cost and coverage. That amendment 
was withdrawn.
    Several Committee Democrats offered amendments to ensure 
that association health plans did not unduly disadvantage 
certain pockets of small businesses and workers. Ranking Member 
Scott offered an amendment prohibiting the legislation from 
taking place if CBO determined small group market premiums 
would rise as a result of the legislation. In his remarks, 
Ranking Member Scott underscored the potential impact of AHPs 
on small group market premiums saying, ``The reason people want 
to join an association is because they will be in a pool with 
younger, healthier people whose healthcare costs are less than 
average. Of course, no one would form an association for this 
purpose with people who have above average costs because it 
would be cheaper for them to just stay in the insurance pool 
and pay the average rate. So these association plans with 
healthier people will always work for those lucky enough to get 
in. But if you have all these healthy, cheaper people in an 
association, then that leaves those left behind with higher 
costs in the small group market and then the premiums for the 
small group market go up. It is simple arithmetic.''
    Representative Bonamici offered an amendment to require the 
legislation only take effect if CBO determined premiums for 
older workers would not increase. Representative Bonamici 
remarked, ``Proponents of the bill argue that association 
health plans would expand the access and drive down costs. Is 
that the case for the young and the healthy? Well, what 
guarantee would older participants have that their costs will 
go down as well, that they will not be discriminated against? I 
have concerns that this legislation would actually make it more 
difficult for people who truly need coverage, older Americans, 
and that they would be losers.''
    Representative Norcross offered an amendment to prohibit 
the legislation from taking effect if the CBO determined that 
premiums for the middle class increased under the legislation. 
In offering his amendment, Representative Norcross stated, ``I 
believe together we can make healthcare work better for working 
families. We can continue to protect those with preexisting 
conditions, protect women, and lower the cost. So let us put 
this into action, let us put partisanship aside, and focus on 
solutions we both can agree to. I hope you will join me in 
supporting this amendment, which will give Americans peace of 
mind that their premiums will not go up.'' These amendments 
were withdrawn due to germaneness concerns, but Committee 
Democrats remain troubled about the impact that AHPs would have 
on the affordability of coverage for certain workers. 
Underscoring these concerns, the Main Street Alliance asserts 
that, ``H.R. 1101 would result in higher premiums and poorer 
coverage for the most vulnerable small business owners.''\18\ 
The National Association of Insurance Commissioners asserts 
that AHPs create a situation where ``unhealthy groups are 
disadvantaged.''\19\
---------------------------------------------------------------------------
    \18\The Main Street Alliance, Letter to Chairwoman Foxx and Ranking 
Member Scott, (March 8, 2017) available at: https://
d3n8a8pro7vhmx.cloudfront.net/mainstreetalliance/pages/487/attachments/
original/1489503369/letteropposingHR1101.pdf?1489503369.
    \19\National Association of Insurance Commissioners, Letter to 
Chairwoman Foxx and Ranking Member Scott, (February 28, 2017) available 
at: http://www.naic.org/documents/
health_archive_naic_opposes_small_business_fairness_act.pdf.
---------------------------------------------------------------------------
    Committee Democrats also recognize that the loss of state 
mandated benefits and consumer protections threaten 
comprehensive services for workers and small businesses in 
AHPs. Representative Shea-Porter offered an amendment that was 
withdrawn, to ensure that substance abuse disorder coverage and 
treatment is not compromised through the expansion of AHPs. 
Representative Shea-Porter stated, ``The fight against the 
heroin, fentanyl, and prescription opioid epidemic is 
multipronged, but it rests on a base of widespread access to 
coverage and care. . . My amendment would defend the gains we 
have made by ensuring that today's bill would not reduce access 
to substance use disorder treatment. Let us not pull the rug 
out from under people who are about to turn their lives 
around.''
    Representative Davis also offered an amendment to ensure 
that association health plans cover needed health services for 
women, such as maternity care and direct access to OB-GYN 
services. In offering her amendment Representative Davis 
stated, ``Madame Chairwoman, we know from our own hearing the 
other day that these provisions are extremely popular. Both the 
witnesses from Democratic and Republican staffs suggested that 
these minimum essential benefits should continue to be offered. 
So that is why I am so concerned that the bill before us could 
allow association health plans to be offered that do not offer 
some of these essential benefits and protections for women . . 
. My colleagues insist that expanding unregulated association 
health plans is about choice. I can tell you, I am all about 
expanding choices in health care coverage, but not if it means 
giving plans the choice to charge women more for the services 
they need . . . [the amendment] says that reductions in 
coverage for maternity care or women's preventive health 
services or limits to direct access to OB-GYN care is not 
basically the intent of this legislation. This really is an 
opportunity for all of us to show our seriousness about women's 
health.'' The amendment failed on a party line vote (17-22).
    Representative Polis offered two additional amendments to 
allow prescription drug importation and support hospital 
pricing transparency. Both amendments were withdrawn.
    H.R. 1101 was favorably reported, as amended, on a party 
line vote (22-17) with all Democratic Members opposing.

                               Conclusion

    After seven years of disparaging the ACA, Republicans 
released a repeal and replacement plan that will leave millions 
of Americans worse off. Meanwhile, the Small Business Health 
Fairness Act would erode the protections in the ACA and leave 
small businesses and their workers vulnerable to unaffordable 
health coverage and fewer benefits. Association health plans 
let the fortunate few form an association where they are able 
to pay less than average, but everyone else outside of the 
association will have to pay more. The Committee should protect 
the progress of the ACA and work to improve and expand 
coverage; the expansion of AHPs will only threaten affordable 
coverage for those outside of the associations. Committee 
Democrats are committed to health care as a right, not a 
privilege for only the healthiest and wealthiest Americans.

                                   Robert C. ``Bobby'' Scott,
                                           Ranking Member.
                                   Raul M. Grijalva.
                                   Marcia L. Fudge.
                                   Gregorio Kilili Camacho Sablan.
                                   Suzanne Bonamici.
                                   Alma S. Adams.
                                   Donald Norcross.
                                   Raja Krishnamoorthi.
                                   Adriano Espaillat.
                                   Susan A. Davis.
                                   Joe Courtney.
                                   Jared Polis.
                                   Frederica S. Wilson.
                                   Mark Takano.
                                   Mark DeSaulnier.
                                   Lisa Blunt-Rochester.
                                   Carol Shea Porter.

                                  [all]