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Insurers marketing to small employers would be required to offer at least a minimum benefit plan and would be required to guarantee that all small employers could purchase the minimum benefit plan. Such plans would be exempt from State benefit mandates. Underwriting criteria would be limited as well as exclusions for pre-existing conditions. Insurers which were not in compliance with the standards would be subject to a penalty.

H.R. 3626, introduced by Chairman Rostenkowski, would prohibit any group insurance plan from discriminating on the basis on health status or medical history. Exclusions for preexisting conditions would be limited to six months. In addition, an individual with a pre-existing condition who changed jobs without experiencing a lapse in coverage of more than three months would generally be protected from any pre-existing condition exclusion.

Insurers selling coverage to small groups (2 to 50
employees) would be required to offer adjusted, community-rated
policies on a continuous open-enrollment basis. Insurers could
vary premiums for the age and sex of the group members, except
that the variation could not exceed 67 percent. Rate variation
would not be allowed within a Metropolitan Statistical Area.
Medical underwriting would not be allowed. Small group insurers
would be required to offer a minimum benefit plan. Insurers
which did not meet the standards would be subject to an excise
tax.

Under H.R. 3626, small employers would be prohibited from self-insuring under the provisions of the Employee Retirement Income Security Act.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Those who wish to file a written statement for the printed record of the hearing should submit six (6) copies by the close of business on Thursday, March 26, 1992, to Robert J. Leonard, Chief Counsel and Staff Director, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. An additional supply of statements may be furnished for distribution to the press and public if supplied to the Subcommittee office, 1114 Longworth House Office Building, before the hearing begins.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness. any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. Statements must contain the name and capacity in which the witness will appear oi, for written comments. the name and capacity of the person submitting the statement, as well as any clients or persons, or any organization for whom the witness appears or for whom the statement is submitted.

4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and public during the course of a public hearing. may be submitted in other forms.

I

102D CONGRESS

1ST SESSION

H.R.2121

To amend the Internal Revenue Code of 1986 to impose an excise tax on premiums received on health insurance policies which do not meet certain requirements.

IN THE HOUSE OF REPRESENTATIVES

APRIL 29, 1991

Mr. STARK introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to impose an excise tax on premiums received on health insurance policies which do not meet certain requirements.

1

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4

This Act may be cited as the "Health Insurance Re

5 form Act of 1991".

2

1 SEC. 2. EXCISE TAX ON PREMIUMS RECEIVED ON HEALTH

2

3

INSURANCE POLICIES WHICH DO NOT MEET

CERTAIN REQUIREMENTS.

4 (a) IN GENERAL.-Chapter 47 of the Internal Reve5 nue Code of 1986 (relating to excise taxes on qualified 6 pension, etc. plans) is amended by adding at the end 7 thereof the following new subchapter:

8 "Subchapter B-Health Insurance Standards

"Sec. 5000A. Failure to satisfy standards for health insurance. "Sec. 5000B. General issuance requirements.

"Sec. 5000C. Specific contractual requirements.

"Sec. 5000D. Definitions.

9 "SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS

10

11

FOR HEALTH INSURANCE.

"(a) GENERAL RULE.-In the case of any person is

12 suing applicable accident and health insurance contracts, 13 there is hereby imposed a tax on the failure of such person 14 to meet at any time during any taxable year—

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16

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"(1) the general issuance requirements of section 5000B, or

"(2) the specific contractual requirements of section 5000C.

19 The Secretary of Health and Human Services shall deter

20 mine whether any contract meets the requirements of such

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2

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“(1) IN GENERAL.—The amount of tax imposed

by subsection (a) by reason of 1 or more failures

during a taxable year shall be equal to 100 percent

of the gross premiums received during such taxable

year with respect to all accident and health insur

ance contracts issued by the person on whom such tax is imposed.

"(2) GROSS PREMIUMS.-For purposes of paragraph (1), gross premiums shall include any consideration received with respect to any accident and

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health insurance contract.

12

13

14

DISCOVERED

EXERCISING

"(c) LIMITATION ON TAX.

"(1) TAX NOT TO APPLY WHERE FAILURE NOT REASONABLE DILIGENCE. No tax shall be imposed by subsection (a)

with respect to any failure for which it is established to the satisfaction of the Secretary that the person

on whom the tax is imposed did not know, or exer

cising reasonable diligence would not have known, that such failure existed.

"(2) TAX NOT TO APPLY WHERE FAILURES CORRECTED WITHIN 30 DAYS.-No tax shall be im

posed by subsection (a) with respect to any failure

if

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"(A) such failure was due to reasonable

cause and not to willful neglect, and

"(B) such failure is corrected during the 30-day period beginning on the 1st date any of

the persons on whom the tax is imposed knew, or exercising reasonable diligence would have known, that such failure existed.

"(3) 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 tax imposed by subsection (a).

12 "(d) LIABILITY FOR TAX.-The person issuing the 13 applicable accident and health contract with respect to 14 which a failure occurs shall be liable for the tax imposed 15 by subsection (a).

16 "SEC. 5000B. GENERAL ISSUANCE REQUIREMENTS.

17

"(a) GENERAL RULE.-The requirements of this sec

18 tion are met if a person meets

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2 2 2 2

“(1) the mandatory policy requirements of subsection (b), and

"(2) the guaranteed issue requirements of subsection (c).

23 "(b) MANDATORY POLICY REQUIREMENTS.— "(1) IN GENERAL.-The requirements of this subsection are met if any person issuing accident

25