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110th Congress                                            Rept. 110-806
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
                             MICHELLE'S LAW

                                _______
                                

                 July 30, 2008.--Ordered to be printed

                                _______
                                

 Mr. Dingell, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2851]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 2851) to amend the Employee Retirement Income 
Security Act of 1974, the Public Health Service Act, and the 
Internal Revenue Code of 1986 to ensure that dependent students 
who take a medically necessary leave of absence do not lose 
health insurance coverage, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................     8
Statement of General Performance Goals and Objectives............     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     8
Earmarks and Tax and Tariff Benefits.............................     8
Committee Cost Estimate..........................................     8
Congressional Budget Office Estimate.............................     8
Federal Mandates Statement.......................................     9
Advisory Committee Statement.....................................    10
Constitutional Authority Statement...............................    10
Applicability to Legislative Branch..............................    10
Section-by-Section Analysis of the Legislation...................    10
Changes in Existing Law Made by the Bill, as Reported............    12

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as ``Michelle's Law''.

SEC. 2. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE OF 
                    ABSENCE.

  (a) Amendments of ERISA.--
          (1) In general.--Subpart B of part 7 of title I of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185 
        et seq.) is amended by adding at the end the following:

``SEC. 714. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE 
                    OF ABSENCE.

  ``(a) Medically Necessary Leave of Absence.--In this section, the 
term `medically necessary leave of absence' means, with respect to a 
dependent child described in subsection (b)(2), a leave of absence of 
such child from a postsecondary educational institution (including an 
institution of higher education as defined in section 102 of the Higher 
Education Act of 1965), or any other change in enrollment of such child 
at such an institution, that--
          ``(1) commences while such child is suffering from a severe 
        illness or injury;
          ``(2) is medically necessary; and
          ``(3) causes such child to lose full-time student status 
        under the terms of the plan.
  ``(b) Requirement To Continue Coverage.--
          ``(1) In general.--In the case of a dependent child described 
        in paragraph (2), a group health plan (or health insurance 
        coverage offered in connection with such a plan) shall not 
        terminate coverage of such child due to a medically necessary 
        leave of absence before the date that is the earlier of--
                  ``(A) the date that is 1 year after the first day of 
                the medically necessary leave of absence; or
                  ``(B) the date on which such coverage would otherwise 
                terminate under the terms of the plan.
          ``(2) Dependent child described.--A dependent child described 
        in this paragraph is a beneficiary under the plan who--
                  ``(A) is a dependent child, under the terms of the 
                plan, of a participant or beneficiary of the plan;
                  ``(B) was enrolled in the plan or coverage as of the 
                first day of the medically necessary leave of absence 
                involved; and
                  ``(C) was enrolled as a full-time student at a 
                postsecondary educational institution (as described in 
                subsection (a)) until the first day of the medically 
                necessary leave of absence involved.
          ``(3) Certification by physician.--Paragraph (1) shall not 
        apply to a group health plan (or health insurance coverage 
        offered in connection with such a plan) unless certification by 
        the child's attending physician is submitted to the plan or 
        issuer stating that the dependent child is suffering from a 
        severe illness or injury and that the leave of absence is 
        medically necessary.
  ``(c) No Loss of Full-Time Status Due to Break in Semester.--Any 
breaks in the school semester shall not disqualify a dependent child 
described under subsection (b) from coverage under this section.
  ``(d) No Change in Benefits.--A dependent child whose benefits are 
continued under this section shall be entitled to the same benefits as 
if (during the medically necessary leave of absence) the child 
continued to be a full-time student at the institution of higher 
education and was not on a medically necessary leave of absence.
  ``(e) Coverage Under Successor Plan.--If a plan sponsor changes group 
health plans after the first day of a medically necessary leave of 
absence of dependent child described in subsection (b) but before the 
date described under subsection (b)(1), and such new group health plan 
offers coverage of beneficiaries as dependent children, such new group 
health plan shall be subject to this section in the same manner as the 
predecessor group health plan.
  ``(f) Presumption.--For purposes of administrative or judicial 
proceedings, upon certification under subsection (b)(3), there shall be 
a rebuttable presumption that the requirements of paragraphs (1) and 
(2) of subsection (a) have been met.''.
          (2) Conforming amendment.--The table of contents in section 1 
        of such Act is amended by inserting after the item relating to 
        section 713 the following new item:

``Sec. 714. Coverage of dependent students on medically necessary leave 
of absence.''.

  (b) Amendments to the Public Health Service Act.--
          (1) Group markets.--Subpart 2 of part A of title XXVII of the 
        Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
        amended by adding at the end the following new section:

``SEC. 2707. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY 
                    LEAVE OF ABSENCE.

  ``(a) Medically Necessary Leave of Absence.--In this section, the 
term `medically necessary leave of absence' means, with respect to a 
dependent child described in subsection (b)(2) in connection with a 
group health plan, a leave of absence of such child from a 
postsecondary educational institution (including an institution of 
higher education as defined in section 102 of the Higher Education Act 
of 1965), or any other change in enrollment of such child at such an 
institution, that--
          ``(1) commences while such child is suffering from a serious 
        illness or injury;
          ``(2) is medically necessary; and
          ``(3) causes such child to lose student status for purposes 
        of coverage under the terms of the plan.
  ``(b) Requirement To Continue Coverage.--
          ``(1) In general.--In the case of a dependent child described 
        in paragraph (2), a group health plan (or a health insurance 
        issuer that provides health insurance coverage in connection 
        with a group health plan) shall not terminate coverage of such 
        child under such plan or health insurance coverage due to a 
        medically necessary leave of absence before the date that is 
        the earlier of--
                  ``(A) the date that is 1 year after the first day of 
                the medically necessary leave of absence; or
                  ``(B) the date on which such coverage would otherwise 
                terminate under the terms of the plan or health 
                insurance coverage.
          ``(2) Dependent child described.--A dependent child described 
        in this paragraph is, with respect to a group health plan, a 
        beneficiary under the plan who--
                  ``(A) is a dependent child, under the terms of the 
                plan, of a participant or beneficiary of the plan; and
                  ``(B) was enrolled in the plan (or health insurance 
                coverage offered in connection with the plan), on the 
                basis of being a student at a postsecondary educational 
                institution (as described in subsection (a)), 
                immediately before the first day of the medically 
                necessary leave of absence involved.
          ``(3) Certification by physician.--Paragraph (1) shall apply 
        to a group health plan (or health insurance coverage offered by 
        an issuer in connection with a group health plan) only if the 
        plan or issuer has received written certification by a treating 
        physician of the dependent child which states that the child is 
        suffering from a serious illness or injury and that the leave 
        of absence (or other change of enrollment) described in 
        subsection (a) is medically necessary.
  ``(c) Notice.--A group health plan, and a health insurance issuer 
providing health insurance coverage in connection with a group health 
plan, shall include, with any notice regarding a requirement for 
certification of student status for coverage under the plan or 
coverage, a description of the terms of this section for continued 
coverage during medically necessary leaves of absence. Such description 
shall be in language which is understandable to the typical plan 
participant.
  ``(d) No Change in Benefits.--A dependent child whose benefits are 
continued under this section shall be entitled to the same benefits as 
if (during the medically necessary leave of absence) the child 
continued to be a covered student at the institution of higher 
education and was not on a medically necessary leave of absence.
  ``(e) Coverage Under Successor Plan.--If a plan sponsor changes group 
health plans after the first day of a medically necessary leave of 
absence of a dependent child described in subsection (b) but before the 
date described under subsection (b)(1), and such new group health plan 
offers coverage of beneficiaries as dependent children, such new group 
health plan shall be subject to this section in the same manner as the 
predecessor group health plan.''.
          (2) Individual market.--Subpart 3 of part B of title XXVII of 
        such Act (42 U.S.C. 300gg-51 et seq.) is amended by adding at 
        the end the following new section:

``SEC. 2753. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY 
                    LEAVE OF ABSENCE.

  ``The provisions of section 2707 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as they apply to health insurance coverage offered 
by a health insurance issuer in connection with a group health plan in 
the small or large group market.''.
  (c) Amendments to the Internal Revenue Code.--
          (1) In general.--Subchapter B of chapter 100 of the Internal 
        Revenue Code of 1986 (relating to other group health plan 
        requirements) is amended by inserting after section 9812 the 
        following new section:

``SEC. 9813. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY 
                    LEAVE OF ABSENCE.

  ``(a) Medically Necessary Leave of Absence.--In this section, the 
term `medically necessary leave of absence' means, with respect to a 
dependent child, a leave of absence of such child from a postsecondary 
educational institution (including an institution of higher education 
as defined in section 102 of the Higher Education Act of 1965), or any 
other change in enrollment of such child at such an institution, that--
          ``(1) commences while such child is suffering from a severe 
        illness or injury;
          ``(2) is medically necessary; and
          ``(3) causes such child to lose full-time student status 
        under the terms of the plan.
  ``(b) Requirement To Continue Coverage.--
          ``(1) In general.--In the case of a dependent child described 
        in paragraph (2), a group health plan shall not terminate 
        coverage of such child due to a medically necessary leave of 
        absence before the date that is the earlier of--
                  ``(A) the date that is 1 year after the first day of 
                the medically necessary leave of absence; or
                  ``(B) the date on which such coverage would otherwise 
                terminate under the terms of the plan.
          ``(2) Child described.--A dependent child described in this 
        paragraph is a beneficiary under the plan who--
                  ``(A) is a dependent child, under the terms of the 
                plan, of a participant or beneficiary of the plan;
                  ``(B) was enrolled in the plan or coverage as of the 
                first day of the medically necessary leave of absence 
                involved; and
                  ``(C) was enrolled as a full-time student at a 
                postsecondary educational institution (as described in 
                subsection (a)) until the first day of the medically 
                necessary leave of absence involved.
          ``(3) Certification by physician.--Paragraph (1) shall not 
        apply to a group health plan (or health insurance coverage 
        offered in connection with such a plan) unless certification by 
        the child's attending physician is submitted to the plan (or 
        the issuer health insurance coverage in connection with the 
        plan) stating that the dependent child is suffering from a 
        severe illness or injury and that the leave of absence is 
        medically necessary.
  ``(c) No Loss of Full-Time Status Due to Break in Semester.--Any 
breaks in the school semester shall not disqualify a dependent child 
described under subsection (b) from coverage under this section.
  ``(d) No Change in Benefits.--A dependent child whose benefits are 
continued under this section shall be entitled to the same benefits as 
if (during the medically necessary leave of absence) the child 
continued to be a full-time student at the institution of higher 
education and was not on a medically necessary leave of absence.
  ``(e) Coverage Under Successor Plan.--If a plan sponsor changes group 
health plans after the first day of a medically necessary leave of 
absence of a dependent child described in subsection (b) but before the 
date described under subsection (b)(1), and such new group health plan 
offers coverage of beneficiaries as dependent children, such new group 
health plan shall be subject to this section in the same manner as the 
predecessor group health plan.
  ``(f) Presumption.--For purposes of administrative or judicial 
proceedings, upon certification under subsection (b)(3), there shall be 
a rebuttable presumption that the requirements of paragraphs (1) and 
(2) of subsection (a) have been met.''.
          (2) Conforming amendment.--The table of sections for 
        subchapter B of chapter 100 of such Code is amended by 
        inserting after the item relating to section 9812 the following 
        new item:

``Sec. 9813. Coverage of dependent students on medically necessary 
leave of absence.''.

  (d) Effective Date.--The amendments made by this Act shall apply with 
respect to plan years beginning on or after the date that is one year 
after the date of the enactment of this Act and to medically necessary 
leaves of absence beginning during such plan years.

                          Purpose and Summary

    The purpose of H.R. 2851, Michelle's Law, is to ensure 
continuity of health coverage for students, who because of a 
serious illness or injury, can no longer maintain student 
status.

                  Background and Need for Legislation

    Michelle Morse was a full-time college student at Plymouth 
State University in New Hampshire who was diagnosed with colon 
cancer in 2003. Her doctors recommended that she cut back her 
college course load while undergoing chemotherapy treatment. 
She was informed, however, that if she cut back her classroom 
hours, she would lose her health insurance coverage because she 
would no longer qualify as a dependent on her parents' health 
insurance plan.
    Other health insurance coverage options were unaffordable. 
As a result, she was forced to remain in school as a full-time 
student while undergoing 14 rounds of chemotherapy. In 2005, 
she succumbed to her illness. The case spurred interest in 
protections that would extend the definition of dependents to 
allow college students needing medical leaves of absence from 
class work to retain health insurance coverage on their 
parents' policies.
    Private health insurance contracts define when a person can 
be considered to be a ``dependent'' for the purpose of 
purchasing a family health insurance plan. It is common 
practice, although far from universal, that dependents are 
considered to include college-age students as long as those 
students are enrolled in college full-time. Many States also 
have legislation that impacts how those dependents can be 
defined. At least six States--Maine, New Hampshire, New York, 
Vermont, Virginia, and Wisconsin--have enacted laws similar to 
Michelle's Law. Those State laws extend the ability of 
dependents to remain on their parents' plan for a limited 
period of time during a medical leave from full-time student 
status.\1\ Four States--Maryland, Michigan, Rhode Island, and 
Texas--require insurers to allow college-age dependents who are 
enrolled part-time in school to remain on their parent's health 
insurance plan.\2\ At least nine additional States--Colorado, 
Florida, Indiana, Massachusetts, Missouri, Montana, New Jersey, 
New Mexico, and Utah--have enacted laws that would define 
dependents to include those older than 18 (the exact age 
varies) regardless of student status.\3\
---------------------------------------------------------------------------
    \1\Based on a CRS review of State statutes and ``The Changing 
Definition of `Dependent': Who is Insured and For How Long?''--National 
Conference of State Legislatures, Updated February 2008.
    \2\Based on a CRS review of State statutes and ``The Changing 
Definition of `Dependent': Who is Insured and For How Long?''--National 
Conference of State Legislatures, Updated February 2008.
    \3\Based on a CRS review of State statutes and ``The Changing 
Definition of `Dependent': Who is Insured and For How Long?''--National 
Conference of State Legislatures, Updated February 2008.
---------------------------------------------------------------------------
    States' laws, however, have limited applicability. States 
can enact laws that apply to individually-offered health 
insurance (not offered through employment) and to employment-
based coverage as long as it is coverage that is comprised of 
an insurance product offered by companies in the business of 
selling insurance (including health maintenance organizations.)
    If an employer self-insures (funds and retains the risk 
that the premiums collected may not cover the cost of medical 
benefits provided) its employees, State laws regulating the 
business of insurance do not apply. Over one-half of all 
employees are covered by self-insured employment-based coverage 
that is exempt from State insurance laws according to the 
Department of Labor.\4\
---------------------------------------------------------------------------
    \4\About 54 percent of workers were enrolled in employment-based 
coverage that was self-insured in CY 2005. Unpublished Department of 
Labor estimates based on March 2006 CPS.
---------------------------------------------------------------------------
    Thus to protect individuals across all plan types, Federal 
action is needed. H.R. 2851, or Michelle's Law, was introduced 
in the House of Representatives by Representative Hodes. The 
bill would extend the ability of dependents to remain on their 
parents' plan for a limited period of time during a medical 
leave from student status and would apply to all health 
insurance products, whether sold to individuals or offered as a 
workplace benefit, and whether or not the employer plan is 
self-insured. More protective State laws would continue to 
remain in effect. The bill does not disturb underlying Federal 
protections relating to rights and responsibilities of plans, 
issuers, or individuals. The American Cancer Society estimates 
that this bill could impact about 2,400 college-age students 
who will be diagnosed with cancer each year.
    A similar bill, S. 400, was introduced in the Senate on 
January 25, 2007, by Senators Sununu, Gregg, and Clinton. That 
bill would have a more limited scope than H.R. 2851, however, 
in that it would only apply to employer-provided health 
insurance. It was referred to the Committee on Health, 
Education, Labor, and Pensions. No further action has been 
taken on S. 400.

                                Hearings

    No hearings were held in connection with H.R. 2851 in the 
Committee on Energy and Commerce.

                        Committee Consideration

    On Wednesday, July 9, 2008, the Subcommittee on Health met 
in open markup session and favorably forwarded H.R. 2851, 
amended, to the full Committee for consideration, by a voice 
vote. On Wednesday, July 16, 2008, the full Committee met in 
open markup session and ordered H.R. 2851 favorably reported to 
the House, amended, by a record vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Dingell to order H.R. 2851 favorably reported to 
the House, amended, was agreed to by a record vote of 40 yeas 
and 0 nays, with two Members voting present. The following is 
the recorded vote taken on the motion, including the names of 
those Members voting for and against:


                      Committee Oversight Findings

    Regarding clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the oversight findings of the 
Committee regarding H.R. 2851 are reflected in this report.

         Statement of General Performance Goals and Objectives

    The purpose of H.R. 2851 is to ensure continuity of health 
coverage for students, who because of a serious illness or 
injury, can no longer maintain student status. The purpose is 
to allow the student to continue coverage on their parents' 
insurance plan for the duration of the plan year.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Regarding compliance with clause 3(c)(2) of rule XIII of 
the Rules of the House of Representatives, the Committee adopts 
as its own the estimate of budget authority, entitlement 
authority, revenues, and tax expenditures regarding H.R. 2851 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                  Earmarks and Tax and Tariff Benefits

    Regarding compliance with clause 9 of rule XXI of the Rules 
of the House of Representatives, H.R. 2851 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
2851 prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate on 
H.R. 2851 provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 28, 2008.
Hon. John D. Dingell,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2851, the 
Michelle's Law.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Robert 
Stewart.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 2851--Michelle's Law

    H.R. 2851 would require that group health plans continue to 
provide coverage for full-time college students who take a 
medically necessary leave of absence from school. Currently, 
health plans extend coverage to dependents of family 
policyholders as long as the dependent is either 18 or younger 
or 22 or younger and enrolled at a post-secondary institution. 
Dependents who are covered by the group health plan on the 
basis of their enrollment at a post-secondary institution may 
lose eligibility if they take a leave of absence for any 
reason. H.R. 2851 would create an exception to that rule by 
preventing group health plans from terminating coverage if the 
leave of absence is for medical reasons.
    CBO estimates that H.R. 2851 would have no significant 
impact on the budget. It would have a negligible impact on 
federal revenues. CBO assumes that less than one percent of 
students go on medical leave of absence annually, of which 
approximately half are covered as dependents under employer-
sponsored insurance. Furthermore, many states already require 
employer-sponsored plans to cover dependents up to 22 years of 
age and older for other reasons; students in these states would 
not be affected by the proposed law. This leaves a very small 
proportion of students enrolled in post-secondary educational 
institutions to whom the bill would apply.
    An insurer's cost of covering a college student who goes on 
medical leave can be significant; for those taking medical 
leaves of absence, the most common causes are mental disorders, 
major illnesses such as cancer, drug and alcohol-related 
problems, and serious trauma. However, due to the small number 
of students who take medical leaves of absence and state 
requirements that plans cover dependents above 22 years of age, 
the overall cost to group health plans would be negligible.
    H.R. 2851 would not impose an intergovernmental mandate but 
would impose a private-sector mandate as defined in the 
Unfunded Mandates Reform Act (UMRA). (The bill would marginally 
affect the budgets of state and local governments only if they 
chose to comply with the bill's requirements.) The bill would 
impose a private-sector mandate by requiring group health plans 
to continue the coverage of full-time students enrolled in a 
post-secondary institution who take a medically necessary leave 
of absence. CBO estimates that the costs of complying with the 
mandate would be small and would not exceed the thresholds 
established in UMRA ($136 million in 2008, adjusted annually 
for inflation).
    The CBO staff contacts for this estimate are Robert Stewart 
(for federal costs) and Stuart Hagen (for the private-sector 
impact). This estimate was approved by Keith J. Fontenot, 
Deputy Assistant Director for Health and Human Resources, 
Budget Analysis Division.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 2851 prepared by the Director of the 
Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
2851.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for H.R. 2851 is provided in Article 
I, section 8, clause 3, which grants Congress the power to 
regulate commerce with foreign nations, among the several 
States, and with the Indian Tribes.

                  Applicability to Legislative Branch

    The Committee finds that H.R. 2851 does not relate to the 
terms and conditions of employment or access to public services 
or accommodations within the meaning of section 102(b)(3) of 
the Congressional Accountability Act of 1995.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the legislation 
as ``Michelle's Law''.

Section 2. Coverage of dependent students on medically necessary leave 
        of absence

            (a) Amendments of ERISA
    This provision would add a new section to the Employee 
Retirement Income Security Act of 1974 (ERISA) requiring all 
employer-provided health insurance plans (whether insured or 
self-insured) to continue coverage for a child dependent on a 
medically necessary leave of absence for a period of up to one 
year after the first day of the leave of absence or the date on 
which such coverage would otherwise terminate under the terms 
of the plan, whichever is earlier. Very small employer plans, 
those with fewer than 2 participants, are exempted from this 
requirement. A dependent child is described as a dependent 
under the terms of the plan who was enrolled in the plan on the 
first day of the medically necessary leave of absence and was 
enrolled as a full-time student at a postsecondary education 
institution until the first day of the medically necessary 
leave of absence.
    A medically necessary leave of absence is defined as a 
leave of absence (or any other change in enrollment) from a 
post secondary education institution that (1) begins while the 
child is suffering from a severe illness or injury, (2) is 
medically necessary, and (3) causes the child to lose full-time 
student status under the terms of the plan. The bill would 
require a certification by the child's attending physician be 
submitted to the plan or issuer stating that the dependent is 
suffering from a severe illness or injury and that the leave of 
absence is medically necessary. .The bill provides that if the 
child's attending physician has made this certification, for 
purposes of an administrative or judicial proceeding there 
shall be a rebuttable presumption that the child has met the 
first two criteria for a medically necessary leave of absence.
    The bill states that breaks in the school semester can not 
disqualify a dependent from protection against disenrollment. 
The bill states that benefits cannot be reduced during the 
medically necessary leave of absence. Ordinary rights under 
ERISA pertaining to items such as appeals, notice, denials, and 
continuation of COBRA coverage would continue to apply.
            (b) Amendments to the Public Health Service Act
    Similar provisions are added to the Public Health Service 
Act, ensuring applicability of the law to insurance carriers 
and other entities in the business of selling health coverage 
both to employers and to individuals. The provisions differ 
from the ERISA provisions described above in the following 
ways:
     It clarifies that the protections of the 
legislation apply to dependents who qualify under the plan as 
students, not solely those who lose full-time student status. 
This would not require plans to cover any particular class of 
dependent, but only ensure that all classes of student 
dependents covered under a plan would receive the protections 
of the legislation. A plan would not be required to cover a 
full time student as a dependent. Only that if the plan did 
cover a full time student as a dependent than the provisions of 
the bill apply. Similarly, the bill does not require a plan to 
cover a part time student as a dependent.
     It modifies the definition of medical leave to be 
the result of a ``serious illness or injury'' instead of a 
``severe illness or injury.''
     It modifies the requirement to provide a physician 
certification so that the child's ``treating'' physician must 
provide such certification instead of the child's attending 
physician.
     It adds a requirement that insofar as plans 
provide notice of the availability of coverage of dependent 
students, the notice describes that such coverage remains 
available during medical leave.
     It removes provisions regarding intra-semester 
breaks and the presumption relating to the burden of proof in 
legal and administrative proceedings.
     It ensures that certification by the treating 
physician is sufficient proof of serious illness or injury and 
the medical necessity of the student's leave of absence for the 
protections of the bill to apply.
            (c) Amendments to the Internal Revenue Code
    Provisions identical to the ERISA amendments are added to 
the Internal Revenue Code, ensuring the applicability of the 
law to certain types of health coverage that is not employer 
sponsored nor sold by entities in the business of selling 
health insurance or health coverage; such as church-sponsored 
plans. In addition, these provisions ensure that certain 
penalties for non-compliance described in the Internal Revenue 
Code are applicable for entities that are found to be in 
violation of the provisions.
            (d) Effective date
    The bill would become effective for plan years beginning on 
or after one year after the date of enactment.

         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):

            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974




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

                            TABLE OF CONTENTS

Sec. 1. Short title and table of contents.

             TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

     * * * * * * *

                    Subtitle B--Regulatory Provisions

     * * * * * * *

                 Part 7--Group Health Plan Requirements

     * * * * * * *

                      Subpart B--Other Requirements

     * * * * * * *
Sec. 714. Coverage of dependent students on medically necessary leave of 
          absence.

           *       *       *       *       *       *       *


TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *


Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *


Part 7--Group Health Plan Requirements

           *       *       *       *       *       *       *


Subpart B--Other Requirements

           *       *       *       *       *       *       *


SEC. 714. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE 
                    OF ABSENCE.

  (a) Medically Necessary Leave of Absence.--In this section, 
the term ``medically necessary leave of absence'' means, with 
respect to a dependent child described in subsection (b)(2), a 
leave of absence of such child from a postsecondary educational 
institution (including an institution of higher education as 
defined in section 102 of the Higher Education Act of 1965), or 
any other change in enrollment of such child at such an 
institution, that--
          (1) commences while such child is suffering from a 
        severe illness or injury;
          (2) is medically necessary; and
          (3) causes such child to lose full-time student 
        status under the terms of the plan.
  (b) Requirement To Continue Coverage.--
          (1) In general.--In the case of a dependent child 
        described in paragraph (2), a group health plan (or 
        health insurance coverage offered in connection with 
        such a plan) shall not terminate coverage of such child 
        due to a medically necessary leave of absence before 
        the date that is the earlier of--
                  (A) the date that is 1 year after the first 
                day of the medically necessary leave of 
                absence; or
                  (B) the date on which such coverage would 
                otherwise terminate under the terms of the 
                plan.
          (2) Dependent child described.--A dependent child 
        described in this paragraph is a beneficiary under the 
        plan who--
                  (A) is a dependent child, under the terms of 
                the plan, of a participant or beneficiary of 
                the plan;
                  (B) was enrolled in the plan or coverage as 
                of the first day of the medically necessary 
                leave of absence involved; and
                  (C) was enrolled as a full-time student at a 
                postsecondary educational institution (as 
                described in subsection (a)) until the first 
                day of the medically necessary leave of absence 
                involved.
          (3) Certification by physician.--Paragraph (1) shall 
        not apply to a group health plan (or health insurance 
        coverage offered in connection with such a plan) unless 
        certification by the child's attending physician is 
        submitted to the plan or issuer stating that the 
        dependent child is suffering from a severe illness or 
        injury and that the leave of absence is medically 
        necessary.
  (c) No Loss of Full-Time Status Due to Break in Semester.--
Any breaks in the school semester shall not disqualify a 
dependent child described under subsection (b) from coverage 
under this section.
  (d) No Change in Benefits.--A dependent child whose benefits 
are continued under this section shall be entitled to the same 
benefits as if (during the medically necessary leave of 
absence) the child continued to be a full-time student at the 
institution of higher education and was not on a medically 
necessary leave of absence.
  (e) Coverage Under Successor Plan.--If a plan sponsor changes 
group health plans after the first day of a medically necessary 
leave of absence of dependent child described in subsection (b) 
but before the date described under subsection (b)(1), and such 
new group health plan offers coverage of beneficiaries as 
dependent children, such new group health plan shall be subject 
to this section in the same manner as the predecessor group 
health plan.
  (f) Presumption.--For purposes of administrative or judicial 
proceedings, upon certification under subsection (b)(3), there 
shall be a rebuttable presumption that the requirements of 
paragraphs (1) and (2) of subsection (a) have been met.

           *       *       *       *       *       *       *

                              ----------                              


                       PUBLIC HEALTH SERVICE ACT



           *       *       *       *       *       *       *
    TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

Part A--Group Market Reforms

           *       *       *       *       *       *       *


Subpart 2--Other Requirements

           *       *       *       *       *       *       *


SEC. 2707. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE 
                    OF ABSENCE.

  (a) Medically Necessary Leave of Absence.--In this section, 
the term ``medically necessary leave of absence'' means, with 
respect to a dependent child described in subsection (b)(2) in 
connection with a group health plan, a leave of absence of such 
child from a postsecondary educational institution (including 
an institution of higher education as defined in section 102 of 
the Higher Education Act of 1965), or any other change in 
enrollment of such child at such an institution, that--
          (1) commences while such child is suffering from a 
        serious illness or injury;
          (2) is medically necessary; and
          (3) causes such child to lose student status for 
        purposes of coverage under the terms of the plan.
  (b) Requirement To Continue Coverage.--
          (1) In general.--In the case of a dependent child 
        described in paragraph (2), a group health plan (or a 
        health insurance issuer that provides health insurance 
        coverage in connection with a group health plan) shall 
        not terminate coverage of such child under such plan or 
        health insurance coverage due to a medically necessary 
        leave of absence before the date that is the earlier 
        of--
                  (A) the date that is 1 year after the first 
                day of the medically necessary leave of 
                absence; or
                  (B) the date on which such coverage would 
                otherwise terminate under the terms of the plan 
                or health insurance coverage.
          (2) Dependent child described.--A dependent child 
        described in this paragraph is, with respect to a group 
        health plan, a beneficiary under the plan who--
                  (A) is a dependent child, under the terms of 
                the plan, of a participant or beneficiary of 
                the plan; and
                  (B) was enrolled in the plan (or health 
                insurance coverage offered in connection with 
                the plan), on the basis of being a student at a 
                postsecondary educational institution (as 
                described in subsection (a)), immediately 
                before the first day of the medically necessary 
                leave of absence involved.
          (3) Certification by physician.--Paragraph (1) shall 
        apply to a group health plan (or health insurance 
        coverage offered by an issuer in connection with a 
        group health plan) only if the plan or issuer has 
        received written certification by a treating physician 
        of the dependent child which states that the child is 
        suffering from a serious illness or injury and that the 
        leave of absence (or other change of enrollment) 
        described in subsection (a) is medically necessary.
  (c) Notice.--A group health plan, and a health insurance 
issuer providing health insurance coverage in connection with a 
group health plan, shall include, with any notice regarding a 
requirement for certification of student status for coverage 
under the plan or coverage, a description of the terms of this 
section for continued coverage during medically necessary 
leaves of absence. Such description shall be in language which 
is understandable to the typical plan participant.
  (d) No Change in Benefits.--A dependent child whose benefits 
are continued under this section shall be entitled to the same 
benefits as if (during the medically necessary leave of 
absence) the child continued to be a covered student at the 
institution of higher education and was not on a medically 
necessary leave of absence.
  (e) Coverage Under Successor Plan.--If a plan sponsor changes 
group health plans after the first day of a medically necessary 
leave of absence of a dependent child described in subsection 
(b) but before the date described under subsection (b)(1), and 
such new group health plan offers coverage of beneficiaries as 
dependent children, such new group health plan shall be subject 
to this section in the same manner as the predecessor group 
health plan.

           *       *       *       *       *       *       *


Part B--Individual Market Rules

           *       *       *       *       *       *       *


Subpart 3--General Provisions

           *       *       *       *       *       *       *


SEC. 2753. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE 
                    OF ABSENCE.

  The provisions of section 2707 shall apply to health 
insurance coverage offered by a health insurance issuer in the 
individual market in the same manner as they apply to health 
insurance coverage offered by a health insurance issuer in 
connection with a group health plan in the small or large group 
market.

           *       *       *       *       *       *       *

                              ----------                              


                     INTERNAL REVENUE CODE OF 1986



           *       *       *       *       *       *       *
Subtitle K--Group Health Plan Requirements

           *       *       *       *       *       *       *


CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS

           *       *       *       *       *       *       *


                    Subchapter B--Other Requirements

     * * * * * * *
Sec. 9813. Coverage of dependent students on medically necessary leave 
          of absence.

           *       *       *       *       *       *       *


SEC. 9813. COVERAGE OF DEPENDENT STUDENTS ON MEDICALLY NECESSARY LEAVE 
                    OF ABSENCE.

  (a) Medically Necessary Leave of Absence.--In this section, 
the term ``medically necessary leave of absence'' means, with 
respect to a dependent child, a leave of absence of such child 
from a postsecondary educational institution (including an 
institution of higher education as defined in section 102 of 
the Higher Education Act of 1965), or any other change in 
enrollment of such child at such an institution, that--
          (1) commences while such child is suffering from a 
        severe illness or injury;
          (2) is medically necessary; and
          (3) causes such child to lose full-time student 
        status under the terms of the plan.
  (b) Requirement To Continue Coverage.--
          (1) In general.--In the case of a dependent child 
        described in paragraph (2), a group health plan shall 
        not terminate coverage of such child due to a medically 
        necessary leave of absence before the date that is the 
        earlier of--
                  (A) the date that is 1 year after the first 
                day of the medically necessary leave of 
                absence; or
                  (B) the date on which such coverage would 
                otherwise terminate under the terms of the 
                plan.
          (2) Child described.--A dependent child described in 
        this paragraph is a beneficiary under the plan who--
                  (A) is a dependent child, under the terms of 
                the plan, of a participant or beneficiary of 
                the plan;
                  (B) was enrolled in the plan or coverage as 
                of the first day of the medically necessary 
                leave of absence involved; and
                  (C) was enrolled as a full-time student at a 
                postsecondary educational institution (as 
                described in subsection (a)) until the first 
                day of the medically necessary leave of absence 
                involved.
          (3) Certification by physician.--Paragraph (1) shall 
        not apply to a group health plan (or health insurance 
        coverage offered in connection with such a plan) unless 
        certification by the child's attending physician is 
        submitted to the plan (or the issuer health insurance 
        coverage in connection with the plan) stating that the 
        dependent child is suffering from a severe illness or 
        injury and that the leave of absence is medically 
        necessary.
  (c) No Loss of Full-Time Status Due to Break in Semester.--
Any breaks in the school semester shall not disqualify a 
dependent child described under subsection (b) from coverage 
under this section.
  (d) No Change in Benefits.--A dependent child whose benefits 
are continued under this section shall be entitled to the same 
benefits as if (during the medically necessary leave of 
absence) the child continued to be a full-time student at the 
institution of higher education and was not on a medically 
necessary leave of absence.
  (e) Coverage Under Successor Plan.--If a plan sponsor changes 
group health plans after the first day of a medically necessary 
leave of absence of a dependent child described in subsection 
(b) but before the date described under subsection (b)(1), and 
such new group health plan offers coverage of beneficiaries as 
dependent children, such new group health plan shall be subject 
to this section in the same manner as the predecessor group 
health plan.
  (f) Presumption.--For purposes of administrative or judicial 
proceedings, upon certification under subsection (b)(3), there 
shall be a rebuttable presumption that the requirements of 
paragraphs (1) and (2) of subsection (a) have been met.

           *       *       *       *       *       *       *