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42 U.S. Code § 18042. Federal program to assist establishment and operation of nonprofit, member-run health insurance issuers
(a) Establishment of program
(1) In general
The Secretary shall establish a program to carry out the purposes of this section to be known as the Consumer Operated and Oriented Plan (CO–OP) program.
(2) Purpose
It is the purpose of the CO–OP program to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets in the States in which the issuers are licensed to offer such plans.
(b) Loans and grants under the CO–OP program
(1) In generalThe Secretary shall provide through the CO–OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of—
(A)
loans to provide assistance to such person in meeting its start-up costs; and
(B)
grants to provide assistance to such person in meeting any solvency requirements of States in which the person seeks to be licensed to issue qualified health plans.
(2) Requirements for awarding loans and grants
(A) In generalIn awarding loans and grants under the CO–OP program, the Secretary shall—
(i)
take into account the recommendations of the advisory board established under paragraph (3);
(ii)
give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and
(iii)
ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.
(B) States without issuers in program
If no health insurance issuer applies to be a qualified nonprofit health insurance issuer within a State, the Secretary may use amounts appropriated under this section for the awarding of grants to encourage the establishment of a qualified nonprofit health insurance issuer within the State or the expansion of a qualified nonprofit health insurance issuer from another State to the State.
(C) Agreement
(i) In generalThe Secretary shall require any person receiving a loan or grant under the CO–OP program to enter into an agreement with the Secretary which requires such person to meet (and to continue to meet)—
(I)
any requirement under this section for such person to be treated as a qualified nonprofit health insurance issuer; and
(II)
any requirements contained in the agreement for such person to receive such loan or grant.
(ii) Restrictions on use of Federal fundsThe agreement shall include a requirement that no portion of the funds made available by any loan or grant under this section may be used—
(I)
for carrying on propaganda, or otherwise attempting, to influence legislation; or
(II)
for marketing.
Nothing in this clause shall be construed to allow a person to take any action prohibited by section 501(c)(29) of title 26.
(iii) Failure to meet requirementsIf the Secretary determines that a person has failed to meet any requirement described in clause (i) or (ii) and has failed to correct such failure within a reasonable period of time of when the person first knows (or reasonably should have known) of such failure, such person shall repay to the Secretary an amount equal to the sum of—
(I)
110 percent of the aggregate amount of loans and grants received under this section; plus
(II)
interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding.
The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer’s tax-exempt status under section 501(c)(29) of such title.
(D) Time for awarding loans and grants
The Secretary shall not later than July 1, 2013, award the loans and grants under the CO–OP program and begin the distribution of amounts awarded under such loans and grants.