Association Health Plans Act of 2019
This bill provides statutory authority for certain short-term, limited-duration health insurance plans and association health plans.
The bill permits short-term, limited-duration plans to provide coverage for a period of less than 12 months, not including extensions. Under current law, such plans are exempt from certain market requirements of the Patient Protection and Affordable Care Act, such as coverage of individuals with preexisting conditions.
The bill further permits groups or associations of employers to sponsor fully insured group health plans as if they were employers. Such plans may not discriminate based on the health factors of any prospective plan participant for the purpose of granting an employer's membership in the association or determining a participant's eligibility for benefits or premium amounts.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1170 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 1170
To amend the Employee Retirement Income Security Act of 1974 to
establish additional criteria for determining when employers may join
together in a group or association of employers that will be treated as
an employer under section 3(5) of such Act for purposes of sponsoring a
group health plan, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 11, 2019
Mr. Enzi (for himself, Mr. Alexander, Mr. Barrasso, Mr. Cornyn, Mr.
Isakson, Mr. Braun, Mr. Blunt, Mrs. Capito, Mr. Inhofe, Ms. McSally,
Mr. Thune, Mr. Sasse, Mr. Romney, Mrs. Hyde-Smith, Mr. Grassley, Mr.
Cramer, Mr. Kennedy, Mr. Scott of South Carolina, Ms. Ernst, Mr.
Perdue, Mr. Wicker, Ms. Murkowski, Mr. Daines, Mr. Lankford, and Mr.
Graham) introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to
establish additional criteria for determining when employers may join
together in a group or association of employers that will be treated as
an employer under section 3(5) of such Act for purposes of sponsoring a
group health plan, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Association Health Plans Act of
2019''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Association health plans allow small businesses to band
together on a regional or national basis and leverage their
combined power to obtain the health benefits they want and
need, at a price they can afford.
(2) Small business owners have experienced average premium
decreases of up to 29 percent under an association health plan.
(3) Association health plans are governed under the same
rules that apply to employer-sponsored insurance arrangements
for large employers utilized by more than 160,000,000
Americans.
(4) Important consumer protections established on a
bipartisan basis under the Employee Retirement and Income
Security Act of 1974, the Health Insurance Portability and
Accountability Act of 1996, and the Consolidated Omnibus Budget
Reconciliation Act of 1985 apply to association health plans.
(5) Association health plans comply with requirements for
large employer health plans under the Public Health Service
Act, as amended by the Patient Protection and Affordable Care
Act.
(6) Association health plans cannot limit plan eligibility
on the basis of medical history, health status, claims
experience, or genetic information.
(7) Fully insured association health plans must comply with
State benefit mandates.
(8) Self-insured association health plans are subject to
State multiple-employer welfare arrangement laws.
(9) The Secretary of Labor used its rulemaking authority to
issue a final rule on June 21, 2018, to expand access to
association health plans for American small businesses and
working families, including self-employed business owners.
(10) The Secretary of Labor required association health
plans formed under the final rule to comply with even stronger
nondiscrimination protections than the nondiscrimination
protections under Federal law prior to the final rule.
(11) On March 28, 2019, a Federal district judge vacated
the Secretary of Labor's final rule, threatening to disrupt
coverage for current enrollees and restrict the ability of
small businesses and working families to band together to
obtain affordable and high quality plans in the future.
(12) Health care is one of the most important issues facing
American families, and small business owners and self-employed
Americans want secure and affordable association health plans
to provide comprehensive coverage for themselves and their
families.
SEC. 3. DEFINITION OF ``EMPLOYER'' UNDER ERISA WITH RESPECT TO GROUP
HEALTH PLANS.
(a) Definition of Employer.--Section 3(5) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002(5)) is amended
by striking the period and inserting ``(which, with respect to a group
health plan, shall be determined in accordance with criteria that
includes the criteria under section 735).''.
(b) Group Health Plans.--Part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181 et
seq.) is amended by adding at the end the following:
``SEC. 735. DEFINITION OF `EMPLOYER' WITH RESPECT TO GROUP HEALTH
PLANS.
``(a) In General.--A group or association of employers that meets
the criteria under subsection (b) shall be considered an employer under
section 3(5) for purposes of sponsoring a group health plan.
``(b) Requirements.--The requirements under this subsection are
each of the following:
``(1) The primary purpose of the group or association may
be to offer and provide health coverage to its employer members
and their employees, if such group or association has at least
1 substantial business purpose, as described in subsection (c),
unrelated to offering and providing health coverage or other
employee benefits to its employer members and their employees.
``(2) Each employer member of the group or association
participating in the group health plan is a person acting
directly as an employer of at least 1 employee who is a
participant covered under the plan.
``(3) The group or association has--
``(A) a formal organizational structure with a
governing body; and
``(B) by-laws or other similar indications of
formality.
``(4) The functions and activities of the group or
association shall be controlled by the employer members of the
group or association, and the employer members of the group or
association that participate in the group health plan shall
control the plan. Control under this paragraph shall be in form
and substance.
``(5) The employer members shall have a commonality of
interest as described in subsection (d).
``(6)(A) The group or association shall not make health
coverage through the group health plan available other than
to--
``(i) an employee of a current employer member of
the group or association;
``(ii) a former employee of a current employer
member of the group or association who became eligible
for coverage under the group health plan when the
former employee was an employee of the employer; and
``(iii) a beneficiary of an individual described in
clause (i) or (ii), such as a spouse or dependent
child.
``(B) Notwithstanding subparagraph (A), the group or
association shall not make health coverage through the group
health plan available to any individual (or beneficiaries of
the individual) for any plan year following the plan year in
which the plan determines pursuant to reasonable monitoring
procedures described in subsection (f)(2)(C) that the
individual ceases to meet the conditions described in
subsection (f)(2) for being a working owner (unless the
individual again meets those conditions), except as may be
required by section 601.
``(7) The group or association, and any health coverage
offered by the group or association, shall comply with the
nondiscrimination provisions under subsection (e).
``(8) The group or association shall not be a health
insurance issuer, or owned or controlled by such a health
insurance issuer or by a subsidiary or affiliate of such a
health insurance issuer, other than to the extent such entities
participate in the group or association in their capacity as
employer members of the group or association.
``(c) Substantial Business Purpose.--
``(1) In general.--For purposes of subsection (b)(1), a
substantial business purpose shall exist if the group or
association would be a viable entity in the absence of
sponsoring an employee benefit plan.
``(2) Business purpose.--For purposes of subsection (b)(1)
and paragraph (1), a business purpose shall--
``(A) include promoting common business interests
of the members of the group or association or the
common economic interests in a given trade or employer
community; and
``(B) not be required to be a for-profit activity.
``(d) Commonality of Interest.--
``(1) In general.--Subject to paragraph (3), employer
members of the group or association shall be treated as having
a commonality of interest for purposes of subsection (b)(5)
if--
``(A) the employers are in the same trade,
industry, line of business, or profession; or
``(B) each employer has a principal place of
business in the same region that does not exceed the
boundaries of a single State or a metropolitan area
(even if the metropolitan area includes more than 1
State).
``(2) Same trade, industry, or line of business.--In the
case of a group or association that is sponsoring a group
health plan under this section and that is itself an employer
member of the group or association, the group or association
shall be deemed for purposes of paragraph (1)(A) to be in the
same trade, industry, line of business, or profession, as
applicable, as the other employer members of the group or
association.
``(3) Nondiscrimination.--The standards under paragraph (1)
shall not be implemented in a manner that is subterfuge for
discrimination as is prohibited under subsection (e).
``(e) Nondiscrimination.--
``(1) In general.--A group or association of employers
sponsoring a group health plan under this section, and any
health coverage sponsored by such group or association, shall
comply with each of the following:
``(A) The group or association shall not condition
employer membership in the group or association on any
health factor of any individual who is or may become
eligible to participate in the group health plan
sponsored by the group or association.
``(B) The group health plan sponsored by the group
or association shall comply with the rules under
section 2590.702(b) of title 29, Code of Federal
Regulations (as in effect on June 21, 2018), with
respect to nondiscrimination in rules for eligibility
for benefits, subject to subparagraph (D).
``(C) The group health plan sponsored by the group
or association shall comply with the rules under
section 2590.702(c) of title 29, Code of Federal
Regulations (as in effect on June 21, 2018), with
respect to nondiscrimination in premiums or
contributions required by any participant or
beneficiary for coverage under the plan, subject to
subparagraph (D).
``(D) In applying subparagraphs (B) and (C), the
group or association may not treat the employees of
different employer members of the group or association
as distinct groups of similarly situated individuals
based on a health factor of 1 or more individuals.
``(2) Definition of health factor.--For purposes of this
subsection, the term `health factor' has the meaning given such
term in section 2590.702(a) of title 29, Code of Federal
Regulations (as in effect on June 21, 2018).
``(f) Dual Treatment of Working Owners as Employers and
Employees.--
``(1) In general.--A person determined in accordance with
paragraph (2) to be a working owner of a trade or business may
qualify as both an employer and as an employee of the trade or
business for purposes of the requirements under subsection (b),
including the requirements under paragraphs (2) and (6) of such
subsection.
``(2) Working owner.--
``(A) Eligibility.--A person shall qualify as a
`working owner' if a responsible fiduciary of the group
health plan reasonably determines that the person--
``(i) does not have any common law
employees;
``(ii) has an ownership right of any nature
in a trade or business, whether incorporated or
unincorporated, including a partner and other
self-employed individual;
``(iii) is earning wages or self-employment
income from the trade or business for providing
personal services to the trade or business; and
``(iv) either--
``(I) works on average at least 20
hours per week, or at least 80 hours
per month, providing personal services
to the person's trade or business, or
``(II) has wages or self-employment
income from such trade or business that
at least equals the person's cost of
coverage for participation by the
person, and any covered beneficiaries,
in the group health plan sponsored by
the group or association in which the
person is participating.
``(B) Determination.--The determination under
subparagraph (A) shall be made when the person first
becomes eligible for coverage under the group health
plan.
``(C) Reasonable monitoring procedures.--A
responsible fiduciary of the group health plan shall,
through reasonable monitoring procedures, periodically
confirm the continued eligibility of a person to
qualify as a working owner under subparagraph (A) for
purposes of meeting the requirements under subsection
(b) for the group health plan sponsored under this
section.
``(g) Applicability.--
``(1) Fully insured.--This section shall apply beginning on
September 1, 2018, with respect to a group or association of
employers sponsoring a group health plan that is fully insured.
``(2) Plans expanding to include broader group.--This
section shall apply beginning on January 1, 2019, with respect
to a group or association of employers sponsoring a group
health plan that--
``(A) is not fully insured;
``(B) is in existence on June 21, 2018;
``(C) meets the requirements that applied with
respect to such plan before June 21, 2018; and
``(D) chooses to be a plan sponsored under this
section (and subject to the requirements under
subsections (b) through (f)).
``(3) Other association health plans.--This section shall
apply beginning on April 1, 2019, with respect to any other
group or association of employers sponsoring a group health
plan.
``(4) Other criteria in advisory opinions.--The criteria
under this section shall not invalidate any criteria provided
in an advisory opinion, in effect on or after the date of
enactment of the Association Health Plans Act of 2019, that the
Secretary may use to determine if a group or association of
employers is an employer under section 3(5) for purposes of
sponsoring a group health plan.
``(h) Determination of Employer or Joint Employer Status.--
``(1) In general.--Participating in or facilitating a group
health plan sponsored by a bona fide group or association of
employers pursuant to subsection (a) shall not be construed as
establishing an employer or joint employer relationship under
any Federal or State law.
``(2) Application of provision.--Paragraph (1) shall apply
to a group health plan sponsored or facilitated by a franchisor
and any franchisee, by multiple franchisors for the benefit of
the employees of such franchisors and their franchisees, by
multiple franchisees for the benefit of the employees of such
franchisees, by a franchisor whose franchisee or franchisees
participate or participates in the plan, or by a person or
entity that contracts with any individual as an independent
contractor for whom the plan benefits.
``(i) Rule of Construction.--Nothing in this section shall be
construed as repealing or otherwise limiting the application of this
Act (including section 712 relating to mental health parity) to group
health plans and employee welfare benefit plans.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions. (Sponsor introductory remarks on measure: CR S2438-2439)
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