Association Health Plans Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 2294 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 HOUSE OF REPRESENTATIVES APRIL 12, 2019 Mr. WALBERG (for himself, Ms. FOXX of North Carolina, and Mr. BURGESS) introduced the following bill; which was referred to the Committee on Education and Labor 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 associa- tion 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Association Health 4 Plans Act of 2019’’. 5 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 2 •HR 2294 IH SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) Association health plans allow small busi- 3 nesses to band together on a regional or national 4 basis and leverage their combined power to obtain 5 the health benefits they want and need, at a price 6 they can afford. 7 (2) Small business owners have experienced av- 8 erage premium decreases of up to 29 percent under 9 an association health plan. 10 (3) Association health plans are governed under 11 the same rules that apply to employer-sponsored in- 12 surance arrangements for large employers utilized by 13 more than 160,000,000 Americans. 14 (4) Important consumer protections established 15 on a bipartisan basis under the Employee Retire- 16 ment and Income Security Act of 1974, the Health 17 Insurance Portability and Accountability Act of 18 1996, and the Consolidated Omnibus Budget Rec- 19 onciliation Act of 1985 apply to association health 20 plans. 21 (5) Association health plans comply with re- 22 quirements for large employer health plans under 23 the Public Health Service Act, as amended by the 24 Patient Protection and Affordable Care Act. 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 3 •HR 2294 IH (6) Association health plans cannot limit plan 1 eligibility on the basis of medical history, health sta- 2 tus, claims experience, or genetic information. 3 (7) Fully-insured association health plans must 4 comply with State benefit mandates. 5 (8) Self-insured association health plans are 6 subject to State multiple-employer welfare arrange- 7 ment laws. 8 (9) The Secretary of Labor used its rulemaking 9 authority to issue a final rule on June 21, 2018, to 10 expand access to association health plans for Amer- 11 ican small businesses and working families, includ- 12 ing self-employed business owners. 13 (10) The Secretary of Labor required associa- 14 tion health plans formed under the final rule to com- 15 ply with even stronger nondiscrimination protections 16 than the nondiscrimination protections under Fed- 17 eral law prior to the final rule. 18 (11) On March 28, 2019, a Federal district 19 judge vacated the Secretary of Labor’s final rule, 20 threatening to disrupt coverage for current enrollees 21 and restrict the ability of small businesses and work- 22 ing families to band together to obtain affordable 23 and high-quality plans in the future. 24 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 4 •HR 2294 IH (12) Health care is one of the most important 1 issues facing American families, and small business 2 owners and self-employed Americans want secure 3 and affordable association health plans to provide 4 comprehensive coverage for themselves and their 5 families. 6 SEC. 3. DEFINITION OF ‘‘EMPLOYER’’ UNDER ERISA WITH 7 RESPECT TO GROUP HEALTH PLANS. 8 (a) DEFINITION OF EMPLOYER.—Section 3(5) of the 9 Employee Retirement Income Security Act of 1974 (29 10 U.S.C. 1002(5)) is amended by striking the period and 11 inserting ‘‘(which, with respect to a group health plan, 12 shall be determined in accordance with criteria that in- 13 cludes the criteria under section 735).’’. 14 (b) GROUP HEALTH PLANS.—Part 7 of subtitle B 15 of title I of the Employee Retirement Income Security Act 16 of 1974 (29 U.S.C. 1181 et seq.) is amended by adding 17 at the end the following: 18 ‘‘SEC. 735. DEFINITION OF ‘EMPLOYER’ WITH RESPECT TO 19 GROUP HEALTH PLANS. 20 ‘‘(a) IN GENERAL.—A group or association of em- 21 ployers that meets the criteria under subsection (b) shall 22 be considered an employer under section 3(5) for purposes 23 of sponsoring a group health plan. 24 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 5 •HR 2294 IH ‘‘(b) REQUIREMENTS.—The requirements under this 1 subsection are each of the following: 2 ‘‘(1) The primary purpose of the group or asso- 3 ciation may be to offer and provide health coverage 4 to its employer members and their employees, if 5 such group or association has at least 1 substantial 6 business purpose, as described in subsection (c), un- 7 related to offering and providing health coverage or 8 other employee benefits to its employer members and 9 their employees. 10 ‘‘(2) Each employer member of the group or as- 11 sociation participating in the group health plan is a 12 person acting directly as an employer of at least 1 13 employee who is a participant covered under the 14 plan. 15 ‘‘(3) The group or association has— 16 ‘‘(A) a formal organizational structure 17 with a governing body; and 18 ‘‘(B) by-laws or other similar indications of 19 formality. 20 ‘‘(4) The functions and activities of the group 21 or association shall be controlled by the employer 22 members of the group or association, and the em- 23 ployer members of the group or association that par- 24 ticipate in the group health plan shall control the 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 6 •HR 2294 IH plan. Control under this paragraph shall be in form 1 and substance. 2 ‘‘(5) The employer members shall have a com- 3 monality of interest as described in subsection (d). 4 ‘‘(6)(A) The group or association shall not 5 make health coverage through the group health plan 6 available other than to— 7 ‘‘(i) an employee of a current employer 8 member of the group or association; 9 ‘‘(ii) a former employee of a current em- 10 ployer member of the group or association who 11 became eligible for coverage under the group 12 health plan when the former employee was an 13 employee of the employer; and 14 ‘‘(iii) a beneficiary of an individual de- 15 scribed in clause (i) or (ii), such as a spouse or 16 dependent child. 17 ‘‘(B) Notwithstanding subparagraph (A), the 18 group or association shall not make health coverage 19 through the group health plan available to any indi- 20 vidual (or beneficiaries of the individual) for any 21 plan year following the plan year in which the plan 22 determines pursuant to reasonable monitoring proce- 23 dures described in subsection (f)(2)(C) that the indi- 24 vidual ceases to meet the conditions described in 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 7 •HR 2294 IH subsection (f)(2) for being a working owner (unless 1 the individual again meets those conditions), except 2 as may be required by section 601. 3 ‘‘(7) The group or association, and any health 4 coverage offered by the group or association, shall 5 comply with the nondiscrimination provisions under 6 subsection (e). 7 ‘‘(8) The group or association shall not be a 8 health insurance issuer, or owned or controlled by 9 such a health insurance issuer or by a subsidiary or 10 affiliate of such a health insurance issuer, other 11 than to the extent such entities participate in the 12 group or association in their capacity as employer 13 members of the group or association. 14 ‘‘(c) SUBSTANTIAL BUSINESS PURPOSE.— 15 ‘‘(1) IN GENERAL.—For purposes of subsection 16 (b)(1), a substantial business purpose shall exist if 17 the group or association would be a viable entity in 18 the absence of sponsoring an employee benefit plan. 19 ‘‘(2) BUSINESS PURPOSE.—For purposes of 20 subsection (b)(1) and paragraph (1), a business pur- 21 pose shall— 22 ‘‘(A) include promoting common business 23 interests of the members of the group or asso- 24 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 8 •HR 2294 IH ciation or the common economic interests in a 1 given trade or employer community; and 2 ‘‘(B) not be required to be a for-profit ac- 3 tivity. 4 ‘‘(d) COMMONALITY OF INTEREST.— 5 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 6 employer members of the group or association shall 7 be treated as having a commonality of interest for 8 purposes of subsection (b)(5) if— 9 ‘‘(A) the employers are in the same trade, 10 industry, line of business, or profession; or 11 ‘‘(B) each employer has a principal place 12 of business in the same region that does not ex- 13 ceed the boundaries of a single State or a met- 14 ropolitan area (even if the metropolitan area in- 15 cludes more than 1 State). 16 ‘‘(2) SAME TRADE, INDUSTRY, OR LINE OF 17 BUSINESS.—In the case of a group or association 18 that is sponsoring a group health plan under this 19 section and that is itself an employer member of the 20 group or association, the group or association shall 21 be deemed for purposes of paragraph (1)(A) to be 22 in the same trade, industry, line of business, or pro- 23 fession, as applicable, as the other employer mem- 24 bers of the group or association. 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 9 •HR 2294 IH ‘‘(3) NONDISCRIMINATION.—The standards 1 under paragraph (1) shall not be implemented in a 2 manner that is subterfuge for discrimination as is 3 prohibited under subsection (e). 4 ‘‘(e) NONDISCRIMINATION.— 5 ‘‘(1) IN GENERAL.—A group or association of 6 employers sponsoring a group health plan under this 7 section, and any health coverage sponsored by such 8 group or association, shall comply with each of the 9 following: 10 ‘‘(A) The group or association shall not 11 condition employer membership in the group or 12 association on any health factor of any indi- 13 vidual who is or may become eligible to partici- 14 pate in the group health plan sponsored by the 15 group or association. 16 ‘‘(B) The group health plan sponsored by 17 the group or association shall comply with the 18 rules under section 2590.702(b) of title 29, 19 Code of Federal Regulations (as in effect on 20 June 21, 2018), with respect to nondiscrimina- 21 tion in rules for eligibility for benefits, subject 22 to subparagraph (D). 23 ‘‘(C) The group health plan sponsored by 24 the group or association shall comply with the 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 10 •HR 2294 IH rules under section 2590.702(c) of title 29, 1 Code of Federal Regulations (as in effect on 2 June 21, 2018), with respect to nondiscrimina- 3 tion in premiums or contributions required by 4 any participant or beneficiary for coverage 5 under the plan, subject to subparagraph (D). 6 ‘‘(D) In applying subparagraphs (B) and 7 (C), the group or association may not treat the 8 employees of different employer members of the 9 group or association as distinct groups of simi- 10 larly-situated individuals based on a health fac- 11 tor of 1 or more individuals. 12 ‘‘(2) DEFINITION OF HEALTH FACTOR.—For 13 purposes of this subsection, the term ‘health factor’ 14 has the meaning given such term in section 15 2590.702(a) of title 29, Code of Federal Regulations 16 (as in effect on June 21, 2018). 17 ‘‘(f) DUAL TREATMENT OF WORKING OWNERS AS 18 EMPLOYERS AND EMPLOYEES.— 19 ‘‘(1) IN GENERAL.—A person determined in ac- 20 cordance with paragraph (2) to be a working owner 21 of a trade or business may qualify as both an em- 22 ployer and as an employee of the trade or business 23 for purposes of the requirements under subsection 24 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 11 •HR 2294 IH (b), including the requirements under paragraphs 1 (2) and (6) of such subsection. 2 ‘‘(2) WORKING OWNER.— 3 ‘‘(A) ELIGIBILITY.—A person shall qualify 4 as a ‘working owner’ if a responsible fiduciary 5 of the group health plan reasonably determines 6 that the person— 7 ‘‘(i) does not have any common law 8 employees; 9 ‘‘(ii) has an ownership right of any 10 nature in a trade or business, whether in- 11 corporated or unincorporated, including a 12 partner and other self-employed individual; 13 ‘‘(iii) is earning wages or self-employ- 14 ment income from the trade or business 15 for providing personal services to the trade 16 or business; and 17 ‘‘(iv) either— 18 ‘‘(I) works on average at least 20 19 hours per week, or at least 80 hours 20 per month, providing personal services 21 to the person’s trade or business; or 22 ‘‘(II) has wages or self-employ- 23 ment income from such trade or busi- 24 ness that at least equals the person’s 25 VerDate Sep 11 2014 01:25 Apr 23, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 kjohnson on DSK79L0C42 with BILLS 12 •HR 2294 IH cost of coverage for participation by 1 the person, and any covered bene- 2 ficiaries, in the group health plan 3 sponsored by the group or association 4 in which the person is participating. 5 ‘‘(B) DETERMINATION.—The determina- 6 tion under subparagraph (A) shall be made 7 when the person first becomes eligible for cov- 8 erage under the group health plan. 9 ‘‘(C) REASONABLE MONITORING PROCE- 10 DURES.—A responsible fiduciary of the group 11 health plan shall, through reasonable moni- 12 toring procedures, periodically confirm the con- 13 tinued eligibility of a person to qualify as a 14 wo [Text truncated for display. 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