Bill Text: IA SF2182 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to association health plans, a type of multiple employer welfare arrangement, established by bona fide associations of employers and including contingent effective provisions. (See SF 2349.)
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced - Dead) 2018-02-13 - Subcommittee recommends amendment and passage. [SF2182 Detail]
Download: Iowa-2017-SF2182-Introduced.html
Senate File 2182 - Introduced SENATE FILE BY BROWN A BILL FOR 1 An Act relating to association health plans, a type of multiple 2 employer welfare arrangement, established by bona fide 3 associations of employers and including contingent effective 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5672XS (5) 87 ko/rj PAG LIN 1 1 Section 1. Section 507A.4, subsection 9, Code 2018, is 1 2 amended to read as follows: 1 3 9. a. Transactions involving a multiple employer welfare 1 4 arrangement, as defined in section 3 of the federal Employee 1 5 Retirement Income Security Act of 1974, 29 U.S.C. {1002, 1 6 paragraph 40, if the multiple employer welfare arrangement 1 7 meets all of the following conditions: 1 8 (1) The arrangement is administered by an authorized 1 9 insurer or an authorized third=party administrator. 1 10(2) The arrangement has been in existence and provided 1 11 health insurance in Iowa for at least five years prior to July 1 12 1, 1997.1 13(3)(2) The arrangementwasis established by a trade, 1 14 industry, or professional association of employers that 1 15 has a constitution or bylaws, andhas beenis organized and 1 16 maintained in good faithfor at least ten continuous years 1 17 prior to July 1, 1997. 1 18(4)(3) The arrangement registers with and obtains 1 19 and maintains a certificate of registration issued by the 1 20 commissionerof insurance. 1 21(5)(4) The arrangement is subject to the jurisdiction 1 22 of the commissionerof insurance, including regulatory 1 23 oversightand complies with all rules and solvency standards as 1 24 establishedby rules adoptedby the commissionerof insurance1 25 pursuant to chapter 17A. 1 26 b. A multiple employer welfare arrangementregistered with 1 27 the commissioner of insurancethat does not meet the solvency 1 28standardsrequirements established byrule adopted bythe 1 29 commissionerof insurance ispursuant to chapter 17A shall be 1 30 subject to chapter 507C. 1 31 c. A multiple employer welfare arrangement that meets all 1 32 of the conditions of paragraph "a" shall not be considered any 1 33 of the following: 1 34 (1) An insurance company or association of any kind or 1 35 character under section 432.1. 2 1 (2) A member of the Iowa individual health benefit 2 2 reinsurance association under section 513C.10. 2 3 (3) A member insurer of the Iowa life and health insurance 2 4 guaranty association under section 508C.5, subsection 12. 2 5 d. A multiple employer welfare arrangement registered with 2 6 the commissionerof insuranceshall file with the commissioner 2 7of insuranceon or before March 1 of each year a copy of the 2 8 report required to be filed by the multiple employer welfare 2 9 arrangement with the United States department of labor pursuant 2 10 to 29 C.F.R. {2520.101=2. A newly formed multiple employer 2 11 welfare arrangement shall file with the commissioner a copy 2 12 of the report required to be filed pursuant to 29 C.F.R. 2 13 {2520.101=2 by a newly formed multiple employer welfare 2 14 arrangement with the United States department of labor thirty 2 15 days prior to operating in any state. The copy shall be filed 2 16 with the commissioner within thirty calendar days of the date 2 17 that the multiple employer welfare arrangement files the report 2 18 with the United States department of labor. 2 19 e.When not otherwise provided, aA foreign or domestic 2 20 multiple employer welfare arrangement doing business in this 2 21 state shall payto the commissioner of insurance thefees 2 22as required inpursuant to section 511.24 unless otherwise 2 23 provided by law. 2 24 Sec. 2. Section 507A.4, Code 2018, is amended by adding the 2 25 following new subsection: 2 26 NEW SUBSECTION. 11. An association health plan that meets 2 27 the requirements of section 513D.1. 2 28 Sec. 3. Section 509.1, Code 2018, is amended by adding the 2 29 following new subsection: 2 30 NEW SUBSECTION. 8A. A policy of group health insurance 2 31 coverage issued to an associated health plan pursuant 2 32 to section 513D.1 that is subject to regulation by the 2 33 commissioner. 2 34 Sec. 4. Section 509.1, subsection 9, unnumbered paragraph 2 35 1, Code 2018, is amended to read as follows: 3 1 A policy issued to a resident of this state under a group 3 2 life, accident, or health insurance policy issued to a group 3 3 other than one described in subsections 1 through88A, subject 3 4 to the following requirements: 3 5 Sec. 5. NEW SECTION. 513D.1 Association health plans. 3 6 1. A multiple employer welfare arrangement, as defined in 3 7 section 3 of the federal Employee Retirement Income Security 3 8 Act of 1974, 29 U.S.C. {1002, paragraph 40, is an association 3 9 health plan established by a bona fide association of employers 3 10 if all of the following requirements are satisfied: 3 11 a. The association exists for the purpose, in whole or in 3 12 part, of sponsoring a group health plan that it offers to its 3 13 employer members. 3 14 b. Each employer member of the association participating 3 15 in the group health plan is a person acting directly as an 3 16 employer of at least one employee who is a participant covered 3 17 under the plan. A working owner of a trade or business may 3 18 qualify as both an employer and an employee of the trade or 3 19 business. Absent knowledge to the contrary, the association 3 20 sponsoring the group health plan may reasonably rely on written 3 21 representations from the individual seeking to participate as 3 22 a working owner as a basis for concluding that all qualifying 3 23 conditions are satisfied. A working owner must meet all of the 3 24 following requirements: 3 25 (1) Must be an individual who has an ownership right of 3 26 any nature in a trade or business, whether incorporated or 3 27 unincorporated, including a partner or other self=employed 3 28 individual. 3 29 (2) Must be an individual who is earning wages or 3 30 self=employment income from the trade or business for providing 3 31 personal services to the trade or business. 3 32 (3) Must be an individual who is not eligible to participate 3 33 in any subsidized group health plan maintained by any other 3 34 employer of the individual or of the spouse of the individual. 3 35 (4) Must be an individual who either works at least 4 1 thirty hours per week or at least one hundred twenty hours 4 2 per month, or has earned income from such trade or business 4 3 that at a minimum equals the working owner's costs of 4 4 coverage of participation by the working owner and any 4 5 covered beneficiaries in the group health plan sponsored by 4 6 the association of employers in which the working owner is 4 7 participating. 4 8 c. The association has a formal organizational structure, a 4 9 governing body, and bylaws or a similar indication of formality 4 10 appropriate under state law for the legal form under which the 4 11 association operates. 4 12 d. The employer members control the association's functions 4 13 and activities, including the establishment and maintenance of 4 14 the group health plan, either directly or through the regular 4 15 election of directors, officers, or similar representatives. 4 16 e. The employer members have a commonality=of=interest that 4 17 may be established by any of the following: 4 18 (1) The employer members are in the same trade, industry, 4 19 line of business, or professional association. 4 20 (2) The employer members have a principal place of business 4 21 wholly within the same state or within the boundaries of the 4 22 same metropolitan area even if such boundaries extend across 4 23 more than one state. 4 24 f. Health coverage offered to employer members through the 4 25 association is available to employees and former employees of 4 26 employer members, and the family members or other beneficiaries 4 27 of such employees and former employees. 4 28 g. The association is not a health insurance issuer 4 29 as described in section 733(b)(2) of the federal Employee 4 30 Retirement Income Security Act of 1974, 29 U.S.C. {1191b, or 4 31 owned or controlled by such a health insurance issuer. 4 32 h. The association health plan is administered by an 4 33 authorized insurer or an authorized third=party administrator. 4 34 i. The association complies with all regulations related 4 35 to association health plans as issued by the United States 5 1 department of labor. 5 2 j. The association registers with and obtains and maintains 5 3 a certificate of registration issued by the commissioner. 5 4 k. The association complies with all rules and solvency 5 5 requirements as established by the commissioner. 5 6 l. An association health plan registered with the 5 7 commissioner files with the commissioner on or before March 1 5 8 of each year a copy of the report required to be filed by the 5 9 association with the United States department of labor pursuant 5 10 to 29 C.F.R. {2520.101=2. A newly formed association shall 5 11 file with the commissioner a copy of the report required to 5 12 be filed pursuant to 29 C.F.R. {2520.101=2 by a newly formed 5 13 association with the United States department of labor thirty 5 14 days prior to operating in any state. The copy shall be filed 5 15 with the commissioner within thirty calendar days of the 5 16 date the association files the report with the United States 5 17 department of labor. 5 18 m. A foreign or domestic association health plan doing 5 19 business in this state shall pay fees pursuant to section 5 20 511.24 unless otherwise provided by law. 5 21 2. A bona fide association, and any health coverage offered 5 22 by the bona fide association, must comply with all of the 5 23 following: 5 24 a. The association shall not condition employer membership 5 25 in the association based on any health factor, as defined in 5 26 29 C.F.R. {2590.702(a), of an employee, former employee, or 5 27 an employee's or former employee's family members or other 5 28 beneficiaries. 5 29 b. Subject to paragraph "d", the group health plan sponsored 5 30 by the association shall comply with 29 C.F.R. {2590.702(b) 5 31 with respect to nondiscrimination in rules for eligibility for 5 32 benefits. 5 33 c. Subject to paragraph "d", the group health plan sponsored 5 34 by the association shall comply with 29 C.F.R. {2590.702(c) 5 35 with respect to nondiscrimination in premiums or contributions 6 1 required by any participant or beneficiary for coverage under 6 2 the group health plan. 6 3 d. In applying the nondiscrimination provisions of 6 4 paragraphs "b" and "c", the association shall not treat 6 5 different employer members of the association as distinct 6 6 groups of similarly situated individuals. 6 7 3. The association health plan must comply with all 6 8 applicable regulations issued by the United States department 6 9 of labor pursuant to the federal Employee Retirement Income 6 10 Security Act of 1974 related to association health plans. 6 11 4. The commissioner may enter into an agreement with an 6 12 insurance regulator from a contiguous state if an association 6 13 health plan has employer members in this state and the 6 14 contiguous state to obtain and share information, in compliance 6 15 with all applicable privacy laws, relating to the association 6 16 health plan as necessary to enforce compliance with this 6 17 section. 6 18 5. An association health plan that meets all the 6 19 requirements of this section shall not be considered any of the 6 20 following: 6 21 a. An insurance company or association of any kind or 6 22 character under section 432.1. 6 23 b. A member of the Iowa individual health benefit 6 24 reinsurance association under section 513C.10. 6 25 c. A member insurer of the Iowa life and health insurance 6 26 guaranty association under section 508C.5. 6 27 Sec. 6. NEW SECTION. 513D.2 Rules and enforcement. 6 28 1. The commissioner shall adopt rules, as necessary, 6 29 pursuant to chapter 17A to administer this chapter. 6 30 2. The commissioner may take any enforcement action under 6 31 the commissioner's authority to enforce compliance with this 6 32 chapter. 6 33 Sec. 7. EMERGENCY RULES. The commissioner may adopt 6 34 emergency rules under section 17A.4, subsection 3, and 6 35 section 17A.5, subsection 2, paragraph "b", to administer 7 1 the provisions of this Act and the rules shall be effective 7 2 immediately upon filing unless a later date is specified in the 7 3 rules. Any rules adopted in accordance with this section shall 7 4 also be published as a notice of intended action as provided 7 5 in section 17A.4. 7 6 Sec. 8. CONTINGENT EFFECTIVE DATE. This Act takes effect 7 7 upon the effective date of a United States department of 7 8 labor's regulation amending 29 C.F.R. pt. 2510 in such a manner 7 9 as to allow the creation of association health plans consistent 7 10 with the provisions of this Act. 7 11 EXPLANATION 7 12 The inclusion of this explanation does not constitute agreement with 7 13 the explanation's substance by the members of the general assembly. 7 14 This bill relates to association health plans, a type of 7 15 multiple employer welfare arrangement, established by bona fide 7 16 associations of employers. 7 17 The United States department of labor issued proposed 7 18 rules in 83 Fed. Reg. 617 (January 5, 2018) that broaden the 7 19 criteria under Title I of the federal Employee Retirement 7 20 Income Security Act (ERISA) to allow more employers to form 7 21 an association health plan to offer a group health plan 7 22 to employees, former employees, family members, and other 7 23 beneficiaries of the employer members of the association. 7 24 Currently, employer groups are prohibited from forming 7 25 associations for the sole purpose of providing group health 7 26 coverage. Under the proposed federal regulations, an 7 27 association may exist solely for the purpose of sponsoring 7 28 a group health plan for its employer members. The current 7 29 commonality=of=interest regulations require employer members 7 30 to have a commonality=of=interest such as the same trade, 7 31 industry, line of business, or profession. The proposed 7 32 federal regulations, and the bill, also allow the commonality 7 33 to be based on the employer members having a principal place 7 34 of business in the same state or the same metropolitan area, 7 35 including a metropolitan area that crosses state lines. 8 1 The bill requires each employer member of the association 8 2 to act directly as the employer of at least one employee that 8 3 participates in the group health plan. The bill outlines 8 4 the criteria for a self=employed individual to be classified 8 5 as both an employer and employee for purposes of joining 8 6 an association. Each employer member must control the 8 7 functions of the association by electing directors or other 8 8 officers of the association and the association must have an 8 9 organizational structure that includes a governing body and 8 10 bylaws. The association cannot be a health insurance issuer or 8 11 be controlled by one. Other requirements for an association 8 12 health plan to comply with federal and state requirements are 8 13 outlined in the bill. To ensure compliance, the bill allows 8 14 the commissioner of insurance to enter into an agreement 8 15 to exchange information with an insurance regulator in a 8 16 contiguous state if an association health plan has employer 8 17 members in this state and the contiguous state. 8 18 The bill outlines the nondiscrimination provisions, 8 19 including eligibility for coverage provisions, that an 8 20 association health plan must comply with. The bill requires 8 21 the commissioner to adopt rules to administer the bill and 8 22 allows the commissioner to take any enforcement action under 8 23 the commissioner's authority to enforce compliance with the 8 24 bill. The commissioner may engage in emergency rulemaking 8 25 as necessary. An association health plan that meets all the 8 26 requirements of the bill shall not be considered an insurance 8 27 company or association under Code section 432.1, a member of 8 28 the Iowa individual health benefit reinsurance association 8 29 under Code section 513C.10, or a member insurer of the Iowa 8 30 life and health insurance guaranty association under Code 8 31 section 508C.5. 8 32 The bill amends Code section 507A.4, unauthorized insurers, 8 33 to update the language related to the exemption from the 8 34 provisions of the Code section for multiple employer welfare 8 35 arrangements. The bill also includes a provision to exempt 9 1 association health care plans from Code section 507A.4. 9 2 The bill amends Code section 509.1 to allow a policy of 9 3 group health insurance sponsored by an association health plan 9 4 pursuant to the provisions of the bill to be delivered in the 9 5 state. The bill takes effect upon the effective date of a 9 6 United States department of labor's regulation amending 29 9 7 C.F.R. pt. 2510 that allows the creation of association health 9 8 plans. LSB 5672XS (5) 87 ko/rj
