II 

117TH CONGRESS 

1ST SESSION S. 896 

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 

MARCH 23, 2021 

Mr. KENNEDY 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Association Health 

5 Plans Act of 2021’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) Association health plans allow small busi4 nesses to band together on a regional or national 

5 basis and leverage their combined power to obtain 

6 the health benefits they want and need, at a price 

7 they can afford. 

8 (2) Small business owners have experienced av9 erage premium decreases of up to 29 percent under 

10 an association health plan. 

11 (3) Association health plans are governed under 

12 the same rules that apply to employer-sponsored in13 surance arrangements for large employers utilized by 

14 more than 160,000,000 Americans. 

15 (4) Important consumer protections established 

16 on a bipartisan basis under the Employee Retire17 ment and Income Security Act of 1974, the Health 

18 Insurance Portability and Accountability Act of 

19 1996, and the Consolidated Omnibus Budget Rec20 onciliation Act of 1985 apply to association health 

21 plans. 

22 (5) Association health plans comply with re23 quirements for large employer health plans under 

24 the Public Health Service Act, as amended by the 

25 Patient Protection and Affordable Care Act. 


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1 (6) Association health plans cannot limit plan 

2 eligibility on the basis of medical history, health sta3 tus, claims experience, or genetic information. 

4 (7) Fully insured association health plans must 

5 comply with State benefit mandates. 

6 (8) Self-insured association health plans are 

7 subject to State multiple-employer welfare arrange8 ment laws. 

9 (9) The Secretary of Labor used its rulemaking 

10 authority to issue a final rule on June 21, 2018, to 

11 expand access to association health plans for Amer12 ican small businesses and working families, includ13 ing self-employed business owners. 

14 (10) The Secretary of Labor required associa15 tion health plans formed under the final rule to com16 ply with even stronger nondiscrimination protections 

17 than the nondiscrimination protections under Fed18 eral law prior to the final rule. 

19 (11) On March 28, 2019, a Federal district 

20 judge vacated the Secretary of Labor’s final rule, 

21 threatening to disrupt coverage for current enrollees 

22 and restrict the ability of small businesses and work23 ing families to band together to obtain affordable 

24 and high quality plans in the future. 


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1 (12) Health care is one of the most important 

2 issues facing American families, and small business 

3 owners and self-employed Americans want secure 

4 and affordable association health plans to provide 

5 comprehensive coverage for themselves and their 

6 families. 

7 SEC. 3. DEFINITION OF ‘‘EMPLOYER’’ UNDER ERISA WITH 

8 RESPECT TO GROUP HEALTH PLANS. 

9 (a) DEFINITION OF EMPLOYER.—Section 3(5) of the 

10 Employee Retirement Income Security Act of 1974 (29 

11 U.S.C. 1002(5)) is amended by striking the period and 

12 inserting ‘‘(which, with respect to a group health plan, 

13 shall be determined in accordance with criteria that in14 cludes the criteria under section 736).’’. 

15 (b) GROUP HEALTH PLANS.—Part 7 of subtitle B 

16 of title I of the Employee Retirement Income Security Act 

17 of 1974 (29 U.S.C. 1181 et seq.) is amended by adding 

18 at the end the following: 

19 ‘‘SEC. 736. DEFINITION OF ‘EMPLOYER’ WITH RESPECT TO 

20 GROUP HEALTH PLANS. 

21 ‘‘(a) IN GENERAL.—A group or association of em22 ployers that meets the criteria under subsection (b) shall 

23 be considered an employer under section 3(5) for purposes 

24 of sponsoring a group health plan. 


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1 ‘‘(b) REQUIREMENTS.—The requirements under this 

2 subsection are each of the following: 

3 ‘‘(1) The primary purpose of the group or asso4 ciation may be to offer and provide health coverage 

5 to its employer members and their employees, if 

6 such group or association has at least 1 substantial 

7 business purpose, as described in subsection (c), un8 related to offering and providing health coverage or 

9 other employee benefits to its employer members and 

10 their employees. 

11 ‘‘(2) Each employer member of the group or as12 sociation participating in the group health plan is a 

13 person acting directly as an employer of at least 1 

14 employee who is a participant covered under the 

15 plan. 

16 ‘‘(3) The group or association has— 

17 ‘‘(A) a formal organizational structure 

18 with a governing body; and 

19 ‘‘(B) by-laws or other similar indications of 

20 formality. 

21 ‘‘(4) The functions and activities of the group 

22 or association shall be controlled by the employer 

23 members of the group or association, and the em24 ployer members of the group or association that par25 ticipate in the group health plan shall control the 


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1 plan. Control under this paragraph shall be in form 

2 and substance. 

3 ‘‘(5) The employer members shall have a com4 monality of interest as described in subsection (d). 

5 ‘‘(6)(A) The group or association shall not 

6 make health coverage through the group health plan 

7 available other than to— 

8 ‘‘(i) an employee of a current employer 

9 member of the group or association; 

10 ‘‘(ii) a former employee of a current em11 ployer member of the group or association who 

12 became eligible for coverage under the group 

13 health plan when the former employee was an 

14 employee of the employer; and 

15 ‘‘(iii) a beneficiary of an individual de16 scribed in clause (i) or (ii), such as a spouse or 

17 dependent child. 

18 ‘‘(B) Notwithstanding subparagraph (A), the 

19 group or association shall not make health coverage 

20 through the group health plan available to any indi21 vidual (or beneficiaries of the individual) for any 

22 plan year following the plan year in which the plan 

23 determines pursuant to reasonable monitoring proce24 dures described in subsection (f)(2)(C) that the indi25 vidual ceases to meet the conditions described in 


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1 subsection (f)(2) for being a working owner (unless 

2 the individual again meets those conditions), except 

3 as may be required by section 601. 

4 ‘‘(7) The group or association, and any health 

5 coverage offered by the group or association, shall 

6 comply with the nondiscrimination provisions under 

7 subsection (e). 

8 ‘‘(8) The group or association shall not be a 

9 health insurance issuer, or owned or controlled by 

10 such a health insurance issuer or by a subsidiary or 

11 affiliate of such a health insurance issuer, other 

12 than to the extent such entities participate in the 

13 group or association in their capacity as employer 

14 members of the group or association. 

15 ‘‘(c) SUBSTANTIAL BUSINESS PURPOSE.— 

16 ‘‘(1) IN GENERAL.—For purposes of subsection 

17 (b)(1), a substantial business purpose shall exist if 

18 the group or association would be a viable entity in 

19 the absence of sponsoring an employee benefit plan. 

20 ‘‘(2) BUSINESS PURPOSE.—For purposes of 

21 subsection (b)(1) and paragraph (1), a business pur22 pose shall— 

23 ‘‘(A) include promoting common business 

24 interests of the members of the group or assoVerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S896.IS S896

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1 ciation or the common economic interests in a 

2 given trade or employer community; and 

3 ‘‘(B) not be required to be a for-profit ac4 tivity. 

5 ‘‘(d) COMMONALITY OF INTEREST.— 

6 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 

7 employer members of the group or association shall 

8 be treated as having a commonality of interest for 

9 purposes of subsection (b)(5) if— 

10 ‘‘(A) the employers are in the same trade, 

11 industry, line of business, or profession; or 

12 ‘‘(B) each employer has a principal place 

13 of business in the same region that does not ex14 ceed the boundaries of a single State or a met15 ropolitan area (even if the metropolitan area in16 cludes more than 1 State). 

17 ‘‘(2) SAME TRADE, INDUSTRY, OR LINE OF

18 BUSINESS.—In the case of a group or association 

19 that is sponsoring a group health plan under this 

20 section and that is itself an employer member of the 

21 group or association, the group or association shall 

22 be deemed for purposes of paragraph (1)(A) to be 

23 in the same trade, industry, line of business, or pro24 fession, as applicable, as the other employer mem25 bers of the group or association. 


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1 ‘‘(3) NONDISCRIMINATION.—The standards 

2 under paragraph (1) shall not be implemented in a 

3 manner that is subterfuge for discrimination as is 

4 prohibited under subsection (e). 

5 ‘‘(e) NONDISCRIMINATION.— 

6 ‘‘(1) IN GENERAL.—A group or association of 

7 employers sponsoring a group health plan under this 

8 section, and any health coverage sponsored by such 

9 group or association, shall comply with each of the 

10 following: 

11 ‘‘(A) The group or association shall not 

12 condition employer membership in the group or 

13 association on any health factor of any indi14 vidual who is or may become eligible to partici15 pate in the group health plan sponsored by the 

16 group or association. 

17 ‘‘(B) The group health plan sponsored by 

18 the group or association shall comply with the 

19 rules under section 2590.702(b) of title 29, 

20 Code of Federal Regulations (as in effect on 

21 June 21, 2018), with respect to nondiscrimina22 tion in rules for eligibility for benefits, subject 

23 to subparagraph (D). 

24 ‘‘(C) The group health plan sponsored by 

25 the group or association shall comply with the 


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1 rules under section 2590.702(c) of title 29, 

2 Code of Federal Regulations (as in effect on 

3 June 21, 2018), with respect to nondiscrimina4 tion in premiums or contributions required by 

5 any participant or beneficiary for coverage 

6 under the plan, subject to subparagraph (D). 

7 ‘‘(D) In applying subparagraphs (B) and 

8 (C), the group or association may not treat the 

9 employees of different employer members of the 

10 group or association as distinct groups of simi11 larly situated individuals based on a health fac12 tor of 1 or more individuals. 

13 ‘‘(2) DEFINITION OF HEALTH FACTOR.—For 

14 purposes of this subsection, the term ‘health factor’ 

15 has the meaning given such term in section 

16 2590.702(a) of title 29, Code of Federal Regulations 

17 (as in effect on June 21, 2018). 

18 ‘‘(f) DUAL TREATMENT OF WORKING OWNERS AS

19 EMPLOYERS AND EMPLOYEES.— 

20 ‘‘(1) IN GENERAL.—A person determined in ac21 cordance with paragraph (2) to be a working owner 

22 of a trade or business may qualify as both an em23 ployer and as an employee of the trade or business 

24 for purposes of the requirements under subsection 


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1 (b), including the requirements under paragraphs 

2 (2) and (6) of such subsection. 

3 ‘‘(2) WORKING OWNER.— 

4 ‘‘(A) ELIGIBILITY.—A person shall qualify 

5 as a ‘working owner’ if a responsible fiduciary 

6 of the group health plan reasonably determines 

7 that the person— 

8 ‘‘(i) does not have any common law 

9 employees; 

10 ‘‘(ii) has an ownership right of any 

11 nature in a trade or business, whether in12 corporated or unincorporated, including a 

13 partner and other self-employed individual; 

14 ‘‘(iii) is earning wages or self-employ15 ment income from the trade or business 

16 for providing personal services to the trade 

17 or business; and 

18 ‘‘(iv) either— 

19 ‘‘(I) works on average at least 20 

20 hours per week, or at least 80 hours 

21 per month, providing personal services 

22 to the person’s trade or business, or 

23 ‘‘(II) has wages or self-employ24 ment income from such trade or busi25 ness that at least equals the person’s 


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1 cost of coverage for participation by 

2 the person, and any covered bene3 ficiaries, in the group health plan 

4 sponsored by the group or association 

5 in which the person is participating. 

6 ‘‘(B) DETERMINATION.—The determina7 tion under subparagraph (A) shall be made 

8 when the person first becomes eligible for cov9 erage under the group health plan. 

10 ‘‘(C) REASONABLE MONITORING PROCE11 DURES.—A responsible fiduciary of the group 

12 health plan shall, through reasonable moni13 toring procedures, periodically confirm the con14 tinued eligibility of a person to qualify as a 

15 working owner under subparagraph (A) for pur16 poses of meeting the requirements under sub17 section (b) for the group health plan sponsored 

18 under this section. 

19 ‘‘(g) APPLICABILITY.— 

20 ‘‘(1) FULLY INSURED.—This section shall apply 

21 beginning on September 1, 2021, with respect to a 

22 group or association of employers sponsoring a 

23 group health plan that is fully insured. 

24 ‘‘(2) PLANS EXPANDING TO INCLUDE BROADER

25 GROUP.—This section shall apply beginning on JanVerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S896.IS S896

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1 uary 1, 2022, with respect to a group or association 

2 of employers sponsoring a group health plan that— 

3 ‘‘(A) is not fully insured; 

4 ‘‘(B) is in existence on June 21, 2018; 

5 ‘‘(C) meets the requirements that applied 

6 with respect to such plan before June 21, 2018; 

7 and 

8 ‘‘(D) chooses to be a plan sponsored under 

9 this section (and subject to the requirements 

10 under subsections (b) through (f)). 

11 ‘‘(3) OTHER ASSOCIATION HEALTH PLANS.— 

12 This section shall apply beginning on April 1, 2022, 

13 with respect to any other group or association of em14 ployers sponsoring a group health plan. 

15 ‘‘(4) OTHER CRITERIA IN ADVISORY OPIN16 IONS.—The criteria under this section shall not in17 validate any criteria provided in an advisory opinion, 

18 in effect on or after the date of enactment of the As19 sociation Health Plans Act of 2021, that the Sec20 retary may use to determine if a group or associa21 tion of employers is an employer under section 3(5) 

22 for purposes of sponsoring a group health plan. 

23 ‘‘(h) DETERMINATION OF EMPLOYER OR JOINT EM24 PLOYER STATUS.— 


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1 ‘‘(1) IN GENERAL.—Participating in or facili2 tating a group health plan sponsored by a bona fide 

3 group or association of employers pursuant to sub4 section (a) shall not be construed as establishing an 

5 employer or joint employer relationship under any 

6 Federal or State law. 

7 ‘‘(2) APPLICATION OF PROVISION.—Paragraph 

8 (1) shall apply to a group health plan sponsored or 

9 facilitated by a franchisor and any franchisee, by 

10 multiple franchisors for the benefit of the employees 

11 of such franchisors and their franchisees, by mul12 tiple franchisees for the benefit of the employees of 

13 such franchisees, by a franchisor whose franchisee or 

14 franchisees participate or participates in the plan, or 

15 by a person or entity that contracts with any indi16 vidual as an independent contractor for whom the 

17 plan benefits. 

18 ‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec19 tion shall be construed as repealing or otherwise limiting 

20 the application of this Act (including section 712 relating 

21 to mental health parity) to group health plans and em22 ployee welfare benefit plans.’’. 

23 (c) CLERICAL AMENDMENT.—The table of contents 

24 in section 1 of the Employee Retirement Income Security 

25 Act of 1974 (29 U.S.C. 1001 et seq.) is amended by inVerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S896.IS S896

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1 serting after the item relating to section 735 the following 

2 new item: 

‘‘Sec. 736. Definition of ‘employer’ with respect to group health plans.’’. 

Æ 


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