I 

116TH CONGRESS 

1ST SESSION H. R. 4484 

To require short-term limited duration insurance issuers to renew or continue 

in force such insurance coverage at the option of the enrollees, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 25, 2019 

Mr. BUDD (for himself and Mr. HARRIS) introduced the following bill; which 

was referred to the Committee on Energy and Commerce, and in addition 

to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To require short-term limited duration insurance issuers to 

renew or continue in force such insurance coverage at 

the option of the enrollees, 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 ‘‘Flexibility Through 

5 Lower Expenses Health Care Act’’ or the ‘‘FLEX Act’’. 


kjohnson on DSK79L0C42 with BILLS
2 

•HR 4484 IH

1 SEC. 2. SHORT-TERM LIMITED DURATION INSURANCE DE2 FINED. 

3 (a) IN GENERAL.—Section 2791(b) of the Public 

4 Health Service Act (42 U.S.C. 300gg–91(b)) is amended 

5 by adding at the end the following: 

6 ‘‘(6) SHORT-TERM LIMITED DURATION INSUR7 ANCE.—The term ‘short-term limited duration insur8 ance’ means health insurance coverage provided pur9 suant to a contract with a health insurance issuer 

10 that has an expiration date specified in the contract 

11 (not taking into account any extensions that may be 

12 elected by the policyholder with or without the 

13 issuer’s consent) that is less than 12 months after 

14 the original effective date of the contract.’’. 

15 (b) APPLICABILITY.—The amendments made by this 

16 subsection shall apply with respect to contracts for short17 term limited duration insurance that take effect on or 

18 after January 1, 2020. 

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

20 RESPECT TO GROUP HEALTH PLANS. 

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

22 Employee Retirement Income Security Act of 1974 (29 

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

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

25 shall be determined in accordance with criteria that in26 cludes the criteria under section 735).’’. 


kjohnson on DSK79L0C42 with BILLS
3 

•HR 4484 IH

1 (b) GROUP HEALTH PLANS.— 

2 (1) IN GENERAL.—Part 7 of subtitle B of title 

3 I of the Employee Retirement Income Security Act 

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

5 adding at the end the following: 

6 ‘‘SEC. 735. DEFINITION OF ‘EMPLOYER’ WITH RESPECT TO 

7 GROUP HEALTH PLANS. 

8 ‘‘(a) IN GENERAL.—A group or association of em9 ployers that meets the criteria under subsection (b) shall 

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

11 of sponsoring a group health plan. 

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

13 subsection are each of the following: 

14 ‘‘(1) The primary purpose of the group or asso15 ciation may be to offer and provide health coverage 

16 to its employer members and their employees, if 

17 such group or association has at least 1 substantial 

18 business purpose, as described in subsection (c), un19 related to offering and providing health coverage or 

20 other employee benefits to its employer members and 

21 their employees. 

22 ‘‘(2) Each employer member of the group or as23 sociation participating in the group health plan is a 

24 person acting directly as an employer of at least 1 


kjohnson on DSK79L0C42 with BILLS
4 

•HR 4484 IH

1 employee who is a participant covered under the 

2 plan. 

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

4 ‘‘(A) a formal organizational structure 

5 with a governing body; and 

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

7 formality. 

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

9 or association shall be controlled by the employer 

10 members of the group or association, and the em11 ployer members of the group or association that par12 ticipate in the group health plan shall control the 

13 plan. Control under this paragraph shall be in form 

14 and substance. 

15 ‘‘(5) The employer members shall have a com16 monality of interest as described in subsection (d). 

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

18 make health coverage through the group health plan 

19 available other than to— 

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

21 member of the group or association; 

22 ‘‘(ii) a former employee of a current em23 ployer member of the group or association who 

24 became eligible for coverage under the group 


kjohnson on DSK79L0C42 with BILLS
5 

•HR 4484 IH

1 health plan when the former employee was an 

2 employee of the employer; and 

3 ‘‘(iii) a beneficiary of an individual de4 scribed in clause (i) or (ii), such as a spouse or 

5 dependent child. 

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

7 group or association shall not make health coverage 

8 through the group health plan available to any indi9 vidual (or beneficiaries of the individual) for any 

10 plan year following the plan year in which the plan 

11 determines pursuant to reasonable monitoring proce12 dures described in subsection (f)(2)(C) that the indi13 vidual ceases to meet the conditions described in 

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

15 the individual again meets those conditions), except 

16 as may be required by section 601. 

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

18 coverage offered by the group or association, shall 

19 comply with the nondiscrimination provisions under 

20 subsection (e). 

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

22 health insurance issuer, or owned or controlled by 

23 such a health insurance issuer or by a subsidiary or 

24 affiliate of such a health insurance issuer, other 

25 than to the extent such entities participate in the 


kjohnson on DSK79L0C42 with BILLS
6 

•HR 4484 IH

1 group or association in their capacity as employer 

2 members of the group or association. 

3 ‘‘(c) SUBSTANTIAL BUSINESS PURPOSE.— 

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

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

6 the group or association would be a viable entity in 

7 the absence of sponsoring an employee benefit plan. 

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

9 subsection (b)(1) and paragraph (1), a business pur10 pose shall— 

11 ‘‘(A) include promoting common business 

12 interests of the members of the group or asso13 ciation or the common economic interests in a 

14 given trade or employer community; and 

15 ‘‘(B) not be required to be a for-profit ac16 tivity. 

17 ‘‘(d) COMMONALITY OF INTEREST.— 

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

19 employer members of the group or association shall 

20 be treated as having a commonality of interest for 

21 purposes of subsection (b)(5) if— 

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

23 industry, line of business, or profession; or 

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

25 of business in the same region that does not exVerDate Sep 11 2014 04:29 Sep 28, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4484.IH H4484

kjohnson on DSK79L0C42 with BILLS
7 

•HR 4484 IH

1 ceed the boundaries of a single State or a met2 ropolitan area (even if the metropolitan area in3 cludes more than 1 State). 

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

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

6 that is sponsoring a group health plan under this 

7 section and that is itself an employer member of the 

8 group or association, the group or association shall 

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

10 in the same trade, industry, line of business, or pro11 fession, as applicable, as the other employer mem12 bers of the group or association. 

13 ‘‘(3) NONDISCRIMINATION.—The standards 

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

15 manner that is subterfuge for discrimination as is 

16 prohibited under subsection (e). 

17 ‘‘(e) NONDISCRIMINATION.— 

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

19 employers sponsoring a group health plan under this 

20 section, and any health coverage sponsored by such 

21 group or association, shall comply with each of the 

22 following: 

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

24 condition employer membership in the group or 

25 association on any health factor of any indiVerDate Sep 11 2014 04:29 Sep 28, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4484.IH H4484

kjohnson on DSK79L0C42 with BILLS
8 

•HR 4484 IH

1 vidual who is or may become eligible to partici2 pate in the group health plan sponsored by the 

3 group or association. 

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

5 the group or association shall comply with the 

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

7 Code of Federal Regulations (as in effect on 

8 June 21, 2018), with respect to nondiscrimina9 tion in rules for eligibility for benefits, subject 

10 to subparagraph (D). 

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

12 the group or association shall comply with the 

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

14 Code of Federal Regulations (as in effect on 

15 June 21, 2018), with respect to nondiscrimina16 tion in premiums or contributions required by 

17 any participant or beneficiary for coverage 

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

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

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

21 employees of different employer members of the 

22 group or association as distinct groups of simi23 larly situated individuals based on a health fac24 tor of 1 or more individuals. 


kjohnson on DSK79L0C42 with BILLS
9 

•HR 4484 IH

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

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

3 has the meaning given such term in section 

4 2590.702(a) of title 29, Code of Federal Regulations 

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

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

7 EMPLOYERS AND EMPLOYEES.— 

8 ‘‘(1) IN GENERAL.—A person determined in ac9 cordance with paragraph (2) to be a working owner 

10 of a trade or business may qualify as both an em11 ployer and as an employee of the trade or business 

12 for purposes of the requirements under subsection 

13 (b), including the requirements under paragraphs 

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

15 ‘‘(2) WORKING OWNER.— 

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

17 as a ‘working owner’ if a responsible fiduciary 

18 of the group health plan reasonably determines 

19 that the person— 

20 ‘‘(i) does not have any common law 

21 employees; 

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

23 nature in a trade or business, whether in24 corporated or unincorporated, including a 

25 partner and other self-employed individual; 


kjohnson on DSK79L0C42 with BILLS
10 

•HR 4484 IH

1 ‘‘(iii) is earning wages or self-employ2 ment income from the trade or business 

3 for providing personal services to the trade 

4 or business; and 

5 ‘‘(iv) either— 

6 ‘‘(I) works on average at least 20 

7 hours per week, or at least 80 hours 

8 per month, providing personal services 

9 to the person’s trade or business; or 

10 ‘‘(II) has wages or self-employ11 ment income from such trade or busi12 ness that at least equals the person’s 

13 cost of coverage for participation by 

14 the person, and any covered bene15 ficiaries, in the group health plan 

16 sponsored by the group or association 

17 in which the person is participating. 

18 ‘‘(B) DETERMINATION.—The determina19 tion under subparagraph (A) shall be made 

20 when the person first becomes eligible for cov21 erage under the group health plan. 

22 ‘‘(C) REASONABLE MONITORING PROCE23 DURES.—A responsible fiduciary of the group 

24 health plan shall, through reasonable moni25 toring procedures, periodically confirm the conVerDate Sep 11 2014 04:29 Sep 28, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4484.IH H4484

kjohnson on DSK79L0C42 with BILLS
11 

•HR 4484 IH

1 tinued eligibility of a person to qualify as a 

2 working owner under subparagraph (A) for pur3 poses of meeting the requirements under sub4 section (b) for the group health plan sponsored 

5 under this section. 

6 ‘‘(g) APPLICABILITY.— 

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

8 beginning on September 1, 2020, with respect to a 

9 group or association of employers sponsoring a 

10 group health plan that is fully insured. 

11 ‘‘(2) PLANS EXPANDING TO INCLUDE BROADER

12 GROUP.—This section shall apply beginning on Jan13 uary 1, 2020, with respect to a group or association 

14 of employers sponsoring a group health plan that— 

15 ‘‘(A) is not fully insured; 

16 ‘‘(B) was in existence on June 21, 2018; 

17 ‘‘(C) meets the requirements that applied 

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

19 and 

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

21 this section (and subject to the requirements 

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

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

24 This section shall apply beginning on April 1, 2020, 


kjohnson on DSK79L0C42 with BILLS
12 

•HR 4484 IH

1 with respect to any other group or association of em2 ployers sponsoring a group health plan. 

3 ‘‘(4) OTHER CRITERIA IN ADVISORY OPIN4 IONS.—The criteria under this section shall not in5 validate any criteria provided in an advisory opinion, 

6 in effect on or after the date of enactment of the 

7 FLEX Act, that the Secretary may use to determine 

8 if a group or association of employers is an employer 

9 under section 3(5) for purposes of sponsoring a 

10 group health plan. 

11 ‘‘(h) DETERMINATION OF EMPLOYER OR JOINT EM12 PLOYER STATUS.— 

13 ‘‘(1) IN GENERAL.—Participating in or facili14 tating a group health plan sponsored by a bona fide 

15 group or association of employers pursuant to sub16 section (a) shall not be construed as establishing an 

17 employer or joint employer relationship under any 

18 Federal or State law. 

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

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

21 facilitated by a franchisor and any franchisee, by 

22 multiple franchisors for the benefit of the employees 

23 of such franchisors and their franchisees, by mul24 tiple franchisees for the benefit of the employees of 

25 such franchisees, by a franchisor whose franchisee or 


kjohnson on DSK79L0C42 with BILLS
13 

•HR 4484 IH

1 franchisees participate or participates in the plan, or 

2 by a person or entity that contracts with any indi3 vidual as an independent contractor for whom the 

4 plan benefits. 

5 ‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec6 tion shall be construed as repealing or otherwise limiting 

7 the application of this Act (including section 712 relating 

8 to mental health parity) to group health plans and em9 ployee welfare benefit plans.’’. 

10 (2) CLERICAL AMENDMENT.—The table of con11 tents in section 1 of the Employee Retirement In12 come Security Act of 1974 is amended by inserting 

13 after the item relating to section 734 the following 

14 new item: 

‘‘Sec. 735. Definition of ‘employer’ with respect to group health plans.’’. 

Æ 


kjohnson on DSK79L0C42 with BILLS