II 

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. 

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


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1 SECTION 1. SHORT TITLE. 

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

3 Plans Act of 2019’’. 

4 SEC. 2. FINDINGS. 

5 Congress finds the following: 

6 (1) Association health plans allow small busi7 nesses to band together on a regional or national 

8 basis and leverage their combined power to obtain 

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

10 they can afford. 

11 (2) Small business owners have experienced av12 erage premium decreases of up to 29 percent under 

13 an association health plan. 

14 (3) Association health plans are governed under 

15 the same rules that apply to employer-sponsored in16 surance arrangements for large employers utilized by 

17 more than 160,000,000 Americans. 

18 (4) Important consumer protections established 

19 on a bipartisan basis under the Employee Retire20 ment and Income Security Act of 1974, the Health 

21 Insurance Portability and Accountability Act of 

22 1996, and the Consolidated Omnibus Budget Rec23 onciliation Act of 1985 apply to association health 

24 plans. 

25 (5) Association health plans comply with re26 quirements for large employer health plans under 


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1 the Public Health Service Act, as amended by the 

2 Patient Protection and Affordable Care Act. 

3 (6) Association health plans cannot limit plan 

4 eligibility on the basis of medical history, health sta5 tus, claims experience, or genetic information. 

6 (7) Fully insured association health plans must 

7 comply with State benefit mandates. 

8 (8) Self-insured association health plans are 

9 subject to State multiple-employer welfare arrange10 ment laws. 

11 (9) The Secretary of Labor used its rulemaking 

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

13 expand access to association health plans for Amer14 ican small businesses and working families, includ15 ing self-employed business owners. 

16 (10) The Secretary of Labor required associa17 tion health plans formed under the final rule to com18 ply with even stronger nondiscrimination protections 

19 than the nondiscrimination protections under Fed20 eral law prior to the final rule. 

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

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

23 threatening to disrupt coverage for current enrollees 

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1 ing families to band together to obtain affordable 

2 and high quality plans in the future. 

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

4 issues facing American families, and small business 

5 owners and self-employed Americans want secure 

6 and affordable association health plans to provide 

7 comprehensive coverage for themselves and their 

8 families. 

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

10 RESPECT TO GROUP HEALTH PLANS. 

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

12 Employee Retirement Income Security Act of 1974 (29 

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

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

15 shall be determined in accordance with criteria that in16 cludes the criteria under section 735).’’. 

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

18 of title I of the Employee Retirement Income Security Act 

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

20 at the end the following: 

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

22 GROUP HEALTH PLANS. 

23 ‘‘(a) IN GENERAL.—A group or association of em24 ployers that meets the criteria under subsection (b) shall 


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

2 of sponsoring a group health plan. 

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

4 subsection are each of the following: 

5 ‘‘(1) The primary purpose of the group or asso6 ciation may be to offer and provide health coverage 

7 to its employer members and their employees, if 

8 such group or association has at least 1 substantial 

9 business purpose, as described in subsection (c), un10 related to offering and providing health coverage or 

11 other employee benefits to its employer members and 

12 their employees. 

13 ‘‘(2) Each employer member of the group or as14 sociation participating in the group health plan is a 

15 person acting directly as an employer of at least 1 

16 employee who is a participant covered under the 

17 plan. 

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

19 ‘‘(A) a formal organizational structure 

20 with a governing body; and 

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

22 formality. 

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

24 or association shall be controlled by the employer 

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1 ployer members of the group or association that par2 ticipate in the group health plan shall control the 

3 plan. Control under this paragraph shall be in form 

4 and substance. 

5 ‘‘(5) The employer members shall have a com6 monality of interest as described in subsection (d). 

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

8 make health coverage through the group health plan 

9 available other than to— 

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

11 member of the group or association; 

12 ‘‘(ii) a former employee of a current em13 ployer member of the group or association who 

14 became eligible for coverage under the group 

15 health plan when the former employee was an 

16 employee of the employer; and 

17 ‘‘(iii) a beneficiary of an individual de18 scribed in clause (i) or (ii), such as a spouse or 

19 dependent child. 

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

21 group or association shall not make health coverage 

22 through the group health plan available to any indi23 vidual (or beneficiaries of the individual) for any 

24 plan year following the plan year in which the plan 

25 determines pursuant to reasonable monitoring proceVerDate Sep 11 2014 20:07 Apr 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1170.IS S1170

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1 dures described in subsection (f)(2)(C) that the indi2 vidual ceases to meet the conditions described in 

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

4 the individual again meets those conditions), except 

5 as may be required by section 601. 

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

7 coverage offered by the group or association, shall 

8 comply with the nondiscrimination provisions under 

9 subsection (e). 

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

11 health insurance issuer, or owned or controlled by 

12 such a health insurance issuer or by a subsidiary or 

13 affiliate of such a health insurance issuer, other 

14 than to the extent such entities participate in the 

15 group or association in their capacity as employer 

16 members of the group or association. 

17 ‘‘(c) SUBSTANTIAL BUSINESS PURPOSE.— 

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

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

20 the group or association would be a viable entity in 

21 the absence of sponsoring an employee benefit plan. 

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

23 subsection (b)(1) and paragraph (1), a business pur24 pose shall— 


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1 ‘‘(A) include promoting common business 

2 interests of the members of the group or asso3 ciation or the common economic interests in a 

4 given trade or employer community; and 

5 ‘‘(B) not be required to be a for-profit ac6 tivity. 

7 ‘‘(d) COMMONALITY OF INTEREST.— 

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

9 employer members of the group or association shall 

10 be treated as having a commonality of interest for 

11 purposes of subsection (b)(5) if— 

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

13 industry, line of business, or profession; or 

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

15 of business in the same region that does not ex16 ceed the boundaries of a single State or a met17 ropolitan area (even if the metropolitan area in18 cludes more than 1 State). 

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

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

21 that is sponsoring a group health plan under this 

22 section and that is itself an employer member of the 

23 group or association, the group or association shall 

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

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1 fession, as applicable, as the other employer mem2 bers of the group or association. 

3 ‘‘(3) NONDISCRIMINATION.—The standards 

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

5 manner that is subterfuge for discrimination as is 

6 prohibited under subsection (e). 

7 ‘‘(e) NONDISCRIMINATION.— 

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

9 employers sponsoring a group health plan under this 

10 section, and any health coverage sponsored by such 

11 group or association, shall comply with each of the 

12 following: 

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

14 condition employer membership in the group or 

15 association on any health factor of any indi16 vidual who is or may become eligible to partici17 pate in the group health plan sponsored by the 

18 group or association. 

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

20 the group or association shall comply with the 

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

22 Code of Federal Regulations (as in effect on 

23 June 21, 2018), with respect to nondiscrimina24 tion in rules for eligibility for benefits, subject 

25 to subparagraph (D). 


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

2 the group or association shall comply with the 

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

4 Code of Federal Regulations (as in effect on 

5 June 21, 2018), with respect to nondiscrimina6 tion in premiums or contributions required by 

7 any participant or beneficiary for coverage 

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

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

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

11 employees of different employer members of the 

12 group or association as distinct groups of simi13 larly situated individuals based on a health fac14 tor of 1 or more individuals. 

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

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

17 has the meaning given such term in section 

18 2590.702(a) of title 29, Code of Federal Regulations 

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

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

21 EMPLOYERS AND EMPLOYEES.— 

22 ‘‘(1) IN GENERAL.—A person determined in ac23 cordance with paragraph (2) to be a working owner 

24 of a trade or business may qualify as both an em25 ployer and as an employee of the trade or business 


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1 for purposes of the requirements under subsection 

2 (b), including the requirements under paragraphs 

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

4 ‘‘(2) WORKING OWNER.— 

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

6 as a ‘working owner’ if a responsible fiduciary 

7 of the group health plan reasonably determines 

8 that the person— 

9 ‘‘(i) does not have any common law 

10 employees; 

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

12 nature in a trade or business, whether in13 corporated or unincorporated, including a 

14 partner and other self-employed individual; 

15 ‘‘(iii) is earning wages or self-employ16 ment income from the trade or business 

17 for providing personal services to the trade 

18 or business; and 

19 ‘‘(iv) either— 

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

21 hours per week, or at least 80 hours 

22 per month, providing personal services 

23 to the person’s trade or business, or 

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1 ness that at least equals the person’s 

2 cost of coverage for participation by 

3 the person, and any covered bene4 ficiaries, in the group health plan 

5 sponsored by the group or association 

6 in which the person is participating. 

7 ‘‘(B) DETERMINATION.—The determina8 tion under subparagraph (A) shall be made 

9 when the person first becomes eligible for cov10 erage under the group health plan. 

11 ‘‘(C) REASONABLE MONITORING PROCE12 DURES.—A responsible fiduciary of the group 

13 health plan shall, through reasonable moni14 toring procedures, periodically confirm the con15 tinued eligibility of a person to qualify as a 

16 working owner under subparagraph (A) for pur17 poses of meeting the requirements under sub18 section (b) for the group health plan sponsored 

19 under this section. 

20 ‘‘(g) APPLICABILITY.— 

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

22 beginning on September 1, 2018, with respect to a 

23 group or association of employers sponsoring a 

24 group health plan that is fully insured. 


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1 ‘‘(2) PLANS EXPANDING TO INCLUDE BROADER

2 GROUP.—This section shall apply beginning on Jan3 uary 1, 2019, with respect to a group or association 

4 of employers sponsoring a group health plan that— 

5 ‘‘(A) is not fully insured; 

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

7 ‘‘(C) meets the requirements that applied 

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

9 and 

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

11 this section (and subject to the requirements 

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

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

14 This section shall apply beginning on April 1, 2019, 

15 with respect to any other group or association of em16 ployers sponsoring a group health plan. 

17 ‘‘(4) OTHER CRITERIA IN ADVISORY OPIN18 IONS.—The criteria under this section shall not in19 validate any criteria provided in an advisory opinion, 

20 in effect on or after the date of enactment of the As21 sociation Health Plans Act of 2019, that the Sec22 retary may use to determine if a group or associa23 tion of employers is an employer under section 3(5) 

24 for purposes of sponsoring a group health plan. 


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1 ‘‘(h) DETERMINATION OF EMPLOYER OR JOINT EM2 PLOYER STATUS.— 

3 ‘‘(1) IN GENERAL.—Participating in or facili4 tating a group health plan sponsored by a bona fide 

5 group or association of employers pursuant to sub6 section (a) shall not be construed as establishing an 

7 employer or joint employer relationship under any 

8 Federal or State law. 

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

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

11 facilitated by a franchisor and any franchisee, by 

12 multiple franchisors for the benefit of the employees 

13 of such franchisors and their franchisees, by mul14 tiple franchisees for the benefit of the employees of 

15 such franchisees, by a franchisor whose franchisee or 

16 franchisees participate or participates in the plan, or 

17 by a person or entity that contracts with any indi18 vidual as an independent contractor for whom the 

19 plan benefits. 

20 ‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec21 tion shall be construed as repealing or otherwise limiting 

22 the application of this Act (including section 712 relating 

23 to mental health parity) to group health plans and em24 ployee welfare benefit plans.’’. 

Æ 


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