Flexibility Through Lower Expenses Health Care Act

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. Short title This Act may be cited as the Flexibility Through Lower Expenses Health Care Act FLEX Act 2. Short-term limited duration insurance defined (a) In general Section 2791(b) of the Public Health Service Act ( 42 U.S.C. 300gg–91(b) (6) Short-term limited duration insurance The term short-term limited duration insurance . (b) Applicability The amendments made by this subsection shall apply with respect to contracts for short-term limited duration insurance that take effect on or after January 1, 2020. 3. Definition of employer (a) Definition of employer Section 3(5) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1002(5) (which, with respect to a group health plan, shall be determined in accordance with criteria that includes the criteria under section 735). (b) Group health plans (1) In general Part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1181 735. Definition of employer (a) In general A group or association of employers that meets the criteria under subsection (b) shall be considered an employer under section 3(5) for purposes of sponsoring a group health plan. (b) Requirements The requirements under this subsection are each of the following: (1) The primary purpose of the group or association may be to offer and provide health coverage to its employer members and their employees, if such group or association has at least 1 substantial business purpose, as described in subsection (c), unrelated to offering and providing health coverage or other employee benefits to its employer members and their employees. (2) Each employer member of the group or association participating in the group health plan is a person acting directly as an employer of at least 1 employee who is a participant covered under the plan. (3) The group or association has— (A) a formal organizational structure with a governing body; and (B) by-laws or other similar indications of formality. (4) The functions and activities of the group or association shall be controlled by the employer members of the group or association, and the employer members of the group or association that participate in the group health plan shall control the plan. Control under this paragraph shall be in form and substance. (5) The employer members shall have a commonality of interest as described in subsection (d). (6) (A) The group or association shall not make health coverage through the group health plan available other than to— (i) an employee of a current employer member of the group or association; (ii) a former employee of a current employer member of the group or association who became eligible for coverage under the group health plan when the former employee was an employee of the employer; and (iii) a beneficiary of an individual described in clause (i) or (ii), such as a spouse or dependent child. (B) Notwithstanding subparagraph (A), the group or association shall not make health coverage through the group health plan available to any individual (or beneficiaries of the individual) for any plan year following the plan year in which the plan determines pursuant to reasonable monitoring procedures described in subsection (f)(2)(C) that the individual ceases to meet the conditions described in subsection (f)(2) for being a working owner (unless the individual again meets those conditions), except as may be required by section 601. (7) The group or association, and any health coverage offered by the group or association, shall comply with the nondiscrimination provisions under subsection (e). (8) The group or association shall not be a health insurance issuer, or owned or controlled by such a health insurance issuer or by a subsidiary or affiliate of such a health insurance issuer, other than to the extent such entities participate in the group or association in their capacity as employer members of the group or association. (c) Substantial business purpose (1) In general For purposes of subsection (b)(1), a substantial business purpose shall exist if the group or association would be a viable entity in the absence of sponsoring an employee benefit plan. (2) Business purpose For purposes of subsection (b)(1) and paragraph (1), a business purpose shall— (A) include promoting common business interests of the members of the group or association or the common economic interests in a given trade or employer community; and (B) not be required to be a for-profit activity. (d) Commonality of interest (1) In general Subject to paragraph (3), employer members of the group or association shall be treated as having a commonality of interest for purposes of subsection (b)(5) if— (A) the employers are in the same trade, industry, line of business, or profession; or (B) each employer has a principal place of business in the same region that does not exceed the boundaries of a single State or a metropolitan area (even if the metropolitan area includes more than 1 State). (2) Same trade, industry, or line of business In the case of a group or association that is sponsoring a group health plan under this section and that is itself an employer member of the group or association, the group or association shall be deemed for purposes of paragraph (1)(A) to be in the same trade, industry, line of business, or profession, as applicable, as the other employer members of the group or association. (3) Nondiscrimination The standards under paragraph (1) shall not be implemented in a manner that is subterfuge for discrimination as is prohibited under subsection (e). (e) Nondiscrimination (1) In general A group or association of employers sponsoring a group health plan under this section, and any health coverage sponsored by such group or association, shall comply with each of the following: (A) The group or association shall not condition employer membership in the group or association on any health factor of any individual who is or may become eligible to participate in the group health plan sponsored by the group or association. (B) The group health plan sponsored by the group or association shall comply with the rules under section 2590.702(b) of title 29, Code of Federal Regulations (as in effect on June 21, 2018), with respect to nondiscrimination in rules for eligibility for benefits, subject to subparagraph (D). (C) The group health plan sponsored by the group or association shall comply with the rules under section 2590.702(c) of title 29, Code of Federal Regulations (as in effect on June 21, 2018), with respect to nondiscrimination in premiums or contributions required by any participant or beneficiary for coverage under the plan, subject to subparagraph (D). (D) In applying subparagraphs (B) and (C), the group or association may not treat the employees of different employer members of the group or association as distinct groups of similarly situated individuals based on a health factor of 1 or more individuals. (2) Definition of health factor For purposes of this subsection, the term health factor (f) Dual treatment of working owners as employers and employees (1) In general A person determined in accordance with paragraph (2) to be a working owner of a trade or business may qualify as both an employer and as an employee of the trade or business for purposes of the requirements under subsection (b), including the requirements under paragraphs (2) and (6) of such subsection. (2) Working owner (A) Eligibility A person shall qualify as a working owner (i) does not have any common law employees; (ii) has an ownership right of any nature in a trade or business, whether incorporated or unincorporated, including a partner and other self-employed individual; (iii) is earning wages or self-employment income from the trade or business for providing personal services to the trade or business; and (iv) either— (I) works on average at least 20 hours per week, or at least 80 hours per month, providing personal services to the person's trade or business; or (II) has wages or self-employment income from such trade or business that at least equals the person's cost of coverage for participation by the person, and any covered beneficiaries, in the group health plan sponsored by the group or association in which the person is participating. (B) Determination The determination under subparagraph (A) shall be made when the person first becomes eligible for coverage under the group health plan. (C) Reasonable monitoring procedures A responsible fiduciary of the group health plan shall, through reasonable monitoring procedures, periodically confirm the continued eligibility of a person to qualify as a working owner under subparagraph (A) for purposes of meeting the requirements under subsection (b) for the group health plan sponsored under this section. (g) Applicability (1) Fully insured This section shall apply beginning on September 1, 2020, with respect to a group or association of employers sponsoring a group health plan that is fully insured. (2) Plans expanding to include broader group This section shall apply beginning on January 1, 2020, with respect to a group or association of employers sponsoring a group health plan that— (A) is not fully insured; (B) was in existence on June 21, 2018; (C) meets the requirements that applied with respect to such plan before June 21, 2018; and (D) chooses to be a plan sponsored under this section (and subject to the requirements under subsections (b) through (f)). (3) Other association health plans This section shall apply beginning on April 1, 2020, with respect to any other group or association of employers sponsoring a group health plan. (4) Other criteria in advisory opinions The criteria under this section shall not invalidate any criteria provided in an advisory opinion, in effect on or after the date of enactment of the FLEX Act, that the Secretary may use to determine if a group or association of employers is an employer under section 3(5) for purposes of sponsoring a group health plan. (h) Determination of employer or joint employer status (1) In general Participating in or facilitating a group health plan sponsored by a bona fide group or association of employers pursuant to subsection (a) shall not be construed as establishing an employer or joint employer relationship under any Federal or State law. (2) Application of provision Paragraph (1) shall apply to a group health plan sponsored or facilitated by a franchisor and any franchisee, by multiple franchisors for the benefit of the employees of such franchisors and their franchisees, by multiple franchisees for the benefit of the employees of such franchisees, by a franchisor whose franchisee or franchisees participate or participates in the plan, or by a person or entity that contracts with any individual as an independent contractor for whom the plan benefits. (i) Rule of construction Nothing in this section shall be construed as repealing or otherwise limiting the application of this Act (including section 712 relating to mental health parity) to group health plans and employee welfare benefit plans. . (2) Clerical amendment The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 is amended by inserting after the item relating to section 734 the following new item: Sec. 735. Definition of employer .

Summary: Flexibility Through Lower Expenses Health Care Act or the FLEX Act This bill provides statutory authority for certain short-term, limited-duration health insurance plans and association health plans. The bill permits short-term, limited-duration plans to provide coverage for a period of less than 12 months, not including extensions. Under current law, such plans are exempt from certain market requirements of the Patient Protection and Affordable Care Act, such as coverage of individuals with preexisting conditions. The bill further permits groups or associations of employers to sponsor fully insured group health plans as if they were employers. Such plans may not discriminate based on the health factors of any prospective plan participant for the purpose of granting an employer's membership in the association or determining a participant's eligibility for benefits or premium amounts.