SEC. 2. FINDINGS. 
Congress finds the following: 
(1) Association health plans allow small busi-
nesses to band together on a regional or national 
basis and leverage their combined power to obtain 
the health benefits they want and need, at a price 
they can afford. 
(2) Small business owners have experienced av-
erage premium decreases of up to 29 percent under 
an association health plan. 
(3) Association health plans are governed under 
the same rules that apply to employer-sponsored in-
surance arrangements for large employers utilized by 
more than 160,000,000 Americans. 
(4) Important consumer protections established 
on a bipartisan basis under the Employee Retire-
ment and Income Security Act of 1974, the Health 
Insurance Portability and Accountability Act of 
1996, and the Consolidated Omnibus Budget Rec-
onciliation Act of 1985 apply to association health 
plans. 
(5) Association health plans comply with re-
quirements for large employer health plans under 
the Public Health Service Act, as amended by the 
Patient Protection and Affordable Care Act. 
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(6) Association health plans cannot limit plan 
eligibility on the basis of medical history, health sta-
tus, claims experience, or genetic information. 
(7) Fully-insured association health plans must 
comply with State benefit mandates. 
(8) Self-insured association health plans are 
subject to State multiple-employer welfare arrange-
ment laws. 
(9) The Secretary of Labor used its rulemaking 
authority to issue a final rule on June 21, 2018, to 
expand access to association health plans for Amer-
ican small businesses and working families, includ-
ing self-employed business owners. 
(10) The Secretary of Labor required associa-
tion health plans formed under the final rule to com-
ply with even stronger nondiscrimination protections 
than the nondiscrimination protections under Fed-
eral law prior to the final rule. 
(11) On March 28, 2019, a Federal district 
judge vacated the Secretary of Labor’s final rule, 
threatening to disrupt coverage for current enrollees 
and restrict the ability of small businesses and work-
ing families to band together to obtain affordable 
and high-quality plans in the future. 
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(12) Health care is one of the most important 
issues facing American families, and small business 
owners and self-employed Americans want secure 
and affordable association health plans to provide 
comprehensive coverage for themselves and their 
families. 
SEC. 3. DEFINITION OF ‘‘EMPLOYER’’ UNDER ERISA WITH 
RESPECT TO GROUP HEALTH PLANS. 
(a) DEFINITION OF EMPLOYER.—Section 3(5) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1002(5)) is amended by striking the period and 
inserting ‘‘(which, with respect to a group health plan, 
shall be determined in accordance with criteria that in-
cludes the criteria under section 735).’’. 
(b) GROUP HEALTH PLANS.—Part 7 of subtitle B 
of title I of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1181 et seq.) is amended by adding 
at the end the following: 
‘‘SEC. 735. DEFINITION OF ‘EMPLOYER’ WITH RESPECT TO 
GROUP HEALTH PLANS. 
‘‘(a) IN GENERAL.—A group or association of em-
ployers that meets the criteria under subsection (b) shall 
be considered an employer under section 3(5) for purposes 
of sponsoring a group health plan. 
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‘‘(b) REQUIREMENTS.—The requirements under this 
subsection are each of the following: 
‘‘(1) The primary purpose of the group or asso-
ciation 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), un-
related 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 as-
sociation 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 em-
ployer members of the group or association that par-
ticipate in the group health plan shall control the 
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plan. Control under this paragraph shall be in form 
and substance. 
‘‘(5) The employer members shall have a com-
monality 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 em-
ployer 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 de-
scribed 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 indi-
vidual (or beneficiaries of the individual) for any 
plan year following the plan year in which the plan 
determines pursuant to reasonable monitoring proce-
dures described in subsection (f)(2)(C) that the indi-
vidual ceases to meet the conditions described in 
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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 pur-
pose shall— 
‘‘(A) include promoting common business 
interests of the members of the group or asso-
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ciation or the common economic interests in a 
given trade or employer community; and 
‘‘(B) not be required to be a for-profit ac-
tivity. 
‘‘(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 ex-
ceed the boundaries of a single State or a met-
ropolitan area (even if the metropolitan area in-
cludes 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 pro-
fession, as applicable, as the other employer mem-
bers of the group or association. 
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‘‘(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 indi-
vidual who is or may become eligible to partici-
pate 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 nondiscrimina-
tion 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 
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rules under section 2590.702(c) of title 29, 
Code of Federal Regulations (as in effect on 
June 21, 2018), with respect to nondiscrimina-
tion 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 simi-
larly-situated individuals based on a health fac-
tor of 1 or more individuals. 
‘‘(2) DEFINITION
OF
HEALTH
FACTOR.—For 
purposes of this subsection, the term ‘health factor’ 
has the meaning given such term in section 
2590.702(a) of title 29, Code of Federal Regulations 
(as in effect on June 21, 2018). 
‘‘(f) DUAL TREATMENT OF WORKING OWNERS AS 
EMPLOYERS AND EMPLOYEES.— 
‘‘(1) IN GENERAL.—A person determined in ac-
cordance with paragraph (2) to be a working owner 
of a trade or business may qualify as both an em-
ployer and as an employee of the trade or business 
for purposes of the requirements under subsection 
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(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’ if a responsible fiduciary 
of the group health plan reasonably determines 
that the person— 
‘‘(i) does not have any common law 
employees; 
‘‘(ii) has an ownership right of any 
nature in a trade or business, whether in-
corporated or unincorporated, including a 
partner and other self-employed individual; 
‘‘(iii) is earning wages or self-employ-
ment 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-employ-
ment income from such trade or busi-
ness that at least equals the person’s 
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cost of coverage for participation by 
the person, and any covered bene-
ficiaries, in the group health plan 
sponsored by the group or association 
in which the person is participating. 
‘‘(B) DETERMINATION.—The determina-
tion under subparagraph (A) shall be made 
when the person first becomes eligible for cov-
erage under the group health plan. 
‘‘(C) REASONABLE
MONITORING
PROCE-
DURES.—A responsible fiduciary of the group 
health plan shall, through reasonable moni-
toring procedures, periodically confirm the con-
tinued eligibility of a person to qualify as a 
working owner under subparagraph (A) for pur-
poses of meeting the requirements under sub-
section (b) for the group health plan sponsored 
under this section. 
‘‘(g) APPLICABILITY.— 
‘‘(1) FULLY INSURED.—This section shall apply 
beginning on September 1, 2018, 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 Jan-
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uary 1, 2019, with respect to a group or association 
of employers sponsoring a group health plan that— 
‘‘(A) is not fully insured; 
‘‘(B) is 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, 2019, 
with respect to any other group or association of em-
ployers sponsoring a group health plan. 
‘‘(4) OTHER
CRITERIA
IN
ADVISORY
OPIN-
IONS.—The criteria under this section shall not in-
validate any criteria provided in an advisory opinion, 
in effect on or after the date of enactment of the As-
sociation Health Plans Act of 2021, that the Sec-
retary may use to determine if a group or associa-
tion of employers is an employer under section 3(5) 
for purposes of sponsoring a group health plan. 
‘‘(h) DETERMINATION OF EMPLOYER OR JOINT EM-
PLOYER STATUS.— 
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