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 subse-
quently 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Flexibility Through 
Lower Expenses Health Care Act’’ or the ‘‘FLEX Act’’. 
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SEC. 2. SHORT-TERM LIMITED DURATION INSURANCE DE-
FINED. 
(a) IN GENERAL.—Section 2791(b) of the Public 
Health Service Act (42 U.S.C. 300gg–91(b)) is amended 
by adding at the end the following: 
‘‘(6) SHORT-TERM LIMITED DURATION INSUR-
ANCE.—The term ‘short-term limited duration insur-
ance’ means health insurance coverage provided pur-
suant to a contract with a health insurance issuer 
that has an expiration date specified in the contract 
(not taking into account any extensions that may be 
elected by the policyholder with or without the 
issuer’s consent) that is less than 12 months after 
the original effective date of the contract.’’. 
(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. 
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).’’. 
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(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 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. 
‘‘(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 
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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 
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 
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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-
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-
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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. 
‘‘(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-
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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 
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. 
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‘‘(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 
(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; 
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‘‘(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 
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-
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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, 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 Jan-
uary 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, 
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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 
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 EM-
PLOYER STATUS.— 
‘‘(1) IN GENERAL.—Participating in or facili-
tating a group health plan sponsored by a bona fide 
group or association of employers pursuant to sub-
section (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 mul-
tiple franchisees for the benefit of the employees of 
such franchisees, by a franchisor whose franchisee or 
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franchisees participate or participates in the plan, or 
by a person or entity that contracts with any indi-
vidual as an independent contractor for whom the 
plan benefits. 
‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec-
tion 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 em-
ployee welfare benefit plans.’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following 
new item: 
‘‘Sec. 735. Definition of ‘employer’ with respect to group health plans.’’. 
Æ 
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