Association Health Plans Act of 2021
Bill: S.896 | Sponsor: Sen. Kennedy, John (R-LA)
Policy area: Health

Summary:
Association Health Plans Act of 2021
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.

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Association Health Plans Act of 
2021''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Association health plans allow small businesses 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 average 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 insurance arrangements 
        for large employers utilized by more than 160,000,000 
        Americans.
            (4) Important consumer protections established on a 
        bipartisan basis under the Employee Retirement and Income 
        Security Act of 1974, the Health Insurance Portability and 
        Accountability Act of 1996, and the Consolidated Omnibus Budget 
        Reconciliation Act of 1985 apply to association health plans.
            (5) Association health plans comply with requirements for 
        large employer health plans under the Public Health Service 
        Act, as amended by the Patient Protection and Affordable Care 
        Act.
            (6) Association health plans cannot limit plan eligibility 
        on the basis of medical history, health status, 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 arrangement 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 American small businesses and 
        working families, including self-employed business owners.
            (10) The Secretary of Labor required association health 
        plans formed under the final rule to comply with even stronger 
        nondiscrimination protections than the nondiscrimination 
        protections under Federal 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 working families to band together to 
        obtain affordable and high quality plans in the future.
            (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 
includes the criteria under section 736).''.
    (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. 736. DEFINITION OF `EMPLOYER' WITH RESPECT TO GROUP HEALTH 
              PLANS.

    ``(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' 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 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' 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 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, 2021, 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, 2022, 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, 2022, 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 Association Health Plans Act of 2021, 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.''.
    (c) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
seq.) is amended by inserting after the item relating to section 735 
the following new item:

``Sec. 736. Definition of `employer' with respect to group health 
                            plans.''.
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