PRINTER'S NO. 973
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
555
Session of
2023
INTRODUCED BY GAYDOS, JAMES, CIRESI, KEEFER, TWARDZIK, STRUZZI,
GROVE, OBERLANDER, ZIMMERMAN, ORTITAY, B. MILLER, ROWE,
R. MACKENZIE, GREINER, KAUFER, M. BROWN, KAUFFMAN, RYNCAVAGE,
GLEIM AND CABELL, APRIL 24, 2023
REFERRED TO COMMITTEE ON INSURANCE, APRIL 24, 2023
AN ACT
Amending Title 40 (Insurance) of the Pennsylvania Consolidated
Statutes, providing for association health plans; imposing
penalties; and making repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 40 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 41
ASSOCIATION HEALTH PLANS
Sec.
4101. Definitions.
4102. Association requirements.
4103. Association health plan coverage requirements.
4104. Association health plan rate and premium requirements.
4105. Health insurer association health plan filing
requirements.
4106. Regulations.
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4107. Enforcement.
§ 4101. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affordable Care Act." The Patient Protection and Affordable
Care Act (Public Law 111-148, 124 Stat. 119), together with the
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152, 124 Stat. 1029), as amended.
"A ssociation." As follows:
(1) A member-based organization of employer members
composed of:
(i) Employers in the same industry, trade or
profession.
(ii ) Employers that do not share the same industry,
trade or profession to the extent permitted under
regulations of the United States Department of Labor in
relation to ERISA.
(iii) Employers domiciled or residing in this
Commonwealth.
(2) The term does not include a union trust established
under a collective bargaining agreement that makes available
health care coverage to the union trust's members.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Covered individual." As follows:
(1) An individual on whose behalf a health insurer is
obligated to pay covered health care expense benefits or
provide health care services under a health insurance policy.
( 2) The term includes a policyholder, certificate
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holder, subscriber, member, dependent or other individual who
is eligible to receive health care services under a health
insurance policy.
"Employee." As follows:
(1) An individual employed by an employer.
(2) The term includes a sole proprietor to the extent
permitted under regulations of the United States Department
of Labor in relation to ERISA.
"Employer." As follows:
(1) As defined in section 29 U.S.C. § 1002(5) (relating
to definitions).
(2) The term includes a sole proprietor to the extent
permitted under regulations of the United States Department
of Labor in relation to ERISA.
"Employer member." An employer that is a member of an
association.
"ERISA." 29 U.S.C. § 1001 et seq. ( The Employee Retirement
Income Security Act of 1974).
"Health care service." A covered treatment, admission,
procedure, medical supply or equipment or other service,
including behavioral health, prescribed or otherwise provided or
proposed to be provided by a health care provider to a covered
individual under a health insurance policy.
"Health factor." An element related to an individual's
physical or mental make-up, including:
(1) Health status.
(2) M edical condition.
(3) Claims experience.
(4) Receipt of health care.
(5) Medical history.
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(6) Genetic information.
(7) Evidence of insurability, including conditions
arising out of acts of domestic violence.
(8) Disability.
"Health insurance policy." As follows:
(1) An insurance policy, subscriber contract,
certificate or plan issued by a health insurer that provides
medical or health care coverage, including emergency
services.
( 2) The term does not include any of the following:
(i) An accident only policy.
( ii) A credit only policy.
(iii) A long-term care or disability income policy.
(iv) A specified disease policy.
(v) A Medicare supplement policy.
(vi) A TRICARE policy, including a Civilian Health
and Medical Program of the Uniformed Services (CHAMPUS)
supplement policy.
(vii) A fixed indemnity policy.
(viii) A hospital indemnity policy.
(ix) A dental only policy.
(x) A vision only policy.
(xi) A workers' compensation policy.
(xii) An automobile medical payment policy.
(xiii) A homeowners insurance policy.
(xiv) A short-term limited duration policy.
(xv) Any other similar policy providing for limited
benefits.
"Health insurer." An entity licensed by the department with
accident and health authority to issue a health insurance policy
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that is offered or governed under any of the following:
(1) The act of May 17, 1921 (P.L.682, No.284), known as
The Insurance Company Law of 1921, including section 630 and
Article XXIV of that act.
( 2) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(3) Chapter 61 (relating to hospital plan corporations)
or 63 (relating to professional health services plan
corporations).
"Sole proprietor." An individual that:
(1) has an ownership right in a trade or business,
regardless of whether the trade or business is incorporated
or unincorporated;
(2) e arns wages or self-employment income from the trade
or business; and
(3) works at least 20 hours a week or 80 hours a month
providing personal services to the trade or business or earns
income from the trade or business that at least equals the
cost of the health insurance policy issued to an association.
§ 4102. Association requirements.
(a) Sponsor.--An association may not sponsor an association
health plan in this Commonwealth unless the association:
(1) Has been actively in existence for at least two
years.
(2) Was formed and is maintained in good faith for
purposes other than obtaining insurance.
(3) Has a constitution and bylaws that provide the
following:
(i) Regular meetings not less than annually to
further purposes of the employer members of the
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association.
(ii) The collection of dues or solicitation of
contributions from employer members of the association.
(iii) Voting privileges and representation on the
board governing the association by employer members of
the association.
(4) Is not organized by an insurer or a parent or
subsidiary or affiliate of an insurer.
(5) D oes not operate from offices of, and is not
controlled by, an insurer or a parent or subsidiary or
affiliate of an insurer.
(6) Does not condition membership in the association on
any health factor relating to an individual or a dependent of
an individual.
(7) Has a governing board to manage the association's
offering of health care coverage. The following shall apply:
(i) At least 75% of the governing board shall be
comprised of employees of employer members of the
association participating in the association health plan,
with the remaining representatives designated by the
association.
(ii) The employees of employer members of the
association participating in the association health plan
shall nominate and, through an election where each
employee is given a vote, elect members to serve on the
governing board.
(iii) The governing board shall act in a fiduciary
capacity with respect to the association health plan
managing it:
(A) For the exclusive purpose of all of the
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following:
(I) P roviding health care coverage to
individuals enrolled in coverage under the
association health plan.
(II) Defraying expenses relating to
administration of the association health plan.
(B) With the care, skill, prudence and diligence
under the circumstances then prevailing that a
prudent person in a similar capacity and familiar
with such matters would use in the conduct of an
enterprise of a similar character and with similar
aims.
(8) Complies with all applicable requirements of ERISA,
including the requirements applicable to a plan sponsor, as
that term is defined in 29 U.S.C. § 1002(16)(B) (relating to
definitions).
(b) Availability of association health plan coverage.--
(1) An association may not make association health plan
coverage available unless the coverage:
(i) Is through a fully insured health insurance
policy issued by a health insurer to the association.
(ii) Covers at least 51 lives of employees of
employer members.
(iii) Is available to all employees of employer
members of the association regardless of any health
factor relating to an employee of an employer member or a
dependent of an employee.
(iv) Is not available other than in connection with
an employer member of the association.
(2) Coverage under an association health plan may be
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available to a dependent of an employee of an employer member
at the option of the employer member.
(3) A t the employee's option, an employee of an employer
member of the association with coverage under an association
health plan who terminates employment with that employer
member, and within 63 days is employed by another employer
member of the association, may remain covered under the
association health plan.
§ 4103. Association health plan coverage requirements.
Association health plan coverage shall:
(1) Be guaranteed issue and guaranteed renewable.
(2) B e subject to the group market coverage requirements
under the Affordable Care Act, including the prohibition
against denying coverage based on a preexisting condition.
(3) Comply with all coverage requirements applicable to
a health insurance policy offered, issued or renewed to a
group of 51 or more employees in this Commonwealth.
(4) Provide essential health benefits, as specified in
42 U.S.C. § 18022 (relating to essential health benefits
requirements), as contained in the benchmark plan currently
in use in the Pennsylvania small group market as of the
effective date of this section.
(5) Provide a level of coverage that is designed to
provide benefits that are actuarially equivalent to or
greater than 60% of the full actuarial value of the benefits
provided under the policy, as calculated in accordance with
the requirements of the Affordable Care Act.
§ 4104. Association health plan rate and premium requirements.
(a) Calculation.--A health insurer shall calculate rates for
an association health plan based on all of the employees who are
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enrolled in coverage under the policy as a single risk pool.
(b) Same industry, trade or profession.-- In the case of an
association composed of employers in the same industry, trade or
profession that does not include sole proprietors:
(1) A health insurer shall calculate premiums for
coverage under an association health plan based on the
collective group experience of the employees who are enrolled
in coverage under the policy.
( 2) At the health insurer's election, the health insurer
may vary premiums developed in accordance with paragraph (1)
for each employer member by the collective group experience
of the employees who are employed by that employer member.
(c) Sole proprietors or not sharing same industry, trade or
profession.--In the case of an association that includes sole
proprietors or is composed solely of employers that do not share
the same industry, trade or profession to the extent permitted
under regulations of the United States Department of Labor in
relation to ERISA:
(1) A health insurer shall calculate premiums for
coverage under an association health plan based on the
collective group experience of the employees who are enrolled
in coverage under the policy.
( 2) (Reserved).
§ 4105. Health insurer association health plan filing
requirements.
(a) Form filing requirements.--A health insurer may not
offer, issue or renew a health insurance policy to an
association unless the health insurer files with the department:
(1) Association documentation demonstrating the
association's compliance with section 4102 (relating to
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association requirements).
(2) F or approval in accordance with the provisions of
the act of December 18, 1996 (P.L.1066, No.159), known as the
Accident and Health Filing Reform Act, the policy form, which
must comply with the requirements of section 4103 (relating
to a ssociation health plan coverage requirements ).
(b) R ate-filing requirement.--Notwithstanding the provisions
of the Accident and Health Filing Reform Act, the rates for a
policy issued to an association shall be filed with the
department prior to use.
(c) Exemptions.--The commissioner may exempt the association
policy form or rate filings from the requirements of this
section by transmitting notice to the Legislative Reference
Bureau for publication in the Pennsylvania Bulletin.
Notwithstanding this subsection, the rate filing requirement
under subsection (b) shall expire June 30, 2025.
§ 4106. Regulations.
The department may promulgate regulations as necessary or
appropriate to carry out this chapter.
§ 4107. Enforcement.
(a) General rule.-- Upon satisfactory evidence of the
violation of any section of this chapter by an insurer or any
other person, one or more of the following penalties may be
imposed at the commissioner's discretion:
(1) Suspension or revocation of the license of the
offending insurer or other person.
( 2) Refusal, for a period not to exceed one year, to
issue a new license to the offending insurer or other person.
(3) A fine of not more than $5,000 for each violation of
this chapter.
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(4) A fine of not more than $10,000 for each willful
violation of this chapter.
(b) Limitation.--
(1) Fines imposed against an individual insurer under
this chapter may not exceed $500,000 in the aggregate during
a single calendar year.
(2) Fines imposed against any other person under this
chapter may not exceed $100,000 in the aggregate during a
single calendar year.
(c ) Additional remedies.--The enforcement remedies imposed
under this subsection are in addition to any other remedies or
penalties that may be imposed under any other applicable law of
this Commonwealth, including:
(1) The act of July 22, 1974 (P.L.589, No.205), known as
the Unfair Insurance Practices Act. Violations of this
chapter shall be deemed to be an unfair method of competition
and an unfair or deceptive act or practice under the Unfair
Insurance Practices Act.
(2) The act of December 18, 1996 (P.L.1066, No.159),
known as the Accident and Health Filing Reform Act.
(3) The act of June 25, 1997 (P.L.295, No.29), known as
the Pennsylvania Health Care Insurance Portability Act.
(d) A dministrative procedure.--The administrative provisions
of this section shall be subject to 2 Pa.C.S. Ch. 5 Subch. A
(relating to practice and procedure of Commonwealth agencies). A
party against whom penalties are assessed in an administrative
action may appeal to Commonwealth Court as provided in 2 Pa.C.S.
Ch. 7 Subch. A (relating to judicial review of Commonwealth
agency action).
Section 2. Repeals are as follows:
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(1) The General Assembly declares that the repeals under
paragraph (2) are necessary to effectuate the addition of 40
Pa.C.S. Ch. 41.
(2) The following are repealed:
(i) Section 621.2(a)(2) and (f)(3) of the act of May
17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
(ii) All other acts and parts of acts insofar as
they are inconsistent with the addition of 40 Pa.C.S. Ch.
41.
Section 3. This act shall take effect in 60 days.
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