PRINTER'S NO. 625
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.608
Session of
2025
INTRODUCED BY BROOKS, BROWN, ROTHMAN, FONTANA, STEFANO, LAUGHLIN
AND COSTA, APRIL 11, 2025
REFERRED TO BANKING AND INSURANCE, APRIL 11, 2025
AN ACT
Amending Title 40 (Insurance) of the Pennsylvania Consolidated
Statutes, in regulation of insurers and related persons
generally, providing for association health plans.
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. H ealth insurance policy requirements.
4103. Applicability.
§ 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:
"Association." As follows:
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18 (1) A member-based organization of employer members.
(2) The term shall include all of the following:
(i) Employers that are in the same industry, trade
or profession.
(ii) Employers that are domiciled or residing in
this Commonwealth that do not share the same industry,
trade or profession to the extent permitted under the
regulations of the United States Department of Labor in
relation to ERISA.
"Employee." An individual employed by an employer. The term
shall include a sole proprietor to the extent permitted under
the regulations of the United States Department of Labor in
relation to ERISA.
"Employee welfare benefit plan." As the term is defined in
29 U.S.C. § 1002(1) (relating to definitions).
"Employer." As follows:
(1) As the term is defined in 29 U.S.C. § 1002(5).
(2) The term shall include an association. For purposes
of determining employer size of an association, all of the
employees of employer members of the association shall be
aggregated and treated as employed by a single employer.
"ERISA." The Employee Retirement Income Security Act of 1974
(29 U.S.C. § 1001 et seq.).
"Group health plan." An employee welfare benefit plan, to
the extent that the plan provides health care service and
includes items and services paid for as health care service to
employees of an employer, employees of employer members of an
association, small employers or any combination of these
persons, directly or through insurance, reimbursement or
otherwise.
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30 "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 an insured
under a health insurance policy.
"Health insurance policy." As follows:
(1) An insurance policy, subscriber contract,
certificate or plan 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 dental only policy.
(ix) A vision only policy.
(x) A workers' compensation policy.
(xi) An automobile medical payment policy.
(xii) A homeowners insurance policy.
(xiii) Another similar policy providing for limited
benefits.
"Insured." As follows:
(1) A person on whose behalf an insurer is obligated to
pay covered health care expense benefits or provide health
care services under a health insurance policy.
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30 (2) The term includes a policyholder, certificate
holder, subscriber, member, dependent or other individual who
is eligible to receive health care services under a health
insurance policy.
"Insurer." An entity licensed by the department with
accident and health authority to issue a health insurance policy
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).
"Large employer." As follows:
(1) In connection with a group health plan or health
insurance coverage with respect to a calendar year and a plan
year, an employer that:
(i) employed an average of at least 51 employees on
business days during the preceding calendar year; and
(ii) employs at least one employee on the first day
of the plan year.
(2) The term shall include an association that includes
at least 51 employees of employer members of the association
on the first day of the plan year.
"Large group market." The health insurance market under
which individuals obtain health insurance coverage, directly or
through any arrangement, on behalf of themselves and their
dependents through a group health plan maintained by a large
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30 employer.
"Small employer." As follows:
(1) In connection with a group health plan or health
insurance coverage with respect to a calendar year and a plan
year, an employer that:
(i) employed an average of at least one but not more
than 50 employees on business days during the preceding
calendar year; and
(ii) employs at least two employees on the first day
of the plan year.
(2) The term shall include:
(i) An association that includes 50 or fewer
employees of employer members of the association on the
first day of the plan year.
(ii) A sole proprietor to the extent recognized by
regulations of the United States Department of Labor in
relation to ERISA.
"Sole proprietor." An individual who meets all of the
following criteria:
(1) The individual has an ownership right in a trade or
business, regardless of whether the trade or business is
incorporated or unincorporated.
(2) The individual earns wages or self-employment income
from the trade or business.
(3) The individual works at least 20 hours a week or 80
hours per month providing personal services for 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. H ealth insurance policy requirements.
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30 (a) Association policies.--A health insurance policy may be
issued to an association, in which the association shall be
deemed the policyholder, if all of the following requirements
are satisfied:
(1) The health insurance policy is issued by an insurer
or a foreign health insurance issuer that is duly licensed in
the state in which the foreign health insurance issuer is
domiciled as permitted under the laws of this Commonwealth.
(2) The association:
(i) Has been actively in existence for at least two
years.
(ii) Has been formed and maintained in good faith
for purposes other than obtaining a health insurance
policy.
(iii) Has a constitution and bylaws that provide the
following:
(A) The association shall hold regular meetings
not less than annually to further purposes of the
members of the association.
(B) The association shall collect dues or
solicit contributions from members of the
association.
(C) The members of the association have voting
privileges and representation on the board governing
the association.
(iv) Does not condition membership in the
association on any health-status-related factor relating
to an individual or a dependent of the individual.
(v) Makes health insurance coverage offered through
the association available to all members of the
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30 association regardless of any health-status-related
factor relating to the members or their dependents.
(vi) Does not make health insurance coverage offered
through the association available other than in
connection with a member of the association.
(b) Large group market plans.--If the association described
in subsection (a) includes 51 or more employees, the policy
issued to the association shall:
(1) Be treated as a large group market plan subject to
the large group market insurance regulations under 42 U.S.C.
Ch. 6A (relating to public health service). The policy shall
be guaranteed issue and guaranteed renewable.
(2) Be subject to the group health plan coverage
requirements under the Patient Protection and Affordable Care
Act (42 U.S.C. § 18001 et seq.), including, but not limited
to, the prohibition against denying coverage based on a
preexisting condition.
(3) Comply with all coverage mandates applicable to a
large group market plan offered in this Commonwealth.
(4) Provide a level of coverage that equals the
actuarial value for a platinum, gold, silver or bronze plan
as specified under 42 U.S.C. § 18022(d) (relating to
essential health benefits requirements). The level of
coverage under this paragraph shall not have an actuarial
value below 60%.
(c) Issuer requirements.--
(1) If the association specified under subsection (a)(2)
is composed of employer members that are sole proprietors or
do not share the same industry, trade or profession to the
extent permitted under regulations of the United States
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30 Department of Labor in relation to ERISA, a health insurance
issuer under subsection (a)(1) shall:
(i) Treat all of the employees who are enrolled in
coverage under the policy as a single risk pool.
(ii) Set premiums based on the collective group
experience of the employees who are enrolled in coverage
under the policy.
(iii) Set premiums based on the average age of the
employees who are enrolled in coverage under the policy.
(iv) Be prohibited from varying premiums based on
gender.
(v) Be prohibited from establishing discriminatory
rules based on the health status of an employer member or
an individual employee of an employer member for
eligibility or contribution requirements.
(2) In the case of an association specified under
subsection (a)(2) that does not include sole proprietors, a
health insurance issuer under subsection (a)(1) may vary
premiums for each employer member by the average age of the
employees of the employer member. Premiums under this
paragraph may not vary among each employer member by more
than five to one.
(d) Compliance and administration.--
(1) The association shall comply with the requirements
applicable to a plan sponsor, as that term is defined in 29
U.S.C. § 1002(16)(B) (relating to definitions).
(2) The health plan providing coverage under the policy
to employees shall be administered in accordance with the
requirements applicable to an employee welfare benefit plan.
(e) Governing board.--The association shall establish a
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30 governing board to manage and operate the health plan. The
following shall apply:
(1) At least 75% of the governing board shall be
comprised of employees of employer members of the association
participating in the health plan, with the remaining
percentage being comprised of representatives designated by
the association.
(2) The employees of employer members of the association
participating in the health plan shall nominate and, through
an election where each employee is given a vote, elect
members to serve on the governing board.
(3) The governing board shall be treated as a fiduciary,
as that term is described in 29 U.S.C. § 1002(21)(A), and
shall manage and operate the health plan:
(i) For the exclusive purpose of all of the
following:
(A) Providing health benefits to employees
enrolled in coverage under the health plan.
(B) Defraying expenses relating to
administration of the health plan.
(ii) 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.
(f) Coverage.--If an employee of an employer member of the
association terminates employment with the employer member and
is subsequently reemployed by another employer member of the
association, the employee shall remain covered under the policy
issued to the association.
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30 § 4103. Applicability.
This chapter shall not apply to an association that offers or
provides health care services through a health insurance policy
that is not fully insured. An association offering or providing
health care services through a health insurance policy that is
not fully insured shall be subject to the requirements of
section 208 of the act of May 17, 1921 (P.L.789, No.285), known
as The Insurance Department Act of 1921.
Section 2. This act shall take effect in 60 days.
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