H.R. 1101 amends the Employee Retirement Income Security Act of 1974 to allow small businesses to join together in association health plans (AHP) across state lines through bona fide trade associations to become larger purchasers of health insurance. Specifically, the bill relieves small businesses that form AHPs from state-mandated benefit laws that often make coverage prohibitively expensive. H.R. 1101establishes a class certification for fully-insured AHPs prescribed by the Secretary of Labor. In addition, self-funded AHPs must meet certain criteria to insure the businesses covered will be of average health risk to avoid pulling healthy individuals from the small group market. Further, the bill contains protections to ensure self-funded AHPs meet and maintain solvency standards, such as maintaining a minimum of $500,000 in surplus reserves which are reviewed quarterly by the AHP’s board of trustees. Self-funded AHPs also will be required to obtain stop-loss and indemnification insurance coverage.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Mar 22, 2017.
Small Business Health Fairness Act of 2017
(Sec. 2) This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to provide for the establishment and governance of association health plans (AHPs), which are group health plans sponsored by business associations.
The bill establishes requirements for AHPs relating to certification, sponsors and boards of trustees, participation and coverage, nondiscrimination, contribution rates, and voluntary termination.
AHPs offering benefits that are not health insurance must: (1) establish and maintain sufficient reserves and stop-loss insurance to cover those benefits, and (2) make annual payments to a fund to be used to pay for stop-loss insurance for such AHPs for which there is a reasonable expectation that claims would not be satisfied without such insurance. AHPs that fail to meet these requirements are subject to termination.
The Department of Labor must establish a Solvency Standards Working Group.
States may tax contributions to AHPs, with certain conditions.
The bill preempts state laws that preclude health insurers from: (1) offering health insurance in connection with a certified AHP; or (2) offering health insurance of the same policy type to other employers in the state that are eligible for coverage under AHPs.
(Sec. 4) The bill establishes criminal penalties for willfully making false representations regarding an AHP.