SMALL BUSINESS HEALTHCARE ACT.

View NCGA Bill Details2019-2020 Session
Senate Bill 86 (Public) Filed Tuesday, February 19, 2019
AN ACT TO ESTABLISH STANDARDS FOR ASSOCIATION HEALTH PLANS AND MULTIPLE EMPLOYER WELFARE ARRANGEMENTS.
Intro. by Bishop, Krawiec, Edwards.

Status: Ch. SL 2019-202 (Aug 26 2019)

SOG comments (2):

Long title change

House committee substitute to the 2nd edition changed the long title.  Original long title was AN ACT TO CREATE GREATER OPPORTUNITIES FOR SMALL EMPLOYERS TO PROVIDE EMPLOYEES ACCESS TO HEALTH INSURANCE.

Long title change

House committee substitute to the 3rd edition changed the long title.  Previous title was AN ACT TO ESTABLISH STANDARDS FOR ASSOCIATION HEALTH PLANS.

S 86/S.L. 2019-202

Bill Summaries:

  • Summary date: Aug 26 2019 - More information

    AN ACT TO ESTABLISH STANDARDS FOR ASSOCIATION HEALTH PLANS AND MULTIPLE EMPLOYER WELFARE ARRANGEMENTS. SL 2019-202. Enacted August 26, 2019. Effective October 1, 2019.


  • Summary date: Aug 7 2019 - More information

    House amendment makes the following changes to the 3rd edition. 

    Makes technical changes by changing the numbering of the definitions in new GS 58-50A-1. Also makes a clarifying change to the definition of Path 2 MEWA.


  • Summary date: Aug 6 2019 - More information

    House committee substitute to the 3rd edition deletes the provisions of the previous edition and replaces it with the following. 

    Includes whereas clauses.

    Enacts Article 50A, Association Health Plans and Multiple Employer Welfare Arrangements, to GS Chapter 58. Requires all group health plans offered by a sponsoring association in the state to be in compliance with GS Chapter 58, regardless of the domicile of the sponsoring association receiving the policy. Defines sponsoring association to mean an association of two or more employer members that offers an employee welfare benefit plan as a Path 2 MEWA, as defined; deemed to be a large employer under the Article. Defines employer member to mean a person or entity acting directly as the employer of at least one employee, or a working owner, either of whom is a participant covered under a Path 2 MEWA. Defines Path 2 MEWA to mean a MEWA established or maintained by an association of employers classified by the US Department of Labor as a bona fide group or association under specified federal law and formed by a sponsoring association that meets three criteria, including (1) having a governing constitution or bylaws that provide for regular meetings, membership dues, and a board of trustees that consists of a representative of at least one employer member; (2) having at least one substantial business purpose unrelated to the offering and providing of health insurance or other employee benefits to its employer members and their employees; and (3) having a commonality of interest shared among the employers comprising the Path 2 MEWA based on the same trade or business or being a statewide organization, as specified. Defines employee welfare benefit plan and multiple employer welfare arrangement (MEWA) as defined in specified federal law, qualified with doing business with employers in the State, as specified.

    Specifies that nothing in new Article 50A regulates or prohibits any group health insurance policy not offered by a sponsoring association. Prohibits any insurer from delivering or issuing for delivery a group health plan (plan) to a sponsoring association or an employer member of a sponsoring association unless the sponsoring association meets the requirements of a Path 2 MEWA. Limits the provision of coverage to eligible employees and working owners. Allows providing coverage to the spouse or dependent children of any eligible individual. Requires employer members to commit to remaining members of the sponsoring association and receiving and paying for benefits under the plan for at least one twelve-month policy period.

    Sets four criteria a plan must meet, including that the plan can neither be offered nor advertised to the public generally, and the plan must provide a level of coverage that is at least 60% of the actuarial value of allowed costs for covered benefits. 

    Requires a sponsoring association to meet five specified solvency requirements before it can be delivered or issued for delivery of a plan.

    Prohibits a sponsoring association from conditioning eligibility for coverage on any health-status factor, including claims experience, evidence of insurability, and disability, among others. Permits an insurer or sponsoring association to make rating distinctions among its employer members on factors other than health-status factors, so long as the rating distinction is not directed at individual beneficiaries or based on a health factor specifically identified by the statute. Prohibits plans from imposing limitations based on preexisting conditions. Clarifies that the statute does not require a sponsoring association or insurer to provide particular benefits other than those provided in the plan's terms, or otherwise required by law, nor prevents the plan from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan. 

    Prohibits an insurer or sponsoring association from requiring any individual, as a condition of initial or continued enrollment in the plan, to pay a premium or contribution greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health-status factor in relation to the individual or to an individual enrolled in the plan as a spouse or dependent of the individual. Clarifies that the statute does not restrict the amount an insurer can charge for coverage under a plan to a sponsoring association, or prevent an insurer from establishing premium discounts or modifying otherwise applicable co-payments or deductibles for a group health plan offered to a sponsoring association in return for adherence to programs of health promotion and disease prevention.

    Specifies that Article 50A does not preclude a sponsoring association from engaging a broker or agent licensed to sell insurance in the state for purposes of reviewing and considering any plan.

    Recodifies the following statutes concerning MEWAs under new Article 50A: GS 58-49-30, GS 58-49-35, GS 58-49-40, GS 58-49-45, GS 58-49-50, GS 58-49-55, GS 58-49-60, and GS 58-49-65. Makes conforming changes.

    Further amends GS 58-49-40, recodified by the act as GS 58-50A-70, to modify the MEWA licensure requirements. Now requires the MEWA to be organized or maintained in good faith for a continuous period of three rather than five years for purposes other than that of obtaining or providing insurance, or alternatively, be a Path 2 MEWA.

    Makes conforming changes to GS 58-51-80 and GS 58-50-115.

    Amends GS 58-50-130 to allow small employer carriers, insurers, subsidiaries of insurers, or controlled individuals of insurance holding companies to provide stop loss, catastrophic, or reinsurance coverage to small employers who employ fewer than 20 eligible employees (was, 26 eligible employees) so long as the coverage complies with the underwriting, rating, and other standards of the North Carolina Small Employer Group Health Coverage Reform Act (Article 50, Part 5, GS Chapter 58). Applies to contracts entered into, amended, or renewed on or after October 1, 2019.

    Authorizes the Department of Insurance (DOI) to adopt temporary implementing rules.

    Directs DOI to study the feasibility of submitting a 1332 waiver to request the federal Department of Health and Human Services with the goal of allowing working owners, and employers with a principal place of business in the state or a metro area that is partially in the state, to participate in a group health plan subject to large group market requirements. Requires DOI to report to the specified NCGA committee no later than 90 days from the effective date of the section, conditioned on a final judicial order striking down the US Department of Labor rules at issue in the identified case pending hearing by the US Court of Appeals for the D.C. Circuit. 

    Authorizes the Revisor of Statutes to make any necessary changes.

    Includes a severability clause.

    Effective October 1, 2019, and applies to contracts entered into, amended, or renewed on or after January 1, 2020.

    Amends the act's long title. 


  • Summary date: Jun 27 2019 - More information

    House committee substitute to the 2nd edition deletes the provisions of the previous edition and replaces it with the following. 

    Enacts Article 50A, Association Health Plans, to GS Chapter 58. Requires all association health plans delivered or issued for delivery in the state to be in compliance with GS Chapter 58, regardless of the domicile of the sponsoring association receiving the policy. Defines associated health plan to mean a fully insured group health insurance policy sponsored by a sponsoring association and offered or sold to members of the sponsoring association, to provide health benefits, as permitted under the Employee Retirement Income Security Act of 1974, its implementing regulations, and GS Chapter 58. Defines sponsoring association to mean an association comprised of one or more employer members that provides an association health plan to its employer members; provided that it meets the other requirements of Article 50A, a sponsoring association is treated as an employer of a single group health plan under the Employee Retirement Income Security Act of 1974, its implementing regulations, and GS Chapter 58. Defines employer member to mean a sole proprietorship, or an individual or entity employing at least one person, which is a member of a sponsoring association.

    Specifies that nothing in new Article 50A, Association Health Plans, regulates or prohibits any group health insurance policy that is not an association health plan. Prohibits any insurer from delivering or issuing for delivery an association health plan (plan) to a sponsoring association unless the sponsoring association meets five specified requirements, including (1) having at least one substantial business purpose unrelated to the offering and providing of health insurance or other employee benefits to its employer members and their employees, (2) having registered as a multiple employer welfare arrangement (MEWA) with the Insurance Commissioner, and (3) having a commonality of interest shared among the employer members based on either the establishment by employer members in the same trade/industry/business/profession, or by employer members as a statewide association in an area that does not exceed state boundaries.

    Sets out employer membership requirements to obtain coverage under a plan, requiring the employer member to be a member of the sponsoring association and either be domiciled or have a principal headquarters or administrative office in the State, or be licensed by the State agency for the employer member's industry, trade, or profession. Limits the provision of coverage to eligible employees and individuals paid on an IRS Form 1099, as specified. Allows providing coverage to the spouse or dependent children of any eligible individual. Requires employer members to commit to remaining members of the sponsoring association and receiving and paying for benefits under the plan for a period of at least two years.

    Sets five criteria a plan must meet, including that the plan can neither be offered nor advertised to the public generally, and the plan must provide a level of coverage that is at least 60% of the actuarial value of allowed costs for covered benefits. 

    Requires a sponsoring association to meet five specified solvency requirements before it can be delivered or issued for delivery of a plan.

    Prohibits a plan or sponsoring association from conditioning eligibility for coverage on any health-status factor, including claims experience, evidence of insurability, and disability, among others. Permits a plan or sponsoring association to make rating distinctions among its employer members on factors other than health-status factors, so long as the rating distinction is not directed at individual beneficiaries or based on a health factor specifically identified by the statute. Prohibits plans from imposing limitations based on preexisting conditions. Clarifies that the statute does not require a plan to provide particular benefits other than those provided in the plan's terms, or otherwise required by law, nor prevents the plan from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan. 

    Prohibits a plan or sponsoring association from requiring any individual, as a condition of initial or continued enrollment in the plan, to pay a premium or contribution greater than the premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health-status factor in relation to the individual or to an individual enrolled in the plan as a dependent of the individual. Clarifies that the statute does not restrict the amount an insurer can charge for coverage under a plan, or prevent an insurer from establishing premium discounts or modifying otherwise applicable co-payments or deductibles for an association health plan in return for adherence to programs of health promotion and disease prevention.

    Specifies that Article 50A does not preclude a sponsoring association from engaging a broker or agent licensed to sell insurance in the state for purposes of reviewing and considering any plan.

    Applies to contracts entered into, amended, or renewed on or after January 1, 2020.

    Amends the act's long title. 


  • Summary date: Mar 7 2019 - More information

    Senate committee substitute makes the following changes to the 1st edition.

    Part I

    Modifies and adds to the previously modified requirements for MEWA (multiple employer welfare arrangement) licensure set out in GS 58-49-40. Now requires a MEWA to be established by a group of employers under an association (not previously required) (1) having a constitution and bylaws, (2) organized and maintained in good faith for a continuous period of at least two years (previously, for a continuous period of two years for purposes other than that of obtaining or providing insurance), and (3) with at least one substantial business purpose unrelated to offering and providing health coverage or other employee benefits to its employer members and their employees (previously proposed as a separate requirement). Adds a new requirement for the MEWA to have at least 500 covered lives. Makes organizational changes. Makes conforming changes to proposed GS 58-49-40(h), regarding treatment of a MEWA as having a commonality of interest. Further amends GS 58-49-40, enacting a new subsection to specify that a newly created association is deemed to have been organized and maintained for as long as its newest constituent association has been in existence as applicable to MEWA licensure qualifications. 

    Part II

    Modifies the proposed changes to GS 58-51-80, concerning requirements for group accident and health insurance policies and contracts. Further specifies that, as used in the provisions concerning premium payment under a policy issued to an employer or to the trustee of a fund established by an employer or two or more employers in the same industry or kind of business whereby the employer is the policyholder and the policy covers employees or agents for amounts of insurance based on a plan, employer includes a MEWA that has at least 500 covered lives and is classified by the US Department of Labor as a bona fide group or association under either any US Department of Labor advisory opinion addressing specified circumstances or the specified section of the Employee Retirement Income Security Act and its implementing regulations, including 29 CFR, Part 2510 (containing the definitions of certain terms; previously, implementing regulations were not included).

    Adds to the proposed changes to GS 58-57-80 to specify that a newly created association is deemed to have been organized and maintained for as long as its newest constituent association has been in existence, as applicable to the requirements concerning policies issued to an association or to a trust or trustees of a fund established, created, or maintained for the benefit of members of one or more associations. Makes organizational and clarifying changes. 


  • Summary date: Feb 19 2019 - More information

    Includes whereas clauses.

    Part I

    Modifies and adds to the requirements for MEWA (multiple employer welfare arrangement) licensure set out in GS 58-49-40. Now requires a MEWA to have a constitution or bylaws and have been organized and maintained in good faith for a continuous period of at least two years for purposes other than obtaining or providing insurance (currently, required the MEWA be established by a trade association, industry association, or professional association of employers or professionals, having a constitution or bylaws, and having been organized and maintained in good faith for a continuous period of five years for purposes other than obtaining or providing insurance). Adds requirement for the MEWA to have at least one substantial business purpose unrelated to offering and providing health care coverage or other employee benefits to its employer members and their employees, and requirement to have a commonality of interest. Provides that a MEWA will be treated as having a commonality of interest if it is established by employers in the same trade, industry, business, or profession, or, by employers in the same region or metro area contiguous to the State and including the State. Makes conforming, technical, and clarifying changes.

    Amends GS 58-49-30, which defines MEWA, to specify that the term employer includes sole proprietors and self-employed workers.

    Amends GS 58-49-50, adding to the application materials for a MEWA license a copy of the most recent M-1 form filed with the US Department of Labor.

    Part II

    Amends GS 58-51-80, concerning requirements for group accident and health insurance policies and contracts. Specifies that, as used in the provisions concerning premium payment under a policy issued to an employer or to the trustee of a fund established by an employer or two or more employers in the same industry or kind of business whereby the employer is the policyholder and the policy covers employees or agents for amounts of insurance based on a plan, employer includes a MEWA that is classified by the US Department of Labor as a bona fide group or association under either the specified section of the Employee Retirement Income Security Act or any US Department of Labor advisory opinion, as described. For a policy issued to an association or to a trust or trustees of a fund established, created, or maintained for the benefit of members of one or more associations, requires the association(s) to have 500 persons at the outset, have been organized and maintained in good faith for purposes other than obtaining insurance, and have been in active existence for at least two years (currently, at least five years), among other existing requirements.

    Makes technical and clarifying changes to the defined terms set forth in GS 58-68-25. Removes the limiting language from the term employer which defined the term to include only employers of two or more employees.

    Part III

    Amends GS 58-50-130, prohibiting insurers from providing stop loss, catastrophic, or reinsurance coverage to small employers who employ fewer than 12 eligible employees (currently, fewer than 26 eligible employees) that does not comply with the underwriting, rating, and other applicable standards of the Small Employer Group Health Coverage Reform Act (Part 5, Article 50, GS Chapter 58).

    Part IV

    Effective October 1, 2019.


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