SB 608 — An Act amending Title 40 (Insurance) of the Pennsylvania Consolidated Statutes, in regulation of insurers and related persons generally, providing for association health plans.

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
 1   Amending Title 40 (Insurance) of the Pennsylvania Consolidated
 2      Statutes, in regulation of insurers and related persons
 3      generally, providing for association health plans.
 4      The General Assembly of the Commonwealth of Pennsylvania
 5   hereby enacts as follows:
 6      Section 1.    Title 40 of the Pennsylvania Consolidated
 7   Statutes is amended by adding a chapter to read:
 8                                  CHAPTER 41
 9                           ASSOCIATION HEALTH PLANS
10   Sec.
11   4101.   Definitions.
12   4102.   Health insurance policy requirements.
13   4103.   Applicability.
14   § 4101.   Definitions.
15      The following words and phrases when used in this chapter
16   shall have the meanings given to them in this section unless the
17   context clearly indicates otherwise:
18      "Association."      As follows:
 1          (1)    A member-based organization of employer members.
 2          (2)    The term shall include all of the following:
 3                 (i)    Employers that are in the same industry, trade
 4          or profession.
 5                 (ii)    Employers that are domiciled or residing in
 6          this Commonwealth that do not share the same industry,
 7          trade or profession to the extent permitted under the
 8          regulations of the United States Department of Labor in
 9          relation to ERISA.
10      "Employee."       An individual employed by an employer. The term
11   shall include a sole proprietor to the extent permitted under
12   the regulations of the United States Department of Labor in
13   relation to ERISA.
14      "Employee welfare benefit plan."        As the term is defined in
15   29 U.S.C. § 1002(1) (relating to definitions).
16      "Employer."       As follows:
17          (1)    As the term is defined in 29 U.S.C. § 1002(5).
18          (2)    The term shall include an association. For purposes
19      of determining employer size of an association, all of the
20      employees of employer members of the association shall be
21      aggregated and treated as employed by a single employer.
22      "ERISA."    The Employee Retirement Income Security Act of 1974
23   (29 U.S.C. § 1001 et seq.).
24      "Group health plan."      An employee welfare benefit plan, to
25   the extent that the plan provides health care service and
26   includes items and services paid for as health care service to
27   employees of an employer, employees of employer members of an
28   association, small employers or any combination of these
29   persons, directly or through insurance, reimbursement or
30   otherwise.

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 1      "Health care service."        A covered treatment, admission,
 2   procedure, medical supply or equipment or other service,
 3   including behavioral health, prescribed or otherwise provided or
 4   proposed to be provided by a health care provider to an insured
 5   under a health insurance policy.
 6      "Health insurance policy."        As follows:
 7          (1)   An insurance policy, subscriber contract,
 8      certificate or plan that provides medical or health care
 9      coverage, including emergency services.
10          (2)   The term does not include any of the following:
11                (i)    An accident only policy.
12                (ii)    A credit only policy.
13                (iii)    A long-term care or disability income policy.
14                (iv)    A specified disease policy.
15                (v)    A Medicare supplement policy.
16                (vi)    A TRICARE policy, including a Civilian Health
17          and Medical Program of the Uniformed Services (CHAMPUS)
18          supplement policy.
19                (vii)    A fixed indemnity policy.
20                (viii)    A dental only policy.
21                (ix)    A vision only policy.
22                (x)    A workers' compensation policy.
23                (xi)    An automobile medical payment policy.
24                (xii)    A homeowners insurance policy.
25                (xiii)    Another similar policy providing for limited
26          benefits.
27      "Insured."      As follows:
28          (1)   A person on whose behalf an insurer is obligated to
29      pay covered health care expense benefits or provide health
30      care services under a health insurance policy.

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 1          (2)   The term includes a policyholder, certificate
 2      holder, subscriber, member, dependent or other individual who
 3      is eligible to receive health care services under a health
 4      insurance policy.
 5      "Insurer."      An entity licensed by the department with
 6   accident and health authority to issue a health insurance policy
 7   that is offered or governed under any of the following:
 8          (1)   The act of May 17, 1921 (P.L.682, No.284), known as
 9      The Insurance Company Law of 1921, including section 630 and
10      Article XXIV of that act.
11          (2)   The act of December 29, 1972 (P.L.1701, No.364),
12      known as the Health Maintenance Organization Act.
13          (3)   Chapter 61 (relating to hospital plan corporations)
14      or 63 (relating to professional health services plan
15      corporations).
16      "Large employer."     As follows:
17          (1)   In connection with a group health plan or health
18      insurance coverage with respect to a calendar year and a plan
19      year, an employer that:
20                (i)    employed an average of at least 51 employees on
21          business days during the preceding calendar year; and
22                (ii)    employs at least one employee on the first day
23          of the plan year.
24          (2)   The term shall include an association that includes
25      at least 51 employees of employer members of the association
26      on the first day of the plan year.
27      "Large group market."      The health insurance market under
28   which individuals obtain health insurance coverage, directly or
29   through any arrangement, on behalf of themselves and their
30   dependents through a group health plan maintained by a large

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 1   employer.
 2      "Small employer."        As follows:
 3             (1)   In connection with a group health plan or health
 4      insurance coverage with respect to a calendar year and a plan
 5      year, an employer that:
 6                   (i)    employed an average of at least one but not more
 7             than 50 employees on business days during the preceding
 8             calendar year; and
 9                   (ii)    employs at least two employees on the first day
10             of the plan year.
11             (2)   The term shall include:
12                   (i)    An association that includes 50 or fewer
13             employees of employer members of the association on the
14             first day of the plan year.
15                   (ii)    A sole proprietor to the extent recognized by
16             regulations of the United States Department of Labor in
17             relation to ERISA.
18      "Sole proprietor."        An individual who meets all of the
19   following criteria:
20             (1)   The individual has an ownership right in a trade or
21      business, regardless of whether the trade or business is
22      incorporated or unincorporated.
23             (2)   The individual earns wages or self-employment income
24      from the trade or business.
25             (3)   The individual works at least 20 hours a week or 80
26      hours per month providing personal services for the trade or
27      business or earns income from the trade or business that at
28      least equals the cost of the health insurance policy issued
29      to an association.
30   § 4102.    Health insurance policy requirements.

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 1      (a)   Association policies.--A health insurance policy may be
 2   issued to an association, in which the association shall be
 3   deemed the policyholder, if all of the following requirements
 4   are satisfied:
 5            (1)   The health insurance policy is issued by an insurer
 6      or a foreign health insurance issuer that is duly licensed in
 7      the state in which the foreign health insurance issuer is
 8      domiciled as permitted under the laws of this Commonwealth.
 9            (2)   The association:
10                  (i)    Has been actively in existence for at least two
11            years.
12                  (ii)    Has been formed and maintained in good faith
13            for purposes other than obtaining a health insurance
14            policy.
15                  (iii)    Has a constitution and bylaws that provide the
16            following:
17                         (A)   The association shall hold regular meetings
18                  not less than annually to further purposes of the
19                  members of the association.
20                         (B)   The association shall collect dues or
21                  solicit contributions from members of the
22                  association.
23                         (C)   The members of the association have voting
24                  privileges and representation on the board governing
25                  the association.
26                  (iv)    Does not condition membership in the
27            association on any health-status-related factor relating
28            to an individual or a dependent of the individual.
29                  (v)    Makes health insurance coverage offered through
30            the association available to all members of the

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 1            association regardless of any health-status-related
 2            factor relating to the members or their dependents.
 3                  (vi)   Does not make health insurance coverage offered
 4            through the association available other than in
 5            connection with a member of the association.
 6      (b)   Large group market plans.--If the association described
 7   in subsection (a) includes 51 or more employees, the policy
 8   issued to the association shall:
 9            (1)   Be treated as a large group market plan subject to
10      the large group market insurance regulations under 42 U.S.C.
11      Ch. 6A (relating to public health service). The policy shall
12      be guaranteed issue and guaranteed renewable.
13            (2)   Be subject to the group health plan coverage
14      requirements under the Patient Protection and Affordable Care
15      Act (42 U.S.C. § 18001 et seq.), including, but not limited
16      to, the prohibition against denying coverage based on a
17      preexisting condition.
18            (3)   Comply with all coverage mandates applicable to a
19      large group market plan offered in this Commonwealth.
20            (4)   Provide a level of coverage that equals the
21      actuarial value for a platinum, gold, silver or bronze plan
22      as specified under 42 U.S.C. § 18022(d) (relating to
23      essential health benefits requirements). The level of
24      coverage under this paragraph shall not have an actuarial
25      value below 60%.
26      (c)   Issuer requirements.--
27            (1)   If the association specified under subsection (a)(2)
28      is composed of employer members that are sole proprietors or
29      do not share the same industry, trade or profession to the
30      extent permitted under regulations of the United States

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 1    Department of Labor in relation to ERISA, a health insurance
 2    issuer under subsection (a)(1) shall:
 3                (i)    Treat all of the employees who are enrolled in
 4          coverage under the policy as a single risk pool.
 5                (ii)    Set premiums based on the collective group
 6          experience of the employees who are enrolled in coverage
 7          under the policy.
 8                (iii)    Set premiums based on the average age of the
 9          employees who are enrolled in coverage under the policy.
10                (iv)    Be prohibited from varying premiums based on
11          gender.
12                (v)    Be prohibited from establishing discriminatory
13          rules based on the health status of an employer member or
14          an individual employee of an employer member for
15          eligibility or contribution requirements.
16          (2)   In the case of an association specified under
17    subsection (a)(2) that does not include sole proprietors, a
18    health insurance issuer under subsection (a)(1) may vary
19    premiums for each employer member by the average age of the
20    employees of the employer member. Premiums under this
21    paragraph may not vary among each employer member by more
22    than five to one.
23    (d)   Compliance and administration.--
24          (1)   The association shall comply with the requirements
25    applicable to a plan sponsor, as that term is defined in 29
26    U.S.C. § 1002(16)(B) (relating to definitions).
27          (2)   The health plan providing coverage under the policy
28    to employees shall be administered in accordance with the
29    requirements applicable to an employee welfare benefit plan.
30    (e)   Governing board.--The association shall establish a

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 1   governing board to manage and operate the health plan. The
 2   following shall apply:
 3            (1)   At least 75% of the governing board shall be
 4      comprised of employees of employer members of the association
 5      participating in the health plan, with the remaining
 6      percentage being comprised of representatives designated by
 7      the association.
 8            (2)   The employees of employer members of the association
 9      participating in the health plan shall nominate and, through
10      an election where each employee is given a vote, elect
11      members to serve on the governing board.
12            (3)   The governing board shall be treated as a fiduciary,
13      as that term is described in 29 U.S.C. § 1002(21)(A), and
14      shall manage and operate the health plan:
15                  (i)    For the exclusive purpose of all of the
16            following:
17                         (A)   Providing health benefits to employees
18                  enrolled in coverage under the health plan.
19                         (B)   Defraying expenses relating to
20                  administration of the health plan.
21                  (ii)    With the care, skill, prudence and diligence
22            under the circumstances then prevailing that a prudent
23            person in a similar capacity and familiar with such
24            matters would use in the conduct of an enterprise of a
25            similar character and with similar aims.
26      (f)   Coverage.--If an employee of an employer member of the
27   association terminates employment with the employer member and
28   is subsequently reemployed by another employer member of the
29   association, the employee shall remain covered under the policy
30   issued to the association.

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1   § 4103.   Applicability.
2      This chapter shall not apply to an association that offers or
3   provides health care services through a health insurance policy
4   that is not fully insured. An association offering or providing
5   health care services through a health insurance policy that is
6   not fully insured shall be subject to the requirements of
7   section 208 of the act of May 17, 1921 (P.L.789, No.285), known
8   as The Insurance Department Act of 1921.
9      Section 2.   This act shall take effect in 60 days.




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