Senate File 2349 - Introduced SENATE FILE 2349 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SF 2182) A BILL FOR An Act relating to association health plans, a type of multiple 1 employer welfare arrangement, established by bona fide 2 associations of employers. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5672SV (5) 87 ko/rj

S.F. 2349 Section 1. Section 507A.4, subsection 9, Code 2018, is 1 amended to read as follows: 2 9. a. Transactions involving a multiple employer welfare 3 arrangement, as defined in section 3 of the federal Employee 4 Retirement Income Security Act of 1974, 29 U.S.C. §1002, 5 paragraph 40, if the multiple employer welfare arrangement 6 meets all of the following conditions: 7 (1) The arrangement is administered by an authorized 8 insurer or an authorized third-party administrator. 9 (2) The arrangement has been in existence and provided 10 health insurance in Iowa for at least five years prior to July 11 1, 1997. 12 (3) (2) The arrangement was is established by a trade, 13 industry, or professional association of employers that 14 has a constitution or bylaws, and has been is organized and 15 maintained in good faith for at least ten continuous years 16 prior to July 1, 1997 with membership stability as defined by 17 rules adopted by the commissioner . 18 (4) (3) The arrangement registers with and obtains 19 and maintains a certificate of registration issued by the 20 commissioner of insurance . 21 (5) (4) The arrangement is subject to the jurisdiction 22 of the commissioner of insurance, including regulatory 23 oversight and complies with all rules and solvency standards as 24 established by rules adopted by the commissioner of insurance 25 pursuant to chapter 17A . 26 b. A multiple employer welfare arrangement registered with 27 the commissioner of insurance that does not meet the solvency 28 standards requirements established by rule adopted by the 29 commissioner of insurance is pursuant to chapter 17A shall be 30 subject to chapter 507C . 31 c. A multiple employer welfare arrangement that meets all 32 of the conditions of paragraph “a” shall not be considered any 33 of the following: 34 (1) An insurance company or association of any kind or 35 -1- LSB 5672SV (5) 87 ko/rj 1/ 4

S.F. 2349 character under section 432.1 . 1 (2) A member of the Iowa individual health benefit 2 reinsurance association under section 513C.10 . 3 (3) A member insurer of the Iowa life and health insurance 4 guaranty association under section 508C.5, subsection 12 . 5 d. A multiple employer welfare arrangement registered with 6 the commissioner of insurance shall file with the commissioner 7 of insurance on or before March 1 of each year a copy of the 8 report required to be filed by the multiple employer welfare 9 arrangement with the United States department of labor pursuant 10 to 29 C.F.R. §2520.101-2 . A newly formed multiple employer 11 welfare arrangement shall file with the commissioner a copy 12 of the report required to be filed pursuant to 29 C.F.R. 13 §2520.101-2 by a newly formed multiple employer welfare 14 arrangement with the United States department of labor thirty 15 days prior to operating in any state. The copy shall be filed 16 with the commissioner within thirty calendar days of the date 17 that the multiple employer welfare arrangement files the report 18 with the United States department of labor. 19 e. When not otherwise provided, a A foreign or domestic 20 multiple employer welfare arrangement doing business in this 21 state shall pay to the commissioner of insurance the fees 22 as required in pursuant to section 511.24 unless otherwise 23 provided by law . 24 Sec. 2. Section 509.1, Code 2018, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 8A. A policy of group health insurance 27 coverage issued to an associated health plan pursuant 28 to section 513D.1 that is subject to regulation by the 29 commissioner. 30 Sec. 3. Section 509.1, subsection 9, unnumbered paragraph 31 1, Code 2018, is amended to read as follows: 32 A policy issued to a resident of this state under a group 33 life, accident, or health insurance policy issued to a group 34 other than one described in subsections 1 through 8 8A , subject 35 -2- LSB 5672SV (5) 87 ko/rj 2/ 4

S.F. 2349 to the following requirements: 1 Sec. 4. NEW SECTION . 513D.1 Association health plans. 2 The commissioner shall adopt rules that allow for the 3 creation of association health plans that are consistent with 4 the United States department of labor’s regulations in 29 5 C.F.R. pt. 2510. 6 Sec. 5. NEW SECTION . 513D.2 Rules and enforcement. 7 1. The commissioner shall adopt rules, as necessary, 8 pursuant to chapter 17A to administer this chapter. 9 2. The commissioner may take any enforcement action under 10 the commissioner’s authority to enforce compliance with this 11 chapter. 12 Sec. 6. EMERGENCY RULES. The commissioner may adopt 13 emergency rules under section 17A.4, subsection 3, and 14 section 17A.5, subsection 2, paragraph “b”, to administer 15 the provisions of this Act and the rules shall be effective 16 immediately upon filing unless a later date is specified in the 17 rules. Any rules adopted in accordance with this section shall 18 also be published as a notice of intended action as provided 19 in section 17A.4. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill relates to association health plans, a type of 24 multiple employer welfare arrangement, established by bona fide 25 associations of employers. 26 The United States department of labor issued proposed 27 rules in 83 Fed. Reg. 617 (January 5, 2018) that broaden the 28 criteria under Title I of the federal Employee Retirement 29 Income Security Act (ERISA) to allow more employers to form 30 an association health plan to offer a group health plan 31 to employees, former employees, family members, and other 32 beneficiaries of the employer members of the association. 33 Currently, employer groups are prohibited from forming 34 associations for the sole purpose of providing group health 35 -3- LSB 5672SV (5) 87 ko/rj 3/ 4

S.F. 2349 coverage. Under the proposed federal regulations, an 1 association may exist solely for the purpose of sponsoring 2 a group health plan for its employer members. The current 3 commonality-of-interest regulations require employer members 4 to have a commonality-of-interest such as the same trade, 5 industry, line of business, or profession. The proposed 6 federal regulations also allow the commonality to be based 7 on the employer members having a principal place of business 8 in the same state or the same metropolitan area, including a 9 metropolitan area that crosses state lines. 10 The bill requires the commissioner of insurance to adopt 11 rules that allow for the creation of association health plans 12 that are consistent with the United States department of 13 labor’s regulations in 29 C.F.R. pt. 2510. The bill requires 14 the commissioner to adopt rules to administer the bill and 15 allows the commissioner to take any enforcement action under 16 the commissioner’s authority to enforce compliance with the 17 bill. The commissioner may engage in emergency rulemaking as 18 necessary. 19 The bill amends Code section 507A.4, unauthorized insurers, 20 to update the language related to the exemption from the 21 provisions of the Code section for multiple employer welfare 22 arrangements. The bill requires that a multiple employer 23 welfare arrangement be established by a trade, industry, or 24 professional association of employers that has a constitution 25 or bylaws, that is organized and maintained in good faith, and 26 has membership stability as defined by rules as adopted by the 27 commissioner. 28 The bill amends Code section 509.1 to allow a policy of 29 group health insurance sponsored by an association health plan 30 pursuant to the provisions of the bill to be delivered in the 31 state. 32 -4- LSB 5672SV (5) 87 ko/rj 4/ 4