H.R. 2528 — Association Health Plans Act

This section revises the definition of "employer" under ERISA (29 U.S.C. 1002(5)) to treat a group or association of employers as a single "employer" solely for purposes of sponsoring a group health plan if it (1) establishes and maintains such a plan covering at least 51 employees in the aggregate, (2) has existed for at least two years, (3) was formed for purposes other than providing medical care, (4) does not condition membership or coverage on health status-related factors, (5) limits coverage to employees of member employers, (6) has a governing board with at least 75% elected employer members, and (7) is not a health insurance issuer or controlled by one (with additional criteria available via prior advisory opinions or Secretary regulations). The section further treats qualifying self-employed individuals (i.e., those without common law employees who work at least 10 hours per week or 40 hours per month in their trade or business) as both employers eligible to join such groups and employees eligible for coverage, subject to initial and ongoing eligibility monitoring by the group's board. Provision of coverage through such a group or association does not establish an employer or joint employer relationship under other federal or state laws. (Thus, the revision enables broader association health plans by allowing employer aggregation across industries for group health plan sponsorship.)

This section establishes rules applicable to employee welfare benefit plans maintained by a group or association of employers described in ERISA section 3(5)(B) (i.e., multiple-employer welfare arrangements). Specifically, it authorizes such plans, to the extent not prohibited by state law, to (1) set base premium rates using an actuarially sound, modified community rating methodology that pools all participant claims and (2) adjust each employer member's contribution rates above or below the base rate based on the employer's specific risk profile, where an employer member is an employer with at least one common law employee or a group of at least 20 self-employed individuals; for plans consisting solely of self-employed individuals, it requires treating all participants as a single risk pool with uniform premium rates. It further prohibits such plans from (1) discriminating in eligibility rules based on health status-related factors, (2) charging higher premiums or contributions based on health status-related factors, or (3) denying coverage based on preexisting conditions.

This section states that nothing in this Act exempts a group health plan that is an employee welfare benefit plan offered through a group or association of employers from the requirements of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, including provisions of part A of title XXVII of the Public Health Service Act incorporated therein. (Part 7 limits preexisting condition exclusions to 12 months [18 months for late enrollees] for conditions for which medical advice, diagnosis, care, or treatment was recommended or received within the six-month period ending on the enrollment date, reduced by creditable prior coverage periods.)