The bill SB247 introduces a new section, Section 10A-20-6.17, to the Code of Alabama 1975, which allows health care service corporations to establish a nonprofit holding corporation through a reorganization process. This process is defined as the creation of a nonprofit holding corporation that will hold membership interests in the health care service corporation, and it includes specific requirements for notifying the Department of Insurance. The reorganization will not be classified as a change of control or acquisition of the health care service corporation, and it permits the transfer of assets to the nonprofit holding corporation under certain conditions, including a cap on the total value of the transfer.

Additionally, the bill outlines the governance structure of the nonprofit holding corporation, mandating that its board of directors consist solely of directors from the health care service corporation, while prohibiting equity or ownership interests for executive officers or board members. It clarifies that the legal status of the health care service corporation remains unchanged post-reorganization, and existing subscriber contracts will remain valid. The bill also allows health care service corporations to pay dividends to their nonprofit holding corporations under specific conditions, permits mergers with other nonprofit corporations, and imposes restrictions on ownership of hospitals and health care providers. Significant transactions must be publicly announced with a 30-day comment period before proceeding, and the act is set to take effect on October 1, 2026.

Statutes affected:
Introduced: 10A-20-6
Engrossed: 10A-20-6
Enrolled: 10A-20-6