FILED SENATE
Feb 19, 2019
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 86
SESSION 2019 PRINCIPAL CLERK
S D
SENATE BILL DRS45039-MR-35
Short Title: Small Business Healthcare Act. (Public)
Sponsors: Senators Bishop, Krawiec, and Edwards (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO CREATE GREATER OPPORTUNITIES FOR SMALL EMPLOYERS TO
3 PROVIDE EMPLOYEES ACCESS TO HEALTH INSURANCE.
4 Whereas, Association Health Plans are regulated by multiple consumer protection
5 provisions contained in the Employee Retirement Income Security Act (ERISA), including
6 provisions under the Health Insurance Portability and Accountability Act (HIPAA), the
7 Affordable Care Act, the Mental Health Parity and Addiction Equity Act, the Newborns' and
8 Mothers' Health Protection Act, the Women's Health and Cancer Rights Act, and the Genetic
9 Information Nondiscrimination Act; and
10 Whereas, under ERISA, the State has been regulating self-insured Association Health
11 Plans in such a way that, in addition to the federal consumer protections that apply to the fully
12 insured Association Health Plans, fully protects the citizens of this State; and
13 Whereas, new federal Department of Labor regulations regarding Association Health
14 Plans allow for states to provide greater opportunities for small businesses and self-employed
15 individuals to access health benefit plans, while still providing health insurance consumers with
16 the coverage protections established by the foregoing legislation and other provisions of federal
17 law; Now, therefore,
18 The General Assembly of North Carolina enacts:
19
20 PART I. MORE OPPORTUNITIES FOR SMALL EMPLOYERS AND SOLE
21 PROPRIETORS TO ACCESS SELF-INSURED MULTIPLE EMPLOYER WELFARE
22 ARRANGEMENTS/ASSOCIATION HEALTH PLANS.
23 SECTION 1.(a) G.S. 58-49-40(a) reads as rewritten:
24 "(a) To meet the requirements for issuance of a license and to maintain a To qualify for
25 licensure as a MEWA, a MEWA must be:meet all of the following requirements:
26 (1) Nonprofit;Be a nonprofit.
27 (2) Established by a trade association, industry association, or professional
28 association of employers or professionals that has Have a constitution or
29 bylaws and that has have been organized and maintained in good faith for a
30 continuous period of five at least two years for purposes other than that of
31 obtaining or providing insurance;insurance.
32 (3) Operated Be operated pursuant to a trust agreement by a board of trustees that
33 has complete fiscal control over the MEWA and that is responsible for all
34 operations of the MEWA. Except as provided in this subdivision, the trustees
35 must be owners, partners, officers, directors, or employees of one or more
36 employers in the MEWA. With the Commissioner's approval, a person who is
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 General Assembly Of North Carolina Session 2019
1 not such an owner, partner, officer, director, or employee may serve as a
2 trustee if that person possesses the expertise required for such service. A
3 trustee may not be an owner, officer or employee of the administrator or
4 service company of the MEWA. The trustees have the authority to approve
5 applications of association members for participation in the MEWA and to
6 contract with an authorized administrator or service company to administer
7 the operations of the MEWA;MEWA.
8 (3a) Have at least one substantial business purpose unrelated to offering and
9 providing health coverage or other employee benefits to its employer
10 members and their employees.
11 (3b) Have a commonality of interest as described in subsection (h) of this section.
12 (4) Neither Be neither offered nor advertised to the public generally;
13 andgenerally.
14 (5) Operated Be operated in accordance with sound actuarial principles."
15 SECTION 1.(b) G.S. 58-49-40 is amended by adding one new subsection to read:
16 "(h) A MEWA will be treated as having a commonality of interest if either of the following
17 is true:
18 (1) It is established by employers in the same trade, industry, line of business, or
19 profession.
20 (2) It is established by employers in the same region or metropolitan area,
21 provided that region or area is contiguous to the State and includes the State."
22 SECTION 1.(c) G.S. 58-49-30 is amended by adding a new subsection to read:
23 "(f) As used in this section, the term "employer" shall include sole proprietors and
24 self-employed workers."
25 SECTION 1.(d) G.S. 58-49-50 is amended by adding a new subdivision to read:
26 "(10a) A copy of the most recent M-1 form as filed with the United States Department
27 of Labor."
28
29 PART II. REGULATIONS IMPACTING FULLY INSURED ASSOCIATION HEALTH
30 PLANS.
31 SECTION 2.(a) G.S. 58-51-80(b)(1) reads as rewritten:
32 "(b) No policy or contract of group accident, group health or group accident and health
33 insurance shall be delivered or issued for delivery in this State unless the group of persons thereby
34 insured by the policy or contract conforms to the requirements of the following subdivisions:all
35 of the following requirements:
36 (1) Under a policy issued to an employer, principal, or to the trustee of a fund
37 established by an employer or two or more employers in the same industry or
38 kind of business, or by a principal or two or more principals in the same
39 industry or kind of business, which employer, principal, or trustee shall be
40 deemed the policyholder, covering, except as hereinafter provided, only
41 employees, or agents, of any class or classes thereof determined by conditions
42 pertaining to employment, or agency, for amounts of insurance based upon
43 some plan which will preclude individual selection. The premium may be paid
44 by the employer, by the employer and the employees jointly, or by the
45 employee; and where the relationship of principal and agent exists, the
46 premium may be paid by the principal, by the principal and agents, jointly, or
47 by the agents. If the premium is paid by the employer and the employees
48 jointly, or by the principal and agents jointly, or by the employees, or by the
49 agents, the group shall be structured on an actuarially sound basis. For the
50 purposes of this subdivision, the term "employer" includes a multiple
51 employer welfare arrangement that is classified by the United States
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1 Department of Labor as a bona fide group or association under at least one of
2 the following:
3 a. The requirements set forth in section 3(5) of the Employee Retirement
4 Income Security Act of 1974.
5 b. Any United States Department of Labor advisory opinion addressing
6 circumstances in which the United States Department of Labor will
7 consider a person as able to act directly or indirectly in the interest of
8 direct employers in sponsoring an employee welfare benefit plan."
9 SECTION 2.(b) G.S. 58-51-80(b)(1a) reads as rewritten:
10 "(1a) Under a policy issued to an association or to a trust or to the trustee or trustees
11 of a fund established, created, or maintained for the benefit of members of one
12 or more associations. The association or associations shall have at the outset
13 a minimum of 500 persons and shall have been organized and maintained in
14 good faith for purposes other than that of obtaining insurance; shall have been
15 in active existence for at least five two years; and shall have a constitution and
16 bylaws that provide that (i) the association or associations hold regular
17 meetings not less than annually to further purposes of the members; (ii) except
18 for credit unions, the association or associations collect dues or solicit
19 contributions from members; and (iii) the members, other than associate
20 members, have voting privileges and representation on the governing board
21 and committees. The policy is subject to the following requirements:
22 …."
23 SECTION 2.(c) G.S. 58-68-25(a) reads as rewritten:
24 "§ 58-68-25. Definitions; excepted benefits; employer size rule.
25 (a) Definitions. – In addition to other definitions throughout this Article, the The
26 following definitions and their cognates apply in this Article:
27 (1) "Bona Bona fide association". association. – With respect to health insurance
28 coverage offered in this State, an association that:meeting all of the following
29 requirements:
30 a. Has been actively in existence for at least five years.
31 b. Has been formed and maintained in good faith for purposes other than
32 obtaining insurance.
33 c. Does not condition membership in the association on any health
34 status-related factor relating to an individual (including individual,
35 including an employee of an employer or a dependent of an
36 employee).employee.
37 d. Makes health insurance coverage offered through the association
38 available to all members and individuals eligible for coverage through
39 a member regardless of any health status-related factor relating to the
40 members (or individuals eligible for coverage through a
41 member).members or eligible individuals.
42 e. Does not make health insurance coverage offered through the
43 association available other than in connection with a member of the
44 association.
45 f. Meets the additional requirements as may be imposed under State law.
46 (2) "COBRA COBRA continuation provision". provision. – Any of the following:
47 a. Section 4980B of the Internal Revenue Code of 1986, other than
48 subdivision (f)(1) of the section insofar as it relates to pediatric
49 vaccines.
50 b. Part 6 of subtitle B of title I of the Employee Retirement Income
51 Security Act of 1974, other than section 609 of the Act.
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1 c. Requirements for certain group health plans for certain State and local
2 employees under Title XXII of the Public Health Service Act (42
3 U.S.C.S. § 300bb, et seq.,) as requirements for certain group health
4 plans for certain State and local employees.Act.
5 d. Article 53 of this Chapter or the Chapter.
6 e. The health insurance continuation law of another state.
7 (3) "Employee". Employee. – The meaning given the term under As defined in
8 section 3(6) of the Employee Retirement Income Security Act of 1974.
9 (4) "Employer". Employer. – The meaning given the term under As defined in
10 section 3(5) of the Employee Retirement Income Security Act of 1974, except
11 that the term shall include only employers of two or more employees.1974.
12 (4a) "Group Group health insurance coverage". coverage. – Health insurance
13 coverage offered in connection with a group health plan.
14 (4b) "Group Group health plan". plan. – The meaning given the term under As
15 defined in 45 C.F.R. § 146.145(a).
16 (4c) "Group market." Group market. – The market for health insurance coverage
17 offered in connection with a group health plan.
18 (5) "Health Health insurance coverage" or "coverage" or "health insurance plan"
19 or "plan". coverage, health insurance plan, coverage, or plan. – Benefits
20 consisting of medical care, provided directly through insurance or otherwise
21 and including items and services paid for as medical care, under any accident
22 and health insurance policy or certificate, hospital or medical service plan
23 contract, or health maintenance organization contract, written by a health
24 insurer. Health insurance coverage includes group health insurance coverage
25 and individual health insurance coverage.
26 (6) "Health insurer". Health insurer. – An insurance company subject to this
27 Chapter, a hospital or medical service corporation subject to Article 65 of this
28 Chapter, a health maintenance organization subject to Article 67 of this
29 Chapter, or a multiple employer welfare arrangement subject to Article 49 of
30 this Chapter, that offers and issues health insurance coverage.
31 (7) "Health Health status-related factor". factor. – Any of the factors described in
32 G.S. 58-68-35(a)(1).
33 (8) "Individual Individual health insurance coverage". coverage. – Health
34 insurance coverage offered to individuals in the individual market, but not
35 short-term limited duration insurance.
36 (9) "Individual market". Individual market. – The market for health insurance
37 coverage offered to individuals.
38 (10) "Large employer". Large employer. – An employer who employed an average
39 of at least 51 employees on business days during the preceding calendar year
40 and who employs at least two employees one employee on the first day of the
41 health insurance plan year.
42 (11) "Large Large group market". market. – The health insurance market under
43 which individuals obtain health insurance coverage, directly or through any
44 arrangement, on behalf of themselves and their dependents through a group
45 health insurance plan maintained by a large employer.
46 (12) "Medical care". Medical care. – Amounts paid for:for any of the following:
47 a. The diagnosis, cure, mitigation, treatment, or prevention of disease, or
48 amounts paid for the purpose of affecting any structure or function of
49 the body.
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1 b. Amounts paid for transportation Transportation primarily for and
2 essential to medical care referred to in under sub-subdivision a. of this
3 subdivision.
4 c. Amounts paid for insurance Insurance covering medical care referred
5 to in under sub-subdivisions a. and b. of this subdivision.
6 (13) "Network plan". Network plan. – Health insurance coverage of a health
7 insurer under which the financing and delivery of medical care (including
8 items and services paid for as medical care) are provided, in whole or in part,
9 through a defined set of health care providers under contract with the health
10 insurer.
11 (14) "Participant". Participant. – The meaning given the term As defined under
12 section 3(7) of the Employee Retirement Income Security Act of 1974.
13 (15) "Placed for adoption". Placed for adoption. – The assumption and retention by
14 a person of a legal obligation for total or partial support of a child in
15 anticipation of adoption of the child. The c