2017 Special Session
2017 - 2018 LEGISLATURE
Employer groups for self-funded health care coverage
Preliminary Draft - Not Ready For Introduction
February 7, 2018 - Introduced by Representatives Zimmerman, Sanfelippo,
Kooyenga, Ott, Duchow, Loudenbeck, Kulp, Felzkowski, Quinn and Hutton,
cosponsored by Senators Stroebel and Tiffany. Referred to Committee on
1An Act to create
146.79, 600.01 (1) (b) 13. and 601.415 (14) of the statutes; 2relating to: employer groups for self-funded health care coverage.
Analysis by the Legislative Reference Bureau
This bill allows the establishment of employer groups to jointly provide health
care benefits on a self-funded basis to the employers' eligible employees and their
dependents under a health care benefit arrangement. Two or more employers that
are members of the same chamber of commerce or industry-based association may
form an employer group. Employer groups that provide evidence to the
commissioner of insurance that they have formed and are able to comply with the
requirements in the bill qualify to participate in the self-funded health benefits
Each employer group in the project must, among other requirements, do all of
the following: determine all matters necessary for administration and operation of
the employee health care benefit arrangement; determine, based on an actuary's
recommendations, the amount that each employer must contribute for the health
care benefit arrangement, adminstrative expenses, and excess or stop-loss coverage;
establish a minimum participation period of no less than three years for an employer
to participate unless the employer meets special circumstances established by the
employer group; and report annually to the commissioner of insurance on the
stability of the group and its finances. The employer group may specify minimum
participation requirements that employers must meet to participate, but must, with
certain exceptions, allow any employer that is a member of the same chamber of
commerce or industry-based association and agrees to comply with those
requirements to participate. If an employer does not pay the required contribution,
the employer group must terminate the participation of the employer. If an employer
terminates participation in an employer group voluntarily or involuntarily, the
employer is responsible for contribution amounts required during the employer's
participation and the employer's proportionate share of the cost of claims payable
before the termination.
Each employer group in the project must require each of its participating
employers to offer a similar level of health care benefits to all eligible employees and
Each employer group in the program is required to pay no more than $50,000
in benefits for each covered individual in a calendar year, unless an independent
actuary confirms the employer group is financially capable of paying more. The
employer group is required to obtain excess or stop-loss coverage in an amount
sufficient to pay the excess amount of claims.
The bill specifies that the employer group is not considered an insurer, and the
health care benefit arrangement is not considered an insurance contract, for any
purpose. The insurance statutes do not apply to an employer group or a health care
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
146.79 of the statutes is created to read:
146.79 Employer group self-funded health benefits project. (1) 3Definition.
In this section, “eligible employee” means an employee who works on a 4
permanent basis and has a normal work week of 30 or more hours and includes all 5
of the following, if included as an employee under the health care benefit 6
arrangement under this section:
(a) A sole proprietor.
(b) A business owner, including the owner of a farm business.
(c) A partner of a partnership.
(d) A member of a limited liability company or a corporation defined under 26
3(2) Employer groups; qualification.
(a) Two or more employers that are 4
members of the same chamber of commerce or industry-based association may form 5
an employer group to establish and administer an employee health care benefit 6
arrangement to jointly provide health care benefits on a self-funded basis to eligible 7
employees of employers in the group and the dependents of those eligible employees.
(b) Employer groups that provide evidence to the commissioner of insurance 9
that they have formed and are able to comply with the requirements of this section 10
qualify to participate in the project under this section. When employer groups have 11
qualified under this paragraph, the commissioner of insurance shall submit a notice 12
to the legislative reference bureau for publication in the Wisconsin Administrative 13
Register that lists the employer groups that have qualified and the date on which 14
each group provided the necessary evidence of compliance.
15(3) Employer group duties and powers.
(a) Each employer group qualified 16
under sub. (2) (b) shall do all of the following:
1. Determine all matters necessary for the administration and operation of its 18
employee health care benefit arrangement.
2. Designate an agent for service of process, notice, or demand.
3. Define who is a dependent for purposes of coverage under its employee health 21
care benefit arrangement.
4. Employ or contract with an actuary to make recommendations, in 23
accordance with generally accepted actuarial principles, as to the sufficient amount 24
of funding for the employee health care benefit arrangement. The employer group
satisfies the requirement under this subdivision if the employer group contracts with 2
an insurer or a 3rd-party administrator that employs an actuary.
5. Determine, based on the actuary's recommendations under subd. 4., the 4
amount that each employer that is participating in the employer group shall 5
contribute to self-fund the employee health care benefit arrangement; to pay 6
administrative expenses, including the actuary's compensation; and to purchase 7
excess or stop-loss coverage, as described under sub. (5) (b). The contribution 8
amount under this subdivision may vary by employer based on criteria developed by 9
the employer group. An employer group may require employers in the employer 10
group to contribute payments for establishing a surplus fund and may levy an 11
assessment whenever the amount of any loss or expense that is due exceeds the 12
assets of the employer group or the surplus fund amount established by the employer 13
group is impaired.
6. Establish a minimum participation period for an employer's participation in 15
the employer group, which shall be the same length for each employer participating 16
in the employer group and may not be less than 3 years. An employer group may 17
specify circumstances under which a participating employer may discontinue 18
participation in the employer group before the minimum participation period 19
established under this subdivision ends without forfeiting all or a portion of the 20
amount paid by the employer under sub. (4) (a) 2.
7. Annually submit a report to the commissioner of insurance describing the 22
stability of the employer group and the finances of the employer group.
(b) An employer group qualified under sub. (2) (b) may specify minimum 24
participation requirements that an employer is required to satisfy to participate in 25
the employer group. Except as provided under sub. (4) (b), an employer group
qualified under sub. (2) (b) shall allow any employer that is a member of the same 2
chamber of commerce or industry-based association as the other group members and 3
that agrees to comply with the participation requirements specified under this 4
paragraph to participate in the employer group.
(c) If an employer group qualified under sub. (2) (b) seeks to contract with a 6
3rd-party administrator to administer any part of the health care benefit 7
arrangement, the employer group shall contract with a 3rd-party administrator that 8
is registered to do business in this state. A contract between an employer group and 9
a 3rd-party administrator that relates to the administration of the payment of 10
claims shall specify terms for the resolution of claims upon termination of the 11
contract with that 3rd-party administrator.
12(4) Employer requirements.
(a) An employer group qualified under sub. (2) 13
(b) shall require each of its participating employers to do all of the following:
1. Offer a similar level of health care benefits to all of the employer's eligible 15
employees and all of the eligible employee's dependents, as defined under sub. (3) (a) 16
2. Participate for at least the minimum participation period specified by the 18
employer group under sub. (3) (a) 6. An employer group may require employers that 19
desire to participate in the employer group to pay an amount that is forfeited to the 20
employer group if the employer's participation terminates voluntarily or 21
involuntarily before the employer's minimum participation period ends.
(b) Subject to any policy created by the employer group regarding late 23
payments, an employer group qualified under sub. (2) (b) shall terminate an 24
employer's participation in the employer group if the employer fails to pay a 25
contribution required by the employer group under sub. (3) (a) 5.
(c) An employer group qualified under sub. (2) (b) shall hold an employer whose 2
participation in the employer group terminates voluntarily or involuntarily 3
responsible for all of the following:
1. Any contribution amounts required during the employer's period of 5
2. The employer's proportionate share of the cost of any claims payable by the 7
employer group that were incurred before the termination of the employer's 8
9(5) Covered benefits; payment of claims.
(a) An employer group may provide 10
a choice of health care benefit plans but shall offer a similar level of health care 11
benefits to all employees and dependents of each employer that participates in the 12
(b) An employer group qualified under sub. (2) (b) shall pay no more than 14
$50,000 in benefits on a self-funded basis incurred in a calendar year for each 15
individual covered under its employee health care benefit arrangement, unless the 16
employer group is financially capable of paying more than $50,000 in benefits per 17
individual per calendar year as confirmed by an independent actuary. Each 18
employer group shall obtain excess or stop-loss coverage through an insurer 19
authorized to do business in this state in an amount that is sufficient to pay claims 20
that exceed the amount that the employer group will pay on a self-funded basis.
(c) If an employer group qualified under sub. (2) (b) ceases operating its 22
employee health care benefit arrangement, the employer group is responsible for 23
paying eligible claims incurred during the time in which the employee health benefit 24
arrangement was operating.
1(6) Exemption from insurance regulation.
Notwithstanding 29 USC 1144
(6) (A), chs. 600
and any rules promulgated under chs. 600 to 646 do not apply 3
to an employer group or an employee health care benefit arrangement under this 4
section. An employer group may not be considered an insurer, and an employee 5
health care benefit arrangement may not be considered an insurance contract, for 6
any purpose under the statutes.
600.01 (1) (b) 13. of the statutes is created to read:
(b) 13. Any employer group or employee health care benefit 9
arrangement under s. 146.79.
601.415 (14) of the statutes is created to read:
601.415 (14) Qualification of employer groups.
The commissioner shall 12
qualify employer groups as specified under s. 146.79 (2) (b).