2017 Special Session
2017 - 2018 LEGISLATURE
Employer groups for self-funded health coverage
Preliminary Draft - Not Ready For Introduction
February 21, 2018 - Printed by direction of Senate Chief Clerk.
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 and
3granting rule-making authority.
Analysis by the Legislative Reference Bureau
The text of Engrossed 2017 Assembly Bill 920 consists of the following
documents adopted in the assembly on February 20, 2018: the bill as affected by
Assembly Amendments 1, 4, and 5. The text also includes the February 21, 2018,
chief clerk's correction to Assembly Amendment 5 to Assembly Bill 920.
Content of Engrossed 2017 Assembly Bill 920:
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
project. To qualify as an employer group, the employer group must create and
maintain a formal organizational structure, control functions and activities of the
employer group through nomination and election of representatives, and be formed
from a chamber of commerce or industry-based association that meets certain
criteria such as being actively in existence for at least five years.
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, administrative 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; specify the procedures to be followed in the event
of insolvency; 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 the same health care benefits or health care benefit arrangements
with minimally different actuarial values to all eligible employees and dependents.
The health care benefit arrangement must include coverage of certain individuals,
treatments, and conditions that private health insurance is required to cover under
current law, including the following: extension of coverage of children with
disabilities; coverage of individuals who have been victims of domestic violence and
covering illness or disease resulting from abuse or domestic abuse; extension of
dependent child coverage to a certain age; coverage of a spouse or dependent under
certain family circumstances; coverage of HIV infection or illness or a medical
condition arising out of HIV infection; coverage of adopted children; coverage of
certain mental health treatments; coverage of services provided by a certain type of
provider, including chiropractors, if the plan generally covers the services; and
coverage of home care, skilled nursing care, kidney disease treatment, newborn
infants, grandchildren, diabetes equipment and supplies, maternity, mammograms,
drugs for HIV infection treatment, lead poisoning screening, correction of
temporomandibular disorders, hospital and ambulatory surgery center charges,
anesthetics for certain dental care, autism spectrum disorders, breast
reconstruction, certain immunizations, students on medical leave, hearing aids and
cochlear implants for children, colorectal cancer screening, and contraceptives. The
bill also imposes on health care benefit arrangements certain cost-sharing
requirements on oral and injected chemotherapy and prohibits the arrangements
from requiring individuals to have or from basing coverage on genetic testing.
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. With limited exceptions, insurance statutes and rules do not apply to an
employer group or a health care benefit arrangement. The commissioner is allowed
to examine the solvency of an employer group and promulgate rules regarding the
solvency of employer groups and may require an employer to take corrective action
or impose another enforcement action on employer groups based on violations of any
rules the commissioner promulgates. The commissioner is also allowed to
promulgate rules to implement federal law if the federal Department of Labor
promulgates a final rule that allows the states to have regulatory authority over
association health plans.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
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
1(2) Employer groups; qualification.
(a) Two or more employers that are 2
members of the same chamber of commerce or industry-based association may form 3
an employer group to establish and administer an employee health care benefit 4
arrangement to jointly provide health care benefits on a self-funded basis to eligible 5
employees of employers in the group and the dependents of those eligible employees.
(am) To qualify under par. (b), an employer group shall satisfy all of the 7
1. The employer group creates and maintains a formal organizational structure 9
with a governing body and an indication of formality, such as having by-laws.
2. The employers in the employer group control functions and activities of the 11
employer group, including establishment and maintenance of the employee health 12
care benefit arrangement, directly or indirectly through nomination and election of 13
representatives that control the employer group or association.
3. The chamber of commerce or industry-based association from which the 15
employer group is formed is actively in existence for at least 5 years before providing 16
evidence to the commissioner under par. (b), has at least 5 members for the 5 years 17
before providing evidence to the commissioner under par. (b), and is formed and 18
maintained in good faith for purposes other than obtaining or providing health 19
(b) Employer groups that provide evidence to the commissioner of insurance 21
that they have formed and are able to comply with the requirements of this section 22
qualify to participate in the project under this section. When employer groups have 23
qualified under this paragraph, the commissioner of insurance shall submit a notice 24
to the legislative reference bureau for publication in the Wisconsin Administrative
Register that lists the employer groups that have qualified and the date on which 2
each group provided the necessary evidence of compliance.
3(3) Employer group duties and powers.
(a) Each employer group qualified 4
under sub. (2) (b) shall do all of the following:
1. Determine all matters necessary for the administration and operation of its 6
employee health care benefit arrangement.
2. Designate an agent for service of process, notice, or demand.
4. Employ or contract with an actuary to make recommendations, in 9
accordance with generally accepted actuarial principles, as to the sufficient amount 10
of funding for the employee health care benefit arrangement. The employer group 11
shall ensure that the actuary making recommendations under this subdivision is in 12
good standing with the Academy of Actuaries, has the skills and knowledge 13
necessary to perform the analyses and make the recommendations, and is 14
performing the analyses and certifications based on sound actuarial principles. The 15
employer group satisfies the requirement under this subdivision if the employer 16
group contracts with an insurer or a 3rd-party administrator that employs an 17
5. Determine, based on the actuary's recommendations under subd. 4., the 19
amount that each employer that is participating in the employer group shall 20
contribute to self-fund the employee health care benefit arrangement; to pay 21
administrative expenses, including the actuary's compensation; and to purchase 22
excess or stop-loss coverage, as described under sub. (5) (b). The contribution 23
amount under this subdivision may vary by employer based on criteria developed by 24
the employer group. An employer group may require employers in the employer 25
group to contribute payments for establishing a surplus fund and may levy an
assessment whenever the amount of any loss or expense that is due exceeds the 2
assets of the employer group or the surplus fund amount established by the employer 3
group is impaired.
6. Establish a minimum participation period for an employer's participation in 5
the employer group, which shall be the same length for each employer participating 6
in the employer group and may not be less than 3 years. An employer group may 7
specify circumstances under which a participating employer may discontinue 8
participation in the employer group before the minimum participation period 9
established under this subdivision ends without forfeiting all or a portion of the 10
amount paid by the employer under sub. (4) (a) 2.
7. Annually submit a report to the commissioner of insurance describing the 12
stability of the employer group and the finances of the employer group and 13
containing any information specified by the commissioner by rule under sub. (5m).
8. Specify in an agreement among the employers in the employer group or in 15
the by-laws of the employer group the procedures to be followed by and 16
responsibilities of the involved parties in the event of insolvency or pending 17
insolvency of the employer group.
(b) An employer group qualified under sub. (2) (b) may specify minimum 19
participation requirements that an employer is required to satisfy to participate in 20
the employer group. Except as provided under sub. (4) (b), an employer group 21
qualified under sub. (2) (b) shall allow any employer that is a member of the same 22
chamber of commerce or industry-based association as the other group members and 23
that agrees to comply with the participation requirements specified under this 24
paragraph to participate in the employer group.
(c) If an employer group qualified under sub. (2) (b) seeks to contract with a 2
3rd-party administrator to administer any part of the health care benefit 3
arrangement, the employer group shall contract with a 3rd-party administrator that 4
is registered to do business in this state. A contract between an employer group and 5
a 3rd-party administrator that relates to the administration of the payment of 6
claims shall specify terms for the resolution of claims upon termination of the 7
contract with that 3rd-party administrator.
8(4) Employer requirements.
(a) An employer group qualified under sub. (2) 9
(b) shall require each of its participating employers to do all of the following:
1. Offer the same health care benefits, or health care benefit arrangements 11
with a de minimis difference in actuarial value, to all of the employer's eligible 12
employees and all of the eligible employees' dependents.
2. Participate for at least the minimum participation period specified by the 14
employer group under sub. (3) (a) 6. An employer group may require employers that 15
desire to participate in the employer group to pay an amount that is forfeited to the 16
employer group if the employer's participation terminates voluntarily or 17
involuntarily before the employer's minimum participation period ends.
(b) Subject to any policy created by the employer group regarding late 19
payments, an employer group qualified under sub. (2) (b) shall terminate an 20
employer's participation in the employer group if the employer fails to pay a 21
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 23
participation in the employer group terminates voluntarily or involuntarily 24
responsible for all of the following:
1. Any contribution amounts required during the employer's period of 2
2. The employer's proportionate share of the cost of any claims payable by the 4
employer group that were incurred before the termination of the employer's 5
6(5) Covered benefits; payment of claims.
(a) An employer group may provide 7
a choice of health care benefit plans to employers but each employer that participates 8
in the employer group shall offer the same health care benefits, or health care 9
arrangement with a de minimis difference in actuarial value, to all employees and 10
dependents of the employer.
(am) 1. An employer group qualified under sub. (2) (b) may not exclude coverage 12
under a health care benefit arrangement for diagnosis and treatment of a condition 13
or complaint by a licensed chiropractor within the scope of the chiropractor's 14
professional license if the health care benefit arrangement covers diagnosis and 15
treatment of a condition or complaint by a licensed physician or osteopath, even if 16
different nomenclature is used to describe the condition or complaint. The health 17
care benefit arrangement may not require examination by or referral from a 18
physician before allowing coverage of chiropractic care under this paragraph. This 19
paragraph does not prohibit any of the following:
a. Application of deductibles or coinsurance under the health care benefit 21
arrangement to chiropractic care if deductibles or coinsurance apply equally to 22
b. Application of cost containment or quality assurance measures to 24
chiropractic services in a manner that is consistent with cost containment or quality 25
assurance measures applied to physician services.