Official Summary Text
HB2693 - 572R - Senate Fact Sheet
Assigned to
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PASSED BY COW
ARIZONA STATE SENATE
Fifty-Seventh
Legislature, Second Regular Session
AMENDED
FACT SHEET FOR
H.B. 2693
insurance; bona
fide associations; qualifications
Purpose
Modifies
requirements to qualify as a bona fide association. Specifies that a statewide
chamber of commerce and statewide business league that meets specified criteria
is not prohibited from operating a self-funded multiple employer welfare
arrangement (MEWA). Requires, subject to available monies, the Arizona
Department of Administration (ADOA) to conduct a feasibility study on state
employee and public school district employee health insurance plans in Arizona and
outlines requirements for the feasibility study.
Background
An association
health plan (AHP) is a health plan that is sponsored by a group or association
of employers to provide health care coverage for their employees. AHPs are
regulated by state and federal law and allow qualified small employers to join
together to buy coverage similar to large employers.
Current statute
qualifies an association as a path 1 bona fide association if the association:
1) has been formed and maintained in good faith for purposes other than
obtaining insurance and does not condition membership on the purchase of
insurance that is sponsored by the association; 2) has a constitution and
bylaws; 3) insures at least 25 members, employees or employees of members of
the association for the benefit of persons other than the association or its
officers or trustees; 4) does not condition membership on any health
status-related factor relating to an individual, including an employee of an
employer or a dependent of an employee, and clearly states this information in
all membership and application materials; and 5) does not make health benefits
plans offered through the association available other than in connection with a
member of the association and clearly states this information in all membership
and application materials (
A.R.S.
� 20-2324
).
Laws 2019, Chapter
194
established a path 2 bona fide association that aligned with the U.S.
Department of Labor (U.S. DOL) 2018 AHP Rule, which established criteria under
the federal Employee Retirement Income Security Act (ERISA) for determining
when employers may join together in a group or association of employers to be treated
as the employer sponsor of a single multiple-employer welfare benefit plan and
group health plan.
The U.S.
District Court for the District of Columbia largely invalidated the 2018 AHP
Rule in a 2019 decision in
New York v. U.S. Department of Labor
. The
U.S. DOL appealed the ruling and announced a temporary safe harbor from
enforcement in April 2019, which allowed AHPs that were established in good
faith reliance on the 2018 AHP Rule to continue operations necessary to wind
down the AHP by the end of the applicable plan year or contract term.
In 2024, the
U.S. DOL rescinded the 2018 AHP Rule following the U.S. DOL determination's
that the core provisions of the 2018 AHP Rule were not consistent with the best
reading of ERISA�s statutory requirements governing the definition of
employer
for purposes of establishing group health plans (
29
C.F.R. � 2510.3-5 (2018) (rescinded 2024)
;
U.S.
DOL
).
Federal law
defines a
MEWA
as an employee welfare benefit plan, or any other
arrangement, which is established or maintained for the purpose of offering or
providing specified benefits through the purchase of insurance to the employees
of two or more employers, including one or more self-employed individuals, or
to their beneficiaries.
ERISA defines
employer
as any person acting directly as an employer, or indirectly in the interest
of an employer, in relation to an employee benefit plan and includes a group or
association of employers acting for an employer in such capacity (
29
U.S.C. � 1002
).
There is no
anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1.
Qualifies an association as a bona fide association if the association
meets the requirements of an
employer
as defined in ERISA, rather than
the requirements outlined in the 2018 AHP Rule.
2.
Specifies
that the bona fide association qualifications and requirements do not limit or
prohibit the operation of a self-funded MEWA in Arizona through a statewide
chamber of commerce or statewide business league that:
a)
has a constitution or bylaws;
b)
was organized and has been maintained in good faith for a continuous
five-year period for purposes other than providing for or obtaining insurance;
and
c)
is
exempt from federal taxation pursuant to section 501(c)(6) of the U.S. Internal
Revenue Code.
3.
Specifies that the definition of
small employer
applies to health
benefits plans issued through a statewide chamber of commerce or statewide
business league, if an insurer elects to issue coverage to small employer
groups of one.
4.
Requires, subject to available monies, ADOA to conduct a feasibility
study on the state employee and public school district employee health
insurance plans in Arizona (feasibility study).
5.
Requires
ADOA to:
a)
review, analyze, and consider relevant state and national data for
individual coverage health reimbursement arrangements (ICHRAs) that include
coverage options, costs, utilization, enrollment trends and administrative
impacts;
b)
ensure greater choice and flexibility for employees;
c)
create cost certainty for employers;
d)
evaluate how an ICHRA may expand employee choice among health insurance
plan options while allowing the state and public school districts to establish
a predictable employer contribution and to improve long-term budget stability;
e)
compare ICHRAs with other available coverage options to analyze employee
choice, affordability, flexibility, state and school district cost
predictability, administrative complexity and short-term and long-term fiscal
impacts;
f)
obtain stakeholder feedback and input from employees, insurers, benefits
administrators, school districts and consumer advocates; and
g)
identify implementation considerations that include administrative
requirements, market impacts, statutory changes, budget changes and regulatory
changes that include cost savings.
6.
Requires
ADOA to submit a report of its findings and recommendations by January 1, 2027,
to the Governor, Speaker of the House of Representatives, President of the
Senate, Chairpersons of the Senate and House Health and Human Services
Committees, Chairpersons of the Senate and House Appropriations Committees and to
provide a copy to the Secretary of State.
7.
Specifies
that the requirements for ADOA's feasibility study do not require the
implementation of an ICHRA or the replacement of an existing health coverage
option.
8.
Allows
ADOA to accept and spend gifts, grants or donations provided from public or
private sources to conduct or contract with a third-party entity to conduct the
feasibility study.
9.
Repeals
the feasibility study requirements on July 1, 2027.
10.
Defines
ICHRA
.
11.
Makes technical and
conforming changes.
12.
Becomes effective on the
general effective date.
Amendments
Adopted by Committee
1.
Requires
ADOA to conduct a feasibility study and outlines requirements for the study.
2.
Requires
ADOA to submit a report of its findings and recommendations to the Governor and
Legislature by January 1, 2027.
3.
Allows
ADOA to accept and spend gifts, grants and donations to conduct or contract with
a third-party to conduct the feasibility study.
4.
Repeals
the feasibility study requirements on July 1, 2027.
Amendments
Adopted by Committee of the Whole
�
Specifies that the requirement for ADOA to conduct a feasibility
study is subject to available monies.
House Action
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Senate
Action
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Prepared by Senate Research
April 2, 2026
MG/SJ/hk
Current Bill Text
Read the full stored bill text
HB2693 - 572R - S Ver
Senate Engrossed
House Bill
insurance; bona fide
associations; qualifications
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
HOUSE BILL 2693
AN
ACT
amending section 20-2324, arizona
revised statutes; relating to accountable health plans.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it
enacted by the Legislature of the State of Arizona:
Section 1. Section 20-2324, Arizona Revised
Statutes, is amended to read:
START_STATUTE
20-2324.
Bona fide associations; definitions
A. An association qualifies as a
path
1
bona fide association if the association
either:
1.
Meets the following
requirements:
1.
(
a
)
Has been formed and maintained in good faith for
purposes other than obtaining insurance and does not condition membership in
the association on the purchase of insurance that is sponsored by the
association.
2.
(
b
)
Has a constitution and bylaws.
3.
(
c
)
Insures at least twenty-five members,
employees or employees of members of the association for the benefit of persons
other than the association or its officers or trustees.
4.
(
d
)
Does not condition membership in the association
on any health status-related factor relating to an individual, including
an employee of an employer or a dependent of an employee, and clearly states
this in all membership and application materials.
5.
(
e
)
Makes health benefits plans offered through the
association available to all members regardless of any health status-related
factor relating to any member of the association or individual eligible for
coverage through a member and clearly states this in all membership and
application materials.
6.
(
f
)
Does not make health benefits plans offered
through the association available other than in connection with a member of the
association and clearly states this in all membership and application
materials.
B.
2.
An association qualifies as a path 2 bona fide association
If the association
Meets the requirements of
29
Code of Federal Regulations section 2510.3-5
an
employer as defined in the employee retirement income security act of 1974
(P.L. 93-406; 88 Stat. 829; 29 United States Code section 1002)
. An
insurer electing to offer health benefits plans through a bona fide association
to small employer groups of one, which may include sole proprietors or working
owners, is not required to make health benefits plans available under section
20-2304, subsection A to small employer groups of one if the small
employer is not seeking a health benefits plan through a bona fide association.
C.
B.
The
requirements of section 20-2304, subsection A do not apply to health
benefits plans offered by an accountable health plan if the accountable health
plan makes this coverage available in the small group market only through one
or more
path 1
bona fide associations.
D.
C.
The
department may survey insurers issuing health benefits plans to determine the
number of health benefits plans issued to bona fide associations in this state
each year.
E.
D.
This
section does not limit or prohibit the
issuance
operation
of
a
self-funded
health benefits plans
multiple employer welfare
arrangement
in this state through
any of the following:
1.
A bona fide association if
the
bona fide
association is established and operating in
compliance with applicable provisions of the employee retirement income
security act of 1974.
2. A statewide chamber of commerce or
a statewide business league that meets all of the following criteria:
(
a
) The
statewide chamber of commerce or the statewide business league has a
constitution or bylaws.
(
b
) The
statewide chamber of commerce or the statewide business league was organized
and has been maintained in good faith for a continuous five-year period
for purposes other than providing for or obtaining insurance.
(
c
)
The
statewide chamber of commerce or statewide business league is exempt from
federal taxation pursuant to section 501(
c
)(6) of the
internal revenue code.
E.
The department retains the
authority to investigate whether an association is unlawfully transacting
insurance in violation of this title.
F. For the purposes of subsection A
,
paragraph 1
of this section, "employees" includes retired
employees.
G. For the purposes of this section:
1. "Bona fide association"
includes path 1 bona fide associations and path 2 bona fide associations.
2.
1.
"Small
employer" includes, if an insurer elects to issue coverage to small
employer groups of one:
(a) For health benefits plans issued through a bona
fide association, an employer who employs at least one but not more than fifty
eligible employees on a typical business day during any one calendar year.
(b) For health benefits plans issued through a
path 2 bona fide association
statewide chamber of
commerce or a statewide business league
, a sole proprietor or working
owner.
3.
2.
"Sole
proprietor" means a person who is a working owner, who owns a business and
who does not operate the business using any type of entity.
4.
3.
"Working
owner" means a person who a responsible plan fiduciary reasonably
determines is an individual who meets all of the following requirements:
(a) Has an ownership right of any nature in a trade
or business, whether incorporated or unincorporated, including a partner and
another self-employed individual.
(b) Is earning wages or self-employment income
from the trade or business for providing personal services to the trade or
business.
(c) Either:
(i) Works on average
at least twenty hours per week or at least eighty hours per month providing
personal services to the trade or business.
(ii) Has wages or self-employment income from
the trade or business that at least equals the working owner's cost of coverage
for participation by the working owner and any covered beneficiaries in the
group health plan sponsored by the association in which the individual is participating.
END_STATUTE
Sec. 2.
Department of
administration; health insurance system study; report; delayed repeal;
definition
A. Subject to available
monies,
the department of administration shall
conduct a feasibility study on the state employee health insurance plans and
the public school districts employee health insurance plans in this state.
B. The department of
administration shall:
1. Review, analyze and
consider relevant state and national data for individual coverage health
reimbursement arrangements that include:
(a) Coverage options.
(b) Costs.
(c) Utilization.
(d) Enrollment trends.
(e) Administrative impacts.
2. Ensure greater choice
and flexibility for employees.
3. Create cost certainty
for employers.
4. Evaluate how an
individual coverage health reimbursement arrangement may expand employee choice
among health insurance plan options while allowing this state and public school
districts to establish a predictable employer contribution and to improve long-term
budget stability.
5. Compare individual
coverage health reimbursement arrangements with other available coverage
options to analyze employee choice, affordability, flexibility, state and
school district cost predictability, administrative complexity and short-term
and long-term fiscal impacts.
6. Obtain stakeholder
feedback and input from all of the following:
(a) Employees.
(b) Insurers.
(c) Benefits
administrators.
(d) School districts.
(e) Consumer advocates.
7. Identify implementation
considerations that include all of the following:
(a) Administrative
requirements.
(b) Market impacts.
(c) Statutory changes.
(d) Budget changes.
(e) Regulatory changes,
including cost savings.
C. On or before January 1,
2027, the department of administration shall submit a report of its findings
and recommendations to the governor, the president of the senate, the speaker
of the house of representatives, the chairpersons of the health and human
services committees in the senate and the house of representatives, the
chairperson of the appropriations, transportation and technology committee in
the senate and the chairperson of the appropriations committee in the house of
representatives and provide a copy of this report to the secretary of state.
D. This section does not
require the implementation of an individual coverage health reimbursement
arrangement or the replacement of an existing health coverage option.
E. The department of
administration may accept and spend gifts, grants and donations that are
provided from public or private sources to conduct or contract with a third-party
entity to conduct the study prescribed by this section.
F. This section is repealed
from and after June 30, 2027.
G. For the purposes of this
section, "individual coverage health reimbursement arrangement" means
a health reimbursement arrangement as prescribed in 45 Code of Federal
Regulations section 146.123.