Better Small Business Employee Benefit Act of 2026

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*sb0779*

SENATE BILL 779
J5 6lr3299
SB 760/25 – FIN CF 6lr2201
By: Senator Feldman
Introduced and read first time: February 6, 2026
Assigned to: Finance

A BILL ENTITLED

AN ACT concerning 1

Better Small Business Employee Benefit Act of 2026 2

FOR the purpose of exempting from certain requirements relating to the offering of health 3
benefit plans to small employers in the State health benefit plans issued through a 4
professional employer organization located in the State; requiring professional 5
employer organizations that enter into agreements with small employers to provide 6
health benefit plans to disclose certain information in writing; and generally relating 7
to h ealth benefit plans issued through professional employer organizations that 8
engage in employee leasing. 9

BY repealing and reenacting, without amendments, 10
Article – Insurance 11
Section 15–1201(a) and (i)(1) and 31–101(a) 12
Annotated Code of Maryland 13
(2017 Replacement Volume and 2025 Supplement) 14

BY repealing and reenacting, with amendments, 15
Article – Insurance 16
Section 15–1201(i)(2), 15–1202(b), 15–1204.1, and 31–101(aa) 17
Annotated Code of Maryland 18
(2017 Replacement Volume and 2025 Supplement) 19

BY adding to 20
Article – Insurance 21
Section 15–1201(r–1) and 15–1206(i) 22
Annotated Code of Maryland 23
(2017 Replacement Volume and 2025 Supplement) 24

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 25
That the Laws of Maryland read as follows: 26

2 SENATE BILL 779

Article – Insurance 1

15–1201. 2

(a) In this subtitle the following words have the meanings indicated. 3

(i) (1) “Health benefit plan” means: 4

(i) a policy or certificate for hospital or medical benefits issued by 5
an insurer; 6

(ii) a nonprofit health service plan contract; or 7

(iii) a health maintenance organization subscriber or group master 8
contract. 9

(2) “Health benefit plan” includes a policy or certificate for hospital or 10
medical benefits that covers residents of this State who are eligible employees and that is 11
issued through: 12

(i) a multiple employer trust or association located in this State or 13
another state; or 14

(ii) a [professional employer organization, ] coemployer[,] or other 15
organization located in this State or another state that engages in employee leasing. 16

(R–1) (1) “PROFESSIONAL EMPLOYER ORGANIZATION” MEANS A BUSINESS 17
ENTITY THAT ENTERS INTO A CONTRACTUAL AGREEMENT WITH ANOTHER BUSINESS 18
ENTITY UNDER WHICH E MPLOYER RESPONSIBILITIES ARE ALLOCATED B ETWEEN 19
THE BUSINESS ENTITIES FOR ALL OR AT LEAST HALF OF THE WORKSITE EMPLOYEES 20
OF THE SECOND BUSINESS ENTITY. 21

(2) “PROFESSIONAL EMPLOYER ORGANIZATION” DOES NOT INCLUDE 22
A BUSINESS ENTITY THAT: 23

(I) RECRUITS AND HIRES ITS OWN EMPLOYEES; 24

(II) FINDS OTHER ORGANIZA TIONS THAT NEED THE SERVICES 25
OF ITS EMPLOYEES; 26

(III) ASSIGNS EMPLOYEES TO CLIENTS ON A TEMPORA RY BASIS 27
TO SUPPORT OR SUPPLE MENT THE CLIENT ’S WORKFORCE IN SPECI AL 28
CIRCUMSTANCES SUCH A S EMPLOYEE ABSENCES , TEMPORARY SKILL SHORTAGES, 29
AND SEASONAL WORKLOADS; AND 30

SENATE BILL 779 3

(IV) CUSTOMARILY ATTEMPTS TO REASSIGN THE EMPLOYEES TO 1
OTHER CLIENTS WHEN THE EMPLOYEES FINISH EACH ASSIGNMENT. 2

15–1202. 3

(b) This subtitle applies to any health benefit plan offered by an association, [a 4
professional employer organization, or any other entity,] including a plan issued under the 5
laws of another state, if the health benefit plan covers eligible employees of one or more 6
small employers and meets the requirements of subsection (a) of this section. 7

15–1204.1. 8

(a) (1) This section applies to a carrier with respect to any health benefit plan 9
that: 10

[(1)] (I) is not a grandfathered health plan, as defined in § 1251 of the 11
Affordable Care Act; and 12

[(2)] (II) is issued, delivered, or renewed in the State on or after January 13
1, 2014. 14

(2) THIS SEC TION DOES NOT APPLY WITH RESPECT TO A HE ALTH 15
BENEFIT PLAN ISSUED THROUGH A PROFESSIONAL EMPLOYER ORGANIZATION. 16

(b) (1) Except as provided in this subsection and § 31 –110(f) of this article, a 17
carrier may not offer health benefit plans to small employers in the State unless the carrier 18
also offers qualified health plans, as defined in § 31 –101 of this article, in the Small 19
Business Health Options Program of the Maryland Health Benefit Exchange in compliance 20
with the requirements of Title 31 of this article. 21

(2) A carrier is exempt from the requirement in paragraph (1) of this 22
subsection if: 23

(i) the reported total aggregate annual earned premium from all 24
health benefit plans offered to small employers in the State for the carrier and any other 25
carriers in the same insurance holding company system, as defined in § 7 –101 of this 26
article, is less than $20,000,000; 27

(ii) the Commissioner determines that the carrier complies with the 28
procedures established under paragraph (3) of this subsection; and 29

(iii) when the carrier ceases to meet the requirements for the 30
exemption, the carrier provides to the Commissioner immediate notice and its plan for 31
complying with the requirement in paragraph (1) of this subsection. 32

4 SENATE BILL 779

(3) The Commissioner shall establis h procedures for a carrier to submit 1
evidence each year that the carrier meets the requirements necessary to qualify for an 2
exemption under paragraph (2) of this subsection. 3

(4) Notwithstanding the exemption provided in paragraph (2) of this 4
subsection, the Commissioner, in consultation with the Maryland Health Benefit 5
Exchange: 6

(i) may assess the impact of the exemption provided in paragraph 7
(2) of this subsection and, based on that assessment, alter the limit on the amount of annual 8
premiums that may not be exceeded to qualify for the exemption; and 9

(ii) shall make any change in the exemption requirement by 10
regulation. 11

15–1206. 12

(I) A PROFESSIONAL EMPLOYE R ORGANIZATION THAT ENTERS INTO AN 13
AGREEMENT WITH A SMALL EMPLOYER TO PROVIDE A HEALTH BENEFIT PLAN SHALL 14
DISCLOSE TO THE SMALL BUSINESS, IN WRITING: 15

(1) DETAILED INFORMATION ABOUT THE BENEFITS OFFERED IN THE 16
HEALTH BENEFIT PLAN TO THE EMPLOYEES OF THE SMALL EMPLOYER T HAT ARE 17
COEMPLOYED BY THE PROFESSIONAL EMPLOYER ORGANIZATION; 18

(2) ANY ADDITIONAL COST TO T HE SMALL EMPLOYER RE LATED TO 19
THE HEALTH BENEFIT PLAN; AND 20

(3) THAT THE SMALL EMPLO YER MAY TERMINATE TH E AGREEMENT 21
WITH THE PROFESSIONA L EMPLOYER ORGANIZAT ION WITHIN 60 DAYS AFTER 22
WRITTEN NOTICE OF TERMINATION OR EARLIER IN ACCORDANCE WITH THE TERMS 23
OF THE AGREEMENT. 24

31–101. 25

(a) In this subtitle the following words have the meanings indicated. 26

(aa) (1) “Small employer” means an employer that, during the preceding 27
calendar year, employed an average of not more than 50 employees. 28

(2) For purposes of this subsection: 29

(i) all persons treated as a single employer under § 414(b), (c), or (o) 30
of the Internal Revenue Code shall be treated as a single employer; 31

SENATE BILL 779 5

(ii) an employer and any predecessor employer shall be treated as a 1
single employer; 2

(iii) the number of employees of an employer shall be determined by 3
adding: 4

1. the number of full–time employees; and 5

2. the number of full–time equivalent employees, which shall 6
be calculated for a particular month by dividing the aggregate number of hours of service 7
of employees who are not full–time employees for the month by 120; 8

(iv) if an employer was not in existence throughout the preceding 9
calendar year, the determination of whether the employer is a small e mployer shall be 10
based on the average number of employees that the employer is reasonably expected to 11
employ on business days in the current calendar year; 12

(v) an employer that makes enrollment in qualified health plans 13
available to its employees thro ugh the SHOP Exchange, and would cease to be a small 14
employer by reason of an increase in the number of its employees, shall continue to be 15
treated as a small employer for purposes of this subtitle as long as it continuously makes 16
enrollment through the SHOP Exchange available to its employees; and 17

(vi) [to the extent permitted by federal law, an entity that leases 18
employees from a professional employer organization, coemployer, or other organization 19
engaged in employee leasing and that otherwise meets the description in this section shall 20
be treated as a small employer ] A WELFARE BENEFIT PLAN OFFERED TO A WORKSITE 21
EMPLOYEE OF A PROFESSIONAL EMPLOYER ORGANIZATION SHALL BE TREATED AS 22
A SINGLE EMPLOYER WELFARE BENEFIT PLAN. 23

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all 24
policies, contracts, and health benefit plans issued, delivered, or renewed in the State on or 25
after January 1, 2027. 26

SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 27
January 1, 2027. 28