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SB-1011, As Passed Senate, June 25, 2026
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SENATE BILL NO. 1011
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
(MCL 500.100 to 500.8302) by adding chapter 71A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
CHAPTER 71A 1
SMALL BUSINESS HEALTH COVERAGE 2
Sec. 7100. As used in this chapter: 3
(a) "Affordable care act" or "ACA" means the patient 4
protection and affordable care act, Public Law 111-148, as amended 5
by the health care and education reconciliation act of 2010, Public 6
Law 111-152. 7
May 21, 2026, Introduced by Senators HERTEL, KLINEFELT, POLEHANKI, CAMILLERI and
MCMORROW and referred to Committee on Health Policy.
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(b) "Bona fide sponsoring association" means a Michigan-1
domiciled nonprofit business association to which all of the 2
following apply: 3
(i) Has operated continuously in this state for at least 5 4
years and maintains a principal office in this state. 5
(ii) Has at least 1 substantial business purpose other than 6
providing health coverage, such as advocacy, education, or economic 7
development. 8
(iii) Admits employer members based on geographic commonality 9
within this state, by region, without regard to the NAIC, or admits 10
members of a single trade or industry. 11
(iv) Is governed by a board of directors or trustees under 12
bylaws meeting the department's fiduciary and conflict-of-interest 13
standards. 14
(v) Has maintained at least 1,000 dues-paying employer members 15
or represented 10,000 workers within this state over the previous 5 16
years, with audited financial statements showing positive net 17
assets. 18
(c) "Commonality of interest" means either of the following: 19
(i) Geographic commonality, where members' principal place of 20
business is located in this state, even if in different industries. 21
(ii) Industry commonality, where members share the same trade 22
or profession. 23
(d) "Eligible employer" means a small business to which all of 24
the following apply: 25
(i) Employs fewer than 500 employees in total across all 26
operations and affiliated entities. A business health pool may 27
include both small and mid-sized employers, including those subject 28
to the affordable care act's applicable-large-employer provisions. 29
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(ii) Maintains its principal place of business in this state or 1
conducts a majority of its operations within this state. 2
(iii) Is a member in good standing of a bona fide sponsoring 3
association. 4
(iv) Meets participation and contribution standards adopted by 5
the director. 6
(e) "Eligible self-employed individual" means a Michigan-based 7
sole proprietor or independent contractor to whom all of the 8
following apply: 9
(i) Has operated the business for at least 2 consecutive years. 10
(ii) Demonstrates positive net self-employment income for the 11
most recent tax year. 12
(iii) Works at least 20 hours per week or 80 hours per month in 13
the business. 14
(iv) Is not eligible for coverage as an employee under another 15
employer plan. 16
(f) "Fully insured pool" means covered lives under the 17
insurance policy issued by an insurer, under which the insurer 18
assumes the financial risk for the payment of claims. 19
(g) "Level-funded pool" means a health arrangement in which 20
the sponsor entity pays a fixed monthly amount but retains claims 21
risk up to a stop-loss threshold. 22
(h) "Multiple employer welfare arrangement" or "MEWA" means 23
that term as defined in section 7001. 24
(i) "Plan" means an employee benefit plan of a multiple 25
employer welfare arrangement authorized under chapter 70. 26
(j) "Pool", when used in reference to a multiple employer 27
welfare arrangement, means the collective group of covered 28
employees and dependents whose health care claims and associated 29
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financial risk are combined and administered under the MEWA's 1
employee welfare benefit plan. 2
(k) "Program" means the small employer catastrophic 3
reinsurance program established under section 7105. 4
(l) "Self-funded pool" means a group of covered individuals 5
whose health care claims are paid directly from the assets of a 6
health benefit plan or arrangement, and for which the plan sponsor 7
or sponsoring entity retains primary financial responsibility for 8
claims. 9
(m) "Small business health pool" means a state-regulated 10
multiple employer welfare arrangement licensed under this chapter 11
to provide health coverage to eligible employers and self-employed 12
individuals through a bona fide sponsoring association. 13
Sec. 7101. (1) Each pool shall provide coverage that includes 14
all essential health benefits required under federal law. 15
(2) A plan shall comply with mental-health parity, maternity, 16
preventive-services, and dependent-coverage standards equivalent to 17
ACA-compliant small-group coverage. 18
(3) A plan sponsor of a MEWA may offer a pool as fully 19
insured, level-funded, or self-funded arrangements, subject to 20
solvency and reserve requirements determined by the director. 21
Sec. 7102. (1) Premiums must be actuarially justified and 22
filed with the director for review in accordance with existing law. 23
Prior approval of rates by the department is not required. The 24
director may require the filing of an actuarial memorandum or 25
certification demonstrating that rating methodologies are 26
consistent with sound actuarial principles and this chapter. 27
(2) Rating factors may include industry class, geography, age, 28
and family composition, but must not include individual health 29
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status or claims history. 1
(3) The director may review rating methodologies that use 2
industry class factors uniformly applied across all employers, even 3
if employers are in different NAIC codes, to verify that the 4
factors described under this subsection are actuarially justified 5
and applied on a nondiscriminatory basis. 6
(4) Employers shall enroll at least 75% of eligible employees 7
and contribute at least 50% of the employee-only premium. 8
Sec. 7103. (1) A sponsoring association shall not condition 9
membership or access to the pool on health status, claims 10
experience, or genetic information. 11
(2) Membership criteria may include only neutral factors such 12
as Michigan location, payment of dues, or adherence to bylaws. 13
(3) Each pool shall furnish enrollees with clear summaries of 14
benefits, grievance procedures, and financial statements as 15
required by the director. 16
(4) The department may place any insolvent or noncompliant 17
pool into receivership to protect enrollees. 18
Sec. 7104. (1) A pool must obtain a license from the 19
department before enrolling members. The director's oversight under 20
this chapter is limited to verifying solvency, compliance, and 21
consumer-protection requirements. The director shall not approve or 22
disapprove rates except as otherwise required by existing law for 23
fully insured products. 24
(2) A fully insured pool shall meet carrier solvency and rate-25
filing requirements applicable to the insurer issuing coverage. 26
(3) A level-funded pool shall maintain stop-loss coverage and 27
reserves as prescribed by the director to ensure payment of covered 28
claims. 29
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(4) Self-funded pools shall maintain reserves adequate to 1
cover projected claims and a surplus of at least $500,000.00, 2
subject to adjustment by the director based on enrollment and 3
claims experience. 4
(5) A pool shall file audited annual financial statements and 5
actuarial certifications of solvency with the department in the 6
form and manner prescribed by rule. 7
Sec. 7105. (1) The small employer catastrophic reinsurance 8
program is established in the department to reimburse 60% of 9
eligible claims between $75,000.00 and $250,000.00 per covered life 10
per plan year. 11
(2) The program is funded entirely by state appropriation. An 12
insurer or employer assessment must not be imposed. 13
(3) The department shall issue an annual actuarial and 14
economic-impact report on the program's operation, cost, and effect 15
on small-business premiums. 16
(4) The program's purpose is to stabilize small-business 17
premiums, expand coverage, and encourage participation in Michigan-18
based pools. 19
Sec. 7106. (1) The department may examine, audit, and enforce 20
compliance for all pools. 21
(2) The director may adopt rules for licensing, reserves, and 22
reporting to protect enrollees. 23
(3) The director shall report annually to the legislature on 24
enrollment, financial performance, and program outcomes under this 25
chapter. 26
Sec. 7107. (1) A pool authorized under this chapter is a MEWA 27
and this state expressly exercises jurisdiction preserved under 29 28
USC 1114(b)(A)(ii). 29
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(2) The geographic-based commonality and multi-industry 1
eligibility under this chapter are state insurance standards and do 2
not depend on any federal redefinition of employer. 3
(3) This chapter does not diminish any federal right or 4
requirement applicable to health coverage under the public health 5
service act, 42 USC 201 to 300, the affordable care act, or the 6
employee retirement income security act of 1974, Public Law 93-406, 7
88 Stat 829. 8