2003 - 2004 LEGISLATURE
February 5, 2004 - Introduced by Representatives Ladwig, Weber, Gottlieb,
Gielow, Honadel, Jensen, Montgomery, Vukmir, Albers, Bies, Gunderson,
Hahn, Hines, Hundertmark, Kaufert, Kreibich, M. Lehman, LeMahieu,
McCormick, Musser, Nischke, Pettis, Stone, Townsend, Van Roy, M.
Williams, J. Wood and
Gard, cosponsored by Senator Darling. Referred to
Committee on Insurance.
1An Act to create
146.92 and 601.415 (8) of the statutes; relating to: self-funded
2employer groups for providing health care coverage.
Analysis by the Legislative Reference Bureau
This bill authorizes the formation of three employer groups each for the purpose
of establishing and administering a health care benefit arrangement for providing,
on a self-funded basis, health care benefits to the employees of the employers that
participate in each employer group. Two or more employers that are members of the
same chamber of commerce may form an employer group and other employers that
are members of that same chamber of commerce may elect to participate in the
employer group that is formed. An employer that participates must offer to cover all
of its employees who have a normal work week of at least 30 hours, and their
dependents, and, generally, may not discontinue participation before the employer
Each employer group will determine all matters necessary for the operation of
its health care benefit arrangement, which may operate for no longer than five years.
An employer group may not provide more than $50,000 in benefits to a covered
person per year on a self-funded basis and must obtain stop-loss coverage. Each
health care benefit arrangement must provide the same benefits for all employers
participating in the employer group, but the contributions paid by participating
employers for self-funding purposes and for purchasing stop-loss coverage do not
have to be the same. Both the employer groups and the health care benefit
arrangements are exempt from all requirements under the insurance statutes. The
employer groups may not be considered insurers, and the health care benefit
arrangements may not be considered insurance contracts, for any purpose under the
Each employer group must annually submit to the Commissioner of Insurance
(commissioner) and to the appropriate standing committees of the legislature a
report that contains information about the employers participating, the covered
employees and dependents, the benefits offered, and the claims paid. The Legislative
Audit Bureau is required to conduct a performance audit of each employer group and
its health care benefit arrangement and to prepare a report on each for distribution
to the appropriate standing committees of the legislature.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB814, s. 1
146.92 of the statutes is created to read:
2146.92 Self-funded employer groups.
In this section:
(a) "Eligible employee" means an employee who works on a permanent basis 4
and has a normal work week of 30 or more hours. The term includes a sole proprietor, 5
a business owner, including the owner of a farm business, a partner of a partnership, 6
and a member of a limited liability company if the sole proprietor, business owner, 7
partner, or member is included as an employee under the health care benefit 8
arrangement under this section, but the term does not include an employee who 9
works on a temporary or substitute basis.
(b) "Eligible employers" means employers that are members of the same 11
chamber of commerce.
12(2) Formation, eligibility, and qualification.
(a) No later than January 1, 13
2006, 2 or more eligible employers may form an employer group to establish and 14
administer an employee health care benefit arrangement for the joint provision of 15
health care benefits on a self-funded basis to their eligible employees, the eligible
employees of other eligible employers that elect to participate in the employer group, 2
and the dependents of those eligible employees.
(b) 1. The eligible employers forming the employer group shall specify a date 4
by which other eligible employers must elect to participate in the employer group or 5
be foreclosed from participating. All eligible employers that elect to participate by 6
the date specified and that meet any requirements established under sub. (5) (d) 7
shall be allowed to participate in the employer group.
2. Notwithstanding subd. 1., an employer that is a new business starting up 9
after the date specified in subd. 1., that becomes a member of the same chamber of 10
commerce after that date, that elects to participate by a later date that the employer 11
group establishes for the new business to make the election, and that meets any 12
requirements established under sub. (5) (d) shall be allowed to participate in the 13
(c) No more than 3 employer groups may be formed under par. (a), and no more 15
than one employer group may be composed of employers that are members of any one 16
chamber of commerce. The first 3 employer groups that provide evidence to the 17
commissioner of insurance that they have formed and are in compliance with the 18
requirements under this section shall qualify to participate in the project under this 19
section. The commissioner of insurance shall provide notice in the Wisconsin 20
administrative register when 3 employer groups have qualified under this 21
paragraph. The notice shall list the groups and the dates on which each provided the 22
necessary evidence of compliance.
(d) 1. Except as provided in subd. 2., an employer group may operate and 24
provide benefits under its employee health care benefit arrangement established 25
under this section for no longer than 5 years.
2. After the employer group has ceased operating its employee health care 2
benefit arrangement, it shall continue to be responsible for paying eligible claims 3
that were incurred during the time in which the employee health care benefit 4
arrangement was operating.
5(3) Employer requirements.
(a) An employer that participates in an employer 6
group under this section shall be required to offer health care benefits under the 7
employee health care benefit arrangement to all of the employer's eligible employees 8
and all of the eligible employees' dependents, as defined by the employer group under 9
sub. (5) (b), and may not offer any other health care benefits to its eligible employees 10
or their dependents.
(b) An employer that elects to participate in an employer group under this 12
section shall be required to participate until the employer group terminates. To 13
ensure participation, an employer group may require all employers that elect to 14
participate to pay, at the commencement of participation, an amount that will be 15
forfeited to the employer group if the employer discontinues its participation before 16
the employer group terminates. In addition, any employer that discontinues 17
participation before the employer group terminates shall be responsible for the 18
employer's proportionate share of the cost of any eligible claims payable by the 19
employer group that were incurred before the employer discontinued participation.
(a) Each employer group shall pay no more than $50,000 in 21
benefits on a self-funded basis in a calendar year for each person covered under its 22
employee health care benefit arrangement. Each employer group shall obtain excess 23
or stop-loss coverage through an insurer authorized to do business in this state in 24
an amount that is sufficient to pay eligible claims that exceed the amount that the 25
employer group will pay on a self-funded basis per person in a calendar year.
(b) An employer group shall provide the same, uniform health care benefits for 2
each employer that participates in that employer group.
(a) Each employer group shall determine all matters 4
necessary for the administration and operation of its employee health care benefit 5
(b) Each employer group shall define who is a dependent for purposes of 7
coverage under its employee health care benefit arrangement.
(c) Each employer group shall determine the amounts that eligible employers 9
participating in the employer group must contribute for self-funding the employee 10
health care benefit arrangement, for paying administrative expenses, and for 11
purchasing excess or stop-loss coverage. The contribution amounts may vary from 12
employer to employer based on criteria developed by the employer group.
(d) An employer group may specify minimum participation requirements that 14
an eligible employer must satisfy for participation in the employer group.
(e) Notwithstanding sub. (3) (b), an employer group may specify circumstances 16
under which a participating employer may discontinue participation in the employer 17
group before the termination of the employer group without forfeiting all or a portion 18
of the amount paid by the employer under sub. (3) (b).
(a) Annually, each employer group shall prepare and submit to 20
the commissioner of insurance and to the chief clerk of each house of the legislature 21
for distribution to the appropriate standing committees under s. 13.172 (3) a report, 22
which shall be due 2 months after the anniversary of the date on which the employer 23
group began operation, that includes all of the following information for the 24
1. The number of employers participating in the employer group.
2. The number of employees that each participating employer has.
3. The number of employees and dependents covered under the employer 3
group's health care benefit arrangement and the age and sex of each covered 4
employee and dependent.
4. A brief description of the benefits that are provided under the health care 6
5. The total contributions paid by participating employers, the contribution 8
amount used for self-funding the health care benefit arrangement, the contribution 9
amount used for paying administrative expenses, and the contribution amount used 10
for purchasing excess or stop-loss coverage.
6. The criteria upon which the employer contribution amounts were based.
7. The amount that has been paid out in benefits under the employee health 13
care benefit arrangement on a self-funded basis and under the excess or stop-loss 14
8. The type of health care coverage, if any, provided by each participating 16
employer during the 2-year period before the employer's participation in the 17
employer group and the cost of that health care coverage, including both employer 18
and employee costs.
9. The number of employers that discontinued participation in the previous 20
year, if any, the reason for each discontinued participation, and the penalty imposed 21
(b) The legislative audit bureau shall conduct a performance evaluation audit 23
of each employer group formed under this section and of its employee health care 24
benefit arrangement. The bureau shall be allowed access to all records of each 25
employer group that may be relevant for this purpose but may not use or maintain
any personally identifying information contained in the records. Within 6 months 2
after an employer group submits its 2nd annual report under par. (a), the bureau 3
shall submit copies of its audit report for that employer group to the chief clerk of 4
each house of the legislature for distribution to the appropriate standing committees 5
under s. 13.172 (3).
6(7) Exemption from insurance regulation.
Notwithstanding 29 USC 1144
(6) (A), chs. 600 to 645 and any rules promulgated under chs. 600 to 645 do not apply 8
to an employer group, or to an employee health care benefit arrangement, under this 9
section. An employer group shall not be considered an insurer, and an employee 10
health care benefit arrangement shall not be considered an insurance contract, for 11
any purpose under the statutes.
AB814, s. 2
601.415 (8) of the statutes is created to read:
601.415 (8) Employer group qualification.
Notwithstanding s. 146.92 (7), the 14
commissioner shall perform the duties required under s. 146.92 (2) (c) related to the 15
qualification of employer groups for the project under s. 146.92.