2017 - 2018 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO SENATE BILL 806
March 12, 2018 - Offered by Senator
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
This substitute amendment 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 substitute amendment 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; 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 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, newborn infants, maternity, mammograms, lead poisoning
screening, hospital and ambulatory surgery center charges, anesthetics for certain
dental care, autism spectrum disorders, breast reconstruction, certain
immunizations, hearing aids and cochlear implants for children, and colorectal
cancer screening. The substitute amendment also prohibits health care benefit
arrangements from requiring individuals to have or from basing coverage on genetic
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 substitute amendment 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 of the statutes is created to read:
2146.79 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
12(2) Employer groups; qualification.
(a) Two or more employers that are 13
members of the same chamber of commerce or industry-based association may form 14
an employer group to establish and administer an employee health care benefit 15
arrangement to jointly provide health care benefits on a self-funded basis to eligible 16
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 18
1. The employer group creates and maintains a formal organizational structure 2
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 4
employer group, including establishment and maintenance of the employee health 5
care benefit arrangement, directly or indirectly through nomination and election of 6
representatives that control the employer group or association.
3. The chamber of commerce or industry-based association from which the 8
employer group is formed is actively in existence for at least 5 years before providing 9
evidence to the commissioner under par. (b), has at least 5 members for the 5 years 10
before providing evidence to the commissioner under par. (b), and is formed and 11
maintained in good faith for purposes other than obtaining or providing health 12
(b) Employer groups that provide evidence to the commissioner of insurance 14
that they have formed and are able to comply with the requirements of this section 15
qualify to participate in the project under this section. When employer groups have 16
qualified under this paragraph, the commissioner of insurance shall submit a notice 17
to the legislative reference bureau for publication in the Wisconsin Administrative 18
Register that lists the employer groups that have qualified and the date on which 19
each group provided the necessary evidence of compliance.
20(3) Employer group duties and powers.
(a) Each employer group qualified 21
under sub. (2) (b) shall do all of the following:
1. Determine all matters necessary for the administration and operation of its 23
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 2
accordance with generally accepted actuarial principles, as to the sufficient amount 3
of funding for the employee health care benefit arrangement. The employer group 4
shall ensure that the actuary making recommendations under this subdivision is in 5
good standing with the Academy of Actuaries, has the skills and knowledge 6
necessary to perform the analyses and make the recommendations, and is 7
performing the analyses and certifications based on sound actuarial principles. The 8
employer group satisfies the requirement under this subdivision if the employer 9
group contracts with an insurer or a 3rd-party administrator that employs an 10
5. Determine, based on the actuary's recommendations under subd. 4., the 12
amount that each employer that is participating in the employer group shall 13
contribute to self-fund the employee health care benefit arrangement; to pay 14
administrative expenses, including the actuary's compensation; and to purchase 15
excess or stop-loss coverage, as described under sub. (5) (b). The contribution 16
amount under this subdivision may vary by employer based on criteria developed by 17
the employer group. An employer group may require employers in the employer 18
group to contribute payments for establishing a surplus fund and may levy an 19
assessment whenever the amount of any loss or expense that is due exceeds the 20
assets of the employer group or the surplus fund amount established by the employer 21
group is impaired.
6. Establish a minimum participation period for an employer's participation in 23
the employer group, which shall be the same length for each employer participating 24
in the employer group and may not be less than 3 years. An employer group may 25
specify circumstances under which a participating employer may discontinue
participation in the employer group before the minimum participation period 2
established under this subdivision ends without forfeiting all or a portion of the 3
amount paid by the employer under sub. (4) (a) 2.
7. Annually submit a report to the commissioner of insurance describing the 5
stability of the employer group and the finances of the employer group and 6
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 8
the by-laws of the employer group the procedures to be followed by and 9
responsibilities of the involved parties in the event of insolvency or pending 10
insolvency of the employer group.
(b) An employer group qualified under sub. (2) (b) may specify minimum 12
participation requirements that an employer is required to satisfy to participate in 13
the employer group. Except as provided under sub. (4) (b), an employer group 14
qualified under sub. (2) (b) shall allow any employer that is a member of the same 15
chamber of commerce or industry-based association as the other group members and 16
that agrees to comply with the participation requirements specified under this 17
paragraph to participate in the employer group.
(c) If an employer group qualified under sub. (2) (b) seeks to contract with a 19
3rd-party administrator to administer any part of the health care benefit 20
arrangement, the employer group shall contract with a 3rd-party administrator that 21
is registered to do business in this state. A contract between an employer group and 22
a 3rd-party administrator that relates to the administration of the payment of 23
claims shall specify terms for the resolution of claims upon termination of the 24
contract with that 3rd-party administrator.
1(4) Employer requirements.
(a) An employer group qualified under sub. (2) 2
(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 4
with a de minimis difference in actuarial value, to all of the employer's eligible 5
employees and all of the eligible employees' dependents.
2. Participate for at least the minimum participation period specified by the 7
employer group under sub. (3) (a) 6. An employer group may require employers that 8
desire to participate in the employer group to pay an amount that is forfeited to the 9
employer group if the employer's participation terminates voluntarily or 10
involuntarily before the employer's minimum participation period ends.
(b) Subject to any policy created by the employer group regarding late 12
payments, an employer group qualified under sub. (2) (b) shall terminate an 13
employer's participation in the employer group if the employer fails to pay a 14
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 16
participation in the employer group terminates voluntarily or involuntarily 17
responsible for all of the following:
1. Any contribution amounts required during the employer's period of 19
2. The employer's proportionate share of the cost of any claims payable by the 21
employer group that were incurred before the termination of the employer's 22
23(5) Covered benefits; payment of claims.
(a) An employer group may provide 24
a choice of health care benefit plans to employers but each employer that participates 25
in the employer group shall offer the same health care benefits, or health care
arrangement with a de minimis difference in actuarial value, to all employees and 2
dependents of the employer.
(am) 1. An employer group qualified under sub. (2) (b) may not exclude coverage 4
under a health care benefit arrangement for diagnosis and treatment of a condition 5
or complaint by a licensed chiropractor within the scope of the chiropractor's 6
professional license if the health care benefit arrangement covers diagnosis and 7
treatment of a condition or complaint by a licensed physician or osteopath, even if 8
different nomenclature is used to describe the condition or complaint. The health 9
care benefit arrangement may not require examination by or referral from a 10
physician before allowing coverage of chiropractic care under this paragraph. This 11
paragraph does not prohibit any of the following:
a. Application of deductibles or coinsurance under the health care benefit 13
arrangement to chiropractic care if deductibles or coinsurance apply equally to 14
b. Application of cost containment or quality assurance measures to 16
chiropractic services in a manner that is consistent with cost containment or quality 17
assurance measures applied to physician services.
2. An employer group qualified under sub. (2) (b) may not do any of the following 19
under a health care benefit arrangement that covers diagnosis and treatment of 20
conditions or complaints by a licensed chiropractor within the scope of the 21
chiropractor's professional license:
a. Restrict or terminate coverage for the treatment of a condition or complaint 23
by a licensed chiropractor within the scope of the chiropractor's professional license 24
other than on the basis of an examination, evaluation, or recommendation by
another licensed chiropractor or a peer review committee that includes a licensed 2
b. Exclude or restrict coverage of a health condition under the health care 4
benefit arrangement solely because the condition may be treated by a chiropractor.