Small Business Health Fairness Act of 2005
The Small Business Health Fairness Act of 2005 is legislation passed by the United States Congress to amend a part of the Employee Retirement Income Act of 1974. The purpose of the act is to improve access to medical care benefit programs for small business owners who want to provide these benefits for their employees. The act also aims to give greater choice to small business owners with regard to the programs they can provide.
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Association Health Plans
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Section 2 of the Fairness Act contains provisions amending the Retirement Income Security Act of 1974. The amendment takes the form of an addition containing rules governing association health plans. An association health plan is also known as a group health plan. The sponsor of a group health plan association must ensure that the association has a constitution and bylaws. These must contain a statement of purpose, such as one stating that an association exists to purchase a group health care plan for the benefit of the employees of the association's members. The constitution and bylaws must ensure that members of the association meet on a regular basis, at least once a year. An association can represent a number of business groups, including those involved in a similar business sector, professional trade associations or chambers of commerce.
Participation and Coverage
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Employers who participate in an association health plan must be a member of the sponsoring association. For example, if a chamber of commerce forms an association for the purpose of negotiating a group health plan that its members may purchase, an employer must be a member of that chamber of commerce to take advantage of the group health plan. In some instances, the sponsor of an association may actually be a participating employer, purchasing the health care plan that the association negotiates on behalf of its own employees. For example, if a professional body, such as one representing accountants, forms an association to negotiate a group health plan for its member businesses, the professional body, as the association's sponsor, may purchase the same group health plan for the benefit of its own employees. A group health plan can cover retired and currently active business owners and their employees.
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Health Plan Termination
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Whenever a trustees of an association health plan wants to terminate the association, the trustees must provide written notice to the beneficiaries of the plan. The trustees must give this notice at least 60 days in advance of the proposed termination date. The trustees must create a plan ensuring that all the association meets its financial obligations prior to termination.
Non-discriminatory Rates
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An association health plan must not discriminate between small business employers entitled to participate, by varying contribution rates for different employers. The act does not allow an association to charge different rates to small business employers who are active in different industries or different types of business. For example, if a chamber of commerce sponsors an association health plan, it cannot demand different rates of contribution from members involved in service industries and those involved in manufacturing.
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