The law changes how a group can qualify as a "bona fide association" to offer health plans, lets self-funded multiple employer health plans run through certain statewide chambers of commerce and business leagues, and orders a state study of a different way to provide health coverage to state and school district employees.
Official title: insurance; bona fide associations; qualifications
- September 12, 2026
- Study report due by January 1, 2027: Department of Administration health insurance study report
- Study requirement repealed after June 30, 2027: Department of Administration health insurance study
What changes
BeforeAn association could qualify as a "path 2" bona fide association by meeting a specific federal regulation (29 CFR 2510.3-5).
NowAn association can qualify as a bona fide association by meeting the definition of an "employer" under the federal Employee Retirement Income Security Act of 1974 (ERISA). The other route, meeting the existing list of state requirements, stays the same.
BeforeUnder this section, an accountable health plan was exempt from the open-offering rule in section 20-2304, subsection A only if it sold small group coverage solely through "path 1" bona fide associations.
NowThat exemption applies when the plan sells small group coverage only through any qualifying bona fide association.
BeforeThis section did not limit self-funded health benefits plans issued through a bona fide association that followed ERISA.
NowThis section does not limit or prohibit the operation of a self-funded multiple employer welfare arrangement (a health plan several employers pay for themselves) through an ERISA-compliant bona fide association, or through a statewide chamber of commerce or statewide business league. The chamber or league must have a constitution or bylaws, must have existed in good faith for a continuous 5-year period for purposes other than insurance, and must be tax-exempt under section 501(c)(6) of the federal tax code.
BeforeSole proprietors and working owners counted as "small employers" for plans issued through a "path 2" bona fide association, if the insurer chose to cover groups of one.
NowSole proprietors and working owners count as "small employers" for plans issued through a statewide chamber of commerce or statewide business league, if the insurer chooses to cover groups of one. The law also states that the department keeps its authority to investigate whether an association is unlawfully transacting insurance.
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NowSubject to available money, the Department of Administration must study whether individual coverage health reimbursement arrangements could be used for state employee and public school district employee health plans. It must get input from employees, insurers, benefits administrators, school districts and consumer advocates, and report to the governor and legislative leaders by January 1, 2027. The study does not require any change to current coverage.
Who it affects
- Small business owners, sole proprietors and working owners seeking health coverage
- Members of associations, statewide chambers of commerce and statewide business leagues
- State employees and public school district employees (study only)
- Health insurers and accountable health plans
- Associations and business groups offering health plans
- Arizona Department of Administration
- The department that regulates insurance
What you need to do
Nothing.
What the law doesn't answer
- Whether money will be available for the Department of Administration study
- Whether associations that qualified under the old "path 2" rule must take any steps to keep qualifying
- How premiums or coverage options for members may change
- Which statewide chambers of commerce or business leagues meet the new criteria
- What happens after the study report is submitted
This summary describes the law as enacted. Later laws, court rulings or referendum petitions can change the picture. Check the official text for the current wording.