article: SECTION 1. SMALL EMPLOYER BENEFIT ARRANGEMENTS. (a) Amendments to IRC.-- (1) In general.--Section 414 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: ``(y) Small Employer Benefit Arrangements.-- ``(1) Treatment as employer.-- ``(A) Retirement, accident, and health insurance.-- A small employer benefit arrangement meeting the requirements of this subsection shall be treated as an `employer' for the purpose of providing qualified retirement and accident and health plans (including a plan qualified under section 105(h) or section 125) or group-term life insurance under section 79. ``(B) Allocation of income.--Notwithstanding subparagraph (A), the shareholder-members of the small employer benefit arrangement shall be treated as employers for purposes of administering and allocating items of income, credits, deductions, or exclusions associated with the provision of employee benefits. ``(2) Certain organizations prohibited.-- ``(A) In general.--An organization shall not be treated as a small employer benefit arrangement if the small employer benefit arrangement or any related entity is owned, in whole or in part, or managed or controlled in whole or in part, by any management agreement or certificates of indebtedness, directly or indirectly, or by an agents, brokers or providers of a-- ``(i) health, life, or disability insurer; ``(ii) retirement plan service provider (including persons who provide plan design, administration, and investment advice services to retirement plans); ``(iii) claim administrators; and ``(iv) investment advisors. ``(B) Ordinary provision of products and services.--Nothing in this paragraph shall be construed-- ``(i) to prohibit a small employer benefit arrangement from contracting for the ordinary provision of products and services from any persons or organizations that might otherwise be prohibited from having an ownership or management interest in a small employer benefit arrangement, or ``(ii) to prohibit small employer benefit arrangements from creating, by and between themselves, service organizations owned and controlled exclusively by small employer benefit arrangements to provide for such products and services in the fulfillment of their purposes. ``(3) Definition.--The term `small employer benefit arrangement' means a member owned, democratically controlled cooperative organization that-- ``(A) meets the requirements of subchapter T; ``(B) has at least 21 shareholders of whom 90 percent are in the same or similar line of business; ``(C) sponsors an accident and health plan for shareholder-members and any employees of shareholder- members; ``(D) sponsors a qualified retirement plan that meets the requirements of paragraph (12) or (13) of section 401(k) and is available to shareholder-members and any employees of shareholder-members; ``(E) provides employee benefits pursuant to a written agreement; and ``(F) requires all benefit eligible employees of a shareholder-member to participate according to the same statutory eligibility criteria normally accorded such persons.''. (2) Effective date.--The amendments made by this subsection shall apply with respect to plan years beginning on or after the date of the enactment of this Act. (b) Amendments to ERISA.-- (1) Treatment as employer.--Section 3 of the Employee Retirement and Income Security Act (29 U.S.C. 1002) is amended-- (A) in paragraph (5), by inserting ``or a small employer benefit arrangement'' after ``a group or association of employers''; and (B) by adding at the end the following new paragraph: ``(43) The term `small employer benefit arrangement' means a member owned, democratically controlled cooperative organization that-- ``(A) meets the requirements of subchapter T of chapter 1 of the Internal Revenue Code of 1986; ``(B) has at least 21 shareholders of whom 90 percent are in the same or similar line of business; ``(C) sponsors an accident and health plan for shareholder- members and any employees of shareholder-members; ``(D) sponsors a qualified retirement plan that meets the requirements of paragraph (12) or (13) of section 401(k) of the Internal Revenue Code of 1986 and is available to shareholder- members and any employees of shareholder-members; ``(E) provides employee benefits pursuant to a written agreement; and ``(F) requires all benefit eligible employees of a shareholder-member to participate according to the same statutory eligibility criteria normally accorded such persons.''. (2) Self-insurance prohibited.--Section 609 of such Act (29 U.S.C. 1169) is amended-- (A) by redesignating subsection (e) as subsection (f); and (B) by inserting after subsection (d) the following new subsection: ``(e) Small Employer Benefit Arrangements.-- ``(1) Self-insurance prohibited.--Any group health plan established or maintained by a small employer benefit arrangement shall be fully insured. ``(2) Fully insured defined.--A group health plan established or maintained by a small employer benefit arrangement shall be considered fully insured only if the terms of the arrangement provide for benefits the amount of all of which the Secretary determines are guaranteed under a contract, or policy of insurance, issued by an insurance company, insurance service, or insurance organization, qualified to conduct business in a State.''. (3) Effective date.--The amendments made by this subsection shall apply with respect to plan years beginning on or after the date of the enactment of this Act. (c) Amendments to PPACA.-- (1) Small employer benefit arrangement defined.--Section 1304(b) of the Patient Protection and Affordable Care Act (42 U.S.C. 18024(b)) is amended by adding at the end the following new paragraph: ``(5) Small employer benefit arrangement.--The term `small employer benefit arrangement' has the meaning given such term in section 3(43) of the Employee Retirement and Income Security Act.''. (2) Qualified health plans.--Section 1301(a) of such Act (42 U.S.C. 18021(a)) is amended by adding at the end the following new paragraph: ``(5) Inclusion of small employer benefit arrangement plans.--Any reference in this title to a qualified health plan shall be deemed to include any group health plan established or maintained by a small employer benefit arrangement.''. (3) Eligibility to participate in american health benefit exchanges.--Section 1312(f)(2) of such Act (42 U.S.C. 18032(f)(2)) is amended by adding at the end the following new subparagraph: ``(C) Small employer benefit arrangements.--For purposes of subparagraph (A), a small employer benefit arrangement shall be treated as a small employer.''. (4) Effective date.--The amendments made to any provision by this subsection shall take effect as if included in the enactment of such provision.
summary: Amends the Internal Revenue Code, the Employee Retirement and Income Security Act (ERISA), and the Patient Protection and Affordable Care Act to treat certain small employer benefit arrangements (SEBAs) as employers for the purpose of providing qualified retirement and accident and health plans or group-term life insurance. Defines a SEBA as a member owned, democratically controlled cooperative organization that: (1) has at least 21 shareholders of whom 90% percent are in the same or similar line of business; (2) sponsors an accident and health plan for shareholder-members and any of their employees; (3) sponsors a qualified retirement plan meeting specified requirements and available to shareholder-members and their employees; (4) provides employee benefits pursuant to a written agreement; and (5) requires all benefit eligible employees of a shareholder-member to participate according to the same statutory eligibility criteria normally accorded them. Treats the shareholder-members of a SEBA as employers for purposes of administering and allocating items of income, credits, deductions, or exclusions associated with the provision of employee benefits. Prohibits treatment as a SEBA of any organization or related entity that is owned, in whole or in part, or managed or controlled in whole or in part, by any management agreement or certificates of indebtedness, directly or indirectly, or by: (1) any agents, brokers or providers of a health, life, or disability insurer; (2) a retirement plan service provider; (3) claim administrators; or (4) investment advisors. Requires any group health plan established or maintained by a SEBA to be fully insured (thus prohibiting self-insurance).