HB477 Alabama 2025 Session

Summary

Primary Sponsor

David FaulknerRepresentative

Republican

Session

2025 Regular Session

Title

Non profit agricultural organization, authorized to offer health benefits to members

Summary

HB477 lets Alabama nonprofit agricultural organizations offer health benefits to their members and families under specific rules, oversight, and taxes.

What This Bill Does

It authorizes nonprofit agricultural organizations to sponsor health benefits for their members and their families, clarifying that these benefits are not traditional health insurance. The benefits must cover ambulatory care, hospitalization, emergency services, labs, mental health/substance use treatment, and prescription drugs, with no annual limit below $2,000,000 per enrollee. The act imposes requirements such as signed notices to applicants (stating benefits are not insurance), actuarial certification, a complaint/ombudsman process, a 1.3% premium tax, and risk transfer arrangements with an insurance entity.

Who It Affects

• Members and families of nonprofit agricultural organizations who would be eligible to enroll in the new health benefits.
• Nonprofit agricultural organizations (and their affiliates) that offer and administer these health benefits, including compliance with notices, actuarial reporting, complaint processes, network rules, and tax obligations.

Key Provisions

• Health benefits are sponsored by a nonprofit agricultural organization or affiliate and offered only to members or their family members, not through a policy regulated as traditional health insurance.
• A nonprofit agricultural organization must meet defined criteria (501(c)(5) exemption, Alabama domicile, existence before 1940, members largely from Alabama counties, annual dues, and mission to promote agriculture and rural life).
• Benefits must include ambulatory care, hospitalization, emergency services, laboratory services, mental health/substance use services, and prescription drugs, with no annual limit below $2,000,000 per enrollee.
• Benefits may be sold only by licensed insurance producers who are either organization employees/affiliates or certain related insurers, and not by general brokers.
• A written notice that benefits are not insurance must be provided to applicants, and signed acknowledgment must be returned before enrollment; copies must be maintained and provided on request.
• The nonprofit is not considered an insurer or engaged in the business of health insurance under this act.
• No post-claim underwriting or cancellation/ premium increase due to medical events while coverage is in effect; individuals must certify they lack employer-sponsored coverage or that it is too costly (more than 9% of household income).
• Annual actuarial certification is required to verify plan reserves; a complaint/ombudsman system must be established; the Department of Insurance can review complaints.
• The nonprofit must transfer some risks to an independent insurance entity and contract with an insurer not under common control.
• In-network care is preferred; in emergencies, out-of-network payments may be limited to the in-network median rate or 80% of the maximum allowable charge; for certain nonemergency services, the nonprofit pays fees to nonparticipating providers under defined terms.
• Plans must ensure prompt payment for services rendered; premiums are taxed at 1.3%, with funds split between the State General Fund and the Insurance Department Fund; administration costs are capped at 2% of collections.
• The act becomes effective June 1, 2025.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Health