House Bill 391 Alabama 2026 Session

Summary

Primary Sponsor

Chris PringleRepresentative

Republican

Session

2026 Regular Session

Title

Insurance; to allow reorganization of a nonprofit health care service corporation under the control of a nonprofit holding company

Summary

HB391 would allow a health care service corporation to reorganize under the control of a nonprofit holding company and set rules for transfers, governance, and reporting.

What This Bill Does

The bill enables a health care service corporation to form a nonprofit holding corporation through a reorganization that would hold its membership interests. It allows an initial transfer of up to 25% of the HCSC's admitted assets (net of liabilities) to the nonprofit holding corporation, subject to risk-based capital rules, and treats the reorganization as an internal restructuring with no change of control. It requires notice to the Department of Insurance, provides for specific reporting (including pro forma financial statements) and governance standards, and clarifies post-reorganization status and potential merger options. The holding corporation would not be an insurance company, and various filings and approvals remain governed by existing law except as otherwise addressed in the act.

Who It Affects

• Health care service corporations (HCSCs) and their subsidiaries/affiliates, who could reorganize under a nonprofit holding corporation and would be subject to new asset transfer limits, governance, and reporting requirements.
• The Alabama Department of Insurance, which would receive notices, oversee compliance, and enforce the new reorganization framework and ongoing requirements.

Key Provisions

• Authorizes formation of a nonprofit holding corporation by a health care service corporation through a reorganization.
• Allows an initial transfer of cash, investments, or equity interests to the nonprofit holding corporation up to 25% of the HCSC's admitted assets, net of liabilities, subject to risk-based capital rules.
• Requires notice of the reorganization to the Department of Insurance and a completion notice with specified attachments (transactions description, amended charter/bylaws, pro forma financial statements).
• Treats the reorganization as internal restructuring with no change of control and without triggering certain change-of-control or filing requirements.
• Board of the nonprofit holding corporation must consist solely of HCSC directors; prohibits equity ownership in the holding company by executives or HCSC board members.
• Establishes governance, reporting, and group capital calculation requirements for the holding corporation and its subsidiaries, with ongoing compliance oversight by the Department of Insurance.
• Post-reorganization, HCSC remains in its legal form and can pursue permitted activities, including potential mergers with nonprofit entities under certain conditions.
• Effective date: October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Businesses & Financial Institutions