Senate Bill 247 Alabama 2026 Session

Summary

Primary Sponsor

Andrew JonesSenator

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

SB247 enables a nonprofit health care service corporation to reorganize under a nonprofit holding company and sets rules for how that structure would work and be overseen.

What This Bill Does

It creates a process for a health care service corporation to form a nonprofit holding corporation as the ultimate controlling entity, while keeping the health care service entity’s operations and contracts intact. The reorganization is treated as an internal restructuring, not an acquisition or change of control, and allows limited transfer of assets to the holding company (up to 25% of admitted assets) with capital checks and required notices. It establishes governance rules (holding company board made up of the health care service corporation’s directors), reporting requirements (annual group capital calculation), and post-reorganization restrictions on what the holding company may control in Alabama’s health insurance market, plus notice and public-comment procedures for large transactions.

Who It Affects

• Health care service corporations and their members in Alabama, who could undergo a reorganization into a nonprofit holding corporation, experience changes in governance and membership structure, and must meet new reporting requirements.
• Other health insurance providers in Alabama (insurance companies, health care service plans, fraternal benefit societies, and HMOs) because the nonprofit holding corporation would not be allowed to control these entities after the reorganizations, with specific conditions and oversight by the Department of Insurance.

Key Provisions

• Adds Section 10A-20-6.17 to authorize formation of a nonprofit holding corporation by a health care service corporation via reorganization.
• Defines key terms (affiliate, control, nonprofit holding corporation, reorganization, etc.) for use in this section.
• Reorganization is an internal restructuring that does not change control, is not an acquisition, and is not subject to certain other statutes; allows an initial transfer of cash, investments, or membership interests to the nonprofit holding corporation up to 25% of admitted assets, with capital requirements.
• Requires notice to the Department of Insurance and provides for pro forma balance sheets and income statements for both entities at completion; the transfer and reorganization are governed exclusively by these subsections.
• The nonprofit holding corporation is not an insurer and is not subject to this article; it must be organized under Chapter 3A and has no members; it is the ultimate controlling person of the health care service corporation.
• The nonprofit holding corporation may organize, acquire, hold, operate, invest in, and conduct transactions with other persons (including insurers) subject to Chapter 3A and 29; annual group capital calculations are due by June 1 each year.
• The board of the nonprofit holding corporation must consist solely of the health care service corporation’s directors; no equity may be issued to executives or board members of either entity; the Department may enforce compliance.
• After the reorganization, the health care service corporation’s subscriber contracts remain in force; the reorganization does not by itself trigger a conversion of the entity.
• The nonprofit holding corporation cannot control certain Alabama health insurers (insurance companies, post-2025 health care service plans, fraternal benefit societies, and HMOs) unless specified conditions are met; foreign acquisitions may be allowed if the direct Alabama health care provider is divested within two years.
• If a reorganization-related transaction requires notice and exceeds 5% of admitted assets, the Department must provide public notice and a 30-day comment period, after which the transaction may proceed unless the commissioner disapproves.
• Effective date: October 1, 2026.

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Mar 19, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Businesses & Financial Institutions