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 would let a Alabama nonprofit health care service corporation reorganize under a nonprofit holding company, creating a new controlling structure under state supervision.

What This Bill Does

The bill adds a new code section that authorizes a health care service corporation to form a nonprofit holding corporation through a reorganization. The reorganization is treated as an internal restructuring that does not change overall control or count as an acquisition, but it can involve transferring up to 25% of the health care service corporation's admitted assets (cash, investments, or equity) to the nonprofit holding corporation, subject to risk-based capital rules. After the reorganization, the nonprofit holding corporation becomes the ultimate controlling entity, while the health care service corporation remains the operating entity; the subscriber contracts stay in force, and the reorganization requires notices, amendments, and financial reporting to the Department of Insurance.

Who It Affects

• Health care service corporations (HCSCs) and their subsidiaries/affiliates, which may undergo a reorganization to place ownership under a nonprofit holding corporation and become subject to new governance relations.
• Nonprofit holding corporations created by the reorganization, which would be the ultimate controlling person of the HCSC and would have specific governance and reporting requirements.
• Department of Insurance, which would oversee compliance, notices, filings, and annual capital calculations.
• Hospitals and direct health care providers in Alabama, which would face restrictions on being controlled by a nonprofit holding corporation.
• Health insurers, health care service plans, fraternal benefit societies, and HMOs, which are restricted from being controlled by the nonprofit holding corporation after the reorganization unless pre-existing conditions apply.
• Subscribers and policyholders, whose contracts and certificates would continue to remain in force after the reorganization.

Key Provisions

• Adds Section 10A-20-6.17 to authorize formation of a nonprofit holding corporation by a health care service corporation through a reorganization.
• The reorganization is an internal restructuring that does not change control or constitute an acquisition, and transfers of cash/investments/ownership interests to the nonprofit holding corporation are limited to 25% of admitted assets and subject to risk-based capital requirements.
• The reorganizing health care service corporation may authorize the reorganization and must amend its certificate of formation and bylaws to create a class of members and define membership rights; a notice of completion and related documents must be filed with the Department of Insurance after the reorganization.
• The nonprofit holding corporation is not an insurer and is not subject to this article; it has no members and serves as the ultimate controlling person of the health care service corporation; its board must be comprised solely of HCSC directors, with no equity given to executives or board members of either entity.
• After the reorganization, the nonprofit holding corporation may engage in organizing, acquiring, holding, operating, managing, and investing in any person (including insurers) and may engage in transactions subject to Chapter 3A or Chapter 29, with annual group capital calculations required by June 1 each year.
• The nonprofit holding corporation cannot control Alabama hospitals or direct health care providers, with exceptions allowing acquisition of foreign entities if divested of Alabama operations within two years; it also cannot control certain Alabama health insurers, health care service plans, fraternal societies, or HMOs unless pre-existing.
• If a transaction related to the reorganization exceeds 5% of the health care service corporation's admitted assets, the Department must provide public notice and allow a 30-day comment period before final approval, during which comments may lead to disapproval.

AI-generated summary using openai/gpt-5-nano on Feb 17, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Businesses & Financial Institutions