SB 779

SENATE BILL 779
     J5  6lr3299
     SB 760/25 – FIN  CF 6lr2201
     By: Senator Feldman
     Introduced and read first time: February 6, 2026
     Assigned to: Finance
  A BILL ENTITLED
1 AN ACT concerning
2Better Small Business Employee Benefit Act of 2026
3 FOR the purpose of exempting from certain requirements relating to the offering of health
4      benefit plans to small employers in the State health benefit plans issued through a
5      professional employer organization located in the State; requiring professional
6      employer organizations that enter into agreements with small employers to provide
7      health benefit plans to disclose certain information in writing; and generally relating
8      to health benefit plans issued through professional employer organizations that
9      engage in employee leasing.
10 BY repealing and reenacting, without amendments,
11Article – Insurance
12Section 15–1201(a) and (i)(1) and 31–101(a)
13Annotated Code of Maryland
14(2017 Replacement Volume and 2025 Supplement)
15 BY repealing and reenacting, with amendments,
16Article – Insurance
17Section 15–1201(i)(2), 15–1202(b), 15–1204.1, and 31–101(aa)
18Annotated Code of Maryland
19(2017 Replacement Volume and 2025 Supplement)
20 BY adding to
21      Article – Insurance
22      Section 15–1201(r–1) and 15–1206(i)
23      Annotated Code of Maryland
24      (2017 Replacement Volume and 2025 Supplement)
25SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
26 That the Laws of Maryland read as follows:
     EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
  [Brackets] indicate matter deleted from existing law.
  *sb0779*
2SENATE BILL 779
1Article – Insurance
2 15–1201.
3(a)     In this subtitle the following words have the meanings indicated.
4(i)     (1)   “Health benefit plan” means:
5(i)     a policy or certificate for hospital or medical benefits issued by
6 an insurer;
7(ii)    a nonprofit health service plan contract; or
8(iii)   a health maintenance organization subscriber or group master
9 contract.
10(2)    “Health benefit plan” includes a policy or certificate for hospital or
11 medical benefits that covers residents of this State who are eligible employees and that is
12 issued through:
13(i)     a multiple employer trust or association located in this State or
14 another state; or
15(ii)   a [professional employer organization,] coemployer[,] or other
16 organization located in this State or another state that engages in employee leasing.
17(R–1) (1)     “PROFESSIONAL EMPLOYER ORGANIZATION” MEANS A BUSINESS
18 ENTITY THAT ENTERS INTO A CONTRACTUAL AGREEMENT WITH ANOTHER BUSINESS
19 ENTITY UNDER WHICH EMPLOYER RESPONSIBILITIES ARE ALLOCATED BETWEEN
20 THE BUSINESS ENTITIES FOR ALL OR AT LEAST HALF OF THE WORKSITE EMPLOYEES
21 OF THE SECOND BUSINESS ENTITY.
22(2)
  “PROFESSIONAL EMPLOYER ORGANIZATION” DOES NOT INCLUDE
23 A BUSINESS ENTITY THAT:
24(I)     RECRUITS AND HIRES ITS OWN EMPLOYEES;
25(II)  FINDS OTHER ORGANIZATIONS THAT NEED THE SERVICES
26 OF ITS EMPLOYEES;
27(III) ASSIGNS EMPLOYEES TO CLIENTS ON A TEMPORARY BASIS
28 TO SUPPORT OR SUPPLEMENT THE CLIENT’S WORKFORCE IN SPECIAL
29 CIRCUMSTANCES SUCH AS EMPLOYEE ABSENCES, TEMPORARY SKILL SHORTAGES,
30 AND SEASONAL WORKLOADS; AND
  SENATE BILL 779  3
1(IV)
  CUSTOMARILY ATTEMPTS TO REASSIGN THE EMPLOYEES TO
2 OTHER CLIENTS WHEN THE EMPLOYEES FINISH EACH ASSIGNMENT.
3 15–1202.
4(b)    This subtitle applies to any health benefit plan offered by an association, [a
5 professional employer organization, or any other entity,] including a plan issued under the
6 laws of another state, if the health benefit plan covers eligible employees of one or more
7 small employers and meets the requirements of subsection (a) of this section.
8 15–1204.1.
9(a)   (1)   This section applies to a carrier with respect to any health benefit plan
10 that:
11[(1)] (I)    is not a grandfathered health plan, as defined in § 1251 of the
12 Affordable Care Act; and
13[(2)] (II)   is issued, delivered, or renewed in the State on or after January
14 1, 2014.
15(2)
  THIS SECTION DOES NOT APPLY WITH RESPECT TO A HEALTH
16 BENEFIT PLAN ISSUED THROUGH A PROFESSIONAL EMPLOYER ORGANIZATION.
17(b)   (1)    Except as provided in this subsection and § 31–110(f) of this article, a
18 carrier may not offer health benefit plans to small employers in the State unless the carrier
19 also offers qualified health plans, as defined in § 31–101 of this article, in the Small
20 Business Health Options Program of the Maryland Health Benefit Exchange in compliance
21 with the requirements of Title 31 of this article.
22(2)   A carrier is exempt from the requirement in paragraph (1) of this
23 subsection if:
24(i)   the reported total aggregate annual earned premium from all
25 health benefit plans offered to small employers in the State for the carrier and any other
26 carriers in the same insurance holding company system, as defined in § 7–101 of this
27 article, is less than $20,000,000;
28(ii)  the Commissioner determines that the carrier complies with the
29 procedures established under paragraph (3) of this subsection; and
30(iii) when the carrier ceases to meet the requirements for the
31 exemption, the carrier provides to the Commissioner immediate notice and its plan for
32 complying with the requirement in paragraph (1) of this subsection.
4SENATE BILL 779
1(3)   The Commissioner shall establish procedures for a carrier to submit
2 evidence each year that the carrier meets the requirements necessary to qualify for an
3 exemption under paragraph (2) of this subsection.
4(4)  Notwithstanding the exemption provided in paragraph (2) of this
5 subsection, the Commissioner, in consultation with the Maryland Health Benefit
6 Exchange:
7(i)    may assess the impact of the exemption provided in paragraph
8 (2) of this subsection and, based on that assessment, alter the limit on the amount of annual
9 premiums that may not be exceeded to qualify for the exemption; and
10(ii)   shall make any change in the exemption requirement by
11 regulation.
12 15–1206.
13(I)     A PROFESSIONAL EMPLOYER ORGANIZATION THAT ENTERS INTO AN
14 AGREEMENT WITH A SMALL EMPLOYER TO PROVIDE A HEALTH BENEFIT PLAN SHALL
15 DISCLOSE TO THE SMALL BUSINESS, IN WRITING:
16(1)
  DETAILED INFORMATION ABOUT THE BENEFITS OFFERED IN THE
17 HEALTH BENEFIT PLAN TO THE EMPLOYEES OF THE SMALL EMPLOYER THAT ARE
18 COEMPLOYED BY THE PROFESSIONAL EMPLOYER ORGANIZATION;
19(2)
  ANY ADDITIONAL COST TO THE SMALL EMPLOYER RELATED TO
20 THE HEALTH BENEFIT PLAN; AND
21(3)
  THAT THE SMALL EMPLOYER MAY TERMINATE THE AGREEMENT
22 WITH THE PROFESSIONAL EMPLOYER ORGANIZATION WITHIN 60 DAYS AFTER
23 WRITTEN NOTICE OF TERMINATION OR EARLIER IN ACCORDANCE WITH THE TERMS
24 OF THE AGREEMENT.
25 31–101.
26(a)     In this subtitle the following words have the meanings indicated.
27(aa) (1)     “Small employer” means an employer that, during the preceding
28 calendar year, employed an average of not more than 50 employees.
29(2)   For purposes of this subsection:
30(i)   all persons treated as a single employer under § 414(b), (c), or (o)
31 of the Internal Revenue Code shall be treated as a single employer;
  SENATE BILL 779  5
1(ii)    an employer and any predecessor employer shall be treated as a
2 single employer;
3(iii)   the number of employees of an employer shall be determined by
4 adding:
51.    the number of full–time employees; and
62.    the number of full–time equivalent employees, which shall
7 be calculated for a particular month by dividing the aggregate number of hours of service
8 of employees who are not full–time employees for the month by 120;
9(iv) if an employer was not in existence throughout the preceding
10 calendar year, the determination of whether the employer is a small employer shall be
11 based on the average number of employees that the employer is reasonably expected to
12 employ on business days in the current calendar year;
13(v)  an employer that makes enrollment in qualified health plans
14 available to its employees through the SHOP Exchange, and would cease to be a small
15 employer by reason of an increase in the number of its employees, shall continue to be
16 treated as a small employer for purposes of this subtitle as long as it continuously makes
17 enrollment through the SHOP Exchange available to its employees; and
18(vi) [to the extent permitted by federal law, an entity that leases
19 employees from a professional employer organization, coemployer, or other organization
20 engaged in employee leasing and that otherwise meets the description in this section shall
21 be treated as a small employer] A WELFARE BENEFIT PLAN OFFERED TO A WORKSITE
22 EMPLOYEE OF A PROFESSIONAL EMPLOYER ORGANIZATION SHALL BE TREATED AS
23 A SINGLE EMPLOYER WELFARE BENEFIT PLAN.
24SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all
25 policies, contracts, and health benefit plans issued, delivered, or renewed in the State on or
26 after January 1, 2027.
27      SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect
28 January 1, 2027.