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AlabamaSB2472026 Regular SessionSenate

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

Sponsored By: Andrew Jones (Republican)

Enacted

Businesses & Financial Institutions

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Bill Overview

Analyzed Economic Effects

6 provisions identified: 3 benefits, 0 costs, 3 mixed.

Health plan members keep existing contracts

Beginning October 1, 2026, subscriber contracts and coverage certificates remain in force when an Alabama health care service corporation reorganizes. The reorganization does not change the corporation’s legal form or state authority to operate. It remains subject to its governing health plan law, and the change does not count as a legal conversion.

Health plan insiders face reward limits

Beginning October 1, 2026, health care service corporation directors, officers, and employees cannot receive fees, extra pay, or valuable rewards for helping the reorganization. Every holding-company board member must also be a director of the health care service corporation. Executive officers and board members of either corporation cannot receive ownership interests in the holding company or its subsidiaries.

Public oversight follows health plan restructuring

Beginning October 1, 2026, reorganized health care service corporations must send completion notices to the Alabama Department of Insurance. Notices must include transaction details, amended formation papers and bylaws, holding-company incorporation papers, and projected balance sheets and income statements for both corporations at the reorganization date. Holding companies must also file a group capital calculation by June 1 each year, covering the prior calendar year. After reorganization, transactions requiring notice under the law’s specified insurance rule trigger public notice when they exceed 5% of admitted assets as of the prior December 31. The department must allow 30 days for written comments; the transaction can proceed unless the commissioner rejects it during that period. The department can use its existing enforcement powers to require holding-company compliance.

Health plan transfers face financial limits

Beginning October 1, 2026, reorganizing health care service corporations can transfer cash, investments, or subsidiary and affiliate ownership interests. These transfers can go to the nonprofit holding company or its subsidiary. Their total value, after liabilities, cannot exceed 25% of admitted assets reported in the latest annual statement filed with Alabama’s insurance department. The corporation must also meet its risk-based capital requirements at reorganization. After completion, additional direct or indirect dividends and distributions are allowed, but must meet state nonprofit distribution and insurance dividend standards.

Health plans gain limited restructuring options

Beginning October 1, 2026, Alabama health care service corporations, including subsidiaries, can reorganize once under a domestic nonprofit holding company. Their boards can approve the change and amend formation papers and bylaws. The holding company must control all membership interests, directly or through another domestic nonprofit, and have no members itself. The restructuring is exempt from acquisition and change-of-control review and other approvals, except for the required completion notice. The holding company can own, manage, and invest in businesses, subject to nonprofit and insurance holding-company laws and ownership limits. It is not an insurer; its affiliates follow health care service corporation rules only when organized under those rules. After reorganizing, the health care service corporation can merge with a domestic or foreign nonprofit, but must survive the merger and meet insurance filing and approval requirements.

Holding companies face healthcare ownership limits

Beginning October 1, 2026, holding companies and affiliates cannot directly or indirectly own any part of, or control, Alabama hospitals or other direct care providers. They can acquire a foreign entity with an Alabama provider only by agreeing to divest that provider within two years after closing. This provider restriction does not apply to the health care service corporation or its subsidiary. The group also cannot own or control specified entities providing health insurance in Alabama: licensed insurers, fraternal benefit societies, health maintenance organizations, and health care service plans formed after 2025. That insurance restriction excludes entities that existed before, or result from, the reorganization.

Sponsors & Cosponsors

Sponsor

  • Andrew Jones

    Republican • Senate

Cosponsors

  • J. T. 'Jabo' Waggoner

    Republican • Senate

  • Robert Stewart

    Democratic • Senate

  • Rodger M. Smitherman

    Democratic • Senate

  • Shay Shelnutt

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 379 • No: 10

House vote • 3/17/2026

Pringle motion to Table - Adopted Roll Call 936

Yes: 96 • No: 2 • Other: 2

House vote • 3/17/2026

Motion to Read a Third Time and Pass - Adopted Roll Call 937

Yes: 99 • No: 4 • Other: 1

House vote • 3/17/2026

Third Reading in Second House

Yes: 89 • No: 4 • Other: 1

Senate vote • 2/17/2026

Jones motion to Adopt - Adopted Roll Call 445

Yes: 32 • No: 0 • Other: 1

Senate vote • 2/17/2026

Third Reading in House of Origin

Yes: 31 • No: 0 • Other: 1

Senate vote • 2/17/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 446

Yes: 32 • No: 0 • Other: 1

Actions Timeline

  1. Enacted

    3/19/2026Senate

  2. Third Reading in Second House

    3/17/2026House

  3. Harrison 1st Amendment Offered

    3/17/2026House

  4. Pringle motion to Table - Adopted Roll Call 936

    3/17/2026House

  5. Motion to Read a Third Time and Pass - Adopted Roll Call 937

    3/17/2026House

  6. Ready to Enroll

    3/17/2026Senate

  7. Enrolled

    3/17/2026Senate

  8. Signature Requested

    3/17/2026House

  9. Delivered to Governor

    3/17/2026Senate

  10. Read for the Second Time and placed on the Calendar

    3/5/2026House

  11. Reported Out of Committee Second House

    3/4/2026House

  12. Re-referred to Committee in Second House

    2/24/2026House

  13. Read for the first time and referred to the House Committee on Insurance

    2/19/2026House

  14. Pending Committee Action in Second House

    2/19/2026House

  15. Third Reading in House of Origin

    2/17/2026Senate

  16. Carried Over to the Call of the Chair

    2/17/2026Senate

  17. Jones 1st Amendment Offered

    2/17/2026Senate

  18. Jones motion to Adopt - Adopted Roll Call 445

    2/17/2026Senate

  19. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 446

    2/17/2026Senate

  20. Engrossed

    2/17/2026Senate

  21. Read for the Second Time and placed on the Calendar

    2/5/2026Senate

  22. Reported Out of Committee House of Origin

    2/4/2026Senate

  23. Read for the first time and referred to the Senate Committee on Banking and Insurance

    2/3/2026Senate

  24. Pending Committee Action in House of Origin

    2/3/2026Senate

Bill Text

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