May 20, 2025 | Kevin Joseph, LHC Student Assistant
Background
In the United States, health insurance is subject to regulations under the Affordable Care Act (ACA) signed by President Obama in 2010. The ACA puts certain rules on health services coverage labeled ‘insurance,’ particularly for group health insurance. Notably, these regulations include that insurance cannot deny (guaranteed issue), not renew (guaranteed renewability), or adjust premiums of an insurance policy based on a pre-existing or new condition of an enrollee. Additionally, insurance must cover a range of essential health benefits, including ambulatory and emergency services, mental health care, prescription drugs, and other benefits (Ortaliza & Cox, 2024). These regulations intend to protect consumers, but not all health coverage programs are required to be compliant with them if they are not considered insurance (Departments of the Treasury, Labor, and Health and Human Services, 2024).
For example, in more than 30 states, including Alabama, there are plans called short-term health insurance plans, which are meant to fill temporary gaps in coverage between employers without being considered health insurance under the Public Health Service Act (Healthinsurance.org, n.d.; Alabama Department of Insurance, n.d.). Accordingly, these ‘plans’ cannot provide coverage for more than 4 months under a 2024 HHS rule (Departments of the Treasury, Labor, and Health and Human Services, 2024). These plans also can deny consumers based on pre-existing conditions, new conditions, etc., and they do not have to cover all essential health benefits required under the ACA. These short-term plans are not allowed in 14 states and the District of Columbia (Healthinsurance.org, n.d.).
Similar to short-term health insurance plans but intended to provide longer-term coverage, farmer bureau ‘health plans’ are an option for health coverage to farmers allowed in several states, including Tennessee, Iowa, Kansas, South Dakota, Texas, and Indiana. If these plans are not considered comprehensive health insurance, they similarly do not necessarily have to meet the aforementioned ACA requirements (United States Government Accountability Office, 2023).
Proposed Legislation
HB477 of the 2025 Alabama Legislature Regular Session authorized nonprofit agricultural organizations and their affiliates to offer health ‘benefits.’ To be an eligible nonprofit agricultural organization, the group must collect annual dues, be exempt from federal income taxes, be based in Alabama, have existed before 1940, and have members residing in at least 98% of the state’s counties.
As passed, benefits authorized by HB477 must cover ambulatory services, hospitalization and emergency services, laboratory services, mental health and substance abuse disorder services, and prescription drugs. The plans cannot set an annual limit lower than 2 million dollars per year on the value of these covered benefits.
The organization providing the health benefits must provide a written notice to applying individuals that these benefits are not considered an insurance policy or part of insurance business in Alabama. However, the agricultural organization offering these health benefit plans must file with the Department of Insurance to confirm they meet certain actuarial standards. The benefits can only cover nonprofit agricultural organization members and their family members if that member does not have the option to participate in an employer-sponsored health plan that is less than 9% of their household income.
If health plan enrollees have complaints about the benefits, HB477 required that the selling organization establish an ombudsman to respond to complaints in a similar fashion to complaint procedures with the Department of Insurance. Despite not being ACA compliant-insurance, benefits must have in- and out-of-network providers with cost-sharing regulations for purchasers and the organizations themselves, like other insurances. Similarly, as enrolled, benefit plans authorized by HB477 will not be allowed to conduct medical underwriting after the contract starts and will not be able to cancel the contract, not renew the contract, modify the contract, or increase contract premiums due to a medical event once the benefits are established.
Premiums for the health benefits plans will be taxed at 1.3% annually for collection by the Department of Revenue.
HB477 had 40 sponsors, with Representative Faulkner (R-Jefferson County) serving as the title sponsor.
Impact
According to the American Community Survey 2023 estimates, about 8.5% of non-institutionalized civilian Alabamians, or about 426,000 people, are uninsured compared to 7.9% of people nationwide. Those who are in young and middle adulthood (ages 19-44), are racial minorities or ethnically Hispanic, are born outside the US, are less educated, are lower income, or are not employed full-time are more likely to be uninsured in Alabama (American Community Survey, 2023).
Currently, the Alabama Farmer’s Federation is a nonprofit agricultural organization that represents over 340,000 members, according to its website, which indicates up to hundreds of thousands of Alabamians may be eligible for such health plans (ALFA Farmers, n.d.). Although it is unclear how many people are covered by similar plans in other states that have authorized these benefits, a supporter in the hearing noted that Tennessee has had 138,000 people receive such coverage since 1947. Consequently, this bill and the consequently authorized plans may allow more Alabamian farmers to be covered under the bill, improving health outcomes due to increased care access. The Centers for Disease Prevention and Control report that agricultural workers face many occupational hazards that cause increased rates of injury and death, and the longitudinal Agricultural Health Study on farmers has shown that farmers may face unique exposures like pesticides that can increase the risk of certain health conditions (CDC, n.d.; National Institutes of Health, n.d.; UN Environment Programme, n.d.). Thus, healthcare coverage through health benefit plans for Alabamian farmers may be particularly needed.
HB477 proponents in an April 2nd, 2025 House Health Committee hearing argued that the bill provides health plans as a less expensive alternative to existing healthcare coverage options that are more expensive. Specifically, they mentioned that ACA Marketplace individual plans may be unrealistic financially for farmers who do not qualify for income-based subsidies (i.e., make 400% or more of the federal poverty level). Since health plans will not necessarily have income stipulations and will also not be limited in time of year when you can enroll (like Marketplace plans are), Alabamian farmers may opt to get health coverage through these plans. However, it is unclear how many farmers will choose these plans over the two alternatives of paying for Marketplace plans or (employer-sponsored plans if they cost more than 9% of a family’s household income), which some claim are too expensive, or choosing not to be insured (since the individual mandate of the ACA was repealed).
Concerns about the quality of coverage exist. As previously noted in a federal government’s Federal Register publication, some federal departments expressed concerns over plans that are not considered ‘comprehensive health insurance coverage’ subject to PHS, ACA, and other statutes’ regulations because potential enrollees may not understand that their plan is not considered comprehensive coverage (Departments of the Treasury, Labor, and Health and Human Services, 2024). Some essential health benefits required for ACA-compliant insurance like maternity and newborn care, certain preventive care services, pediatric dental and vision care, and rehabilitative and habilitative services, are not required to be covered in these plans per HB477.
Additionally, even if the bill’s writing does not allow for health plans to be terminated or non-renewed based on medical conditions, applicants still can be initially denied based on pre-existing conditions. Groups offering these health plans may opt not to cover certain individuals/families with high expected healthcare costs, which may leave such farmers and their families vulnerable. However, if these individuals/families are accepted and enrolled in the health plans, they may face higher out-of-pocket costs as opposed to traditional health insurance plans. Consequently, individuals with lower expected healthcare costs may preferentially opt to enroll in these health plans, which could destabilize existing insurances’ risk pools.
Next Steps
HB477 was passed by the Alabama State Legislature and signed by Governor Kay Ivey. If you want to make your voice heard on this or future legislation, click here to identify your elected officials.
Don’t know what to say? Check out this guide from the American Civil Liberties Union on drafting a letter to your government officials.
References
Alabama Department of Insurance. (n.d.). Short-term health insurance plan. https://www.aldoi.gov/Consumers/ShortTermHealthIns.aspx
ALFA Farmer. (n.d.) History. https://alfafarmers.org/federation/history/
American Community Survey (2023). Selected Characteristics of Health Insurance Coverage in the United States, ACS 1-Year Estimates Subject Tables, Table S2701. [Data set]. U.S. Census Bureau, U.S. Department of Commerce. https://data.census.gov/table/ACSST1Y2023.S2701?q=S2701:+Selected+Characteristics+of+Health+Insurance+Coverage+in+the+United+States
Centers for Disease Control and Prevention (CDC). (n.d.). Agriculture Worker Safety and Health. https://www.cdc.gov/niosh/agriculture/about/index.html
Departments of the Treasury, Labor, and Health and Human Services. (2024). Short-Term, Limited-Duration Insurance and Independent, Noncoordinated Excepted Benefits Coverage. https://www.federalregister.gov/documents/2024/04/03/2024-06551/short-term-limited-duration-insurance-and-independent-noncoordinated-excepted-benefits-coverage
Healthinsurance. org. (n.d.). Short-term health insurance. https://www.healthinsurance.org/short-term-health-insurance/
UN Environment Programme. (n.d.). Highly Hazardous Pesticides (HHPs). https://www.unep.org/topics/chemicals-management/pollution-and-health/highly-hazardous-pesticides-hhps
National Institutes of Health. (n.d.). Study Updates. Agricultural Health Study https://aghealth.nih.gov/news/updates.html
Ortaliza, J. & Cox, C. (2024, July 29). The Affordable Care Act 101. KFF. https://www.kff.org/health-policy-101-the-affordable-care-act/?entry=table-of-contents-what-is-the-affordable-care-act
United States Government Accountability Office. (2023). Private health coverage: Information on farm bureau health plans, health care sharing ministries, and fixed indemnity plans. https://www.gao.gov/assets/gao-23-106034.pdf#page=13.19