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SB 760

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2025 Regular Session Introduced by Barbara Favola

Allows Maryland small employers using PEOs to access non-small-group health plans outside MHBE SHOP, treating PEO welfare plans as single-employer, potentially lowering costs.

Senate sustained Governor's veto
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Bill Summary · SB 760

SB 760 — Better Small Business Employee Benefit Act of 2025

Status: Introduced (Senate Bill), First Reader Feb 24, 2025. Effective date: January 1, 2026. Cross-file: HB 1439.

Main purpose

Allow small employers who obtain workforce services through professional employer organizations (PEOs), co‑employers, or other employee‑leasing entities to access health benefit plans outside Maryland’s small‑group market and Maryland Health Benefit Exchange (MHBE) SHOP requirements. The bill removes PEO‑issued plans from certain "small group" rules and treats PEO worksite welfare plans as single‑employer welfare plans.

Key provisions

  • Amends multiple sections of the Insurance Article (notably §§ 15‑1201, 15‑1202, 15‑1204.1, and 31‑101):
    • Removes PEOs/co‑employers/employee‑leasing organizations from the statutory definition/application of “health benefit plan” under the small group subtitle.
    • Adds a statutory definition of “professional employer organization” (PEO): a business that contracts to allocate employer responsibilities with another business for all or at least half of the other business’s worksite employees.
    • Excludes certain temporary staffing/reassignment entities from the PEO definition (i.e., staffing firms that recruit/hire their own employees and reassign them across clients).
    • Provides that § 15‑1204.1 (carrier obligation to offer qualified plans in MHBE SHOP) does not apply to health benefit plans issued through a PEO.
    • Replaces prior language that, to the extent permitted by federal law, treated entities that lease employees from PEOs as “small employers.” Instead, a welfare benefit plan offered to a PEO worksite employee is to be treated as a single‑employer welfare benefit plan.

Who is affected

  • Small employers and their employees that participate in PEO arrangements: may gain access to large‑group coverage negotiated by the PEO.
  • Professional employer organizations and co‑employers: obtain the ability to sponsor or access group plans not subject to small‑group market rules and SHOP participation requirements.
  • Health insurers/carriers and the Maryland Health Benefit Exchange: carriers offering PEO‑issued plans may be exempt from some small‑group/SHOP obligations.
  • Small employers not partnered with PEOs: potential indirect effects on small‑group market risk pools and premiums.

Fiscal and policy impacts

  • Fiscal note (Dept. of Legislative Services): no fiscal or operational impact to the Maryland Insurance Administration; revenues not affected.
  • Small business effect: characterized as "meaningful" — some small employers may access lower‑cost large‑group coverage through PEOs; conversely, premiums in the remaining small‑group market could rise if risk pools are altered.
  • Context: MIA reported ~73 PEOs operating in Maryland (Jan 2025 study). Maryland historically restricted PEOs from offering large‑group coverage to small‑employer clients; this bill reverses that approach.

Timeline / Application

  • Applies to all policies, contracts, and health benefit plans issued, renewed, or delivered in Maryland on or after January 1, 2026.

Compiled from official sources — confirm details with the bill’s official record.

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