(a) The Commissioner of Insurance shall, by regulation, establish the conditions, restrictions, requirements, and plan of operation of the Alabama Small Employer Allocation Program consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 and any and all federal regulations adopted pursuant thereto, which plan benefits shall be inclusive of the provisions of Sections 27-1-10 and 27-19-39. The program shall be patterned after the Small Employer Health Insurance Availability models developed by the National Association of Insurance Commissioners.

(b) All insurers that offer health benefit plans to small employers in this state on and after August 1, 1997, shall be required to meet the requirements of the program as a condition of authority to transact business in this state.

(c) For the purposes of this article, a "small employer" means any person, firm, corporation, partnership, association, political subdivision, or self-employed individual that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed no less than two and no more than 50 eligible employees, with a normal work week of 30 or more hours, the majority of whom were employed within this state, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer-employee relationship exists. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of taxation by this state, shall be considered one employer.