Association Health Insurance Standard Model Act
Section 1. Short Title
This Act shall be known and may be cited as the Association Group Health Insurance Act.
Section 2. Purpose
The purpose of this act is to establish standards for offering group health insurance products through an association.
Section 3. Association Groups
(1) A policy issued to an association or to a trust or to the trustees of a fund established by an association or associations otherwise eligible for issuance of a policy under this subsection and maintained, directly or indirectly, by the association or associations for the benefit of members of one or more associations.
(a) An association shall not be controlled by an insurer as evidenced by the operation of the association.
(b) The following factors may be used as evidence to determine whether an association is an insurer-operated association; however, the presence of these factors shall not serve to limit or be dispositive of such a determination:
(i) Common board members, officers, executives or employees;
(ii) Common ownership of the insurer and the association or other eligible group; or
(iii) Common use of the same office space or equipment utilized by the insurer to transact insurance.
(3) An association may use the solicitation of insurance as one of its methods to obtain new members.
(4) The association or associations shall:
(a) Have at the outset a minimum of 50 persons;
(b) Have a shared or common purpose that is not solely a business or customer relationship;
(c) Have been in active existence for at least one year; and
(d) Have a constitution and by-laws that provide that:
(i) The association or associations hold regular meetings not less than annually to further the purposes of the members;
(ii) Except for credit unions, the association or associations collect dues or solicit contributions from members; and
(iii) Association members have voting privileges and representation on the governing board and committees.
(5) The policy shall be subject to the following requirements:
(a) The policy may insure members of the association or associations, employees of the association or associations or employees of members, or one or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employee’s employer.
(b) The premium for the policy shall be paid from funds contributed by the association or associations, or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations or employer members.
(c) An insurer may exclude or limit the coverage on any individual as to whom evidence of individual insurability is not satisfactory to the insurer unless otherwise prohibited by any other applicable law or regulations adopted by the commissioner.
(6) If the commissioner determines that an association uses the solicitation of insurance as its primary method of obtaining new members, the commissioner shall not use this determination as the sole criterion for the disapproval of a group under this subsection.
(7) The insurer shall disclose the following:
(a) All costs related to joining and maintaining membership in the association, such as the membership processing fees, the initial association membership fee and the amount of the annual association dues;
(b) That membership fees or dues are in addition to the policy premium;
(c) That the association holds the master contract;
(d) That the premium charged and the terms and conditions of coverage are determined between the association and the insurer; and
(e) That the premium and the terms and conditions of coverage may be changed by agreement of the association group policyholder and the insurer, without the consent of the individual certificate holder.
(8) If an insurer collects membership fees or dues on behalf of an association, the insurer shall disclose to the members of the association that the insurer is billing and collecting membership fees and dues on behalf of the association.
B. A policy issued to cover persons in a group where that group is specifically described by a law of this state as a group that may be covered for group life insurance. The provisions of the law relating to eligibility and evidence of individual insurability shall apply.
Section 4. Policies Issued Out of State or to Groups Not Meeting the Requirements of Section 3
Group health insurance coverage offered to a resident of this state or in connection with employment within this state under a group health insurance policy issued to a group other than a group described in Section 4 shall be subject to the following requirements:
A. For any such coverage to be delivered in this state the commissioner must find that:
(1) The issuance of the policy is not contrary to the best interest of the public;
(2) The issuance of the policy would result in economies of acquisition or administration; and
(3) The benefits are reasonable in relation to the premiums charged.
(1) For any such coverage that is being offered in this state by an insurer under a policy issued in another state, the commissioner must make a determination that the requirements of Subsection A have been met.
(2) The insurer shall file with the commissioner no more than annually:
(a) A copy of the group master contract;
(b) Evidence of approval in the state where the policy is issued; and
(c) Copies of all supportive material used by the insurer to secure approval of the policy in that state including the documentation required in Subsection A.
(3) If the commissioner has not made a determination within thirty (30) days of filing by the insurer, the requirements shall be deemed to have been met.
C. The premium for the policy shall be paid either from the policyholder’s funds or from funds contributed by the covered persons, or from both.
D. An insurer may exclude or limit the coverage under the policy on any person as to whom evidence of individual insurability is not satisfactory to the insurer unless otherwise prohibited by any other applicable law or regulations adopted by the commissioner.
Section 5. Regulations
The commissioner may adopt regulations necessary to implement this act.