Can similar organizations band together to form a group which can then get a group health plan for all employees?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 25, 2010

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Insurance Question from Phoenix, AZ

Asked on 06/25/2010

Can similar organizations band together to form a group which can then get a group health plan for all employees? NULL

Answer given on June 29, 2010

What you are describing sounds like an association plan. 

There are pros and cons to doing so; less regulation, etc.

Currently, I believe 46 states allow you to go thorugh the process of organizing and declaring yourself an "association" for the purpose of buying "group health insurance". Most people who are self employed and married can get "group health insurance" without joining an association plan.  Small group is guarantee issue.

But, starting an associatiin is not always as easy as it sounds.  There are rules and stipulations you’ll have to abide by, such as a mininum number of participants, etc.

From the NAIC:

______________________________________________________________________________________In  National Association of Insurance Commissioners (NAIC) has provided a model to guide states’ oversight of the association group market. The NAIC guidelines assert:

  • “The association or associations shall have at the outset a minimum of 100 persons and have been organized and maintained in good faith for purposes other than that of obtaining insurance;
  • “Shall have been in active existence for at least one year;
  • “And shall have a constitution and by-laws that provide that (i) the association or associations hold regular meetings …, (ii) … collect dues or solicit contributions from members, and (iii) the members have voting privileges and representation on the governing board and committees.”



But, since the new insurance reform bill that was passed, I think this option will soon go the way of the dodo, along with group health insurance. 

When everyone is allowed to get their OWN coverage, guarantee issue, group health insurance will be a thing of the past, as will association plans.  Employers can decide how much, if any, they will pay towards an employee’s insurance if they have their own, tax free.  They are already able to do this… have been since the 1950’s ( Section 105 ).


Good luck!

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