Examples of Association Health Plans:

Example 1

Association A offers group health coverage to all members. According to the bylaws of Association A, membership is
subject to the following criteria: All members must be restaurants located in a specified area. Restaurant B, which is
located within the specified area, has several employees with large health claims. Restaurant B applies for membership
in Association A, and is denied membership based on the claims experience of its employees.
In this Example 1, Association A’s exclusion of Restaurant B from Association A discriminates on the basis of claims
history, which is a health factor. Association A does not meet the definition of a bona fide group or association of
employers.



Example 2


Association F offers group health coverage to all plumbers working for plumbing companies in a state, if the plumbing
company employer chooses to join the association. Plumbers employed by a plumbing company on a full-time basis
(which is defined under the terms of the arrangement as regularly working at least 30 hours a week) are eligible for
health coverage without a waiting period. Plumbers employed by a plumbing company on a part-time basis (which is
defined under the terms of the arrangement as regularly working at least 10 hours per week, but less than 30 hours per
week) are eligible for health coverage after a 60-day waiting period.


In this Example 2, making a distinction between part-time versus full-time employment status is a permitted distinction
between similarly-situated individuals provided the distinction is not directed at individuals. Accordingly, the requirement
that plumbers working part time must satisfy a waiting period for coverage is a rule for eligibility that is permissible under
the nondiscrimination rules.

Example 3


Association G sponsors a group health plan, available to all employers doing business in Town H. Association G charges
Business I more for premiums than it charges other members because Business I employs several individuals with
chronic illnesses.


The employees of Business I cannot be treated as a separate group of similarly-situated individuals from other members
based on a health factor of one or more individuals. Therefore, charging Business I more for premiums based on one or
more health factors of the employees of Business I does not satisfy these requirements.

This can be an exciting new option for you or your small business. Contact Cosmo for more details! 732-363-3888.

Posted 12:00 PM

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