2023 Florida Statutes › Title XXXVII - Insurance › Chapter 624 - Insurance Code: Administration and General Provisions › Part III - Authorization of Insurers and General Requirements (Ss. 624.401-624.491) › 624.438 - General eligibility.

624.438 General eligibility.—
(1) To meet the requirements for issuance of a certificate of authority and to maintain a multiple-employer welfare arrangement, an arrangement:
(a) Must be nonprofit.
(b) Must be established by a trade association, industry association, professional association of employers or professionals, or a bona fide group that has a constitution or bylaws specifically stating its purpose and that has been organized for purposes in addition to obtaining or providing insurance.
1. A trade association consists of employer members who are in the same trade as recognized by the appropriate licensing agency.
2. An industry association consists of employer members who are in the same major group code, as defined by the Standard Industrial Classification Manual issued by the federal Office of Management and Budget, unless restricted by subparagraph 1. or subparagraph 3.
3. A professional association consists of employer members who are of the same profession as recognized by the appropriate licensing agency.
4. A bona fide group is a group or association of employers which meets the following requirements:
a. The primary purpose of the group or association may be to offer and provide health coverage to its employer members and their employees. However, the group or association must also have at least one substantial business purpose unrelated to such primary purpose. For purposes of this sub-subparagraph, a substantial business purpose is deemed to exist if the group or association would be a viable entity in the absence of sponsoring an employee benefit plan. A substantial business purpose includes promoting common business interests in a given trade or employer community and is not required to be a for-profit activity.
b. Each employer member of the group or association which participates in the group health plan is a person acting directly as an employer of at least one employee who is a participant covered under the plan.
c. The group or association has a formal organizational structure with a governing body and has bylaws or other similar indications of formality.
d. The functions and activities of the group or association are controlled by its employer members, and the group’s or association’s employer members that participate in the group health plan control the plan. Control must be present both in form and in substance.
e. The employer members have a principal place of business in the same region that does not exceed the boundaries of a single state or metropolitan area, even if the metropolitan area includes more than one state.
f. The group or association does not make health coverage through the group’s or association’s group health plan available to any person other than:
(I) An employee of a current employer member of the group or association;
(II) A former employee of a current employer member of the group or association who became eligible for coverage under the group health plan when the former employee was an employee of the employer; or
(III) A beneficiary, such as a spouse or dependent child, of an individual described in sub-sub-subparagraph (I) or sub-sub-subparagraph (II).
g. The group or association and the health coverage offered by the group or association comply with the nondiscrimination provisions of s. 627.6699.
h. The group or association is not a health insurance issuer as defined in s. 733(b)(2) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. s. 1191b(b)(2), or owned or controlled by such a health insurance issuer or by a subsidiary or affiliate of such a health insurance issuer, other than to the extent such entities participate in the group or association in their capacity as employer members of the group or association.
The requirements of this paragraph do not apply to an arrangement licensed before April 1, 1995, regardless of the nature of its business. However, an arrangement exempt from the requirements of this paragraph may not expand the nature of its business beyond that set forth in the articles of incorporation of its sponsoring association as of April 1, 1995, except as authorized in this paragraph.
(c) Must be operated pursuant to a trust agreement by a board of trustees which shall have complete fiscal control over the arrangement and which shall be responsible for all operations of the arrangement. The trustees selected shall be owners, partners, officers, directors, or employees of one or more employers in the arrangement. A trustee may not be an owner, officer, or employee of the administrator or service company of the arrangement. The trustees shall have the authority to approve applications of association members for participation in the arrangement and to contract with an authorized administrator or service company to administer the day-to-day affairs of the arrangement.
(d) Must be neither offered nor advertised to the public generally.
(e) Must be offered only to eligible employers who have been members of the sponsoring association for at least 2 consecutive months. The requirements of this paragraph shall not apply to an arrangement that has been operating under a certificate for at least 3 years.
(f) Must be operated in accordance with sound actuarial principles.
(g) May, notwithstanding the provisions of paragraph (e), be offered to eligible physician employers. An eligible physician employer may participate in an arrangement’s employer health benefit plans without being a member of the arrangement’s sponsoring association if:
1. The physician has more than one employee.
2. The physician employer enters into a contract to render medical services to the arrangement’s plan participants.
3. The physician employer agrees to waive any fee due from the arrangement in the event that the arrangement becomes insolvent.
4. The physician employer agrees to be subject to the same assessments and surcharges as apply to arrangement members.
(2) The arrangement shall issue to each covered employee a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided. This evidence of the benefits and coverages provided shall contain in boldfaced print and in at least 12-point type in a conspicuous location, the following statement: “The benefits and coverages described herein are provided through a trust fund established and funded by a group of employers. It is not an insurance company and it is not protected by a guaranty fund in the event of insolvency. Participating employers are assessable for any losses incurred by the trust.”
(3) Each arrangement shall maintain specific excess insurance with a retention level determined in accordance with s. 624.439(6) and sound actuarial principles.
(4) Each arrangement shall establish and maintain appropriate loss reserves determined in accordance with sound actuarial principles.
(5) The office shall not grant or continue a certificate of authority for any arrangement if the office determines any trustee, manager, or administrator to be incompetent, untrustworthy, or so lacking in insurance expertise as to make the operations of the arrangement hazardous to potential and existing insureds; that any trustee, manager, or administrator has been found guilty of, or has pled guilty or no contest to a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country, whether or not a judgment or conviction has been entered; that any trustee, manager, or administrator has had any type of insurance license revoked in this or any other state; or that the business operations of the arrangement are or have been marked, to the detriment of the employers participating in the arrangement, of persons receiving benefits from the arrangement, or of creditors or the public, by the improper manipulation of assets, accounts, or specific excess insurance or by bad faith.
(6) To qualify for and retain approval to transact business, an arrangement shall make all contracts with administrators or service companies available for inspection by the office initially, and annually thereafter upon reasonable notice.
(7) Failure to maintain compliance with the eligibility requirements established by this section and the filing requirements of ss. 624.33(1) and 624.439 shall be grounds for suspension or revocation of the certificate of authority of an arrangement.
History.—s. 3, ch. 83-203; s. 3, ch. 84-94; s. 3, ch. 85-212; ss. 25, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 94-133; s. 2, ch. 95-340; s. 810, ch. 2003-261; s. 1, ch. 2019-129; s. 1, ch. 2023-212.