Types of Groups
Various types of organizations can sponsor group health insurance. Understanding the different group structures helps in serving employers and organizations.
Employer Groups
The most common type of group coverage:
Single Employer Groups
| Feature | Details |
|---|---|
| Sponsor | One employer |
| Eligibility | Employees of that employer |
| Coverage | Medical, dental, vision, life, disability |
| Funding | Fully insured or self-funded |
Common Employer Types
| Employer Type | Characteristics |
|---|---|
| Large corporations | Often self-funded, broad benefits |
| Small businesses | Typically fully insured |
| Government entities | Often own insurance programs |
| Nonprofit organizations | Similar to for-profit rules |
Association Groups
Trade and Professional Associations
| Feature | Details |
|---|---|
| Members | Businesses in same industry/profession |
| Examples | Medical societies, bar associations, trade groups |
| Underwriting | May be group-rated or individually underwritten |
| Regulation | Varies by state |
Association Health Plans (AHPs)
| Feature | Details |
|---|---|
| Purpose | Allow small employers to band together |
| Benefits | Access to large group rates/rules |
| Regulation | Subject to federal and state rules |
| Requirements | Genuine association with common interest |
Note: AHP rules have changed over time. Always check current regulations.
Multiple Employer Welfare Arrangements (MEWAs)
MEWAs pool multiple employers to provide health benefits:
MEWA Characteristics
| Feature | Details |
|---|---|
| Structure | Multiple unrelated employers |
| Purpose | Achieve economies of scale |
| Regulation | Subject to ERISA and state insurance laws |
| Risk | Participants share risk |
Fully Insured vs. Self-Funded MEWAs
| Type | Regulation |
|---|---|
| Fully insured MEWA | State insurance laws apply fully |
| Self-funded MEWA | Subject to more state regulation than single-employer plans |
Exam Tip: Unlike single-employer self-funded plans, self-funded MEWAs are subject to state insurance regulation.
Taft-Hartley Trusts (Multi-Employer Plans)
Also called jointly administered trusts or union welfare funds:
Taft-Hartley Characteristics
| Feature | Details |
|---|---|
| Origin | Taft-Hartley Act of 1947 |
| Governance | Joint union-management trustees |
| Participants | Employees of multiple employers in same union |
| Industries | Construction, entertainment, transportation |
| Portability | Coverage moves with union membership |
Taft-Hartley Administration
| Aspect | Requirement |
|---|---|
| Board of trustees | Equal union and employer representation |
| Funding | Employer contributions per collective bargaining |
| Benefits | Determined by trust agreement |
| Regulation | ERISA, DOL oversight |
Example Industries
| Industry | Reason for Taft-Hartley |
|---|---|
| Construction | Workers move between employers |
| Entertainment | Project-based employment |
| Trucking | Frequent employer changes |
| Healthcare | Multiple facilities, same union |
Labor Union Groups
| Feature | Details |
|---|---|
| Sponsor | Labor union |
| Members | Union members and families |
| Negotiation | Benefits negotiated in collective bargaining |
| Administration | Union or third-party administrator |
Franchise Groups
| Feature | Details |
|---|---|
| Structure | Franchisor sponsors plan for franchisees |
| Participation | Individual franchisee locations |
| Benefits | Purchasing power of larger group |
| Underwriting | May vary by franchisee characteristics |
Creditor-Debtor Groups
| Feature | Details |
|---|---|
| Coverage | Life/disability on borrowers |
| Purpose | Protect lender if borrower dies/disabled |
| Premium | Often paid by or included in loan |
| Beneficiary | Creditor (lender) |
Affinity Groups
| Feature | Details |
|---|---|
| Members | People with common interest (not employment) |
| Examples | Alumni associations, credit unions |
| Underwriting | May be individually underwritten |
| Regulation | Subject to state rules |
Comparison of Group Types
| Group Type | Sponsor | Eligibility | Regulation |
|---|---|---|---|
| Single employer | One employer | Employees | ERISA (if private) |
| Association | Trade group | Member employers' employees | State and federal |
| MEWA | Multiple employers | Employees of participating employers | ERISA + state |
| Taft-Hartley | Union/employers | Union members | ERISA, DOL |
| Affinity | Non-employer org | Members | State |
Self-Funded (Self-Insured) Plans
Many larger employers choose to self-fund their health plans:
Self-Funding Characteristics
| Feature | Details |
|---|---|
| Risk | Employer assumes claims risk |
| Claims payment | Employer pays claims directly |
| Stop-loss insurance | Protects against catastrophic claims |
| Administration | Often by TPA (Third-Party Administrator) |
| Regulation | ERISA (exempt from state insurance laws) |
Self-Funding Advantages
| Advantage | Benefit |
|---|---|
| State law exemption | ERISA preemption |
| Cash flow | No premiums; pay claims as incurred |
| Customization | Design benefits to meet needs |
| Transparency | Know exactly where money goes |
| Savings | No insurer profit margin |
Stop-Loss Insurance
| Type | Protection |
|---|---|
| Specific stop-loss | Per-person claim limit |
| Aggregate stop-loss | Total claims limit |
Example:
- Specific stop-loss: $100,000 per person
- Aggregate stop-loss: 125% of expected claims
- Employer pays claims up to these limits
- Insurer pays amounts exceeding limits
Test Your Knowledge
What is the key characteristic that distinguishes a Taft-Hartley trust from a single employer group health plan?
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Test Your Knowledge
How does regulation differ between a self-funded MEWA and a self-funded single-employer plan?
A
B
C
D
Test Your Knowledge
What is the purpose of stop-loss insurance in a self-funded health plan?
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B
C
D
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23.3 Eligibility and Enrollment
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