§ 4079. Group insurance policies; definitions

Group health insurance is hereby declared to be that form of health insurance covering one or more persons, with or without their dependents, and issued upon the following basis:

(1)(A) Under a policy issued to an employer, who shall be deemed the policyholder, insuring at least one employee of such employer, for the benefit of persons other than the employer. The term “employees,” as used in this section, shall be deemed to include the officers, managers, and employees of the employer; the partners, if the employer is a partnership; the officers, managers, and employees of subsidiary or affiliated corporations of a corporation employer; and the individual proprietors, partners, and employees of individuals and firms, the business of which is controlled by the insured employer through stock ownership, contract, or otherwise. The term “employer,” as used in this section, may be deemed to include any municipal or governmental entity or officer, or the appropriate officer for an unincorporated town or gore or for the Unified Towns and Gores of Essex County, as well as private individuals, partnerships, and corporations.

(B) In accordance with section 3368 of this title, an employer domiciled in a jurisdiction other than Vermont that has more than 25 certificate-holder employees whose principal worksite and domicile is in Vermont and that is defined as a large group in its own jurisdiction and under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1304, as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, may purchase insurance in the large group health insurance market for its Vermont-domiciled certificate-holder employees.

(2)(A) Under a policy issued:

(i) to an association, a trust, or one or more trustees of a fund established by one or more associations otherwise eligible for the issuance of a policy under this subdivision (2) and maintained, directly or indirectly, by one or more associations for the benefit of its members or a contract or plan issued by such an association or trust; or

(ii) by a multiple employer welfare arrangement as defined in the Employee Retirement Income Security Act of 1974, as amended.

(B)(i) The association or associations shall have:

(I) a minimum of 100 persons at the time of incorporation or formation;

(II) been organized and maintained in good faith for purposes other than that of obtaining insurance;

(III) been in active existence for at least one year; and

(IV) a constitution and bylaws that provide that:

(aa) the association or associations hold regular meetings not less than annually to further purposes of the members;

(bb) except for credit unions, the association or associations collect dues or solicit contributions from members; and

(cc) the members constitute a majority of the voting power of the association for all purposes and have representation on the governing board and committees.

(ii)(I) The association or associations shall not be controlled by an insurer, as evidenced by the operation of the association or associations.

(II) The following factors may be used as evidence to determine whether an association is an insurer-operated association; provided, however, that the presence or absence of one or more of these factors shall not serve to limit or be dispositive of such a determination:

(aa) common board members, officers, executives, or employees;

(bb) common ownership of the insurer and the association, or of the association and another eligible group; and

(cc) common use of office space or equipment used by the insurer to transact insurance.

(C) An association’s members shall have a shared or common purpose that is not primarily a business or customer relationship.

(D)(i) A policy issued by an association shall not insure persons other than the members or employees of the association or associations, or employees of members, or all of any class or classes of employees of the association, associations, or members, together, in each case, with the employees’ or members’ dependents, as applicable, for the benefit of persons other than the employee’s employer.

(ii) A policy issued by an association shall insure all eligible persons, except those who reject coverage in writing.

(E) An association shall not use the solicitation of insurance as the primary method of obtaining new members.

(F) 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.

(3)(A) Under a policy issued to a trust, or to one or more trustees of a fund established and maintained, directly or indirectly, by:

(i) two or more employers;

(ii) one or more labor unions or similar employee organizations; or

(iii) one or more employers and one or more labor unions or similar employee organizations.

(B)(i) A policy under this subdivision must be issued to the trust or trustees for the purpose of insuring all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes of employees or members, together, in each case, with the employees’ or members’ dependents, as applicable, for the benefit of persons other than the employers or the unions or organizations.

(ii) A policy issued to a trust shall insure all eligible persons, except those who reject coverage in writing.

(4) Under a policy issued to any other substantially similar group that, in the discretion of the Commissioner, may be subject to the issuance of a group accident and sickness policy or contract. (Amended 1989, No. 106, § 4, eff. Sept. 1, 1989; 1991, No. 52, § 2, eff. June 6, 1991; 2013, No. 79, § 1, eff. Oct. 1, 2013; 2021, No. 137 (Adj. Sess.), § 3, eff. July 1, 2022.)