Florida Statutes
Part III - Authorization of Insurers and General Requirements (Ss. 624.401-624.491)
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 as defined in 29 C.F.R. part 2510.3-5 which has a constitution or bylaws specifically stating its purpose and which has been organized for purposes in addition to obtaining or providing insurance.
1. A trade association consists of member employers who are in the same trade as recognized by the appropriate licensing agency.
2. An industry association consists of member employers 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 member employers who are of the same profession as recognized by the appropriate licensing agency.
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.

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