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Tennessee Code Title 56. Insurance § 56-26-204

Current as of January 02, 2024 | Updated by Findlaw Staff

(a)(1) Two (2) or more member employers of the same trade or professional organization with at least five hundred (500) covered lives may enter into an agreement to pool their liabilities under this chapter for the purpose of qualifying as self-insurers.  The trade or professional association must:

(A) Have a constitution or bylaws;

(B) Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis;  and

(C) Have at least one (1) substantial business purpose unrelated to offering and providing health insurance coverage or other employee benefits to its employer members and their employees.  However, offering and providing such coverage or benefits may serve as the professional association's primary purpose.

(2)(A) Ten (10) or more employers of the same nonprofit business coalition for health, organized in this state, may enter into an agreement with the coalition to pool their liabilities under this chapter for the purpose of qualifying as self-insurers.  The business coalition must:

(i) Have a charter or bylaws;

(ii) Have members who support the coalition by regular payment of dues on an annual, semiannual, quarterly, or monthly basis;  and

(iii) Have at least one (1) substantial business purpose unrelated to offering and providing health insurance coverage or other employee benefits to its employer members and their employees.  However, offering and providing such coverage or benefits may serve as the coalition's primary purpose.

(B) A nonprofit business coalition for health does not qualify as a self-insurer under this subdivision (a)(2) until the department of commerce and insurance has promulgated the rules authorized by subsection (b).

(3) Two (2) or more member employers with at least five hundred (500) covered lives may enter into an agreement to pool their liabilities under this chapter for the purpose of qualifying as self-insurers if the employers are members of the same association that has a principal office within this state.  The association must:

(A) Have a constitution or bylaws;

(B) Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis;  and

(C) Have at least one (1) substantial business purpose unrelated to offering and providing health insurance coverage or other employee benefits to its employer members and their employees.  However, offering and providing such coverage or benefits may serve as the association's primary purpose.

(4) Two (2) or more member employers with at least five hundred (500) covered lives may enter into an agreement to pool their liabilities under this chapter for the purpose of qualifying as self-insurers if the employers are members of the same association that has a principal office within a municipality with a boundary that lies at least partially within this state.  The association must:

(A) Have a constitution or bylaws;

(B) Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis;

(C) Have at least one (1) substantial business purpose unrelated to offering and providing health insurance coverage or other employee benefits to its employer members and their employees.  However, offering and providing such coverage or benefits may serve as the association's primary purpose;

(D) Adhere to any multi-state compact applicable to its establishment and operation;  and

(E) Establish eligibility standards for membership in the association, subject to the requirements of this chapter.

(5)(A) As used in this subdivision (a)(5):

(i) “Bank”:

(a) Means an entity chartered pursuant to the laws of this state, the laws of a contiguous state, or the laws of the United States, or in the process of organizing to seek a charter, and authorized, or to be authorized, to conduct business as a savings and loan, savings bank, trust company, commercial bank, or other institution, and which is a member or affiliate member of a trade or professional organization organized to provide advocacy, leadership, and support for these entities;  provided, that the entity's participation is authorized under Internal Revenue Code § 501(c)(9)(26 U.S.C. § 501(c)(9));  and

(b) Includes the entity's parent, affiliate, or subsidiary, which is under common control within the meaning of Internal Revenue Code § 414 (26 U.S.C. § 414);

(ii) “Commissioner” means the commissioner of commerce and insurance;

(iii) “Multiple employer welfare arrangement” has the same meaning as defined in 29 U.S.C. § 1002(40);  and

(iv) “Plan-sponsoring organization” means an association that:

(a) Sponsors a multiple employer welfare arrangement comprised only of banks;

(b) Has been actively in existence for at least five (5) years;

(c) Has at least one (1) substantial business purpose unrelated to offering and providing health insurance coverage or other employee benefits to its employer members and their employees;  provided, that offering and providing such coverage or benefits may serve as the association's primary purpose;

(d) Does not condition membership in the association on any health status-related factor relating to an individual, including an employee of an employer or a dependent of an employee;

(e) Makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to the members or individuals eligible for coverage through a member;  and

(f) Does not make health insurance coverage offered through the association available other than in connection with a member of the association.

(B) A foreign multiple employer welfare arrangement is deemed a domestic multiple employer welfare arrangement if the foreign multiple employer welfare arrangement:

(i) Is comprised only of banks together with their plan-sponsoring organization, and their respective employees;

(ii) Is duly licensed as a multiple employer welfare arrangement by the regulatory agency having jurisdiction over the regulation of insurance in a state physically contiguous to this state;

(iii) Has no more than two thousand five hundred (2,500) residents of this state who are employees of its member banks enrolled in or receiving health, sickness, and accident benefits as insureds, members, enrollees, or subscribers of the multiple employer welfare arrangement;

(iv) Is subject to adequate regulatory oversight by the contiguous domiciliary state, including, but not limited to, solvency examination authority and actuarially sound reserve-adequacy requirements, as determined in the commissioner's sole discretion;  and

(v) Applies for and receives a certificate of authority from the commissioner to operate as a foreign multiple employer welfare arrangement.

(C) The commissioner may, in the commissioner's sole discretion, waive any portion of this chapter, and any portion of chapter 7 of this title, for a qualifying multiple employer welfare arrangement upon a determination that the multiple employer welfare arrangement is subject to reasonable and adequate oversight by the regulatory agency having jurisdiction over the regulation of insurance in the multiple employer welfare arrangement's domicile.

(b) The commissioner may promulgate rules in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, as deemed necessary to provide for the solvency, administration, examination, and enforcement of the pooling agreements.  However, the rules must not prohibit or deter any association lawfully formed under the laws of this state or another state from offering health insurance coverage to its members within this state, including through a multiple employer welfare arrangement, if the health insurance coverage complies with federal law.  To the extent deemed necessary by the commissioner, each employer member of the approved group must be classified as a self-insurer as otherwise provided in this chapter.

(c) A pool created or deemed domestic under this section is subject to taxation under chapter 4 of this title, filing and approval under this chapter, and laws for protection of policyholders under chapter 7 of this title.

(d) Notwithstanding any law to the contrary, a pool created under this section by an association of private, not-for-profit educational institutions, whose association having been in existence for twenty-five (25) years or more, is exempt from taxation under chapter 4, part 2 of this title.

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Cite this article: FindLaw.com - Tennessee Code Title 56. Insurance § 56-26-204 - last updated January 02, 2024 | https://codes.findlaw.com/tn/title-56-insurance/tn-code-sect-56-26-204/

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