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VEBAs and Bona fide associations

Don Levit

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I am curious about any conflicts you may see between these 2 entities.

According to Sec. 2791(d)(3) of the Public Health Service Act, a bona fide association, with respect to health insurance coverage offered in a state, must meet the following requirements:

1. Must have existed for 5 years.

2. Been formed for purposes other than obtaining insurance.

3. A person must not have to prove health to join.

4. Must be a member of the association to obtain insurance.

5. Meets any additional state requirements .

A VEBA is formed in order to obtain insurance for the participants.

Wouldn't this conflict directly with the first 2 requirements of a bona fide association?

Don Levit

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To whom is the PHSA applicable?

What is the definition of "association" under PHSA?

How would a VEBA be used ?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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The PHSA stands for the Public Health Service Act.

I am not sure to whom this applies, although according to a memorandum from the Dept. of Health and Human Services from Sept. 2002, these associations are applicable to the group and individual markets.

I would assume that the people are banded together either individually, or in groups, through some common bond.

The VEBA provides a similar function, if more than one employer is involved.

Through section 501©(9), employers, in the same line of business across 3 contiguous states, can form an "association," expressly for various health and welfare benefits for its participants.

Don Levit

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