Tennessee § 56-26-204 - Pooling of liabilities to self-insurer.

§ 56-26-204. Pooling of liabilities to self-insurer.

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: Have a constitution or bylaws; Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis; and 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. 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: Have a charter or bylaws; Have members who support the coalition by regular payment of dues on an annual, semiannual, quarterly, or monthly basis; and 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. 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). 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: Have a constitution or bylaws; Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis; and 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. 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: Have a constitution or bylaws; Have members that support the association by regular payment of dues on an annual, semiannual, quarterly, or monthly basis; 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; Adhere to any multi-state compact applicable to its establishment and operation; and Establish eligibility standards for membership in the association, subject to the requirements of this chapter. The commissioner of commerce and insurance has the authority to 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, such rules must not prohibit or deter any association lawfully formed under the laws of this state or any other state from offering health insurance coverage to its members within this state 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. Pools created under this section are 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. 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. Acts 2000, ch. 681, §§ 1, 2; 2001, ch. 164, § 1; 2007, ch. 159, § 1; 2007, ch. 496, § 1; 2020, ch. 515, § 4. Compiler's Notes. Acts 2000, ch. 681, § 3 provided that implementation of § 56-26-204 shall be subject to the funding being provided in the General Appropriations Act. Funding was provided in Acts 2000, ch. 994. Acts 2001, ch. 164, § 2, provided that nothing in subdivision (a)(2) shall allow nonprofit business coalitions for health to pool their liabilities for the purposes of qualifying as self-insurers for dental or workers' compensation insurance. Amendments. The 2020 amendment rewrote this section, which read: “(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 shall have been in active existence in Tennessee for at least five (5) years and the association shall: “(A) Have a constitution or bylaws; “(B) Have members that support the association by regular payment of dues on an annual, semi-annual, quarterly or monthly basis; and “(C) Be created in good faith for a purpose other than that of creating accident and sickness self-insurer pools. “(2)(A) Ten (10) or more employers of the same nonprofit business coalition for health, organized in Tennessee, 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 shall: “(i) Have a charter or bylaws; “(ii) Have members who support the organization by regular payment of dues on an annual, semiannual, quarterly or monthly basis; “(iii) Be created in good faith for a purpose other than that of creating accident and sickness self-insurer pools; and “(iv) Otherwise comply with the requirements of a “bona fide association” as defined in § 56-7-2802 . “(B) A nonprofit business coalition for health shall 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). “(b) The commissioner of commerce and insurance has the authority to promulgate rules and regulations 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. To the extent deemed necessary by the commissioner, each employer member of the approved group shall be classified as a self-insurer as otherwise provided in this chapter. “(c) Pools created under this section shall be 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, the association having been in existence for twenty-five (25) years or more, shall be exempt from taxation under chapter 4, part 2 of this title.” Effective Dates. Acts 2020, ch. 515, § 5. July 1, 2020.