At the heart of association health plan eligibility is the nature of the association sponsoring the health insurance. Associations can be founded on a membership requirement related to profession or related to geographic region. Membership in a professional association can be based on any of the following shared characteristics:
- Line of business
Membership in a geographically-based association can be established on any of the following regional characteristics shared among the association members’ principal place of business:
- Multi-state metro region
Both professional and regional associations can also use narrower membership definitions if they so choose. For example, a professional association could restrict its membership to cloud-based data storage vendors and a geographically-based association could be restricted to part of a county.
The Health Insurance Portability and Accountability Act prohibits group health plans from discriminating in eligibility, benefits, or premiums against an individual within a group of similarly situated individuals based on a health factor. Health factors, in this context, include diseases, illnesses and other medical conditions, claims experience, medical history, genetic characteristics, or disability. Since association health plans are a form of group health insurance, this prohibition applies to them as well.
While associations are composed of employers, employers can include freelancers, sole-proprietors, and also the self-employed. This opens up associations to the millions in the “gig economy,” where supplemental work done part-time can still qualify for association membership so long as the person meets the other criteria of membership and the association accepts “working owners.” Working owners are individuals who do work on their own, with or without incorporation. Within an association, a working owner is treated simultaneously as an employer who has a say in the control of the association and as an employee who can participate in the association’s health plan. For more information on how freelancers, sole-proprietors, and the self-employed can participate in association health plans, read “What is a “working owner?”