Association (Bona Fide)

A bona fide association refers to a group of employers, with a shared professional or regional commonality of interest, that has a formal organizational structure and at least one substantial business purpose unrelated to providing health coverage (or other employee benefits) to the group.

For a complete list of the qualifications of a bona fide association, see “What Is a Bona Fide Association?

In order to sponsor a health plan under the new Department of Labor Regulation, an association must be bona fide. The bona fide criteria fulfills a variety of goals. These goals include sound governance of the association so that the resulting health plan is stable and financially solvent. Another goal of the bona fide criteria is ensuring the employers sponsoring the health plan control the health plan as opposed to control resting in a third party with a potential financial conflict of interest (e.g. an insurer, a health insurance broker or agency, a healthcare provider group, etc.).

Another important goal is promoting nondiscrimination measures within the health plan and rules protecting employer and employee eligibility for the health plan.

Finally, the bona fide association criteria promotes alignment among the employers sponsoring the health plan through their shared commonality of interest. This commonality can be a shared professional category (e.g. an industry or line of work) or the commonality can be a shared geography where the employers all have their principal place of business.

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