A client of mine provides retirement and investment services to companies and high-net-worth individuals. He asked me if they could set up a group health plan that could include some of these self-employed or retired individuals -- possibly under the guise of an "association" or some other collection of people. I told him that while this is not my area of expertise, it is my understanding that a group of people cannot form an alliance solely for the purpose of buying insurance.

Does anyone know if there is a way for a group of people to buy a group health plan. Especially if the group collectively has no major health problems. Can they enjoy the cost savings of "spreading the risk" by forming a group?

If not, what reasoning or regulations support the inability to do so?

Thanks!!!

Your particular state law definitions of "group" and "association" will govern. I doubt that there are any states that allow a "group" or "association" for this purpose.

It seems that this "group" would be too small to enjoy any "spreading of risk" and derive any savings.

There are some existing "associations" and "group" plans being sold by some of the large TPAs which might suit this purpose. Try Benefitsmall.com and look in publications such as Broker World and Insurance Selling. Also contact your local NAHU office for regional providers and recommendations.

The problem you're going to have is finding a medical carrier that is going to write this business. In general, no medical carrier will insure a fully-insured association plan. The risk of adverse selection and a death spiral down the road is just too great.