A group of employees of employers or members of labor unions may be insured for the benefit of persons other than the employers or unions under a policy issued to the trustees of a fund established by two or more employers in the same industry or by two or more labor unions, or to the trustees of a fund established by one or more employers in the same industry and one or more labor unions or by one or more employers and one or more labor unions whose members are in the same or related occupations or trades, which trustees are deemed to be the policyholder, subject to the following requirements:(1) A policy may not be issued:(a) To insure employees of any employer whose eligibility to participate in the fund as an employer arises out of considerations directly related to the employer being a commercial correspondent or business client or patron of another employer, regardless of whether the other employer is or is not participating in the fund; or
(b) To insure employees of any employer not located in this state, unless the majority of the employers whose employees are to be insured are located in this state, or unless the employer has assumed obligations through a collective bargaining agreement and is participating in the fund either pursuant to those obligations with regard to one or more classes of its employees that are encompassed in the collective bargaining agreement or as a method of providing insurance benefits for other classes of its employees, or unless the policy is issued to the trustees of a fund established by two or more labor unions.
(2)(a) The persons eligible for insurance must be all of the employees of the employers or all of the members of the unions, or all of the members of any class or classes of employees or members determined by conditions pertaining to their employment or to membership in the unions, or both. The policy may provide that the term “employees” includes corporate directors, former employees, or retired employees and the individual proprietor or partners if an employer is an individual proprietor or a partnership.
(b) Except as provided in paragraph (a) as to retired employees, an individual proprietor or partner is not eligible for insurance under the policy as an employee unless he or she is actively engaged in and devotes a substantial part of his or her time to the conduct of the business of the proprietor or partnership. The policy may provide that the term “employees” includes the trustees or their employees, or both, if their duties are principally connected with such trusteeship.
(c) A policy may insure the spouse or dependent children with or without the employee of the employer or member of the union being insured.
(3) The premium for the policy must be paid by the policyholder either wholly from the policyholder’s funds or from funds contributed by the employer or employers of the insured persons or by the union or unions, or by both, or partly from such funds and partly from funds contributed by the insured persons.
(4)(a) The policy must cover at date of issue not less than five persons, other than individual proprietors or partners, from each employer unit unless any of the following apply:1. The policy is issued to the trustees of a fund established by employers who have assumed obligations through a collective bargaining agreement and are participating in the fund either pursuant to those obligations with regard to one or more classes of their employees encompassed in the collective bargaining agreement or as a method of providing insurance benefits for other classes of their employees.
2. The employer unit is a subsidiary corporation of an employer in the group or is an affiliated corporation, proprietorship, or partnership of an employer in the group whose business is under common control with the business of the employer.
3. The policy is issued to the trustees of a fund established by two or more labor unions.
(b) If the fund is established by the members of a group of employers:1. The policy may be issued only if the participating employers constitute at date of issue at least 60 percent of those employer members whose employees are not already covered for group health insurance or if the total number of persons covered at date of issue exceeds 600.
2. The policy may not require that, if a participating employer discontinues membership in such group of employers, the insurance of its employees will cease solely by reason of such discontinuance.
(5) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the insured persons or by the policyholder, employer, or unions.
