23-4.2:1 - Formation of not-for-profit benefits consortium.
§ 23-4.2:1. Formation of not-for-profit benefits consortium.
A. As used in this section:
"Benefits consortium" means a nonstock corporation formed pursuant tosubsection B.
"Benefits plan" means plans adopted by the board of directors of a benefitsconsortium to provide health and welfare benefits to employees of privateeducational institutions that are members of the benefits consortium andtheir dependents.
"Employee welfare benefit plan" has the meaning set forth in § 3(1) of theEmployee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(1).
"Private educational institution" means a nonpublic, nonprofit college oruniversity that is accredited by a nationally recognized regionalaccreditation body or by the Board of Governors of the American BarAssociation; and
1. Has its primary campus located within the Commonwealth;
2. Is owned and operated by a corporation, trust, association or religiousinstitution or any subsidiary or affiliate of any such entity;
3. Has been in existence as a private educational institution in theCommonwealth for at least 10 years;
4. Is a member in good standing of the sponsoring association; and
5. Otherwise qualifies as an institution of higher education as defined in §23-276.1.
"Sponsoring association" means an association of private educationalinstitutions that is incorporated under the laws of the Commonwealth, hasbeen in existence for at least 20 years and exists for purposes other thanarranging for or providing health and welfare benefits to members.
B. Notwithstanding any provision of law to the contrary, five or more privateeducational institutions may form a not-for-profit benefits consortium forthe purpose of establishing a self-funded employee welfare benefit plan byacting as incorporators of a nonstock corporation pursuant to the VirginiaNonstock Corporation Act (§ 13.1-801 et seq.). In addition to provisionsrequired or permitted by the Virginia Nonstock Corporation Act, theorganizational documents of the benefits consortium shall:
1. Limit membership in the benefits consortium to private educationalinstitutions;
2. Set forth the name and address of each of the initial members of thecorporation;
3. Set forth requirements for the admission of additional private educationalinstitutions to the corporation and the procedure for admission of additionalmembers;
4. Require that each initial member of the corporation and each additionalprivate educational institution admitted to membership agree to remain amember of the benefits consortium for a period of at least five years fromthe date the consortium begins operations or the date of its admission tomembership, as the case may be;
5. Provide that the number of directors of the corporation shall be equal tothe number of members and include one person employed by each member and mayprovide for an additional director who shall be an employee of the sponsoringassociation; however, two individuals affiliated with the same member may notserve on the board of directors at the same time;
6. Provide that the board of directors shall have exclusive fiscal controlover and be responsible for the operation of the benefits plan and shallgovern the benefits consortium in accordance with the fiduciary dutiesdefined in the federal Employee Retirement Income Security Act of 1974;
7. Vest in the board of directors the power to make and collect specialassessments against members and, if any assessment is not timely paid, toenforce collection of same in the name of the corporation;
8. State the purposes of the benefits consortium, including the types ofrisks to be shared by its members;
9. Provide that each member shall be liable for its allocated share of theliabilities of the benefits consortium as determined by the board ofdirectors;
10. Require that the benefits consortium purchase and maintain (i) a bondthat satisfies the requirements of the Employee Retirement Income SecurityAct of 1974, (ii) fiduciary liability insurance, and (iii) a policy orpolicies of excess insurance with a retention level determined in accordancewith sound actuarial principles from an insurer licensed to transact thebusiness of insurance in the Commonwealth;
11. Require that the benefits consortium be audited annually by anindependent certified public accountant engaged by the board of directors;
12. Prohibit the payment of commissions or other remuneration to any personon account of the enrollment of persons in any benefit plan offered by thebenefits consortium; and
13. Not include in the name of the corporation the words "insurance,""insurer," "underwriter," "mutual" or any other word or term orcombination of words or terms that is uniquely descriptive of an insurancecompany or insurance business unless the context of the remaining words orterms clearly indicate that the corporation is not an insurance company andis not carrying on the business of insurance.
C. A benefits consortium shall establish and maintain reserves determined inaccordance with sound actuarial principles. Capital may be maintained in theform of an irrevocable letter of credit issued to the benefits consortium bya state or national bank authorized to engage in the banking business in theCommonwealth.
D. Except to the extent specifically provided in this section, a benefitsconsortium organized under and operated in conformity with this section, solong as it remains in good standing under the Virginia Nonstock CorporationAct (§ 13.1-801 et seq.) and otherwise meets the requirements set forth inthis section, shall be governed solely by and be subject only to theprovisions of the Employee Retirement Income Security Act of 1974 asimplemented by the United States Department of Labor, shall be exempt fromall state taxation, and shall not otherwise be subject to the provisions ofTitle 38.2, including regulation as a multiple employer welfare arrangement.
(2007, c. 136.)