An association seeks small employer health coverage in New York for its member businesses, which vary in size. Under Reg 145, how is the small-employer employee-count test applied to association members?

Why D is correct

Under Reg 145 (11 NYCRR Part 360 (Reg 145)), when association members purchase small employer coverage, the employee-count test is applied to each member group separately: each member business must be within the small-employer range of no more than 50 employees. The association's total workforce is not aggregated, so a large association can still deliver small-group access to its genuinely small member firms.

Why the other options are wrong

• A) The association's combined headcount is irrelevant; each member group is tested individually against the size limit.
• B) At least 50 reverses the rule; member groups must have no more than 50 employees, not at least that many.
• C) Averaging the counts of all member businesses is not permitted; the test looks at each member group's own employee count.

Memory hook

Associations: each member firm counts its own heads, up to 50.

Why A is correct

Under the New York Insurance Law and the Department of Financial Services' small-group rules, when accident and health coverage is provided through an association, eligibility is tested member group by member group: each association member group counts as a small group only if it employs no more than 50 employees. This group-by-group test prevents large employers from qualifying for the community-rated small-group market merely by joining an association.

Why the other options are wrong

• B) Association membership does not waive the size limit; every member group must independently satisfy the small-group employee ceiling.
• C) Associations are not shut out of the small-group market; member groups that meet the size test may participate through the association.
• D) The employee test is applied to each member group, not to the association's aggregate headcount across all members.

Memory hook

Association coverage counts heads member by member: each group must stay at 50 or fewer employees.