Typically, states will permit the grouping of two or more small employers in order to obtain group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

• A. Welfare association
• B. Trust
• C. Consortium
• D. Alliance

Answer: (B)

Pooling two or more small employers to secure group health insurance is done through a multiple employer trust. A trust acts as the plan sponsor, collecting premiums from the member employers and administering the plan on behalf of all participants. This fiduciary structure allows the pool of insured individuals to spread risk across a larger group, which typically leads to better negotiated rates and more efficient administration.

Compared with looser terms like welfare association, consortium, or alliance, a trust provides a formal mechanism for managing funds, paying claims, and overseeing the plan for multiple employers, which is why it’s the most accurate description of this arrangement. In short, the grouping functions as a trust that pools resources to obtain favorable health coverage terms.