Why are Association Plans that provide health benefits to their members regulated by the state?

Association Plans that provide health benefits to their members are subject to state regulation primarily because they are insured by an authorized insurer. This regulatory oversight is crucial because it ensures that the plans adhere to established state laws and standards designed to protect policyholders. When a plan is insured by an authorized insurer, it must comply with the state's insurance regulations, which are in place to promote financial stability, fair treatment of consumers, and sufficient coverage.

State regulation also includes ensuring that the plans maintain solvency and are capable of meeting their financial obligations to enrollees. This is essential in safeguarding consumers from potential losses and ensuring the availability of necessary health services. By being insured by a licensed insurer, these plans fall under the scrutiny of state authorities that monitor their operations, allowing for the enforcement of consumer protections.

In contrast, options that refer to the non-profit nature of the operation, specific disease coverage, or administration by health departments do not directly pertain to the insurance regulation framework enacted by states. While these aspects may impact how the plans function or are perceived, they do not serve as the primary reason for the requirement of state regulation.