Who may form a cooperative?
- Two or more small or large employers may form a standard private purchasing cooperative.
- Two or more small employers may form a small employer health coalition.
- Any person (other than a health carrier) may form a health group cooperative. A health carrier may assist a sponsoring entity in forming a cooperative. A health group cooperative must have at least ten participating employers.
How do I start a cooperative?
All three types of purchasing cooperatives must be formed as a nonprofit corporation. For more information on how to form a nonprofit corporation, you may wish to consult the Texas Secretary of State's web site, at www.sos.state.tx.us/corp/boc.shtml.
Texas Insurance Code Chapter 1501, Subchapter B provides for the formation of Purchasing Cooperatives. Small employers interested in assistance with forming or joining a small employer health coalition should also consider contacting their insurance agent or one of the existing small employer health coalitions listed on this page. Once the cooperative has received a certificate of incorporation or certificate of authority from the secretary of state, the cooperative must file that document and the cooperative's organizational document with the Texas Department of Insurance. The address for filing these documents is: Filings Intake Division, Mail Code 106-1E, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104.
What Type of Cooperative Should I Form?
This decision will be based on the goals for the cooperative and the employers interested in joining. You should consult the description of the types of cooperatives available and review the statutes and regulations associated with each. Things you should consider when forming a cooperative include the potential for growth in the cooperative, the complexities associated with potential growth, interest from a carrier and a sponsoring entity in the cooperative, and carrier requirements, such as participation levels.