HCSMs are organizations through which members share medical expenses among themselves. But HCSM plans must meet strict requirements in order to avoid being regulated as insurance products. For example, under federal law, an HCSM must have been in existence with members continually sharing health care costs since 1999, and under Kentucky law, all members of an HCSM must be members of the same denomination or religion. Since its inception, Aliera failed to comply with these requirements.
With this judgment, it is now established that despite the claims by Aliera that its health plans were “not insurance,” they were in fact insurance products as a matter of Kentucky law. Further, it is also established that the health insurance policies Aliera sold to customers as cheaper alternatives to traditional health insurance coverage did not comply with important requirements of Kentucky and federal insurance law, including requirements designed to protect consumers and ensure adequate funds were available to cover health care expenses.