(1) A VEBA group may be formed voluntarily by:

(a) employees in an office, department, board, commission, attached-to agency, county, incorporated city or town, school district, unit of the university system, the judicial and legislative branches of state government;

(b) employees in an organizational subdivision of an employer, such as a division, bureau, work unit, institution, etc.;

(c) employees in a bargaining unit; or

(d) other groups of employees defined by an employer that are not designed to provide individual decision-making regarding participation.

(2) No VEBA group may be formed that is fewer than two employees.

(3) No VEBA group may be formed that is only for the benefit of a select group of the highest paid employees, which means compensation in excess of $80,000 and in the top 20% of employees ranked on the basis of compensation paid during the year.

(4) Employees who may be excluded from participation without violating the nondiscrimination provisions include:

(a) employees with less than three years of service;

(b) seasonal and less than half-time employees;

(c) employees covered by a collective bargaining agreement; and

(d) certain nonresident aliens.