Concerns about the new, improved association health plans (AHPs) notwithstanding, they are showing promise to be just what the doctor ordered for small businesses, sole proprietors and the self-employed: Big business-style benefits that don’t break the bank to provide.
Today’s iteration of AHPs resulted from last summer’s updated U.S. Department of Labor rule allowing small businesses sharing a professional similarity or business region to form a group to facilitate offering the kinds of enriched health benefits typically the province of big businesses. Some 4 million could be covered by the new AHPs over time, the labor department estimates.
The traction so far speaks to their potential, according to recent AssociationHealthPlans.com data:
- 71 percent of new AHPS are by regional associations; 80 percent of sponsors are chambers of commerce.
- 86 percent are fully insured.
- Maximum savings claims among self-funded AHPs averaged 29 percent versus 23 percent for fully insured plans. (However, claims will vary considerably vis-a-vis non-AHP plans.)
- 43 percent of new AHPs are available to the self-employed and sole proprietors.
- Half of the new plans include a medical savings account option.
Tennessee REALTORS®, with 21 local chapters and 29,000 members – a mix of 1099 contractors, W2 employees and sole proprietors/partners and owners – recently launched one of the first professional association AHPs under the new rule. Its rich program of benefits includes three medical plan options, dental and vision, and wellness solutions, along with non-medical benefits and competitive premiums. Its members are among those the revised AHP is geared to.
AHPs also are helpful in non-competitive markets like Nebraska – which has a single carrier on the ACA exchange whose 2019 premium on its second lowest cost silver plan jumped 9.1 percent before subsidies. The farmer-owned cooperative Land O’Lakes AHP is crossing state lines, thanks to the new rule. Its Nebraska members can save 25 percent to 35 percent over exchange rates, and 12 percent over comparable plans in Minnesota.
Should the opportunity to join an AHP present itself, it’s important to read the fine print before you do anything, as no plan, structure or lineup of benefits and fees are going to be equal. Three particular areas to investigate include:
- AHP membership parameters
- Who will be invited to join?
- What are the terms for adding new members?
- What are the rules over leaving the AHP pool?
- Health plan options and benefits covered
- What specific health plan options are included?
- How does this affect your competitive advantage in recruiting and retaining employees?
- How does it come out on competitive benchmark comparisons? In balancing benefits and costs, for example, weigh things like the menu of services for the cost, out-of-pocket maximums and how the pharmacy benefit is structured. Customer service is key, too, like turnaround on claims.
- Added costs of administration
- What’s the cost to administer an AHP?
- Who will be responsible for paying this cost?
- Who can counsel you to navigate and understand costs/fees?
The new AHPs are still a work in progress. But when they bring together all the elements that characterize best-of-class health plans – not just price, but value in terms of holistic and forward-thinking benefits and services – they may give a positive boost to our pressured healthcare system.
HUB International’s Employee Benefits specialists are ready to help with health and other benefits that make employers stand out.