Association Health Plans (Small Business Health Plans)

For small businesses that have struggled under the Affordable Care Act, a new rule could provide relief. It marks a new era in the world of self-funded plans.

In early January, the Trump administration introduced a proposal to expand the health insurance options afforded small employers. The proposed rule would allow those employers to participate in Association Health Plans, also called Small Business Health Plans. The Department of Labor is expected to finalize the rule soon.

The goal of allowing Association Health Plans is to help small businesses that might not otherwise be able to afford employee health coverage to band together and increase their bargaining power. AHPs would also be open to sole proprietors and their families. Individual employers wouldn’t lose any autonomy in their quest to secure high-quality insurance for their employees.

Like in other large group plans, the benefit of an AHP is that it would give employers access to more plan options and lower rates than they have individually. Large groups have more leverage when negotiating with carriers. Sharing plan administration also means lower costs and less work for employers. AHPs would not be allowed to deny employees coverage or charge certain employees higher premiums based on health factors.

Under the proposed rule, groups would be free to form themselves based on geography or industry. Theoretically, a particular plan might be open to certain employers operating in the same city or state, or might be open to nationwide members of a specific industry.

Some analysts say that the widespread formation of AHPs could cause millions of young and healthy people to leave their individual and small group plans in favor of joining AHPs, potentially driving up premiums for those who stay behind in those plans.

While the initial the roll-out of AHPs will be fully funded plans, we expect to see the addition of self-funded plan options in the coming years.  We don’t yet know how the rise of Association Health Plans will affect employers in New England, or what provisions or restrictions will end up in the final version of the rule. But we’ll be watching closely in the coming weeks and months and continuing to help our clients get the comprehensive stop loss coverage they need at competitive rates. Contact us today with any questions.