On June 19, 2018, The Department of Labor issued new guidelines allowing small employers to band together and buy group health insurance. This is an important decision for business owners like realtors, lyft drivers, independent property and causality agents and more.
Some groups could buy association health plans before this ruling, but only on a limited basis. Associations could not be formed for the sole purpose of buy health insurance. This ruling changes that!
While we think this ruling will have a dramatic impact on the marketplace with the Congressional Budget Office predicting four million Americans will enroll in these plans, it won’t happen overnight. Carriers are just starting to formulate how they will underwrite and offer these plans; some, like BlueCross and BlueShield of Kansas City are ahead of the curve and have already begun the process, while others like Aetna and United are just beginning to explore the opportunity.
There will be “fake news” about these plans; there are two things that you need to understand:
- New associations will not be able to price based on past health data
- There will be no pre-existing conditions which would keep people from being allowed to enroll in these plans.
If you are an employer who belongs to an organization and are interested in learning more about association plans, here are some things that you will need to know before you begin the process:
1. The association will need to have legal documents drawn up by an attorney who specializes in employer benefits law.
2. The association will be administered by your group or organization, however, you can
hire a TPA (third party administrator) for this process.
3. Premium collection, enrollment and disenrollment should be handled by the insurance carrier, meaning collection of premium payments would be mailed to the carrier’s lockbox. Enrollments and disenrollment would be handled directly by the carrier.
4. You will need a broker or consultant who understands how association plans work and is willing to put in a significant amount of effort in order to coordinate all of the above moving pieces.
The Wall Street Journal advises that the association plans will allow employers to attract and retain talent and compete with larger firms.