What The New Association Health Plans Mean for Your Business

The Trump administration has announced a plan to expand association health plans (AHPs).

AHPs are a type of insurance where employers band together and create a health plan for their workers.

The new regulation loosens requirements for forming AHPs, enabling more small businesses and even sole proprietors to participate in these plans.

Businesses that are physically close to each other or have common professional interests can form a new AHP, and unlike previously, the main purpose of association can be solely to provide health insurance (which means new AHPs won’t need any other common purpose).

According to President Trump, “These actions will result in very low prices, much more choice, much more freedom, including, in many cases, new opportunities to purchase health insurance. You’ll be able to do this across state lines.”

The Details

The new rules will be effective as of September 2018. However, existing AHPs may keep functioning as before. As under the previous rules, members will be able to extend their insurance coverage to their children under 26 years of age.

Legally, providers won’t be able to discriminate against people with pre-existing medical conditions. However, the rule allows insurance providers to offer higher rates for businesses with a more hazardous profile. For example, construction companies may have to pay more for their plans than landscaping businesses.

Possible Catches

While this all sounds good, there may be a catch or two. Since the new rules shift small business insurance coverage to the large group market, these plans will become exempt from the ten essential requirements (including prescription drugs or maternity coverage) of the Affordable Care Act (ACA).

Experts warn that while the number of AHPs could definitely grow, the quality of their coverage may suffer as a result of loosened requirements. For example, businesses with fewer than 15 employees won’t be legally required to provide maternity coverage.

Worthless, or “junk” insurance could flood the market. While companies with more than 50 employees would face penalties if they offered insufficient coverage for their workers, smaller businesses are exempt from such measures.

Additionally, the new rule allows insurance providers to adjust their premiums depending on various factors, including age, gender, location, and occupation of employees.

This may leave the door open to discrimination against older people or women in general (because of possible maternity issues). According to the Blue Cross Blue Shield Association, premiums for women in their 30s may be 30% higher than for men. In turn, young men may receive 40% lower rates than the ACA average.

What Your Business Can Do

When considering an AHP to join, make sure to keep your employees’ best interest at heart. Offering them insufficient insurance plans can lead to disgruntled employees, a high turnover rate, and possible penalties.

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This content was originally published on the Veem blog. Check it out for more information and exclusive articles.