Starting on January 1st small businesses may have another option when looking for affordable health insurance solutions. Association Health Plans allow unrelated companies to band together to purchase health insurance at hopefully lower rates.
AssociationHealthPlans.com has assembled the following information to help small businesses decide if this might be an option for their situation.
Here are five things to know:
1. These are not Affordable Care Act plans, and their benefits may differ.
While the regulation allows associations to design health plans around employee needs and employer budgets, association health plans do not have to offer all of the essential health benefits required by the Affordable Care Act. However, large group association plans are still subject to state benefit rules as well as numerous federal benefit requirements relating to issues such as maternity care, pre-existing condition coverage and preventive care. Association health plans must also provide a Summary of Benefits and Coverage that describes insurance features in "plain language."
2. New options are available Jan. 1.
The new association health plan regulation has an effective date that is staggered. Jan. 1 is the date that existing associations may launch self-funded health plans under the new regulations. These plans can have even lower costs than fully insured plans because an insurance company does not make a profit off their coverage, and the plan is not subject to normal health insurance taxation.
New fully insured (meaning they are insured by a third-party health insurer) plans became available Sept. 1, 2018. New self-insured association health plans will be available April 1, 2019.
3. Large group association health plans cover pre-existing conditions and cannot deny coverage or raise premiums based on an individual's health status.
Multiple federal regulations apply to association health plans. Among the rules governing these plans is the requirement to cover pre-existing conditions within any Essential Health Benefit category included within the insurance plan. Additionally, people eligible for association membership cannot be denied insurance based on health factors nor can their premiums be increased due to health factors.
4. Part of the gig economy? You can qualify, too.
One of the major changes to association health insurance under the new regulation is its ability to cover self-employed individuals who are not part of a business with other employees. And you don't have to be incorporated. Informal work — such as handyman work, tutoring, music lessons, etc. — would be just as legitimate as independent contracting for a company.
5. There are new provisions to discourage fraud and mismanagement.
Because the history of association health plans includes examples of mismanagement and fraud, the new regulation incorporated a series of measures to promote sound governance and solvency. These measures include the requirement that the association health plan be controlled by the employers making up the association. Insurance companies, medical providers and other entities with conflicts of interest are prohibited from controlling an association health plan. Vendors performing services on behalf of an association health plan (e.g. record keeping, compliance, marketing, etc.) are prohibited from receiving more than reasonable compensation for these services. There is also a class of prohibited transactions that prevent self-serving transactions that work in the interests of an association employer or affiliate rather than the plan and plan participants.
AssociationHealthPlans.com is the leading online resource supporting the emerging association health plans market. AssociationHealthPlans.com is headquartered in Nashville, Tennessee.
CONTACT: Amy Fletcher Faircloth