As a small business owner or even as an employee, you may have a love/hate relationship with health insurance. Health benefits are needed to attract and retain quality employees. The challenge, however, is unless you are over a particular size company, you and your employees will be too small to enjoy the lower, large group insurance rates that larger companies enjoy. However, there is an alternative that you should know about: Association Health Plans (AHPs).
Is my neighborhood association, my church, or my sports team an association?
Not everyone who just gets together can be considered an association. An association is a group of employers who collaborate within a formal organization and comply with various factors and conditions that state how membership is handled and the commonality of interest.
There are two types of associations: Industry-specific and geographical. Industry-specific associations meet regularly to network and discuss trends in a specific industry. Members of these associations work in that industry. Geographic or regional associations accept members from various sectors within a small geographical area. Chambers of Commerce are the most well-known of these geographical associations, and membership is open to anyone who does business in that area. Under current federal law, only trade or industry-specific associations can offer health benefits to members.
What are Association Health Plans?
Association health plans are health benefit plans a trade association offers its members. These plans offer members health insurance comparable in options and price as large group plans.
Currently, 14 states, including Texas, offer these plans to small businesses. To be eligible to provide a health plan, the association must be a bonafide one and be considered a multiple employer welfare arrangement (MEWA). A MEWA is a group of business owners (employers), sole proprietors, and freelancers (working owners).
There are self-, and fully-funded HMO, PPO, and EPO association plans available. Self-insured plans give members the highest cost savings, more flexibility, and subject to fewer state regulations. Association plans get regulated by federal ACA, COBRA, and HIPPA laws like traditional small group health plans. Unlike other small group plans that require underwriting, AHPs are not level-funded, so there are no claims refunds. Instead, a business will get lower premiums by being part of the association and pooling its employees with other association members. Companies must maintain similar contribution and participation levels as for a direct health insurance contract.
What Are the Benefits of AHPs?
Association plans aim to give small business owners the healthcare options and cost-savings of large group plans. They do this by leveraging their membership size to get lower rates when negotiating with healthcare providers and insurers.
Members of associations offering health insurance can enjoy several benefits:
- Lower rates. Size gets you rates lower than traditional small group insurance or individual insurance. Self-funded AHPs, for instance, had maximum savings of 29% on claims, and fully-funded plans had a savings of 23%. In one report, AHPs have premium savings of up to $4,100 in the small group market and up to $10,800 in premium savings in the individual health insurance market.
- More plan options and flexibility. There are more plan options and plan flexibility with large group plans unavailable for small group plans. With an association plan, members have access to the greater customization found with large group plan options.
What Plans are Available in Texas?
There are multiple association health plans in Texas. The AHP’s being offered right now in Texas are through a state-wide non-profit that has partnered with a well-known large insurance company. There are several others as well through specific markets.
The Texas Restaurant Association offers its members health insurance through United Healthcare. This AHP is underwritten and has rates comparable to Affordable Care Act (ACA) plans. By partnering with United Healthcare, members have access to an expansive network of doctors and hospitals.
Another association that offers health insurance to its members is Decent; a MEWA focused on the IT industry. With Decent, a business doesn’t have to join an association to receive health insurance. This program is available for IT professionals and couples Direct Primary Care (DPC) with a traditional health plan. Members will be able to choose to get access to DPC providers or use a network. Decent is working to expand health benefits to those in other industries. This is still in the works and needs to get approval from the state of Texas.
With several other organizations coming on board with these plans, contact your local credit union, professional organization, or chamber to see if you qualify or contact Holloway Benefits Concepts and talk to us about your options.