Welcome to Association Health Plans

Welcome to AssociationHealthPlans.com, a site where you can learn more about a type of insurance plan designed to offer affordable coverage with benefits tailored to meet your needs. Whether you are an association, an employer or an employee, we are here to help you understand if an association health plan might be right for you.

What is an association health plan?

Association health plans allow employers to band together by geography or industry to purchase health insurance.[1] Acting together through business associations — such as chambers of commerce or industry groups — small businesses, including self-employed workers, are able to access the type of insurance packages previously only available to large employers.

for the first time, association health plans would now be an option for working owners without other employees, including sole-proprietors, and their families

For the first time, association health plans would now be an option for sole proprietors and their families

Association health plans are not new for small businesses. According to a report by the Kaiser Family Foundation, 6 percent of firms with fewer than 250 workers that offer health benefits do so through a trade or professional association health plan.”[2] However, a new rule issued in June 2018 by the U.S. Department of Labor (DOL) is expected to make association health plans more widely available.

In fact, for the first time, association health plans would now be an option for working owners without other employees, including sole proprietors, and their families.

Association health plan coverage is not subject to the essential health benefits requirements of the individual and small group health coverage markets, which previously had been the main option available to small business owners and the self-employed. As a result, association health plan participants, much like large employer group plans, now have greater flexibility in the structure of their benefits, which can be tailored to meet the needs of each association’s particular membership. While association health plans may still choose to provide some or all of the benefits included in the list of essential health benefits, they — like large, self-funded plans — are not required to do so.

Association health plans are a viable option for employers and employees who are currently uninsured or lack affordable health insurance options.

Association health plans are a viable option for those who lack affordable health insurance options.

As a result of the new regulations, the DOL and others expect more affordable coverage options to become available, offering a viable option for employers and employees who are currently uninsured or lack affordable health insurance options.[3]

Who can participate in an association health plan?

Association health plans can be formed by small businesses in the same trade industry, line of business or profession. Alternatively, they may have their principal place of business in the same state or metro area, including metro areas that cross state lines. An association’s own members must control an association that offers major medical coverage. Insurance companies cannot set up or control association health plans.

Association health plans have the potential to create new economies of scale for small-business owners, their employees, sole proprietors and other self-employed workers. Through association health plans, these groups can come together to share costs and use their larger size to negotiate better insurance rates and benefits with hospitals, doctors and prescription drug providers. Large employers have a history of effectively doing this to obtain better benefits for their employees at a lower cost. Through association health plans, this also is possible for small businesses, including those that in the past have been unable to offer insurance benefits to their employees because of the time, effort and cost involved.

Association health plans have been in existence for years. The new DOL regulations, which broadens the definition of “employers” who can participate in association health plans, goes into effect in September 2018 for fully-insured plans. Self-insured association health plans can begin operating under the new rule beginning in 2019, with existing plans phased in on Jan. 1, 2019 and new plans authorized beginning on April 1, 2019.

 

FAQ

What is an association health plan?

Association health plans are group health plans that employer groups and associations offer to provide health coverage for employees. They allow small employers to band together to purchase the types of coverage that are available to large employers.

How have association health plans changed?

Association health plans have been available for years, however they were heavily regulated under the Affordable Care Act and other restrictions made it difficult for many employers to qualify for the plans. A June 2018 rule issued by the U.S. Department of Labor eliminated restrictions on the establishment and maintenance of association health plans, and other changes allow promote flexibility in plan offerings, making them more affordable for participants.

Why is the association health plan rule significant?

The rule creates an opportunity for almost any employer to be eligible to participate in a qualifying association health plan, giving them access to plans similar to those used by large employers as well as benefits tailored to their needs. Before the rule, employers had to purchase insurance in the individual or small group market, which are governed by complex regulations that require insurance plans to cover a specific range of services. Employers participating in an association health plan would benefit from sharing costs and risks across a larger pool of insured participants and would be able to leverage bargaining and purchasing power similar to that of a large employer as they negotiate plan benefits and rates.

When does the rule go into effect?

Association health plans continue to be available under the previous regulatory guidelines, and those plans can choose to operate under either the previous or new guidelines once the rule is fully implemented. The new, broader regulations issued in the final DOL rule in June 2018 will be implemented on a staggered basis, beginning with fully insured plans in September 2018. Self-insured association health plans can begin operating under the new rule beginning in 2019, with existing plans phased in on Jan. 1, 2019, and new plans authorized beginning on April 1, 2019.

Why can’t insurance companies set up or control association health plans?

Association health plans are intended mainly to benefit the employers and employees they serve, not to be a product that is sold by insurance companies for a profit. A group or association has to be connected by a “commonality of interest” standard defined by the Department of Labor in order to be able to sponsor an association health plan. Insurance companies that are interested in offering benefits to employers can do so through the state-regulated private insurance market. They can also offer administrative services to association health plans.

[1] “About Association Health Plans.” U.S. Department of Labor. https://www.dol.gov/general/topic/association-health-plans. 30 July 2018.

[2] Claxton, Gary, M Rae, M Long, A Damico, G Foster, H Whitmore, et al. Employer Health Benefits 2017 Annual Survey. Chicago: Henry J. Kaiser Family Foundation, 2017. http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2017. 30 July 2018.

[3] “Definition of ‘Employer’ Under Section 3(5) of ERISA—Association Health Plans,” 83 Fed. Reg. 120 (June 21, 2018). Federal Register: The Daily Journal of the United States. Web. 30 July 2018.

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