The Final Rule
The Department of Labor began reviewing Association Health Plans earlier this year in an effort to provide lower-cost healthcare alternatives for small business owners. On June 19th, the DOL announced they are reforming the Association Health Plan rules to address the inequality of access to healthcare between small and large businesses.
When the Affordable Care Act was enacted, parts of the law affected Association Health Plans and their ability to help small business owners negotiate group plans with affordable rates. As a result, many small businesses could no longer offer healthcare coverage to their employees. The burdens on small businesses were unequal to larger corporations, and without AHPs, small businesses have suffered. More than 15 million people working for small businesses or sole proprietors currently lack health insurance due to cost.
Associations offer their members customized benefits packages and services, but when it comes to generating non-dues revenue, how can you make those services work? Affinity plans are a great way to offer benefits to your members while generating non-dues revenue and retaining membership from year to year. Understanding how an affinity plan can help your Association grow is a key component to strengthening your member base and generating revenue at the same time.
Affinity plans are a partnership between a business and an association and their members. The members of the association receive discounted services or rates for a product, the business providing the service gets access to a new customer base, and the association generates non-dues revenue and remains relevant to their members. Affinity plans for members can include travel discounts, reduced car insurance rates, subscriptions to publications, and much more.
Association Health Plans were designed decades ago to help small businesses secure health insurance for their employees. By bringing together a larger pool of people to negotiate premiums and buy insurance, small businesses were looking to recreate what large corporations do to provide their employees with competitive employee benefits. In the early 1990s, many AHP plans filed for bankruptcy due to funding issues, and consequently the government made changes that almost drove AHPs out of the market completely.
Recently, the Department of Labor began looking into expanding the use of Association Health Plans to help small businesses reduce rising health care expenses and enjoy similar benefits as large corporations do today under the Affordable Care Act (ACA) regulations. As more small businesses struggle to maintain health coverage for their employees, Association Health Plans might be the key to lowering costs for this sector of the market.
As healthcare legislation continues to evolve, the Department of Labor has been tasked with providing solutions and recommendations for the Affordable Care Act. Their most recent proposal includes changes to definitions of associations that could expand Association Health Plans. Blog 1 of this 3-part blog series will focus on “Commonality of Interest” and Sole Proprietors/Working Owners.
With the new proposed change, employer members with a “commonality of interest”, such as the same trade, industry, line of business, profession, or metropolitan area, even if the metropolitan area includes more than one state, would be allowed to provide health insurance plans to members. This will help small businesses who may have offices in a metropolitan area that includes 2 states (like Chicago/Northwest Indiana).
DOL Issues Proposed Regulations Designed to Expand Association Health Plans
With apologies to the Coen Brothers, let’s start with a brief quote from “O Brother, Where Art Thou?”
Ulysses Everett McGill: “I am the only daddy you got; I am the damn paterfamilias!”
Daughter #2: “But you ain’t bona fide!”
The DOL’s proposed regulations would, for the first time, define the term “employer” for purposes of ERISA to include a bona fide group or association of employers. And, just to make sure we get it, the term “bona fide” is repeated 24 times in the course of 23 densely-packed pages in the Federal Register. First a bit of background, then we’ll take a look at the proposed regulations and speculate about the impact.
With so many types of Life insurance to purchase and so many different companies to choose from, do you really know what riders are included in your Group Term Life insurance? There are unique riders and often-overlooked benefits in life insurance policies, and one of those is Accidental Death and Dismemberment (aka: AD&D). Not such a fun thing to think about, but this is an important rider sometimes included in your life insurance policy and it should be carefully reviewed.
Association Plans were created to help small employers and businesses find cost-effective health care plans and aggregate smaller groups into one larger cohesive unit. Association plans have evolved and grown more sophisticated over the last 50 years, and as healthcare reform continues, so will the evolution of Association plans.
90% of all businesses belong to an Association – trade groups, chambers of commerce, or a special interest association. The marketplace is strong, and chambers offer the most cost-effective way for small businesses to purchase various business services for their employees. Association plans also offer a delivery system for many needed services to small businesses, so small business owners can spend more time focused on various employer issues and less time on paperwork.
Healthcare reform is a hot topic in the news almost every day, but most people don’t really know what everyone is talking about when it comes to Individual rates and how they will change with proposed healthcare reform.