As a small employer, I was shocked to receive a 75% increase for my health insurance plan cost this year. I need a better solution for my employees! A broker friend of mine suggested considering Association Health Plans. What does that mean and what are they?
In June 2018, the Department of Labor officially allowed Association Health Plans (AHP). These plans allow businesses to join together through some commonality to obtain healthcare coverage. They are able to “pool” together and appear as one larger employer spreading out the risk and increasing their ability to obtain better, more competitive health insurance rates.
These plans do not come without rules of course. The rule for these plans is that employers can join together to form these Association Health Plans if they either:
- Are in the same trade, industry, line of business or profession; or
- Have a principal place of business in an area that does not exceed the boundaries of the same state or same metropolitan area.
There are additional rules that must be satisfied including nondiscrimination rules, joining together under a purpose more than just offering health care coverage, no ‘cherry-picking’ for only healthy participants (all must be accepted) and others.
Bottom line, the Association Health Plans may be a great alternative for small businesses who are impacted by large rate increases. It is recommended that you refer to the Department of Labor website for additional details (https://www.dol.gov/general/topic/association-health-plans) and talk with your insurance broker about your options.
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