Association Health Plans (AHPs) allow small businesses to join together to purchase group health insurance coverage for their employees. They do this by joining an association which then partners with a traditional health insurer to provide health insurance coverage for the entire group.
Sounds like an extra step, why not just buy directly from the insurer?
When a small business buys insurance directly, they are considered to be a “small group.” By joining together, however, all of these small businesses can, under AHP regulations, be considered a “large group.”
One big advantage large groups have over small groups is cost. The premiums of small group plans are usually higher than those of large group plans.
It mostly comes down to one of our favorite words: mandates. Small groups are subject to more regulations and mandates, which, as we know, drive up health insurance premiums.
Also, large groups, because of their size, have more power with providers (such as hospitals) when negotiating prices.
Cool! Do we have access to AHPs in North Carolina?
We sure do! North Carolina law allows for established associations that have over 500 members to offer AHPs.
Basically, these associations have to be real organizations. Not some fly-by-night cockamamie group put together just to sell junk health insurance plans. The regulations ensure that any association offering an AHP has a real commitment to the welfare of its members.
Back in the 1990s a lot of less scrupulous AHPs ended up filing for bankruptcy, leaving their members out in the cold. So these regulations are a good thing.
How can we make sure more people have access to them?
Some good news here. Last year the federal Department of Labor (DOL) set rules that encouraged associations to take advantage of AHPs.
Our lawmakers still have some work to do here in North Carolina to take advantage of it though.
One thing the new DOL rules allow is for sole proprietors – individuals who work independently and for themselves – and other small business owners to buy AHP insurance through associations. Right now, that isn’t allowed in North Carolina. This could bring relief to people who would otherwise be buying insurance through the Affordable Care Act (ACA) marketplace, but make too much money to qualify for a subsidy (like our friend Keith).
Second, it is important to ensure that they are run by experienced, reputable associations. This is a vital consumer protection that should be extended to all AHPs.
These changes will allow more independent entrepreneurs and small business owners to have access to affordable healthcare coverage that is better tailored to their needs.
I heard this is going to kill the individual marketplace, is that right?
Some of the people who might take advantage of these AHPs are young, healthy people currently purchasing their health care through the individual marketplace. Critics say that if these people join AHPs and leave that market, won’t the ACA pool be older and sicker, which would lead to higher individual premiums?
This is fair concern in some states, but will likely be mitigated in NC, by other initiatives like Value Based Reimbursement that are helping to bring down costs for everyone. We have already seen individual premiums go down (in most areas) in North Carolina this year thanks to initiatives the Coalition and others are pursuing to bring down costs.
Additionally, if AHPs are implemented correctly in North Carolina, the impact should be minimal.
All AHPs will do is bring some relief to small business owners who are currently forced to endure high individual premiums without a subsidy.
Without all those costly mandates, could I be denied because of a pre-existing condition? Will these just be junk plans?
TL;DR – No and no.
Protection for patients with pre-existing conditions is very popular among consumers. From the DOL website:
AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions, or cancel coverage because an employee becomes ill.
AHPs offered by experienced, reputable associations are not “junk plans.”
Think of these like the plans you might get as an employee of a large employer. Those large group plans are not subject to the same mandates as small groups and individuals. Large groups are better able to tailor their plans, without the same government mandates, to their members’ needs. That would be the situation here. If the AHP plan isn’t right for the consumer, they can always buy on the ACA marketplace.