With the new regulations and rules governing association health plans (AHPs), it will be significantly easier for more people to join and form associations to get health insurance. See three of the main ways association health plans have changed in order to allow access to more individuals and groups.
Traditionally, sole proprietors without any employees have not been able to purchase group health insurance plans. In order to have a small business health insurance plan, a business owner must have at least one full-time equivalent employee (FTE) that is not a spouse. And before the new regulations on association health plans, only small businesses could join AHPs, in hopes of forming a larger group and having more negotiation power with health insurance companies.
But now, access to AHPs has been expanded—sole proprietors can join an AHP, instead of purchasing a health insurance plan in the individual health insurance market, according to healthinsurance.org.
Before the updated regulations on association health plans, groups had to be formed based on industry. So a small bakery could not join forces to form an AHP with a small mechanic shop.
Under the new, more flexible regulations, AHPs can be formed based on industry and area. This could mean a lot more groups will be able to join AHPs, since all they have to do is team up with a sole proprietor or small business in their area.
Before the new regulations on AHPs were put into place, the groups had to be formed for reasons beyond getting health insurance for the members. Now, AHPs can be formed for no other reason than to obtain health insurance for members.
Paired with the removal of the rule that AHPs must be formed between groups in the same industry, it’s likely that AHPs could be formed purely for the reason to get health insurance with less benefits, at a lower cost.
So why does it even matter that more people will be allowed to join these plans? Less restrictive regulations might seem like a good thing—AHPs allow small groups of people to team up and get more affordable coverage, so the more people who can join them, the better.
Although it’s true many will benefit from getting to join an AHP, it might result in the destabilization of the Obamacare exchanges, and a loss of affordable options for those who do need the ACA plans with extensive benefits.
The individual market is facing some unpleasant changes in the form of rising prices and fleeing insurance providers. With the uncertainty and unaffordable prices in the individual market, those who can live without the extensive benefits of ACA-compliant plans will likely be drawn towards the more affordable coverage they’ll find in an AHP.
The effect of individuals being able to leave the Obamacare exchanges and various markets where individual plans are available could result in even more price increases. This means that those who need the extensive benefits offered with Obamacare plans might see even more price increases in the future, to make up for small groups and sole proprietors leaving the ACA-compliant individual and small group markets.
If you still want traditional small business health insurance, and want to make sure that you’re group members are receiving quality coverage and benefits, then visit eHealth to compare group plans offered in your area.
This article is only for general information, and may not be updated after publication. If you are concerned about the legitimacy of an AHP, consider consulting legal counsel.