What are Association Health Plans?
Published on April 19, 2018
You may have heard the term “Association Health Plan” thrown around before, but not really understood how it’s different than a traditional group health insurance plan. Even if you’re looking for a small group health insurance plan, or already covered, it’s good to know what changes are going on in the health-care world.
Let’s explore what Association Health Plans could mean for you, as a small business, and how they may differ from the typical group health insurance plans you may be looking at for your small business.
What are Association Health Plans?
The Trump administration has proposed a change of rules that would expand the ability of small employer groups and individuals to band together to obtain health insurance through association health plans (AHPs).
In simpler terms, this means that small employers can get together and act as one large group, which often leads to lower administration expenses and other additional values, such as decreased prices due a larger pool of employees and spreading out risk among them.
Supporters of the rule change suggest that AHP’s would drive down costs of group health insurance plans, and more employers would be able to offer health insurance.
According to the health insurance trade association AHP, association Health Plans (AHPs) are commonly organized around some sort of similarity or connection such as:
- Professional organization
- Industry group
- Trade organization
- State or local chamber of commerce
A key point in the proposed rule change, is that organizations could be across state line, which some fear would destabilize the market created by the Affordable Care Act (ACA).
What’s the executive order concerning Association Health Plans?
An executive order, issued October 2017, wants to allow greater access to Association Health Plans, so that more employers to form associations. The order suggests that measures should be taken to promote the formation of AHPs on the basis of both proximity and common industry.
In other words, if you are a small business or sole proprietor who formerly had no access to an AHP, or did not qualify to be part of one, this executive order could potentially make forming or joining one possible.
How do Association Health Plans (AHPs) differ from group health insurance?
- The term group health insurance typically refers to an insurance product meant for one business. This type of insurance would only include you and your employees.
- If you offer health insurance to your employees as a small business, it must be compliant with ACA’s standards for small group plans, and it should cover all essential health benefits.
- Association Health Plans, on the other hand, have more flexibility when it comes to following regulations, and there may be less regulation and less health issues covered under an Association Health Plan
- AHP can technically be “insurance sold across state lines” since the businesses involved in the association may not be required to be in the same state.
Association health plans are not actually products
“Association Health Plan” is really more of an overarching term to describe how the group health insurance plan comes about—by multiple organizations coming together.
Make sure to not mistake this concept for an actual product itself—it’s the idea that small businesses and sole proprietors can come together to get a group health insurance plan that covers a larger pool, which may allow them to negotiate better prices with insurance companies.
How does the expansion of Association Health Plans affect small businesses?
Essentially, the expansion of Association Health Plans would potentially result in more small businesses or sole proprietors potentially qualifying for membership in one of these associations. For many small businesses, though, it will make no difference. As a qualifying small business, you still have the option to buy a group health insurance plan from somewhere like eHealth, where you can still find great prices even as a small group. If you choose to get a traditional small group health insurance plan, the expansion of AHPs will likely not affect you at all.
Check out quality group health insurance plans on eHealth, and you’ll clearly see the benefits covered under each plan.