DOL Allows Qualified Small Businesses to Join Association Health Plans
The Department of Labor issued a rule in June that will permit eligible small businesses to join together in association health plans (AHPs), forming single groups to purchase health insurance in the large group market. Business owners without other employees, such as sole proprietors and other self-employed individuals, will also be allowed to join AHPs. According to the DOL, this will provide small employers with more affordable health insurance benefits options.
What is important to understand is that while these plans are intended to lower premiums and increase bargaining power for its member employers, it may also result in less comprehensive health coverage for employees. This is because most AHPs will not be required to cover certainAffordable Care Act requirements, such as coverage for prescription drugs, emergency services, mental health care, maternity care and newborn care.
At Corporate Coverage, when and if association plans become available, we will be working with our clients to determine which plan options make the most sense for the health care needs of their particular employee population. Factors like age, general health and desired benefits are considered. Also, we will be deeply evaluating the available plans to help our clients understand exactly what they are getting.
Who Is Eligible?
The final rule allows employers to join together to form an AHP that is a single ERISA plan if either of the following requirements is satisfied:
- The employers are in the same trade, industry, line of business or profession; or
- The employers have a principal place of business within a region that does not exceed boundaries of the same state or the same metropolitan area (even if the metropolitan area includes more than one state).
Currently, AHPs are not permitted in Maryland. Our seasoned health insurance consultants were in the industry decades ago when the plans were available in Maryland, so we know well the pros and cons of these plans and how they work. That said, this rule is just the beginning of a months-long process where states and national government agencies will determine the provisions for implementing the plans, so the eligibility for Maryland employers may change. We encourage our clients from any state to contact us to learn more.
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