Bring­ing down cost of health in­sur­ance for small busi­ness

The Charlotte Observer (Sunday) - - Business - BY JOYCE M. ROSEN­BERG As­so­ci­ated Press

As small busi­ness own­ers shop for 2019 health in­sur­ance, some will for the first time have the chance to join forces and buy cheaper in­sur­ance – de­pend­ing on which state they’re in.

New rules that be­gan go­ing into ef­fect last month al­low sole pro­pri­etors and other busi­ness own­ers with­out em­ploy­ees to form what are known as as­so­ci­a­tion health plans, or AHPs. But while the Trump ad­min­is­tra­tion has touted the rules as a break­through, many own­ers will be dis­ap­pointed to learn their states’ in­sur­ance laws will limit their abil­ity to join the plans.

The rules is­sued by the La­bor Depart­ment al­low sole pro­pri­etors and part­ners to buy cov­er­age that wasn’t avail­able to them un­der the Af­ford­able Care Act. The rules also per­mit the plans to of­fer in­sur­ance that doesn’t meet the health law’s re­quire­ments for ba­sic cov­er­age.

The catch for many busi­nesses is the rules, un­like many other fed­eral laws and reg­u­la­tions, don’t su­per­sede state re­quire­ments for health in­sur­ance, and states that heav­ily reg­u­late in­sur­ance are ex­pected to make it harder, if not im­pos­si­ble, for as­so­ci­a­tion health plans to be formed.

More­over, there are con­cerns that new as­so­ci­a­tion health plans could re­vive a prob­lem from the past – plans that be­come in­sol­vent or are scams.

As own­ers re­search their op­tions for 2019 health in­sur­ance, here’s what they should know about AHPs:

Why AHPs are ap­peal­ing: As­so­ci­a­tion health plans have been around for decades; they’ve been le­gal if their mem­bers were in the same in­dus­try or pro­fes­sion, or in the same state. But un­der the Af­ford­able Care Act, own­ers with­out em­ploy­ees had to buy in­di­vid­ual cov­er­age from a ma­jor car­rier or from state ex­changes.

The Ne­braska Farm Bu­reau an­nounced its AHP soon af­ter the new rules be­gan tak­ing ef­fect. The bu­reau had been work­ing on a plan for farm­ers, ranch­ers and agribusi­ness own­ers, but “the rules made it eas­ier for sole pro­pri­etors to be in­volved,” says Rob Robert­son, the bu­reau’s chief ad­min­is­tra­tor.

The So­ci­ety of Col­li­sion Re­pair Spe­cial­ists, which rep­re­sents over 6,000 ve­hi­cle re­pair shops across the coun­try, is de­vel­op­ing an as­so­ci­a­tion health plan and hopes to be able to of­fer cov­er­age dur­ing the first quar­ter of 2019, ex­ec­u­tive di­rec­tor Aaron Schu­len­burg says. Nearly three-quar­ters of the group’s mem­bers have said they’re in­ter­ested, Schu­len­burg says.

The or­ga­ni­za­tion is us­ing a ben­e­fits con­sul­tant to find the best car­rier for its plan, Schu­len­berg says.

“We found ex­am­ples of av­er­age sav­ings in some of the al­ready es­tab­lished net­works reach­ing close to 20 per­cent,” he says.

Still, many own­ers know lit­tle about the plans. A sur­vey of 1,000 own­ers by Bank of Amer­ica found that 30 per­cent aren’t fa­mil­iar with them. The sur­vey, taken be­tween late Au­gust and early Oc­to­ber, also found 35 per­cent were in­ter­ested in of­fer­ing cov­er­age through an as­so­ci­a­tion health plan, and 35 per­cent weren’t. Con­cerns and ob­sta­cles: While many states have wel­comed the new rules, 11 oth­ers and Wash­ing­ton, D.C., are su­ing the Trump ad­min­is­tra­tion, charg­ing the rules al­low in­sur­ance to be sold that of­fers less cov­er­age and fewer con­sumer pro­tec­tions than are re­quired by law. Un­der the rules, as­so­ci­a­tion health plans are con­sid­ered to be large group em­ploy­ers, and the Af­ford­able Care Act doesn’t re­quire large groups to pro­vide min­i­mum es­sen­tial, or ba­sic, cov­er­age. Among the ben­e­fits the ACA re­quires: pre­scrip­tion, preg­nancy and well­ness cov­er­age.

That may not worry some own­ers. Melissa Perl­man hasn’t been able to af­ford in­sur­ance for her staffers since start­ing her pub­lic re­la­tions com­pany, BlueIvy Com­mu­ni­ca­tions, in 2011. She’s in­ter­ested in the po­ten­tial as­so­ci­a­tion health plan be­ing con­sid­ered by the Greater Del­ray Beach Cham­ber of Com­merce. Perl­man is aware cov­er­age might not be as com­pre­hen­sive as on the open mar­ket. But, she says, “what­ever is of­fered would be an im­prove­ment from of­fer­ing noth­ing.”

But the La­bor Depart­ment rules have also raised con­cerns that some new as­so­ci­a­tion health plans might not be fi­nan­cially sound; if they be­came in­sol­vent, as some mis­man­aged plans did in the past, pol­i­cy­hold­ers could be stuck with med­i­cal bills.

There are also fears that some new plans could be scams, re­peat­ing some un­pleas­ant his­tory. In 2004, the U.S. Gov­ern­ment Ac­count­abil­ity Of­fice re­ported that there were 144 plans that weren’t au­tho­rized to sell health in­sur­ance be­tween 2000 and 2002; these scams cov­ered 15,000 em­ploy­ers and more than 200,000 pol­i­cy­hold­ers and left over $250 mil­lion in un­paid med­i­cal claims.

Those scams are a key rea­son why Con­gress gave states broad pow­ers to reg­u­late as­so­ci­a­tion health plans, says Kevin Lu­cia, a pro­fes­sor at Ge­orge­town Univer­sity’s Health Pol­icy In­sti­tute. He noted that some states re­quire as­so­ci­a­tion health plans to be in ex­is­tence for two years be­fore they can sell in­sur­ance, and some AHPs are re­quired to be li­censed as in­sur­ers. Cal­i­for­nia re­cently en­acted a law that pro­hibits sole pro­pri­etors and part­ners from par­tic­i­pat­ing in the plans. Ad­vice and caveats: Own­ers in­ter­ested in as­so­ci­a­tion health plans should do plenty of re­search, start­ing with the laws of their states.

“It could be a non­starter de­pend­ing on what state you’re in,” says James Schutzer, a vice pres­i­dent at in­sur­ance bro­ker JDM Ben­e­fits in White Plains, New York. Like other bro­kers, Schutzer re­ceived a re­minder in July from the state Depart­ment of Fi­nan­cial Ser­vices that New York law “strictly lim­its the as­so­ci­a­tions or groups of em­ploy­ers that may spon­sor a health in­sur­ance plan.”

Even states that don’t cur­rently have laws re­strict­ing as­so­ci­a­tion health plans could en­act them, says Karen Pol­litz, a se­nior fel­low at the Kaiser Fam­ily Foun­da­tion.

“They could pass rules say­ing you can’t form an AHP just for the pur­pose of sell­ing in­sur­ance,” some­thing that the rules per­mit, Pol­litz says.

The pend­ing law­suit is a red flag to em­ploy­ment at­tor­ney Lorie Mar­ing, who notes that a suc­cess­ful chal­lenge to the rules could put new as­so­ci­a­tion health plans in jeop­ardy.

“I wouldn’t rec­om­mend that any­one do any­thing un­til we have a bet­ter idea of where the lit­i­ga­tion is headed,” says Mar­ing, who prac­tices with Fisher Phillips in At­lanta.

WILFREDO LEE AP

Melissa Perl­man, owner of BlueIvy Com­mu­ni­ca­tions in Del­ray Beach, Fla., hasn’t been able to af­ford in­sur­ance for her staff in the past. But she’s in­ter­ested in the po­ten­tial as­so­ci­a­tion health plan, or AHP, be­ing con­sid­ered by the Greater Del­ray Beach Cham­ber of Com­merce.

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