New plans could save employers money, but might not be right for every group
New regulations released by the Trump administration means more employers can form Association Health Plans (AHPs) to offer health coverage to employees. By allowing employers to band together to offer health coverage, AHPs allow smaller employers to take advantage of economies of scale.
The new rules mean any employers in the same industry or region, as well as sole proprietors, can now form or join an association and offer an AHP. Because these plans don’t have to offer the same set of benefits as other health plans, this can represent cost-savings for many employers.
However, this strategy isn’t necessarily right for every small business. How do you know if an AHP is right for your organization? Here are a few questions to ask.
Am I already in an industry organization?
If your business is already a member in some sort of professional association or enterprise, you may want to look at AHPs more seriously. Alternatively, if you know of an association you could join, you might want to pursue membership. In order to offer an AHP, you first have to be a part of an association, so if there isn’t an existing group, your organization would have to form one. This may be more of an administrative hassle than most groups are willing to take on.
Am I willing to be an early adopter?
The expanded rules around AHPs mean more employers will be pursuing this strategy for the first time. As with any new regulation, there are likely to be some hiccups in developing and implementing this strategy. However, some employers might find the possibility of significant cost reductions worth the work of offering an AHP.
Do I have a broker willing to help with this strategy?
In order to offer an AHP to employees, you will want to work with an insurance broker familiar with this strategy. Not every broker will advise employers on AHPs, so be sure to ask your current advisor what their position is. If they aren’t making AHPs part of their business model, consider pursuing a different benefits broker during this year’s renewal.
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