New option could produce premium savings for some groups
UnitedHealthcare announced this week the launch of a state-wide geographically-based Association Health Plan (AHP) for small employer groups in Texas.
This new United product provides another option for Texas employers with 2 to 50 employees. For up to half of small employers in the Texas market, the AHP option could potentially produce premium savings of 5 percent to 15 percent, as compared to traditional, fully-insured small group rates.
The new option takes advantage of the executive order to expand AHPs from the Trump Administration. In the past, employers could only band together to offer health coverage if the association was trade-based. Now employers in a shared geographic area can also take advantage of economies of scale. (More: What employers need to know about the new Association Health Plan regulations)
Business Fund For Texas Children Battling Cancer (BFF)
To join the AHP, called the Business Fund For Texas Children Battling Cancer (BFF), employer groups will pay an annual membership fee of $500, which is donated to children’s cancer groups throughout Texas. This fee appears annually on the first month’s invoice of their plan year.
Through the AHP, small groups will be able to access United’s most popular plans currently only available to large employers — those with more than 50 employees.
The plan is not medically underwritten, which means premiums are not based on medical conditions. However, rates will be based on gender, the size of the group, and type of business covered, which is not allowed under traditional ACA small group plans.
Effectively, small groups - defined as 2 to 50 employees - now have three options for group health coverage with UnitedHealthcare in Texas.
- Traditional Small Group Plans
These plans are fully-insured and adhere to Affordable Care Act regulations. Premiums are based exclusively on age and tobacco use.
- Association Health Plan
This plan is fully-insured, and rates are based on more factors than ACA plans, including the group’s gender, size and type of organization.
This dividend-eligible insurance option is medically underwritten, so rates are based on health conditions, and this plan can produce employer savings in low-claim years. (More: What is level funding?)
Which groups will benefit from the new AHP option?
Joining the AHP will be a better fit for some employers than others. The important thing is that United is putting more attention into the small group market, while many of its peers have either left altogether or narrowed their product offering. Should they be successful in Texas, we should expect them to try a similar offering in other states.
Are you a Texas employer looking for more information on group health plan options? Call Bernard Health at 1-800-505-0750.