Insurance plan binder TennesseeREALTORS® recently launched one of the first AHPs for aprofessional association after a survey of members showed stronginterest in the kinds of benefits that could be provided. (Photo:Shutterstock)

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For all the dire warnings about the new association health plans (AHPs) that wereenabled under an updated U.S. Department of Labor rule last summer,they actually may be just what the doctor ordered for smallbusinesses (along with sole proprietors and the self-employed).

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That doesn't mean there aren't provisos. But AHPs are gaining tractionas they trend toward offering comprehensive benefits and doubledigit cost savings, according AssociationHealthPlans.com data. If such trendshold, they'll go a long way toward countering concerns that theplans would provide neither while putting consumers at risk offraudulent action by new groups entering the market.

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Related: Association health plans: What small businessesneed to know

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Today's iteration of AHPs began as a result of the updated LaborDepartment rule making it easier for small businesses to jointogether to offer the same type of health insurance coverageoffered by large companies. It applies to small businesses thatshare a professional similarity or the same businessregion. Although a recent court ruling overturnedthe expanded regulations, several such programs have been formedand continue to operate, showing the potential of plans to meet theneeds and demands of those they serve. Accordingto AssociationHealthPlans.com:

  • Of new AHPs launched, 71 percent were by regional associations.The most common sponsors, four out of five, were chambers ofcommerce.
  • The majority, 86 percent, are fully insured, versus beingself-funded.
  • Maximum savings claims among self-funded AHPs averaged 29percent versus 23 percent for fully insured plans. (However, claimswill vary considerably vis a vis non-AHP plans.)
  • Of the new AHPs, 43 percent are available to the self-employedand sole proprietors.
  • Half of the new plans include a medical savings accountoption.

For all the concern expressed over AHPs—in addition toopposition from groups like the American Medical Association, 11states sued over the rule change—they provide a health caresolution many have been looking for.

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Tennessee REALTORS® recently launched one ofthe first AHPs for a professional association under the new rulesafter a survey of members showed strong interest in the kinds ofbenefits that could be provided. The group has 21 local chaptersand 29,000 members statewide.

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Membership of the group (full disclosure: a HUB Internationalclient) has the classic profile of the types of small businesseswhose interests are underserved in the current health caremarketplace—1099 contractors, W2 employees and soleproprietorships/partners and owners. The survey found 94 percentwere interested in accessing benefits through a Tennessee REALTORS®sponsored AHP; 50 percent identified as individuals who believedthey were paying too much for their health care coverage.

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The fully insured AHP solution offers a robust range of optionsfor members, their employees and dependents. That includes threedifferent medical plan options; a dental and vision option; andwellness solutions. Non-medical benefits also are offered, such asaccident with a disability insurance rider, critical illness andlife insurance with a long-term care rider. Premiums arecompetitive in a state where prices, on the whole, stabilized ordeclined for 2019 after years of double digit increases.

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In addition to opening the doors for small businesses topreviously inaccessible, big business-type benefits, AHPs can makea difference in environments that lack competition for healthplans. Take Nebraska, with a single insurer offering coverage onthe ACA exchange that had a 9.1 percent jump in the 2019 premium ofits second lowest cost silver plan to $686 before subsidies.

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It's made AHPs such as Land O'Lakes, a farmer-owned cooperative,welcome. Its self-insured plan is expanding across state lines withthe new rule, offering savings of 25 percent to 35 percent overNebraska's exchange plans and 10 percent to 12 percent overcomparable plans in Minnesota's.

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Are AHPs the panacea for small businesses in search of adequateor better medical coverage at affordable rates? As in everythingelse, the rule of “caveat emptor” applies. Not every plan, itsstructure or lineup of benefits and fees will be equal. It pays toread the fine print. Small businesses whose states allow them andthat believe their companies and employees might benefit by joiningone should start the process by investigating along three lines ofinquiry:

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1. AHP membership parameters

  • Who will be invited to join?
  • What are the terms for adding new members?
  • What are the rules over leaving the AHP pool?

2. Health plan options and benefits covered

  • What specific health plan options are included in the AHP?
  • How does this affect your competitive advantage when hiring newemployees or retaining current workers?

Consider establishing some benchmarks for competitivecomparison. Cost is important, but so are other factors. Inbalancing benefits and costs, for example, weigh things like themenu of services for the cost, out-of-pocket maximums and how thepharmacy benefit is structured. Customer service is key, too, liketurnaround on claims

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3. Added costs of administration

  • What's the cost to administer an AHP?
  • Who will be responsible for paying this cost?
  • Who can counsel you to navigate and understand costs/fees?

Today's new and improved Association Health Plans are still awork in progress. But designed with a critical eye toward all theelements that successfully come together in best-of-class healthplans – not just price, but value in terms of holistic andforward-thinking benefits and services – they may give a positiveboost to our pressured health care system.

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Margaret Collignon is vice president ofemployee benefits at HUB International, and MattCowan is president of Tennessee Operations.

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