Insurers like United Health and Blue Cross Blue Shield are getting behind 86% of new AHPs.
Newly allowed association health plans, or AHPs, have begun to take shape nationwide. The plans allow small employers to band together and form larger blocks to negotiate affordable group insurance. The Department of Labor began allowing the plans in 2018, and many features of the plans are still not available. Yet enrollment in AHPs has been strong, a report by associationhealthplans.org suggests.
The report has some key insights to how association plans are coming together. There are 28 new association plans across the country. Seventy-one percent of the association plans are regional, or the membership is based on geography of participating businesses. Four out of five regional association plans were sponsored by a Chamber of Commerce. Alternatively, professional plans group customers together by industry.
Major health providers have embraced the associations. Third party insurers like United Health and Blue Cross Blue Shield cover 86% of the association plans, as opposed to self-funded associations. Fully insured associations pay more for their coverage, as fees and taxes apply. Only four of the twenty-eight new associations self-fund, but under the new law, newly formed associations cannot self-fund until April 1, 2019. Expect more associations to eschew insurers and self-fund if the savings are too good to pass up.
Most associations are composed of employers with 2 to 50 employees. Forty-three percent of associations currently disallow sole proprietors. Associations can set size restrictions on participating employers.
Quality of coverage
The report by associationhealthplans.com claims that there is no evidence of “narrow benefit designs” in the association health plan marketplace. United Health, a popular insurance supplier for AHPs, claims that it does not offer skinny plans. AHPs with posted benefit information consistently include maternity care, and prescription drug coverage, two coverages consistently absent from short-term “skinny plans.”
What’s next for AHPs? Territorial expansion. The largest region for current AHPs is a state. Multi-state AHPs have yet to hit the market.