Many small businesses face a tough choice: Do you push to grow your company, or do you offer health benefits in order to retain your employees?
In an attempt to address the latter, the Southern Arizona Chamber of Commerce Association launched a new health insurance plan this month for self-employed workers and those operating modest proprietorships.
“For small businesses that don’t have access to healthcare right now, hopefully this will give them an option to acquire insurance and offer it to their employees,” said Robert Medler, vice president of public affairs at the Tucson Metro Chamber.
And if a qualifying company already provides benefits, the new association health plan could give employers a more cost-effective option, he added.
In June, the U.S. Department of Labor implemented new regulations that make it easier for small businesses to coalesce and purchase an association health plan.
The Southern Arizona Chamber Benefits plan, which is managed by UnitedHealthcare, is one of the many new AHPs to hit the market nationally.
AHPs allow multiple employers, including small businesses or self-employed workers, to purchase health insurance as a group. Associations are usually formed among a particular industry, trade or professional affiliation and are designed to grant access to medical insurance options that are offered to employees working at large businesses.
The federal changes to AHPs clarified and liberalized which organizations can form a professional group, Medler explained.
To be eligible for coverage, businesses must have between two and 50 employees and be a member of any of the Southern Arizona Association chambers, including Yuma, Nogales, Florence, Marana, Oro Valley, Tucson Metro, Tucson Hispanic, Tucson GLBT, Green Valley/Sahuarita, Tubac, Vail, Benson/San Pedro, Wilcox and Sierra Vista.
Under Southern Arizona’s new plan, member businesses can choose from 17 different healthcare insurance policies, which include various preferred provider organizations and health saving accounts. UnitedHealthcare boasts a care provider network of more than 1.2 million physicians and healthcare professionals working in 6,500 hospitals/facilities throughout the U.S. Prescription plans are also offered at various levels of coverage, Medler said.
The various health plans range among a high-end option to life-event situations.
“Our thought behind having a nice mix of options is, regardless of the business situation, companies would be able to find an affordable healthcare option that also provides the benefits they want,” he said.
Medler said that of SAACA’s 7,500 member businesses, about 1,500 companies would qualify for this new AHP.
Overall, the regional plan is a way to offer qualifying companies additional choices when it comes to health insurance, said Lucas Mattila, vice president of sales and account management at UnitedHealthcare of Arizona.
“We can now provide small businesses another coverage option so families across the state can have access to cost-effective, quality health care,” Mattila said.
While the cost of health insurance shouldered by employees and their companies are on the rise, national median income and the level of care remains flat, according to statistics provided by the Commonwealth Fund, an independent healthcare research organization.
In 2017, about 56 percent of American employees, or their families, under the age of 65 received health insurance through their employer, a Commonwealth study found.
New federal rules, and trends so far
The new regulation now allows businesses to join an AHP just to gain healthcare benefits. Sole proprietors as well as their families can sign on to these association plans, which was previously forbidden.
AHPs can include workers from unrelated trades or a particular industry nationwide and the plans can serve employers across a city, county, state or a multi-state metro area.
Existing AHPs can adopt to the current rules or operate as is, and newly formed associations can decide whether to opt in.
Under last year’s regulatory change, the Trump administration is trying to correct the “competitive disadvantage” small businesses face when purchasing health insurance, according to the president’s executive order that prompted the revamp.
The reform also aims to increase competition among insurers.
Insurance rates for professional groups and associations are governed by the size of the workforce. An association that includes 50 employees or less is considered “small groups,” and healthcare insurance rules must follow the Affordable Care Act guidelines.
The ACA requires these groups must offer all 10 “essential health benefits,” which can drive up costs for small businesses.
However, insurable associations with 51 or more employees are considered a “large group,” which have more authority over what their healthcare plans offer.
AHPs can either be “fully-insured,” where a third party insurance company assumes responsibility for policy, or “self-insured,” when the association takes on its members’ health risk. Fully-insured plans could enter the marketplace on Sept. 1, while the self-insured option will be available starting April, 1.
According to AssociationHealthPlans.com—a website designed to help businesses and individuals access insurance savings offered to large firms—an association that qualifies as a “large group” can broker a health plan to best suit employee needs and an employer’s budget as well as secure better insurance rates.
Critics of the federal change believe the move would flood the market with “junk” plans. But recent studies about the AHP overhaul have shown mixed results on the health insurance market.
Before the regulation was finalized, Avalere Health released a five-year analysis of the change, starting in 2018. The healthcare consulting firm estimated premiums in the current individual and small group markets would rise, because healthy enrollees would switch to new AHPs.
But by 2022, people enrolled in new small group AHPs could save between $1,900 and $4,100 annually, while individual policy holders may save from $8,700 to $10,800 each year. However, the overall savings is dependent upon the generosity of each particular plan, according to Avalere’s estimates.
Moreover, about 80 percent of the 28 active new regional AHPs were sponsored by a chamber of commerce, according to Kev Coleman, an authority on American health insurance markets and president of AssociationHealthPlans.com.
Despite the benefit flexibility afforded to AHPs, there is no evidence of narrow benefit designs proliferating the market, Coleman wrote in a report on Jan. 30.
Although it may be too early to determine how this change will affect the healthcare insurance market, Southern Arizona’s local chambers believe giving small business owners more options could help relieve the financial stress related to providing, or obtaining coverage.
The single greatest challenge facing small businesses today is managing health care for their employees, said Joe Erceg, president and CEO of the Green Valley/Sahuarita Chamber of Commerce.
“While policy changes in the past decade have had benefits for the health of workers, small business owners have only seen increasing costs,” Erceg said. “We believe this association health plan will help ease that burden.”