Many individuals do not understand various insurance terms and the plans available to them. Most employers have a hard time trying to find the best and the most affordable coverage for their employees. It is important you find an insurance company or agent that can break it down for you to get the best coverage.
We asked our founding partner and CEO, Jamie Charlton, to shed some light on Association Health Plans (AHPs) and also give their advantages and disadvantages.
What is an AHP, and How Does it Work?
According to Charlton, AHP or Association Health Plans are a conglomeration of smaller groups that come under the guise of a larger umbrella to leverage bulk buying power. They might not be small companies per se, but are those that come together under one industry or from the same geographic area to strengthen their negotiating power. They can be a group of manufacturers, printers or self-employed individuals from the same jurisdiction. An example of such an association is the Chamber Alliance.
Ideally, small businesses, including self-employed individuals in the same industry or geographic location, can merge to form larger groups to get healthcare plans as one large group. Coalitions are more or less the same as these associations, only that coalitions are groups made up of non-profit institutions such as schools. Associations are mostly businesses or organizations aimed at making profits.
AHP Expansion
United States (US) President, Donald Trump, issued an executive order to promote healthcare coverage in the US on October 12, 2017. The order aims at expanding access to small businesses to get the same competitive advantage as large corporations when purchasing health insurance. This order was meant to provide more affordable health insurance plans to as many individuals as possible. These individuals include farmers, wage earners and employees of any small business in the US.
Charlton has a slightly different view of this expansion. Though it has helped a few individuals, the expansion does not present any advantage as the rates keep going higher with age. He explained, “AHPs don’t have an advantage in the long run, unless they have a long-term sponsor.” AHPs have always been in existence, and the expansion is just political rhetoric that will give the plans some credibility.
Advantages of an AHP to Smaller Employers
There are some advantages that come with AHPs, both to the employer and the employees. These include:
- Negotiating power
- Spreading the risk
- Maintaining lower rates instead of lumping them into unverified age groups
- No charging different premiums to employees based on health status
- No charging different rates to employers based on the health status of their employees
- Healthy, younger groups will be fully underwritten
- Self-employed individuals with a few employees and those with no employees are also eligible
- Will not cherry pick or discriminate based on the status of an applicant pre-existing or previous health condition.
There are also some disadvantages. They include:
- Many of these plans might not allow single person groups.
- An individual must be a bona-fide member of a group and pay a membership fee.
The Role Saxon Plays in Helping the Employer
Saxon prides itself as a top provider of AHPs. The company has experts with knowledge of how this system works. Writing these plans for the last four years, Saxon can offer stable rates and consistent, professional assistance.
For more information regarding employee benefits and competitive benefits packages that fit your business strategy, you can contact Jamie Charlton at 513-573-0129 or via email at jcharlton@gosaxon.com.