July 6, 2018

What are Association Health Plans (AHPs)?

Association Health Plans (AHPs) are one type of benefit plan for employees. According to the U.S. Department of Labor (DOL), AHPs are group health plans that employer groups or associations may offer to their members. For example, some members of Actors’ Equity Association (AEA) benefit from health coverage and pension plans to which only AEA members have access.

AHPs may help make more robust benefits available to association members.

AHPs may help make more robust benefits available to association members.

Usually, insurers work with single large employers with many employees to create benefits and programs such as group health plans. The benefits and coverage available to large employers and their workers because of this arrangement mean they are able to provide more robust benefits with lower premiums than small employers are able to offer.

In contrast, AHPs allow associations and smaller employers to come together to make similar types of benefits available to their members. This creates economies of scale, which helps associations contain costs and provide more competitive benefits.

Therefore, AHPs can be less expensive than other alternatives. Moreover, associations can match AHP benefits to the specific needs of their members more successfully.

How have AHPs changed?

The definition of “employers” under the Employee Retirement Income Security Act of 1974 (ERISA) has changed following a June 2018 ruling by the Employee Benefits Security Administration. The ERISA ruling expanded the definition of “employers.” Now, associations can be formed more easily, such as, for example, around a common geography or industry.

A larger number of employers and employees will be able to access AHPs.

A larger number of employers and employees will be able to access AHPs.

These changes are paving the way for a larger number of employer groups and associations. Under this new ruling, according to the DOL, “an AHP could offer coverage to some or all employers in a state, city, county, or a multi-state metro area…” In addition, an AHP could offer coverage nationwide to businesses within an trade or industry group. Therefore, a larger number of employers and employees will be able to access AHP benefits.

Including some people who currently have health coverage, the DOL expects nearly 4 million additional people to enroll in AHPs. In particular, the U.S. Congressional Budget Office (CBO) has predicted that close to half a million people (400,000) who otherwise would have been uninsured will enroll in an AHP. Moreover, the CBO expects 3.6 million people who would have had other types of coverage to enroll instead in AHPs.

The changes will allow sole-proprietors and working owners without other employees to join AHPs for the first time. This is expected to create “…a new path for these hardworking Americans to access affordable, quality health coverage,” according to the DOL.

How will AHPs affect dental coverage?

The effects of the new ruling on dental insurance and dental coverage are difficult to foresee. AssociationHealthPlans.com is monitoring this new situation and will be providing ongoing updates. Check it out, or click on the following article link to learn more!

Read next: How can consumers access an Association Health Plan?

 

Article sources:

https://www.federalregister.gov/documents/2018/06/21/2018-12992/definition-of-employer-under-section-35-of-erisa-association-health-plans

https://www.dol.gov/general/topic/association-health-plans

 

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