If you own a small company, you know the frustration of not having the same buying power as large groups when purchasing health benefit coverage. According to the National Conference of State Legislatures, small businesses on average pay eight to 18 percent more than large companies for the same health insurance policy.
That may change with a new rule that gives small businesses more freedom to create Association Health Plans (AHPs). The Department of Labor (DOL) began phasing in the final AHP rule on Sept. 1, 2018. An AHP gives small businesses the ability to purchase insurance in the large group market with the same kind of leverage large companies have to negotiate prices and benefits.
Companies with young, healthy employees will most likely will be able to get the lowest premiums. Young men in certain low-risk industries who are currently healthy will have the lowest premiums. Companies in some industries, such as engineering companies, could be about nine percent lower than what they could get on the individual or small group market.
The reason rates are lower is that AHPs don’t have to follow certain Affordable Care Act (ACA) rules and regulations, which gives the associations more flexibility when developing their plans. Certain core ACA services, such as mental health care and newborn care, could be left out of coverage to lower costs. Keep in mind that AHPs are regulated at both the federal and state level, so the availability of AHP plans will depend on your state’s regulations.