HI Everyone,
Several folks have asked for my notes on AHPs. As discussed, we intend to pursue an AHP when it is possible to do so for a national association; as of today we are told maybe 2019 or 2020. Feel free to reach out to me with any questions or comments. Notes are below:
Over the past 8 months or so we have been exploring Association Health Plans. Below are my notes from the dozens of conversations we have had. We are told it can take 6 -18 months and it is cost prohibitive for many. We saw the National Federation of Independent Businesses will not be launching an AHP to their 300,000+ members. Also, the National Retail Federation does not expect to. Having said that, the National Restaurant Association launched one before the recent DOL ruling and many others are as well. Several states have also filed lawsuits against the AHP so it is working through the courts.
When we last spoke to a broker the first week of September we were told that National plans are essentially on hold by the insurance companies pending the lawsuits filed by a dozen states. If you have an association where all of your members are in one state, that state is friendly to AHPs and you have a group of significant size so as to attract an insurance company than you can form an AHP. There is confusion if you must get the heath history of the population first.
Formation:
- You need to form a trust (separate c3 org) that will handle the AHP.
- This needs to have a separate board from your c6 although members can be on both.
- Your organization needs to be a bona fide association - you can google this but nothing to worry about
- Self-insured plans can start in 2019, fully insured after 09/18.
- This cannot be the primary benefit for the organization, just one of several or many although there is conflicting information on this
Underwriting your Plan:
- This area is still confusing.
- We have spoken to several brokers who said the insurance companies are still working on how to do this.
- Each company, although under your plan, will need to submit the history of their employees when they go to sign up. So just like we do today, but being a member does not guarantee coverage.
- You can go through a broker or direct.
- You can use a 3rd party administrator or administer it yourself. They will handle all the billing and collection and the risk involved there. The plan will be Your Assoc Health Plan and that is how the invoices will go to the companies involved and you can handle this yourself and remit back to the insurance company or have a 3rd party which will cost money of course.
- The insurance companies then have to agree to underwrite you. In terms of a national plan, United seems to be the best and they have done this. Anthem and the blues get confusing and the reciprocity between them all is a nightmare. You can also look at Cigna and others of course. They know how to do state-based, national plans there is some uncertainty.
- Several people have told me that you will need to hire an actuary and get the data from your membership so the insurance company can score you. This takes time and money of course. We will be using a broker and people will submit their history when their renewals come up just like we all do now but it will be to the new insurance company or broker network that will have to be nationwide.
- Setting a plan when your members are all within one state is easier, depending on your state….
Conversions:
- People and companies can be denied but this is gray. What I was told is if there is a company with 10 employees and 1 has had cancer, the group will be denied. The age, health and occupation impact all of this for each individual company.
- The conversion rates, from their existing to your plan, varied greatly.
- The plans are setup to work with companies that have between 2 - 99 employees
Savings & Non-Dues Income:
- The average savings per insured is 10% - 15% as of our last call.
- The cost for the 3rd party admin and broker is added to the costs form the insurance company so it could be $200 for insurance, $10 for the 3rd party and $20 for the broker, etc.
- The income varies by state but in an example, we were given, a broker makes about $26 and your association might get $4 - $5. So, if there are 1,000 insured on your plan, perhaps $4,000 - $5,000 per month.
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Kevin Kennedy
CEO
SALA
Washington DC
kevin.kennedy@smallassociations.org------------------------------