We are all scratching our heads at the inability of the people in Washington to come up with an alternative plan to the Affordable Care Act or fix it in a manner that will help control costs, provide their constituents with proper access to health care, and begin the long process of fixing this country’s broken healthcare system.
As a result, small businesses have to live with the uncertainty of what the Republican controlled Congress or the President will propose. In the meantime, small business owners are left wondering how any changes to the ACA will affect the prospects of continuing to provide health insurance to their families and employees.
Although House Majority leader, Paul Ryan, decided not to bring to a vote the Republican sponsored alternative to ACA , on March 22, 2107, the Small Business Health Fairness Act of 2017 passed — and will now make its way to the Senate for a vote. President Trump supports this legislation, which would amend certain provisions of Employee Retirement Income Security Act (ERISA) that have made it difficult for association plans whose members reside in multiple states (like NARFA) to offer health coverage in the most efficient manner possible.
If enacted the bill would amend ERISA “to exempt health care plans sponsored by trade and business associations from most state laws and regulations.” The bill would also allow association health plans (“AHP”) to offer self-funded plans, provided that they met a number of criteria designed to protect members from the self-funded arrangement becoming insolvent and leaving members in the lurch with unpaid claims. A self-insured plan is one in which the employer (or association, in this case) assumes the financial risk for insuring employees, rather than passing that risk along to a health insurance company. The advantage of this bill is that AHPs would not be subject to state laws. As discussed more fully below, AHPs would be governed entirely by ERISA (federal law) making it a lot easier for plans like NARFA’s to obtain large group coverage for its membership and thereby offer more efficient pricing.
For years, we have discussed the advantages of joining an association like NARFA to gain access to exclusive programs not available to small businesses on the open market, and enjoy buying power like a large group, have a voice in legislative issues, and receive the administrative support allowing businesses to focus on growth, not endless paperwork and regulations. Large corporations are typically able to provide better health benefits at lower cost to both themselves (per employee) and to employees — because they’re getting a bit of a break from the insurance company for bringing so many employees to the risk pool.
Small companies don’t have that negotiation power, but advocates say that AHPs would be one way to level the playing field because the association would be able to negotiate group rates for a number of small groups as one large representative entity.
The idea isn’t new. Association health plans, such as NARFA have existed for decades. But they often escaped close supervision because neither states nor the federal government had clear regulatory authority over them. In the 1970s and ’80s, there were cases of fraud and insolvency that raised concerns about the model. Some multiple-employer purchasing groups went belly up and left consumers and providers with millions in unpaid claims.
So Congress amended federal law to allow states to regulate these plans. When the ACA passed in 2010, the Obama administration required that AHPs meet the new standards for small group plans: They had to cover the 10 essential health benefits, for example, and couldn’t charge older people monthly insurance premiums that were more than three times higher than those of younger people.
The new bill would change all that. It would eliminate state regulation of AHPs and put oversight in the hands of the federal Department of Labor, which, under the Act, is required to certify the plan. The bill includes solvency and guarantee fund protections, which should theoretically address the potential problem of self-insured AHPs.
This legislation is far from being enacted. It still has to pass the Senate. The President is on record saying that it is prepared to sign the House version. Similar legislation has been proposed repeatedly over the years and it has consistently been defeated, but with a more business-friendly Congress perhaps this year it will be enacted.
Many believe that forming Association Health Plans (AHPs) would help to closer align options for small businesses with those available to large businesses and labor unions, which are able to offer their employees and members common health benefits across State lines. Small businesses also would benefit from larger risk pools, increased negotiating power, and administrative efficiencies, decreasing costs for their workers.
Associations provide much needed strength and stability for small business, especially during uncertain times. While nobody is exactly sure what is coming out of Washington D.C. in the near future, we strongly believe every business should look at how Associations can provide transparency, custom plan designs, strong administrative support, and in some cases, better prescription drug programs.
Since 1929, NARFA has remained strong during many different economic environments, and continues to offer strong employee benefit programs to keep our members compliant, stable, and well-equipped to continue growing and thriving during periods of uncertainty. The NARFA Team also strongly believes in becoming your true partner, with a strong focus on strategy, rather than just simply brokering. One of the core values of any association should be to exist for the health of its member businesses.
Please contact us today to learn more about our programs and why 99% of our members stay with us year after year.
NARFA is the Automotive Wholesalers Association of New England, a non-profit automotive trade association organized for the benefit of member companies in automotive-related businesses throughout New England, specifically in the states of Maine, New Hampshire, Massachusetts, and Connecticut.
NARFA has the answers and solutions. Since 1929 NARFA has sponsored group health, dental, vision, life, short-term, and long-term disability programs, and a self-funded workers’ compensation program in the state of Massachusetts. NARFA has not only been a solution for employee benefits, but we continue to stay strong for our members to advocate, protect, and grow. NARFA also provides our members with industry information and updates, business bulletins, health bulletins, and much more.