For many years, Association Health Plans were able to offer individual health insurance to their members at special rates based on the association group’s claim experience. The association, in turn, received revenue from insurers for their administrative and marketing role. The arrangement was a win-win. Association members had access to good benefits at a favorable premium, and the association developed a healthy non-dues revenue stream. The Affordable Care Act changed all that by eliminating the ability to form these industry-based risk pools and forcing all individuals into one giant fully insured state risk pool with the goal of smoothing rates for everyone.
Time will tell whether that theory proves true. But meanwhile, people who were in these Association Health Plans have been forced into the individual insurance marketplace to buy ACA-compliant plans, and associations are smarting from the resulting lost revenue. But some associations have been able to implement an alternative means of providing health benefits for their members. They have established a multiple employer welfare arrangement, or a MEWA, to provide group health plans for their members and their members’ employees.
For qualified candidates, it creates a win-win situation. Members can have access to health plans designed with their needs in mind, with participation rules developed by their own organization, and often at lower prices than they would pay for commercially available plans. The MEWA earns money by charging an administration fee. And the association provides a unique service to its members that they cannot obtain elsewhere. A MEWA can be a great solution for organizations with the knowledge and financial resources to build and administer it properly.
But what an Association doesn’t have the resources to cover the startup cost? Then maybe a Group Captive option is a good fit depending on the size of the employer groups and the states where coverage will apply? What if the employer groups are too small for “any” self-funding” program out there, even Aggregate Only products? Depending on the State, Number of Covered Lives and the goals of the Association, a fully insured carrier would work with them, allowing them to collect some admin fees and sharing some of the risk via a reinsurance mechanism?
The point I’m attempting to make is Association Health Plans can be a great fit for “qualified” candidates, and a waste of time for others considering this option. Let Sawgrass help you decide what’s in the best interest for your clients.
