Small business healthcare gets a lift in new proposed legislation.
The potential for your small business to get a big boost in coverage is looking good with President Trump’s new proposed changes in small business healthcare legislation. Coming soon, the US Department of Labor has signed regulations to improve healthcare options for small businesses. Association Heath Plans, or AHPs, will give small business owners easier access to healthcare benefits that are currently in effect for large-scale companies.
Association Health Plans will aim to provide equality among all businesses in terms of health care. It will be significantly easier to provide high quality healthcare as a business owner if you employ less than 50 employees.
Previously, small business owners have had to meet a strict criterion to qualify for AHPs under the Affordable Care Act. With the changes in effect, a larger number of companies will be able to join an AHP. Association Health Plans allow small businesses to band together and receive coverage similar to bigger competitors. Self-employed workers will also be able to join these associations to access health coverage similar to that of large businesses.
Perhaps the most important change that comes with the rules is a significant decrease in premiums. Previously, being able to cover all employees was a difficult task due to premiums of close to $7,000. The huge increase in premiums from the pre-ObamaCare era forced many small business owners to drop coverage completely. However, small business owners will once again be able to give their employees full coverage with healthcare premiums being slashed.
After the Affordable Care Act was passed, the number of small business providing health coverage dropped by almost 25%. This was a huge blow to employees, who were left to find their own coverage or face ObamaCare mandated fines.
It’s estimated that approximately four million Americans will be able to access the benefits of AHPs once the new rule takes effect. The rule will also provide coverage to 400,000 Americans who were completely uninsured previously.
Sole-proprietors, who are the exclusive owners of their business, will gain the most from the new health-care rule. Previously, sole-proprietors could only access individual market health plans, which have sky high premiums. Now, these business owners can enjoy the benefits of AHPs through group associations. This means huge savings on health care for your business as the individual market is no longer the sole option for coverage plans.
The new AHP rule could also lead to an increase in small businesses being created. Currently, small business creation is almost as low as it was during the Great Recression. This is due to potential entrepreneurs being scared off by the daunting small business health-care premiums. These potential entrepreneurs often stay in their corporate jobs where they have access to high quality healthcare.
However, the task of creating a small business comes with one less downside as health coverage for employees will be easier than ever to acquire.
A good example of AHPs already taking effect among small businesses owners is the formation of the Restaurant and Hospitality Association Benefit Trust. This association plan offers over 100 different plans for its members. Restaurant owners participating in the association will see a huge cut in costs for health plans, which will level the playing field against big business competition.
Multiple Attorney Generals, including those of New York and Massachusetts, are filing objections to the new AHP rule. The grounds for this objection is based on the grounds that the new AHP expansions are unlawful under the Affordable Care Act.
Massachusetts and New York Attorneys General Maura Healey and Barbara Underwood announced Wednesday their plans to sue the Trump administration over the new AHP rules. The Attorneys General argue that the expansion of AHPs will lead to the downfall of consumer protections for Americans covered by AHPs. The goal of the lawsuit is to protect the Affordable Care Act, which has been the target of the President and his administration. The AGs claim Association Health Plans often result in fraud among consumers and small businesses.
It’s highly unlikely the lawsuit will stop the implementation of the new AHP rule. There is simply no violation of Affordable Care Act regulations. The expansion only eases the paperwork required for AHPs and invites for small business owners and self-employed workers to join in. The market forces in play will squeeze out any potential fraud as well as make insufficient coverage obsolete.
Many consumer protections will stay in place, such as requirements to cover pre-existing conditions. AHPs have to comply with these protections in order to prevent scams that were prevalent among these health plans in the past.
The US Department of Labor will provide federal oversight of AHPs. This could mean more competitive AHP markets due to the ability to thrive over state lines. With AHP markets competing across multiple states, small business owners will see better plans and decreased costs. No longer will AHPs have to adhere to strenuous state regulations due to a federal approach.
Expanding AHPs to more small businesses is just one more step to dismantling the Affordable Care Act, however, there are some potential downsides for some. The new rules allow for AHPs to increase premiums based on age, gender, or the status of one’s health. ObamaCare had fierce protections that made it illegal to vary plan costs based on these factors, but AHPs no longer have to comply. While this benefits young and healthy people, it could sharply raise premiums for older consumers with health conditions.
There’s also no minimum requirements for health benefits for AHPs, which means plans could potentially exclude a number of coverage options previously offered. For example, previous plans were required to cover pregnancies, mental health care, and more. However, these minimum coverage requirements have been exempted under the new rule. This probably won’t be an issue though, as the increase in competition among AHP providers means they’ll be fighting to provide high-quality benefits at competitive prices. While some worry no minimum coverage requirements will be harmful, the proponents of the plan say marketplace will correct that issue naturally.
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