Over the past eight years, The Affordable Care Act, or ACA, has been a source of insurance for many small businesses and self-employed individuals. But the Trump Administration believes it has a better idea. It recently proposed a new health care option for businesses and the self-employed that would run parallel to the ACA. Here’s what that option looks like, and how it might affect your ability to obtain and hold health insurance for you or your employees.
Association Health Plans
In June 2018, the Administration rolled out a model for expanding the use of Association Health Plans, or AHPs. With oversight from the Department of Labor, AHPs are health plans that employer groups and associations offer for health coverage.
AHPs make it possible for small employers to band together to purchase the types of coverage available to large employers. This coverage could very well be less expensive and better tailored to the needs of employees than other health insurance options. At the very least, it offers small businesses another health insurance choice.
A new AHP can be formed to cover a specific geographic area, such as a state, city, county, or a multi-state metro area. Or an AHP can offer coverage to businesses in a trade or industry group nationwide. Unlike earlier AHPs, business owners without employees (i.e., self-employed individuals or sole-proprietors) and their families will be permitted to join AHPs.
How Do AHPs Differ from the ACA
It could be said that the Administration’s goal when it comes to AHPs is simply to privatize the ACA. While some analysts are skeptical that AHPs will have the intended result of lowering health care costs overall, others see them as providing more flexibility with fewer restrictions than the ACA.
The Department of Labor makes it clear that AHPs have the same consumer and anti-discrimination safeguards as the ACA. AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions. Nor may they cancel coverage just because an employee becomes ill. Further, AHPs are not able to charge different premiums to employers or employees based on their health status. States will share enforcement authority over AHPs with the federal government.
For the time being, small businesses and self-employed individuals can still get insurance through the ACA. AHPs are another option, one that may offer more competitively priced health insurance. Businesses and individuals wanting to purchase health insurance are encouraged to make accurate comparisons and read the fine print to make sure they are comparing apples to apples.