Associations have the ability to offer unique health insurance programs (AHPs) to their members that provide deep value and better pricing that purchasing health insurance directly from insurance carriers.
AHP's are subject to the federal Employee Retirement Income Security Act (ERISA) because they are multiple employer welfare arrangements (MEWAs), and are also subject to state regulation. Not all states have allowed AHP's to exist, although there has been an increase in states that permit these offerings in recent years.
State governments have the most direct impact on whether these programs are viable because they directly legislate them. As a result, there are very few AHP's that operate in multiple states.
States that permit AHPs classify them as large group programs which carry underwriting privileges and operating flexibility not available in the small group market. This gives AHP's pricing advantages over small group/community solutions offered through insurance carriers.
AHP's are a group health plan where multiple employers join together to offer medical benefits. By leveraging the power of their collective membership, Association's can:
Design plan benefits for small employers that have features and advantages similar to those of large employers.
Bundle medical, dental, vision, life and other health insurance products to create a comprehensive solution.
Negotiate better rates from healthcare providers and insurers.
Provide administrative relief to employers by offering Cobra, tax filing and other compliance services.
Improve the delivery and communication of health insurance benefits to the workforce.
There are two primary drivers for why AHP's are relevant and important to employers
1) Battle for professional talent: Attracting and retaining staff talent is important in all industries and especially those industries that rely on professional talent to differentiate their business. This is especially critical for small employers who often don't have the resources or expertise to compete for talent against larger employers. A great health insurance program can often make the difference in a competitive hiring situation and will help employers demonstrate ongoing commitment to their workforce.
2) Cost: After salaries, the second largest check that most employers write on an annual basis is for health insurance. Health insurance has averaged an~11% price increase in the small group market over the last 40 years. This means that an employer's second largest expense is doubling every ~6.5 years. Without a good options to offset these cost increases, employers run the risk of reduced profit margins and/or scaling down their employee benefits, which has direct impact on their workforce and the performance of their business.
Associations must be ready to invest
Associations are in the "catbird" seat in terms of being able to offer unprecedented value to small employers and sole proprietors. They have the ability to sponsor these programs and provide unique value not elsewhere available. AHPs create a reason for members to join, stay and become active within the Association.
So ... if an Association wants to offer AHP's what do they need to do?
Monroe Professional Services
Most Assocations don't have the expertise, resources or background to launch an AHP. They typically rely on hiring a program manager that can help them build and run these programs.
Choosing the right program manger is critical since they will have the greatest impact on the product suite and, ultimately, the value delivery to the Association's membership.
Monroe Professional Services has deep program management experience and we have successfully launched several AHP's, including AHPs managed by the Association directly. We have also helped Associations run RFPs and assist in the evaluation of program manager providers. Lastly, we have worked with service providers to help them solicit, build and manage AHPs on behalf of the Association.
We believe in the small business community and are committed to supporting product and service solutions that can help them grow and prosper.