What are Association Health Plans and how could they lower healthcare costs for millions

In January, the U.S. Department of Labor announced that it planned to allow small businesses to offer employment-based health insurance through Small Business Health Plans, also known as Association Health Plans. The proposed rule would only apply to employer-sponsored health insurance and would allow employers to purchase insurance as part of a much larger group, or “association”, which could potentially lower costs significantly for the businesses and their employees.

Who is impacted?

The rule could impact up to 11 million Americans working for small businesses/sole proprietors and their families.

How it could lower costs and improve quality?

Rather than a small business/sole proprietor purchasing a single plan or just a few plans, the association, of which the employer would be a part of, may reduce administrative costs through economies of scale to strengthen its bargaining position and purchase thousands of plans for all of its members at a lower cost and offer a wider array of insurance options.

What kinds of associations could be formed?

As proposed, the rule would allow employers to form a Association Health Plan on the basis of geography or industry. A plan could serve employers in a city, county, state or multi-state metro area, or it could serve all the businesses in a particular industry nationwide.

Protections included in the proposed rule

Consistent with the Affordable Care Act’s stance on pre-existing conditions, Association Health Plans would not be allowed to charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of their health. This will be monitored by the Department of Labor.

What’s next for the proposed rule?

The Notice of Proposed Rulemaking was published in the Federal Register on January 5, 2018 and will be available for public comment for 60 days from that date. The procedure for submitting comments can be found on the Federal Register website.


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