AFFORDABLE HEALTH COVERAGE FOR SMALL BUSINESSES
BY THOMAS SANTUCCI
Queens Chamber Chairperson
On June 19, the U.S. Department of Labor (DOL) expanded access to affordable health coverage options for America’s small businesses and their employees through Association Health Plans (AHPs).
These plans work by allowing small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer under the Affordable Care Act (ACA). In sum, this is a huge step for Chambers of Commerce, whereby they may now offer health insurance to their Members.
LEGAL BASIS
This expansion of coverage to allow AHPs all hinges on the interpretation of the word “employer” as defined by section 3(5) of the Employee Retirement Income Security Act of 1974:
(5) The term “employer” means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.
Previously, “employer” was more narrowly defined and disallowed associations to be included. The DOL has now confirmed that employers desiring to form an AHP “must consist of employers engaged in either the same trade, industry or line of business, or have a principal place of business in the same region that does not exceed the boundaries of a single state or a metropolitan area” (which may include more than one state).
Further, the association must have a least one substantial business purpose unrelated to offering and providing benefits, even if the primary purpose of the AHP is to offer coverage to the group.
The other purpose could be education or promotion of the industry, but it should be a viable entity even in the absence of acting as a sponsor of an AHP. It is allowable to have a pre-existing group or association to form an AHP as a wholly owned subsidiary to administer the health plan.
WHO IS COVERED?
Only employees and former employees of Chamber Members (and their families) are permitted to participate in AHPs. However, if certain conditions are met, self-employed owners, such as sole-proprietors, may elect top act as employer members of an association and be treated as employees of their businesses for purposes of being covered by the AHP.
Working owners generally must work at least 20 hours per week or 120 hours per month (or less).
AHPs will not be able to charge different premiums to employees based on their health status and will not be able to charge employers different rates based on the health status of their employees.
CONCLUSION
This is a monumental decision for the Queens Chamber of Commerce. As an owner/operator of a small business, I know, as do many others, the challenges of providing health insurance for my employees. Often, this is the single greatest overhead cost. By permitting small business owners access to health care via Membership with the Queens Chamber of Commerce, we can alleviate a significant burden to the Members and further increase our overall Membership. This, in sum, creates a greater pool for business development and opportunity.
