Two Michigan business associations are launching a small business health care plan meant to lower costs.
The Small Business Association of Michigan and the Michigan Business and Professional Association are launching TranscendAHP, taking advantage of recent federal Affordable Care Act reforms to give small businesses access to health care plans previously available to only larger employers.
In June, the U.S. Department of Labor published new regulations to allow Association Health Plans beginning in September, which enables small businesses and self-employed workers to band together to obtain health care coverage as if they were a single large company.
Once the regulations were passed in June, SBAM and MBPA worked together to form TranscendAHP, a 501(c)(6) nonprofit, said Jennifer Kluge, MBPA president.
TranscendAHP is an early endeavor using the new regulations, so its effects have yet to be seen, though results from similar organizations have made them confident that pooling risk is effective in lowering costs, said Rob Fowler, president and CEO of SBAM.
The TranscendAHP plan is available to businesses with fewer than 50 people, including sole proprietors, with Blue Cross Blue Shield of Michigan and Blue Care Network as the TranscendAHP provider.
Kluge said ACA regulations turned out to have a negative impact on small business, increasing some MBPA member businesses’ premiums by as much as 120 percent.
Being forced into the individual market, Fowler said sole proprietors were hit particularly hard by ACA regulations.
This has created a “new normal” of high rates, Kluge said.
“Access to comprehensive health insurance programs continues to rank at the top of small-business owners’ concerns,” Kluge said. “Combined with a tight labor market, our members need options that allow them to compete with much larger companies for the talent they need to be successful.”
TranscendAHP is fully insured and not subject to some of the Affordable Care Act’s mandated benefits and taxes, which Kluge said allows for better-tailored benefits and costs to reflect the unique demographics of individual businesses.
Fowler said they decided not to include pediatric dental in this plan.
Unlike ACA premium rates that are determined solely by age, location, family size and tobacco use, TranscendAHP pricing will be determined based on a company’s demographics, including company industry, company location, and age and gender mix of covered employees.
Kluge said this plan creates consistent rates based on a contract rather than changing rates based on individuals, which she said was burdensome to small employers.
Association Health Plans are regulated under federal law, which means TranscendAHP is not subject to all the state health insurance regulations and benefit mandates, which could contribute to lower costs.
To be eligible, businesses must be members of one of the associations involved.
Kluge said other associations and chambers throughout the state are encouraged to join TranscendAHP, which would give access to their member businesses. The more entities involved, the higher likelihood of lowered costs, she said.
Fowler said the organization was created to allow for this, rather than having multiple Association Health Plans throughout the state.
“We can imagine it being the largest in the state in a fairly short period of time,” he said.
Fowler said small businesses are encouraged to get a quote from TranscendAHP agents and compare it with what they have now.
For some, he expects the new plan will be a better deal.