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What’s at stake with association health plans for staff?


A change in health insurance regulations is expected to bring the cost of coverage within reach of more small businesses, including restaurants. Should yours be one of them? Restaurant Business asked the insurance experts at the National Restaurant Association to decipher how the federal government’s green-lighting of association health plans (AHPs) will likely change the market for operators who are interested in adding coverage as an employee recruitment and retention tool.

Among the information they shared were the findings of a study that computed the likely savings. AHPs should lower the annual premiums for small group coverage by $1,900 to $4,100 by 2022, according to the report from Avalere Health, a healthcare think tank. It estimated the yearly savings for individual plans at $8,700 to $10,800.

Here are more details from our conversation with Aaron Frazier, director of healthcare policy for the association, and Clinton Wolf, senior vice president of health and insurance services for the group. Their insights come in part from the association’s own AHP, which the organization has offered in partnership with United Healthcare since before the Trump administration eased the rules for trade groups.

Q: If I’m a restaurant operator, why should I care that the federal government has OK’d association health plans?

Frazier: A small-business operator is challenged by health insurance costs, just as all businesses have been. But they don’t have the resources to do much about it. Many can’t afford it.

The change provides expanded flexibility under the rules for employers, so now you can band together as part of an association and negotiate rates as if you’re a bigger company. If I’m an operator, now I’ll be able to get a Costco-scale cost.

Wolf: A lot of operators could save money on their health insurance costs. They should get a quote. 

Q: So I’ll be able to pool my purchase with other restaurateurs and negotiate better rates. But what do I give up in terms to an operator? Am I getting “insurance lite?”

Wolf:  If you’re dealing with a credible association, it’s unlikely. Speaking for ourselves, you’re not giving up anything. The products we’re offering are the standard United Healthcare offerings.

[But] if it seems too good to be true, I’d keep looking.

Q: How large do these breaks or benefits tend to be, in terms of real dollars?

Frazier: That’s going to depend a lot on where you’re coming from. [He noted the wide variation in the savings estimated by Avalere.] Under the high scenario, the average change would be 4% in the high scenario, if I recall correctly.

Q: Are operators responding? Is healthcare coverage becoming a more widespread benefit?

Wolf: I definitely think we’ve seen an uptick since the [new] rule became final. I expect, once you get to the January/December enrollment period [when many current plans expire], I think you’re going to see a lot more activity.

Q: What’s the time frame? When should operators act?

Wolf: if you have existing coverage today, I’d encourage you to start looking into this a good 60 to 90 days ahead of when you’d want it to take effect. There’s underwriting involved, so that takes longer.

If you don’t offer coverage and you’re looking at more than one association plan, you want to take a look early because you want to compare them all before you decide.

Q: Why should I investigate the cost now, instead of waiting until more AHP programs enter the market and presumably drive down rates with heightened competition?

Wolf: The war for talent. If operators don’t have coverage, they should for that reason. We hear it all the time: “I’m having a really hard time hiring people, or retaining people, so I want to start offering benefits.”

This is a very affordable way of doing it. It really helps them in the war on talent.

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