What is an Association health plan?
Q: What is an Association health plan?
A: An Association is a group formed from members of a professional association in which all members work in a similar industry. Members of an association may be self-employed or work for companies that do not typically offer health insurance to their employees because their employers are sub-contractors who work on commission and are not part of the company’s regular payroll. Associations may also be formed by franchise owners who work for a larger corporation. Association health plans, also known as Affinity health plans, are not group health insurance plans. Many people make the assumption that if they are part of an association, they may enroll in that association’s health plan and are entitled to the same rights provided to them under an employer-sponsored group health plan. This is not typically the case and the insurance companies will usually use the same underwriting guidelines that apply to individual/family health plans. Association health plans are gaining more attention in recent years as both federal and state legislatures look at changing the laws governing these association groups. Some proposed legislations suggests giving associations the right to negotiate better premium rates with the insurance companies or requiring the insurance companies to offer coverage to association members on a guaranteed issue basis by giving them group health insurance status.
Since Association health plans are not group health plans, members of an Association health plan are not afforded COBRA or HIPAA rights. Some insurance companies may, at their own discretion, provide group health insurance benefits and coverage to association members, but this is rare. Because associations do not meet the state or federal guidelines that define group health insurance, they are not provided with the same guarantees that are given to employer-sponsored groups. An insurance company may have a special agreement with an association to provide extra benefits, customized health plans and personalized customer assistance to members of an association. The association administrators develop these special relationships with the insurance carriers so they may offer their members health plan options above those offered to the general public.
In most states, the insurance companies have the right to select which association members they will accept for enrollment under the association health plan. This protects the insurance company against adverse selection. Since association health plans have no minimum participation requirements, the insurance companies must have the right to select those that are eligible based on their current and past health status.
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