First association health plan approved

OLYMPIA, Wash. – The Office of the Insurance Commissioner has approved UnitedHealthcare of Washington, Inc.’s 2014 association health plan for Associated General Contractors of Washington.

This is the first approval for the more than 60 association health plans currently under review for compliance with new federal regulations.

Association health plans are sold by insurers to a large professional or trade group. In the past, small employers within an association had the benefit of buying large group insurance for their employees. Until recent federal regulation, association health plans were exempt from having to meet key consumer protections and from the rating and underwriting standards of the individual or small-employer market.

“Associations offer a lot of benefits to their members, and to their communities. We’ve worked very hard to reach out to as many associations and insurers as possible for the last several years to help them understand the new federal law,” said Insurance Commissioner Mike Kreidler. “We understand many of their members rely on the insurance that associations provide. We’ve offered guidance and advice on what steps associations need to take to comply with the new federal law.”

Associations can still offer health insurance to their members, but new federal guidelines mean that they cannot offer large group coverage to their small employer members. An exception exists for associations that meet the definition of an employer under federal law. Generally, an association can be considered an employer if it has a genuine organizational relationship unrelated to providing benefits.

UnitedHealthcare of Washington, Inc. is the first carrier to have its plan approved so far this year. All association health plans are currently under a two-part review – do they meet the new federal definition of an employer and if so, do their rates comply with large group standards, which prohibit discrimination for similarly situated employees.

Prior to this federal regulation, some small employers who joined an association for the benefit of affordable health insurance saw their rates increase significantly when one of their employees became sick. If they could not afford the increase, they were forced to seek coverage in the small employer market, where premiums were historically higher.

Approximately 500,000 people in Washington state are enrolled in association health plans and that more than half of these will be in plans that meet the new federal law. Many of the others may as well, but our review is ongoing.

“Associations can still offer their members health insurance, but they must play by a common set of rules,” said Kreidler. “The federal regulations help set the new standards are we’re already seeing positive market changes occur. Small employers in particular will have many more choices, including a SHOP or Washington Business plan available in every county.”