How the Trump administration's association health plan proposal affects small businesses: 6 things to know

The Trump administration proposed a new plan that would allow small business owners, employers, sole proprietors and self-employed individuals to group together to purchase insurance in the large group market, according to The New York Times.

 

Here are six things to know:

1. In accordance with President Donald Trump's executive order signed in October 2017, the proposal would make it easier for small businesses to join together to purchase insurance plans, and those plans would be exempt from covering mental healthcare, emergency services, maternity care and prescription drugs.

2. According to the Labor Department, the proposal would help small businesses and self-insured individuals reduce administrative costs and increase bargaining power.

3. Blue Cross Blue Shield plans and consumer groups have opposed this idea, which would be attractive to employers with younger workforces and leave behind sicker individuals that are covered in the ACA-compliant plans. Premiums could increase as a result, according to the report.

4. Republican Congress members have promoted association plans for the past two decades unsuccessfully, however the Trump administration now plans to use regulatory authority to create the framework. The proposal also redefines the interpretation of "employer" and other ERISA terms for employer-sponsored health plans.

5. The association plans would still be prohibited from charging individuals higher premiums based on health factors and refusing to admit employees to the plan due to their health.

6. The associations would allow membership across state lines, which means employers from around the country could work together to form a single group. The employers could come together if they are in the same trade, industry or line of business, a change from the current department requirements that forced a higher commonality of interest among the small businesses.

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