June 19, 2010

What you don't know about your Association Health Insurance Plan

Why is my association health insurance plan so expensive? You may have already received a sizable premium increase notice and you are confused about what options are available to you.

A frequent question that I receive is "Why is my Association Health Plan so Expensive?"

Whether you work with a local or national association, trade union or other affiliated professional organization, you need to understand the facts about the insurance policy offered to you. Many (most) plans offered to association members are not true group plans, but rather supplemental coverages, sponsored or endorsed products that may or may not offer a discount.

Insurance companies require "true group" cases to have a minimum participation percentage. Although it varies by company, most plans require at least 70% or more of their eligible employees to be included in the companies health plan. Ineligible employees may be part time, seasonal, newly hired or employees that have elected to be covered under another plan, which is often their spouses coverage. Insurance companies also usually require the employer sponsor to pay for a large percentage of the employees medical costs.

These facts are not true with an association. Members are not employees. Many individuals are self employed or independent contractors. The insurance company and association can not require these members to enroll in the plan offering, therefore the actual participation rate may be poor. With the uncertainty of the actual number of participants joining the plan, the insurance company actuarial  department may calculate a higher premium rate or cushion into the plan design.

An association "group" plan does not mean that the premium will be lower or cheaper for member. It merely means that a member can join the plan, usually without medical underwriting to qualify for coverage. This creates a new problem for the sponsoring insurance company. Sick people enroll in a group with an already low percentage rate among eligible participants. This factor also contributes to higher rates. Many older associations are eventually dropped from the insurance carrier for poor claims experience and lack of member participation. Others experience large annual premium increases. Healthy people find alternative less expensive coverage, creating a larger "polluted pool" of more sick people, without the benefit of receiving the premiums from the healthy population. Often healthy or younger people pay more to help offset the expenses due to the plans high claims experience.

Before you join an association sponsored plan, don't jump in without first checking the premium rates against the open market. You may be able to purchase a small group plan (possibly the same plan as offered by the association) or individual coverage for less money, better benefits and more plan options. In California and several other states, small groups with (2 -50) employees can often qualify for Guaranteed Issue coverage. Incorporated spouses that are both officers of that company may even qualify as a 2 person group. This is a popular in the Real Estate community.

Become an informed shopper and compare the pro's and con's before buying your next health care program. You no longer need to pay for benefits and features that are not important to your situation. For more information on how you and your family or small business can purchase a quality health care plan for less money, take five minutes and shop on-line for additional plan options, competitive company comparisons and premiums rates. Once a plan is selected, you may enroll on-line or download an enrollment form and mail it.

For more information about affordable health insurance options for association plans, true group and individual plan options, visit QuoteBroker, or Association Benefit Marketing