Explaining Association Health Plans
California Health Insurance Plan

Small business owners are looking to comply with the California law that requires them to carry a California health insurance plan. Association health plans are not new but are being forced into the limelight again by pending legislation in Congress. Many believe that Association health plans are a way to save money and still cover their employees with a California health insurance plan.

An association health plan is similar to a regular group health plan but is designed so small business owners can combine to get a better group health plan. If they are banded together under one California health insurance plan it is easier for them to get coverage for their employees. The idea of association health plans is to give a small business owner a break on insurance coverage. Unfortunately, that is not always the case because association health plans are regulated like union and corporate California health insurance plans. This hampers the association health plan carrier from passing on the savings to the employees.

A group is heading the effort to change this legislation so association health plans are no longer regulated under the same laws as larger insurance plans. Many are opposed to relaxing controls on association health plans fearing much higher medical costs and higher premiums for small business owners. Some groups are also afraid that AHP members will cater to only markets that are low-risk. Medical associations and other insurance companies are banding together to block this deregulation legislation. If these association health plans are deregulated many insurance companies are worried that premiums will be increased for AHP members and destabilize the entire medical insurance industry.

Many former association health plan participants state they believe that they were forced to pay higher premiums than with a normal California health insurance plan. Small business owners still believe that association health plans can help them stay competitive and prevent any financial hardship if one of their employees should become sick with a serious illness. In a regular California health insurance plan, one sick employee in a small business can mean significantly higher premiums for all employees associated with that company.

Congress will look at both sides of the issue and deciding how their action would benefit the small business holder. They want to pass on the savings to the one who rightfully deserves it the small business holder.