The cost of healthcare is one of the biggest challenges small business owners and their employees face. A new proposed rule by the Department of Labor is looking to alleviate this pain point by expanding access to healthcare through small business health plans.
New Health Plan Options for Small Businesses
The rule will give small businesses and sole proprietors the ability to group together and provide quality health insurance their employees can afford. One of the goals of the proposed rule is to give small businesses an alternative to the current system, which is too expensive and full of barriers and restrictions.
There are around 11 million Americans working for small businesses, which doesn’t include the families they support. For the businesses owners, finding affordable insurance has been difficult and it is only getting worse as the cost of healthcare continues to rise. The plan by the Department of Labor is offering an alternative to Small Business Health Plans, also called Association Health Plans.
The Department of Labor explains in a press release, “These improvements stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors. By joining together, employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options.”
The Proposed Rule
The proposed rule has two mandates.
The first is to let employers form a Small Business Health Plan based on either their location or industry. This makes it possible for a plan to address the needs in a particular location, whether it is a city, county, state or multi-state metro area. But it would also allow small businesses and sole proprietors to join together in a single health plan based on industry nationwide.
The second mandate is to allow sole proprietors to join Small Business Health Plans. With close to 23 million sole proprietorships in the United States (not counting single-owner farm businesses), these entrepreneurs and their families account for millions of potentially uninsured individuals. But the new rule would clear the path for this group to be able to access health insurance.
The rule also includes measures to protect the individuals purchasing the insurance through Small Business Health Plans. They will not be charged higher premiums or be rejected from a plan based on health factors. Consumers will be protected by the Department of Labor’s Employee Benefits Security Administration with close monitoring of the plans.
The proposal by the Department of Labor is part of an Executive Order President Trump signed in October of 2017. The order directs the departments of Health and Human Services, Labor, and the Treasury to re-establish the health care associations, or association health plans.