How to help clients create association health plans
Check out this column in Employee Benefits Adviser:
New rules from President Trump and the Department of Labor expand the scope of association health plans, thereby creating a key opportunity for brokers to help clients who may benefit from the updated regulations.
The new rule expands who can participate in AHPs. This will allow more people to benefit from economies of scale in health insurance. Groups in the same metropolitan area no longer have to have a common business interest in order to form an association, and self-employed individuals will now also be able to participate in AHPs.
Offering coverage through an AHP can produce significant cost savings for your clients or prospects, but the group or sole proprietor will first have to join or form an association. It’s important that your groups get the regulatory and compliance aspects of AHPs right, which is why some of your current or prospective clients may already be asking you for advice on this.
To support these clients, partnering with an attorney will provide much-needed assistance.
Vetting a labor or ERISA attorney will allow you to provide another layer of support to clients interested in AHPs, but it will require some research. You will likely want to first interview at least two or three attorneys in your market, and ultimately form an alliance with one to assist clients who wish to create associations and ensure compliance.
Here’s how some brokerages are thinking about going about this, and a few steps to consider.
1. Identify relevant prospects
First, identify clients or prospects who may be interested in forming an AHP. You may want to start with franchising groups first. Traditionally, franchisees have had to pursue benefit plans for employees individually, and, as a result, many franchisors face a constant struggle to recruit new franchisees. Groups facing this dynamic may particularly benefit from the new AHP regulations allowing them to band together to offer health coverage.
Ask if these groups have thought about forming an AHP and if they would be interested in you doing some digging on it. If they would like more information, the next step is to engage an attorney.
2. Choose a lawyer to recommend
Call a few major law firms in your market and ask for attorney recommendations, as well as asking for referrals from any lawyers you already know or work with. Explain you are interviewing lawyers to find one who can assist clients with forming associations, and ask if they would be interested in that work.
During the consultation process, describe a situation one of your prospects is facing, and ask how the attorney would advise this client. To get the best information, ask if the attorney would be willing to write a one- or two-page memo as part of the evaluation process.
Last, and as with any external partnership, ask for the attorney’s references. Note that you should not need to pay the attorney for their time during this interview process — they should view it as business development time for them.
3. Circle back to clients and prospects
Once you’ve chosen a lawyer to recommend, circle back to the clients and prospects who expressed interest in forming an AHP. Explain what you learned, and share that you vetted multiple attorneys during your research. Offer to arrange a meeting with the attorney you felt was best suited to help them evaluate what would be necessary from a legal perspective to form an AHP.
This may seem like a lot of work on the front end, but the benefit is that you will have a significant competitive advantage in your market for all prospective AHP business.
With so many more businesses and self-employed workers now eligible to start or join an association and offer an AHP, this is an avenue of business growth worth considering.
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