Association coverage affected by ACA

The American Veterinary Medical Association announced earlier this year it would be ending its medical coverage for its 17,500 association members and their dependents on Dec. 31, 2013, bringing to light the issue of association coverage and how association plans could be affected by the Affordable Care Act.

“The guaranteed issue coverage mandate – in other words, you have to take somebody regardless of previous conditions – makes those kinds of plans too risky for an insurer,” says Jay Jensen of Insight Benefits Group. His firm has been working with the AVMA to find alternative health care coverage for its members. “It changes the dynamics of the plan for the insurance company.”

The plan’s underwriter, New York Life Insurance, notified AVMA it would no longer underwrite major medical coverage for professional associates after 2013 because of impending federal health care regulations.

“Under Obamacare, they’d have to abide by each individual state mandates and requirements. Administratively it’s just impossible,” says Jensen.

Jensen believes some associations may try to set up their own private exchanges. Another alternative is self-insurance. “We’re looking at doing some partially self-insured models and some self-insured models if some of the clinics are big enough,” he says. “We’ve got some different strategies to try and provide the coverage and keep the cost down. The self-insured route seems to be the best route and I think you’re going to see that pretty much universally across the board. Fully insured pricing is just going to be too expensive.”

Jensen acknowledges that association coverage has always been challenging, saying insurers tend to shy away from general business association health plans because of the adverse risk. “But for the other association plans that do exist, I would imagine they’re going to have the same problems. I don’t know how they’re going to get around it,” he says.

The AVMA Group Health & Life Insurance Trust has offered medical insurance to AVMA members at group rates for 56 years. Term life, disability income and other nonmedical insurance policies are not affected.

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