Rand Paul Group Association Plans

[somarco]

I haven't paid much attention to association plans in a while, but many of them used a master trust incorporated into the association plan. The trust was the policyholder filed in a specific state, say Texas. As long as the benefits and wording complied with TX requirements that was all that mattered.

The association plan could be sold in other states under the deemer provisions without having to file in each state. Companies and individuals that bought coverage through the association were subscribers and were issued a certificate.

The association plan - trust arrangement was great for marching across state lines. The vulnerability lies in the fact that when the master trust is dissolved, or loses their issuing carrier without a replacement, the coverage went away.

At least one Medigap carrier (can't recall which one) uses a trust/association for their product. It has the same vulnerability that the association health plans had in the past.

Many of these trusts ran quite successfully for years. Issuing carriers came and went but the block remained viable. Benefits usually did not change with a new carrier but rates often did. One nice thing (from a certificate holder perspective) was if carrier A wanted a 20% rate increase but carrier B was willing to assume the risk at 10% above current rates those who have coverage were "winners".

They kept their plan, the benefits didn't change, same people (the TPA administering the trust) paid claims and rates were stable over time. But only as long as the folks running the trust did a proper job of managing the plan.

 

[goillini52]

I haven't paid much attention to association plans in a while, but many of them used a master trust incorporated into the association plan. The trust was the policyholder filed in a specific state, say Texas. As long as the benefits and wording complied with TX requirements that was all that mattered.

The association plan could be sold in other states under the deemer provisions without having to file in each state. Companies and individuals that bought coverage through the association were subscribers and were issued a certificate.

The association plan - trust arrangement was great for marching across state lines. The vulnerability lies in the fact that when the master trust is dissolved, or loses their issuing carrier without a replacement, the coverage went away.

At least one Medigap carrier (can't recall which one) uses a trust/association for their product. It has the same vulnerability that the association health plans had in the past.

Many of these trusts ran quite successfully for years. Issuing carriers came and went but the block remained viable. Benefits usually did not change with a new carrier but rates often did. One nice thing (from a certificate holder perspective) was if carrier A wanted a 20% rate increase but carrier B was willing to assume the risk at 10% above current rates those who have coverage were "winners".

They kept their plan, the benefits didn't change, same people (the TPA administering the trust) paid claims and rates were stable over time. But only as long as the folks running the trust did a proper job of managing the plan.

I believe you're referring to Heartland National Bob. They have a certificate instead of a policy. It's called the Senior Savers Association. They have some "useless" discounts that come with it. I think they charge $2 a month to belong.

 

[junkman]

I've seen association plans become viable and get sold. American Medical Security (AMS) started as an association & was eentually bought by UHC. Health Net was a forerunner started by the same people as AMS and sold to Humana. Others quickly crash and burn. The ones that became viable had high sales, low rates and nit picked on underwriting.

I have never seen a high risk pool in TN that was worth a crap from the insured's position. Premiums are prohibitively high and cause them to have ever increasing adverse selection and eventually crahing. It hasn't mattered whether they were private or state run. Private were abandoned when not profitable and principals making money were protected by corporate structure. Insureds were left uncovered and stuck with the claims. State run became so expensive that they were closed.

Anyone that has ever seen large group claims data knows that the top 4-5% of the largest claims accounts for 40% of the total.

Looking at a 800 member renewal, 60% have claims under $1,000. 80% have claims under $2,500. 85% have claims under $5,000. I noticed similar numbers is a front page WSJ chart last Friday.

Because of the above, we only need to enroll a large population that isn't itself adversly selected and avoid adverse selection within that group. Carriers know this. TPAs know. It is the reason the coverage mandate and penalty were instituted. The fact that the healthy could avoid coverage is the driving factor in ACA rates.

Talk to anyone making $10 to $15/hr and it becomes apparent that a HDHP isn't considered a benefit and that they are reconciled to going without coverage. They will spend $30/month on dental coverage and skip paying $60/month on a HDHP medical. They sure aren't going to spend more for a lower out of pocket.

They know they have a cavity and will take a chance on a heart attack which ain't gonna happen at 30 yrs old. They're healthy unless they have an accident ant think that's most likely to happen at work where they're covered under workmans comp.

Reinstituting 2 man groups will help those who are self-employed only because, the group documentation can be rigged. Get a federal tax ID, pay your wife minimum wage for 30hrs per week or whatever the carrier eligibility rules require and you have a group. You only need to file the quarterly reports and there are $0 tax consquences. Now you've cut the underwriting questions to only considering the last 5 years. Pass that and you're golden.

Of course, anyone stuck in the individual market is still sucking wind.