In many ways, it’s a great time to be a small business owner in Arizona. The state led the country in a number of small business performance indicators in 2018, including wages and overall growth, according to the IHS Markit Small Business Employment Watch.
But while revenues grew, so did health insurance premiums.
Healthcare continues to be one of the thorniest problems facing Arizona small businesses, with costs rising 51% in 2017 alone. This has undoubtedly been a major reason why about one-third of U.S. small businesses choose to forego health benefits for their employees. However, chasing cost savings at the expense of employee health coverage can backfire. With our economy seeing record low unemployment, attracting good talent has become more difficult. Health benefits are now, even more than usual, a major bargaining chip.
While the advantage of offering benefits is clear, affordability is less so.
The Chamber to the Rescue
Fortunately, 2019 provided some much-needed relief for businesses struggling with healthcare costs. In February, the Southern Arizona Chamber of Commerce Association launched a new Association Health Plan (AHP) for self-employed workers and small businesses.
The plan provides a potential lower-cost option, as AHPs have been shown to significantly decrease healthcare costs. The healthcare research firm Avalere projected that AHP premiums would remain “between $8,700 to $10,800” lower compared to the individual market by 2022.
What is an AHP?
Following its passage in 2008, the Affordable Care Act resulted in higher premiums for group and individual plans, leading to higher costs for some small businesses.
The Department of Labor sought to counteract these negative consequences by issuing a change in January that relaxed the “commonality of interest” rule. The rule change allows insurance industry trade groups, chambers of commerce, and businesses in the same geographical area to create their own association plans.
Since AHPs are offered to smaller groups, they can focus on specific areas of need for each association. Another benefit of the plans is that they cannot disqualify or raise rates due to pre-existing conditions.
In addition to health insurance, most AHPs offer added benefits like annual industry events or discounts on supplies and software.
The Chamber’s Plan
The SACCA plan is run by UnitedHealthcare, which boasts a provider network of over 1.2 million physicians and healthcare providers working in more than 6,500 hospitals and healthcare facilities.
Members choose from 17 different healthcare plans, plus six dental and vision plans, along with life insurance and UnitedHealthcare Global business travel insurance. Each plan varies in levels of coverage, provider organization, and healthcare savings accounts.
In order to qualify, your business must have between 2 to 50 employees and be a member of a Southern Arizona Association chamber. In a recent article in Inside Tucson Business, Robert Medler, VP of Public Affairs at the Tucson Metro Chamber, shared that that 20% of his chamber’s 7,500 businesses qualify for the plan.
SACCA’s willingness to embrace innovation in the insurance market is yet another example of how Southern Arizona is leading the way in creating a more equitable healthcare system. The new association plans can help our small businesses remove the hurdle of healthcare costs so they can focus on what they do best.
Mike Trueba, CCIM is Vice President, Business Banking for Vantage West Credit Union, a $2 billion financial institution, which serves a growing Membership of more than 150,000 via branches across Arizona and online channels. Vantage West offers consumer and business banking services, and is federally insured by NCUA.