Small Business Alliances and Group Health Care Plans
With AHPs under heavy scrutiny, there is a new alternative to provide small businesses with a solution to your problem. Small business alliances are similar to an association health plan, but are governed differently, which might make them easier to find and to qualify for. Here are some key points to help you decide if a SBA is right for you.
- A SBA, or small business alliance, can be compared to a stocking distributor. With greater purchasing power after combining the SBA can find better deals on group health insurance plans. With several small businesses banded together, they can purchase a large group health policy that will allow coverage to all members while at the same time keeping deductibles down for the employees.
- Although similar in nature, an AHP is governed and regulated completely different. Association group plans have particular benefits that insurance companies do not like. SBAs on the other hand do not enjoy these special perks but offer small businesses a way to save money by purchasing a larger plan than they normally would.
- It is cheaper to purchase insurance through and alliance because the small businesses can purchase one large group health policy, which reduces the risk to the insurance company.
- Employees generally have more options with SBAs than association plans because premiums are much lower due to more alternatives that can be offered and the amount of benefits for members, which is greatly increased.
- An alliance is a small band of three parties with the first party referred to as the owning company. This company functions on behalf of its members and is usually the larger company that will purchase the plan for the smaller business partners. The second party is the health plan, which is the insurance company that contracts with the alliance. Finally, the third party is called a neutral, third party administrator, which usually has experience in group health plan administration. The final party will be concerned with enrolling new members and offering customer service to existing members.
- Alliances are governed at the state level, and there are several available throughout California from Sacramento down to San Diego. If you are not sure who those are, contact the California state insurance regulation board to find out who is a member.
- An SBA is considered a non-profit organization, which works with small business owners to be able to purchase one large, group policy. The company must be privately held and must work for the benefit of all members involved.