The Association Myth

Mar 29, 2007

  1. somarco
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    somarco That Medicare Guy

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    Some carriers issue health plans via association membership, others do not. It varies by state. Association plans are no better, or worse, than individually filed plans.

    When a carrier opts to offer health insurance via an association this is usually for one reason . . . savings. Most state DOI's have deemer provisions that allow them to approve policies filed in another state that has similar laws to their own. This means a plan filed under a TX association can also be written in other states without filing an individually drafted policy (which is VERY expensive).

    Sometimes plans are issued via an association set up by a marketing organization (such as American Health Underwriters). The association is simply another revenue source for the marketing organization as the dues are usually non-commissionable and the underlying cost of the "association benefits" are nominal.

    Here are a few myths about association plans.

    You cannot be cancelled for any reason or singled out for a rate increase.

    Stop paying your premium and see how quickly your coverage is cancelled. Of course most (if not all) states prohibit a carrier from singling out an individual for rate increases just because they used the plan.

    Association plans do not have to comply with state mandates.

    Another myth. Look at the policies and you will see any number of riders or amendments that are state specific. Association health plans have to be filed & approved by the state DOI just as individually drafted plans.

    Association plans have less protection on renewal against rate increases than individually filed plans.

    Yes, this is a myth too. As a general rule, association plans have more pooling of rates (new & old) than do individually filed plans. As long as the LR experience is favorable for the association pool, the renewal rates may be more favorable than non-association plans.

    It can also be worse.

    All manual rates, both new & renewal, are filed with the state DOI. This is true for association & non-association plans. A policy holders renewal can be higher or lower than filed rates depending on the LR for the class of business.

    Association plans are "better" than non-association plans.

    Myth. There are benefits that are only available thru an association, such as the Time Suite Solutions add-on and those benefits (usually) do not coordinate with the underlying coverage. Just because you can get an accident benefit, or dental/vision, etc as part of the association package does not mean the plan is better . . . it just means it is different.


    There are other myths I am overlooking. I am sure someone will remind me.
     
    somarco, Mar 29, 2007
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  2. salpro22
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    salpro22 Guru

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    What does LR stand for?



     
    salpro22, Mar 29, 2007
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  3. Crabcake Johnny
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    Crabcake Johnny Guru

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    Associate plans in general offer a lot more options for clients and more rate flexability.

    And that post was dead on - a huge myth is associaton plans offer far less protection then domicled plans.

    However, this doesn't stop some DOI's from trying their best to keep people away from all association plans. In FL for example, on all association policies on the first page it's 24 point bold print that that policy is regulated by a state other than Florida and does not offer the same protections. You think the FL DOI hopes that clients see that and cancels? You'd better bet.
     
  4. somarco
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    somarco That Medicare Guy

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    LR = loss ratio
     
    somarco, Mar 29, 2007
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  5. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    LR is loss ratio
     
  6. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    quit copying me somarco
     
  7. somarco
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    somarco That Medicare Guy

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    Hey, you think all my stuff is original?

    I just type faster and am sneaky.
     
    somarco, Mar 29, 2007
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  8. Crabcake Johnny
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    Crabcake Johnny Guru

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    The FL DOI disagrees with both of us. I haven't seen any different between association and domiciled carriers. Aetnat just hit MD with 19% and VA with 27%.

    However, here's what's on every FL association policy:

    "This policy is governed by the laws of (state of issue.) As a result, all of the rating laws applicable to the policies filed in this state do not apply to this coverage, which may result in increases in your premium at renewal that would not be permissible under a Florida-approved policy. Any purchase of individual health coverage should be considered carefully, as future medical conditions may make it impossible to qualify for another individual health policy."

    So Somarco - you think the FL DOI wants anyone on an association plan?
     
  9. Crabcake Johnny
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    Crabcake Johnny Guru

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    And by the way, in fairness to FL, they do have some bad experiences with association coverage:

    http://info.insure.com/states/fl/health/americanmedicalsecurity702.htm

    This was AMS "reunderwriting" sick blocks of business. For all the newbies, this is the horrible practice of lumping all the sick people together at the time of renewal, then slamming them with insane rate increases in an effort to get them to cancel. There's also no law against it so FL and AMS went head to head.
     
  10. somarco
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    somarco That Medicare Guy

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    I no longer write in FL, so I really can't address that. At one time FL would only allow non-admitted carriers to offer medical stop loss cover. Go figure. That was changed and A&H carriers were then able to offer xs cover.

    FL also created a risk pool about 15 years ago that was to be funded with premium taxes, premiums from those in the risk pool & assessments. The pool was open to new entrants for about 3 years and has been closed ever since.

    Of course it really doesn't matter how the rates are filed (or not) since we operate in a competitive market. When a carrier is too far above market rates they lose business.

    That is what is happening in the peach state with some carriers, regardless of their association status or not.
     
    somarco, Mar 29, 2007
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