Forming a group for health insurance. Not employees, but an association of gardeners.?

Question

They are all self employed people, who want to form a legitimate association in order to acquire a guarantee issue health plan in California. I am an insurance broker, and have NO IDEA how you accomplish this. I know that lots of associations have them, (Association of Veterinarians, associations of appraisers, associations of roofing contractors.)....

How do I MAKE or CREATE one of these groups? And how do I get the insurance company to recognize it as LEGITIMATE here in California?

Answer 1

Well, this was done a couple decades ago, but what happened was the only people who wanted the group health coverage, were horrible risks.  So the premiums were sky high.  So the most healthy of the bunch opted out, when they could get coverage cheaper on their own, and the premiums went higher.  

Bottom line - the insurance companies couldn't charge high enough premium for the group, to cover the losses.  

So they don't do that any more.  

Even with an EMPLOYMENT group, there is a minimum mandatory participation - like 75% of the employees MUST be on the group health plan.  

If you really, really want to make one of these groups, go to your 'best' carrier, and ask them if they'll do it.  I really don't see it happening, though.  It's been done - and hasn't worked out from the insurance company point of view.

I mean, really, if the going rate for a healthy 25 year old is $200 a month, are they REALLY going to pay the $1200 a month premium just to be on the landscapers group guaranteed issue plan?  I don't think so!

Oh, and the associations that have these, it works like this:  each person is individually rated, and pre-existing conditions are excluded, if it's guaranteed issue, and I've never seen one of these groups have guaranteed issue coverage.  It's NOT a "deal" over individual coverage.

Answer 2

Pac Advantage made that a lot harder for us to set up nowdays, because of how badly that went for them.  Most of the associations out there pre-date AB1672, which means all of them pre-date the ruin of Pac Advantage.

Essentially, what you have to do is call an insurance carrier, preferably one with whom you and your agency has an extremely good relationship, and talk to them about negotiations.

Because you are looking at an Association Plan, not a regular group, you are not looking at something that the insurance companies HAVE to do, and as a result, it is unlikely they'll want to buy into that.  Association plans are CERTAINLY not protected under AB1672, so you'll basically be negotiating with the carrier, to create a new plan, from scratch.

You'll want to have a few hundred people interested in this plan to make it look attractive to the carrier, but you can always start small and renegotiate later.

Good luck!

Answer 3

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