Tag Archives: small business administration

Association Health Plans: What to Know

The U.S. Department of Labor recently announced regulations that it will allow for the expansion of Association Health Plans (AHPs). But what exactly are AHPs, and what do they mean for small businesses?

Essentially, AHPs allow small businesses to band together to purchase health insurance. The definition of a small business varies by state, with most states capping it at 50 employees, and California, Colorado, New York and Vermont at 100 employees. While we have seen efforts to promote AHPs since the 1980s, the new rules are different in that they also allow sole proprietors — those who own unincorporated business by themselves — to join the associations. Previously, sole proprietors could only buy individual coverage.

The new rules allow carriers to introduce AHPs as early as September 2018, so we may see plans on the market as soon as this fall and early next year.

How many small businesses and sole proprietors are affected?

According to the U.S. Small Business Administration, there are more than 5 million small businesses in the U.S., which employ almost 40 million people. There are also about 23 million sole proprietorships, which will likely continue to increase along with the growth of the gig economy and number of freelancers in the workforce. The expansion of AHPs, therefore, has the potential to affect the lives of a huge number of people.

Today, there are more than 35,000 associations in the U.S., organized by geography (state or greater metropolitan area) or industry. Some examples include your local Chamber of Commerce, the National Restaurant Association and the National Writers Union. Existing associations can be grandfathered in under the new AHP regulations, but new associations will have to meet the following criteria: 1) be in the same geographic area or the same industry and 2) have another business purpose other than offering health insurance.

Existing options for these small businesses and sole proprietors aren’t going away. Small businesses can still participate in the small group market and Small Business Health Options Program (SHOP), while sole proprietors will still be able to purchase individual coverage. AHPs will just add another layer of choice to the market.

See also: Why Start-Ups Win on Small Business  

Lower premiums

AHPs provide small businesses with the opportunity to offer health insurance at lower premiums, which is important because cost is one of their main concerns. Healthcare costs are an issue for almost everyone but are especially significant for small businesses, which are usually juggling between growing their business and paying for increasing costs of growing their team. AHPs are likely to provide lower premium options for two reasons: 1) They are exempt from requirements to cover the 10 essential benefits required by the Affordable Care Act, and 2) the law allows for more flexibility in the way AHP premiums are set.

Thus, AHPs allow some small businesses to be able to offer health plans with lower premiums. In turn, these lower premiums may mean that businesses can offer insurance to their employees when previously they could not afford to do so.

But with some caveats

While AHPs offer lower costs for some, it’s also important to remember that you don’t get the same benefits as you would with a traditional health plan. The Affordable Care Act outlined certain essential benefits that have to be included in health insurance plans, including preventive care, ambulatory services, emergency services, hospitalization, mental health services, maternity care, prescription drugs, rehabilitation, laboratory services and pediatric care. AHPs are exempt from these regulations and may not cover some of these things.

See also: Taking Care of Small-Medium Business  

The new AHPs are better for relatively healthy individuals without high needs for medical services. If you need any of the services mentioned above, or just generally use care more frequently, be aware that AHPs may not cover all the benefits you frequently use. The expansion of AHPs makes it especially important to understand plan benefits before purchasing health insurance. Buyers should compare premiums, benefits and network coverage between AHPs and other existing options on the market (including fully insured or self-funded plans). By doing this research, you can make an informed decision and pick a plan that best meets your employees’ health needs.

Conclusion

Providing health insurance as a small business can be costly, and Association Health Plans are an attempt to lower premiums and increase choice. While AHPs will result in lower-cost options, it is important to remember the plan benefits may not be the same as those in more expensive health plans. Now more than ever, it is critical for consumers to do their research and make informed choices about health insurance. When in doubt, seek out the help of licensed experts who can guide you through your options and help you make the best decision for your business and your employees.

Why Trump’s Travel Ban Hurts Innovation

Silicon Valley exports technology and imports the world’s best talent. That is how it has helped grow America’s economy and boosted its competitive advantage. President Trump’s executive order banning immigrants from some Muslim countries sent shock waves through the tech industry over the weekend because it was a loud and clear message to the world that America’s doors are now closed, and that xenophobia and bigotry are the new rules of law.

It is no wonder that executives at almost every major technology company, including Alphabet, Facebook and Apple, have made statements defending immigrants and distancing their companies from the president. These companies are worried about their survival and the future of the country.

Let there be no doubt that immigrants are essential to our economic present and future. These newcomers start a disproportionate number of U.S. businesses, particularly in advanced technologies. Immigrants and foreign-passport holders occupy a growing majority of places in graduate education programs in computer science, mathematics, physics and other hard sciences. They play an outsize role in U.S. research and innovation.

See also: An Open Letter to the Trump Administration  

A 2012 research paper I co-wrote, “America’s New Immigrant Entrepreneurs: Then and Now,” documented that 24% of U.S. engineering and technology startup companies and 44% of those based in Silicon Valley were founded by immigrants. My research also determined that immigrants contributed to more than 60% of the patent filings at innovative companies such as Qualcomm, Merck, General Electric and Cisco Systems. And surprisingly, more than 40% of the international patent applications filed by the U.S. government had foreign-national authors.

Study after study has found that immigrants are more likely to start job-creating businesses, not only in tech but across the economy. In 2014, 20% of the Inc. 500 companies had immigrant founders. That’s despite immigrants accounting for less than 15% of the U.S. population. According to research by economist Robert Fairlie for the Small Business Administration, immigrants are more than twice as likely to found businesses as non-immigrants, and 7.1% of immigrant-founded businesses export their products outside the U.S. as compared with only 4.4% of non-immigrant-founded businesses.

Clearly, blocking the path of immigrants into the U.S. cuts off the exact economic growth serum that has made America great. Creating an atmosphere where immigrants are fearful and uncertain about their future will reduce their incentives to open businesses here and stay. This is becoming even more so as other countries increasingly court educated immigrants and entrepreneurs. Those who support the president’s executive order say that the intent is to block people from countries where terrorism is sourced. But it’s not so simple.

By blocking entrance based on passport or country of birth rather than objective criteria, the executive order paints all immigrants from those affected countries and possibly dual passport holders with the same scarlet letter. What if the next Mark Zuckerberg happens to be Iranian? Or if an Einstein happened to be born in Libya? Let’s not forget that Steve Jobs’s father was Syrian — and he would have been banned from entering the U.S. under Trump’s dictate.

Yes, it is true that the affected countries are not the largest sources of immigrant entrepreneurs. But setting a precedent like this can mean that a politician can use this weapon against other countries that have become critical in supplying talent to fuel U.S. innovation. What if a frustrated president elected to block immigrants with Mexican, Chinese or Indian passports? The scenario, totally unthinkable a few months ago, is today entirely plausible.

In my 2012 book, “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent,” I documented the stories of numerous immigrant entrepreneurs who were forced to leave the country because of shortages of skilled immigrant visas, called green cards. It wasn’t that we didn’t want these people here; American politics was caught in a political quagmire on skilled immigration. As a result, the country began suffering a brain drain, with highly skilled foreign-born doctors, engineers and scientists returning home.

With this executive order, Trump has made it clear that immigrants will have to worry about being singled out even after they have become lawful permanent residents; that their religion and place of birth may be the deciding factor in whether they are allowed to reenter the U.S. after going abroad. This will no doubt turn the trickle of skilled workers permanently leaving the country into a flood. Entrepreneurs who had wanted to come here will have now second thoughts.

See also: What Will Trump Mean for State Regulation?  

Whether or not the courts uphold the legality of the executive order, the damage has been done. Already, the number of billion-dollar technology startups, commonly called “unicorns,” that are located outside the U.. has been increasing dramatically. Fifteen years ago, almost all were in the U.S., while today 86 of the 191 unicorns are in countries such as China and India. We can expect this trend to accelerate because the Trump administration has just added fuel to the fire of innovation abroad and handicapped our own technology industry.