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What's Hot in Small Business – Chris Crum

What's Hot in Small Business – Chris Crum
Chris Crum writes for Small Business Resources about what's new for small business. Chris was a featured writer with the iEntry Network of B2B Publications where hundreds of publications linked to his articles including the Wall Street Journal, USA Today, LA Times and the New York Times.

New Labor Rule Impact on Small Business

New Labor Rule Impact on Small Business

Earlier this year, as directed by President Donald Trump, the United States Department of Labor proposed a new rule that would expand access to small business health plans or Association Health Plans (AHPs). This rule went into effect as of June 19.

AHPs are group health plans that employer groups and associations offer to employees. Small businesses, including sole proprietors and their families, can buy coverage as groups based on geography or industry. AHPs are able to serve employers in a city, county, state, or a multi-state metropolitan area, or a "particular industry nationwide."

While self-employed people who employ other individuals were able to join AHPs in the past, the new rule allows those without other employees (along with their families) to join. This is noteworthy considering the rise of the gig economy, which sees an ever-increasing number of people working at home for themselves in a freelance capacity.

The Trump administration claims the reform addresses "many of the inequities between small and large businesses in access" to the coverage, and that the rule will help millions of working Americans gain access to "quality, affordable health insurance for themselves and their families."

According to the Department, many small business owners are unable to afford to offer health insurance to employees, with the number of those offering coverage having dropped "substantially." The rule is intended to reverse that.

"For the self-employed, the individual market exchanges do not offer affordable coverage either; premiums more than doubled between 2013 and 2017 with deductibles increasing even more," the Department stated. "This reform allows small employers – many of whom are facing much higher premiums and fewer coverage options as a result of Obamacare – a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers."

Simply put, the impact the rule is to have on small businesses is that insurance should become more affordable. Plans can also be customized to fit the needs of the business, similar to plans for larger employers. Administrative costs will also be reduced, the Labor Department says. It also says the plans will "strengthen negotiating power with providers from larger risk pools and greater economies of scale."

As critics of the rule have pointed out, while the costs savings will be there for small businesses, the benefits to employees may be reduced. For example, The New York Times reports the new plans may not have to provide mental health care, emergency services, maternity/newborn care, and/or prescription drug benefits.

The Labor Department says AHPs will not be able to deny coverage or charge higher rates based on pre-existing conditions.

U.S. Secretary of Labor Alexander Acosta says the plans are about "more choice, more access, and more coverage" and that the rule "helps working Americans – and their families – purchase quality, affordable health coverage."

State oversight of plans will remain intact, according to the Department, but states will share enforcement authority with the federal government. The Department of Labor's website has more information on the new rule and AHPs.

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