Proposal seeks to expand health care for small businesses

Expansion would offer small businesses employment-based health care


WASHINGTON – The U.S. Department of Labor announced Thursday a proposal to expand the opportunity to offer employment-based health insurance to small businesses through Small Business Health Plans, also known as Association Health Plans. 

Up to 11 million Americans working for small businesses, sole proprietors and their families lack employer-sponsored insurance. Under the department's proposal, those people could find coverage. 

Many small employers struggle to offer insurance because it is currently too expensive and cumbersome. The employees and their families would have an additional alternative through Small Business Health Plans (Association Health Plans). The plans are intended to close the gap of the uninsured without eliminating options available in the health care marketplace. 

Under the proposal, small businesses and sole proprietors would have more freedom to band together to provide affordable, quality health insurance for employees.  

The proposed rule, which applies only to employer-sponsored health insurance, would allow employers to join together as a single group to purchase insurance in the large group market.

The Department says the new rules stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors. By joining together, department officials say employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure and offer a wider array of insurance options.  

As proposed, the rule would:

  • Allow employers to form a Small Business Health Plan on the basis of geography or industry. A plan could serve employers in a state, city, county or a multi-state metro area, or it could serve all the businesses in a particular industry nationwide.
  • Allow sole proprietors to join Small Business Health Plans, clearing a path to access health insurance for the millions of uninsured Americans who are sole proprietors or the family of sole proprietors.

The proposed rule includes important protections for Americans. Small Business Health Plans (Association Health Plans) cannot charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors. The Department says its Employee Benefits Security Administration will closely monitor these plans to protect consumers.

The NPRM will be published in the Federal Register on Jan. 5, and be available for public comment for 60 days.  

The U.S. Department of Labor encourages interested parties to submit comments on the proposed rule. The NPRM, along with the procedures for submitting comments, can be found at the Federal Register here.