DOL Proposal on Association Health Plans Could Help Advisers

Dale Brown, President & CEO, Financial Services Institute
April 18, 2018

Allowing groups to negotiate health plans with insurers could make it easier for small businesses to find affordable coverage.

Traditionally, one of the most significant obstacles many small business owners face is finding quality, affordable healthcare solutions for themselves and their employees. This includes countless Financial Services Institute members.

Recently, though, the problem seems to be getting worse. As insurance premiums have spiked, many financial advisers have been forced to shutter their group plans and choose from options available on state-sponsored individual marketplaces, which are often plagued by inefficiencies and high costs.

Last October, President Donald J. Trump paved the way for a potential solution, issuing an executive order that prompted the Department of Labor to seek options for expanding access to association healthcare plans. The DOL's response was a rule proposal that would, in part, make it easier for associations across state lines to form large groups and negotiate more favorable rates with insurers. In February, FSI submitted a comment letter in support of the proposal.

Explaining our decision to weigh in on the issue, we wrote: "We are excited that the Department of Labor's rule proposal would make it easier and more cost-effective for FSI to offer Association Healthcare Plans as a potential solution to a problem that has plagued our members and those working in the broader industry for years.

"While being an independent financial adviser comes with many benefits, it also makes it difficult to find affordable healthcare options. Over the years, as such costs have only gotten more unmanageable, our members have consistently asked us to help. We think the latest rule proposal by the DOL is a step in the right direction."

The core of our comment letter focused on our experience in bringing groups together to create value by sharing costs and administrative burdens. We touted the success of our CoveredAdvisor benefits plan, which has provided our members with disability, life and continuity insurance protections — among other benefits — for the last four years.

Current law, however, makes it far too complicated to include health insurance as part of this program. That obstacle could be removed if the rule proposal were to be adopted, resulting in a new offering that would benefit the vast majority of our members, their families and their employees.

In our comment letter, we wrote: "Currently, it is prohibitively expensive for small businesses to provide employer-sponsored benefits. The Proposed Rule will help small businesses manage those costs and allow more of them to offer benefits to their employees through AHPs, benefitting not only small businesses but the workers they employ. Because every financial adviser member of FSI is a small business owner, the Proposed Rule could potentially benefit hundreds of thousands of individuals."

While making a difference for our members through advocacy is and always will be FSI's core focus, the proposed rule regarding AHPs presents an opportunity for us — and for all industry associations — to help small business owners in our role as vital hubs of nationwide communities of professionals.

As our letter states: "Our mission envisions investors getting advice from a growing network of independent advisers and firms, so any benefit we can provide that would allow our members to thrive is almost by definition a part of our advocacy efforts.

"If independent advisers and their employees can obtain consistent access to affordable healthcare coverage, that helps more professionals enter the independent channel and enables those who are already in it to grow their businesses. That, in turn, makes our collective voice even stronger in Washington, D.C., and statehouses around the country as we engage in important debates that impact our industry."

As we have learned throughout the debate over the DOL fiduciary rule, the federal rule-making process often moves at a snail's pace. Were this rule to win adoption, however, FSI would immediately begin to work with existing partners and other experts in the healthcare industry to structure plans to address the unique needs of professional communities all over the country.

For FSI and other associations, the DOL's proposed rule regarding association healthcare plans represents a tremendous opportunity to play a key role in providing a solution to a challenge that has hindered independent advisers — and small business owners more broadly — for years. We look forward to working on behalf of our members to support this proposal in the months ahead.