The health insurance option touted by President Donald Trump as the superior alternative to the Affordable Care Act has stalled in North Carolina amid questions of legality.
Less than two weeks ago North Carolina’s trade group for restaurants and hotels introduced the Restaurant & Hospitality Association Benefit Trust, for the state’s 482,300 workers in the food-service and hospitality industry.
The N.C. Restaurant & Lodging Association began vigorously promoting its association health plan, and a number of bars and eateries in the state have eagerly responded for more information on the plan’s benefits and terms. But on Friday, the North Carolina restaurant trade group put its new health insurance on hold, after the N.C. Department of Insurance warned the plan may not be approved for sale in the state.
UnitedHealth Group, the insurer behind the Restaurant & Hospitality Association Benefit Trust, has not filed the appropriate paperwork in North Carolina, said Ted Hamby, N.C.’s Deputy Insurance Commissioner.
“It was basically a mistake on the insurance company’s part,” Hamby said. “We don’t have a record that the plan of insurance has been approved here for use in North Carolina.”
Association health plans have long been offered by trade groups to their members around the country. The new Trump administration rule said the plans can be offered to workers in the same industry, as has been done for years, or an association can form to offer health insurance in a single geographical area. The association health plans are also exempt from certain Affordable Care Act requirements; for instance, they don’t have to offer the same essential benefits as ACA plans and can vary premiums more than ACA plans are allowed based on gender, age and other factors.
UnitedHealth Group, the nation’s largest health insurance company, is marketing the same plan across the country.
Margo Metzger, spokeswoman for the N.C. Restaurant & Lodging Association, said the organization is trying to resolve the matter with the N.C. Department of Insurance.
“We need to press pause and make sure everything’s a go before we can move forward with marketing it,” she said by phone. “We are confident that will be worked out in the next few weeks so we can offer a new option for North Carolinians in hospitality.”
Because they pool workers from many small businesses, association health plans spread out costs over a large population, which reduces average health care costs for everyone enrolled. The N.C. Restaurant & Lodging Association’s announcement cited an example: A small business saved 28 percent for its six employees using the Restaurant & Hospitality Association Benefit Trust.
The potential savings could lure 3.2 million people from ACA plans to association health plans by 2022, according to a February analysis by Avalere Health, a consulting firm in Washington DC.
Those savings were the draw for Sean Wilson, CEO, owner and founder of Fullsteam Brewery in Durham, which has two dozen full time employees and two dozen part-timers. For the past four years Fullsteam Brewery has tried to offer health insurance to its workers but few were interested because it was too expensive, and some employees opted to go without health insurance, Wilson said.
The brewery plans to submit employee information to the insurance broker to determine what kind of premiums and benefits Fullsteam workers could get through an association health plan.
“The hope is this aggregate makes it more affordable for us than it has been,” Wilson said. “This is an industry that employes a lot of people who are under-insured and often at risk.”
The Restaurant & Hospitality Association Benefit Trust is available to North Carolina association members in a range of hospitality areas: restaurants, cafes, bars, motels, sports camps and private clubs. To qualify for the health insurance, a business must employ between two and 99 employees and pay an annual membership fee to the association: $295 for a small hotel and $350 for a small restaurant.
Hamby, of the Department of Insurance, said that each plan in the state must be analyzed to make sure it meets minimum requirements under state law. The agency must approve the amount of the premiums, deductibles and terms and benefits, he said.
UnitedHealth Group did not respond to a request for comment. Hamby said the representative he talked to “acknowledged it was a mistake from the marketing site.” Hamby said UnitedHealth is working to get North Carolina removed from online marketing offers so that state residents can’t apply for the coverage online.
“What I’m looking for is basically to make sure that any of the links to sign up for the coverage are not available anymore,” Hamby said.
And he said it’s possible that UnitedHealth could be subject to a fine for marketing an unauthorized insurance product in the state.
“When you have a third-party doing something for you, things go awry, but you’re still responsible for it,” Hamby said.