Getting Better Rates Through Purchasing Alliances
Small businesses looking for affordable ways of insuring their employees may find
purchasing alliances and association plans as good alternatives to typical group plans. Health purchasing alliances that are also known as purchasing pools are private nonprofit organizations that are specifically created for bringing different enterprises together and purchase insurance plans in bulk as a much larger group than separately.
The concept behind these organizations is quite simple: the more - the better. Because the overall number of employees in such pools becomes quite big in comparison to separate entities, health purchasing alliances have more power in negotiating better rates for their members. There are different purchasing pools, some may even let individuals join them, however in most cases the minimum number of workers in an enterprise should be 50 in order for the business to be able to join such a purchasing alliance. And as you may guess, the rates and coverage amounts are much more competitive then if buying a group plan for a single business, even a medium sized company.
Most purchasing alliances are structured in the following way:
1. An owning company is the entity, which agglomerates the smaller pool members and acts on their behalf. It is usually the entity that sets the rules of the alliance and negotiates the purchase of health insurance with insurance providers. There are a lot of pools where a local state agency or chamber of commerce acts as an owning company.
2. Health plans are often purchased from different providers, which gives the pool member a wide range of options to consider. There are usually managed car plans (HMO, PPO and POS) offered through purchasing pools because they have the best ratio between price and amount of coverage offered.
3. A third-party administrator company that is usually specialized in healthcare services and administration. This entity deals with routine operations of the pool, providing all the benefits to members that need it and ensuring proper customer support for effective distribution of services within the organization.
Each state has separate legislation concerning health insurance purchasing alliances, so it's important to check if your state allows such organizations first. The best source of information concerning the matter is your state insurance department. If there is a possibility to purchase a plan through a purchasing pool then it's probably the best way to get cheap health insurance for your enterprise.
In case your state does not allow such pools, you still have the possibility to get better group plan rates by purchasing through an association plan. Such plans are available through many professional associations such as labor unions, alumni associations, credit unions, trade associations and various lodges.
Such associations usually have higher premiums and fewer coverage options if compared with purchasing pools. However, it's often more beneficial to buy health insurance for your business through an association plan rather than buying it on your own. Yet again, the strength is in numbers, and professional associations are a good way to lower your insurance costs. Just make sure your business complies with the requirements of the association you are looking forward to joining for insurance benefits.
by: Haz Duell
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