Published
May 30, 2023
Of
Kate Andrews
Approximately 25-33% of Dillon Behr’s workload as an information and executive liability broker at insurer Risk Placement Services is related to phishing. Compromised emails constitute the largest category of attacks. Photo by Stephen Gosling
Finding affordable health insurance has long been a challenge for small business owners and employees.
Premiums can be cheap one year and could double the next. In 2020, the average per capita cost of health insurance in Virginia was $8,815, according to data from the Kaiser Family Foundation, and 36.1 percent of people surveyed reported not seeking mental health care because of the cost. The average monthly cost of health insurance for small business owners is $547 per employee, rising to $1,175 for family coverage, Kaiser reported in 2021.
The federal Affordable Care Act, passed in 2010, helped self-employed Americans negotiate affordable health care policies, and in 2022, Virginia lawmakers passed legislation that aims to make similar strides for small businesses.
Small businesses with between 2 and 50 employees will soon be able to join a self-funded health insurance consortium, or Multiple Employer Welfare Association (MEWA), through the local chamber of commerce or another business organization, such as Virginia Farm Bureau. The ultimate goal is to reduce the cost of insurance per person by creating a larger risk pool.
I think this could be a game changer for small businesses, says state Senator Monty Mason, D-Williamsburg, one of the legislation’s sponsors. He predicts that MEWA will help small businesses attract more employees, noting that 80 percent of new jobs are offered by small businesses in Virginia. Other states that have these types of consortia have seen awards [go] 15% to 20%.
Under state law, no one can be excluded from a MEWA based on pre-existing health conditions, and insurance policies must cover emergency care, hospital stays, prescription drugs, and other expenses typically covered by insurance. Any excess income will be paid back into the insurance plan at the end of the year, and associations must maintain net assets of at least $4 million and deposit at least $50,000 of high-quality securities with the Virginia Department of the Treasury.
The first organization in the state expected to offer such a plan is the Virginia Chamber of Commerce, which is launching its WiseChoice Healthcare Alliance this summer. Barry DuVal, chambers president and chief executive officer, says he anticipates about 3,000 people will join in the first year, similar to health care coverage for a large company. The only requirement for membership is for a business to join a local chamber affiliated with the Virginia Chamber. The rewards will differ by company, notes DuVal.
The State Corporation Commissions Bureau of Insurance will oversee the consortia starting in May. The office has not yet received any applications for approval, but a spokesman says it expects one soon from the Virginia Chamber. Any organization intending to establish a MEWA must submit a three-year financial viability plan with enrollment projections, a methodology for determining premium rates, as well as projected balance sheets, financial statements showing capital expenditures and the purchase and investment sale, says the SCC.
We’ve been working closely with the Bureau of Insurance, Mason says, I think the structure is as strong as it gets.
Mason’s first attempt to pass the legislation in 2019 was vetoed by Governor Ralph Northam, who was concerned that the bill would reduce state insurance purse membership.
We argue that it would not harm the status swap, says DuVal. Northam’s successor, Gov. Glenn Youngkin, a Republican, said before taking office in January 2022 that he would sign a bill into law if it was passed again by the Virginia General Assembly. He did it in a ceremony last year.
In addition to stabilizing the cost of health insurance, DuVal says MEWAs will likely help increase membership in local chambers. Similar policies in other states have helped chambers grow, with health insurance consortia including up to 40,000 members after a year or two of existence. Mason expects Virginia consortia to include 10,000 to 20,000 people once they’ve been around for a couple of years.
Ninety percent of Virginians work for small businesses, DuVal notes. The real benefit of this is producing and promoting a healthy Virginia. He also helps small businesses recruit. They can now offer competitive health coverage for employees.
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