For more than 25 years, the cost of providing healthcare benefits for employees has consistently ranked as the No. 1 concern of NJBIA’s 20,000 member companies in our annual Business Outlook Survey. That’s why NJBIA has spent the past two years actively researching health benefit product alternatives for our members to find a way to simplify the process, better manage costs, and help smaller businesses save money.
After an extensive review, we have found a health benefits solution we expect to roll out to NJBIA members this fall: a multi-employer, not-for-profit trust that can give smaller businesses and sole-proprietors who are members of NJBIA access to a full menu of “large company” health benefit plans. Teaming up with other NJBIA members will give participating businesses greater buying power and access to the more affordable healthcare plans that are typically only available to corporations with thousands of employees.
This variation of a self-funded insurance plan is called a MEWA, or Multiple Employer Welfare Arrangement. A MEWA, which is closely regulated by the state to protect participants’ interests, allows smaller businesses to pool their risks to better control costs. And because it is run by members for members, all profits stay within the plan, often producing annual dividends for participating businesses.
NJBIA has selected the Association Master Trust (AMT), which has been successfully operating in New Jersey since 1978, to run a new self-insured sub-trust, capitalized by NJBIA and open to all NJBIA member businesses that choose to participate. AMT specializes in association-sponsored group benefit plans and currently has more than 18,000 participants in 16 New Jersey trade and member-association benefit sub-trusts, including the New Jersey Builders Association, the Fuel Merchants Association of New Jersey, and the New Jersey Veterinary Medical Association. Through AMT, the sub-trusts provide their members with self-funded medical benefits, administered by Horizon BCBSNJ, and self-funded dental, administered by Delta Dental Plan NJ.
Although these plans are self-funded, members’ loss exposure is limited because of the purchase of “stop loss coverage” to protect against catastrophic claims. In addition, State Department of Banking & Insurance regulations set a Risk Based Capital ratio to ensure the MEWA trust remains fiscally sound. At year-end in 2016, AMT’s RBC was 601 percent, significantly exceeding the state’s RBC minimum.
By law, sufficient funds must also be held in reserve for future claims, based on calculations from an independent actuary, before any dividends are paid to members. Nevertheless, over the past five years, AMT has still been able to return about $14.5 million in surplus to the members of its MEWA sub-trusts. The most recent percentage rate of return was 3 percent ($3.1 million) returned to members in 2017 for the 2016 plan year. The prior year the return was 2.5 percent ($2.5 million).
The requirements of the Affordable Care Act have made choosing a health benefits plan confusing and time consuming for small businesses. At NJBIA, our goal is to provide our members with greater flexibility to design better health plans that are more affordable. AMT offers more than 50 medical plan design options, including traditional, PPO (Preferred Provider Organization), and EPO (Exclusive Provider Organization) options. Most importantly, the not-for-profit board of trustees’ first priority is affordable, quality care for members.
Is the MEWA a better health benefits solution for your business? When we officially launch this fall, NJBIA members will be able to go online to get a free quote from AMT for benefit plans effective in 2018.