What is an Association?

An association is a group of businesses or companies that all provide the same type of services. These companies come together to form an association in order to protect and serve their mutual interests. Here’s a few examples of common industries and professions that might create associations:

  • Non-profit community services
  • Fire stations
  • Truckers
  • Construction companies

What is an Association Health Plan?

An association health plan is one that is available to any eligible employers within that association. For example, consider a local construction association: construction companies that are part of that association can utilize the association health plan, which is designed specifically for them, and employers like them. These benefits plans are created with the entire association in mind, rather than an individual employer.

Benefits for Association Health Plan Groups

Association health plans allow for consistency between the companies in the association, and for employees who move between companies. This is especially important when unions are involved, but it also shows the commitment to equity from employers.

1. Better Rates

For the pooled benefits, the gain is straightforward. A larger pool equals better rates, as the risk of a claim is spread out across more people and companies

2. Access to Coverage

Smaller employers may have difficulty accessing and maintaining traditionally insured benefits, either because of their size, number of eligible employees, stability of the plan, or any combination of the three. An association would be able to offer employees benefits through the association health plan at significantly reduced risk and cost.

3. Less Renewal Responsibilities

Groups that are part of association health plans are also relieved from dealing with individual benefits renewals. Instead, the association head office usually appoints a person or committee to handle the renewals for the entire association.

How Do Association Health Plans Work?

There will typically be pre-set coverage options for Extended Health Care (EHC) and Dental Insurance. The premiums are partially based on the anticipated participation of the number of groups in the association. Life Insurance, Accidental Death & Dismemberment (AD&D) Insurance, Disability Insurance and/or Critical Illness (CI) Insurance may be offered as well.

Other Considerations

The coverage for each group can be customized, but still needs to remain within the specified plan options though not all options have to be selected.

The plan design may be limited by any Collective Bargaining Agreement’s (CBA’s) specifications if the employees are unionized. 

Each group is responsible for their own employees, but sometimes there will be one employee from the head office of the association who manages the benefits for all businesses within the association.