Small businesses have long struggled to provide the same quality healthcare benefits to their employees as larger corporations. As a result, their hiring pool is often smaller, and they sometimes lose good workers, solely because they lack the ability to provide certain benefits. Thanks to the new AHP, that could all change. Franchisors and small businesses need to tread lightly, however, as there are some aspects of the law that could increase their risk of a lawsuit. Learn more in the following sections, including how a seasoned small business lawyer could help to mitigate this risk for your company.
A Closer Look at the New AHP
At their core, AHPs allow small businesses to band together to purchase healthcare coverage for their employees, but unlike the older version, this new AHP allows companies to band together based on more than just industry or field. Instead, they can be linked by geography, or simply the desire to offer healthcare coverage. Set to start in September, the new AHP will apply to all small businesses, and even self-employed individuals, which were originally excluded.
Employers who enroll in the program are expected to have the same flexibility as large corporations when choosing a coverage plan, but they may find that there are more exclusions. For example, a provider can choose not to cover prescriptions or drug rehabilitation services. Laws regrind maternity care, pre-existing conditions, and preventative care still apply.
Avoiding Lawsuits Under the New AHP
In a large corporation, the human resources (HR) department typically works to ensure that all provided benefits are complaint with the law. In a small business or franchise, the task typically falls on the shoulders of the owner, who may already be spread too thin. As a result, they may fail to meet the legal requirements, such as ensuring that:
- They are providing maternity coverage if they have 15 or more employees;
- The cost to workers does not exceed more than 9.56 percent of their income (companies with 50 or more employees); and
- The plan covers at least 60 percent of the cost of covered benefits (companies with 50 or more employees).
If an employer fails to meet these requirements and their employee has to seek other coverage because of that oversight, the small business could be subject to fines, penalties, and lawsuits.
Franchisors have an even bigger challenge; overcoming joint liability when their franchisees fail to meet the requirements. Extra precautions, like hiring a program administrator and setting up an AHP trust, are highly encouraged for these companies.
Contact Our Wheaton Small Business Lawyers
At Stock, Carlson, Oldfield & McGrath, LLC, we recognize just how devastating a lawsuit can be to your company’s future, and we strive to protect it. Skilled and experienced, our Wheaton small business lawyers can assist you in taking the appropriate steps before enrolling in an AHP. Call 630-665-2500 and schedule a personalized consultation to get started today.