Realtors® say they’d take advantage of a proposed rule that would allow them to create a health plan as an association. However, they won’t be sold on the rule until its language is tweaked to support more workers.

Several members and local chapters of the National Association of Realtors sent comment letters to the Labor Department supporting a proposed rule to expand association health plans. The proposal, which is in the comment phase until March 6, would change the definition of “employer” to make it easier for individuals and employers in the same industry to band together to form their own health plan.

That change would be crucial to real estate agents, most of whom are considered to be a small business and could benefit from a health plan of their own, Marcia Salkin, managing director of public policy for NAR, told Bloomberg Law.

NAR has more than 1.2 million members, with about 86 percent considered independent contractors, according to the association. Many states require realtors to work under a broker, where they’re commonly considered independent contractors rather than employees.

“Our members are the individual real estate agents and brokers,” Salkin said. “They’re their own small businesses, and they commonly don’t have access to employer coverage.”

According to NAR’s 2017 annual membership profile, which garnered responses from 12,685 members, 46 percent paid for health insurance out of pocket; 32 percent received it through a spouse, partner, or family member; 3 percent had employer-provided health insurance; and 20 percent didn’t have health insurance at all.

Many members of the organization get their health-care benefits through the individual market of the Affordable Care Act, Christie DeSanctis, a business issues policy representative for the NAR, told Bloomberg Law.

DeSanctis said the NAR is “advocating for some changes” to the proposed rule “to maximize the amount of people that could be included” in an association plan. The NAR hasn’t submitted a comment letter yet but said it plans to closer to the early March deadline.

Including More Workers

NAR and its local chapters are calling on the DOL to include language in the final rule that would ensure working owners, or self-employed individuals, coverage under an association health plan even if they have health insurance available through a spouse.

One of the reasons NAR got involved in the discussion surrounding the proposal was because much of the focus is on small-business employers and not working owners, Salkin said.

The letter template the association provided its members to submit as a comment on the rule praises the inclusion of working owners and encourages the DOL to also include working owners who have benefits available through a spouse.

Political Context

President Donald Trump asked the DOL to create the rule in an October 2017 executive order, and the proposed rule for association health plans was put forward several months later.

Critics say the rule would damage the individual marketplace by luring healthy people currently paying for ACA plans to cheaper association plans with less coverage, leaving behind a sicker population in need of more care. ACA plans would likely be more expensive than association plans because they require 10 “essential health benefits,” whereas association plans would likely have less coverage without those benefit requirements. Advocates, on the other hand, say the rules could help small businesses and individuals currently paying costly premiums in the individual marketplace get more affordable care.

Tough to Form Group Plans

Not every association has the membership numbers that NAR has, which might pose problems when creating group plans, Roberta Casper Watson, a employee benefits lawyer at Wagner Law Group in Tampa, Fla., told Bloomberg Law.

It’s more difficult to guess what health-care premiums should be when a group has fewer members, Watson said. As a result, association plans could experience membership fluctuations as plan rates change from year to year. A common way to keep a self-funded plan stable is through stop-loss coverage, which is a form of insurance that guarantees the plan against losses. Plans without large membership will need stop-loss coverage, she said, but that’s another expense that comes from premiums.

To remain stable, association health plans will need to keep members in the program long-term—an issue not currently addressed in the proposed rule, she said.

Larry Mitchell, an Los Angeles-based consulting actuary who has specialized in health care since the 1960s, told Bloomberg Law that larger associations that are already established may have a slightly easier time keeping members in their plans, but retention will always be an issue for association health plans.

Groups that form for the sole purpose of creating a health plan will be subject to individuals and employers joining as they need care and leaving when they don’t, Mitchell said. “People will buy the insurance if they think it’s worth their while,” he said.