Is a MEWA right for your bar? An inside look at the NSBA Health Insurance Consortium

On January 1, 2019, the NSBA Health Insurance Consortium launched as a multi-employer welfare arrangement (MEWA) to provide health insurance for bar staff and for dues-paying members of the Nebraska State Bar Association who meet certain requirements.

The process of developing this new member benefit began in November 2017; at press time, 48 firms across Nebraska were participating, resulting in health insurance coverage for 869 individuals—and NSBA Executive Director Liz Neeley says those numbers continue to grow.

Seven different plan options (three PPOs and four HSAs) are available through the consortium, and all are 100 percent backed by BlueCross BlueShield Nebraska. As of now, only firms with at least one staff person (in addition to a solo lawyer) working at least 17 hours a week are eligible to participate. Firms also must meet standard underwriting guidelines, including that at least 50 percent of the firm’s employees must agree to take coverage through the plan.

Old rules found preferable to new rules

Eventually, the NSBA hopes that its dues-paying solo members without any staff will also be eligible. This would require an exception from the U.S. Department of Labor; the bar’s request for this exception is pending.

While the NSBA was in the midst of building the new consortium, the U.S. Department of Labor changed the rules governing association health plans (in this case, “association” refers to multiple employers purchasing health insurance as a group, and not necessarily to associations in the usual sense). The new rules would allow sole practitioners; however, the NSBA was not offered an insurance option under the new rules.

Significant savings based on lawyers’ better health

Even as the bar awaits approval for solos without staff, Neeley says the response from members has been overwhelmingly positive, in part because of the savings that have arisen because “lawyers are an attractive group for insurance carriers.” Though lawyers do face some well-publicized health challenges, people with higher levels of education tend to be healthier in many ways, Neeley explained, such as being less likely to smoke, and more likely to eat better and to use preventative health services. An initial analysis by the insurance carrier found that lawyers and law firm staff are about 15 percent healthier than their regular book of business, Neeley adds.

“Our broker and our staff have gotten numerous thank-you notes and phone calls from people who want to tell us how much they are saving on their premiums, their prescriptions, or both,” she says.

The bar anticipates that the coverage for its staff will achieve a savings of about $20,000. Also, the bar will recoup a small percentage from premiums, which Neeley notes is not subject to unrelated business income tax. Neeley also says that the Health Insurance Consortium helps the NSBA improve its value proposition because participants must be dues-paying members (the NSBA structure includes both mandatory and voluntary components).

Advantages to the MEWA model

Among the various ways of offering health insurance, the key to the savings seems to be the MEWA model—and Neeley believes that for lawyers, bars are in great position to offer health insurance under this type of arrangement (or to spin off a separate entity that does so).

“MEWA regulations require that the group have a ‘professional nexus’ and a ‘bona fide group or association’ acting in the interest of the group of employers,” she explains. “Given the regulations, it would be difficult for another, non-bar related organization to provide this benefit to lawyers.”

Neeley points out the following advantages that a MEWA has over the more standard bar association health insurance partnership:

• Affordable coverage. “By pooling together,” she says, “employers are better positioned to obtain more affordable health insurance coverage due to economies of scale, managing savings, and spreading risk.”
• Flexibility. “Each employer in the consortium has the option of selecting the type of health plan or plans that works best for its employees (high deductible plan vs. low deductible plan, etc.).”
• A stable community. “The NSBA’s goal is to create and to encourage a stable community of employers participating in the consortium. When a group has a stable environment, annual rate fluctuations are less likely and less dramatic from year to year. The structure of our consortium insulates you from dramatic rate increases. Firms are rated in one of six tiers. The most a firm can move from year to year is one tier.”
• Availability to family members. “In addition to staff, employers participating in the consortium may offer family and dependent coverage to their employees.”

Important steps and things to consider

But the advantages listed above don’t mean that a MEWA is perfect, or easy to establish. Neeley has some advice for other bars that are considering setting up a similar consortium. (Note: Because Neeley explains these details much better than any paraphrase could, the remainder of this article is in her own words.)

“The first step is to call your state’s department of insurance. The regulations governing MEWAs differ by state. Find out what existing MEWAs are in place in your state and give them a call to learn more about how they are structured.

“Step two, hire an employee benefits lawyer who has started a MEWA before.

“Step three, determine if there is sufficient interest to move forward. Sit down with the insurance carriers in your state and tell them what you are interested in doing. We were told that we would need at least 1,000 lives in order to make this a reality. We did a membership survey to try and determine the size of the pool of law firms potentially interested in joining a health insurance consortium. When our survey came back showing interest from more than 2,500, the insurance carriers knew we were serious about moving forward. (Not all who expressed interest ultimately signed up, in part because many did not meet the requirements.)

“There are countless other decisions throughout this process. You will need to decide whether you will be offering a fully insured or self-funded product (regulations differ depending on which product you choose). You will need to establish a process to select a broker and an insurance carrier. You will need to aggressively market the plan.

“The largest hurdle in setting up a MEWA is that you are constantly in a chicken-and-egg scenario. People won’t join until they know what the premiums are, and you can’t provide them with premiums until you know who is in the plan. Lots of people will want to ‘wait and see’ to make sure it takes off the ground before committing.

“Establishing a MEWA is not for the faint of heart. It takes a tremendous amount of communication and effort on behalf of your staff, broker and carrier.”