How Does Farm Bureau Health Coverage Work?

Regulation Differs From Other Types of Coverage

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In some states, the local Farm Bureau offers health plans to individuals or small groups as an alternative to Affordable Care Act (ACA)-compliant health coverage. The specifics of these plans vary across the states where they're available, but they tend to be less expensive than ACA-compliant plans. In this article, we'll explain how these plans work and the health care reform process that has led to their creation.

Note that this article is about non-ACA-compliant health coverage that's provided via Farm Bureau programs; some Farm Bureaus help their members enroll in ACA-compliant health plans through their state's exchange, and others partner with a health insurance brokerage that helps members enroll in health plans available in their state. But those sort of programs are not what we mean when we talk about coverage that's sponsored by Farm Bureau.

Health Plan Choices

Most working-age Americans get their health coverage from an employer. But people who aren't eligible for Medicare, Medicaid/CHIP, or an employer's plan have to purchase their own health coverage in the individual market.

The ACA imposed significant reforms in the individual market, ensuring that the plans cover essential health benefits and that people who buy their own health coverage are able to enroll regardless of their medical history. And the ACA's premium subsidies make that coverage affordable for millions of Americans.

But for people who earn just a little too much to qualify for premium subsidies, ACA-compliant individual market health plans can sometimes be simply unaffordable due to the "subsidy cliff," although there is a lot of variation that depends on the person's age and location.

Note that contributions to a pre-tax retirement account and/or a health savings account (HSA) can be used to reduce the ACA-specific modified adjusted gross income that's used to determine subsidy eligibility; note also that the Biden/Harris health plan includes a simple way of fixing the subsidy cliff, but it would take Congressional approval to make it happen.

People in this situation are sometimes seeking other alternatives for their health coverage, particularly if they're in fairly good health and not currently using their health coverage extensively. Some turn to short-term health insurance plans, especially in states that allow these plans to renew for up to three years.

Others choose health care sharing ministries. Others opt for various combinations of fixed indemnity plans and direct primary care plans. And in several states, Farm Bureau health plans are available as another alternative, although eligibility rules vary from one state to another.

Farm Bureau Plans Exempt From State Law

In several states, Farm Bureau plans are explicitly exempt from state insurance laws, as these states do not consider Farm Bureau plans to be health insurance. This is the case in Tennessee, Iowa, Kansas, and Indiana.

Tennessee's Farm Bureau health plans predate the ACA, but the other three states have passed laws within the last few years that specifically allow Farm Bureau to offer medically underwritten health coverage that's not considered health insurance under state rules.

In all four states, enrollment is available year-round. And anyone can apply, as long as they're members of the Farm Bureau. Membership is just a matter of paying dues; there is no requirement that the person actively be engaged in agriculture in order to join the Farm Bureau or gain coverage under the Farm Bureau health plans available in these four states.

Note that Farm Bureau membership dues do not cover the cost of the health benefits; those are paid separately, in addition to the cost of belonging to the Farm Bureau.

Because these plans use medical underwriting, they can reject applicants due to their medical history, or impose waiting periods before pre-existing conditions are covered. And since these plans are not considered health insurance, they are not required to comply with state or federal health insurance mandates.

So for example, they don't have to cover essential health benefits, and can offer plans with maximum-out-of-pocket limits that are much higher than ACA-compliant plans are allowed to have.

The available plans vary considerably in terms of the benefits they offer. It depends on the state and the specific plan that a person chooses; some are quite comprehensive, while others are more bare-bones.

Because these plans do not have to comply with state and federal insurance mandates, and because they're medically underwritten (and thus can reject applicants based on medical history or impose pre-existing condition waiting periods), they have monthly premiums that are lower than the full-price cost of ACA-compliant coverage for a person who isn't eligible for premium subsidies in the exchange.

This was the driving force behind the creation of these plans, as they can potentially provide a more affordable alternative for healthy people in that situation. But the plans are also controversial, as they are not technically health insurance and can potentially result in the ACA-compliant risk pool having poorer overall health (and thus higher premiums) if healthy people leave the ACA-compliant risk pool in favor of non-insurance options.

Tennessee

For nearly three decades, the Tennessee Farm Bureau's health plans have been exempt from Tennessee's health insurance regulations, as the state does not consider the product they offer to be health insurance.

Because the coverage is not considered health insurance, people who relied on it from 2014 through 2018 were subject to the ACA's individual mandate penalty. But that penalty was reduced to $0 as of 2019, so Tennessee residents who enroll in Farm Bureau plans are no longer penalized by the IRS for not having minimum essential coverage.

And tens of thousands of Tennessee residents have been relying on these plans in recent years, finding them to be a more affordable alternative to ACA-compliant individual major medical coverage, despite their drawbacks. Membership in the Tennessee Farm Bureau is required in order to apply for coverage, and costs $30 per year.

Iowa

Iowa enacted legislation in 2018 (Senate File 2349) that allows the Iowa Farm Bureau to offer medically underwritten health plans. The legislation specifies that the plans are not considered insurance and are not subject to the state's requirements for health insurance plans. The policies became available for purchase in November 2018, with coverage effective at the start of 2019.

Kansas

Kansas enacted legislation in 2019 (House Bill 2209) that allows the Kansas Farm Bureau to sell medically underwritten health plans. The legislation specifies that the coverage is not considered health insurance and is not subject to Kansas insurance laws or regulations. These plans became available for purchase in October 2019, with coverage taking effect at the start of 2020.

Membership in the Kansas Farm Bureau is required in order to apply for the health coverage, but that's available to anyone who signs up and pays the dues (dues are non-refundable, even if the person's subsequent application for the health plan is rejected).

Indiana

Indiana enacted legislation in 2020 (Senate Bill 184) that allows the Indiana Farm Bureau to sell medically underwritten health coverage that "is not insurance and is not subject to the regulatory authority of the department of insurance."

These plans became available for purchase as of October 2020, with coverage effective starting in 2021. Indiana residents must be Farm Bureau members in order to apply for the health coverage; membership costsr $32.50 per year.

Nebraska Short-Term Plans

Nebraska's approach to Farm Bureau coverage is different. Instead of medically underwritten coverage being made available year-round to anyone in the state who joins the Farm Bureau, Nebraska opted for coverage that's guaranteed-issue (i.e., available regardless of medical history) but only during an open enrollment period in the fall and only to people who are actively engaged in agriculture.

Nebraska's Farm Bureau plans initially became available for 2019 as association health plans (AHPs), under the new rules that the Trump administration had issued to provide added flexibility for AHPs. But the rule, which allowed sole proprietors without employees to enroll in AHPs, was soon overturned by a judge.

So for 2020, Nebraska Farm Bureau began partnering with Medica to offer short-term health plans with terms of up to 364 days (short-term plans with terms of up to 364 days are allowed under federal rules that the Trump administration finalized in 2018).

But these plans are quite different from the standard short-term plans that are available in many other states. The coverage is similar in many ways to ACA-compliant coverage. And the plans are only available during an enrollment window that runs from November 1 to December 15 (the same as the federally-established open enrollment window for ACA-compliant coverage).

The coverage is guaranteed-issue (i.e., eligibility does not depend on the applicant's medical history), but people can only enroll if they're actively engaged in agriculture in Nebraska and have been a member of the Nebraska Farm Bureau since at least August of the year they're enrolling.

Ohio and Georgia Self-Funded Plans

In Ohio and Georgia, the Farm Bureaus offer another type of health coverage, designed as an employee welfare benefit plan, available to groups as well as sole proprietors. In Georgia, the plans can cover groups with up to 50 employees, while in Ohio they can cover groups of up to 99 employees.

In both states, enrollees must be members of the Farm Bureau and actively engaged in agriculture-related industries, but there is a broad list of industries that qualify. Ohio's Farm Bureau notes that one out of eight employees in Ohio is in an industry that qualifies, and the list of eligible occupations in Georgia is quite extensive.

Like ACA-compliant small group health plans, the Farm Bureau health plans in Georgia and Ohio have participation requirements and contribution requirements.

At least 75% of eligible employees must participate in the plan or have a valid waiver because they have coverage elsewhere, and the employer must cover at least a certain percentage of the premium cost (25% of the cost of the chosen plan in Ohio, and 50% of the cost of the cheapest available option in Georgia).

And like other group coverage, plans are available to employers year-round, but eligible employees can only sign up during the group's designated open enrollment period (or when they're initially eligible for coverage or experience a qualifying life event).

The Farm Bureau coverage is guaranteed-issue in both Georgia and Ohio, but the premium can be based on the group's overall medical history. The ACA allows large group health insurance to work this way, but ACA-compliant small group health coverage (up to 50 employees in most states) cannot use a group's medical history to determine premiums.

So by using the Farm Bureau plan, a business in Georgia or Ohio with healthy employees can potentially qualify for coverage that's less expensive than an ACA-compliant plan.

Should You Enroll in a Farm Bureau Health Plan?

Your ability to enroll in a Farm Bureau health plan will depend on a variety of factors, including where you live. And if a plan is available in your state, your ability to enroll will depend on your occupation, your medical history, or your employer's choice of health coverage.

If you're in Tennessee, Iowa, Kansas, or Indiana, you have the option to join the Farm Bureau by paying the required dues (regardless of whether you're involved in agriculture in any way), and then you can apply for the Farm Bureau's health coverage. But your eligibility for coverage will depend on your medical history.

And you'll want to pay very close attention to the specifics of the policy you're considering: Which of the essential health benefits does it cover, and what restrictions are built into the coverage it does offer?

What's the maximum benefit amount that the plan will pay on your behalf if you need extensive health care? (keeping in mind that if you buy an ACA-compliant plan instead, this amount is not capped).

What's the maximum out-of-pocket amount, assuming you need extensive care but not so much that you go over the plan's benefit cap? (keeping in mind that if you buy an ACA-compliant plan for 2021, the in-network maximum out-of-pocket won't exceed $8,550 for a single person or $17,100 for a family).

If you're eligible for a premium subsidy in the ACA-compliant market, you'll almost certainly be better off with a plan purchased through the health insurance exchange in your state. The ACA-compliant plan will cover the essential health benefits with no dollar limit on how much the plan will pay, and with an out-of-pocket cap that falls within the allowable range.

For 2021 coverage, a single individual in the continental U.S. can qualify for a premium subsidy with an income of up to $51,040, and a family of four can qualify for a premium subsidy with an income of up to $104,800 (these limits are higher in Alaska and Hawaii).

You can use HealthCare.gov's plan comparison tool to quickly and anonymously see the available plans in your area and learn how much they'd cost after any applicable premium subsidy is applied (if you're in a state that runs its own exchange instead of using HealthCare.gov, you'll be directed there when you enter your zip code).

But if you're not eligible for a premium subsidy and cannot afford to pay full-price for an ACA-compliant plan (and also cannot get your income into the subsidy-eligible range by making contributions to a retirement plan or HSA), a Farm Bureau plan will likely be a better option than being uninsured altogether, if that's the other alternative you're considering.

But keep in mind that in the states where medically underwritten Farm Bureau plans are available for purchase year-round by anyone who joins the Farm Bureau, the states do not consider these plans to be health insurance coverage, and have specifically exempted them from insurance rules and regulatory oversight. So if you have problems with the coverage at some point, the state department of insurance would not be able to step in your behalf.

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Article Sources
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