A health plan that for years has provided coverage for employees at beer and wine wholesalers in Michigan now looks to offer the same benefits to craft brewers, distilleries and wineries across the state, providing a potential lower-cost option to consider.
An offshoot of the Michigan Beer & Wine Wholesalers Association, the Michigan Beverage Collective decided a year ago to extend to craft beverage producers an association health plan that presently covers more than 4,000 people at 33 companies.
The Michigan Beverage Collective offers health plans through Blue Cross Blue Shield of Michigan and HMO subsidiary Blue Care Network, including five high-deductible medical plans with a health savings account and three HMO and PPO plans. The collective also offers four dental and vision options, and short-term disability.
“These are good plans,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association. “They’re plans for good jobs.”
The Michigan Beverage Collective dates back to 1990, when the Beer & Wine Wholesalers Association formed a trust to offer employee benefits to members.
Federal regulations for years have allowed small businesses in a common sector to pool together for an association health plan. Changes made to federal rules in 2018 broadened criteria for association health plans and allowed the employee benefits trust to transition in early 2020 to offer coverage to craft brewers, wineries and distillers, Nevins said.
“It just made sense to reach out to our partners in the industry — people who we know care about their employees … and want to provide good benefits and take care of those that are taking care of them,” he said. “It just seemed to be a really good fit to offer the program to them because we think we can offer them really great packages in insurance benefits at a really competitive price.”
Creating market awareness
Now focused on distributors and alcohol beverage producers, the collective spent the last year working to promote and create market awareness of the association health plan.
After the COVID-19 pandemic slowed the roll out, the collective is now ready to begin enrolling craft brewers, distilleries and wineries.
“For the first year, our goal was just to get out there and make relationships, get in the door to start talking to people. Insurance is a relationship-type thing. You have to know people and kind of build that relationship, so that’s been our focus,” said Nevins, who estimates that there are some 500 alcohol beverage producers in the state between craft brewers, distilleries and wineries who are eligible to join the plan.
“Obviously, we’d love to have all of them, but if we can bring in a handful a year until people start to get used to the program, and then start growing faster than that, we’d consider that a success,” he said.
Federal rule changes
Because of the larger collective pool of participating employers, association health plans are not subject to the same coverage mandates for 10 essential benefits under the federal Affordable Care Act, which enables them to craft lower-cost benefits packages.
U.S. Department of Labor rules under which the Michigan Beverage Collective offers health benefits differ from regulations issued in 2018 under the former Trump administration. The regulations allowed different types of small businesses within a state to come together to form an association health plan and collectively qualify for large group coverage.
A federal court ruling in 2019 set aside that portion of the Department of Labor rules, saying they amounted to an end run around mandates in the Affordable Care Act. The case remains under appeal.
In West Michigan, a family health plan in 2020 cost an average of $1,500 a month, according to an annual survey by The Employers’ Association. A two-person plan had an average monthly premium across all plan types of $1,100 and an individual health plan costs about $500 per month.
A large part of extending the Michigan Beverage Collective’s insurance pool to include craft brewers, distillers and wineries was to enable them to potentially afford health benefits that can help to attract and retain employees.
“It is very hard right now to attract and retain talent, and good health benefits are a tool to do that,” Nevins said. “There is a talent crunch out there. We hear it all of the time. We hear it from craft brewers, we hear it from wineries, we hear it from distributors, we hear it from everyone working in the alcohol beverage industry.”
That’s the case at Rockford Brewing Co., where partner Seth Rivard says employee health insurance is simply unaffordable.
Rockford Brewing employs about 40 full time employees at its taproom, restaurant and brewery. The inability to afford health benefits puts the small company at a competitive disadvantage in attracting and retaining talent, especially chefs who are in short supply right now and will migrate to larger organizations that offer insurance coverage.
“It’s hard for us to compete with that,” Rivard said. “We just can’t make the numbers work.”
To afford employee health coverage, Rockford Brewing needs costs at about half of what the company has been quoted, Rivard said.
Nevins said the Michigan Beverage Collective’s health plans are “very competitive” in price and generally beat other products on the market, often quoting policies “lower than what people are already paying,” although he could not say by how much.
Of the beer and wine wholesalers that now use the Michigan Beverage Collective, “most years we have a 100 percent retention rate” for policy renewals, Nevins said. “We’re a very stable plan with great benefits.”