Health insurance availability and affordability for individual dairy farm families and their employees has changed dramatically over the past few years, according to Paul Kulpa, vice president of market and product strategy with Agri-Services Agency. Ongoing federal health care reforms mean the situation remains in flux.
Kulpa said it’s important to note that prior to the Affordable Care Act (also called Obamacare), many dairy farmers had very limited access to health insurance coverage. ACA reforms helped individual producers find policies on the Marketplace Exchange. He cites the HIREDnAg project research (see Should farmer healthcare coverage be considered as part of 2018 Farm Bill?) showing one out of five farmers said Obamacare marketplace options gave them opportunity to purchase health insurance for the first time.
However, as large insurance companies began to pull out of the exchanges, coverage costs again rose, reducing plan options available to farmers. In some rural counties, the health care insurance situation has returned to pre-ACA conditions, where there are no longer coverage options available.
“Prior to Obamacare, there wasn’t an individual market. Now, post-2016, it’s starting to go back in that direction again because the lack of options, the unaffordable premiums and the high out-of-pocket deductibles,” Kulpa said. “For example, we have farmers call us from South Dakota, Minnesota and parts of Wisconsin, where there are no health insurance options for an individual or family basis available.”
The ACA also affected Agri-Services Agency’s business. The company, based in East Syracuse, New York, will enter its 50th year of business next year. It was formed by dairy farmer members of dairy cooperative Dairylea who were unable to find affordable health, workers' compensation, property and casualty insurance for co-op members.
In addition to its relationship with Dairylea, the company had developed its own insurance program, writing health insurance policies for individual agricultural producers throughout the U.S.
With the merger of Dairylea and Dairy Farmers of America (DFA), Agri-Services Agency is now a subsidiary of DFA. While its primary business is serving DFA’s dairy farmer members, Agri-Services Agency continues to provide insurance options for those in other agricultural fields and ag organizations.
Under reforms implemented through the ACA, companies like Agri-Services Agency had to change their approach. The company turned its attention to working with agricultural co-ops and individual farm families across the U.S. to help meet insurance needs. Dairy farmer members of co-ops can fit under both individual and employer groups.
“We deal with dairy farmers every day and understand their struggles and labor force,” Kulpa said.
A 2016 USDA Agriculture Resource Management Survey (ARMS) revealed that, while about 90 percent of the general farm population had health insurance coverage, the rate was much lower for dairy farmers. Due to the nature of their business (more likely full-time farmers with less opportunity for off-farm employment), 41.4 percent of dairy farmers were without health insurance coverage (see Figure 1). While more than 50 percent of all farmers had access to health care coverage through off-farm employment (either themselves or a spouse), that rate was just 36 percent among dairy farmers.
Like the the HIREDnAg project suggests, Kulpa said the full-time nature of dairy farming limits access to health insurance through off-farm employment. There may be other reasons as well. A secondary factor, on employer group policies, is the nature of farming operations and employee status.
Nondairy or crop farm operations frequently have seasonal, part-time employees who do not count against minimum “participation requirements” imposed by insurance companies.
In contrast, dairy farm employees are more frequently full-time employees, counting against those participation requirements that may make offering health insurance as a benefit too cost-prohibitive.
And, even if offering lowest-cost employee insurance, the nature of the labor force – immigrant workers who don’t see value in health insurance and don’t want any deductions from their pay check – the employer can’t meet an insurance company’s participation requirements, so the insurance carrier won’t write that risk.
“It creates challenges for dairy,” Kulpa said.
To overcome that challenge, larger dairies have gravitated toward low-cost minimum essential coverage (MEC) plans, where employers cover premiums as a benefit for employees, and employees pay no additional premium.
“Management carve-outs” allow farms to purchase coverage for its management team, while purchasing lower-cost coverage as a benefit for dairy employees.
Association health plans
An executive order signed by President Donald Trump last fall potentially opens another avenue for dairy farmers to access health insurance through “association” health plans.
While seen as a destabilizing factor for the ACA, the order could allow individuals with “common” industry situations – such as dairy farmers – to obtain group insurance through companies such as Agri-Services Agency.
Farmers might be able to find more stability through group coverage plans. Those policies, including premium rates, have been more stable than the individual market, which Kulpa calls ”messy.”
“Unfortunately, most farm families are looking for individual coverage, creating a challenge,” he said.
Agri-Services Agency as been working with insurance carriers to develop those plans. While a timetable is uncertain, Kulpa said he believes that opportunity might not be far off.
“I think pooling of like occupations will be very real in the future,” Kulpa said. “'Fluid' is the key word. It seems like things are shifting every year, based on government involvement.” 
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Dave Natzke
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