Last week the Department of Labor announced a final rule to expand access to Association Health Plans (AHPs) through a new, more flexible “Commonality of Interest” requirement. This could be good news for small businesses and consultants who, in theory, will now be able to receive health insurance options that are comparable to larger group plans with lower premiums and including some of the better parts of the Affordable Care Act, as access to preventive care without any out of pocket costs and allowing people to keep their children on the plan until age 26. AHPs are, however, still subject to state rules that oversee multiple employer welfare arrangements (MEWAs) and other federal mandates pertaining to annual limits on certain benefits and coverage of mental health benefits. And it’s still unclear how broad a range of benefits will be offered in the AHPs.
What are AHPs? Association Health Plans (AHPs) allow business groups and certain trade associations to band together to purchase health insurance coverage if a group or association meets certain requirements. Members of these associations, under former and current rules must have one, or more, “substantial business purpose” that is unrelated to health coverage to exist, and they must have an organized structure with official by-laws and a governing body. Self-employed individuals or contractors are also allowed to participate in these AHP groups under the new ruling, providing that these individuals work an average of 20 hours per week and their related wages are equal to or greater than the cost of AHP coverage.
What now constitutes Commonality of Interest? Commonality of Interest indicates that businesses who group together for these AHPs are bonded together by either industry (same trade, line of business, profession) or geography (same state or metropolitan area). Previously, AHPs had to have both of these boxes checked in order to qualify; now one or the other will suffice. In theory, this will allow a much greater number of possible businesses to fall under these qualifications, potentially allowing more employers to participate, assuming they fall under these specific guidelines within state and federal law when forming their AHPs. However, states will still have the authority to impose their own individual laws when it comes to AHPs and insurance laws.
This final ruling comes in response to Executive Presidential Order 13813, issued by President Trump in October of 2017, directing the DOL to reassess and expand the use of AHPs. In response to this order, the Department of Labor released its proposed changes in January of 2018, while also stating a lack of confidence in the proposal’s effectiveness. These concerns by the DOL resulted in nine states taking individual action to shield their insurance markets from the new rule, with proposals having been advanced in Washington, California, Connecticut, and the District of Columbia. In May, New Jersey created its own version of the Affordable Care Act to try and stabilize its state health insurance market. Meanwhile, attorneys in New York and Massachusetts have threatened lawsuits with concerns that the final rule will undercut consumer health protections that are imposed by the ACA.
For fully insured AHPs, they may begin to offer coverage as of September 1, 2018. For existing AHPs with self-insured members, this new rule could go into effect as soon as January 1, 2019. For newly self-insured AHPs who are looking to form under the new standards, they may do so after April 1, 2019.
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