Association Health Plans (AHPs)



The Department of Labor (DOL) released a final rule on June 19, 2018 to allow new options for associations to sponsor health plan for their members and broadens the criteria for both businesses and self-employed individuals. The new rule allows them to band together SOLELY to establish health insurance coverage as well as expand access across state lines under the revised commonality-of-interest test.

Commonality-of-Interest Test:

  • In the same trade, industry or profession throughout the United States.

  • In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.

Mark your calendars! The 198 pages of regulations will take effect in three phases:

  1. September 1, 2018, for fully-insured association plans

  2. January 1, 2019, for existing self-funded association plans

  3. April 1, 2019, for new self-funded association plans.

The new rule does not affect previously existing AHPs, which were allowed—but with stricter geographic and commonality restrictions—under prior guidance. What the new rules does affect, in addition to the updated commonality-of-interest test, are as follows:

  • Expands the definition of a single employer under the Employee Retirement Income Securities Act (ERISA).

  • Expands access for self-employed individuals and sole proprietors.

  • Retains several ACA requirements, including a cap on an individuals Out-Of-Pocket Maximum, ban of lifetime/annual limits for Essential Health Benefits, and the ban on preexisting condition exclusions.

  • Limits the Affordable Care Act (ACA) requirement to cover 10 types of Essential Health Benefits

  • Require the continuation to coverage preventive services at no cost to the individual

  • Preserve nondiscrimination provisions under the Health Insurance Portability and Accountability Act (HIPAA) and the ACA

  • Cannot be controlled by a health insurance issuer and must be controlled by the employee-members of the association.

Opposition

On June 21, 2018, the attorneys general of New York and Massachusetts announced they would sue the administration to attempt to block the new rule. Opposition is concerned with shrinking consumer protections for small employers and working owners as a result of the expansion of association health plans. In addition the expansion has the potential to drive up costs in small groups and the individual market if younger healthier members opt out of ACA compliant health plans and choose to enroll instead in association health plans.

Supporters

Senator. Rand Paul (R-Ky.) calls AHPs a "pro-patient, pro-worker, and pro-family solution" and "one of the most significant free market health care reforms in a generation." The new reform could allow those facing much higher premiums and fewer coverage options, under the current Reform, the ability to join together and leverage opportunities currently enjoyed by much larger employers. Supporters also indicate the new rules could reduce administrative costs, create greater economies of scale, and strengthen negotiation power with providers.

AJM Associates will continue to monitor the changes and opportunities for clients through this transition as well as monitor all regulatory actions both on the State and Federal level.

Want to learn more? Contact us at info@ajmassoc.com

Information contained in this Associate Release is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. AJM Associates, Inc. provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, individual insurance, Medicare, and ancillary coverage services. For additional information about our services, please contact us at www.ajmassoc.com

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