Questions from the Field: Association Health Plans

Recently, your favorite buds in blue suits at the Department of Hard Labor in DC made it a bit easier for small businesses to band together and purchase health insurance without the pesky regulatory requirements that individual states and the Affordable Care Act (ACA) impose on the little guys. Since we’ve recently received a few questions about this topic, let’s talk about it. 

We’ve been following this topic, as it is a potential new path for employers with fewer than 100 employees to be in a large group. In October, the Trump administration issued an Executive Order for comments regarding a) Health Reimbursement Arrangement expansion, b) short term policies and c) association health plans. Comments were given and received, and on June 19th, the Trump Administration issued new regulations.

While association health plans are already in existence, this changes the definition of a “Bona Fide Association” in that it can be 1) the same trade, industry, line of business or profession, or 2) be based on location. Not the same location, like “everyone in California” but “businesses located in Irvine.” This is a significant change. Another big change is that groups within the association can be counted on the overall size in the association, not each individual employer. Even self-employed business owners could join. This will be the first time in 20+ years that associations may form for the purpose of offering health insurance. Associations do have to offer at least one other service, such as an educational program.

Individual employers within the group cannot be rated on health status, and in most other ways, the health plans must be ACA compatible. So, these are comprehensive medical plans, not the ones with the religious exemption that can have pre-existing condition limitations. The ACA components associations will not have to comply with are small group requirements, such as modified community rating (member level rating) and having to offer the entire “essential health benefit” lineup (like pediatric dental and vision). To reduce concerns about adverse selection, the plan may impose special enrollment periods. They still have to have a board of trustees to govern the plan, and audits, among other things that make the plan sustainable. The final rule seems to be fairly well written in eliminating bad actors or crappy plans.

From here, state regulators will weigh in on the regulations. In California’s case, they may try to stop the entire thing because they may feel safer with more risk in the community pool, and AHPs could lead to “better risk” leaving the pool. The Trump Administration stated that if that happens, more regulations will follow.

So keep watching because yes, it could impact employers out there, but not yet. 

Ruling your world is all about knowing the latest news and how it affects your benefits plans. And when you have questions about any of this stuff, our team of health insurance and employee benefits experts will be there for you! Happy 4th of July to all of our readers out there! 

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