Association Health Plans, President Trump, & The DOL – What You Need To Know

9-18-18  | Employee Benefits  |

Over the past few years, it seems like health insurance has made a permanent home in our nation’s news.

With changes to our health insurance laws constantly being proposed, implemented, and retracted, it can be difficult to keep up with your responsibilities and options as an employer.

In the last year, Association Health Plans (AHPs) have become the latest insurance topic to make the headlines. Discussions began after President Trump released an Executive Order in October 2017 directing the Secretary to consider permitting more employers to form AHPs.

In August 2018, this expanded access to AHPs was implemented through a new ruling by the Department of Labor (DOL).

Below we’ve summarized the key points of AHPs, the DOL ruling, and the impact these changes may have on your business.

If you have any questions or are interested in evaluating your health insurance options, give us a call at 502.805.3742 or contact us on our website here.

What are Association Health Plans?

According to the Department of Labor, Associated Health Plans (AHPs) are “group health plans that employer groups and associations offer to provide health coverage for employees.”

Typically, the health insurance options available to employers are dependent upon the number of employees in the organization. AHPs enable small employers to join together and purchase coverage options that would otherwise only be available to large employers.

Utilizing an AHP may help small employers to reduce their insurance expenses and tailor their coverage offerings to the needs of their employees as long as they are capable of navigating their unique administrative responsibilities and compliance regulations.

What is this “new rule?”

On June 21, 2018, the Department of Labor published a new rule in the Federal Register entitled, “Definition of “Employer” under Section 3(5) of ERISA – Association Health Plans.” The rule went into effect on August 20, 2018.

In this final ruling, the DOL broadened the definition of “employer” under the Employee Retirement Income Security Act (ERISA). The new criteria in the ruling reduced state and federal AHP regulations, making it more accessible for small businesses to create and utilize AHPs.

What do I actually need to know?

If you want more detailed information on this new ruling and how AHPs may affect your business, check out the DOL’s website here. Otherwise, here’s a short summary of the key changes you should be aware of:

  • Easier Common Interest Test: The new rule allows employers to create an AHP as long as they can document that they share a “common interest” through their industry or geography. This adjustment means that an AHP could offer coverage to a group of employers based on their shared trade nationwide or based on their shared location in a certain region.
  • No Essential Health Benefits Required: Under the Affordable Care Act (ACA), individual and small group insurance markets are required to provide “essential health benefits” to their employees. The new AHP ruling enables employers to join together to create a larger group capable of purchasing insurance in the large group market, which does not have these same ACA regulations.
  • Sole Proprietors Included: The new rule includes sole proprietors and their families, allowing them to join an AHP and access health insurance coverage. Previously, self-employed individuals were only allowed to join AHPs if they employed other individuals.

You should also note:

  • State & Federal Regulations: States still have regulatory oversight of AHPs but will share their enforcement responsibilities with the federal government.
  • Existing AHPs: The new rule does not impact existing AHPs, and they can continue to operate as they previously did. However, previously existing AHPs can expand if they elect to follow the new requirements.
  • Consumer Protections: Under the new rule, AHPs are still subject to consumer protections and healthcare anti-discrimination protections.
  • Employer Liability: Forming an AHP will not subject employers to joint employer liability nor will businesses be considered an employer of its independent contractors because of participation in an AHP.

What happens next?

Although the new rule was effective in August 2018, it’s likely that implementation of the changes will be gradual and cautious.

On July 27, 2018, approximately one month after the final ruling was published, a group of states filed a law suit against the DOL in the D.C. Federal District Court.

The states involved in the State of New York et al. v. United States Department of Labor et al are: New York, Massachusetts, D.C., California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, and Washington.

The states argue that the AHP final rule conflicts with the terms of the ACA, increasing the risk of harm to individual consumers and jeopardizing states’ efforts to protect and regulate accordingly.

The litigation process may cause insurers to be tentative about offering new coverage options under the AHP until a resolution is reached.

If you’re considering creating an AHP for your business, you should keep an eye out for updates on this legal case and how it may impact new coverage options.

If you have any questions or are interested in evaluating your health insurance options, give us a call at 502.805.3742 or contact us on our website here.