The Department of Labor (DOL) released a proposed rule making changes to Association Health Plans (AHPs) as directed by President Trump’s Executive Order. Specifically, DOL proposes to make changes to the definition of “employer” in order to expand AHP offerings to consumers. The notice of proposed rulemaking will be published in the Federal Register on January 5, 2018, and be available for public comment for 60 days.
Under current regulations, coverage provided through an employer trade association, chamber of commerce, or similar organization to individuals or small employers is generally regulated under the same federal standards that apply to insurance coverage sold by health insurance issuers directly to these individuals and small employers unless the coverage sponsored by the association constitutes a single Employee Retirement Income Security Act (ERISA)-covered plan. Practically, very few of these associations are treated as a single ERISA-covered plan, and as such, most associations’ plans are treated as separate and have to comply with either small group or individual insurance regulations.
DOL is proposing to allow companies to form an AHP on the basis of geography or industry and remove the requirement that these AHPs need some other reason to band together other than providing health coverage to its members. The rule also proposes sole proprietors to join AHPs, allowing for a different pathway for self-employed individuals and their families to receive coverage. These AHPs would not have to follow some key beneficiary protections such as pre-existing medical conditions, or the requirement to cover the ten essential health benefits (EHB), as required under the individual and group insurance market.
The proposed rule does state, however, that AHPs cannot charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors. However, because AHPs do not need to follow the EHB guidelines, this will likely open the door to skimpier plans that cherry-pick consumers based on provided and excluded benefits.
Though DOL cites 11 million potential customers, it is unclear the level of interest these new proposed plans will see in 2019. Many insurers expressed hesitation in regards to offering skimpier options that do not conform to the standards of the Affordable Care Act (ACA). As we wait for the comments to roll in, the Department of Health and Human Services has a pending regulation for Short Term Health Plans that may do much greater damage to the stability of the ACA marketplace, one which is expected imminently.
Registration is now open for the Gorman Health Group 2018 Forum, April 25-26, 2018, at the Red Rock Resort ideally located near the Red Rock Canyon in Las Vegas.
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