Association Health Plans (AHP) in Las Vegas, NV, Henderson, NV, Laughlin, NV and North Las Vegas, NV
Under the final rule, AHPs will be expanded to allow more small employers to join together to purchase health coverage as a single group. According to the DOL, this approach will give small employers (as well as sole proprietors) access to more affordable, high-quality health coverage.
On June 19, 2018, the Department of Labor (DOL) released a final rule that gives small businesses more freedom to join together as a single group to purchase health insurance in the large group market. These benefit arrangements are called association health plans (AHPs).
By forming AHPs, small employers can avoid certain Affordable Care Act (ACA) reforms that apply to the small group market. According to the DOL, this will provide small employers with more affordable health insurance options.
According to the DOL, this reform provides small employers—many of whom are facing higher premiums and fewer coverage options—with a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers, as well as increased bargaining power.
Put us to work for you! You should always use a trusted insurance professional to help you understand all your options because, while you may see lower premiums with an AHP, they are often plans that cover fewer benefits. Not all plans are the same!
While AHPs may have lower premiums, they are also exempt from some key consumer protections under the ACA. For example, most AHPs will not be subject to the ACA’s EHB requirement, which requires small group plans to cover a core set of items and services, such as mental health care, maternity and newborn care, prescription drugs and emergency services. Most AHPs will also be exempt from the ACA’s rating restrictions for the small group market, which means that AHPs may base premiums on factors such as age, industry and gender.
The final rule allows employers to join together to form an AHP that is a single ERISA plan if either of the following requirements is satisfied:
- The employers are in the same trade, industry, line of business or profession; or
- The employers have a principal place of business within a region that does not exceed boundaries of the same state or the same metropolitan area (even if the metropolitan area includes more than one state).
In addition, the final rule allows working owners without other employees, such as sole proprietors and other self-employed individuals, to join AHPs.
To distinguish single plan AHPs from commercial insurance-type arrangements, the final rule requires AHPs to satisfy the following conditions:
- The primary purpose of the group or association may be to offer and provide health coverage to its employee members; however, the group or association also must have at least one substantial business purpose unrelated to offering and providing health coverage or other employee benefits to its members.
- Each employer member of the group or association participating in the group health plan must be the employer of at least one employee who is a plan participant.
- The group or association has a formal organizational structure with a governing body and has bylaws or other similar indications of formality.
- The group or association’s member employers control its functions and activities, including the establishment and maintenance of the group health plan.
- Only employees and former employees of the current employer members (and family members of those employees and former employees) may participate in the group health plan sponsored by the association.
- The group or association is not a health insurance issuer (or owned or controlled by an issuer or by a subsidiary or affiliate of an issuer).
In addition, the final rule requires AHPs to comply with certain consumer protections and anti-discrimination protections that apply to the large group market. For example, AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions, or cancel coverage because an employee becomes ill. Additionally, AHPs under this rule will not be able to charge employers different rates based on the health status of their employees.
The final rule does not affect existing AHPs, which are allowed under the DOL’s current guidance. These plans can continue to operate as before or may elect to follow the new requirements if they want to expand within a geographic area, regardless of industry, or to cover the self-employed.
The final rule includes a phased applicability date. The final rule allows fully insured plans to begin operating under the new rule on Sept. 1, 2018. Existing self-insured AHPs can begin operating under the new rule on Jan. 1, 2019, and new self-insured AHPs can begin on April 1, 2019.
According to the DOL, this phased approach will provide prompt relief to individuals seeking affordable health coverage through AHPs while allotting some additional time for the DOL and state authorities to address concerns about self-insured AHPs’ vulnerability to financial mismanagement and abuse.