Association Health Plans: No Clear Picture Yet of What Will Emerge Out of the New Regs

On June 19th the Department of Labor released final regs that offer new options for associations to sponsor health plans for their members.  There’s no clear picture yet of what will emerge out of the new “Association Health Plan” (AHP) regs and how the new regs will impact health coverage options for small businesses.  Here are a few of the highlights from what we know so far about the status and the market implications of the new AHP regs:

  • Association plans will be treated as large employer plans.  This frees them from some of the ACA provisions (i.e. Essential Health Benefits or EHB’s) that apply to small group and individual plans.  AHP’s are still required to comply with the ACA and ERISA rules that apply to large employer plans (e.g. ACA – deductible/out of pocket, preventive care, annual and lifetime limits, minimum actuarial value, etc; ERISA – Cobra).  And, fully insured plans must also comply with state mandated rules that apply.
  • A major piece of the new AHP regs is that Individual states are maintaining their existing authority (as established under ERISA) and will continue to regulate AHPs as they currently do. This is expected to make multiple state AHP’s difficult to establish.  AHPs will have to comply with the rules in the state where the employee is located regardless of where the policy originates.
  • In general, states are being very deliberate in reviewing the new regs and appear to be slow-walking how they will respond to and assimilate these recent changes.  Adding to the crawl is the fact that twelve (12) states have responded by filing suit and legally challenging the law.
  • Also, from what we hear, there hasn’t been much reaction, interest or enthusiasm to jump in on the part of the established insurance carriers.

We’ll continue to monitor and report back with any significant developments.  For those interested in peeling back the onion on the new regs, healthcare attorney Larry Grudzien has an informative webinar posted on his website that does a good job of diving into the details.

 



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