With publication of the final rule, the Trump administration has breathed new life into an old concept – the association health plan. While the new rule offers a few twists, whether association plans take off may rely on actions taken by the states. Already a number of states have initiated legal action in an attempt to block the rule.
In the meantime, states are reviewing the federal rule in relation to state law and rules on association plans. Some states are less receptive to AHPs than others. One example is a letter written by Pennsylvania’s insurance commissioner which challenges a number of provisions in the final rule. That letter can be found here.
And, the jury is still out on whether any insurers or AHP sponsors will embrace this new flexibility. Already some organizations that had shown early interest in AHPs have decided they will not act at this time. Still others are expressing interest.
Here are a dozen items of interest in the final rule:
- Applicability dates depend on the plan
- September 1, 2018 all fully-insured associations new or existing
- January 1, 2019 AHPs in existence on or before publication of final rule
- April 1, 2019 all others may establish a self-insured AHP.
- An association must have at least one substantial business purpose other than the offering of health coverage or employee benefits to members. The offer of coverage may be the primary purpose.
- Commonality of interest may be:
- Same trade, industry, line of business or profession
- Have a principal place of business within a region that doesn’t exceed the boundaries of the same state or same metropolitan area
- Metropolitan area which may include more than one state.
- An eligible participant includes employees of a current employer member of association and former employees who became entitled to coverage under the association’s plan and beneficiaries.
- Working owners can be considered employees; AHPs have a responsibility to verify a person is a working owner.
- As a part of the criteria to determine “working owner” status, the hours-worked average is 20 hours per week or 80 hours per month. Hours may be aggregated across jobs or contracts to accommodate workers in the gig economy.
- Health insurers cannot sponsor an AHP, in general. Insurers may provide administrative services.
- A provider or healthcare organization cannot sponsor an AHP.
- AHPs are not subject to the ACA’s Essential Health Benefits (EHBs) but must provide coverage for certain recommended preventive services without cost-sharing.
- Generally, for compliance purposes, whether an AHP is considered a small or large group is based on the number of employees employed in the aggregate during the preceding calendar year by the employer members of the association. More clarity on whether COBRA or other laws related to employer size is yet to be determined.
- AHPs cannot discriminate based on health status; other factors are permitted such as industry-type and geography. Age and gender may also be permissible rating factors. Rating flexibility may be constrained by state law.
- States continue to have authority to regulate both insured and self-insured AHPs.
A one page overview of the AHP rule is here.
NAHU members can register for our member exclusive Compliance Corner webinar on August 16, 2018 – Are Association Health Plans the Cure?