Finalized Association Health Plan Ruling by the Department of Labor

On June 19th, 2018, the Department of Labor released final rules allowing for expanded availability of Association Health Plans (AHPs), typically for small employers.  The rule establishes a broader definition of eligible employers that can join an association to be under a single group health plan.  Allowing for small employers, including those that are self-employed, to come together based on geography or industry to gain access to healthcare coverage similar to that of large employers.  AHP’s may give employers an additional competitive option to healthcare coverage for their employees compared to small group or individual plans which comply with the Affordable Care Act. 

One change included in the new regulations is the allowance of working owners, without other employees, to join AHPs.  In addition to allowing employers in similar industries to pool together the new rules also allow AHPs to cross state lines in certain metropolitan areas. However in a significant departure from the existing association rules, AHPs will not be able to vary premium based on health factors, nor discriminate group members based on health.  Although, AHPs may make distinctions based on other factors such as industry, occupation, or geography.

The new rule does not affect existing AHPs, which were allowed under prior guidance.  These plans may continue to operate as before or elect to follow the new rules.  In addition, new AHPs may also elect to follow either the new or existing rules. The new ruling goes into effect September 1, 2018 for new or existing AHPs that are fully insured.  Existing self-funded AHPs may adapt new rules January 1, 2019, while new self-funded AHPs will be able to use the new rules on April 1, 2019.

Although the industry is still interpreting the rules we are pleased to have new opportunities to bring to the employer community.  Every small employer’s situation is different and so is the solution that works best for them.  Whether it’s transitional (grand-mothered) plans, community rates, level-funding, association health plans or PEO arrangements we will regularly research and recommend based on each employer’s goals and situation.