Exploring the Expansion of Association Health Plans
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The Patient Protection and Affordable Care Act (ACA) offered Americans a new place to find health insurance – the government-run
Health Insurance Marketplace
. After the Marketplace opened for business on January 1, 2014, the number of insured adults increased. By 2017, however, the number of
un
insured people age 19 to 64 rose to
15.5 percent
. It was clear that not everyone was finding a good plan in the Marketplace. A different type of insurance – the Association Health Plan – remained unavailable to many of the uninsured, in part due to ACA restrictions on the type of groups that could form such a plan. However, recent changes have created an environment opening this benefit to more people.
Association Health Plans, an Alternative to ACA
An
Association Health Plan
, or AHP, is a group health plan. However, instead of being sponsored by a single employer, a group or association of employers establishes and manages the AHP. This type of ERISA-covered plan is a group health plan
and
a multiple employer welfare arrangement (MEWA).
Through an AHP, groups, collectives, and small businesses have access to more affordable health care options for their employees. However, AHPs are
not
required to carry certain benefits required under ACA, specifically, essential health benefits packages. As such, AHPs have enjoyed greater flexibility in designing benefit packages.
Although AHPs offer opportunities to some Americans, many groups and individuals were excluded due to restrictions on sponsorship.
One Solution to Association Health Plan Limitations
An expansion of Association Health Plans seemed necessary to address the people who remained uninsured.
On October 12, 2017, President Trump signed
Executive Order 13813
(the “Order”). He stated the Executive Branch’s policy would be to “... facilitate the purchase of insurance across State lines...” The Order also directed the Secretary of Labor to work on new regulations easing the way for employer groups to form AHPs.
The Executive Order also singled out three areas where it was felt that regulations restricted the choices and competition available through AHPs:
- Small businesses can overcome the competitive advantage large companies have when buying health insurance for their employees.
- More small businesses may avoid some of the ACA’s “costly requirements.”
- More affordable health insurance opportunities will open to “hourly wage earners, farmers, and the employees of small businesses and entrepreneurs.”
In January 2018, the Department of Labor (DOL) proposed changes to existing law that would
expand access to AHPs
.
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New Regulations, New Choices
“AHPs are about more choice, more access, and more coverage. The President’s decision helps working Americans – and their families – purchase quality, affordable health coverage.”
One regulation targeted by for revision is
Section 3(5)
of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Before the recent changes, employers had to meet the following criteria to be considered a bona fide single employer group capable of forming an AHP:
- The group has a purpose and function other than providing benefits;
- The employer members of the group share a commonality not related to providing benefits; and
- Employers in the benefit program have at least some control over the program.
Using a broader definition of employer under Section 3(5), employer group members may be:
- In the same profession, trade, industry, or type of business; or
- Maintain a principal place of business in a specific geographic region.
A new AHP may form simply to offer insurance to its members. In addition, an AHP formed by members in the same business may include members located anywhere in the United States.
According to a
press release
issued by the DOL, the new rules
do
provide consumer protections, including prohibitions against healthcare discrimination.
Criticisms of the Expansion
While some welcome the expanded access to AHPs, others cite the following potential problems:
- Fewer people may enroll in ACA-regulated programs, which may jeopardize ACA altogether.
- ACA premiums may rise due to the destabilization of risk pools and potential loss of healthier individuals to AHPs.
- AHP participants may lose some of the consumer protections offered by the more expensive ACA-approved plans.
- There is joint and several liability for participating members.
Where Do We Go from Here?
According to the DOL and
Congressional Budget Office
, almost 400,000 people may enroll in newly expanded AHPs. In addition, an estimated 3.6 million people may switch their insurance to an AHP.
As the expansion of association health plans plays out, new or revised plans may be needed. Just as it is important for plan sponsors to stay apprised of government laws impacting healthcare insurance plans, it is critical to have the assistance of attorneys whose counsel will allow plan sponsors to pivot and ensure not only compliance but plans that ensure attraction and retention of employees.
At
Hall Benefits Law
, we assist clients with employee benefit plans, including plan design, implementation, administration, and maintenance. Please call 678-439-6236 to discuss your concerns with an experienced attorney. Our
website
contains more information about our firm, a
Contact Form
, and free resources for your review. From our home office in Georgia, we assist clients throughout the United States.
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UPCOMING SPEAKING ENGAGEMENTS
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January 25, 2019
Financial Planning Association of Georgia
January 31, 2019
Health and Welfare Benefits Legal Compliance Update, Atlanta
May 2019
SHRM-Atlanta
Legal Summit
Atlanta, GA
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