The Department of Labor (DOL) recently issued new regulations that may allow some employers and self-employed individuals to buy large group health insurance through an association health plan (AHP).
This may be of particular interest to small employers and self-employed individuals because an AHP covering 50 or more employees would not have to comply with a limited subset of Affordable Care Act (ACA) rules, primarily those governing how premiums are calculated and essential health benefits which dictates what types of services the plan must cover. Those ACA rules currently result in small employers and individuals having little to no ability to impact premium prices, which tend to always increase, and being covered by plans with richer benefits than they may believe they need.
The promise of an AHP is that some small employers and self-employed individuals will be able to find cheaper coverage through an AHP because an AHP can provide less than the essential health benefits. Also, an AHP may be able to set premiums using factors like age, gender, occupation and location. For example, an employer with a predominantly young and male workforce in a low-risk industry may be able to find cheaper health insurance through an AHP than it can find in the small group market.
Before you raise your hand and say “sign me up!” here are some important details to know:
States have the authority to regulate AHPs, and it is unclear whether AHPs will be viable in many states. An AHP is a type of multiple employer welfare arrangement (MEWA). States have the authority to regulate MEWAs, including AHPs, like insurance plans, which means that AHPs may have to comply with state laws similar to the ACA rules that AHPs were designed to avoid. State laws applicable to MEWAs vary widely which could make it very difficult and costly to organize and operate an AHP in multiple states or in those states with strict MEWA laws.
Fully-insured AHPs operating under the new regulations cannot operate until September 1, 2018, and self-insured AHPs cannot operate until April 1, 2019. It is unclear at this time how many AHPs, if any, will be organized and ready to go on these dates.
Will insurance companies and TPAs play along? Uncertainty regarding state regulation may make some insurance companies and TPAs reluctant to offer products and services to support an AHP. They may also be concerned about such plans cannibalizing their other individual and group markets. On the other hand, there will almost certainly be carriers and TPAs more than happy to support an AHP but may not be able to provide all of the features a particular AHP may want (e.g. a highly customized plan design or age based premiums). Only time will tell to what extent the insurance companies and TPAs decide to support AHPs.
AHPs must be carefully designed so they meet the requirements of the new regulations. It takes more than a few employers and a handshake to create an AHP. The association sponsoring an AHP must be a formal organization, with a governing body and by-laws or similar governing rules. The employer members have to control the association and the AHP in form and in substance and have a commonality of interest. “Commonality of interest” means the employers are in the same trade, industry, line or business or profession, or have their principal place of business in a region that does not exceed the boundaries of the same state or metro area. The AHP must not establish premiums or eligibility rules that discriminate against individuals based on their health factors, which means that an employer with high claims cannot be terminated from the AHP based on the claims history or charged higher premiums based on the claims history. The AHP must comply with other generally applicable Affordable Care Act rules, such as the preventive care and age 26 dependent mandates, as well as other generally applicable employee benefits laws.
Sarah provides employer-focused guidance on human resource matters. With an emphasis on employee benefits and the Affordable Care Act, she distils the complexity of employment laws into understandable action items that meet a client’s business goals.
Sarah provides employer-focused guidance on human resource matters. With an emphasis on employee benefits and the Affordable Care Act, she distils the complexity of employment laws into understandable action items that meet a client’s business goals. During previous private practice experience, Sarah handled numerous complex benefit matters, including the transition of benefit plans in large corporate acquisitions, de-risking solutions in pension plans, contested health plan claims, DOL and IRS audits and the implementation of ACA-compliant health plan solutions. Sarah graduated from University of Wisconsin Law School, with a Bachelor of Arts degree from Grinnell College.
On May 11, 2014, the governor of Minnesota signed the Women’s Economic Security Act (WESA), a bill that will require Minnesota employers to make dramatic changes to their employment policies and practices.
While WESA directly impacts employers who conduct business in Minnesota, the changes follow plans by federal and local governments to expand legal protections for women and other employees. For this reason, employers in other jurisdictions should pay close attention to these national and state law trends.
Biometric screenings top the list of wellness tools that employers use today, according to MetLife’s 2014 U.S. Employee Benefit Trends Study. After biometrics, employers use other types of wellness programs as follows:
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