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Is the New Association Health Plan (AHP) Rule Providing New Opportunities for Employers?

Latest Developments on Association Health Plans (AHPs) – January 10, 2019

Far from being commonplace, we have seen some movement and activity on the Association Health Plans (AHP) front. Organizations, states, regulators, and consumers have been trying to understand the impact and feasibility of the new rule since its passage last summer.

The new AHP Department of Labor final rule, expanding the formation and treatment of AHPs, creates a new methodology for these multiple employer groups to come together as a single large employer to purchase their health plan. It allows aggregation of employers within an industry or within a certain geographic region and can allow certain entrepreneurs to participate even if they do not have any other employees.

Comments and activities subsequent to the release of the final rule range from welcome and acceptance to skepticism and lawsuits. This new methodology also has an effect on the implementation of the Affordable Care Act (ACA) and other employer laws. The range of responses and feasibility to this new rule hinges on the state, the insurance carriers, and each association itself.

The summary below shows the opportunities and challenges for the various stakeholders:

Stakeholder Group

Opportunities

States

Improves consumer choice and satisfaction in the marketplace Reduces uninsured and number of subsidized individuals May generate additional state revenue through premium taxes

Insurance Carriers

Greater flexibility in rate setting, plan design and risk management than allowed in small group or individual markets Ability to underwrite for non-health factors like location or industry class Improved administration working with one group rather than multiple groups and plans

Association Entities

Allows for large group plan with more flexible plan design and potential for lower costs Provides value and responsiveness to the members Ties members closer to the association

Challenges

States

Many states do not agree entrepreneurs should be eligible May have a negative effect on the state Exchange as people move from individual to group coverage Some states feel it reduces consumer protections since parts of ACA will not apply

Insurance Carriers

Risk mix will significantly vary from group to group Difficulty in gauging the actual number of groups and individuals who will enroll Ability to provide adequate network coverage to all eligible members

Association Entities

Some states prohibit entrepreneurs from participation National organizations may have members in states that require stringent plan rule Some states prohibit multiple employers from being a large group

Coupling these elements with the already existing set of state laws and regulations affects the introduction of these new AHPs. The new rule expressly states that all association health plans are multiple employer welfare associations (MEWAs). States regulate both AHPs and MEWAs and usually have two separate sets of regulations for each, which adds to the complexity and feasibility of establishing these plans.

Some states, however, are emerging more quickly with solutions in this area. Examples include Nevada and Missouri who are adding new chamber AHPs. Other states make the rules more stringent, enforce more oversight or stricter guidelines, or prohibit some portions of the AHP rule. Examples of states requiring each member of the AHP to be rated as a small or large group based on its own size rather than being aggregated as one large group include CA, CT, and NY. Others continue to work to find a balance that ensures the appropriate amount of consumer protections while trying to figure the “right fit” for these new arrangements. The best example here is IA and NE and its creation of new AHPs for agriculture-related businesses.

In the interim, associations and employers alike are looking for answers. So, what should employer groups and associations do? Gather information and learn about the marketplaces that affect their members. Work with knowledgeable benefits consultants who understand the current landscape and advocates with strong and active connections to federal and state regulators and insurance carriers and can help advocate for new opportunities.

Our OneDigital consultants and compliance teams continue to work in each of these areas to help our partners explore and analyze what unique opportunities may lie ahead.

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