The Department of Labor (DOL) has released a proposed rule that would allow more employers to form association health plans (AHPs) and more self-employed workers to participate. The rule was developed in response to President Trump’s Executive Order 13813, which prioritized the expansion of AHPs; short-term, limited-duration insurance; and health reimbursement arrangements.
AHPs were traditionally sponsored by groups of unrelated employers and have been limited to small employers that share a “commonality” of industry and other characteristics (excluding geography). To expand access to these plans, the proposed rule would broaden the definition of “employer” under ERISA and related regulations by:
- Relaxing the requirement that associations sponsoring AHPs must exist for a reason other than offering health insurance
- Relaxing the requirement that association members share a common interest (as long as they operate in the same geographic area)
- Allowing associations whose members are in the same industry but in different areas to sponsor AHPs
- Clarifying that “working owners” (the self-employed) and their dependents may participate in AHPs
For example, the proposed rule would allow a local chamber of commerce (that otherwise met the conditions) to offer AHP coverage to its small-business members, including the self-employed. It would also allow an association to be formed explicitly for the purpose of offering health insurance.
Under the proposed rule, an AHP will be treated as a “large group health plan” for purposes of ERISA, the Affordable Care Act (ACA) and state law. The DOL is hoping that AHP members will be able to leverage their combined negotiating power, economies of scale and the greater flexibility in benefit design to offer lower-cost health coverage.
If AHPs become more common, the development may unsettle the individual and small group markets (both on ACA public exchanges and off) by allowing individuals and small employers to bypass the public exchanges.
Comments on the proposed regulations are due by March 6, 2018.