New Association Health Plan Rules Present Opportunity for Small Businesses
(c) Dwight Nadig
After months of anticipation, today the Department of Labor (DOL) released the final regulations for the expansion of Association Health Plans (AHPs). The new rules are the result of President Trump’s October 2017 Executive Order, which targeted the expansion of AHPs as a means to address the cost and access issues in the individual and small group insurance markets. This regulation opens a large door for associations, small employers and sole proprietors to access competitive health care benefits.
Association Health Plans are arrangements where employers band together to purchase health coverage. By banding together, smaller employers can access benefits currently afforded only to large employers, like cost savings, reduced administrative complexity, and less regulatory burden.
The White House believes the new rules for AHPs will result in expanded access and significantly lower coverage cost for millions of Americans who own or are employed by small businesses. The U.S. Congressional Budget Office (CBO) estimates that by 2023, 4 million people will enroll in AHPs – consisting of 400,000 who would have been uninsured and 3.6 million who would have had other coverage.
Key highlights of the new rules based on our initial understanding:
- Permits associations in different industries or businesses that share a common geographic locale (such as, state or city) to offer health plans. Chambers of Commerce are just one example of the type of organization who will benefit from the new rule.
- Allows sole proprietors to participate in an AHP.
- Allows existing AHPs to continue on under the previous regulations. These new rules are intended to offer an additional path to forming an AHP, not a replacement.
- Associations that are interested in forming a fully-insured health plan are expected to be able to do so beginning on September 1, 2018.
- The final regulations say associations must still have a substantial purpose other than providing healthcare coverage.
Mercer has been preparing a bundled solution for associations and franchises in anticipation of these new regulations. The bundle includes strategic advice, plan design development and pricing negotiation with carrier partners, administration, marketing, and access to services and expertise to ensure offerings comply with federal and state regulations.
Join us on June 28 for a webinar to explore the impact of the new Association Health Plan rules.