MS Society of Association Executives September 19, 2018
MS Society of Association Executives September 19, 2018 President Trump Executive Order President Trump issued an executive order on October 12, 2017 to encourage the expansion of association health plans (AHPs) for small businesses and the self-employed. On June 19, 2018 the U.S. Department of Labor (DOL) released a final regulation to implement that order.
2 Association Health Plans Association Health Plans (AHPs) are group health plans that employer groups and associations offer to provide health coverage for their members employees. They allow small employers, through associations, to gain regulatory and economic advantages available to large employers. Small employers would be allowed to band together to act as a single employer to buy health insurance without regulatory requirements that the ACA enforce on small employers.
3 Association Health Plans - The U.S. Department of Labor (DOL) published a Final Rule that aims to remove restrictions on the establishment of Association Health Plans (AHPs) in order to make affordable health care coverage more accessible to small businesses and self-employed individuals. - Issued in June of 2018, the DOL's Final Rule establishes new guidelines regarding the definition of "employer" under Employee Retirement Income Security Act (ERISA). It also provides additional, alternative criteria for evaluating when
multiple employers may join together in a group or association to sponsor a single group health plan under ERISA. 4 Association Health Plans AHPs have been available to small employers, but the Final Rule offers new options: Allows associations to form for the primarily purpose of offering health insurance, which was previously prohibited; Revises the commonality of interest standard so that associations can be composed of members who are in the same trade, industry, line of business, or who have a principal place of business within the same state or metropolitan
area; and Allows working owners self-employed individuals or individuals who have ownership rights in a trade or business that earn income and work at least 80 hours a month to participate in a group AHP. These sole proprietors previously purchased health insurance in the individual market, a market regulated by states. Allows for those living in metro areas that encompass two states (Kansas City in Missouri and Kansas, for example) to buy across state lines with other plan members from the same municipality, as well. 5 Association Health Plans The criteria for a bona fide group of association of employers
that may establish a single-employer AHP under ERISA includes: Commonality of Interest that promotes a common business interests; For example, all employers in North Dakota would share commonality of interest, as would employers in the metropolitan Washington, D.C. area regardless of whether they are in D.C., Maryland, or Virginia. Those employers would not be required to share any additional business connection other than their location. Formal organizational structure with a governing body and bylaws; Must comply with the nondiscrimination rules regarding prohibitions on membership based on health factors.
6 Association Health Plans The Final Rules effects by the numbers: Fifteen million Americans who work for a small business or operate a sole proprietorship, and their families, who lack health coverage. Four million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023 according to Congressional Budget Office estimates. 7
Association Health Plans Important dates for AHP expansion under the Final Rule: All associations (new or existing) may establish a fullyinsured AHP on September 1, 2018 Existing associations that sponsored an AHP on or before the date the Final Rule was published may establish a selffunded AHP on January 1, 2019 All other associations (new or existing) may establish a self-funded AHP on April 1, 2019 8 Association Health Plans UnitedHealthcare:
UnitedHealthcare recently met with MID, proposing to sell fully insured AHPs. MID is working with UnitedHealthcare on this project to ensure a successful outcome. 9 Association Health Plans - The rule allows that AHPs may continue to exist under the definitions and regulations in place prior to the effective date of this rule, meaning that any new or existing AHPs that meet prior AHP standards do not have to adopt new non-discrimination protections.
- To partially address concerns about related to discriminating based on health status, the rule prohibits associations from conditioning membership in that association based on any health factor. It also prohibits AHPs from adjusting eligibility, enrollment, benefits, or premiums for an individual based on a health factor. 10 Association Health Plans States can regulate fully-insured MEWAs on issues related to financial accountability, state licensure, registration, certification, auditing, and maintenance of specific contribution and reserve standards. States also have the
authority to regulate the insurers that sell policies to associations and the policies themselves. State authority to regulate AHPs is limited and varies depending on whether the AHP meets large-group status and whether the association is fully- or self- insured. (For example, whether the association contracts with an insurer to provide insurance policies to its members, or whether the association develops and offers its own policy direct to members). 11 Self-funded MEWAs MID in the past has treated self-funded Multiple Employer Welfare Arrangements (MEWA) as unauthorized insurers.
The reason for this is that these MEWAs are conducting the business of insurance and therefore should be licensed as an insurance company through MID. With the passage of the new AHP regulation, MID is studying the impact of the regulation on self-funded MEWAs. MID wants to protect consumers from MEWAs that may not be financially stable; while at the same time, recognizing that there may be legitimate opportunities for employers to enter into successful and viable self-funded MEWAs. 12 Association Health Plans
The rule underscores: States abilities to regulate self-insured MEWAs; States capacities to enact policies to prevent risk segmentation; and States abilities to mandate benefits and rating rules for policies procured by fully-insured AHPs and self-insured MEWAs, including requirements similar to those applicable to the small group and individual markets. 13 Association Health Plans AHPs that gain single employer plan status under the
DOLs new flexible pathway cannot discriminate in eligibility, benefits, or premiums based on a health factor either within or across employer groups including any self-employed members that make up the AHP. Importantly, AHPs that meet DOLs previous, stricter rules for qualifying as a single employer plan will continue to be allowed to use health factors to differentiate among employer members. 14 Association Health Plans AHPs under this rule are considered group health plans and
thus, under the ACA, must cover preventive health benefits without enrollee cost-sharing, cap enrollees annual out-ofpocket costs for covered benefits, and cannot impose annual or lifetime dollar limits on covered benefits. Plans must also provide consumers with a summary of benefits and coverage (SBC) that details any limits and exclusions. However, unlike small-group plans, AHPs do not need to cover a minimum set of essential health benefits, and they are permitted to use age, gender, industry, occupation or other demographic factors to set premiums for member employers. AHPs are also exempt from the ACAs single risk pool requirement and the risk adjustment program. 15
Mississippi Insurance Department www.mid.ms.gov (601) 359-3569 (800) 562-2957
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