Association Health Plan Update

Last year, the Trump administration issued new regulations relating to Association Health Plans (AHPs). The primary intent of the regulations was to allow small employers to more easily band together to purchase health insurance coverage. The regulations not only allowed for AHPs to be established by employers in the same industry, but the regulations also allowed AHPs to be established by employers in a similar geographic location (e.g. city, state, metropolitan area). Self-employed individuals would also be able to join AHPs under the new regulations.

There were several critics of the AHP regulations. The primary criticism was that these AHPs would be regulated like large group health plans exempting them from some of the Affordable Care Act (ACA) market reforms, including the requirement to cover all ten essential health benefits. A group of states led by New York sued the Department of Labor (DOL) indicating that changing the AHP rules would require a law to be passed by Congress, and it was impermissible for the Trump administration to pass such regulations absent a law being passed by Congress.

On March 28, 2019, a federal judge agreed with the critics, and the new expanded AHP regulations are now disregarded. The primary concerns for the judge was allowing self-employed persons to join an AHP and allowing unrelated businesses to establish or join an AHP based solely on geographic location. These types of AHPs have generally been impermissible in the past.

This has created a little bit of a problem for some employers and individuals. Some AHPs have already been established based on the expanded regulations issued by the Trump administration. That means there are some AHPs that are now operating under regulations that are no longer considered to be legal.

Fortunately, the DOL has recently issued some guidance to address this matter. In a statement issued on April 29, 2019, the DOL has indicated that employers or self-employed individuals that joined an AHP that was established under the expanded regulations may keep their coverage through the end of the plan year or, if later, the end of the contract term. Insurers must generally honor the coverage and benefits offered to participating employers and employees during this time. These AHPs may only continue to exist for longer periods of time if they conform to all of the ACA market reforms, such as the essential health benefit requirements and premium rating rules that apply to the small group market.

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