The Department of Labor (DOL) has made it easier for small employers (i.e. generally 50 employees or less) to join together to buy health insurance coverage with big company benefits and potential large group savings. The DOL's recently released Association Health Plan (AHP) final rule expands access for these organizations. AHPs have been around for many years, but the rules on them have now been loosened a little with the newly adopted legislation. AHPs have a better negotiating position due to the health risks being spread over a larger pool than if the members participated individually. The final rule also bestows upon them the ability to self-insure without being required to meet all of the essential benefit mandates of a small employer.
AHPs are required to pass a “commonality of interest” test to form and offer health insurance, which typically means being part of the same industry. With the new ruling, that test will also now include being able to join together by geography (e.g. within a single state or metropolitan area).
The final rule also expands coverage to include eligibility for the following categories: working owners, sole proprietors, and even self-employed individuals without employees, as long as the individual obtains wages or income for providing services and meets the minimum hours worked requirements.
The DOL has laid out the following effective dates for implementation of new AHPs:
- September 1, 2018 – new and existing fully-insured AHPs
- January 1, 2019 – self-insured AHPs that are in compliance with the DOL’s pre-rule guidance on AHPs and that wish to expand the group or association under the terms of the new final rule
- April 1, 2019 – new self-funded AHPs formed under the new final rule
The new rule does not impact existing AHPs. Existing AHPs can follow current rules or choose to operate under the new requirements. Moreover, the new rule does not eliminate the anti-discrimination and consumer protections that currently apply to large employers. Additional safeguards built in to the new rule include a prohibition against charging different premiums for employees due to health status and charging employers different rates for their employees' health statuses. Plans are still subject to state regulation of insurance. The rule is administered by the DOL’s Employee Benefits Security Administration, and the DOL has committed to work with states to enforce regulations.
If your company is struggling to manage its healthcare options, it may be time to consider going beyond spreadsheets and manual forms. A modern Human Capital Management system can assume these and many other HR-related burdens, freeing you up to grow your business.