On January 4, 2018, the U.S. Department of Labor (DOL) announced proposed rules to expand the
opportunity to offer employment-based health insurance to small businesses through Association
Health Plans.
On June 19, 2018, the Trump Administration released a final rule as well as a fact sheet on the new rule.
The rule was in response to an executive order issued by President Trump on October 12, 2017 directing
federal agencies to expand the availability of AHPs, short-term limited duration insurance policies and
Health Reimbursement Arrangements. The proposal calls for a revision to ERISA in order to redefine
“employer” to allow more groups to qualify as associations and treat health coverage sponsored by an
employer association as a single group health plan that would not be subject to the ACA’s ten essential
health benefits required in the consumer and small group markets.
The goal of the Administration’s rule is to provide small-business owners, employees of small businesses and
family members of working owners and their employees with more coverage options, more affordable pricing,
enhanced ability to self-insure, less regulatory burden and complexity and reduced administrative costs.
HOW
Under the final rule, self-employed individuals, sole proprietors and common-law employees would be
permitted to join an AHP.
The final rule does say that there must be at least one other service, e.g., education, offered to members
so that the association cannot solely exist to provide health insurance. Allowing the self-employed without
employees to join is beneficial as they were excluded in 2014 when they could no longer get group coverage,
but there is a risk of anti-selection. It was suggested that they should have one open enrollment season to
avoid any anti-selection. Although the final rule does not mandate one enrollment period, it does allow the
association to incorporate the suggested rule.
State laws are not preempted, which means the final rule will apply to them.
REGIONAL STATE REVIEW
New York State DFS (New York State Department of Financial Services) has reported that the Trump
Administration’s final rule expanding the role of association health plans won’t prevent its authority to
regulate health insurance.
New Jersey DOBI (New Jersey Department of Banking and Insurance) has reported that it will not allow
non-compliant plans.
Delaware currently allows a Delaware-based employer to participate in an association plan from another
state if that state allows it and the Delaware group is a member of that association.