The United States Department of Labor (DOL) issued final rules on Association Health Plans (AHP). Association Health Plans are group health plans that employers and associations offer to provide health coverage for their employees. They allow small employers to band together to purchase coverage, which may be less expensive than purchasing the coverage individually.
The new rule expands the ability of more groups and associations to form AHPs, based on a common geography or industry. For example, an AHP could offer coverage to some or all employers in a state, city, county, or metropolitan area, or could offer coverage to businesses in a trade group or industry group throughout the country.
AHPs must follow the following guidelines:
- Employers in an AHP must be engaged in the same trade, industry or line of business and have a principal place of business in the same state or metropolitan area.
- The association must have at least one substantial business purpose that is not related to offering and providing benefits.
- The association must be member governed and cannot be controlled by a health insurance issuer.
- A working owner in the AHP is one who works 20 hours per week or 80 hours per month.
- Premiums may not be based on claims experience, but employer members may be charged different premiums based on certain non-health status factors.
- AHPs are not subject to the essential health benefit and minimum value coverage requirements of the Affordable Care Act, but they are subject to quality of coverage requirements and some state mandates.
- An AHP may be subject to ERISA, the MEWA rules and other applicable laws.
The recent regulations become effective September 1, 2018 for existing insured plans, January 1, 2019 for existing self-insured plans, and April 1, 2019 for any other new AHPs.
