“ASAE supports quality, affordable, accessible health care for all Americans. ASAE supports national uniform standards for funding benefits and employee protections. ASAE further believes that association health care plans possess many years of proven experience in the delivery of benefits through purchasing coalitions. As such, association health care plans can lead the way to the reform goals of providing the efficient delivery of quality health care to more citizens.” – ASAE Board Approved Position Statement #6
Association Health Plans
In February 2018, ASAE submitted comments to the Department of Labor on the administration’s proposed rules to expand association health plans (AHPs). The proposed rule, which grew out of an executive order issued by President Trump last October, would broaden the types of groups that could form association health plans with the goal of expanding affordable coverage options for small businesses and the self-employed.
ASAE’s comments focus on what types of organizations should qualify as an “employer” for the purposes of establishing an AHP (and who could participate in these plans), as well as the complexities associated with state regulation of AHPs. Importantly, the proposed rule would not preempt any current state regulations. Because the laws vary from state to state, AHP formation would be challenging without addressing state regulation.
Another critical issue is who is eligible to form AHPs and who could join for coverage. ASAE has pointed out that the proposed rules assume that the members of an association are employers, when more than half of all associations are professional societies with individual members. ASAE also suggests the administration adopt some additional restrictions on the formation of AHPs by start-up organizations where there is not already a membership nexus.
Because of the complexity of the rules, ASAE also submitted a memorandum prepared by its general counsel firm, Pillsbury Winthrop Shaw Pittman LLP, which addresses additional technical issues in the proposal.
In June, the Trump administration issued a final rule to expand association health plans (AHPs) to help small businesses and self-employed people get affordable health coverage. The final rule broadens the definition of an employer under the Employee Retirement Income Security Act (ERISA) to allow more groups to form AHPs as an alternative to the Affordable Care Act health exchanges. ERISA is the federal law that governs health benefits offered by large employers. Under the final rule, AHPs may be sold nationally, in groups of states or in a single state, according to the U.S. Department of Labor (DOL). States will continue to regulate them, although ASAE and others had pushed for AHPs to be exempt from state regulation.
ASAE suggested in its comments submitted to the DOL that the definition of “bona fide groups or associations” be expanded to include professional societies whose members are not necessarily employers. The final rule, however, clarifies that existing law stipulates that an AHP must be sponsored by a group of employers and/or self-employed individuals who themselves are considered employers. An existing trade association would be eligible to form an AHP, for example.
The rule also allows small businesses and self-employed individuals who are in unrelated professions to collectively obtain coverage through an AHP if they are in the same geographic region. The rule attempts to strengthen oversight of AHPs by requiring associations to have a formal organizational structure with a governing body and bylaws so they can act in the interests of participating employers and ensure claims are paid.
ASAE currently leads the Coalition to Protect and Promote Association Health Plans, an ad hoc coalition that comprises 25 national and state member-based organizations. Following the DOL’s final AHP rule, the coalition will work constructively and collaboratively with federal and state regulators to resolve remaining policy and legal uncertainties so AHPs can operate as the DOL envisioned. Ultimately, the coalition’s goal is to codify the DOL’s AHP rule in federal legislation. The coalition will meet with congressional offices to begin that process when the timing is right.
Meanwhile, a number of states introduced AHP bills this year – either to conform with the DOL’s AHP rule and facilitate the formation of AHPs in their respective state, or to resist the DOL’s expansion of AHPs as “large group plans” that can serve small businesses and self-employed people in the same industry or in different professions within the same geographic region.
The coalition has already met with the insurance commissioner’s office in Pennsylvania and testified on legislation limiting AHPs in the District of Columbia. Both DC and PA are resisting AHP expansion. The coalition is preparing to take advocates to Harrisburg to meet with state lawmakers and urge them to codify the DOL language in state legislation.
The Coalition will meet with other state insurance commissioners and state representatives throughout the year to gauge their interpretation of the “look-through rule,” and how states should determine whether a “bona fide group or association of employers” sponsoring a health plan is a “small group” or “large group” plan.
Another issue of concern to the association community is the Cadillac Tax, a 40 percent non-deductible excise tax on high-cost health plans in the Affordable Care Act that was set to go into effect in 2018. The tax was delayed by Congress in 2015. In January 2019, Congress again passed a two-year delay of the tax. Postponing the start of the Cadillac tax from 2018 to 2022 should lessen the incentive for employers to make changes immediately to their benefit plans and give opponents additional time to repeal the tax altogether. The tax is projected to raise $87 billion in revenue over the next ten years.