New association health plan rules provide opportunity for small businesses

Posted by Charles Middleton on 06/26/2018

Q: I understand new regulations were issued recently that expand the establishment of association health plans?

A: That's correct. On June 19, the U.S. Department of Labor Employee Benefits Security Administration issued final regulations that expand the establishment of association health plans and treat these plans as large group health plans at the federal level. This is very exciting for small businesses and the self-employed, which have struggled to afford and provide health insurance coverage for their employees. Larger employers, especially those with franchisees in multiple states, also might benefit from this new rule.

Q: What is an association health plan?

A: It's an innovative option for expanding access to employer-sponsored coverage, especially small businesses. Through association health plans, employers come together to buy health coverage. By participating in association health plans, employees of small employers are able to obtain coverage that isn't subject to the legal complexities that currently characterize the market for individual and small-group health coverage. Thus, small employers may now be able to enjoy flexibility with respect to benefit package design that's comparable to that enjoyed by large employers.

Q: How do these new rules help small businesses?

A: The new rules provide more flexibility and allow employers to join together and participate in the same health plan if there's a “commonality of interest,” either where the employers are in the same trade, industry, line of business or profession; or each employer has a principle place of business in the same region that doesn't exceed the boundaries of a single state or metropolitan area. Under this standard, more small businesses and self-employed individuals in Oklahoma could join together and participate in an association health plan, regardless of whether they're in the same trade, industry, line of business or profession.

Q: Are there other rules beyond those that you mention above?

A: Yes. In addition to the required commonality of interest, other requirements apply. For example, the new rules contain specific nondiscrimination requirements that prohibit an association health plan from conditioning membership based on a health factor, i.e., an association health plan couldn't charge an employer member higher premiums because it has several individuals with chronic illnesses. Other tricky rules also may apply at the state level.

Q: When are these new rules effective?

A: Very soon. Employers who are interested in association health plans should get moving on them quickly. For new fully insured association health plans, the rules are effective Sept. 1. For new self-funded association health plans, the rules are effective April 1. State insurance regulators likely will be looking at these rules very closely to determine how they fit with Oklahoma state laws.

PAULA BURKES, BUSINESS WRITER

Published The Oklahoman, June 26, 2018