On January 4th, 2018 the U.S. Department of Labor (Department) issued a proposed rule for regulating association health plans (AHPs) in response to President Trump's recent executive order that directed the federal government to expand access to AHPs and other types of insurance products or arrangements.
The article linked to below provides a solid review of the proposed rule, albeit with a tone that indicates a point of view that any reduction in regulation or expansion of access to AHPs will likely lead to fraud and abuse.
Essentially the Department proposes to adopt a new definition of "employer" for purposes of determining when employers can join together to offer or enroll in an AHP that is treated as a group health plan under ERISA. The new definition relaxes the requirement of a bona fide purpose for the AHP other an offering health insurance by allowing an association to show commonality of interest among its members by either 1) being in the same trade, industry, or profession; or 2) being in the same principle place of business within the same state or a common metropolitan area (even if the metro area extends across state lines).
In addition the new definition of "employer" allows self-employed individuals (referred to as "working owners" in the rule) to have access to an AHP. The self-employed individual is considered to be an employer (to participate in the AHP and offer group coverage) and an employee (of their own business to qualify for the health coverage offered by the AHP).
The proposed rule also establishes requirements so that associations are genuine organizations, controlled by its members, with the proper organizational structure and other legal formalities necessary to ensure that the association acts in the interest of participating employers and their employees.
Finally the proposed rule adopts a series of nondiscrimination protections that groups and associations must comply with when offering AHP coverage. These protections are similar to existing health nondiscrimination provisions applicable to group health plans under HIPAA and the ACA.
All in all the expansion of access to AHPs should help small businesses and self-employed individuals band together more easily and demand better deals from insurance carriers. Of course appropriate controls and due diligence are required but no more so than when dealing with insurance carriers as an employer or an individual.
The proposed rule is probably a small step in the right direction but the fundamental problem of the health financing system in this country is still not addressed: a third-party payment system tied to employment that is hopelessly over-regulated to the benefit of payers and providers.
Access to the full article and analysis of the proposed rule can be found here.
The full proposed rule can be found here.