Final rules issued by the U.S. Department of Labor for Association Health Plans (AHPs) mean small businesses and the self-employed can enjoy new health insurance options.
The schedule for the final rule changes to go into effect will unfold in in three phases over the next year. On Sept. 1, 2018 the new fully-insured association plans will be able to start recruiting members. On Jan. 1, 2019, currently existing self-funded association plans can start. April 1, 2019 is the jumping off point for new self-funded association plans.
“AHPs are about more choice, more access and more coverage,” commented Secretary of Labor Alex Acosta when the final rules were released. “Many of our laws, particularly Obamacare, make healthcare coverage more expensive for small businesses than large companies.”
Acosta also predicted that as many as four million people will gain health insurance coverage in the coming years under the various new plan offerings.
DOL reports that the families of up to 11 million people who work for small businesses or who are sole proprietors of their own businesses currently lack employer-sponsored insurance. The Congressional Budget Office also estimates that 400,000 previously uninsured people will gain coverage under AHPs.
When the rules were first proposed, AHPs also came under fire from critics who charge that they will further undermine the Affordable Care Act a/k/a Obamacare. However, Obamacare opponent plug that prospect as another beneficial side effect (AA, 5-18-18, P. 4).
The day after the final rules for AHPs were announced, the New York and Massachusetts attorneys general reported that they intend to file lawsuits to overturn them.
One way Obamacare will be further weakened by the expansion of AHPs is because the new plans are not required to offer the full list of what were deemed essential benefits under the ACA which state exchanges must provide to all those they insure.
These include such things as mental health and substance abuse treatments, maternity care, ambulance rides, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services, and pediatric services, including oral and vision care, among others.
Previously, existing AHPs like the Teamsters regional health and welfare funds were required to offer these benefits just like the state exchanges, private group insurance plans for employers of more than 50 people were not required to do so, although many chose to do so anyway.
“The rule has raised concerns that certain health plans now violate the ACA, an allegation the DOL firmly denies,” says Kristine M. Woliver, an attorney with the law firm of Squire Patton Boggs. “DOL claims that association health plans are considered large group health plans, which are not subject to the ACA.”
One major change originally proposed but later removed from the final rules was lifting the prohibition on refusing to insure or charge higher rates for people with certain pre-existing conditions. AHPs will continue to be prohibited from refusing this coverage or charge more in premiums for these.
In fact, this was one of the biggest objections critics raised regarding the proposed rules when they were put forward earlier this year by the Trump Labor Department.
Employer Groups Approve
Major employer groups hailed the new rules. “We’ve been advocating for association health plans for almost 20 years, and we’re pleased to see the department moving aggressively forward,” said David French, National Retail Federation senior vice president for government relations.
“This is an important step toward expanding affordable healthcare options for small businesses and lowering costs for their employees,” French observed. “We stand ready to work with the department to help make association health plans a reality for small retailers nationwide.”
Chatrane Birbal, the Society for Human Resource Management’s director of congressional affairs for health and employee benefits policy, also agreed that AHPs “could provide an option for small employers to offer competitive and affordable health benefits to their employees, thereby increasing the number of Americans who receive coverage through their employer.”
Thomas J. Donohue, president of the U.S. Chamber of Commerce, called the AHP final rule “good news at last for the millions of small businesses nationwide that have struggled to find affordable health insurance.”
“Previously, the unequal treatment of large and small companies left smaller employers with a stark choice: either pay for high-priced comprehensive plans or offer no health coverage at all.”