The U.S. Department of Labor (DOL) has recently released its long-anticipated final rule on Association Health Plans (AHPs). This will allow small businesses to group together - by area or commerce - to create health plans as if they were a single large employer. Sole proprietors, as well as their families, will be permitted to join such plans helping millions of working Americans gain access to quality, affordable health insurance for themselves and their families.
Secretary of Labor Alexander Acosta said:
"President Donald J. Trump is expanding affordable health coverage options for America's small businesses and their employees. Many of our laws make healthcare coverage more expensive for small businesses than large companies. AHPs are about more choice, more access, and more coverage. The President's decision helps working Americans – and their families – purchase quality, affordable health coverage."
The Association Health Plans will not be subject to the essential health benefits requirements of the Affordable Care Act, which necessitate cover for mental health, substance abuse, maternity care – amongst other matters.
The DOL states that, as many small businesses and their employees have struggled with government restrictions that limit access to quality, affordable health coverage, this AHP reform will address many of the inequalities between small and large businesses in access to that coverage. The reform allows small employers – many of whom are facing much higher premiums and fewer coverage options – a greater ability to join together and gain many of the advantages enjoyed by large employers.
The administration’s plan is to encourage competition in the health insurance markets and lower the cost of coverage. In co-operation with the executive order - issued by the president in October 2017 – AHP’s will not be able to restrict membership based on health status or charge higher premiums to sicker individuals, which were two of the biggest fears about expanding AHP’s.
Alexander Acosta has stated that in the future, as many as 4 million people will take advantage of coverage under the new plan offerings. This is in accordance with the estimate of Avalere Health – a DC-based healthcare consulting firm – who has predicted that as many as 4.3 million people will leave the individual and small-group insurance markets to enroll in association health plans over the next five years.
The Association Health Plans will become available on September 1, 2018.
Self-employed workers can join the plans under the new regulation and in addition, groups that want to form an association plan do not need to have another purpose beyond providing health coverage to members.
The Labor Department's Employee Benefits Security Administration will monitor the new plans to ensure compliance with the law and protect consumers. Also, States will continue to share enforcement authority with the Federal Government.
