On Thursday, the Trump administration released new proposed rules to carry out an executive order the President signed in October expanding association health plans to self-employed individuals and small businesses. Supporters of the proposed rule claim that association health plans would be less expensive than plans that available today. Challengers to the bill “including insurers“ feel these plans would provide poor coverage and could further damage the already weak ACA marketplaces.

“Association health plans could provide a viable opportunity for small employers to have access to more options and potentially lower costs as long as the programs were established long-term and there was not abuse or adverse selection,” said Jonathan Edelheit, President, Health Care Reform Center & Policy Institute. “This could provide some exciting times and innovation and will disrupt things.”

Alan Tawshunsky, Principal of Tawshunsky Law Firm PLLC and Faculty for the Certified Healthcare Reform Specialist® program provided the following analysis of the proposed rules.

“The proposed regulations, if finalized, would dramatically modify two longstanding Labor Department positions and would significantly expand the situations in which an association can sponsor a single ERISA-covered health plan and would allow some owners of small businesses with no common law employees to act as employees of the association for ERISA purposes. In formulating the regulations, the Labor Department is attempting to balance many complex policy considerations on an accelerated schedule, including:

  1. Preventing association health plans from siphoning off small employers with relatively healthy employees, thereby raising rates for other employers who remain in the community-rated small group market,
  2. Preventing the abuses sometimes associated with multiple employer welfare arrangements (MEWAs) from spreading to association health plans
  3. Ensuring that state insurance regulations are not circumvented through use of association health plans,
  4. Ensuring that participating employers, not the promoters of these arrangements, control the operation of the association

The regulations would also permit many more small employers to participate in Association plans that will typically be large group market plans and thus exempt from the requirement to cover all essential health benefits. Employers, insurers, consumer representatives and other interested parties will need to consider during the comment period whether the Department has satisfactorily addressed these issues.

“Additionally, the preamble notes that the regulations do not apply for purposes of the Internal Revenue Code and further guidance is likely to be needed on the interaction of ERISA and the Code.”

As the proposed rule goes through the process to become law, understanding the potential impact this could have on the Affordable Care Act, and your health plan is crucial to providing the best benefits possible. The Corporate Health & Wellness Association (CHWA) is a membership-based organization created to help companies understand the complexities of these rules and make their employees healthier. Join today and receive a membership and a Certified Healthcare Reform Specialist® designation for $299.