On October 12, 2017 President Trump issued an Executive Order concerning a number of health plan market initiatives. One of the items included in the Executive Order was a directive to the Secretary of Labor to issue proposed regulations or guidance within 60 days from the date of the Order, “to expand access to health coverage by allowing more employers to form AHPs (Association Health Plans).” https://www.whitehouse.gov/presidential-actions/presidential-executive-order-promoting-healthcare-choice-competition-across-united-states/
On January 4, 2018 the U.S. Department of Labor, Employee Benefits Security Administration (EBSA) announced a Notice of a Proposed Rulemaking consistent with the Executive Order, to expand the availability of association sponsored group health plans that would qualify as large group plans under the Affordable Care Act. The Proposed Regulation is open for comment over the next 60 days before it will be finalized. https://www.gpo.gov/fdsys/pkg/FR-2018-01-05/pdf/2017-28103.pdf
Key provisions of the Proposed Regulation deal with an expansion of the definition of “Employer” for purposes of ERISA Section 3(5). “Employer” would be expanded to include sole proprietors and other self-employed owners if they otherwise meet the requirements for participation in the health plan as a participating employer. Under the Proposed Regulation AHPs would not be limited to same industry based associations in a narrow geographic area. Groups of diverse employers (i.e. chambers of commerce) could form a small business health plan on the basis of geography (city, metropolitan area or a single state). Alternatively, industry based trade associations could now offer small business health plan coverage across multiple states or nationwide without restrictions by state insurance laws.
In exchange for the expanded group eligibility, there are non-discrimination rules which would prohibit association health plans from discriminating against groups or individuals based on health factors. According to the Department of Labor, the expanded AHPs would not be fully exempt from state regulation. The reservation of rights in ERISA Section 514(b)(6)(a) allowing states to establish reserve and contribution requirements would be preserved.
The Department of Labor estimates that there are 11 million Americans working for small businesses and sole proprietors and their families who do not have employer based coverage. The Department hopes that the expanded rules will enable many of the 11 million to obtain affordable coverage than is available in the individual health insurance marketplace.
