By Sirona Strategies
Last week’s post provided an update from Washington, focused on two current health care policy issues related to employers: (1) amendments to Health Savings Account rules; and (2) repeal or a further delay of the ACA’s so-called Cadillac tax. This post will focus on a third issue: an expansion in access to Association Health Plans.
Association Health Plans
On October 12, in an effort to expand access to more affordable coverage, President Trump signed an Executive Order instructing the Secretary of the Department of Labor (DOL) to issue regulations and guidance to expand access to health coverage by allowing more employers to form association health plans (AHPs).
AHPs provide health coverage, generally within an industry association, to businesses that share an affinity or common interest but are not constrained by state borders. For example, local trade organizations may offer AHP coverage to members to spread across multiple states.
To date, insurance offered through an association is generally regulated under the same standards that apply to the small group and individual insurance markets, requiring the coverage to comply with the ACA’s market rules and consumer protections.
The EO seems to instruct the Department of Labor to amend rules relating to AHPs to allow different types of small businesses, whether in a similar geographic area or type of business, to band together to provide coverage that would qualify as providing large, self-insured insurance. This would allow the insurance to be exempt from state insurance regulation and many federal regulations, and may also allow such coverage to be offered across state lines. By exempting it from the ACA’s rules, plans will have more flexibility in benefit and coverage design, which may improve the affordability of the coverage offered to employees of the small businesses participating in the AHP.
One important distinction is that while the rules could feasibly allow different types of small businesses to band together in AHP arrangements, the statute does not provide much flexibility for allowing self-employed or other individuals to enroll in such coverage.
It will likely take several months for such policies to be implemented, given that the EO directed the Secretary of Labor to “consider” proposing regulations or revising guidance to expand access to AHPs. The federal rulemaking process is established in law, and requires a series of steps intended to ensure that federal agencies take public comment into account when considering changes to established rules or policies. Given this process, changes are not likely to be made until some point next year, providing employers and others time to assess their options.
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About Sirona Strategies
Sirona Strategies is a strategic health care consulting firm that consistently delivers results for clients seeking to succeed and grow in an evolving health care marketplace. Sirona’s strength lies at the intersection of health care policy, politics and business. This expertise gives them the ability to counsel clients across the health care spectrum on regulatory, legislative and market dynamics. Collectively, Sirona Strategies offers clients nearly two decades of experience in health care decision making at the state and federal levels. Having served in senior positions in state governments, Congress and the Administration, Sirona Strategies offers policy expertise, political savvy, business acumen and opportunities to be heard by Washington thought leaders and decision makers. Their firsthand experience with the ACA’s implementation gives them a unique perspective on how policymakers think and react in times of transformation. Sirona leverages this expertise to help clients stay ahead of evolving politics and policy. Learn more.