Final rule considerations for association health plans

In October 2017, the Trump administration issued the “Executive Order Promoting Healthcare Choice and Competition Across the United States.” This sought to provide additional health insurance coverage options for small groups and individuals outside of the Patient Protection and Affordable Care Act (ACA) market. One option the executive order addressed directly is the association health plan (AHP) for small groups and certain individuals.

In January 2018, the proposed rules for AHPs were issued, and in June 2018, the final rule was released.

Prior to the release of the final rule, associations did not have a well-defined pathway to being determined bona fide. Instead, each association’s facts and circumstances were evaluated against three broad issues:

• Does the association exist for a purpose other than providing benefits?
• Do employer members of the association have a close enough relationship to be essentially a single common entity?
• Do employer members control the health plan in form and substance?

With the new pathway identified in the June final rule, the second criteria is made much more explicit and can be satisfied by demonstrating that association members share a common industry or geography.

Many, if not most, of the currently existing associations, including local and national chambers of commerce, local or national industry groups, professional groups, and regional interest groups, could fairly easily fulfill all the conditions to become a bona fide association under the latest rules and thereby offer a large-group health plan as an employer. This was not the case prior to the president’s executive order.

In this article, Milliman consultants Fritz Busch and Jason Karcher examine the final rule released in June, evaluate considerations for sponsors of AHPs, and briefly assess the final rule’s impact on the small-group health and individual markets.

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