The Employee Benefits Security Administration (EBSA) today posted draft regulations that could let a trade group offer a nationwide association health (AHP) plan for its member employers.
Under the draft regulations, a general business group in a multi-state metropolitan area could offer an AHP for all of its member employers, regardless of what industry the employers were in, as long as the employers were in the group’s metropolitan area.
Today, a business group that wants to sponsor an AHP must have some other “bona fide purpose.”
Under the draft regulations, an AHP would not have to have any purpose other than to provide health benefits. Organizers could set up a new AHP simply to obtain health coverage.
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EBSA, an arm of the U.S. Department of Labor (DOL), developed the draft regulations in response to an executive order President Donald Trump signed in October.
The order calls for federal agencies to try to ease employer access to AHPs.
The order also calls for federal agencies to ease individuals’ constraints on access to short-term health insurance, and to ease any constraints on employers’ use of health reimbursement arrangements.
The new draft regulations packet, which takes up 83 PDF file pages, is set to appear in the Federal Register on Friday. The Federal Register is a publication the federal government uses to distribute official regulatory documents, ask for comments on draft regulations, and put completed regulations into effect.
EBSA lists Elizabeth Schumacher, an official in the EBSA Office of Health Plan Standards and Compliance Assistance, and Janet Song, an official in the Office of Regulations and Interpretations, as the regulation project contact people.
Jeanne Klinefelter Wilson, the DOL deputy assistant secretary who’s been managing EBSA, signed the draft packet.
Comments on the new draft regulations will be due 60 days after the official publication date.
A copy of the packet is available here.
Here’s a look at seven highlights from the packet.
1. Association health plans already exist.
Federal regulators already let employers form single-state AHPs.
The Small Business Health Options Program (SHOP), part of the Affordable Care Act public health insurance exchange system, gives SHOP members the ability to buy health coverage through a program that could function as a kind of government-run, multi-industry AHP for small employers.
As of January 2017, however, SHOP plans were serving just 27,205 small employers and covering just 233,000 employees and dependents, EBSA officials write in the introduction to the proposed regulations.
(Photo: Mike Scarcella/ALM)
Multiple employer welfare arrangements, or MEWAs, cover about 1.8 million people, officials estimate.
EBSA officials note, however, that one problem they ran into when they were developing and analyzing the new draft regulations is a lack of data on the existing multi-employer health plan purchasing programs.
Officials say the draft regulations would have no direct effect on existing types of multi-employer coverage purchasing arrangements, and that the new AHPs could use MEWAs, voluntary employees’ beneficiary association charters and similar vehicles to provide coverage.
2. EBSA officials talk about why they are easing access to AHPs, and why they have mixed feelings about the project.
EBSA drafted the new proposal because some employers believe AHPs would help them cut benefits costs, officials write.
AHP supporters believe stronger AHPs could “purchase coverage that would be less expensive, because it would not be subject to some of the regulatory requirements applicable to the small-group market but not the large-group market,” officials write. “Proponents also contend that AHPs can help reduce the cost of health coverage because of increased bargaining power, economies of scale, administrative efficiencies, and transfer of plan maintenance responsibilities from participating employers to the AHP sponsor.”
For would-be AHP organizers, one problem has been that the Centers for Medicare and Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services, has rarely treated the association as the true AHP coverage sponsor, EBSA officials write.
Instead, officials write, CMS officials have “looked through” the association to see what kind of employer was sponsoring a particular individual’s coverage. If an AHP member employer is a small business, for example, CMS applies small-group rules to the coverage, not large-group or association rules, officials say.