The Employee Benefits Security Administration (EBSA) has posted a 10-page instruction book that explains how the new association health plan (AHP) regulations are supposed to work.
EBSA officials wrote the guide to explain what an AHP is, discuss what the new AHP regulations, and give answers to frequently asked questions about the new AHP regulations.
Some health insurance industry policy watchers have questioned whether the new AHP rules will be flexible enough to encourage widespread use of AHPs.
But EBSA officials are hoping the new AHP rules will help more small employers offer health benefits.
“Expanding access to AHPs creates a path to affordable health coverage for millions of American workers and their families,” Preston Rutledge, the head of EBSA, said in a statement about the new AHP regulations.
A copy of the AHP compliance guide is available here.
What is an AHP?
An AHP is a group for employers that want to team up to buy health coverage.
Under federal law, employers have been able to join together to form multi-state AHPs all along. But, in practice, rules for multi-state AHPs have been so rigid that most AHPs have operated in just one state.
The administration of President Donald Trump moved to expand use of AHPs this summer, by releasing regulations that let any eligible group offer an AHP for employers in a metropolitan area, even if the metropolitan area extends into two or three states.
The new regulations also let an AHP offer coverage to some or all employers in a designated trade or industry group nationwide, and they let an AHP offer coverage to self-employed people who have no employees.
Before, the rules for the kinds of employers a multi-state AHP could serve were much narrower.
What are some key AHP regulation effective dates?
Associations have been able to start fully insured AHPs under the new regulations since Sept. 1.
Existing associations with self-insured AHPs can expand the AHPs, to take advantage of the new regulatory flexibility, Jan. 1, 2019.
Associations will be able to start new, self-funded AHPs under the new rules starting April 1, 2019.
EBSA is the arm of the U.S. Department of Labor (DOL) that oversees federal laws, regulations and programs that relate to group health insurance, pension plans, defined contribution retirement plans, and other employer-sponsored health benefits that fall under the scope of Employee Retirement Income Security Act of 1974 (ERISA).
Most of the time, when employee benefits and retirement services professionals are talking about something the DOL has done, they’re talking about something EBSA has done.
What’s in the new AHP guide?
EBSA officials summarize the benefits, disclosure, claim administration and financial reporting rules that apply to AHPs formed under the new rules.
Officials say they may shut down an AHP that is in a financially hazardous condition or marketed in a deceptive way, and that they may impose criminal penalties on AHP marketers who make false statements about the AHPs.
Officials note that AHP sponsors and managers can apply for “prohibited transaction exemptions” (PTEs) from the ERISA fiduciary rules that apply to benefit plans, just as managers of retirement plans or single-employer health plans can.
In theory, for example, ERISA could block an association from hiring an affiliate to administer an AHP. EBSA officials say an association with an AHP can apply for a PTE to get permission to hire an affiliate to help with AHP administration.
EBSA officials also address a question that has been of concern to state officials who are skeptical about multi-state AHPs: “Do the states have any authority over AHPs?”
Here’s what EBSA officials say about whether states’ have authority over AHPs:
Yes. ERISA expressly provides both the Department and State insurance regulators joint authority over AHPs. In addition, States can regulate health insurance issuers and the health insurance policies they may sell to AHPs, and they can regulate self-insured AHPs to the extent the regulation is not inconsistent with ERISA. The new rule does not diminish state oversight. Employers and plan administrators should check with the applicable state insurance department for more information on that state’s insurance laws.
— Read Senate Confirm’s DOL Benefits Boss, on ThinkAdvisor.