The Department of Labor (DOL) has recently released a new proposed rule that would expand access to association health plans for small business owners and self-employed individuals.
Association health plans generally allow smaller businesses to join together in order to purchase and provide health insurance options for employees on a scale more comparable to a larger business. Banding together allows the business owners to purchase either large group health insurance plans that are typically only available to larger employers, or to explore options for self-insurance.
Historically, however, employers were required to operate within the same industry in order to join together, and association health plans were also off limits to self-employed individuals operating as sole proprietors. The DOL rules would expand these restrictions so that more businesses will be able to access association health plans by allowing either businesses in the same industry or geographic area to join together, and by eliminating the restriction that requires the business to have two or more employees.
We asked Professors Robert Bloink and William Byrnes, who are affiliated with ALM’s Tax Facts, and hold opposing political viewpoints, to share their opinions on the proposed rule, which is expected to be finalized in the coming months. Below is a summary of the debate that ensued between the two professors.
Byrnes: I think expanding access to association health plans is a great idea. Some small business owners who are not required to provide employers with health coverage under the Affordable Care Act will be motivated to offer coverage if they are able to access health plans on terms that are similar to larger businesses with substantial bargaining power, which is important because the ACA restrictions on these plans are less onerous than those that apply in the small group market.
Bloink: Association health plans are only attractive on the surface, and once consumers take a closer look, they’re going to realize that these plans are not all they’re cracked up to be. These plans are not adequately regulated in most cases, meaning that they do not offer the same level of coverage that is required of ACA-compliant plans. Because of this, they’re really only beneficial for healthy individuals with fairly low medical expenses.
Byrnes: But the new rules would not block less healthy people from accessing the plans, association health plans still cannot discriminate based on pre-existing conditions.