As health insurance premiums continue to rise, more and more employers are looking for ways to continue to offer coverage while keeping the costs affordable for their employees. This is especially true for small groups (fewer than 50 employees) who have seen significant cost increases on their health plans due to the adjusted community rating provision of the Patient Protection Affordable Care Act (PPACA). However, a recent executive order from President Trump asked agencies to look into the current regulations to possibly promote Association Health Plans (AHPs), leaving employers with possible new options for financing their plans.
The Current Situation
Many employers that share a common industry form associations for the betterment and perpetuation of their industries. Within some of these associations, health plans for participants are often offered. However, current legislation prohibits employers from forming an association simply for the purpose of offering health insurance. In North Carolina, there are only a few associations that offer health plans such as the NC Medical Society, the NC Bankers Association, and the NC Bar Association. The rules around forming Association Health Plans (AHPs) have prevented other associations from following suit. However, the recent executive order #13813 led to proposed regulations, and if the proposed regulations are finalized, they will amend current regulations and make it easier for employers to establish an association for the purpose of offering health insurance to its members.
What do these legislative changes mean for me?
The proposed regulations would modify current law to broaden the definition of employer under ERISA, enabling groups of employers to satisfy the current “commonality of interest” test by simply sharing a common industry or geography. This change will allow businesses to form an association for the sole purpose of purchasing health insurance. While the executive order seems to allow for greater flexibility to form AHPs, the proposed regulations still require compliance with state and federal guidelines for Multiple Employer Welfare Arrangements (MEWAs) around organizational structures, plan maintenance, and non-discrimination laws.
However, the change in regulations can have a significant impact for employers if, and when, new AHPs begin to emerge in the marketplace. Although the proposed regulations are not yet effective, employers whose fully-insured rates have been negatively impacted by the PPACA may soon have new options for buying less-expensive health coverage. If your organization is evaluating an AHP, there are many important options to consider. Your HCW consultant can help you ensure it’s the right fit. Contact us today to discuss.