On Tuesday, June 19th, the Department of Labor (DOL) released final rules for Association Health Plans (AHP). In summary, the final rules will allow small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer. The intent is to provide greater negotiating power for coverage that is typically only available to large employers.
Companies without common ownership will be able to form an association with other companies if the companies have sufficient commonality of interest, defined as:
- In the same trade, industry, line of business, or profession; or
- Have a principal place of business within a region that does not exceed the boundaries of the same state (e.g., a city or county) or the same metropolitan area (even if the metropolitan area includes more than one state).
The final rule includes the criteria for forming a “bona fide group or association of employers,” including the requirement to have a “formal organizational structure with a governing body that has by-laws or other similar indications of formality.” In other words, there will need to be formal documents establishing the group for the purpose of purchasing insurance.
- September 1, 2018 – all associations (new or existing) may establish a fully-insured AHP under the new rule;
- January 1, 2019 – existing associations that sponsored an AHP on or before the publication date of the final rule in the Federal Register may establish a self-funded AHP under the new rule; and
- April 1, 2019 – all other associations (new or existing) may establish a self-funded AHP under the new rule.
Further guidance is necessary to determine the regulatory impact on self-insured Association Health Plans.
Do you have questions about how this ruling will impact your business? Contact your local Hays Representative or email us at email@example.com.
By: Ben Graves, J.D., Director of Research and Compliance at Hays Companies.