June 19, 2018, the U.S. Department of Labor expanded access to affordable health coverage options for America's small businesses and their employees through Association Health Plans.
Association Health Plans work by allowing 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.
Association Health Plans will also be able to strengthen negotiating power with providers from larger risk pools and greater economies of scale.
The Final Rule’s effects:
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Fifteen million Americans who work for a small business or operate a sole proprietorship, and their families, lack health coverage
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Four million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023 according to Congressional Budget Office estimates
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Association Health Plans (AHPs), under the Department of Labor's rule, are group health plans that employer groups and associations offer to provide health coverage for employees.
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AHPs allow small employers to band together to purchase the types of coverage that are available to
large employers, which can be less expensive and better tailored to the needs of their employees.
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The rule allows more employer groups and associations to form AHPs, based on common geography or industry.
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An AHP could offer coverage to some or all employers in a state, city, county, or a multi-state metro area, or it could offer coverage to businesses in a trade or industry group nationwide.
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For the first time, working owners without other employees (including sole-proprietors) and their families will be permitted to join AHPs, creating a new path for these hardworking Americans to access affordable, quality health coverage.
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Consumer protections and healthcare anti-discrimination protections apply to large businesses and will also apply to AHPs organized under this rule.
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AHPs may not charge higher premiums or deny coverage to people because of pre-existing conditions, or cancel coverage because an employee becomes ill.
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AHPs will not be able to charge different premiums to employees based on their health status.
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Additionally, AHPs under this rule will not be able to charge employers different rates based on the health status of their employees.
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The new rule does not affect previously existing AHPs, which were allowed under prior guidance.
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Such plans can continue to operate as before, or elect to follow the new requirements if they want to expand within a geographic area, regardless of industry, or to cover the self-employed.
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New plans can also form and elect to follow either the old guidance or the new rules.
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The final rule does not diminish state oversight, which remains in place.
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States will share enforcement authority with the federal government.
Important dates for AHP expansion under the Final Rule:
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All associations (new or existing) may establish a fully-insured AHP on September 1, 2018
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Existing associations that sponsored an AHP on or before the date the Final Rule was published may establish a self-funded AHP on January 1, 2019
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All other associations (new or existing) may establish a self-funded AHP on April 1, 2019
