Proposed Regulations Expand Association Health Care Options

Small businesses and self-employed individuals may soon have more options for obtaining affordable group health coverage. As directed by Executive Order 13813, on January 5, 2018, the U.S. Department of Labor (DOL) released proposed regulations (83 Fed. Reg. 614) intended to increase the availability of association health plans (AHPs). The proposed regulations would achieve that aim by broadening the definition of “employer” to make it easier for employers to join together to sponsor an AHP for their employees.

The proposed regulations would broaden the definition of “employer,” making it easier for an AHP to qualify as a single large group plan. The proposed regulations would also extend AHP coverage to certain self-employed individuals. The current definition of “employer” requires an association or group of employers to be tied by a common “economic or representational interest” that is unrelated to the provision of health coverage (called the “commonality of interest test”), and the member-employers must have the right to exercise control, directly or indirectly, over the form and substance of the AHP (called the “control test”).

Under the proposed regulations, association member-employers would meet the commonality of interest test by either being in the same trade, industry, line of business, or profession (regardless of geographic location) or by having a principal place of business within a single state or metropolitan area (even if the metropolitan area includes more than one state). Examples given of such metropolitan areas include the Greater New York City Area/Tri-State Region covering parts of New York, New Jersey, and Connecticut, and the Washington Metropolitan Area of the District of Columbia and portions of Maryland and Virginia. Smaller geographic regions, such as a city or county, would also satisfy the commonality of interest test.

To ensure that the groups or associations sponsoring AHPs are bona fide employment-based organizations, the proposed regulations specifically provide that AHPs may only cover the employees and former employees (and family members and beneficiaries) of their employer members. Coverage cannot be sold to non-member employers or the general public.

This entry was posted in Legislation & Regulation and tagged , , , , , . Bookmark the permalink.