The Department of Labor has issued proposed regulations that would allow “bona fide groups or associations of employers” to more easily join together to form Association Health Plans (“AHPs”) that offer group health coverage to member employers and their employees under a single group health plan. The proposed rule would allow employers to join together as a bona fide, single group to purchase insurance in the large group market.
Bona Fide Groups. For these purposes, a bona fide group or association of employers must meet the following requirements:
- The group or association exists , in whole or in part, for the purpose of sponsoring a group health plan;
- The group or association has a formal organizational structure with a governing body and by-laws or other similar “indications of formality”;
- The functions and activities of the group or association, including the establishment and maintenance of the group health plan, are controlled by its employer members, either directly or indirectly through the regular nomination and election of directors, officers, or other similar representatives that control the group or association and the establishment and maintenance of the plan;
- The employer members have a “commonality of interest”;
- The group or association does not make health coverage through the association available other than to employees and former employees of employer members and family members or other beneficiaries of those employees and former employees; and
- The group or association and health coverage offered by the group or association complies with certain nondiscrimination provisions of the ACA.
The proposal does not appear to limit the size of employers who may participate in an AHP.
Commonality of interest. Commonality of interest of employer members of a group or association will be determined based on relevant facts and circumstances and may be established by:
- Employers being in the same trade, industry, line of business or profession; or
- Employers having a principal place of business in a region that does not exceed the boundaries of the same State or the same metropolitan area (even if the metropolitan area includes more than one State).
Discrimination. The group or association:
- Must not condition employer membership in the group or association on any health factor of an employee or employees or any employee’s family members or other beneficiaries.
- Must comply with the ACA nondiscrimination rules for eligibility for benefits, and nondiscrimination in premiums.
- Must not restrict membership in the association itself based on any health factor, as defined in the HIPAA/ACA nondiscrimination rules. The ACA nondiscrimination rules define a health factor as: health status, medical condition (including both physical and mental illnesses), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, and disability.
Owner/Employees: The proposed regulations would also permit working owners of an incorporated or unincorporated trade or business, including partners in a partnership, to elect to act as employers for purposes of participating in an employer group or association sponsoring a health plan, and also to be treated as employees with respect to a trade, business or partnership for purposes of being covered by the employer’s group’s or association’s health plan.
Note: Under the proposal, AHPs would not be required to comply with all provisions of the ACA. For example, their group health plans would not have to cover all of the 10 “essential health benefits” (which include hospitalization, prescription drugs and emergency care). They would also be exempt from an ACA rule requiring insurers to spend at least 80 percent of premium revenue on medical care.