On June 19, 2018, the U.S. Department of Labor (DOL) released its long-awaited final rule on Association Health Plans (AHPs). AHPs are not a new concept. However, under prior guidance, it has been difficult for an association or group of employers to sponsor a health plan that would be treated as a single large group plan.
The final rule relaxes certain requirements and creates a new alternative for employers and working owners to access more affordable health coverage through AHPs. The new rule allows small employers and individuals who join a qualifying AHP to avoid the community rating rules and other requirements imposed on small group and individual health insurance policies under the ACA. But some practical challenges remain - particularly for employers in California.
Highlights from the Final Rule
The final rule relaxes the existing requirement that an association must exist for a bona fide purpose other than to offer health insurance. Instead, it requires that an association have at least one “substantial business purpose” other than offering health insurance, although the primary purpose of the association can be the provision of insurance.
- Members’ ability to regularly nominate and elect representatives of the governing body of the association and AHP;
- Members’ authority to remove representatives of the governing body with or without cause;
- Members’ ability to approve or veto decisions regarding plan formation, design, amendment and termination.