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Administration finalizes rule expanding access to association health plans


The U.S. Department of Labor today released its final rule as part of the Trump administration’s broader actions to give people more health insurance options, the Washington Examiner reported. Beginning this fall, small businesses and individual workers will be allowed to band together to provide medical coverage that will be less expensive than Obamacare plans. But critics say the move will provide inadequate protection for consumers.

Certain plans can be available in September, ahead of the open enrollment period that would be starting under Obamacare in November.

“Small businesses, including the self-employed, will be able to obtain health care coverage as if they were a large employer,” Labor Secretary Alexander Acosta said in a call with reporters Tuesday morning.

Six million people are expected to enroll in these plans, according to the Congressional Budget Office.

Supporters say the proposal would allow people and businesses to join associations even if they are working in different states. The National Federation of Independent Businesses, the National Restaurant Association and the National Retail Federation all support the rule.

Those opposed to the provision say healthier people would opt for the association health plans, or AHPs, instead of the Obamacare-created exchanges, which allow certain consumers access to private health insurance that is subsidized by the government. Customers who are left in the exchanges and whose income doesn’t qualify them for subsidies would have to pay more because sicker people would be left behind. 

The Los Angeles Times found in a recent analysis that more than 95 percent of health care groups that filed comments on the proposed rule expressed serious concern or opposed it. Furthermore, not even one group representing patients or the industry submitted comments in support of the association plan rule, the Times found.

According to the 198-page final rule, the ability of groups or associations to band together for insurance will be enhanced in four ways: 

First, the rule relaxes the requirement that group or association members share a common interest, as long as they operate in a common geographic area, in order for the group or association to qualify as bona fide. 

Second, it confirms that groups or associations whose members operate in the same trade, industry, line of business or profession can sponsor AHPs under the final rule, regardless of geographic distribution.

Third, it clarifies the existing requirement that bona fide groups or associations sponsoring AHPs must have at least one substantial business purpose unrelated to the provision of benefits.

Fourth, it permits AHPs that meet the final rule’s new requirements to enroll working owners without employees. Consequently, for example, the final rule would allow a local chamber of commerce that meets the other conditions in the rule to offer AHP coverage to all of its members, including self-employed working owners, based on having their principal places of business within a single state or metropolitan area. 

Here in Iowa, Gov. Kim Reynolds in April signed legislation that will allow small employers to form association health plans, in an effort to provide new options for lower-cost coverage with fewer mandates. That law, which goes into effect July 1, authorizes associations or related businesses to form multiple employer welfare arrangements (MEWAs), which would be regulated by the insurance division. 

The Iowa legislation, which combined two bills into one, also allows the Iowa Farm Bureau Federation to offer a health benefit plan to its 160,000 members on the premise that the coverage is not technically insurance, so it will be exempt from regulation by the Iowa Insurance Division. 

To read a Business Record Insider story about the prognosis for association health plans in Iowa, click here.

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