On October 12, 2017, President Trump signed a “Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States” (the “Executive Order”) to “facilitate the purchase of insurance across State Lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for the American People.” One of the stated goals in the Executive Order is to expand access to and allow more employers to form Association Health Plans (“AHPs”). In furtherance of this goal, the Executive Order directed the Department of Labor to consider proposing new rules to expand the definition of “employer” under Section 3(5) of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Department of Labor issued its proposed rule on January 5, 2018.
In Part 1 of this “Deep Dive” series, we started examining the history of AHPs and the effects of the changes proposed by the Trump Administration by providing a high-level, summary overview of the three types of arrangements that fall under the umbrella of health arrangements sponsored by associations. This week, we compare features of the three types of arrangements when such arrangements are offered on a fully-insured basis.
Comparison of Fully-Insured Arrangements
|Plan Feature||Group Insurance Arrangement||Affinity Plan||Association Health Plan (fully-insured)|
|ACA plan design requirements (e.g., requirement to provide essential health benefits)||Look to size of employer to determine the extent to which ACA plan design requirements apply||Look to size of employer to determine the extent to which ACA plan design requirements apply||ACA requirements relating to large employer plans apply|
|Community rating rules (ACA)||Look to size of employer to determine the extent to which ACA community rating rules apply||Look to size of employer to determine the extent to which ACA community rating rules apply||ACA community rating rules do not apply|
|State law community rating rules||Look to size of employer to determine the extent to which state community rating rules apply||Look to size of employer to determine the extent to which state community rating rules apply||State law community rating rules do not apply to the amount charged by the carrier to the AHP|
|Ability to negotiate large discounts from carriers||Yes||No||Yes|
|Ability to provide large firm solutions to small firms||Yes||No||Yes|
The first two rows of this chart refer to which ACA plan design and rating rules apply to different types of plans, i.e. large or small plan rules. The third row of the chart addresses the extent to which state law community rating rules apply. The last two rows refer to the group health association’s ability to provide participants with the types of health insurance advantages procured by very large employers, such as lower plan administration rates.
Next “Deep Dive”: AHP qualification under current law.