Health care expert says employers have new options

AKRON — Recent changes in the law governing Association Health Plans (AHPs) give employers new options for providing health care to their workers, according to a speaker at the Tire Business Educates Live Online Conference & Expo.

But employers also must recognize the challenges the new AHP rules present, said Frank Spinelli, vice president and director of affinity groups and emerging markets for the Oswald Companies.

Up until the June 2018 changes in the law, AHPs had to be offered by "bona fide" associations, meaning they had to have business purposes and functions unrelated to providing health benefits, according to Mr. Spinelli.

The Employee Retirement Income Security Act of 1974 (ERISA) defines the term "employer" to include the "direct" or common law employer of the covered employees, as well as "any other person acting indirectly in the interest of" that employer, he said.

Employers in an AHP had to share some commonality and genuine organizational relationship unrelated to the provision of benefits, Mr. Spinelli said.

They could not condition AHP membership on health status factors, and participating employers had to exercise either direct or indirect control over the program.

Under the new ERISA rules, AHP members may have health insurance coverage as their primary purpose, as long as they have at least one other substantial business purpose in common, according to Mr. Spinelli.

Industry, line of business, trade or profession, or common geographic location are all acceptable as a business purpose.

"Business owners without common law employees may join or participate in the association, but are not eligible to obtain group coverage in the AHP," he said.

However, AHP rules will not be uniform in all 50 states, according to Mr. Spinelli.

"The final Association Health Plan rule allows for each state to determine how they will view group participation within an AHP or creation of an AHP within their state," he said.

To date, eight states have considered legislation to establish AHP laws, and four have enacted laws, according to Mr. Spinelli. Those states are:

Hawaii: AHP policies must comply with the laws of the state, regardless of the association's domicile. Certain voluntary associations, including employer associations that issue AHPs, may qualify for authorization to transact insurance in the state.

Iowa: The Iowa Commissioner of Insurance is required to adopt rules that allow the creation of AHPs consistent with final U.S. Department of Labor regulations.

Utah: The Utah Commissioner of Insurance must authorize an association group before it may purchase a group health insurance policy. Association groups must have been active for at least five years, have a constitution and bylaws, and must have a shared or common purpose that is not primarily a business or customer relationship.

Vermont: The state defines AHPs and directs the Commissioner of Financial Regulation to adopt rules regulating them.

Current or future regulations and state mandates may prohibit or deter the formation of AHPs, according to Mr. Spinelli. But the new law also offers opportunities for AHP formation, he said, such as:

• Greater options for employers with no common law employees;
• Potential new insurance carriers in the marketplace;
• New plan options; and
• Less restrictive networks.

The full webinar is available online.