Department of Labor Reforms AHPs to help Small Business Owners
The Final Rule
The Department of Labor began reviewing Association Health Plans earlier this year in an effort to provide lower-cost healthcare alternatives for small business owners. On June 19th, the DOL announced they are reforming the Association Health Plan rules to address the inequality of access to healthcare between small and large businesses.
When the Affordable Care Act was enacted, parts of the law affected Association Health Plans and their ability to help small business owners negotiate group plans with affordable rates. As a result, many small businesses could no longer offer healthcare coverage to their employees. The burdens on small businesses were unequal to larger corporations, and without AHPs, small businesses have suffered. More than 15 million people working for small businesses or sole proprietors currently lack health insurance due to cost.
With the latest DOL reform, an association can show commonality of interest by one of two different ways: 1) being in the same trade, industry, or profession; or 2) being in the same principal place of business within the same state or a common metro area even if that metro area crosses state lines. This will allow small business owners to participate in association health plans they previously would not have been allowed to join. AHPs will now increase membership which will allow them to offer more benefits, coverage, and services to small businesses as well. The DOL estimates that 4 million additional people will join AHPs by 2023, including 400K who previously had no health insurance.
The expanded use of Association Health Plans will benefit small employers by offering more coverage options with affordable pricing, as well as lower administration costs. The new rule also allows sole proprietors to join AHPs for the first time. The same anti-discrimination and consumer protection regulations that currently apply to large businesses will also apply to AHPs, and the DOL has indicated they will work with states to ensure small business owners and their employees are protected as well.
What Comes Next
Associations may begin establishing a new fully-insured AHP on September 1 of this year, but existing associations who already have AHPs prior to the publishing of the Final Rule may establish a self-funded AHP on January 1, 2019. All other associations may establish a self-funded AHP on April 1, 2019.
The DOL has made an important first step to ensuring millions of people by expanding the use of Association Health Plans. Small business owners, their families, and employees will now have a path to affordable health care by utilizing Association Health Plans and the collective bargaining power of a larger group. Working owners and sole proprietors will now have an affordable option to insure themselves and their families.
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