On Tuesday, June 19 the U.S. Department of Labor published a new rule titled Definition of “Employer” under Section 3(5) of ERISA–Association Health Plans. The rule is expected to ease regulations that have in the past restricted small businesses from banding together to purchase insurance across state lines in “Association Health Plans.” The rule modifies the definition of “employer” under the Employee Retirement Income Security Act (ERISA). The broader interpretation of ERISA will let employers anywhere in the country that can pass a “commonality of interest” test join together to offer health care coverage to their employees.
The reliance under ERISA, a federal statute, is expected to make national plans permissible and portable across state lines. Under previous laws and regulations Association Health Plans were not “portable” and employers were required to comply with their home state mandated requirements, regardless of which state requirements the Association Health Plan was formed in.
Additionally, under the new rules small businesses in Association Health plans are permitted to participate in the “large group” market which functions across state lines and has less rigid requirements, specifically concerning covering fewer of the “essential benefits” mandated by the Affordable Care Act. This would greatly reduce the cost of some plans by requiring fewer benefit coverages.
Critics of the rule are concerned this will allow employers to usurp the Affordable Care Act and only offer coverage that doesn’t adequately provide health insurance that covers all their needs. Critics also believe that Association Health Plans will be ripe for fraud on consumers and will further increase costs to others participating in the open exchange as more insurers will leave the market place. Soon after the Department of Labor published the rule last week New York and Massachusetts filed lawsuits against the rule.
NPMA has been monitoring this process since President Trump issued an executive order last year directing the Department of Labor to issue a rule that would ease the burdens on creating and implementing Association Health Plans. Now that the final rule is published, NPMA is working with the administrators of the NPMA Health Insurance exchange to improve coverage and the availability of affordable health care to all our NPMA members.
Click here to read information provided by the White House concerning the new rule.