N.C. Expands Access to Association Health Plans While Federal Rule Is Litigated

The fight over AHPs continues in the courts, Congress and state legislatures

Stephen Miller, CEBS By Stephen Miller, CEBS September 5, 2019
N.C. Expands Access to Association Health Plans While Federal Rule Is Litigated

North Carolina has enacted a law that allows unrelated small businesses in the state to band together and offer group health insurance coverage through association health plans (AHPs)despite a federal court ruling in March that blocked a 2018 Trump administration rule that would have expanded access to AHPs nationally. The administration has appealed the decision.

AHPs are multiemployer health plans that allow small businesses that could previously only purchase group coverage in their state's small group market to unite through an association and purchase insurance in the less-regulated large group market. Under the Department of Labor (DOL) rule, employers in an AHP would not need to be in the same industry or share a common location.

The DOL, while appealing the district court's decision in State of New York v. U.S. Department of Labor, announced in April that it will not pursue violations stemming from employers' good-faith reliance on the AHP rule's validity as long as businesses in an AHP meet their responsibilities to pay health benefit claims as promised. Nor will the DOL take action against existing AHPs for continuing to provide benefits to members who enrolled before the district court's order, through the remainder of the applicable plan year or contract term.

Rep. Virginia Foxx, R-N.C., leader of the House Committee on Education and Labor, praised North Carolina's action. Foxx, along with Reps. Tim Walberg, R-Mich., and Michael Burgess, R-Texas, have introduced the Association Health Plans Act of 2019, which would statutorily expand access to AHPs nationwide.

We've rounded up articles from SHRM Online and other trusted news sources on the fight over association health plans. 

North Carolina Law Raises Coverage Concerns

North Carolina's Small Business Health Care Act allows association health care plans that are cheaper than Affordable Care Act (ACA) [small group market] plans. While the bill does not remove health care coverage from people with pre-existing conditions, insurers aren't required to offer association health plans with a full range of services for people with pre-existing conditions. N.C. Gov. Roy Cooper, a Democrat, let the bill become law without his signature but issued a statement saying, "People have a right to be frustrated with the cost of private health insurance plans, but even though there is significant bipartisan support for this legislation, my concerns about the legality of these cheaper plans and their potential negative effects on health care prevent me from signing the bill."

(The News & Observer

Litigation Over Federal Rule Continues

In March, Judge John D. Bates of the federal district court in Washington, D.C., sided with a coalition of 12 Democratic attorneys general in concluding that the Trump administration's AHP rule violated federal law and was "clearly an end-run around the ACA." That decision has been appealed to the Court of Appeals for the D.C. Circuit, where a panel of judges will consider the legal questions.

The government filed its opening brief on May 31, with amicus briefs filed in support of the Trump administration's AHP rule by 16 Republican state attorneys general or governors, among others. The plaintiffs filed their opening brief on July 15, supported by amicus briefs filed by former Department of Labor officials, Democratic members of Congress, and others. The government filed its reply brief on July 25, and final briefs are were due Aug. 8.

(Health Affairs

[SHRM members-only toolkit:
Communicating with Employees About Health Care Benefits Under the Affordable Care Act]

Business Groups Support Rule

Business groups had welcomed the DOL's rule. Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, called its enactment "a major step in the right direction for small businesses and the millions of Americans who will now be able to buy lower-cost health insurance plans."

"Thousands of employees and family members within the small business community have already enrolled in association health plans" since they became available under the AHP rule last fall, said Kev Coleman, president of AssociationHealthPlans.com, an online resource for AHPs. "While I do not believe [the court's] ruling will survive appeal, I believe Judge Bates' decision is an unnecessary detour on small businesses' path toward more affordable health coverage," he said.

(SHRM Online)


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