SHRM Supports Association Health Plan Rule, Opposes Lawsuit

 

Allen Smith, J.D. By Allen Smith, J.D. November 13, 2018
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​The Society for Human Resource Management (SHRM) has filed a brief supporting a Department of Labor (DOL) rule that makes it easier for small employers to band together to buy insurance through association health plans (AHPs). The brief was filed Nov. 6 in a case brought by 12 state attorneys general who are seeking to overturn the final rule.

The rule offers AHPS to many small businesses and owners that had been limited to plans offered in the individual and small-group markets, the brief notes. By allowing small businesses and owners to purchase coverage together through AHPs, small companies can enjoy health coverage in the large-group market, which "offers a variety of quality options at more affordable prices," the brief states.

Many smaller employers are unable to provide health care coverage on their own. "This rule enables them to provide this important benefit to employees by taking advantage of the economies of scale that are enjoyed by large employers," noted Nancy Hammer, SHRM vice president, regulatory affairs and judicial counsel.

We've gathered articles on the final rule and lawsuit challenging it from SHRM Online and other trusted media outlets.

Large Group Treatment for Small Employers

The Affordable Care Act requires that insured health plans offered in the individual and small group markets provide a core package of health care services, known as essential health benefits. Large employer group plans and self-funded plans don't have to comply with the essential benefits requirements. The AHP rule will let employers that formerly could purchase group coverage only in their state's small group market join together to purchase insurance in the less-regulated large group market. AHPs must be fully compliant with the nondiscrimination provisions of the Affordable Care Act regulations and may not keep certain individuals out of the AHP due to health conditions. Franchisees may be winners with the new final rule. They'll be likelier now to provide more affordable health insurance options to employees, experts predict.

(SHRM Online)

[SHRM members-only toolkit: Managing Health Care Costs]

Lawsuit's Allegations

The lawsuit maintains that the rule will undo the progress states have made under the Affordable Care Act in decreasing uninsured rates, ensuring comprehensive coverage, and stabilizing the individual and small-group insurance markets. The attorneys general filing suit were from California, Delaware, the District of Columbia, Kentucky, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Virginia and Washington.

The SHRM brief notes, however, that "the individual and small-group markets are currently unstable, unaffordable and inaccessible to millions of Americans working for small businesses—which is precisely why many small employers want the opportunity to participate in the more stable large-group market." Moreover, the brief points out that the Affordable Care Act's "core consumer protections apply to all plans, including self-insured, individual, small- and large-group market plans."

(Modern Healthcare and SHRM brief)

California, New York Limitations

While many states have welcomed the new rule, some state insurance laws will limit small businesses' or owners' ability to join the plans. California has enacted a statute barring sole proprietors and partners from participating in AHPs. New York law strictly limits the groups of employers that may sponsor a health insurance plan.

(Insurance Journal)

Other States' Reaction Mixed

States that take a more stringent approach to AHPs may apply existing state rules to the plans. Insurance departments in Connecticut and Vermont have increased their minimum coverage requirements for AHPs. States welcoming AHPs have issued guidance supporting the final rule. Insurance departments in Illinois, Louisiana and Michigan have issued supportive bulletins to assist groups wanting to establish AHPs.

(Bloomberg Law)

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