As the Department of Labor considers expanding association health plans, ASAE says critical issues around qualification, participation, and state regulations must be addressed.
On February 8, ASAE submitted comments [PDF] on the Department of Labor’s proposal to expand association health plans (AHPs).
The proposed rules [PDF], which grew out of an executive order issued by President Trump last October, would broaden the types of groups that could form association health plans with the goal of expanding affordable coverage options for small businesses and the self-employed.
ASAE’s comments focus on what types of organizations should qualify as an “employer” for the purposes of establishing an AHP (and who could participate in these plans), as well as the complexities associated with state regulation of AHPs.
The proposed rule released last month would not preempt any current state regulations. Because the laws vary from state to state, ASAE has said AHP formation would be challenging without addressing state regulation.
“The viability of an AHP will be severely constrained if the AHP must comply with the myriad of differing regulations in each state,” ASAE said in its comments. “While an AHP within a single jurisdiction might be successful, most industries and professions cross many state lines.”
While state preemption is a critical issue, who is eligible to form AHPs and who could join for coverage is another. ASAE has pointed out that while the proposed rules assume that the members of an association are employers, more than half of all associations are professional societies with individual members. “The proposed regulation should be clarified to allow the employers of association members to join the AHP offered by that association,” ASAE said.
ASAE also suggested that the administration adopt some additional restrictions on the formation of AHPs by startup organizations where there is not already a membership nexus. “An association would not risk its reputation and goodwill, and potentially its survival, by offering a thinly capitalized or substandard health plan,” ASAE said. “Without this nexus, a startup AHP might not be as careful to ensure the success of the plan.”
Because of the complexity of the rules, ASAE also submitted a memorandum [PDF] prepared by its general counsel firm Pillsbury Winthrop Shaw Pittman LLP, which addresses additional technical issues in the proposal.