Working Toward Adoption of DOL’s Association Health Plan Proposed Rule

MARCH 6, 2018

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 The Department of Labor (DOL) recently issued a Proposed Rule to expand the availability of employer-based health care by reducing the mandates of what those insurance products must contain for small businesses in “Association Health Plans.” In comments submitted this week, ILMA applauded DOL’s efforts, saying it would allow small businesses, sole proprietors and other self-employed people to join together to form groups across state lines and purchase insurance in the market, reducing costs through risk sharing amongst a larger group.

ILMA noted in its comments, “By reducing the mandates of what plans must contain, the proposed rule will allow groups to craft plans that are appropriately tailored to their needs, which should lower the cost and incentivize their creation. Further, trade associations are uniquely attuned to the needs of their membership and have the greatest ability to craft health insurance benefits to the requirements of the specific industry sector they represent.”

The Association urged DOL to clarify the scope of state preemption in the final rule noting, “In ILMA’s circumstance, the Association represents companies in nearly every state. Unless [DOL] more clearly articulates that states are preempted from imposing their own regulations on AHPs, it seems unlikely that any membership organization could functionally operate an AHP if it had to navigate a ‘patchwork’ of state rules that may directly conflict with one another.”

Finally, ILMA noted that DOL must appropriately safeguard the general public from potential “bad actors” who deliberately offer “junk” or undercapitalized plans.

ILMA stated in its comments, “For long-standing associations, such as ILMA, offering an AHP would merely be an ancillary benefit offered to the membership, not a central tenet of its existence. That reality would prevent those associations from considering formation of an AHP that offered sub-standard benefits or that was not sufficiently capitalized. However, the same may not be said for organizations that may spring up ‘overnight’ to form an AHP that do not have the same symbiotic relationship with its members.”