What is an Association Health Plan (AHP)?
A1: In general, an AHP is a health plan sponsored
by an association for their members and their employees. Typically, these types
of plans are run by an industry or professional association that small
businesses can join and that can provide health insurance to their employees.
Q2: Why is there an
increased interest in AHPs?
A2: The federal
government, through the United States Department of Labor (DOL), finalized a regulation
on June 21, 2018 intended to encourage the formation of AHPs by allowing more
small employers to come together for the purposes of purchasing health
insurance. As a result, many small
businesses that were previously limited to the small group market will now be
able to join together as an AHP and qualify as a large group plan, which can
provide additional flexibility in health plan design.
Q3: How does the new final regulation interact
with Ohio law?
A3: Because all AHPs are comprised of multiple
employer groups, AHPs are Multiple Employer Welfare Associations (MEWAs) under
Ohio law. Therefore, Ohio’s laws
pertaining to MEWAs (R.C. Chapter 1739) continue to apply to groups that are
providing benefits through a self-insured MEWA.
Other insurance laws, such as those requiring insurance companies to
file forms and rates, will continue to apply to insurance products offered through
a fully-insured MEWA.
Q4: What is the
difference between fully-insured and self-insured AHP? How do I know which one I have?
A4: A self-insured AHP does not buy a product
from a licensed health insurance company, but rather pays for the benefits
directly with the “premiums” the group pays.
In the case of a self-insured AHP, there is typically a licensed health
insurer involved in the set up and processing of claims for the group – but the
insurance “risk” is assumed by the members of the group rather than the
insurance company. Alternatively, a
fully-insured AHP purchases the health insurance product directly from a
licensed insurance company.
Q5: Does the final regulation create new options
A5: Yes. The final regulation allows employers to
join together to form an AHP if those employers meet broader requirements than
were previously allowed. For example,
now AHPs can use geographic location as a reason to come together for purposes
of forming an AHP. In addition, the federal
regulation clarifies that AHPs may allow working owners who are self-employed
However, under federal law, an association must have at
least one substantial business purpose, in addition to providing health care
benefits to its members. Therefore, the
association must be viable even in the absence of sponsoring a health plan and
if the AHP is self-insuring, it must comply with Ohio MEWA requirements in R.C.
Q6: When does the final regulation become
A6: The final regulation contains three staggered
effective dates depending on the status of the AHP:
- September 1, 2018 for new or existing fully-insured
- January 1, 2019 for self-insured employee
welfare benefit plans in existence as of June 21, 2018 that wish to operate an
AHP pursuant to the final regulation; and
- April 1, 2019 for any other AHP operated
pursuant to the final regulation.
Regardless, Ohio law remains in
effect for both types of AHPs.
Q7: If I am interested in joining an AHP, what
should I know?
A7: It is important to know whether the AHP is
self-insured or fully-insured, and to know that it is compliant with applicable
state law regarding MEWAs or product filings depending on if it is self- or
fully-insured. If the AHP is offering a fully-insured
product, the insurance carrier must have filed the benefits and rates with the
department for approval, prior to the sale to the AHP (R.C. 3923.02-.021). If the AHP is offering a self-insured benefit
plan, it must have a valid certificate of authority and products on file with
the department prior to offering the plan (R.C. Chapter 1739).
Q8: What are the
state filing requirements for a self-insured AHP?