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.
1. Why is there an increased interest in AHPs?
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.
2. How does the new final regulation interact with Ohio law?
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.
3. What is the difference between fully-insured and self-insured AHP? How do I know which one I have?
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.
4. Does the final regulation create new options for AHPs?
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 to join.
5. When does the final regulation become effective?
The final regulation contains three staggered effective dates depending on the status of the AHP:
- September 1, 2018 for new or existing fully-insured AHPs;
- 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.
6. If I am interested in joining an AHP, what should I know?
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).