Association Health Plans and the Cold Chain
The Trump Administration has taken actions to make the development of association health plans (AHPs) more available for groups in the United States. In late 2017, President Trump issued an Executive Order entitled “Promoting Healthcare Choice and Competition Across the United States.” The Executive Order directed the Department of Labor (DOL) to explore proposing regulations to expand access to health coverage by allowing more employers to form AHPs. DOL moved quickly to propose and finalize a new rule that establishes additional criteria under the Employee Retirement Income Security Act (ERISA) for determining when employers may join together in a group or association of employers that will be treated as the “employer” sponsor of a group health plan. The regulation establishes a more flexible “commonality of interest” test for the employer members of a group health plan to enable broader use of such plans.
The Final Rule was published on June 21, 2018 and became effective on August 20, 2018. The rule is applicable as of September 1, 2018, for fully insured AHPs, January 1, 2019, for existing self-insured AHPs complying with the Department’s pre-rule test, and April 1, 2019, for new self-insured AHPs formed pursuant to the final rule. The policy change is intended to facilitate the adoption and administration of AHPs and expand access to affordable health coverage, especially for employees of small employers. The new AHP policy will allow small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer. AHPs can also strengthen negotiating power with providers from larger risk pools and greater economies of scale. It is important to note that under the new policy, AHPs will not be able to charge different premiums to employees based on their health status. AHPs cannot charge higher premiums or deny coverage to people because of pre-existing conditions or cancel coverage because an employee becomes ill. Additionally, AHPs under this rule will not be able to charge employers different rates based on the health status of their employees. Consumer protections and healthcare anti-discrimination protections will also apply to AHPs organized under this rule.
GCCA Member Survey
In light of the new AHP rules, GCCA issued a survey to its U.S. warehouse members to determine whether there is interest for a GCCA-led AHP. Fifteen warehouse companies participated in the survey. Thirteen of the fifteen companies currently offer healthcare to their employees, 12 of which offer group insurance. Seven responding companies are fully insured, while three are level funded and three are self-funded. Only one respondent purchases health insurance online through the ACA SHOP Marketplace, while the remaining 12 work through a broker or insurance company. Similarly, only one respondent offers payment/reimbursement of premiums under a small-employer Health Reimbursement Account (HRA).
Each of the companies that currently offer healthcare to all of their employees pays at least some portion of the cost for employee insurance. The levels ranged from 40 percent to 100 percent. Of the companies that answered the survey, the average number of full-time employees was 141. However, 70 percent of respondents had 50 or fewer full-time employees.
Member Perspectives on AHPs
93 percent of respondents stated they would consider using an AHP if the association could provide access to health nsurance that met the company’s needs.
• The top three reasons why a company would be interested in using an AHP:
1. Lower cost – 87 percent
2. Administrative simplicity (get it off your plate) – 60 percent
3. Holistic product offerings – 27 percent
• When asked what benefits they would like the association to provide, the top five responses were:
1. Medical/prescription – 100 percent
2. Dental – 93 percent
3. Vision – 80 percent
4. Life/Accidental Death & Dismemberment – 73 percent
5. Disability – 40 percent
• 73 percent of employers would contribute at least 50 percent towards the cost of medical coverage, while 27 percent
• 87 percent of respondents would consider AHP coverage even if it required them to change networks. The same number would be willing to consider committing to the association’s program for two or three years in order to help ensure the program remains stable.
The results of the survey show a strong interest from participating companies in the development of a GCCA led association health plan. While the business community and some states have embraced the new AHP policy as an opportunity to help employers provide more affordable health insurance, there is growing opposition from other states and interest groups. Twelve states have filed a lawsuit against the DOL, alleging that the AHP rule violates federal law because it conflicts with existing regulation. In addition, some states are adding new restrictions to their state rules governing AHPs. For example, the states of Vermont and Connecticut have increased their minimum coverage requirements for association health plans and added other requirements that make AHPs less attractive. California has passed a law that prohibits self employed individuals from joining an AHP. As the policy around AHPs evolves, GCCA will continue to explore options for establishing an AHP and better understanding member needs and demands for such a program. GCCA will also continue to work on AHPs at the policy level. GCCA recently joined the Coalition to Protect and Promote Association Health Plans, a new group dedicated to addressing attacks on AHPs and preserving the AHP option for associations such as GCCA and its members.