Association health plans in limbo years after Trump rule overturned

The Biden administration is under pressure to take action on association health plans, which have been mired in regulatory uncertainty since a federal court struck down a Trump-era regulation three years ago.

The plans allow small businesses to come together and offer health insurance as a large group. The Trump administration relaxed the plans’ requirements with a rule that the U.S. District Court for the District of Columbia struck down in 2019.

The Trump administration appealed the ruling to the United States Court of Appeals for the DC Circuit, where the case has stalled as the Biden administration continues to review it.

The lack of legal certainty around the plans creates confusion for consumers, businesses and people trying to sell them. There are also regulatory and enforcement gaps between the federal government and the states, which have adopted their own rules for the plans.

A coalition of trade groups that support the associations’ health plans want certainty, either from the court or from states passing laws authorizing such plans, said Christopher Condeluci, a health care attorney who has helped to draft portions of the Affordable Care Act as counsel for the Senate Finance Committee.

Proponents of association health plans want to see the Biden administration “provide some kind of certainty or have the circuit court issue a ruling that provides” certainty to allow these plans, Condeluci said. Proponents want to see the administration allow some flexibility for these types of plans, while ensuring they provide comprehensive coverage.

AHPs formed prior to Trump administration regulation were required to have members with a common interest, establish the association for purposes other than providing health insurance, and have one or more employees in addition to the business owner to be treated as a group health plan under the Employees Retirement Income Security Act. The Trump rule relaxed provisions regarding the purpose of the association and employee requirements, among other measures.

Unclear app

The judge’s ruling prevented new self-insured AHPs from forming, but it did not address what happens to existing ones, and what kind of enforcement action states or the federal government can take against them. Not all AHPs offering health coverage to individuals or small employers qualify as ERISA plans and are therefore subject to the ACA’s consumer protections, such as coverage for pre-existing conditions and essential health benefits.

The Biden administration could roll back the Trump-era rule or propose new regulations using the Obama-era policy that insurance companies in small group markets or individual markets must operate under corresponding rules for each market, said Sabrina Corlette, co-director of the Georgetown University Center on Health Insurance Reforms.

The Biden administration has not signaled any intention to act on the issue. The Labor Department did not immediately respond to a request for comment on whether it plans new regulations or to reverse the Trump administration’s rule.

Amid the regulatory uncertainty, “people may have a misunderstanding of their rights, their protections,” said Mila Kofman, executive director of the DC Health Benefit Exchange Authority, which operates the district’s ACA marketplace. “Until the Department of Labor rolls back the problematic AHP regulations, we will continue to see a lot of confusion.”

Kofman said she often hears from insurance brokers about AHPs who may not meet the minimum requirements so she can work with other relevant city agencies to stop the sale of those plans.

These products are often sold by “fictitious groups” and claim to be association-type group coverage, Kofman said. Recently, one such product was marketed by a legitimate association as full coverage, but it was a simple plan, she said.

States Act

At least seven states have passed laws allowing more AHPs similar to the Trump settlement after the court struck down the rule. Four states have done so before that. The most recent, Virginia, has passed both the House of Delegates and the state Senate, and is awaiting the governor’s signature.

North Carolina and Florida laws allow small employers to offer an AHP based on shared geography or industry and include sole proprietorships who have no employees other than themselves. themselves.

Several states adopted the Trump administration’s rule as state law, ignoring what the court said, according to Timothy Jost, professor emeritus at the Washington and Lee University School of Law.

“In Virginia, we’re going to start to see a proliferation of combination products,” Kofman said. “I don’t think Virginia is unique, I think in other states there is an effort to pass DOL-like association health plan legislation.”

State lawmakers are trying to meet the demand “to do something about these grueling healthcare costs,” Corlette said. These bills don’t solve the problem and “shift costs and make insurance cheaper if you have healthier workers and more expensive if you have sicker workers,” she said.

‘Cleaning job’

Health analysts say the confusion is likely to persist unless Biden’s labor department moves forward with its own regulations.

“It’s been pending for a long time and at some point someone has to do something about it,” said Katie Keith, director of health policy and legal initiative at the O’Neill Institute of Georgetown Law. . “The court is either going to relaunch the case and issue a ruling, which I don’t think is a good thing. Or the Biden administration just has to issue a rule proposal that’s okay with the court. .

“It seems, from my perspective, quite simple to override the association’s health rule,” Keith said. “It hasn’t been in effect for years at this point, it’s kind of a clean-up job at this point to formalize that these provisions are off the books.”

Andrew B. Reiter