Associated Health Plans Final Rules
Background: Why is the expansion of Associated Health Plans (AHPs) important?
When different employers join together to provide benefits to their employees, the result is usually a multiple employer welfare arrangement (MEWA). While a MEWA can offer some financial advantages over separate plans, in most cases, each participating employer must meet ERISA requirements on an independent basis. In other words, the ERISA rules apply to each employer as if they had an independent, separate plan. So, each employer must still file a 5500, have plan documents, distribute SPDs, and meet all ERISA fiduciary requirements.
Under current rules (pre-AHP final regulations), a MEWA would only be treated as one plan under the ERISA rules if the employers were part of a “bona fide association” of employers. In addition, the employers would have to have an organization relationship and be able to control that organization. This usually requires that the employers be engaged in the same business or industry, like dairy farms or dentistry, for example.
The new AHP rules expands the scope of which types of employer groups will be considered to have one plan for purposes of ERISA.
How have the new rules made AHPs more accessible?
The new rules have expanded which employers can join together to form a MEWA that will be considered a single ERISA plan at the MEWA level. In addition to employers who have the same business interests in common, the new AHP rules will allow employers in the same geographic area to join together to form an AHP. That means employers in the same metropolitan area, county, or state can form an AHP based on geography even if they have nothing else in common. For example, a city or county chamber of commerce could now form a MEWA and be considered an AHP. That means the chamber would be responsible for the plan and ERISA responsibilities and the participating employers would not have separate plan responsibilities.
For metropolitan areas that involve more than one state, there are some challenges. The final rules did not address buying and selling insurance across state lines as directed in the Executive Order, so there is no change with respect to that issue. In addition, since insurance is regulated by state, the rules of each state (in addition to federal laws) will have an impact on the AHP.
Finally, under the new AHP rules, sole-proprietors can now join an AHP, which was not allowed under the current “bona fide association” rules.
What else do I need to know?
Although ERISA won’t apply at the employer level, the final regulations still require participating employers to have control over the plan and over the organization maintaining the plan. In addition, there are additional trust requirements to hold AHP assets and HIPAA nondiscrimination requirements that apply to the plan coverage, premiums, and eligibility requirements. Finally, all other employee benefits rules will still apply to AHPs; for example, COBRA, the Internal Revenue Code, HIPAA, and applicable state laws.
The rules go in effect in stages:
- September 1, 2018 for existing and newly-formed fully-insured arrangements
- January 1, 2019 for existing self-funded arrangements
- April 1, 2019 for newly-formed self-funded arrangements
If you are interested in learning more about Associated Health Plans and whether this arrangement might be good for your organization, please contact your Benefits Consultant.