3‑minute read

Join our guest blog­ger, Devin McBray­er, as she unpacks the Asso­ci­a­tion Health Plan rule from the Depart­ment of Labor and its pos­si­ble effects on the den­tal ben­e­fits indus­try. Devin is a Leg­isla­tive and Pol­i­cy Ana­lyst based in Sacra­men­to, Cal­i­for­nia.

As you’ve prob­a­bly heard, the Depart­ment of Labor (DOL) recent­ly released the final rule regard­ing Asso­ci­a­tion Health Plans. This rule makes it eas­i­er for small busi­ness­es to come togeth­er and form an “asso­ci­a­tion health plan” (AHP). This allows busi­ness­es to lever­age their com­bined bar­gain­ing pow­er to pur­chase health ben­e­fits for their employ­ees. Bro­kers will play an extreme­ly impor­tant role in work­ing with AHPs, espe­cial­ly new­ly-formed AHPs, which will like­ly have min­i­mal expe­ri­ence work­ing with­in the health ben­e­fits indus­try.

The new rule makes three major changes to the reg­u­la­tions con­cern­ing AHPs:

  1. AHPs can now form across geo­graph­ic regions such as coun­ties or states
  2. AHPs can con­sist of orga­ni­za­tions from dif­fer­ent indus­tries as long as the orga­ni­za­tions are with­in the same geo­graph­ic region
  3. Self-employed indi­vid­u­als, for the first time ever, will be able to join an AHP

These changes were not as flex­i­ble as some orga­ni­za­tions hoped. How­ev­er, cham­bers of com­merce in Neva­da and Texas have already announced their inten­tion to form AHPs to pro­vide health ben­e­fits to their mem­bers, and we antic­i­pate many more AHPs form­ing in the next sev­er­al months.

Although the rule does not specif­i­cal­ly men­tion den­tal ben­e­fits, it does state that AHPs can pro­vide except­ed ben­e­fits, such as den­tal or vision, to their mem­bers. AHPs that choose to obtain den­tal ben­e­fits for their mem­bers will like­ly want to take advan­tage of more flex­i­ble ben­e­fit designs, such as diag­nos­tic-and-pre­ven­tive-only plans.

Since AHPs are able to act as a large group, they do not have to fol­low cer­tain ACA require­ments such as meet­ing actu­ar­i­al val­ue stan­dards or pro­vid­ing essen­tial health ben­e­fits, which could bring down the cost of pre­mi­ums. On the oth­er hand, AHPs must con­tin­ue to fol­low exist­ing large group require­ments such as pro­vid­ing pre­ven­tive ser­vices with­out cost-shar­ing, guar­an­teed issue, or pro­hi­bi­tions on life­time max­i­mums.

The DOL rule states that new ful­ly-insured AHPs are allowed to form start­ing Sep­tem­ber 1, 2018; exist­ing self-insured AHPs are allowed to fol­low the new DOL rule start­ing Jan­u­ary 1, 2019; and new self-insured AHPs will be allowed to form begin­ning April 1, 2019. How­ev­er, some states already have laws on the books ban­ning the for­ma­tion of new AHPs, par­tic­u­lar­ly laws that ban Mul­ti­ple Employ­er Wel­fare Arrange­ments, which encom­pass AHPs. In addi­tion, some states such as Ver­mont and Penn­syl­va­nia have tak­en steps to make it more dif­fi­cult for AHPs to form in their states.

Time will tell whether AHPs will pro­lif­er­ate and there are still many ques­tions that need to be answered as state insur­ance com­mis­sion­ers come to terms with this new rule. Bro­kers will be on the front lines and will like­ly be the first to hear about orga­ni­za­tions that are inter­est­ed in join­ing togeth­er to form an AHP. As always, the Pub­lic & Gov­ern­ment Affairs team here at Delta Den­tal will be close­ly watch­ing what hap­pens next.

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