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:
- AHPs can now form across geographic regions such as counties or states
- AHPs can consist of organizations from different industries as long as the organizations are within the same geographic region
- 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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