With record-low unemployment and an increase in open positions, along with reports that over 50 percent of employees are actively looking for a new job, benefits are a real inducement for new talent. In this environment, it’s essential for small to midsize employers to be able to offer a competitive benefits package.
Larger companies with more resources have access to benefits flexibility, bigger benefits packages, as well as the power to negotiate with providers for better rates. For years, certain small employer groups have been able to band together to offer benefits under association health plans (AHPs), but these had limitations. However, recent activity on the federal level has expanded the definition of an AHP as a potential solution to the affordability dilemma and allow smaller businesses to offer more attractive health benefits.
AHP expansion
In October 2017, President Trump issued an executive order directing the Department of Labor (DOL) to expand access to association health plans. On January 5, DOL issued proposed regulations identifying new potential requirements for AHPs and opening a public comment period.
The feedback was very divided. Some saw a great opportunity for smaller employers to lower their healthcare costs as a result of more relaxed AHP guidance. However, other respondents anticipated greater risk in allowing associations to be formed for the purposes of providing benefits (based on issues that had previously arisen in similar groups decades before).
Rule changes
On June 19, the Department of Labor released a final rule. This final rule is similar to the proposed regulations in many ways, but it does contain some differences. Ultimately, it was designed to relax the association rules from those that exist today.
The key changes this final rule makes to the existing rule are:
Rollout dates
The association health plan final rule goes into effect in a staggered rollout. Effective dates are as follows:
Want to know more about AHPs? Check out our latest webinar below.
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