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June 20, 2018 Rex Hammock
June 20, 2018 by Rex Hammock in Insurance
Small Business, Self-Employed Will Soon Have Access to Association Health Plans | 2018

After failing to repeal the Affordable Care Act, the Trump administration has sought regulatory actions to loosen ACA requirements to lower premiums for individuals and small businesses.

Tuesday (June 19, 2018) at the opening session of the 75th anniversary of the National Federation of Independent Business (NFIB), President Donald J. Trump released the finalized version of a new rule that enables self-employed individuals and more small businesses to band together to buy healthcare insurance through “association health plans.”

See our previous overview of association health plans 

Lamar Alexander, chairman of the Senate Health, Education, Labor and Pensions Committee, lauded the plans:

Large companies have always had an advantage because they have more employees, which means they can provide health insurance at a lower cost. Expanding association health plans will give more small businesses and self-employed Americans a chance to get a similar bang for their buck because they’ll be buying health insurance for a larger group of people. They can spread administrative costs, allow employers to bargain for better deals and create ways to bring more people into the market, which brings down costs for everyone.

Hey, wait! Wasn’t the healthcare battle in Congress over?

After Republicans failed to repeal the Affordable Care Act (Obamacare), the Trump administration has sought regulatory actions to loosen ACA requirements and try to lower premiums for individuals and small businesses. Today’s rule expands the definition of employer under the Employee Retirement Income Security Act of 1974, or ERISA. The new definition will enable more groups to form association health plans and bypass rules under the Affordable Care Act. Its enactment does not need legislative approval. Its costs may require more funding at some point, which would require congressional approval.

Aren’t businesses with less than 50 employees excluded from requirements to provide insurance to employees?

Yes. Businesses with less than 50 employees are not required to provide insurance to employees, nor will they under this new rule. According to the White House, association healthcare plans will level the playing field to be more like plans available to large corporations.

Are individuals mandated to purchase healthcare coverage?

As part of the Tax Cuts and Jobs Act passed in December 22, 2017, the penalty associated with the Affordable Care Act’s (ACA’s) individual mandate — also known as the act’s individual shared responsibility provision — has been reduced to $0 beginning Jan. 1, 2019. The change essentially repeals the ACA’s individual shared responsibility provision.

Will association health plans cover preexisting conditions?

According to the Department of Labor, association health plans will be required to comply with protections like those at larger companies or via Healthcare.gov, including:

  • Prohibitions against charging more or denying coverage because of a preexisting condition
  • Canceling plans because you get sick
  • Imposing annual or lifetime limits on benefit coverage
  • The requirement to offer coverage to dependent children up to age 26
  • The requirement to provide preventive health coverage free of charge to the patient.

Who opposes association health plans, and why?

  • Critics say it will draw healthy people away from the current health law’s insurance markets, raising the cost of coverage, which is subsidized by taxpayers.
  • Currently, healthcare insurance is regulated at the state level. Association group plans that can cross state lines can be viewed as a threat to the status quo.
  • The plans may not all provide comprehensive benefits offered by some of the Obamacare options
  • Some similar plans in the past had problems with financial solvency
  • See also our previous association health plan pros and cons 

Photos: iStock, SmallBusiness.com

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