Associations now have new options to sponsor health plans for their members. These final Association Health Plan (AHP) regulations make it easier for small businesses to offer large employer plans that would be free from Affordable Care Act (ACA) mandates (applicable only to individual and small group insurance plans).
What the AHP Regulations Mean
This new regulation is a revision of former DOL guidance on what constitutes a “commonality of interest,” which association members share if:
- They are in the same trade, industry, line of business or profession,
- Or, are located in the same state or metropolitan area even if that area includes more than one state.
AHPs must also meet the following requirements to be valid under the new regulations:
- Purpose/Sponsorship: There must be at least one substantial business purpose unrelated to providing health coverage or other employee benefits to its members and their employees.
- Control: Activities of the association must be controlled by members, and the group or association’s members that participate in the group health plan must control the plan.
- Eligible AHP participants are defined are employees of a current employer member of the group or association. Former employees of current ones are grandfathered in.
These regulations, however, do not apply to existing AHPs that follow the previous guidance. This is because they created their operations with the former guidance in mind and may have a hard time complying with and meeting all the requirements of the new regulations.
As with many new regulations, there are several provisions requiring additional guidance. Employers should thoroughly review these new provisions prior to embarking on a change in their health care arrangement. For more information about the AHP final regulations and how they affect you, please consult with the Sikich professional employee benefit plans team.