States have less than a month to plan how they will regulate a new version of small-business health plans—referred to as association health plans (AHPs)—formed under a new Department of Labor (DOL) regulation, according to Bloomberg Law.
The first roll-out date is Sept. 1, and states such as Pennsylvania and Vermont recently released strict regulations for the new AHPs.
The DOL regulation expanded access to AHPs by changing the definition of "employer" to include more small businesses, such as self-employed individuals; those employers now can unite by geography or industry and purchase health plans as a large group. The Congressional Budget Office estimates the plans will provide coverage for 4 million small-business workers during the next five years.
The final rule included a time frame for states to develop laws and regulations before the plans begin to form, and many states already have laws for similar group health plans that were popular before the existence of the Affordable Care Act (ACA). However, there is a history of misuse regarding those plans that reportedly left 200,000 people without coverage between 2000 and 2002 and racked up $252 million in unpaid bills.
Critics are concerned the low-cost, low-coverage plans will lure healthy people away from the small and individual marketplace and leave a sicker population behind. Supporters say the plans allow small companies the same bargaining power as large companies, and employers will look out for members' needs regarding coverage.
Some states have created new regulations for the rule. For example, Pennsylvania requires an association to be established "for purposes other than that of obtaining insurance, and has been in active existence for at least two years." Vermont requires plans to cover the essential health benefit of the ACA. Other states are waiting for more information before acting.
Twelve jurisdictions have filed a lawsuit against DOL, Secretary of Labor Alexander Acosta and the U.S., arguing the rule's disruption of the ACA and conflict with federal employee benefits law violates the Administrative Procedures Act.