“ASAE supports quality, affordable, accessible health care for all Americans. ASAE supports national uniform standards for funding benefits and employee protections. ASAE further believes that association health care plans possess many years of proven experience in the delivery of benefits through purchasing coalitions. As such, association health care plans can lead the way to the reform goals of providing the efficient delivery of quality health care to more citizens.” – ASAE Board Approved Position Statement #6
Association Health Plans
President Trump signed an executive order in October 2017 instructing federal agencies to rewrite federal rules for association health plans (AHPs), which allow small businesses of a similar type to band together through an association to purchase coverage. Under the executive order, membership groups could sponsor insurance plans across state lines and would be able to avoid some requirements of the Affordable Care Act (ACA), including requirements that they cover certain benefits.
The administration is also expanding the availability of short-term insurance plans, allowing insurers to sell short-term insurance that would last for up to a year, up from three months under Obama-era restrictions. These stop-gap policies may not be required to cover preexisting conditions, mental health services, and other benefits but could serve as a bridge for people who are between jobs or young adults no longer eligible for coverage under their parents’ health plans. Critics say such plans would attract younger, healthier people, causing prices to skyrocket for older or sicker individuals in the Obamacare markets.
Administration officials made clear that the executive order does not itself make changes but directs agencies to issue new regulations. Those new rules will be subject to a notice and comment period that could take months, officials told reporters.
Among the details missing in Trump’s executive order is who will qualify as an association. According to Politico, the Labor Department (DOL) is working on a reinterpretation of the workplace rule that would broaden the kinds of groups that can qualify as an association and exempt themselves from ACA regulations.
ASAE is studying the executive order closely, and we will be looking for more details about how these new rules would work. ASAE has long believed that AHPs could expand healthcare choices for small businesses and franchise owners if federally regulated. But how the administration defines an association and how DOL and other agencies rewrite existing rules will be important questions to answer.
An issue of concern to the association community within the ACA is the so-called Cadillac tax, a 40 percent nondeductible excise tax on high-cost health plans that was set to go into effect in 2018. The omnibus spending bill passed by Congress in December 2015 delayed implementation of the tax for two years. Postponing the start of the Cadillac tax from 2018 to 2020 should lessen the incentive for employers to make changes immediately to their benefit plans and give opponents additional time to repeal the tax altogether. The tax is projected to raise $87 billion over the next 10 years.
Under the ACA, both fully insured and self-funded employer health plans will be assessed the tax on the dollar amount of any employee premiums that exceed annual limits of $10,200 for individual coverage and $27,500 for family coverage. While stand-alone dental and vision plans are excluded from the cost limits triggering the tax, the law includes several other costs paid by employers and employees, such as contributions to flexible spending accounts or health savings accounts.
Dislike of the Cadillac tax has become pervasive among Republican and Democratic lawmakers alike, as it would likely result in a reduction of benefits for millions of Americans. ASAE filed two sets of comments with the IRS in 2015, suggesting that employers will look to make changes to their benefit plans to avoid the tax. These changes will reduce benefits and transfer the cost of insurance to employees through increased deductibles, reduced covered services, use of private exchanges, and the reduction or elimination of flexible spending accounts, ASAE argued.
President Trump has said he would sign a bill to repeal the tax, but legislation on this issue hasn’t progressed recently. The fate of the Cadillac tax may be decided by the ACA repeal outcome. ASAE takes no position on ACA repeal but supports quality, affordable, accessible healthcare for all Americans.
We will continue to monitor this issue closely.