Alaska Division of Insurance issues guidance on Association Health Plans
The Alaska Division of Insurance issued new guidance on Association Health Plans (AHPs) earlier this month. The bulletin states that it was created in response to new federal regulations issued late last year to expand access to the plans.
According to the federal Department of Labor (DOL), AHPs allow small businesses and employers to join together to purchase plans that are usually available to larger employers with more people in their risk pool. The new rule from the DOL now allows groups to band together based on geography or industry and allows sole-proprietors and their families to join AHPs, even purchasing into plans across state lines.
Criticism of the plans centers around the fact that historically, due to their limited regulation, they have been prone to insolvency and fraud. The 2010 federal Affordable Care Act (ACA) sought to hold these plan to a higher standard, requiring them to cover the same essential benefits that individual and small-group market plans cover, could not reject people for pre-existing conditions, or charge people wildly different rates based on age or health.
The Division of Insurance bulletin acknowledges that several areas of the new DOL regulations directly conflict with Alaska laws on the plans. DOI distinguishes two categories of AHPs, also referred to as Multiple Employer Welfare Arrangements (MEWAs), Non-Plan MEWAs and Plan MEWAs.
Plan MEWAs treat an association as a large pool for the purposes of health insurance, whereas Non-plan MEWAs provide individual plans to individual member. Plan MEWAs are desirable because the ability to join into a larger risk pool results in lower premiums. Under the old ACA it was difficult to qualify as a Plan MEWA, but the new DOL regulations expand the circumstances that now qualify for this distinction.
The DOI’s guidance clarifies that the federal regulations do not modify state law. As a result, groups wishing to form an AHP should carefully review Alaska statutes on the matter found at AS 21.85 to make sure they comply with the still stricter Alaska requirements. In addition, the bulletin includes a chart that outlines specific approval and regulatory requirements of Alaska law with regard to both Plan and Non-Plan MEWAs.