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NYS Pushes Back Association Plans and Short Term Medical

NYS is pushing back on Association Health  Plans (AHP) In reaction to President Trump’s Executive Order of Association Health Plans expansion.  The President expanded the role of association plans earlier this week rule to makes it easier for small businesses and trade groups to band together to purchase health coverage outside of Obamacare’s insurance markets.

These regulations provide an additional basis for a group or association of employers to be treated as an “employer.  New York’s top insurance official said the Trump administration’s final rule making it easier to form association health plans will not hamper the state’s ability to continue regulating the health insurance industry.  Other states like Massachusettes have have also pushed back over Association Plans. “Yesterday’s announcement by the Trump Administration to dramatically expand the footprint of Association Health Plans will invite fraud, mismanagement, and deception – and, as we’ve made clear, will do nothing to help ease the real health care challenges facing Americans,” Healey and Underwood said in a joint statement. “We believe the rule, as proposed, is unlawful and would lead to fewer critical consumer health protections.”

One program getting attention are inpexpesivive but limited short-term health insurance plans.  According to yesterdays NYS DFS annoncment, however, New York regardless of federal actions will prohibit these plans as consumer protection.  Current federal rules only permit short-term plans — which are exempted from certain health benefits coverage requirements, such as chronic pre-existing conditions — to last up to three months, but the Trump administration wants to expand that up to 364 days. “Such ‘limited health’ plans, whether limited to less than three months or one year, are not short-term at all, but rather an end-run around requirements applicable to individual or group hospital, surgical or medical expense coverage and are prohibited under New York State law,” DFS wrote in a circular letter to insurers.

Summary of Trump’s Association Health Plans Expansion

 Purpose of Association. Employers may band together in an association for the purpose of obtaining health coverage.  However, the association also “must have at least one substantial business purpose unrelated to offering and  providing health coverage or other employee benefits to its employer members and their employees.”  The DOL clarifies in its safe harbor that a “substantial business purpose is considered to exist if the group or association would be a  viable entity in the absence of sponsoring an employee benefit plan.” 

 Commonality of Interest. Employers in the association can either (1) be from the same trade, industry, line of business, or profession; or (2) all have a principal place of business in a State (or portion of a State, such as a city or  county) or in the same metropolitan area (even if the metropolitan area spans more than one State, like New York, Washington, D.C., or Kansas City

 Structure and Control. There must be a formal organizational structure with a governing body and by-laws or similar formalities, to control the association, including the establishment and maintenance of the group health plan.   The  control can be direct or indirect through the regular election of directors, officers, or other similar representatives; however control must be present both  in form and in substance. Ultimately, the functions and activities of the group or association are controlled by its employer members, and the group’s or association’s employer members that participate in the group health plan  control the plan, by determining contributions, plan designs, and benefits. 

Eligibility. Only employees and former employees of association members (and  their eligible family members) may participate in the association health plan.  In other words, it cannot be an insurance exchange for any interested party. 

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