Proposed rules would expand access to small business health plans

U.S. Department of Labor announced the release of proposed regulations that would “expand the opportunity to offer employment-based health insurance to small businesses through Small Business Health Plans, also known as Association Health Plans.” The proposed regs would do so by expanding the definition of “employer” under Section 3(5) of ERISA – Association Health Plans.

The regulations, according to its preamble, would modify the definition of “employer,” in part, by creating a more flexible “commonality of interest” test for the employer members. In doing so, the proposed regs, which would apply only to employer-sponsored health insurance, would allow more employers to join together as a single group to purchase insurance in the large group market. “These improvements stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors,” the Department of Labor news release explained. As proposed, the revised rules would:

  • Allow employers to form a Small Business Health Plan on the basis of geography or industry that would include a state, city, county, or a multi-state metro area, or it could include all businesses in a particular industry nationwide; and
  • Allow sole proprietors to join Small Business Health Plans.

Comment. According to the new release, the proposed rules would include protections that would prohibit Small Business Health Plans from charging individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors. It would also require the Department of Labor’s Employee Benefits Security Administration “to closely monitor these plans to protect consumers.” President Trump has been reported to say recently that the combination of associated health plans and elimination of the individual mandate may be the key to forcing a bipartisan compromise on health care.

(RIN 1210-AB85, (Fed Reg. January 5, 2018), U.S. Dept. of Labor News Release, January 4, 2018)