MA Law on AHPs and MEWAs Still Applies

On July 27, 2018, Commissioner of Insurance Anderson issued Bulletin 2018-03 to remind health insurance carriers of the continuing applicability of the MA health insurance legal requirements to association health plans (AHPs) and multiple employer welfare arrangements (MEWAs).

As background, on June 19, 2018, the EBSA issued a final rule related to the creation and maintenance of AHPs under ERISA. The rule modified an AHP requirement that the group or association have a commonality of interest and further prevented associations that exist solely for the purpose of purchasing or providing health benefits to its members. Under the new AHP rule, the group or association must have at least one substantial business purpose unrelated to the provision of benefits, although the principal purpose may be the provision of benefits. That said, the rule clarifies that it doesn't, in whole or in part, preempt state regulation of MEWAs.

This MA bulletin reiterates the Division of Insurance's understanding that the federal AHP regulation doesn't limit MA law for individual and small group coverage. In other words, MA law continues to apply to health coverage offered to Massachusetts-based individuals and small employers, including eligible small businesses that are within a MEWA.

As background on MA's laws applicable to MEWAs, it's important to note that small employers participating in a fully insured MEWA in MA will be rated as a small group and must be in compliance with the state's small group insurance requirements. In other words, a fully insured MEWA in MA would not be rated as an aggregate large group. Also, self-insured MEWAs are required to be licensed as an insurer.

The bulletin also reminds health carriers and licensed producers that MA law continues to require each adult resident to have health coverage that meets the minimum creditable coverage (MCC) standards as set by the Health Connector unless plans meeting these standards are deemed unaffordable to that person according to the Health Connector standards.

The main purpose of this letter was to remind insurers doing business in MA that the state retains the right to regulate AHPs or MEWAs regardless of changes to federal law. Employers should be aware that their participation in such a plan will likely fall under MA's jurisdiction.

Bulletin 2018-03 »