Association Health Plan Restrictions

On Aug. 10, 2018, Commissioner Wade issued Bulletin HC-122 to remind insurers that state law continues to regulate association health plans.

As background, on June 21, 2018, the DOL issued final regulations regarding association health plans (AHPs). Under the regulations, a group or association of employers may act as a single “employer” sponsor of an association health plan under ERISA. The federal regulations attempted to encourage the creation of these associations, but emphasized that the states retain their authority to regulate AHPs. This bulletin clarifies the coordination with CT law.

CT allows fully insured AHPs, but any “small employer” participating in an AHP must continue to be rated as a small employer. CT defines a “small employer” as an employer with at least one but no more than 100 employees during the preceding calendar year and that employs at least one employee on the first day of the group plan’s year. The state does not consider a sole proprietorship that employs only the sole proprietor or the spouse of such sole proprietor to be a “small employer.”

The bulletin further clarifies that AHPs are considered MEWAs, and that self-insured MEWAs or multiple employer trusts (METs) must be licensed as an insurance carrier in the state. An employer that operates a self-insured MEWA or MET without authority or license is considered an illegal operation.

The main purpose of this bulletin is to remind insurers that the state retains the right to regulate MEWAs, regardless of changes to federal law. Employers should be aware that their participation in a fully insured MEWA will likely fall under CT’s jurisdiction. The state also took the time to reiterate that an organization operating (or seeking to operate) a self-funded MEWA must be licensed as an insurance carrier to do so or risk being considered an illegal operation.

Bulletin HC-122 »