New York Issues Reminder of State Requirements for “Single Group Health Plans”

On Nov. 1, 2018, Health Bureau Chief Johnson issued a Supplement No. 1 to Insurance Circular Letter No. 10 (2018) to remind insurers that if an association is considered a “single group health plan” under federal law, issuers must determine what type of group the association is under the NY insurance law and ensure that such coverage issued to the association complies with state law and regulations.

As background, on July 27, 2018 the Dept. of Financial Services issued Circular Letter No. 10 to remind insurers that associations are not preempted by federal law and NY strictly limits the associations or groups of employers that may sponsor a health insurance plan (see Compliance Corner on Aug. 7, 2018). Both circular letters are in response to the new AHP rule that is intended to expand the availability for AHPs to smaller employers.

This primary intent of this supplemental letter is to clarify that, because NY specifically codified the ACA’s “look through” provision, there isn’t an exemption recognized in the state that would allow an association to be considered a “single group health plan.”

The look through provision requires that employer-based association coverage exist at the individual employer level and not at the association-of-employers level. (Large employers must be issued large group coverage; small employer members must be issued small group coverage). However, HHS acknowledged a rare instance where an association of employers may be deemed a single “employer” to provide a single group health plan. This rare instance is the basis for the recent federal expansion to the definition of “employer” for associations that could sponsor group health coverage. However, such instance cannot exist in NY and any “association coverage” in NY must be rated based on its underlying member employers and not based on the size of the association.

Supplement No. 1 to Insurance Circular Letter No. 10 (2018) »