Information on AHPs

On Jan. 30, 2019, Director Wing-Heier issued Bulletin B 19-02 to provide information to insurers and entities regarding association health plans (AHPs) and the application of AK’s insurance statutes.

As background, the DOL and EBSA published a final rule relating to AHPs on June 21, 2018, intending to expand access to AHP coverage options. The final rule establishes new standards and criteria for the creation of AHPs and, by providing additional clarifications of existing criteria, expands access to health coverage through AHPs. Specifically, the new regulatory framework expands the “commonality of interest” requirement to include geographic location and industry. The expansion is intended to allow employers from non-related industries and trades from the same geographical areas and working owners (for example, sole proprietors with no employees) to access health coverage through AHPs. This AK bulletin points out that several provisions of the final rule are in direct conflict with existing AK statutes, and while AK seeks to harmonize any conflicts to the reasonable benefit and flexibility to AK employers, the new final rules do not preempt state law.

Because AK continues to have broad authority under ERISA to regulate AHPs under state licensure and solvency statutes, insurance companies that offer health insurance plans to AHPs in AK must follow the existing state regulations. Regarding self-funded AHPs, any entity wishing to form a self-funded AHP in AK must do so within the existing framework of permissible self-funded arrangements. Specifically, AK requires employers in an AHP to be members of a “bona fide association or group of two or more businesses in the same or a closely related trade, profession or industry that provide support, services, or supplies primarily to that trade, profession or industry.” So, the expansion of “commonality of interest” within the DOL’s final rules is not permissible in AK. Also keep in mind that all AHPs, both fully-insured and self-funded, must file with the Division of Insurance for review.

AK employers interested in AHPs should work closely with insurance carriers on fully-insured arrangements. However, the provisions of the DOL’s final rule intended to expand access will likely not be permissible for self-funded AHPs under existing AK regulations.

Bulletin B 19-02 »