On January 4, the administration released the anticipated proposed rule broadening the ERISA definition of “employer” and expanding the options for small employers seeking insurance coverage, as foreshadowed in the President’s executive order on October 12, 2017. PCG subject matter experts reported on the potential impact of the President’s executive order back in October, and that article is available here. Association health plans (AHPs) are exempt from certain protections of the Affordable Care Act (ACA) including coverage of the ten essential health benefits.
The proposed rule seeks to redefine “employer” by creating a more flexible “commonality of interest” test. The “commonality of interest” test is currently defined as a “bona fide” group of employers with a common interest (other than obtaining health insurance) typically operating in the same industry, comprised of one or more employees other than the owner and owner spouse that exercise control over the AHP.
The proposed rule seeks to amend this test by affording employers two ways to meet the common interest standard:
- Same trade, industry or profession
- Same geographic location with the group having a principal place of business within the same state or a common metropolitan area (which would be across state lines)
Additionally, the definition of employer is broadened to allow an owner employer to be considered an employer and an employee thus in effect allowing a sole-proprietor to qualify, which previously was not allowed under ERISA or the definition of employer as outlined in the ACA and subsequent regulations.
The administration seeks comment by March 6, 2018 on many portions of the proposed rule including the change to the definition of employer.
More details on the proposed rule and the potential impact on clients and state insurance markets will be included in the January edition of Health Policy News. To subscribe to our monthly health policy newsletter, please send an email to HealthPolicyNews@pcgus.com.