The Association Health Plan (AHP) Final Rule: What You Need to Know

AOTA is concerned about a regulation finalized last month that could lead to the creation of new insurance plans with little or no coverage for occupational therapy services. The regulation will make it easier for some people to find lower-cost, lower-benefit alternatives to individual and small group plans from the marketplaces established under the Affordable Care Act (ACA). It carries out part of a presidential executive order directing the federal government to increase access to association health plans (AHPs) and short-term, limited-duration insurance—two types of health coverage that don’t have to cover essential benefits like occupational therapy.

What the Final Rule Does

The rule, finalized on June 19, 2018, revises federal rules governing AHPs, arrangements that allow businesses in the same industry to band together to provide health insurance to their employees. It encourages more AHPs to be set up by permitting associations to form for the primary purpose of providing health insurance, and by allowing AHPs to come together based not only on a common industry, profession, or trade, but also on a common geographic area, including multi-state metropolitan areas like the Washington, D.C., metro area. It also broadens access to AHPs by opening membership to self-employed individuals without any employees. A Congressional Budget Office analysis estimates that 4 million more people will sign up for AHPs under the Trump Administration’s proposal, 3.6 million of whom will be switching from some other form of health insurance coverage. 

Under the previous regulatory framework, members of AHPs were regulated as small or large groups based on the size of the particular business (a “look through” approach that didn’t take the group or association into account when determining if individual, small group, or large group regulations applied). The new approach regulates them all like large group coverage, which doesn’t have to comply with the ACA requirement to cover 10 categories of essential health benefits (EHBs), including rehabilitative and habilitative services.

The new regulation prohibits AHPs from denying membership, charging more, or offering fewer benefits to a member based on any health factor. But it allows them to consider factors including gender, age, geography, or industry when setting premiums. And the old framework is still an option: AHPs that wish to operate under the old requirements so that they can avoid the new health factor nondiscrimination provisions may do so.

Implications for OT

If AHPs grow as expected under the final rule, fewer people will have health insurance that is required to cover rehabilitative and habilitative services—including occupational therapy. Because the EHBs don’t apply, associations will be able to design plans that discourage less healthy people from joining by excluding certain benefits. This could give some relatively healthy consumers more affordable options than are currently available to them, but make coverage less affordable for others, including AHP enrollees who face out-of-pocket expenses for health care services not covered by their less-comprehensive plans. Premiums for ACA plans covering the full suite of EHBs will go up as healthier people leave for AHPs, resulting in a sicker risk pool.

To read more about AOTA’s concerns with the AHP expansion, see our March 6, 2018, comment letter here.

What’s next?

The final rule did not erase the states’ power to regulate AHPs as some state officials had feared. Some states might want to change some of their own laws and regulations in response to the policy change at the federal level.

A related proposal, now under consideration, would allow short-term plans, currently limited to three months, to last as long as 364 days. The Obama Administration established the 3-month limit to keep short-term plans from being treated as coverage akin to standard health insurance, instead of a bridge over a short coverage gap. Short-term plans are exempt from the EHB requirement and preexisting condition nondiscrimination. A final rule on short-term plans is expected soon.