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Human Resources
ASSOCIATION HEALTH PLANS & THEIR
POSSIBLE IMPACT ON NSAA MEMBERS

BY SARALYN CROCK & DEBRA DAVIS, ARTHUR J GALLAGHER & CO

THERE’S BEEN A LOT OF CONVERSATION and media coverage are often more expensive and do not provide the broader
over the past few months about Association Health Plans pool of insured to spread the risk) or the economies of scales
(AHPs). These AHPs allow employers (often within a geo- from which larger employers can benefit (think Amazon,
graphic region or a common industry) to join together to Walmart, Google, Apple, GM, etc.).
obtain preferential treatment under group market rates for A second advantage is that some working owners may be
health care plans for employees under the Affordable Care able to obtain group health coverage through an association.
Act (or healthcare reform) rules, giving better access for Under prior rules, working owners with no employees could
smaller employers to obtain better health insurance rates, not participate in an association health plan. Large employers
despite their individual small employee numbers. may already use the large group market rules without having
You may think that AHPs are new, but that is not the to join an association health plan.
case. They have actually been around for many years—which The new rules for AHPs apply only to the provision of
may lead you to wonder why AHPs have been making so health benefits. An AHP that chooses to offer additional
many recent headlines. The reasons lay in the rules affecting types of benefits such as life or disability insurance may not
individual, small group, and large group fully insured plans use the new rules for those benefits beyond health insurance.
under the Affordable Care Act. Before delving into all of the benefits for forming or join-
In June 2018, the Department of Labor (DOL) issued ing an AHP under the new rules, let’s briefly clarify what an
a new regulation under the Employee Retirement Income AHP is, and how one works under the current regulations.
Security Act of 1974 (ERISA) that broadens the definition
of “employer” that allows separate employers to join together AHPs allow small employers to
in a group or association (hence, “association plans”) in
order to offer more affordable health coverage to their pool together to buy insurance,
employees. The new rules provide an additional method
for these “associations” where, if properly structured, an aiming to make rates more
AHP will be treated as one single, large group employer
plan, rather than as a collection of multiple separate affordable by spreading the
employer plans. risk more broadly.
To be clear, this new regulation’s reference to “asso-
ciation” plans does not mean these employers have to be
connected to a particular trade association, like NSAA is An AHP is a specific type of Multiple Employer Welfare
a national trade association for ski area owners (and Ski Arrangement (MEWA) offered by groups of companies
California is the state trade group in California and Nevada). and associations to provide health coverage to employees of
However, many industries across the spectrum have trade unrelated businesses. AHPs allow small employers to pool
associations that sponsor and organize AHPs as part of their together to buy insurance, aiming to make rates more afford-
member benefits. able by spreading the risk more broadly. By pooling together,
Although, under this new regulation, associations may small employers have more purchasing power, which, in
offer an AHP to employers of any size, AHPs are most likely theory, could provide them with access to lower premiums.
to be of interest to small employers and working owners. Historically, the most common examples of AHPs have
The primary advantage of an AHP under this new DOL been farm bureaus that allowed independent farms to band
rule (which is really a new interpretation under ERISA) together to purchase insurance.
is to enable the AHP to be subject to the Affordable Care The full definition of a MEWA is expansive, and it
Act’s large group market rules rather than each participating currently covers what one would traditionally consider to
employer being subject to small group market rules (which be an AHP. Unrelated employers or businesses have often

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