On October 12th, the President issued an Executive Order instructing three cabinet departments to undertake regulatory efforts to make changes to Health Reimbursement Accounts (HRAs), short-term insurance policies, and so-called “Association Health Plans”. It is expected that, on this third issue, the Department of Labor will begin a regulatory process whereby the definition of an “employee organization” under the 1974 ERISA statue would be broadened to include not just labor organizations but also trade or other associations. This would allow such associations the opportunity to offer self-insured health insurance products to their members that would be exempt from state regulation. Certain federal regulations would still apply, such as non-discrimination requirements, prohibitions on health status underwriting and pre-existing condition exclusions, coverage of children up to age 26 and no lifetime or annual limits on essential health benefits. But some ACA requirements that otherwise apply to small group insurance – such as the essential benefits mandate – would not apply.

The Association Health Plan idea has been around for many years, and Congress has voted on it several times, but this is the first time an effort to implement it through a regulatory change has been undertaken. The idea has very broad support in the small business community and elsewhere based on the opportunity to create more robust risk pools and competitive options. But critics believe that it could lead to the creation of plans that would siphon off lower risk beneficiaries and leave higher risk individuals in state small group markets. Of course, whether these predictions might turn out to be accurate would depend in part of how any final regulation is structured. California Attorney General (and former Member of Congress) Xavier Becerra has filed a motion seeking an emergency injunction that would require the federal government to pay cost-sharing reduction (CSR) subsidies. The motion was signed by 18 states and Washington, D.C.

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