ERISA Reporting and Disclosure Requirements
An AHP is treated as a single plan with the association as the plan sponsor. Existing rules generally require AHPs to file
both a Form M-1 and Form 5500 with the DOL. Small AHPs (generally under 100 participants) are not eligible for the filing
exemption available for insured and unfunded plans with fewer than 100 participants.
AHPs will likely have to put in place appropriate safeguards for handling plan assets. To the extent participant and
employer contributions are being transmitted to the association, who then pays benefits out of the AHPs assets or forwards
them to the insurance carrier, those contributions are considered plan assets and must be held in a trust.
An AHP must comply with all ERISA disclosure requirements such as maintaining a written plan document and providing
disclosures to plan participants including, but not limited to, a Summary Plan Description (SPD) and a Summary of
Benefits and Coverage (SBC). Also, each member employer of the AHP must ensure new hires receive a Marketplace
notice as required by the Fair Labor Standards Act.
Application of other Federal and State Laws
AHPs remain subject to all ACA requirements that would otherwise apply to a plan of the same size and funding method.
As stated earlier, ALEs remain subject to Employer Shared Responsibility rules and risk penalty if the AHP does not
provide minimum essential coverage that is affordable and meets minimum value requirements.
The Mental Health Parity and Addiction Equity Act (MHPAEA) and Mental Health Parity Act (MHPA) (collectively known as
the “Mental Health Parity” laws) apply to employers with more than 50 employees. Mental Health Parity laws will apply to an
AHP if the number of employees across all member employers in the preceding calendar year exceeds 50 in the aggregate.
COBRA continuation coverage requirements generally apply to employers with 20 or more employees. It is unclear
whether all AHP member employers will be required to offer COBRA if the number of employees exceed 20 in the
aggregate across all employers. No IRS guidance has been announced yet.
State Involvement
States are permitted to regulate self-insured and fully-insured AHPs to the extent the AHP is marketing to employers within
the state. AHPs are subject to the same regulatory requirements, funding concerns, and state licensing restrictions which
may have hindered formation at the state level in the past. States may require an AHP obtain a certification or license
to operate in the state. The state may also require the AHP to purchase an insurance policy from another state-licensed
insurance company. Careful review of state rules will be important if considering establishing an AHP.
Conclusion
We anticipate existing associations, carriers and TPAs will carefully review these rules to determine whether to establish
AHPs. Additionally, industry groups currently not providing an insurance option to its employer population may consider
creating one of these AHPs. Further analysis is needed on a state-by-state level to understand the state laws that may
affect the establishment and administration of these programs.
Also, the Attorneys General (“AGs”) in New York and Massachusetts have initiated a lawsuit against the administration
challenging the validity of these rules. Depending on how quickly the AGs move, the effective dates outlined above could
be affected.
Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.
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