Association Health Plan and Short-Term Limited-Duration Insurance Final Rules September 25, 2018

Agenda Introduction Association Health Plans: Background 3 4-5 Eligibility Key Provisions Considerations for States State Activity: AHPs 6 7 8 9-10 Short Term Limited Duration Insurance: Background 11-12 Duration & Notice State Activity: STLDI 13 14 15-16 Q&A Contact Us 17 18 Fall Webinar Series: AHP/STLDI

Introduction FALL WEBINAR SERIES---Next Up! On Tuesday October 9th at 2:30 pm EST, we will host a webinar on State initiatives relative to Medicaid Buy-In Public Options.  Come prepared with questions for our expert roundtable. Please visit the Health Policy News blog @ https://healthpolicy.pcgus.com/ for summaries of the final Association Health Plan and Short-Term Limited-Duration Insurance rules. Fall Webinar Series: AHP/STLDI

Association Health Plans Background In June 2018, the Department of Labor (DOL) finalized its proposed rule, expanding access to Association Health Plans (AHPs) by making it easier for “bona fide” associations of small employers to join together to purchase large group AHPs. The new standards: Make it easier for associations to be considered “bona fide associations” Allow more employees to join AHPs Apply new non-discrimination provisions AHPs may continue to be established under the old rules and standards. DOL and IRS have disseminated follow-up guidance on AHPs Fall Webinar Series: AHP/STLDI

Association Health Plans Background Effective Dates September 1st for fully-insured AHPs seeking to operate under the new rule January 1st for existing self-insured AHPs seeking to operate under the new rule April 1st for new self-insured AHPs seeking to be formed under the new rule * State insurance law may still apply to AHPs to the extent it is not inconsistent with ERISA. States may continue to regulate fully-insured AHPs, including: Licensing requirements Financial reporting Registration and certification State regulatory authority related to reserves, contributions and funding obligations Examinations and audits Fall Webinar Series: AHP/STLDI

Association Health Plans Eligibility The new rule makes some standards for bona fide associations more flexible: Commonality of Interest Purpose Can be met by being in the same state or metropolitan area (including across state lines) Offering health insurance still cannot be the sole purpose but it may be the primary purpose Sponsors Structure Conflicted organizations may sponsor as employers and provide administrative support Members must still control and there must be a clearly-defined structure The new rule expands the types of employees who can participate in AHPs: Working Owners without other employees who meet hours or income requirements Current employer members and their beneficiaries Fall Webinar Series: AHP/STLDI

Association Health Plans Key Provisions AHPs are subject to ERISA as well as ACA protections and State law applicable to large group plans. Do not have to comply with standards that only apply to the individual and small group market, including the Essential Health Benefits (EHBs) Do not have to meet Federal ACA standards relative to design benefit and cost sharing requirements applicable to QHPs or MEC standards AHPs have to comply with the HIPAA nondiscrimination provisions: cannot discriminate related to premiums or benefits for “similarly situated” individuals. May not consider health claims in developing rates or target specific high-cost employees; may base rates on factors such as gender, industry, and unlimited age rating May not discriminate in applying eligibility standards (coverage eligibility, coverage dates, waiting periods) based on health status Fall Webinar Series: AHP/STLDI

Considerations for States It is important for states to ensure the estimated 3.6 million individuals expected to leave the individual and small group market to enroll in AHPs understand the coverage and benefit differences. Market stabilization efforts should include a focus on the impact of AHPs; with the risk profiles of small group and individual markets likely to be impacted and small group and individual market premiums expected to increase by 3 percent. Jurisdictional issues related to oversight and enforcement could arise between states, as associations as well as group members may cross state lines. States should educate the assister populations as the 2019 navigator grants encourage navigators to make consumers aware of a range of available coverage including AHPs and STLDI. Fall Webinar Series: AHP/STLDI

State Activity: AHPs Fall Webinar Series: AHP/STLDI

State Activity: AHPs Fall Webinar Series: AHP/STLDI

Short-Term Limited-Duration Insurance Background On August 1, 2018, the Departments of Labor, Treasury and HHS finalized their proposed rule, expanding coverage periods associated with STLDI plans. The historical purpose of these plans – which are exempt from individual market insurance rules - was to provide a bridge between conventional coverage options. The new standards: Extends the permitted duration of STLDI plans Amends the notice standards that must be provided to consumers Fall Webinar Series: AHP/STLDI

Short-Term Limited-Duration Insurance Background Effective Date The new rule becomes effective on October 2, 2018. Plans sold on or after the effective date must meet all final rule requirements to qualify as a STLDI plan. States may continue to regulate STLDIs, including: Further limiting permitted durations of coverage Determining whether coverage is under the same contract The form and content of required notices Fall Webinar Series: AHP/STLDI

Short Term Limited Duration Insurance Duration and Notice The new rule extends the permitted duration of STLDI plans Coverage periods of up to 12 months are permitted Each contract may be renewed for up to 36 months Coverage contracts may be stacked; options may be purchased in advance The new rule builds on existing notice requirements including requiring: Disclosure that STLDI plans may not contain all of the coverage required by the ACA even though they may be offered for almost the same duration as QHPs. Specific examples of what services may fail to be covered and what other limitations may apply. Individuals be informed that they may be subject to a gap in coverage if the plan expires outside of the open enrollment period. Prior to 2019, individuals must be informed that STLDI plans do not qualify as minimum essential coverage for purposes of the individual mandate. Fall Webinar Series: AHP/STLDI

Considerations for States States must ensure that the 500,000 individuals estimated to leave individual market plans for STLDIs understand the coverage and benefit differences. The notices are particularly important as these plans are now more of alternative options rather than gap-fillers. Market stabilization efforts should include a focus on the impact of STLDI plans; with individual market premiums expected to increase by 1 percent in 2019 and by 5 percent in 2028. The Departments suggested that they may allow states to further expand access to STLDI plans by seeking to allow eligible individuals to use the Federal premium subsidies to purchase a STLDI plan via a Section 1332 Waiver. Some states have existing laws that apply and include requirements such as; offering requirements, mandatory coverage of state mandates, duration limitations, pre-existing conditions requirements, minimum MLRs Fall Webinar Series: AHP/STLDI

State Activity: STLDI Fall Webinar Series: AHP/STLDI

State Activity: STLDI Fall Webinar Series: AHP/STLDI

Q & A If you have additional questions, feel free to pass them along after the webinar by emailing healthpolicynews@pcgus.com. Fall Webinar Series: AHP/STLDI

Contact us Margot Thistle, JD Lisa Kaplan Howe, JD Senior Consultant Senior Advisor lkaplanhowe@pcgus.com Margot Thistle, JD Senior Consultant mthistle@pcgus.com Fall Webinar Series: AHP/STLDI