What the Final Rule on Association Health Plans Means for California

Essentially, this ruling will make it easier for small businesses and individuals to "band together" and buy health insurance with fewer regulations. This ruling goes into effect September 1, however it is unknown when plans will actually be operational.

President Donald Trump said the ruling would "result in very low prices, much more choice, much more freedom, including in many cases new opportunities to purchase health insurance. You'll be able to do this across state lines."

As we are all well aware, the State of California does not see “eye to eye” with the federal government on most issues and this is no exception. The impact to Covered California small business and individual plans could be devastating.

Senate Bill 1375 (Hernandez, D-Azusa) has been introduced to ensure self-employed individuals cannot proclaim themselves as “employees” for the sole purpose of joining Association Health Plans. The bill aims to maintain a stable, competitive individual market and to keep Covered California premiums low. In addition, Senate Bill 910 (Hernandez, D-Azusa) would prohibit short-term insurance health plans from being sold in California. The bill passed out of the Assembly Health Committee.

California Insurance Commissioner Dave Jones is also pushing back, pointing out that California law prohibits the formation of any new MEWAS. “Some MEWAS have had a troubling history in California, including cases of MEWA fiscal insolvency, inability to pay consumer claims, and allegations of fraud,” Jones said.

While we cannot predict the future, this opposition to Association Health Plans may mean no changes for most employers in California. We are fortunate that California markets, most notably Northern California are unique, with three HMO’s competing for small business - Kaiser, Western Health Advantage/Canopy Health and Sutter Health Plus.

For larger employers with more than 100 employees, an Association Health Plan may hold appeal. Our Acrisure partner agencies across the county are working with Association Health Plans in the markets where permitted. Through our partners we can help determine if this is an approach that will work for your company.

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