The Future of the Affordable Care Act under President Trump: Stakeholders Respond to the Proposed Association Health Plan Rule. Part III: Insurers

By Emily Curran and Sagar Desai

The U.S. Department of Labor (DOL) received over 900 comments on its proposed rule, which aims to promote the growth of Association Health Plans (AHPs) by making it easier for self-employed individuals and small employers to buy coverage through professional and trade associations. The proposed rule suggests relaxing the definition of AHPs so that eligible members can join together to act as a single, large group under the Employee Retirement Income Security Act (ERISA). In doing do, members would be regulated as large-group coverage, and therefore, would be exempt from many of the Affordable Care Act’s (ACA) critical standards, including the provision of essential health benefits and compliance with the risk adjustment program. To learn more about the proposed rule, you can access our brief here.

To understand the potential impact of the proposed rule, CHIR reviewed a sample of comments from state officials, consumer groups, insurers, and business representatives. The first blog in this series summarized reactions from eighteen state attorneys general, while the second blog highlighted concerns from nine consumer and patient advocacy organizations. In this third blog, we summarize comments from ten of the largest health insurers and associations, including:


America’s Health Insurance Plans (AHIP)


Association for Community Affiliated Plans (ACAP)

Blue Cross Blue Shield Association (BCBSA)

Centene Corporation



Kaiser Permanente

UnitedHealth Group

The Majority of Insurers Rejected DOL’s Proposed Changes to the Structure and Membership of AHPs

Definition of employer and eligible participants

Insurers largely rejected DOL’s proposal to expand the definition of “employers” to include “working owners” (those who are self-employed) who have no employees. Under the proposed rule, such “sole proprietors” would be eligible to join an AHP after meeting certain minimal requirements, such as satisfying 30 hours of service to the trade or business per week or 120 hours per month, or having earned income from the business that equals the cost of coverage under the AHP, among other requirements.

Several commentators, including Centene, Kaiser, and AHIP, argued that the definition should not be altered to include “working owners,” claiming the modification would exceed DOL’s regulatory authority, lead to confusion, and negatively impact the existing insurance market. For example, BCBSA explained that the proposal would open the door for the movement of healthy working owners from fully regulated plans into AHPs, undermining the stability of the individual market.

Several insurers specifically opposed allowing former employees or extended family members to be included as eligible participants in AHPs. Kaiser and AHIP echoed Centene’s sentiments that the definition of “eligible participants” is vague and should include only active employees, not merely any individual with a past relationship to an AHP. Many insurers requested that DOL clarify what constitutes a “former employee,” noting that the term could be interpreted to include retirees or employees eligible for COBRA continuation coverage. Humana recommended that the final rule make clear that eligibility is not intended to include such persons.

On the other hand, while Aetna agreed that it likely was not DOL’s intent to allow any former employee of an AHP to remain eligible, it nevertheless recommended that the term include retirees or those under COBRA. The insurer expressed similar concerns as its competitors: that the inclusion of working owners could lead to gaming, damage the risk pool, and create “significant financial instability” within AHPs themselves. However, rather than restrict the definition, it argued that AHPs themselves should be allowed to establish their own eligibility rules, including setting minimum size and participation requirements.

A few insurers recommended that AHPs or any insurer providing coverage to the group should be permitted to validate employment relationships (Humana) or require the submission of documents, including business licenses or customer invoices to verify that individuals have satisfied the definition of being a working owner (UnitedHealth Group).

Commonality of Interest Test

Insurers were united in arguing that the “commonality of interest” test proposed is too broad and should be limited. The current test requires associations to be formed for some purpose other than the offering of health benefits, in order to distinguish them from traditional commercial insurance. Under the proposed rule, the test would be relaxed to allow AHP formation for the sole purpose of offering health coverage, so long as members share commonalities in profession or geography, even if the geographic area spans more than one state.

BCBSA explained that the current commonality of interest test is meant to protect the integrity of the group, by ensuring quality options are available and preventing potential abuse. The association expressed concern that loosening the requirement to a mere geographic similarity could “pave the way for bad actors,” particularly those who might take advantage of the less stringent large group market requirements in order to attract healthier members. It offered the example that, under the proposal, two employers in the same building or geographic area could create an association of “employers located at [description of the specific geography],” calling such an option “redlining taken to an extreme level.” Cigna shared similar concerns that bringing together “disparate groups” would destabilize risk-sharing arrangements.

Insurers asked for clarification as to what rules apply when AHPs span across states. UnitedHealth Group requested guidance on which federal or state laws would control AHPs regarding rating rules and benefit mandates, while Anthem recommended that if the proposal is finalized as-is, DOL should consult with the National Association of Insurance Commissioners to resolve jurisdictional issues.

Some Insurers Asked that Existing AHPs Be “Grandfathered”

A handful of insurers used the opportunity to ask that existing AHPs be “grandfathered,” rather than having to come into compliance with the proposed provisions, particularly the proposed nondiscrimination rules that would prohibit the use of health status as a factor in issuance, rating, or benefit design. UnitedHealth Group noted that allowing existing AHPs to maintain their governing structures, rating methodologies (including their current ability to use claims experience to set premiums for each small business that makes up the AHP), and coverage options would help to reduce disruption in the employer market. Anthem explained that, in many states, large employers have joined bona fide associations to access affordable coverage options and those associations have maintained stable membership over time. The insurer expressed concern that requiring existing entities to conform to new provisions would “upset” their stability and suggested that such plans be permanently grandfathered and thus exempt from the proposed nondiscrimination provision.

Several Insurers Called on DOL to Allow Licensed Insurers to Serve as TPAs for AHPs

Under the proposed rule, the modified definition of “employer” excludes health insurers from controlling or owning an AHP. Both AHIP and Cigna agreed with the definition, believing that members of the association should own the association. However, they argued, along with Aetna, that DOL should permit health insurers to continue serving in their capacity as third-party administrators (TPAs) to self-funded associations. They called on the agency to ensure that providing administrative services to AHPs will not be prohibited, noting that licensed insurers have decades of experience in this area and are well-positioned to help deter fraud, control healthcare costs, design benefits, and develop provider networks. Anthem went a step further, arguing that in addition to providing administrative services, insurers should be permitted to own or control AHPs. The company reasoned that insurers have the capacity to retain large reserves and protect new AHPs from insolvency, offer meaningful provider discounts, and institute antifraud programs, among other abilities.

The Majority of Insurers Cited the Need to Preserve State Oversight Authority

Given AHPs’ history of fraud and insolvency, the majority of insurers expressed concern over the “limited oversight” of AHPs (ACAP) and rejected the proposed rule’s suggestion that DOL might use administrative authority to exempt certain AHPs from state regulations. Centene argued that state oversight should not be limited by the rule and that it is “imperative” for states to have authority over solvency and consumer protections to guard against fraud. Kaiser urged DOL to clearly state that the rule does not preempt state authority over benefits and coverage disclosures, solvency, and abuse, and argued that states are in the best position to protect against fraudulent behavior. Both Anthem and BCBSA then noted that while the President’s FY2019 budget includes additional funding for federal enforcement of AHPs, it is not yet clear whether Congress will appropriate the amount. Until the funds are appropriated, Anthem argued that states should continue serving as the primary regulators of insurers, while BCBSA recommended that the final rule not become effective until oversight is expanded.

Insurers Urged DOL to Allow Sufficient Time for Implementation and to Promote a Level Playing Field

In order to effectively implement the rule and ensure that appropriate laws and guardrails are in place, insurers urged DOL to set the effective date as no sooner than January 1, 2020 (AHIP, Anthem, BCBSA, Centene). AHIP argued that if the proposed rule is largely finalized as-is, the impact on small and individual groups would be significant and state risk pools would be “dramatically altered.” AHIP explained that employers of all sizes would need a 24-month window to enter into benefit contracts, while stakeholders develop actuarial models of the risk pool in order to price appropriately. ACAP then recommended that DOL develop a set of criteria for evaluating the impact of the regulation over the next 2-3 years. Given the lack of data in this area, ACAP argued that the regulation should be evaluated to ensure it is not having a detrimental effect on risk pools, cost, or quality.

Finally, across a range of topics (e.g., bona fide association standards, non-discrimination protections), insurers stressed that DOL should strive to create a level playing field. Cigna cautioned against having “different requirements imposed on different entities offering the same product in the same competitive landscape.” AHIP and Centene argued that all plans competing in the same market should be subject to the same rules, and they recommended that AHPs limit enrollment periods, with members being required to commit to a full year of coverage. Many insurers raised concerns that the proposed rule would threaten the stability of other markets, and recommended that the final rule do more to “avoid creating adverse selection dynamics” (UnitedHealth Group).

A Note on our Methodology

This blog is intended to provide a summary of some of the comments submitted by a specific stakeholder group: health insurers. This is not intended to be a comprehensive report of all comments from health insurers on every proposal in the AHP rule. Future posts in this blog series will summarize comments from business associations and state departments of insurance. For more stakeholder comments, visit

Disclaimer: CHIR is part of a coalition that has submitted a Freedom of Information Act request asking DOL to release critical data and analysis that would support the agency’s capacity to adequately implement its proposed policies and protect consumers.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.