Chamber of commerce and trade association health plans are in legal limbo after a federal judge ruled earlier this year that the Trump administration rule allowing them violates the Affordable Care Act.
Some associations in Nevada have stopped allowing new businesses into their health plans out of an abundance of caution as the case goes up on appeal, while others have chosen to press forward. The heterogeneous response is the result of the fact that the court’s decision only affects some association health plans and the state Division of Insurance, which oversees the plans, doesn’t know which ones those are.
In May, the division released a statement saying that so-called Pathway 2 association health plans — which generally include chamber of commerce plans and those that cover self-employed individuals — cannot allow new employers to join, based on guidance from the federal Department of Labor. But a division spokeswoman now says the division is in a “holding pattern” as it confers with the Department of Labor on how to proceed; until then, the division doesn’t plan to take any enforcement action against Pathway 2 plans.
Since 2018, 17 association health plans have filed with the Division of Insurance in Nevada, including several chambers of commerce and a number of trade associations. But the information collected by the division from those association health plans doesn’t delineate between Pathway 1 and Pathway 2 plans, making it difficult to determine which plans shouldn’t be enrolling new employer members.
“Therefore the Division cannot currently distinguish the AHPs pathway using only [the] information [submitted],” the division said in the statement. “The Division is working with the Department of Labor for guidance, in order to figure out how to move forward.”
The Department of Labor, for its part, has offered resources to help plans informally confirm whether they fall under Pathway 1 or 2 and also said it will write an official advisory opinion for any plan that requests one.
The surge of association health plans in Nevada came after the Department of Labor released a rule in June 2018 exempting the plans from providing the essential health benefits required under the Affordable Care Act, allowing companies in different industries in the same region to provide coverage together and permitting the enrollment of new sole proprietors. Under previous guidance, association health plans could only be offered by trade and industry groups in the same geographic area — the Pathway 1 plans that are unaffected by the court’s decision.
The Las Vegas Metro Chamber of Commerce, which had offered an association health plan for nearly 30 years before the Affordable Care Act went into effect, was one of the earliest to take advantage of the new Trump administration rule in Nevada and decided to offer the plan not just to small businesses but sole proprietors, too. Chamber CEO Mary Beth Sewald was even singled out by President Donald Trump at a tax reform roundtable in Las Vegas last year for her efforts to reinstate a chamber health plan.
But in the wake of the Division of Insurance’s May guidance, the chamber has halted enrolling new businesses into its association health plan. Chamber spokeswoman Cara Clarke, in an interview earlier this summer, said that businesses can continue to enroll new employees as they come online but no new businesses will be allowed to join the chamber’s plan.
“Association health plans is something we’re really committed to and we’ll continue to work on this to see if there’s a way to bring them back,” Clarke said, pointing to federal legislation that would codify the Trump administration’s association health plan rule.
Another association health plan formed by three chambers of commerce in Southern Nevada that took early advantage of the Trump administration has also paused enrollment of new employer members. Scott Muelrath, president and CEO of the Henderson Chamber of Commerce, said that the association health plans are in “uncharted waters.”
“We believe enrolling right now is a violation of ERISA,” Muelrath said, referring to the federal law that governs association health plans. “We’re having to interpret these rulings based on what we know and based on our counsel and based on our [insurance] carrier. We want to make sure we’re protecting and complying to the best of our ability.”
Other association health plans, including some that have been formed in conjunction with the insurance company Prominence, are pushing forward.
Valerie Clark, president of the insurance brokerage firm Clark & Associates, said that the association health plans she oversees — including those offered by the Nevada Hotel and Lodging Association, Nevada Builders Alliance Association and the Reno-Sparks Chamber — are continuing to enroll new employers. She said that those plans took a more conservative approach in not deciding to enroll sole proprietors, which was one of the focuses of the court’s decision, and have decided to move ahead with enrollment.
“We haven’t had any negative effects from all of that at this point with the programs that I’ve been involved with,” Clark said. “They are proper associations that follow all the rules, that have all the proper paperwork and therefore, so far, we are running very, very well.”
The uncertainty hasn’t stopped other plans from coming on board. The Washoe County Medical Society launched its association health plan this summer with Clark’s help. Executive director Mary Ann McCauley said that the medical society felt comfortable moving forward with its health plan because its members are bound by both common geography and common industry, which would tend to be more indicative of a Pathway 1 plan.
“Interpreting whether or not we’re qualified as a group is easier because we’re pretty well defined,” McCauley said. “As long as [association health plans are] available, we’ll offer it.”