The Biden Administration has made healthcare a key pillar of it’s first 100 days in office. On January 28th, the president announced an Executive Order with significant impacts on health care so we wanted to put together a quick summary with what you need to know.
Specifically, groups with association health plans will want to be discussing this Executive Order with their benefits advisor and watching for future legislative and regulatory action that may impact their group insurance benefits.
Here’s a direct link to the Executive Order as published on January 28th 2021.
Special Enrollment Period for ACA Marketplace Health Insurance
The Secretary of Health and Human Services is opening a Special Enrollment Period for the ACA exchanges from February 15th to May 15th. There are 36 states served by the federally facilitated marketplace and California is one of them.
Covered California is one of the state marketplaces opening the exchanges for enrollment beginning on February 1st, and it will close on May 15th.
Review of Existing Healthcare Policies
Agency heads including the Secretary of the Treasury, Secretary of Labor, the Secretary of Health and Human Services, and the heads of other executive departments and agencies related to healthcare will be reviewing policies relating to the following areas:
Pre-existing conditions, including COVID-19 complications
Waivers that reduce coverage
Barriers to access
Affordability and financial assistance of coverage
Policies or practices that may undermine marketplace health insurance or individual, small group, and large group markets
This last point calls for additional discussion as it relates to employer-sponsored health insurance.
Possible Effects on Association and Group Health Insurance of the Executive Order
Employers who choose to offer health insurance and other benefits to employees may contract with a health insurance carrier to offer coverage, self-fund their coverage, or purchase group insurance through an association plan, typically related to their industry.
The availability of association plans can vary widely throughout the country based on local market and state law. California, for example, is less accommodating to association health insurance, while Nevada has been more supportive recently.
One key difference is association plans can typically refuse to offer coverage to groups. As a result, association plans may take relatively healthy groups and members from carrier risk pools.
Conversely, health insurance carriers cannot deny coverage to companies for the most part and sometimes have limited ability to adjust their prices to match the risk of a group, especially in the small group space. This dynamic can lead to small and large group risk pools becoming relatively less healthy and more costly compared to those of the association plan.
This can negatively affect remaining groups when the health insurance carrier must raise premiums to account for the new dynamics of its risk exposure.
Because health insurance regulation is strongly correlated with the politics of each state, there is variance in how each state approaches association plans. And just as we’ve seen California take action to limit the availability of association plans, it appears from this Executive Order that the Biden Administration may broadly curtail the use of these plans.
You should keep in mind that if your group is currently offering benefits through an association, say the “Pawnee Hospitality Industry Association,” any adverse action that would preclude the association’s offer of coverage cannot affect existing plans and coverage.
Rather, a plan may no longer be offered or available at your renewal or a future date. If this were to happen, your employee benefits advisor can assist you in assessing other options for coverage appropriate for your employees.