Labor Department Releases New SMB Healthcare Rules

This week, The U.S. Department of Labor (DOL) released revised rules for small businesses (SMBs) on use of association health plans following an executive order by the White House.

Reports in CNN said President Donald Trump’s efforts to reduce healthcare costs for some small businesses moved forward with the DOL’s rules that enable SMBs and self-employed professionals to buy health insurance collectively. These professionals can group together based on industry or location, reports noted.

The rules, which allow association healthcare plans (AHPs) to be regulated the same way as large employer policies, are part of the Trump administration’s efforts to dismantle the Affordable Care Act (ACA) and provide small businesses with alternatives to the program. According to CNN, the executive order could threaten some customer protections under ACA.

“Many of our laws, particularly Obamacare, make healthcare coverage more expensive for small businesses than large companies,” said Labor Secretary Alexander Acosta when the rules were announced. “AHPs are about more choice, more access and more coverage.”

Reports said the AHPs would be cheaper, but likely provide less coverage to employees. Opponents of the initiative argue that they also allow these associations to base employer rates on worker age, gender and industry, whereas the ACA prohibits healthcare insurance providers from basing premiums on these factors, — critics say AHPs women are likely to pay more than men for insurance.

The AHPs would not allow premiums to be based on preexisting health conditions or on employee health status, however.

Analysis from Avalere Health predicted that an estimated 3.2 million employees currently enrolled in Obamacare could shift their coverage to new AHPs. That shift may lead insurers to raise rates by up to 3.5 percent in the individual market, and by to 0.5 percent on the small business exchange for Obamacare.