NY DFS Regulation of Association Health Plans

In a recent memo from NY’s Department of Financial Services, it was made clear that NY would not allow new Association Health Plans that were recently allowed by the Federal Department of Labor to exist in NY except under very limited circumstances.

While the Department of Labor has made changes to allow owner only small groups and individuals to form Association Health Plans, New York State will continue to prohibit small group or individual associations from forming AHP’s because NY insurance law “takes precedent over the Department of Labor regulations.” Any limited AHPs that would be allowed would have to follow strict NY DFS laws and regulations currently required in NY for insurance coverage.

Some of the reasoning NY cited in the past is that without strict oversight  of AHPs, consumers will be hurt as there would be no regulation of the coverages required to be included with these plans. Members would be attracted to the lower costs, only to find out when they need coverage that certain services or conditions would not be covered. This was a common occurrence in the early 1990’s when plans like this were more prevalent, before NY adopted it’s current laws that limited these sort of plans for that very same reason.

In addition, NY is worried many relatively healthy members would move to these plans as they don’t utilize services, and those who have more medical issues would be left on the current ACA approved plans that are required to cover all essential health benefits under the ACA. This would ultimately lead to higher rates in the ACA marketplace, causing a failure of the entire NY healthcare system.

I hope to see some movement for approval for very small employers who as an owner only business are not allowed to join small group health plans and are forced into the individual marketplace where carriers are limited and prices high. This would give them a new option group coverage that is lacking today.

Please check back with us for updates on this topic and many others. For more detailed information on this topic, please see the notice given by NYSDFS – Click Here