Benefit Requirements for Association Health Plans

Overview of Benefit Requirements for Association Health Insurance

Part of the appeal of association health plans is its freedom from the benefit requirements of the Affordable Care Act. However, this freedom does not mean that association health plans do not have any requirements with respect to benefits. Benefit requirements do exist for these plans but there are narrower in scope than the Affordable Care Act and they result from a variety of different regulations.

Federal Benefit Requirements

Association health plans are governed by multiple regulations at the federal level. These regulations include sections of:

• The Employee Retirement Income Security Act of 1974 (ERISA)
• The Health Insurance Portability and Accountability Act of 1996 (HIPAA)
• The Civil Rights Act
• The Women’s Health and Cancer Rights Act
• The Public Health Service (PHS) Act
• The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
• The Genetic Information Nondiscrimination Act
• The Affordable Care Act
• The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

These various regulations require large group association health plans to:

• Cover pre-existing conditions for any health plan benefit that corresponds to an Essential Health Benefit
• Cover government-selected preventive care services with no out-of-pocket costs
• Prohibit annual and lifetime spending limits for any health plan benefit that corresponds to an Essential Health Benefit
• Cover pregnancy, childbirth, and related maternity and newborn medical conditions in a manner similar to other medical conditions insured under the health plan
• Cover hospital stays of at least 48 hours in connection with childbirth & 96 hours for a caesarian birth
• Have internal and external appeals processes regarding benefit determinations
• Prohibit benefit waiting periods beyond 90 days
• Comply with COBRA obligations allowing participants to continue in the health plan despite termination or reduction in hours for 18 to 36 months depending on circumstances
• If the plan includes mastectomy coverage, it must also provide coverage for related services such as breast reconstruction with out-of-pocket costs consistent with other surgical services covered by the health plan
• If the plan includes coverage of mental health care and substance use disorder, it must do so with out-of-pocket costs consistent with other medical services covered by the health plan
• If dependent children are eligible for health plan participation then they retain this eligibility for coverage until they reach their 26th birthday

There are additional requirements that address eligibility for benefits and nondiscrimination obligations.

State-Level Benefit Requirements

Just as is the case for federal regulation, state regulation can require specific benefits for a health plan and also establish criteria those benefits must satisfy.

State-level benefits can differ based on health plan characteristics such as:

• Funding mechanism (i.e. fully-insured or self-insured)
• Whether or not the health plan is a Multiple Employer Welfare Arrangement
• The category of health insurance (e.g. Affordable Care Act plans sold on a government-based exchange)
• Health plan size

Information on state-level health insurance mandates can be found on resources such as “Mandated Health Insurance Benefits and State Laws” from the National Conference of State Legislatures. Third-party insurance specialists can also assist with the determination of state-level benefit requirements.