As a reminder, President Trump signed an Executive Order in October of 2017 allowing what has come to be known as Pathway 2 Association Health Plans (AHP).  TranscendAHP follows the Pathway 2 regulations that allow sole proprietors and companies within a set geographic boundary to form an AHP.  Following the Executive Order, there were a number of procedural steps that concluded in June of 2018, with the Department of Labor issuing final regulations for Pathway 2 AHPs.  Following these regulations, TranscendAHP launched in late 2018, with the first effective date of January 2019.

Fast-forward a couple of months to March 28, 2019.  This is the date that the U.S. District Court for the District of Columbia ruled against the Pathway 2 regulations in the State of New York v. Department of Labor case, resulting in the vacating of Pathway 2 regulations.   What followed was an Advisory Statement from the Department of Labor that did two things.  First, it provided a non-enforcement or safe harbor that allows currently enrolled sole proprietors and small businesses that are enrolled in an AHP to remain enrolled through the end of 2019.  Second, it advised that no new sole proprietor or company enrollments be allowed, although new enrolled employees to current plans are allowed.  Based upon this Advisory Statement, Transcend suspended all sales activities.

More recently, on behalf of the Department of Labor, the Department of Justice has appealed this decision and the appeal is on an expedited timeline.  That expedited timeline asks the Court to rule by the end of September, in order to allow sole proprietors and small business currently enrolled in an AHP time to make alternative coverage arrangements. 

Transcend Association has also joined forces with other AHPs across the country in a coalition supporting AHPs.  The Coalition to Protect and Support AHPs has filed an Amicus Brief (Friend of the Court brief) outlining our views on AHPs and the lawsuit brought by 11 Attorney Generals, mostly from coastal states that support the Affordable Care Act.  These AGs see AHP as an end-run around the Affordable Care Act. The 11 States and D.C. suing to invalidate the final AHP regulations already prohibit certain types of AHPs from forming in their State.  The result is 11 states and D.C. dictating to the other 39 states what insurance plans can and cannot operate in their states. These 11 states and D.C. are effectively taking away affordable and quality health insurance from people who do not even live in their states.

Based upon conversations with many members of Michigan’s Congressional Delegation, the Department of Labor, and others in Washington D.C. familiar with the case, Transcend anticipates one of a small handful of outcomes:

  • The Appeals Court overturns the District Court ruling – if this happens, Transcend and other Pathway 2 AHPs can resume selling activities.
  • The Appeals Court upholds the District Court ruling – in this case, Transcend must consider alternative structures, including the possibility of pivoting to a Pathway 1 AHP.
  • The Appeals Court modifies the ruling – in this case, and dependent upon the level of modification, Transcend will be forced to adjust either what types of companies are eligible to enroll, what products are offered, or how products are priced.
  • The Appeals Court does not act in a timely manner and, as a result, the Department of Labor extends the non-enforcement/safe harbor timeline into 2020.

The problem with all of this is that no one knows what direction the Court may take or, for that matter, when the Court will issue its ruling.  Again, the appeal is complete and the Amicus Briefs have been submitted, but when the Court will rule is as cloudy as what the Court will rule.  Stay tuned.

Last, there has been legislation introduced in both the U.S. Senate and the U.S. House of Representatives that would codify the Department of Labor regulations of Pathway 2 AHPs into law.  The legislation in the Senate is S. 1170 sponsored by Sen. Mike Enzi (R) Wyoming and H.B. 2294 sponsored by U.S. representative Tim Wahlberg (R) Michigan.  Transcend does not expect this legislation to help in the short run, but it would be great if the regulations were turned into law. 

Again, stay tuned and as things become clearer, Transcend will communicate with our members, their agents, and our affiliates.

Over the past month, there was a court ruling as well as a new Department of Labor (DOL) statement regarding association health plans (AHP). TranscendAHP is in full compliance with the Department of Labor (DOL) regulations, however on March 28, 2019, a federal court ruling stated that AHPs are not in compliance with ERISA standards. The latest DOL Advisory Statement details were then released on April 29, 2019. From this Statement, it is clear that groups currently enrolled in TranscendAHP plan will continue to have coverage through the year (December 31, 2019). The appeal is being expedited with a possible conclusion as soon as September.

During the remainder of the plan year, you and your members will not experience interruption in coverage.

Transcend is working closely with Blue Cross® Blue Shield® of Michigan to determine a recommended strategy prior to your January renewal. As more information becomes available from either the DOL or around the renewal strategy, you will receive additional communications.

You are highly encouraged to share this information with your employees who are enrolled in TranscendAHP. If you have additional questions you are encouraged to contact your health insurance agent.

You may have read that late Thursday, March 28, 2019, the United States District Court for the District of Columbia ruled that the efforts of the Trump Administration to make health insurance more available and more affordable for small businesses through Association Health Plans do not align with ERISA standards. Along with the Transcend Association attorney, the staff at Blue Cross® Blue Shield® of Michigan and our contacts at the Department of Labor, we are reviewing this ruling and its impact on TranscendAHP. Please click here to view what the Department of Labor’s stance. According to their site: “The Administration will continue to fight for sole proprietors and small businesses so that they can have the freedom to band together to obtain more affordable, quality healthcare coverage.” This means it is business as usual for TranscendAHP and its members.

Transcend is a huge success for Michigan small business owners with hundreds of companies and thousands of their employees enrolled. Transcend has opened up coverage opportunities to sole proprietors and small business owners who did not previously offer health insurance coverage, helping them save thousands of dollars on their health insurance purchase.

Transcend Facts:

  • Transcend is a 501 c 6 non-profit association open to small business owners, including sole proprietors, with fewer than 50 enrolled employees.
  • TranscendAHP began offering coverage January 1, 2019
  • Transcend has been endorsed by over 20 chambers of commerce and trade associations across Michigan for their members.
  • TranscendAHP coverage is offered on a fully-insured basis from Blue Cross Blue Shield of Michigan and Blue Care Network. Enrolled companies have 20 health plan options to choose, all of which were selected from the Blue Cross and Blue Care Network large group menu of products. These plans meet the Essential Health Benefit requirements of the Affordable Care Act and offer deductibles starting at $250.00.
  • The plans are guarantee issue.
  • Nearly 200 sole proprietors have found TranscendAHP to be the right option for themselves and their families.