California outlaws association health plans over fraud and insolvency concerns.
Recently, California became the first state to pass legislation that prohibits a recent Trump expansion of a Labor of Department regulation. Under this new state law, sole proprietors are prohibited from joining association health plans. These plans allow small businesses (including self-employed individuals and independent contractors) to join together and purchase group health insurance.
According to Senator Dr. Ed Hernandez, who sponsored the legislation, the Department of Labor’s new regulations were an “assault” on the Affordable Care Act. He noted that the legislation was meant to keep California healthcare laws consistent and in-line with the Affordable Care Act’s rules.
The passing of this state legislation must also be considered in the context of similar plans that caused trouble for the state in the past. Prior to the enactment of the Affordable Care Act, there were health care plans known as multiple employer welfare arrangements. From 2000 to 2002, these plans left 200,000 without coverage and resulted in $252 million in unpaid medical bills. So, California’s prohibition of association health insurance plans can be seen as the state’s attempt to avoid rampant fraud and insolvency.
California is not the only state blocking association health plans. Connecticut, Massachusetts, New York, Oregon, and Pennsylvania have also enacted barriers against these plans.
This is why the State of California prohibited association health insurance plans. Do you have additional questions about your health insurance coverage? If so, contact the experts at Randy Jones Insurance Services in Pleasanton, California. We are ready to assist you with all your coverage needs today.