Business groups are fighting back against the Department of Labor’s (DOL’s) proposed rescission of the rules governing association health plans (AHPs). The groups say AHPs are a way to make affordable health insurance accessible to small businesses and self-employed individuals.

The Trump Administration-era AHP rules, parts of which were struck down in 2019 by the U.S. District Court for the District of Columbia expanded the definition of “employer” to allow self-employed individuals and small employers without a common industry connection to join an AHP and thus qualify to provide health insurance to their workers through the AHP. In December 2023 DOL proposed rescinding the entire rule.

According to the comments filed in response to the proposed rescission, many businesses and the groups that represent them said AHPs are a way to provide more affordable health coverage for their workers. Opponents, however, noted that the rules circumvent the individual and small plan protections contained in the Affordable Care Act (ACA), such as the requirement that small business and individual health coverage contain minimum essential benefits (as delineated in the law). Large employers—which would include AHPs—are not subject to the minimum essential benefits (and other) ACA rules.

The National Federation of Independent Business (NFIB) commented that the proposed rescission of the AHP rule “shows continued hostility to the efforts of small businesses to help their employees obtain affordable, flexible and predictable health benefits.” The National Association of Realtors told DOL to “take the next step and propose a constructive and coherent national policy to restore small business access to comprehensive and affordable health benefits through AHPs.”

Opposition seems to be focused on the consumer protections that are required for small business and individuals under ACA rules. Also commented on by opponents of the original AHP rule was the potential harm to ACA health insurance affordability and availability if AHPs could drain off healthier potential participants from the pool of ACA health insurance prospects. Among the opponents are a number of Democrats on the House Committee on Education & the Workforce. They said the Trump-era rule would “be harmful to millions of consumers, including people enrolled in AHPs as well as those left behind in the traditional insurance market.” GOP supporters of the rule, however, say that AHP health insurance coverage usually includes coverage of minimum essential benefits, and that there is not “any sort of end run” around ACA’s consumer protection rules.

Prospects: It is probable that DOL will propose new AHP rules if the agency is successful in its effort to rescind the current rules. However, resolution of the issue is still weeks if not months or even years into the future.

NAIFA Staff Contact: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.