Last month, the Department of Labor (DOL) proposed rescission of the 2018 association health plan (AHP) regulations. AHPs are designed to allow small employers to band together to achieve cost-effective health insurance availability.
In announcing the proposed rescission, DOL said the rules are “not consistent with the best reading of the statutory requirements governing group health plans.” Prior to the 2018 rule, a valid AHP had to demonstrate a “commonality of interest” among participating employers. The 2018 rule expanded on “commonality of interest” to permit working owners without common-law employees to participate in an AHP. However, a 2019 District of Columbia District Court decision overturned key parts of the regulation, including the expanded commonality of interest section that permitted working owners without employees to participate in the AHP.
DOL now says a rescission of the rule is necessary, even though the agency had issued limited new guidance and a nonenforcement policy as a result of the court’s ruling. New guidance is needed, DOL said, to “resolve and mitigate uncertainty” about AHP rules, and to align AHP rules with ERISA’s “text, purposes, and policies.”
The law authorizing AHPs was designed to make more affordable group health insurance accessible to smaller employers. However, the uncertainty over the implementing regulations has made AHP use less robust than had been anticipated.
Prospects: New proposed regulations on the rules governing AHPs are likely in the relatively near future. While the new regulations are likely to be less sweeping than the rescinded rules, in terms of eligibility to participate in AHPs, they still could result in an expanded AHP market
NAIFA Staff Contact: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.