U.S. Department of Labor Issues Rule to Expand Association Health Plan Eligibility

 

By Justin Storch June 29, 2018
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Last week, the U.S. Department of Labor (DOL) issued a final rule titled Definition of "Employer" Under Section 3(5) of ERISA—Association Health Plans, which expands the ability for small employers to join together as a group or association to be treated as the "employer" sponsor of a single multiple-employer "employee welfare benefit plan" or "group health plan" under the Employee Retirement Income Security Act (ERISA). 

In addition to the groups and associations that are already able to provide association health plans (AHPs) under existing DOL rules, employer groups or associations will be bona fide under the new rule if they are 1) entities in the same industry or profession, regardless of where those entities are located or 2) unrelated entities in the same state or metropolitan area. Additionally, individuals who are self-employed ("working owners") can create bona fide groups or join other groups or associations for the purpose of providing AHPs. 

The final rule is scheduled to become effective on August 20, 2018, with the following applicability dates for AHPs:

  • On September 1, 2018, new fully insured AHPs can be established.
  • On January 1, 2019, self-insured AHPs complying with the department's pre-rule test can be established.
  • On April 1, 2019, new self-insured AHPs formed pursuant to the final rule can be established.

However, the final rule is likely to face legal challenges, as the attorneys general of New York and Massachusetts have announced their intent to sue the DOL over the final rule and could seek a temporary injunction prior to the August 20 effective date.

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