DOL Releases Final Rule Governing Association Health Plans

Author: David B. Weisenfeld, XpertHR Legal Editor

June 22, 2018

The US Department of Labor has released a final rule governing association health plans (AHPs) that aims to help small businesses and their employees. The new rule provides an added mechanism for meeting the definition of employer under the Employee Retirement Income Security Act (ERISA) and could affect an estimated 3.2 million enrollees in the Affordable Care Act (ACA) individual and small group markets.

Secretary of Labor Alex Acosta said in a statement, "AHPs are about more choice, more access, and more coverage," adding that the new rule would help working Americans and their families purchase quality, affordable health coverage. But the final rule is drawing criticism from ACA supporters.

It represents a follow-up to a pair of executive orders President Trump issued last fall that aimed to weaken the ACA's regulatory structure. The ACA currently bans insurers from basing premiums on an individual's gender or industry and also limits the amount that can be based on one's age. But this final rule allows associations to base an employer's rates on gender or age, as well as the industry of its workers.

The new rule does not affect previously existing AHPs. Such plans can continue to operate as before and elect to follow the new requirements or to cover the self-employed. New plans can also form and decide whether to follow the old guidance or the new rule.

There will be staggered effective dates for AHPs to comply, including:

  • September 1, 2018, for new and existing fully insured AHPs;
  • January 1, 2019, for self-funded AHPs in existence on or before June 21, 2018; and
  • April 1, 2019, for self-funded AHPs created after June 21, 2018.

These AHPs may have lower premiums, but critics contend that they will also provide fewer benefits. But supporters say it will make insurance more affordable for small businesses.