DOL Finalizes Rule Rescinding Expansion of Association Health Plans

The U.S. Department of Labor (DOL) on April 29 finalized a rule reversing a Trump-era regulation designed to expand the formation and use of association health plans (AHPs) without having to comply with all the requirements of the Affordable Care Act (ACA). AHPs are group health plans covering small employers and self-employed individuals in the same or different industries.

The final rule from the Biden administration, which was proposed in December, was issued by the DOL’s Employee Benefits Security Administration after clearing White House review. It will take effect 60 days after its April 30 publication in the Federal Register.

The 2018 rule from the Trump administration that expanded AHPs was struck down by a federal judge in 2019 and was never fully implemented.

The DOL has said the 2018 rule expanded the definition of an AHP in a way that would have allowed some individual and small group health insurance coverage to be treated as large group coverage and “evade critical consumer protections under the Affordable Care Act, which requires coverage of essential health benefits such as emergency and maternity and newborn care.”

Specifically, the rule “established an alternative set of criteria for determining when a group or association of employers is acting ‘indirectly in the interest of an employer’ under section 3(5) of the Employee Retirement Income Security Act (ERISA) for purposes of establishing an association health plan as a multiple employer group health plan, allowing the AHP to evade ACA consumer protections,” the DOL said in a news release back in December.

“Today’s final rule reverses lax criteria the Trump administration finalized that made it easier for a group or association of employers to be treated as the ‘employer’ when offering multiple-employer group health insurance, which effectively allowed more employers to offer health insurance coverage that evades several critical ACA consumer protections,” the DOL said in a statement Monday.

Assistant Secretary for Employee Benefits Security Lisa M. Gomez said the rule is consistent with President Joe Biden’s “directive to improve the comprehensiveness of coverage and ensure that consumers have access to quality coverage that is consistent with federal law.”

AHPs, which are governed by state and federal laws, have historically varied significantly in size and membership. Some are formed to offer health insurance to individuals, while others serve small or large employers. AHPs can also serve a mix of individuals and employers. Although many groups were critical of the 2018 AHP rule, proponents of AHPs say they can give small businesses and self-employed business owners the same benefits of better bargaining for lower prices and better coverage that large employers have.

House Education and the Workforce Committee Chairwoman Rep. Virginia Foxx, R-N.C., said in a statement that the final rule limits workers’ health care options and puts high-quality care out of their reach.

“The administration’s final rule fails on every mark, moving us backwards, not forwards, in providing Americans more ways to get high-quality, low-cost health care,” she said.