DOL Publishes Proposed Rule to Rescind Definition of Employer – Association Health Plans; Comments Due February 20

The Department of Labor's (DOL) Employee Benefits Security Administration (EBS) released a proposed rule rescinding its 2018 rule, “Definition of Employer – Association Health Plans.”

The 2018 rule expanded the definition of association health plans (AHP) to allow some individual and small group health insurance coverage to be treated as large group coverage so as not to be covered under the Affordable Care Act (ACA) requirements of essential health benefits such as emergency and maternity and newborn care. 

Specifically, the 2018 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 AHP as a multiple employer group health plan, allowing the AHP to evade ACA consumer protections.

The proposed rule to rescind in full the 2018 rule aims to:

• resolve any uncertainty regarding the status of the standards established under the rule,
• allow for a reexamination of the criteria for a group or association of employers to be able to sponsor an AHP, and
• ensure that guidance being provided to the regulated community is in alignment with ERISA’s text, purposes and policies.

The DOL had not fully implemented the 2018 rule and is not aware of any existing AHP formed based on the rule.

Comments are due February 20, 2024.