{"id":7702,"date":"2024-01-18T11:21:32","date_gmt":"2024-01-18T16:21:32","guid":{"rendered":"https:\/\/chirblog.org\/?p=7702"},"modified":"2024-01-18T11:21:32","modified_gmt":"2024-01-18T16:21:32","slug":"proposed-rule-would-roll-back-expansion-of-association-health-plans","status":"publish","type":"post","link":"https:\/\/chirblog.org\/proposed-rule-would-roll-back-expansion-of-association-health-plans\/","title":{"rendered":"Proposed Rule Would Roll Back Expansion Of Association Health Plans"},"content":{"rendered":"\n

The U.S. Department of Labor (DOL) has released a proposed rule<\/a> that would rescind a Trump-era regulation designed to expand the formation and use of Association Health Plans (AHPs). DOL is also seeking comment on whether to formalize, through rulemaking, pre-existing criteria for the formation of a \u201cbona fide\u201d employee welfare benefit plan. Comments on this proposed rule are due 60 days after it is published in the federal register.<\/p>\n\n\n\n

Background<\/h2>\n\n\n\n

AHPs are governed by state and federal laws and have historically varied significantly<\/a> in size and membership. Some are formed to offer health insurance to individuals, others serve small or large employers, and still others serve a mix of individuals and employers. AHPs that offer benefits to employers generally qualify as multiple employer welfare arrangements (MEWA) under the Employee Retirement Income Security Act (ERISA). MEWAs, particularly those that are self-insured, have a long history of insolvency<\/a> and even fraud<\/a>.<\/p>\n\n\n\n

Indeed, in the preamble to its proposed rule, DOL describes its \u201cextensive experience\u201d with unscrupulous promoters and operators of MEWAs. Compared to traditional health insurers, MEWAs have disproportionately suffered from financial mismanagement and abuse, leaving enrollees and providers with significant financial liabilities.<\/p>\n\n\n\n

Under ERISA, an association can only sponsor an employee health benefit plan when it is acting as an employer. Such plans can only be offered through genuine employment-based arrangements. Longstanding DOL guidance prior to 2018 therefore allowed an association of employers to sponsor a single \u201cmultiple employer\u201d plan only if certain criteria are met. Once the criteria were met, the group would be considered a bona fide single employer group under federal law. On the other hand, if an AHP did not meet these criteria, federal regulators<\/a> would disregard the existence of the association in determining whether the coverage offered was considered individual, small-group, or large-group market coverage.<\/p>\n\n\n\n

Under the Affordable Care Act (ACA), individual and small-group market insurers must meet federal standards<\/a> to which large-group market insurers are not subject. These standards include requirements to cover a set of essential health benefits<\/a> and participate in a single risk pool and risk adjustment programs, as well as limits on using health and age to set premiums. If an association could be considered a bona fide single employer group plan under ERISA, and the size of its membership qualified it as a large-group plan, it would be exempt from these ACA standards.<\/p>\n\n\n\n

In 2018, the Trump administration sought to expand the number of AHPs that could qualify as single employer plans (and thus become exempt from ACA individual and small-group market standards). The 2018 federal rule loosened the criteria for the circumstances under which a group or association would be considered an \u201cemployer\u201d under ERISA. However, in 2019 the U.S. District Court for the District of Columbia in New York v. Department of Labor <\/em>set aside much of the 2018 rule and remanded it to DOL. Although the Trump administration appealed that ruling, the appellate court has stayed action in the case while the DOL reassessed its rulemaking.<\/p>\n\n\n\n

Over four and a half years later, DOL is now seeking to rescind the 2018 regulation in its entirety.<\/p>\n\n\n\n

Pre-2018 Policy On AHPs<\/h2>\n\n\n\n

Before publishing its 2018 regulations, DOL had, largely through sub-regulatory guidance, distinguished between bona fide single employer groups under ERISA and arrangements that would be considered state-regulated private health coverage subject to state and federal insurance rules. The Department had three criteria that had to be met for a group or association of employers to be considered a single employer group:<\/p>\n\n\n\n