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This update is intended to make you aware that a federal judge has now ruled that key parts of the DOL’s final rule on AHPs are invalid. Under this 2019 ruling, small groups, individuals, and sole proprietors are not permitted to together to gain the buying power of a large group for purposes of purchasing health insurance under the AHP rule. The 2019 court ruling now effectively puts a hold on development of AHPs in all states, even those states that were open to implementation of the AHP rule. These states may now need to unwind any prior AHP related approvals. In 2017, President Trump signed an executive order directing the DOL to consider issuing regulations that would permit more employers to form AHPs as a way to expand access to more affordable health coverage. The DOL was specifically instructed to consider expanding when an AHP may be treated as a single plan under the Employee Retirement Income Security Act (ERISA). Accordingly, the 2018 AHP rule was issued. An AHP is a type of group health plan that is sponsored by a group or association of employers (instead of a single employer) to provide health coverage to employees of the AHP’s members. By forming AHPs, small employers can avoid certain Affordable Care Act (ACA) reforms that apply to the small group market. However, in exchange for lower premiums, AHPs may cover fewer benefits. Because AHPs are also regulated at the state level, the availability of these plans depends on each state’s regulatory approach. The DOL’s Employee Benefits Security Administration (EBSA) disagrees with the 2019 court ruling on AHPs and is considering all available options in consultation with the Department of Justice including the possibility of appealing the decision and the possibility of requesting that the court stay its decision pending an appeal. Currently, the DOL has not reached a decision on how to proceed. The 2019 AHP court ruling has effectively put a hold on development of AHPs in all states.
This update is intended to make you aware that a federal judge has now ruled that key parts of the DOL’s final rule on AHPs are invalid. Under this 2019 ruling, small groups, individuals, and sole proprietors are not permitted to together to gain the buying power of a large group for purposes of purchasing health insurance under the AHP rule. The 2019 court ruling now effectively puts a hold on development of AHPs in all states, even those states that were open to implementation of the AHP rule. These states may now need to unwind any prior AHP related approvals.
In 2017, President Trump signed an executive order directing the DOL to consider issuing regulations that would permit more employers to form AHPs as a way to expand access to more affordable health coverage. The DOL was specifically instructed to consider expanding when an AHP may be treated as a single plan under the Employee Retirement Income Security Act (ERISA). Accordingly, the 2018 AHP rule was issued.
An AHP is a type of group health plan that is sponsored by a group or association of employers (instead of a single employer) to provide health coverage to employees of the AHP’s members. By forming AHPs, small employers can avoid certain Affordable Care Act (ACA) reforms that apply to the small group market. However, in exchange for lower premiums, AHPs may cover fewer benefits. Because AHPs are also regulated at the state level, the availability of these plans depends on each state’s regulatory approach.
The DOL’s Employee Benefits Security Administration (EBSA) disagrees with the 2019 court ruling on AHPs and is considering all available options in consultation with the Department of Justice including the possibility of appealing the decision and the possibility of requesting that the court stay its decision pending an appeal. Currently, the DOL has not reached a decision on how to proceed.
The 2019 AHP court ruling has effectively put a hold on development of AHPs in all states.