An Update on Association Health Plans

In response to a federal district court decision to set aside portions of the DOL’s Association Health Plan (AHP) rule, a group of Republican senators, led by Senator Mike Enzi (R-WY), introduced the Association Health Plans Act of 2019 (S. 1170) on April 11. The bill would effectively codify the rule in statute.

Like the final rule, the bill contains the following key provisions:

• Establishes criteria under which a group or association of employers will be considered a single “employer” under the Employee Retirement Income Security Act (ERISA) for purposes of sponsoring one group health plan (e.g., permits the formation of AHPs—with the primary, but not the sole, purpose of offering health coverage—based on common geography (city, county, state, or multi-state metropolitan area) or industry, if other criteria are met);

• Allows “working owners” without common law employees to participate in AHPs, if certain conditions are satisfied;

• Does not invalidate any other criteria provided in existing or future advisory opinions that the DOL may use to determine if a group or association of employers qualifies as a single “employer” for purposes of sponsoring a group health plan;

• Notes in its findings that fully-insured AHPs must comply with state benefit mandates and that self-insured AHPs are still subject to state laws governing Multiple Employer Welfare Arrangements (MEWAs);

• Contains nondiscrimination provisions that, among other things, prohibit AHPs from distinguishing between employees of different employer members based on health factors (as defined in the final rule) for purposes of premiums, benefits, terms of coverage, etc.; and

• Staggers applicability dates for establishing AHPs under the new framework:
  • September 1, 2018 – all associations (new or existing) may establish a fully-insured AHP;
  • January 1, 2019 – existing associations that sponsored an AHP on or before June 21, 2018 may establish a self-funded AHP; and
  • April 1, 2019 – all other associations (new or existing) may establish an AHP.

Beyond these provisions modeled after the DOL’s rule, the bill also clarifies that participating in an AHP does not establish a joint employer relationship under federal or state law—a topic that was discussed in the final rule, but not formally incorporated into the DOL’s regulations.

Companion legislation (H.R. 2294) has also been introduced in the House by Representative Tim Walberg (R-MI).