In a potential policy change that will primarily benefit small employers, the Department of Labor has issued a proposed rule that would amend the definition of an employer under the Employee Retirement Income Security Act (ERISA) to encourage the creation of fully-insured and self-insured association health plans (AHPs). In the rule, DOL proposes to broaden the criteria under which a group can sponsor an AHP by:
- Relaxing the requirement that associations sponsoring an AHP exist for a reason other than providing insurance;
- Easing the requirement that associations share a common interest as long as association members are in the same geographic area; and
- Clarifying that associations operating in the same industry can sponsor AHPs regardless of geographic distribution.
AHPs may be fully insured or can opt to self-insure. Moreover, an AHP that otherwise satisfies the requirements of the proposed rule will not automatically be an ERISA-covered Multi-Employer Welfare Arrangement (MEWA). To address concerns over adverse selection, the proposed rule also makes clear that AHPs may not discriminate on health factors, including claims experience, medical experience or disability. Although AHPs would be exempt from some of the ACA marketplace regulations, plans must still comply with rules pertaining to large employers.
