On June 19, 2018, the U.S. Department of Labor (DOL) released its final rule on association health plans (AHPs). The final rule generally is consistent with the proposed rule published on January 5, 2018, and allows employers and sole proprietors to band together on the basis of geography or industry.
Existing DOL regulation on AHPs remains in effect, and such plans may continue to rely upon the existing, stricter commonality rules outlined in the prior regulation. The final rule provides an additional mechanism through which groups or associations may meet the definition of “employer” under the Employee Retirement Income Security Act (ERISA). Under the final rule, organizations that establish an AHP must have “control” over the AHP and must have a substantial business purpose other than providing health insurance, even if providing health insurance is the primary purpose of the organization. The preamble to the final rule makes clear that the rule does not change existing ERISA preemption rules with regard to state regulation of AHPs, through either regulation of insurance carriers and policies or direct regulation in the case of self-insured AHPs.
The final rule imposes staggered effective dates for AHPs to comply:
- September 1, 2018, for new and existing fully insured AHPs;
- January 1, 2019, for self-funded AHPs in existence on or before June 19, 2018;
- April 1, 2019 for self-funded AHPs created after June 19, 2018.