On April 29, 2024, the DOL announced a final rule to rescind the 2018 Association Health Plan (AHP) rule that created alternative criteria that could be used to determine whether a group or association of employers without a commonality of interest could establish an AHP for the primary purpose of providing benefits. We covered the DOL’s proposed rule in our January 3, 2024, edition of Compliance Corner.
The intention of the 2018 AHP rule, in part, was to increase access to quality health coverage. However, the DOL determined that the rule was inconsistent with the definition of employer under ERISA. The department notes that the rule was never fully implemented and is unaware of any existing AHP formed based on the rule.
The recission will alleviate uncertainty under the rule and marks a return to a facts-and-circumstances approach to determine if a group or association of employers is a bona fide employer group capable of sponsoring an ERISA plan. Criteria include:
AHPs offered by bona fide employer groups remain subject to ERISA and are subject to MEWA regulations, including state-specific MEWA laws.
Employers participating in an AHP should review the rescinded rule to identify whether it continues to meet the pre-rule requirements as noted above.
Federal Register: DOL’s Rescission Rule » Fact Sheet »