ACA UPDATE: OCI Guidance on AHP Rule

Compliance, Employee Benefits

On May 2, 2019, the Office of the Commissioner of Insurance – Wisconsin (OCI) issued a bulletin regarding the status of Association Health Plans (AHPs). The bulletin follows the recent guidance issued by the federal Department of Labor (DOL) regarding the status of these plans in relation to a recent US District Court decision striking down important provisions of the AHP rule. As such, the future of AHPs is uncertain.


In late 2017, President Trump issued an Executive Order that requested a broadening of the existing rules regarding AHP. The DOL responded by creating and issuing a final AHP rule on June 28, 2018. The final rule expanded the definition of what types of organizations can participate in an AHP. This new definition of “bona fide associations” includes unrelated employers in a certain geographic area, allows AHPs to include “working owners” in the same trade, industry or line of business and allows AHPs to sponsor one large employer group plan thereby allowing small employers (under 50 employees) to avoid being rated individually under the small group plan rules of the Affordable Care Act (ACA).

This rule was challenged in court and on March 28, 2019, the US District Court for the District of Columbia granted a judgment without a trial for a group of states opposing the new rule. The Court vacated the expanded definition of a “bona fide association” and also vacated the “working owner” provision. The DOL is appealing this judgment.


After the recent court judgment, the status of the new AHP rule is uncertain.  Until further decisions, future AHPs will be subject to the old DOL AHP rules which are more stringent and do not allow working owners to participate.  The DOL interim guidance confirms that no enforcement action will be taken against AHPS formed under the new rule but prior to the court ruling.  In addition, until further notice the DOL will require that any renewals of these plan will include conformity to the individual employer size market requirements (small group participants must be rated as an ACA small group).

The Office of the Commissioner of Insurance – Wisconsin (OCI) has reminded insurers who have issued coverage under the new AHP rule that coverage provided prior to the court decision must stay in force and claims must be paid for the full policy term.

If you have questions about the current status of the AHP market, we encourage you to discuss them with your M3 Account Team.

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