Association Health Plan Rule Rescission

Compliance, Employee Benefits

On April 29, 2024 the U.S. Department of Labor (DOL) released a final rule that rescinds the 2018 Association Health Plan (AHP) regulations that were designed to expand the number of AHPs by loosening the criteria for an association to be considered an “employer” for benefit purposes under ERISA.

You can read M3’s summary of the 2018 regulations here.

The rescission of the 2018 regulations, which essentially allowed groups and self-employed individuals to join for the sole purpose of providing health benefits under one employer group health plan, marks a return to pre-2018 DOL guidance.

The previous guidance is more stringent and has 3 criteria that must be met for an AHP to exist:

  • The group or association has a business or organizational purpose and functions unrelated to the provision of benefits (the “business purpose” standard);
  • The employers share a commonality of interest and genuine organizational relationship unrelated to the provision of benefits (the “commonality” standard); and
  • The employers participating in the benefit program exercise control over the program, both in form and in substance (the “control” standard).

If a group or association meets the criteria, the group or association will be considered a single “bona fide” employer group and will not have to comply with individual or small group insurance requirements.

The rescission also removes the ability of self-employed individuals to participate in AHPs.

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Key Takeaways:

The DOL rescinded the 2018 Association Health Plan rules which allowed groups of employers and self-employed individuals to provide health insurance under one plan without meeting strict business purpose or commonality standards. Employer groups or associations must now meet the more stringent pre-2018 DOL guidance to provide an AHP. If you have questions about AHPs we encourage you to discuss them with your M3 Team.

The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.

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