Final Rule Rescinds 2018 Association Health Plan (AHP) Rules

Back in 2018, agency rules established looser criteria under ERISA for determining when unrelated employers may join or create a health plan without creating a multiple employer welfare association (MEWA). This rule is known as the 2018 AHP rule.

The 2018 AHP rule allowed the AHP to be treated as a single plan for ERISA purposes rather than treating each participating employer as a separate ERISA plan sponsor.

A court decision in 2019 invalidated portions of the final rule, removing the expanded AHP option. However, the Department announced a temporary safe harbor from enforcement that allowed those using the 2018 AHP rules to wind down by the end of the applicable plan year. This has long since expired meaning there shouldn’t be any 2018 AHP plans in existence at this time.

Recently, the agencies provided regulations that formally rescind the 2018 AHP rules and confirm that in most cases, when unrelated entities offer shared benefits via a multiple employer welfare arrangement (MEWA), the coverage available for a participating member will be based on that particular member’s size, and each participating member will be seen as sponsoring their own separate group benefit plan(s).

The DOL states that they are “not aware of any parties currently relying on the 2018 AHP Rule”. Because of that, it’s expected that these rules will not have any impact, and employers participating in established, industry based AHPs should be okay under the pre-2018 rules.

The formal repeal of the 2018 AHP rule reinforces that it is generally difficult for unrelated employers to band together to offer coverage to their employees.

The DOL’s announcement can be found here.

The text of the final regulations can be found here.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.