DOL Issues Additional Guidance on AHP Final Rule

The fate of Association Health Plans (AHPs) is still up in the air as the Department of Labor (DOL) litigates against the State of New York regarding the DOL’s Final Rule on AHPs. These regulations were designed to expand the criteria that allowed employers to come together to form AHPs and be treated as a single plan under ERISA.

A Federal District Court recently issued a ruling siding with the State of New York and ruling against certain provisions of the Final Rule. The DOL has chosen to appeal this ruling. Meanwhile, the DOL has issued additional guidance for businesses and plan providers to follow while waiting on an appeal ruling. This guidance, in short, allows those already participating in AHPs to keep their current plans in place until either the end of the year or the end of the contract term, whichever is later.

  • Clarification on “Employer:” Preexisting guidance on Pathway 1 AHPs are unaffected by the Federal Court’s ruling. These AHPs do not allow plan participation by working owners. Further, business commonality to form the AHP must be for a stronger reason than mere geography. Both of these elements are aspects of the Pathway 2 AHPs that were ruled against by the court.
  • Enrolling New Employers: Currently, Pathway 2 AHPs that were set up pursuant to the Final Rule on AHPs and before the court’s ruling can continue to exist but may not market to or enroll new employers. Businesses already enrolled in a Pathway 2 AHP can enroll new plan participants so long as their enrollment is otherwise consistent with the plan’s terms.
  • Enforcement Relief: Businesses currently providing Pathway 2 AHPs to employees can continue with their current plan until the end of the year or the remainder of the contract, whichever comes later. HHS has issued a corresponding enforcement policy.
  • Pathway 1 AHPs: AHPs that will still be legal even if the court’s ruling is upheld on appeal are encouraged to look at other existing advisory opinions for guidance on what types of employers can form associations. These plans may want to consider an informal phone call with an EBSA specialist rather than going through the formal advisory opinion process.

Certainly, this situation will continue to evolve as legislation is passed and the case passes through the court system. Employers who are taking advantage of AHPs for their teams, or are interested in doing so, should pay close attention to these changes.

For help monitoring the legislative and regulatory landscape, deciding what benefit plans are best suited for your business, and implementing and updating the plans as needed, reach out to the experienced team at Hall Benefits Law. We not only help employers comply with the law, we pay attention to upcoming changes that may impact our clients, and we help them take steps to stay in compliance or take advantage of changes in the law. Learn more by calling 678-439-6236 or visiting the Hall Benefits Law website.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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