On Thursday, January 4, 2018, the Department of Labor released the proposed rule Definition of “Employer” under Section 3(5) of ERISA- Association Health Plans. The rule has been proposed in response to an executive order that President Trump signed in October. This executive order covered a variety of topics including association health plans (AHPs), the subject of the new proposed rule. That order had directed the Secretary of Labor to expand access to this type of health plan.

In the proposed rule, the Department of Labor is proposing to change regulations under the federal law, the Employee Retirement Income Security Act (ERISA), which regulates health insurance plans operated by an employer. With the proposed regulation, the Labor Department would broaden the criteria in ERISA that determines when employers may join together into an association that is treated as an employer sponsor of a health plan, making it easier to form these groups. Specifically, the regulation would allow employers to join togethers for the purpose of offering health coverage if they are either:

• In the same trade, industry, line of business, or profession; or
• Have a principal place of business within a region that does not exceed the boundaries of the same state of the same metropolitan area (even if the metropolitan area includes more than one state)

In forming these groups, the proposed rule would require that they have a formal organizations structure and that the association’s member employers control its functions and activities. The rule notes that these requirements largely duplicate conditions in existing sub-regulatory guidance from the Department of Labor. Additionally, only employees and former employees of the employers that are part of the association would be able to participate in a group health plan sponsored by this association while sole proprietors with no employees would be able to join such coverage for the first time under the proposal.

The proposed rule also included a request for public comments and a request for information. Public comments related to the interaction with other state and federal laws as well as the impact of the proposals on risk pools in the individual and small group markets are requested. The request for information is looking for stakeholder feedback about possible exemptions to promote healthcare consumer choice and competition in addition to the risk that such exemptions could present to regulation and oversight.

The stated goal of the new proposed rule is to expand access to affordable health coverage, particularly among small employers and self-employed individuals. This idea echoes the sentiments expressed by the administration when the executive order was initially signed in October. However, the proposals in this rule could be met with pushback as many interest stakeholders, including consumer groups, state officials, and Blue Cross and Blue Shield plans have previously opposed similar ideas.

Public comments on the proposed rule are due March 6, 2018.