On June 19, 2018, the U.S. Department of Labor (DOL) published Frequently Asked Questions About Association Health Plans (AHPs) and issued a final rule that broadens the definition of “employer” and the provisions under which an employer group or association may be treated as an “employer” sponsor of a single multiple-employer employee welfare benefit plan and group health plan under ERISA.

The final rule is intended to facilitate adoption and administration of AHPs and expand health coverage access to employees of small employers and certain self-employed individuals. Generally, it does this in four main ways:

• It relaxes the requirement that group or association members share a common interest, as long as they operate in a common geographic area;
• It confirms that groups or associations whose members operate in the same trade, industry, line of business, or profession can sponsor AHPs, regardless of geographic distribution;
• It clarifies the existing requirement that groups or associations sponsoring AHPs must have at least one substantial business purpose unrelated to providing health coverage or other employee benefits; and
• It permits AHPs that meet the final rule’s new requirements to enroll working owners who do not have employees.

The final rule will be effective on August 20, 2018.

The final rule will apply to fully-insured AHPs on September 1, 2018, to existing self-insured AHPs on January 1, 2019, and to new self-insured AHPs formed under this final rule on April 1, 2019.

The DOL is using a staggered approach to implement this final rule so states and state insurance regulators will have time to tailor their regulations to the final rule and address a range of oversight and compliance assistance issues, especially concerns about self-insured AHPs’ vulnerability to financial mismanagement and abuse.