On June 21, 2018, the US Department of Labor (DOL) published a final rule making it easier for a group or association of employers to act as a single “employer” sponsor of an Association Health Plan (AHP) under the Employee Retirement Income Security Act of 1974 (ERISA). Below are some frequently asked questions about the AHP Final Rule.

What are Association Health Plans (AHPs)?
Association Health Plans as defined by the Department of Labor (DOL) are group health plans that employer groups and associations offer to provide health coverage for employees. Under the DOL’s rules, small employer groups can band together to form an AHP in order to provide health coverage for their respective employees. AHPs must be formed for a bona fide purpose and not solely for the purpose of providing health care to employees.

Are AHPs new?
No. AHPs have been around some time and historically could only be formed if the employer groups were of the same industry and the same geographic location. However, in June of 2018, the DOL released a Final Rule, which expanded the circumstances under which AHPs can be formed, and provided rules for these new types of AHPs. It is important to note that AHPs formed under the old rules remain unaffected by the DOL’s new Final Rule.

When does the new Final Rule go into effect?
The new rule was effective upon release. There is a staggered timeframe for when different types of AHPs may be formed. Fully funded AHPs may be formed beginning September of 2018. AHPs that existed prior to the new Final Rule may covert to self-funded status effective 1/1/2019. All remaining AHPs may be formed beginning April of 2019.

What has changed?
One of the biggest changes is that AHPs formed under the new rule may be formed by either common industry or common geography; this includes forming AHPs across state lines.  Other changes within the Final Rule may be impacted by state law.

What does this mean for Massachusetts employers?
The Final Rule contains state preemption language, which means that the Final Rule does not preempt or overrule the laws of each state. Any laws established in each state, whether existing or new, will govern how an AHP may provide health insurance. The Massachusetts Division of Insurance (DOI) will release a bulletin that will provide guidance as to which laws AHPs must adhere to.

What is Health New England doing about the Final Rule?
At this time, Health New England is awaiting guidance from the DOI.