Last year, the Department of Labor expanded the possible use of Association Health Plans (AHPs). Those AHP regulations allowed groups of employers to band together to sponsor health plans that did not meet certain Affordable Care Act requirements. The employer groups would be treated as a “single employer,” even if their members were only tenuously affiliated.
The U.S. District Court for the District of Columbia recently overturned several parts of the DoL regulations. The Court determined that the regulations were attempting an end-run around the ACA and wrongfully expanded the reach of associated employers. The guidance was determined to be an unreasonable broadening of the definition of “employer” under ERISA. The Court found fault in that the regulations did not differentiate between AHPs and regular insurance, as the associations were not truly required to have a purpose other than the establishment of a health plan.
Follow up action on this guidance should be followed by existing AHPs and other groups of employers who band together to purchase health coverage.