Final Association Health Plan Guidance Released

On June 19, 2018, the U.S. Department of Labor (DOL) released its final rule on association health plans (AHPs). The final rule generally is consistent with the proposed rule published on January 5, 2018, and allows employers and sole proprietors to band together on the basis of geography or industry.

Existing DOL guidance on AHPs remains in effect, and such plans may continue to rely upon the existing, stricter commonality rules outlined in the prior guidance. The final rule provides an additional mechanism through which groups or associations may meet the definition of “employer” under the Employee Retirement Income Security Act (ERISA). Under the final rule, organizations that establish an AHP must have “control” over the AHP and must have a substantial business purpose other than providing health insurance, even if providing health insurance is the primary purpose of the organization. The preamble to the final rule makes clear that the rule does not change existing ERISA