DOL Issues FAQs About Association Health Plans

The FAQs explain the Department of Labor’s (DOL)’s enforcement policy and ongoing administration of association health plans (AHPs) following a federal court ruling striking down the DOL’s most recent AHP guidance.

The Department of Labor (DOL) has issued two sets of frequently asked questions (FAQs) regarding the administration of association health plans (AHPs) following a federal court decision that final rules issued by the DOL last year violated the Employee Retirement Income Security Act (ERISA).

The first FAQs assure participants covered under AHPs established based on the final rules that they will continue to get benefits. The second FAQs clarify that AHPs established based on previous definitions are not affected by the court decision and that new employers cannot join AHPs set up under the new rules.

AHPs have been in existence. In what is called a Pathway 1 AHP, the AHP generally may not include working owners without other employees.  In addition, Pathway 1 AHPs may provide benefits to employees of employers who have a sufficiently close economic (such as those that are in the same trade, industry, line of business or profession) or representational nexus to the group or association, but may not establish commonality based on geography.

The DOL’s final rules last year expanded the nexus to include geography. AHPs established under the new rules are called Pathway 2 AHPs. Following the federal court’s decision, the DOL’s Employee Benefit Security Administration (EBSA) issued a statement saying “employers participating in insured AHPs can generally maintain that coverage through the end of the plan year or, if later, the contract term.”

In the second FAQs, the DOL says no new employer members may sign up for Pathway 2 AHPs, but “existing employer members can continue to enroll new employees upon special enrollment events (for example, upon marriage, birth, adoption, placement for adoption, or loss of eligibility for other coverage) and consistent with the plan’s terms for eligibility (for example, enrolling new hires) while the enforcement relief remains in effect.”