DOL proposes to rescind AHP rules: What's going on?

During the holiday break, the Department of Labor announced a proposal to rescind the 2018 Trump-era Association Health Plan rules. This proposal is aimed at addressing the existing confusion and uncertainties surrounding the regulations governing Association Health Plans.

Background Analysis

In 2018, the Trump administration introduced rules intended to offer more flexibility for Association Health Plans to operate. Prior to these rules, regulations governing Association Health Plans were stringent, with compliance requiring adherence to strict guidelines. However, court decisions in 2019 led to the vacating of certain portions of these rules, resulting in ambiguity regarding their application.

Current Status Evaluation

The Department of Labor's latest proposal seeks to rescind the 2018 rules entirely to eliminate potential confusion. This move is intended to provide clarity on the structure and operation of Association Health Plans moving forward. Stakeholders, including individuals and organizations, are invited to submit their comments on the proposed rescission to the Department of Labor by February 18, 2024.

Additional Context:

Association Health Plans (AHPs) have been a subject of debate and scrutiny for several years due to their potential impact on the health insurance market. Here's a bit more context to help you understand the significance of the Department of Labor's proposed decision:

1. Purpose of Association Health Plans: AHPs allow small businesses and self-employed individuals to band together to purchase health insurance as a group, potentially reducing costs through economies of scale. The 2018 rules aimed to expand access to AHPs by loosening restrictions on who could join and how they could be structured.
   

2. Controversies Surrounding AHPs: While proponents argue that AHPs provide more affordable health insurance options for small businesses and individuals, critics raise concerns about potential adverse, including destabilizing the individual and small group insurance markets, offering skimpier coverage, and leaving consumers vulnerable to fraud and abuse.

3. Legal Challenges and Regulatory Uncertainty: The legal landscape surrounding AHPs has been tumultuous, with court decisions overturning parts of the 2018 rules. This has created uncertainty for both AHP sponsors and participants, making it difficult to navigate compliance and plan for the future.

4. Impact on Healthcare Access and Affordability: The outcome of the Department of Labor's proposal could have far-reaching implications for healthcare access and affordability. Depending on how the regulations are revised, it could shape the availability and cost of health insurance options for millions of Americans, particularly those who rely on AHPs for coverage.

BCS has seen very few of these AHPs in action, but they do exist. Benefits consultants should be aware of the new proposed rules affecting AHPs in case they do come up with an employer client or potential employer client.