ADEA Washington Update

Association Health Plan Rule Alters Definition of Employer and Insurance Requirements

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On Oct. 12, 2017, President Trump issued Executive Order 13813, “Promoting Healthcare Choice and Competition Across the United States.” The Order specifically directed the Secretary to consider expanding the conditions that satisfy the commonality of interest requirements under existing Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974 (ERISA) and also to consider ways to promote association health plan (AHP) formation based on common geography or industry.

The Final Rule modifies the definition of “employer” under ERISA to expand the pool of employers who may come together and sponsor group health coverage. The change would allow small employers who would not otherwise qualify to join together and collectively have a vehicle, the AHP, to offer that coverage to their employees. These employers must simply meet the new “commonality of interest” test, which is now quite flexible. The benefit of doing so, among other elements, is that such employers will no longer have to meet the insurance requirements of the Affordable Care Act for small group insurance offerings. 

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