Coalition Warns of Ripple Effects From Ruling on Association Health Plans

The Coalition to Protect and Promote Association Health Plans warned that a court decision last week overturning Labor Department rules for AHPs could result in thousands of people losing health insurance coverage.

Last week’s federal court ruling invalidating Department of Labor (DOL) regulations issued last year for association health plans (AHPs) creates uncertainty for organizations that were working to implement plans and imperils coverage for members, according to the Coalition to Protect and Promote Association Health Plans.

“An immediate stop to AHPs would result in thousands of people losing their current healthcare coverage,” the coalition said in a news release. “Those impacted include self-employed farmers and real estate agents and employees of small businesses whose employers cannot afford health coverage in the existing small group market.” The coalition includes ASAE and almost two dozen other national and state-level associations.

Ruling in a lawsuit filed by the attorneys general of 11 states and the District of Columbia, U.S. District Judge John D. Bates called the regulations “clearly an end run” around the Affordable Care Act and said they were incompatible with the Employee Retirement Income Security Act of 1974, which provides the existing framework for employer-sponsored health plans.

“In short, the final rule exceeds the statutory authority delegated by Congress in ERISA,” Bates wrote. He added that the rule’s “provisions defining ‘employer’ to include associations of disparate employers and expanding membership in these associations to include working owners without employees are unlawful and must be set aside.”

The coalition noted that the decision does not affect industry-specific groups that satisfy the “bona fide group” definition under previous Labor Department guidance, which means that industry-specific groups can still offer an AHP in multiple states.

According to the coalition, about 35 AHPs have been created since the Department of Labor issued the regulations last June. Many plans have been established by local chambers of commerce to cover small businesses in a wide range of industries.

Beyond traditional associations and nonprofits, at least one well-known brand is a member of the coalition: the agricultural cooperative Land O’Lakes, which announced a multi-state AHP for its member producers last fall and implemented it at the start of 2019.

In the coalition statement, ASAE President and CEO John H. Graham IV, FASAE, CAE, warned of the ripple effects from the ruling.

“If this decision goes into effect, it would cause employees of small employers in multiple industries, along with self-employed farmers, real estate agents, and other independent contractors, to lose their health plan,” Graham stated. “Our coalition is hopeful that the DC Circuit Court of Appeals will overturn the ruling.”

The coalition predicted that AHPs that have already been established, and those planning to launch this year, will continue, assuming that the regulations remain in effect during the appeals process.

“This is because these organizations want to offer comprehensive health coverage at a reasonable cost to their members,” the coalition added. “The AHP regulations allow them to do that.”

(AndreyPopov/iStock/Getty Images Plus)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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