An Executive Order issued by President Trump on October 12, 2017 directs the Department of Labor (“DOL”) to consider issuing new guidance to expand the availability of association health plans (“AHPs”) and the selling of insurance across state lines, among other agenda items. The Executive Order directs the DOL, within 60 days, to consider proposing new rules or revising existing guidance to permit more employers to participate in AHPs. Pursuant to this Executive Order, the DOL could expand certain conditions that satisfy the commonality-of-interest requirements under current DOL advisory opinions that address the definition of “employer” under ERISA section 3(5). The Executive Order notes that the DOL should consider ways to promote AHP formation on the basis of common geography or industry, which could further expand the breadth of AHPs and enable the sale of insurance across state lines.
The Executive Order also contemplates regulatory changes that would impact self-insured AHPs. Some have speculated whether the DOL might utilize its existing authority under ERISA to "except" certain self-funded AHPs from state regulation. Doing so would open the door to expansion of self-funded AHPs across state lines, a task that ranges from difficult to impossible under existing state and federal guidance.
One advantage of AHPs for small employers is that certain AHPs may be considered for large group insurance coverage; under federal law, large group coverage is exempt from certain requirements under the ACA, including the provision of "essential health benefits" and community rating requirements. While many small businesses have advocated for AHP expansion in recent years, any new AHP opportunities will depend upon the nature and extent of any rules issued by the DOL as a result of the Executive Order. We'll be following these developments closely. Stay tuned.