The Department of Labor issued final regulations that allow employers who share a common geography or industry to form an association and sponsor a single-employer Association Health Plan (AHP). This guidance gives small employers including self-employed individuals potential flexibility, negotiating power and access to more affordable health coverage as sponsors of a large plan under the Affordable Care Act (ACA). Large plans are exempt from certain ACA provisions such as the essential health benefits requirement and small group rating restrictions on age, industry and gender.

Associations may operate as permitted by prior guidance or expand membership under the new rule which takes effect as follows:

  • Fully-insured plans – September 1, 2018
  • Self-insured plans in existence on June 21, 2018 and meet pre-June 21 requirements – January 1, 2019
  • New self-insured plans – April 1, 2019

Main compliance considerations:

  • The association must have certain member control, a formal organizational structure and a substantial business purpose unrelated to the health plan or other employee benefits. It is subject to consumer protection and nondiscrimination rules.
  • AHPs are Multiple Employer Welfare Arrangements (MEWAs) subject to ERISA and other federal and state regulations.
  • Forms 5500 and M-1 must be filed.
  • Self-insured MEWAs are prohibited in several states, so employers should consult with their legal counsel prior to joining one.
  • States may require licensing, registration, certification, financial reporting, examination, audits and compliance with insurance laws

View the final rule and read our bulletin for more information about the qualifications of an AHP. If you have questions about the benefits of participating in an AHP, please contact an S.S. Nesbitt benefits consultant.