The Biden administration recently announced plans to scrap a 2018 rule introduced during Donald Trump’s presidency, aimed at broadening opportunities for certain employers to form association health plans.
The 2018 rule, crafted by the U.S. Department of Labor (DOL) under former President Trump, intended to establish additional criteria within the Employee Retirement Income Security Act. This was to determine when multiple employers could band together to sponsor a single multiemployer health plan. However, this rule faced legal opposition from several states, leading to a federal judge vacating and sending it back for review in 2019.
According to a DOL press release, despite the rule never being fully enacted and no existing association health plans formed based on it, the administration seeks to address uncertainty. The goal is to reassess criteria for association health plan sponsors and ensure alignment with the Employee Retirement Income Security Act (ERISA) through updated guidance.
The now-defunct rule was part of a broader strategy by the previous administration to expand health insurance options for both individuals and employers. In 2017, Trump issued an executive order directing federal agencies to create regulations facilitating access to association health plans. Trump highlighted the potential benefits for hourly wage earners, farmers, small business employees, and entrepreneurs.
However, the 2019 decision by Judge John D. Bates of the U.S. District Court for the District of Columbia ruled the provisions of the rule as “unreasonable interpretations of ERISA.” The court labelled the rule as an attempt to circumvent the requirements of the Affordable Care Act.
Lisa Gomez, DOL’s assistant secretary for employee benefits security, stated in the agency’s press release that they now believe the provisions of the 2018 Association Health Plan Rule invalidated by the district court aren’t in line with the best interpretation of the statutory requirements governing group health plans.
