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June 19, 2018

Final Rule on Association Health Plans (AHPs)

Today, the White House and the Department of Labor (“DOL”) rolled out the Administration’s long-awaited final rule on association health plans (“AHPs”).

The rule, meant to make it easier for small businesses and sole proprietors to band together to form large group health plans, contains the following key features:

  • Allows small businesses that pool together to be underwritten at the large group level and avoid small group rules under the Affordable Care Act (“ACA”)
  • Allows “working owners” without common law employees to participate in AHPs if certain conditions are satisfied
  • Permits formation of AHPs – with the primary, but not the sole, purpose of offering health coverage – based on common geography (city, county, state, or multi-state metropolitan area) or industry, if other bona fide association requirements are met
  • Leaves in place existing AHP rules and guidance (which current AHPs may opt to follow) and creates a parallel regime with the new rule
  • Does not alter the legal, regulatory, or preemption framework for Multi-Employer Welfare Arrangements (“MEWAs”)—of which AHPs are one type
  • Contains anti-discrimination provisions that, among other things, prohibit AHPs from distinguishing between employees of different employer members based on health factor for purposes of premiums, benefits, terms of coverage, etc.
  • Staggers applicability dates:
    • September 1, 2018 – all associations (new or existing) may establish a fully-insured AHP under the new rule
    • January 1, 2019 – existing associations that sponsored an AHP on or before the publication date of the final rule in the Federal Register may establish a self-funded AHP under the new rule
    • April 1, 2019 – all other associations (new or existing) may establish a self-funded AHP under the new rule.

The Administration has long touted AHPs as a solution for bringing small businesses’ and sole proprietors’ healthcare costs down and for opening up coverage options to those groups. CBO estimates that, as a result of the rule, four million Americans will be covered by AHPs by 2023, including approximately 400,000 who are currently uninsured.

Moreover, according to today’s release, estimated cost savings in annual premiums for small businesses range from $1,900 to $4,100, and from $8,700 to $10,800 for individuals (depending on the generosity of AHP coverage offered).

Without changes to state-law treatment of MEWAs (particularly self-insured MEWAs), however, operational and legal hurdles for interstate AHPs will persist. Thus, it appears that the new regime will be most useful/impactful in intra-state scenarios.

Please contact Joel Wood at, Joel Kopperud at, or Blaire Bartlett at with any questions.