A district court ruling issued today has struck down 2018 Department of Labor (DOL) final regulations for “association health plans” (AHP), which was intended to define circumstances under which separate employers could join together and participate in a single health insurance plan. The U.S. District Court for the District of Columbia issued the ruling on March 29, which found that the DOL’s regulatory changes to permit association health plans were unlawful.
Health Plan Regulations
The DOL’s final regulations offered an expanded interpretation of the term “employer” within the meaning of ERISA. The guidance broadens the definition to include an employer association based on multiple employers within a specific industry, or employers located in an identifiable geographic region. Such employers would be eligible to form an employer association for the primary purpose of sponsoring a health plan. The regulations also permit self-employed individuals with no employees to be treated similarly to those employers that have employees.
The court found that these DOL regulations constituted an unreasonable interpretation of the term “employer” under ERISA. It is being reported that the U.S. Justice Department has indicated its disagreement with the court’s ruling, and is considering its options, the most obvious of which would be to appeal the ruling.
Similar Retirement Plan Regulations
Notable for retirement plans is the fact that the DOL recently issued substantially similar regulations regarding retirement plans. Today’s ruling does not directly impact those retirement plan regulations, which would permit employers to join together for the purposes of offering “association retirement plans.” However, much of the reasoning for the court’s objections to the DOL association health plan rules could potentially be applied to its association retirement plan guidance. Future developments pertaining to these regulations will be followed and reported as appropriate.