Court blocks Association Health Plan rule

Investigating potential Association Health Plans for members, ruling could stifle IFB's work.

A recent U.S. District Court ruling blocking parts of a Department of Labor rule expanding the use of Association Health Plans (AHP) could stifle work already underway at IFB to develop an AHP for members. (Photo via Canva)

By Deana Stroisch

Illinois Farm Bureau continues to analyze the impact of a recent U.S. District Court decision that blocked parts of a Department of Labor (DOL) rule expanding the use of Association Health Plans (AHP).

Twelve district attorneys from 11 states, excluding Illinois, and the District of Columbia sued DOL over its final AHP rule, alleging some provisions conflict with the Affordable Care Act (ACA) and the Employee Retirement Income Security Act (ERISA) of 1974. States also argued it would create an “increased regulatory burden” and result in lost tax revenue, among other things.

“The final rule was intended and designed to end run the requirements of the Affordable Care Act, but it does so only by ignoring the language and purpose of both ERISA and the ACA,” Judge John D. Bates wrote in his 43-page opinion. “DOL unreasonably expands to definition of ‘employers’ to include groups without any real commonality of interest and to bring working owners without employees within ERISA’s scope despite Congress’ clear intent that ERISA cover benefits arising out of employment relationships.”

The judge’s ruling strikes down the section of the rule that allowed unrelated employers located in the same state to form a “bona fide group” and sponsor an AHP and the ability for self-employed individuals with no employees to participate in an AHP. It does not impact the rules that allow “related” employers in the same industry to form a “bona fide group” and sponsor an AHP.

It’s unclear what happens next. DOL could appeal the decision.

On the recommendation of its Health Care Working Group, IFB has been in discussions with insurance carriers about creating an AHP for Farm Bureau members.

“We are evaluating the impact of the court ruling,” said Brian Duncan, IFB vice president and chair of the Health Care Working Group. “Allowing sole proprietors to participate in an association health plan is appealing for our Farm Bureau membership, but may not be allowed if the court ruling stands.”

AHPs aren’t new. Washington Farm Bureau, for example, has offered its members health insurance through an AHP since 2004. But many state Farm Bureaus stopped offering AHPs after 2011, when the Centers of Medicare and Medicaid issued a guidance document based on the ACA that regulated AHPs by small group insurance requirements. This essentially removed the cost savings they provide.

In 2017, President Donald Trump signed an executive order that called for expanded access to AHPs, among other things. The rule allowed working owners without other employees (including sole proprietors) and their families to join AHPs. DOL finalized those new rules in June 2018, and at least 34 new plans have been developed in 13 states since.