On March 28, 2019, a federal judge struck down the Trump-era rule that allows small businesses and those who are self-employed to band together under one Association Health Plan (AHP) for purposes of better underwriting ratings and to avoid some more restrictive mandates.
The Trump Administration expanded the AHP rules after his Executive Order was followed up by the Department of Labor’s (DOL) AHP Expanded Rule in what the Court called “clearly an end-run around the A.C.A.” The Judge’s ruling said the“unreasonable interpretation of ERISA creates absurd results” under Obamacare – and indeed – the AHP rules issued summer of 2018 has created much confusion about the AHP rules that contradicted existing rules. This confusion is likely because the Trump Administration pushed through this change to the rules via executive order rather than through legislation- causing two sets of rules to co-exist and not cleanly merge.
Specifically, the court struck down two parts of the rule:
- The provision defining “employer” to include associations of disparate employers; and
- The provision expanding membership in these associations to include working owners without employees.
In its ruling, the court stated that the final rule was an “end-run” around the Affordable Care Act and that the DOL exceeded its authority under ERISA. The court directed the DOL to reconsider how the remaining provisions of the final rule are affected by its ruling.
What Happens Now?
The ruling by the court did not address all parts of the AHP Trump administration’s rules – only those mentioned here. It is too soon yet to know what action will be taken by the administration and / or the DOL but AHPs in existence now pursuant to the Trump-era rules will remain status quo until more guidance is released.