Association Health Plans Back to the Future

Association Health Plans Back to the Future

A 2018 rule that expanded the definition of association health plans (AHPs), has been rescinded. As a reminder, AHPs exist when two or more unrelated employers participate in a single plan. If two or more unrelated employers participate in a welfare benefit plan a multiple employer welfare arrangement (MEWA) is established. See our previous Benefit Beat articles here and here.

As background, the 2018 final rule was adopted on June 21, 2018, many of the criteria in that rule were weaker than previous guidance in order to grow formation of AHPs. The 2018 rule was fraught with legal challenges and on December 20, 2023, a notice of proposed rulemaking to rescind the 2018 AHP rule completely was published.

The final rule published on April 30, 2024, withdraws the 2018 regulations in their entirety and returns to the pre-2018 standards for AHPS. These standards are intended to ensure compliance with ERISA. Under these standards, a facts and circumstances approach is used to determine if a group or association of employers is a bona fide employer group or association capable of sponsoring an ERISA plan on behalf of its employer members. There are three general criteria:

  1. whether the entity has business or organizational purpose and function unrelated to the provision of benefits;
  2. whether the employers share a commonality and genuine organizational relationship unrelated to the provision of benefits; and
  3. whether the employers that participate in a benefit program, either directly or indirectly, exercise control over the program, both in form and substance.

States can regulate these AHPs known as MEWAs. As a reminder, any welfare benefit plan providing health coverage to employees of two or more employers who are not part of a control group of businesses, is required to file an annual Form M-1 report. The Form M-1 is to be filed by the MEWA's plan administrator, or if the plan administrator has not been designated, by the plan sponsor.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

Association Health Plans Back to the Futurehttps://www.cbiz.com/Portals/0/Images/GettyImages-1187179171 (1)-2.jpg?ver=YFCzvsVqXgX6n3M_rYrJrg%3d%3dhttps://www.cbiz.com/Portals/0/Images/GettyImages-1187179171 (1)-1.jpg?ver=f0JhNvSSDW8XPYek6z-FOQ%3d%3dA 2018 rule that expanded the definition of association health plans (AHPs), has been rescinded. As a reminder, AHPs exist when two or more unrelated employers participate in a single plan.2024-05-02T17:00:00-05:00A 2018 rule that expanded the definition of association health plans (AHPs), has been rescinded. As a reminder, AHPs exist when two or more unrelated employers participate in a single plan.Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceNo