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Rule change promotes creation of Association Health Plans

The Department of Labor has changed a rule about health benefits that could affect workers in the District of Columbia and across the country, particularly those who work for small businesses. The rule change was prompted by a 2017 executive order by President Trump and is intended to promote the creation of Association Health Plans or AHPs. These plans are designed to provide a form of group health insurance for small employers who come together to form an association. Because they can be considered large group policies rather than small group or individual policies, they are exempt from some of the provisions of the Affordable Care Act.

This means that AHPs may be a more affordable benefits option for some small businesses, self-employed people and related individuals, but members of the plan may lack some of the consumer protections provided for in the ACA. The Department of Labor's new rule eliminated certain restrictions on the formation of AHPs that were in place by promulgating a new understanding of the definition of "employer" under the Employee Retirement Income Security Act. ARPs are considered a form of joint employee welfare benefit plan shared among multiple employers.

Previously, employers who came together to form an AHP already had to be bound together for an existing purpose rather than forming an association specifically to create a health plan. The new understanding of the term allows employers to explicitly join together solely for the purpose of creating an AHP.

Association Health Plans are governed by ERISA and are also regulated under state law, especially after legal changes prompted by past multi-employer benefit funds becoming hotbeds of fraud that deprived workers of their benefits. When issues arise with an AHP or other benefit plan, including denials of benefits and claims, an attorney can help employees to protect their rights under ERISA and other relevant laws.

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