The U.S. Department of Labor rolled back a Trump-era rule that lets self-employed individuals and small businesses purchase cheaper association health plans. The plans did not fully comply with Affordable Care Act requirements.
Small business owners and entrepreneurs benefiting from cheaper association health plans will soon lose their more affordable options.
As reported by Bloomberg, the new Biden rule – issued by the DOL’s Employee Benefits Security Administration – will take effect 60 days after its publication in the Federal Register.
Initially proposed in December 2023, the new rule replaces a 2018 Trump-era regulation that broadened the definition of “employer,” thereby enabling small businesses to pool resources and purchase health insurance under the ACA.
However, some business groups have voiced concerns about rising healthcare costs, and they oppose the rule’s rescinding.
Under the ACA, employer-sponsored health plans must adhere to comprehensive coverage requirements, which can be financially burdensome for smaller businesses.
Many have turned to association health plans as a cost-effective alternative, especially those that don’t meet the ACA’s threshold of 50 full-time employees for providing essential minimum coverage.
AHPs have been accessible to small businesses through methods like self-insurance, where claims are paid directly along with stop-loss plans to limit losses. These self-insured plans, common among large employers, are not subject to all ACA requirements.
Before the 2018 Trump rule, AHPs were only available to small business groups within common industries. However, this limitation was challenged in court, resulting in portions of the rule being struck down in 2019, leading to the discontinuation of AHPs established under the rule.
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