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DOL Issues Guidance on New Rule AHPs

DOL Issues Guidance on New Rule AHPs

DOL Issues Guidance on New Rule AHPs, Repeal / Replace / Repair, Ken Ruotolo, Chief Operating Officer

On March 29, 2019, when Judge Bates of the Federal Court in the District of Columbia issued a decision invalidating the DOL’s new relaxed rules regarding AHPs (more on the ruling), it created uncertainty in the AHP market. Were AHPs established under the new rule still valid? Could they continue offering coverage to employers and employees insured under them? Could they continue to market and sell coverage?

The DOL and Department of Health and Human Services (HHS) provided much-needed clarity by announcing on April 29th that AHPs formed under the new rule:

  • can continue to provide benefits to those enrolled before the court’s decision through the end of the plan year.
  • must pay claims and continue to meet other obligations as promised to members.
  • at renewal, must offer coverage to each employer-member that complies with the requirements appropriate to the employer’s size:
    • Individuals must be offered individual plans that comply with the requirements for the individual market.
    • Likewise, if the employer is a small group, the AHP must offer coverage that complies with small group market requirements.

So long as AHPs comply with this guidance, the DOL and HHS have said they will not take enforcement action.

In addition to these restrictions on existing, new-rule AHPs, the announcement made clear that:

  • AHPs formed under the new rule cannot market to new employer-members.
  • No new AHPs may be formed under the new rule.
  • The Department of Justice will be appealing the Judge Bates’ ruling.

This announcement from the DOL and HHS provides much-needed clarity on the impact of Judge Bates’ decision.

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