On Jan. 5, 2018, the Department of Labor (DOL) issued a proposed rule that would make it easier for small businesses to join together to purchase health insurance.
This is not a completely new concept. Unrelated small employers can join together to purchase health insurance today. Under current guidance, however, these types of plans are generally not considered a single ERISA plan. The result is that each participating employer in one of these plans is typically treated as maintaining its own ERISA plan. That means that each employer is separately responsible for complying with the myriad requirements applicable to group health plans, such as HIPAA, COBRA and the Affordable Care Act. Moreover, participating employers with fifty or fewer employees are typically subject to additional insurance-based requirements under the Affordable Care Act, including the requirement to offer certain “essential health benefits” and the requirement to comply with restrictive community rating rules when determining premiums. The combination of additional administrative complexity and increased costs currently makes fully-insured association health plans a non-starter for most small employers.