AHP Rule Challenged in Court

As expected, last week, twelve attorney generals (AGs) filed suit against the Department of Labor (DOL) challenging the Association Health Plan (AHP) rule issued in June. The state AG’s include New York, Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia and Washington, plus D.C.

The lawsuit challenges DOL’s redefinition of “employer” under the Employee Retirement Income Security Act (ERISA), which the AGs argue is unprecedented and in violation of the Administrative Procedures Act. The lawsuit also challenges the rule’s conflict with the statutory intent of the Affordable Care Act (ACA) to provide fundamental protections to the individual and small group insurance markets because the AHPs would be subject to different large group market rules.

Of importance to NAR members, the lawsuit argues against AHP eligibility for “working owners” (self-employed individuals), claiming that the re-characterization of working owners to be eligible to join an AHP was intended to skirt the ACA’s individual market protections, placing these consumers and others health and financial security at risk.

The AG’s alleged harm imposed by the rule further includes: state insurance market destabilization; increased fraud and abuse by insurers; fewer benefits and protections for individuals enrolled in the plans; and, higher costs for states and those unable to enroll in an AHP.

NAR will be closely following this lawsuit as it has the potential to impact NAR’s efforts to explore potential options for health insurance coverage for REALTORS® and their families.