On March 28, 2019, the U.S. District Court for the District of Columbia struck down parts of the Association Health Plan (AHP) rule finalized by the Department of Labor last summer that expanded access to health insurance benefits through these plans. In this case, twelve attorney generals (AGs) filed suit against DOL challenging the final rule, arguing among other things, that it exceed DOL’s statutory authority to expand coverage of AHPs, including to self-employed individuals (sole proprietors, like real estate professionals). The state AG’s include New York, Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia and Washington, plus D.C.
The court held in favor of the AGs, striking down essential parts of the rule that would allow self-employed individuals to participate in an AHP and also for “unrelated” employers to band together to sponsor an AHP. More specifically, the court held that DOL’s redefinition of “employer” under the Employee Retirement Income Security Act (ERISA) to (1) re-characterize of self-employed (“working owners”) to be eligible to join an AHP and (2) allow unrelated employers to band together under an AHP, exceeds the statutory authority delegated by Congress under ERISA. The court further explained how the rule conflicts with the intent of the Affordable Care Act (ACA) to provide fundamental protections to individual and small group insurance market participants whereby allowing working owners to join an AHP, they will lose the ACA’s individual market protections, placing these consumers and others health and financial security at risk.
In denouncing the ruling, NAR issued the following statement from President John Smaby:
“As independent contractors, Realtors® have long struggled to find and secure affordable health insurance options. This is why NAR strongly supports the U.S. Department of Labor’s final rule expanding access to Association Health Plans.
This rule has been successful and is growing in many states, providing high quality, lower cost coverage alternatives to many of NAR’s 1.3 million members and their families.
We are extremely disappointed in this week’s District Court decision, which threatens the progress Realtor® Associations have made in offering much-needed health insurance solutions. NAR is reviewing this ruling to determine its potential nationwide impact and we vow to continue to fight for more affordable, quality health insurance options for our members.”
It is anticipated that DOL will ask for a stay, allowing for the final rule to remain effective while an appeal is pursued, which could take up to an additional 12 to 24 months. NAR is analyzing the potential nationwide impact of this decision and working with state and local associations who have already implemented and are pursuing AHPs as a benefit option to better understand the local impact.
Please visit the Health Care Reform page for the latest information.