By Pension and Benefits Editorial Staff
The Department of Labor (DOL) has issued additional guidance in the form of frequently asked questions (FAQs) regarding a federal district court’s ruling in State of New York v. United States Department of Labor, which vacated portions of the DOL’s final rule on Association Health Plans (AHPs). The AHP rule, which the DOL published on June 21, 2018, established a new test as an alternative to that described in prior DOL sub-regulatory guidance for determining who can sponsor an ERISA-covered AHP as an "employer."
The FAQs are intended to provide additional clarification on the scope of the enforcement relief described in the DOL’s statement on April 29, 2019, which indicated that, for an interim period of time, the DOL will not pursue enforcement actions against parties for potential violations stemming from actions taken before the district court's decision in good faith reliance on the AHP rule's validity. The parties must meet their responsibilities to association members and their participants and beneficiaries to pay health benefit claims as promised, however.
Pathway 1 AHPs. The FAQs indicate that AHPs formed under the DOL’s pre-rule sub-regulatory guidance (sometimes referred to as Pathway 1 AHPs) are unaffected by the district court’s decision. The court’s decision vacated portions of the AHP rule (affecting what are sometimes referred to as Pathway 2 AHPs), but did not address the DOL’s guidance on determining who can sponsor an ERISA-covered AHP as an “employer” under ERISA Sec. 3(5). The DOL’s pre-rule guidance remains in effect and employer groups and associations that meet that criteria continue to be able to act as an “employer” for purposes of sponsoring an ERISA-covered AHP.
Pathway 2 AHPs. The guidance indicates that a Pathway 2 AHP formed pursuant to the DOL’s final rule prior to the district court’s decision cannot market to or sign up new employer members, however. Enforcement relief is limited to potential violations stemming from actions taken before the district court’s decision in good faith reliance on the AHP rule’s validity. For example, it is available for employer members who entered into a binding contract in good faith reliance on the AHP rule’s validity before the district court’s order.
Nevertheless, existing employer members can continue to enroll new employees upon special enrollment events (for example, upon marriage, birth, adoption, placement for adoption, or loss of eligibility for other coverage) and consistent with the plan’s terms for eligibility (for example, enrolling new hires) while the enforcement relief remains in effect.
Confirmation of status. The DOL also indicates it has posted guidance on EBSA’s website that AHPs and their legal counsel can use to confirm their Pathway 1 AHP status. Although AHPs are not required to obtain an advisory opinion from the department to qualify as Pathway 1 AHPs, if an AHP has a particular need for an official advisory opinion, the DOL has published procedures for individuals or organizations to follow when asking for the DOL’s official opinion on their status under ERISA.
If interested in submitting a request for an advisory opinion or talking with an EBSA employee benefits law specialist, the DOL provides the following contact information: Office of Regulations and Interpretations Employee Benefits Security Administration U.S. Department of Labor, 200 Constitution Avenue, NW, Room N-5655, Washington, DC 20210. A benefit advisor can be reached at 1-866-444-3272.
SOURCE: Federal District Court Ruling in State of New York v. United States Department of Labor Concerning Department of Labor’s Final Rule on Association Health Plans, Questions and Answers, Part Two, May 13, 2019.
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