Response to the District Court Ruling on DOL’s AHP Rules

On April 23, 2019, the Vermont Department of Financial Regulation (DFR) published Insurance Bulletin No. 204. The bulletin is meant to provide guidance for association health plans (AHPs) and multiple employer welfare arrangements (MEWAs) operating in VT on the regulatory impact of the U.S. District Court for the District of Columbia’s decision in New York v. DOL, issued on March 28, 2019. In that case, the court found that the DOL’s AHP rule, which modified the definition of “employer” to allow more employer groups and associations to form AHPs, exceeded its rulemaking authority under ERISA. The court vacated the DOL’s rule and sent it back to the DOL for reconsideration. The DOL has subsequently appealed the decision (albeit without requesting a stay, meaning the DOL’s AHP rule is currently invalid).

The bulletin states that VT DFR takes the position that insurers must honor existing AHP policies and pay valid claims. Until such time as the court’s decision is stayed or vacated, though, the bulletin states that DFR lacks a legal basis on which to approve AHPs or MEWAs seeking to form on the basis of the final AHP rule, and that existing AHPs and MEWAs do not have the authority to enroll new employer groups or offer market coverage to potential new groups under the rule. On that basis, AHPs and MEWAs operating in VT are prohibited from advertising to or enrolling new employer groups and must post a public-facing notice prominently on their websites stating as such.

The bulletin is directed toward the AHP/MEWA, so there’s no additional employer obligations under the new bulletin. Employers that are part of an AHP/MEWA in VT, however, should work with their NFP adviser and/or outside counsel in determining next steps.

Insurance Bulletin No. 204 »