Chamber Comments on DOL Proposed Rule: Definition of “Employer” Under Section 3(5) of ERISA – Association Health Plans

Attention: Proposed Rescission of AHP Final Rule RIN 1210-AC16
Office of Regulations and Interpretations
Employee Benefits Security Administration
Room N-5655
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210

RE: Definition of “Employer” Under Section 3(5) of ERISA – Association Health Plans

To Whom It May Concern:

The U.S. Chamber of Commerce (the “Chamber”) submits these comments to the Department of Labor (“DOL” and “the Department”) in response to the notice of proposed rulemaking (“NPRM”) which proposes to:

• Rescind in full the DOL’s 2018 rule entitled “Definition of Employer - Association Health Plans” (“2018 AHP Rule”);
• Reexamine the criteria for a group or association of employers to be able to sponsor an AHP; and,
• Ensure that guidance being provided to the regulated community is in alignment with the text, purposes, and policies of the Employee Retirement Income Security Act of 1974 (“ERISA”).[1]

While the Chamber supported the issuance and defended the legality of the 2018 AHP Rule, we recognize that formally rescinding the 2018 Rule now merely clears away the regulatory remains of a no-longer viable alternative pathway which has long ceased to be an option for associations, employers and employees. Given the district court’s unfavorable decision, the Department’s request in 2021 to stay the appeal, and the court of appeals’ action to hold the case in abeyance, the Chamber is not surprised that the Biden Administration’s is proposing to rescind the 2018 AHP Rule at this time. 

The Chamber strongly supports the employer-sponsored insurance coverage as the backbone of our country’s healthcare system where over 150 million Americans obtain health coverage that individuals highly value and that employers want and benefit from offering. We have long advocated in favor of policies that allow more individuals to access health care coverage through this framework. Further, the Chamber strongly agrees with the Department’s frequent references to the validity and legality of the historical guidance prior to the 2018 AHP Rule (“pre-rule guidance”) which recognizes that a group or association of employers may sponsor a single “multiple employer” plan if certain criteria are met.[2] We urge the Department to preserve this coverage option and not take any further action which could inadvertently or intentionally disrupt the health coverage it allows.

The Value of Employer-Sponsored Coverage

The Chamber supports opportunities for employers to provide coverage to their employees. The historical guidance issued prior to the 2018 AHP Rule has allowed more employers, employees and dependents to access coverage through a group market health plan. Data shows that employees highly value the health coverage they receive from their employers, and employers have a vested interest in supporting the health and welfare of employees and their families. 

A survey conducted by Seven Letter Insight indicates consumer perceptions of and satisfaction with employer provided health coverage are exceedingly favorable[3]:

• Strong majorities believe that employer provided health care plans are extremely important and cite their health plan as the most important benefit provided by their employer. 
• An overwhelming majority view their employer provided health care plan as “affordable,” “convenient” and “worth what they pay for it.”
• Respondents believe their employer provided health coverage is simpler, more affordable, and higher quality than plans they could find on the open markets or government provided coverage plans.

Not only do employees highly value employer-sponsored insurance, but businesses also see a value in providing coverage as well. By offering health coverage, businesses benefit with:

• Reductions in direct medical costs
• Improved productivity
• Enhanced recruitment
• Greater retention, and 
• Lower costs related to short- and long-term disability.

In 2023, employer-sponsored benefits were estimated to account for a return on investment of 47%; for every dollar invested in employer-sponsored coverage, business sees a benefit of $1.47 in these measures. These benefits for employers are projected to continue to steadily increase to 52% in 2026.[4]

Preserve Existing Pre-rule Guidance

We support the policy which the pre-rule guidance, articulated in a collection of advisory opinions, advances to enable access to group health plans and agree with the affirming comments made by the Department in the NPRM.

“The long recognition that even absent the involvement of an employee organization a group or association of employers may sponsor a single multiple employer plan if certain criteria are satisfied.[5]”

“No court has found or even suggested that the pre-rule guidance criteria too narrowly construe the meaning of acting indirectly in the interest been found by a court or even suggested to be too narrowly.[6]”

Beyond the federal sub-regulatory guidance, an extensive state regulatory infrastructure exists to support bona fide AHPs. Clearly, Congress intended for states to regulate AHPs as part of the 1982 amendments to ERISA, allowing state insurance departments to exercise broad authority over AHPs, including registration requirements, solvency standards, mandated benefits, marketing standards, required contributions to guaranty funds, and other insurance market rules and oversight authorities. States are well equipped to manage the health and solvency of their markets and they have proven to be best situated to regulate traditional insurance products and association plans within their jurisdiction.

At this time, we urge the Department to refrain from future rulemaking on AHPs and allow the existing pre-rule guidance to remain standing as is. We do not believe the Department should propose a new rule that codifies or replaces the pre-rule guidance nor do we believe that the department should issue any additional clarifying guidance now.

Conclusion

We urge the DOL to continue to preserve access to valued, meaningful health coverage and not destabilize or create additional uncertainty or confusion regarding the coverage enjoyed by businesses and employees under Association Health Plans established under the pre-rule guidance.   

Sincerely,

Katie Mahoney
Vice President
Health Policy
U.S. Chamber of Commerce

[1] Proposed Rule, 88 Fed. Reg. 87,968 – 87,981 (December 20, 2023)(to be codified at 29 C.F.R. pt. 2510 [hereinafter referred to as the “Proposed Rule”]

https://www.govinfo.gov/content/pkg/FR-2023-12-20/pdf/2023-27510.pdf

[2] 87969

[3]https://www.uschamber.com/assets/documents/Final-PACT-Public-Opinion-Survey.pdf

[4]https://www.uschamber.com/assets/documents/20220622_Chamber-of-Commerce_ESI-White-Paper_Final.pdf

[5] 87969

[6] 87969

About the authors

Katie Mahoney

Katie W. Mahoney is the former vice president of health policy at the U.S. Chamber of Commerce.