On June 7, 2019, the WRA joined the National Association of REALTORS^® (NAR) and numerous other state and local REALTOR^® associations in filing an amicus curiae brief, or “friend of the court” brief, in the appeal of a federal district court’s ruling, which strikes down the federal Department of Labor (DOL) rules that made it easier to create association health plans (AHPs). 

This litigation is part of an ongoing effort by NAR to take a more proactive role in improving access to affordable health care options for self-employed individuals and small employers. This includes supporting legislative and regulatory changes allowing bona fide trade associations to offer AHPs to their respective memberships, including working owners.

This article provides an overview of AHPs, the efforts by Congress to address the cost and availability of health care, and the litigation surrounding AHPs.

Background

With the rising cost of health insurance, self-employed individuals, such as REALTORS^®, often have difficulty affording health insurance or necessary medical care. Prior to 2013, approximately 33 percent of REALTORS^® across the country were uninsured, according to surveys conducted by NAR. As a result, NAR made reforms to health insurance coverage for self-employed and small employers a top priority. In doing so, NAR adopted several principles for guidance on public policies related to health care, including “health care coverage and/or insurance should be made available to all” and “a ‘single payer’ health care system in which the government pays for and allocates health care services should be opposed.”

The Affordable Care Act (ACA), enacted in 2010, made health insurance more attainable for many Americans. As of 2016, the number of REALTORS^® uninsured decreased to approximately 19 percent. However, under the ACA, the cost of health insurance continues to rise, and some self-employed individuals have found it more difficult to obtain coverage due to changes made to the underwriting and rating rules regulating individual policies. 

After attempts by Congress to repeal and replace the ACA failed in 2017, President Trump issued an executive order later that year aimed at expanding health insurance coverage options for small groups and individuals outside of the ACA market. One of the options created by the executive order was AHPs for small groups and certain individuals. 

What is an AHP?

An AHP is a group health insurance plan that permits associations of employers to provide health care coverage for employees. AHPs allow small employers to join together and be treated as a single large employer for purposes of obtaining health care coverage. By joining together, the members of the AHP are better able to negotiate pricing and coverage options for their employees.

NAR is studying the viability of creating a national AHP or various AHPs for REALTORS^®. In addition, NAR has retained outside health insurance consultants to work with large insurance companies to better understand and create more favorable regulatory environments for AHPs at the state level. Several state and local REALTOR^® associations are currently pursuing the creation of AHPs for their own members. In Wisconsin, numerous regulatory barriers exist that prevent the WRA from creating an AHP, including the inability of the self-employed and independent contractors to participate.

Litigation surrounding AHPs

On June 19, 2018, the DOL issued final rules, which allow unrelated employers to join together to create an AHP and broaden the definition of “employer” so that “working owners,” such as self-employed individuals, and small employers can participate in AHPs under the Employee Retirement Income Security Act (ERISA). ERISA is a federal law governing employee benefit plans, including employer-sponsored group health plans, which create minimum standards and protections for participants. Under the prior rules, self-employed and independent contractors were not eligible to participate in AHPs. 

Within weeks of the final rules being issued, attorneys general from 12 states filed a lawsuit against the DOL, arguing that the DOL exceeded its authority in issuing the rule, which would also circumvent several key provisions in the ACA.

On March 28, 2019, the U.S. District Court for the District of Columbia declared several provisions in the final rule to be unlawful under the Administrative Procedure Act. One of the provisions declared illegal was the working owner provision that allowed REALTORS® and other self-employed individuals to join AHPs. In addition, the court determined that allowing working owners to join an AHP would undermine the ACA’s individual market protections. The U.S. Department of Justice, representing DOL, has filed an appeal and has issued an order indicating that existing AHPs can remain in place for at least the next insurance policy year.

The amicus brief filed by the WRA and NAR in this case argues, among other things, that the DOL had the authority to interpret the definition of “employer” and “employee” in the final rule, and that the ability of self-employed individuals to participate in AHPs is reasonable in light of the evolving workforce and changing market dynamics.

While an exact timeline of a ruling by the court of appeals is unknown, we are hopeful that the court will release its decision by the end of 2019.

Tom Larson is Senior Vice President of Legal and Public Affairs for the WRA.