The U.S. Labor Department has sent a draft rule to the White House for review that would revisit how some workers gain access to health insurance, reviving a debate over association health plans as coverage costs rise for small businesses, self-employed workers and people buying policies on their own.
According to a federal regulatory database, the proposal would address the definition of "employer" under the Employee Retirement Income Security Act, or ERISA, in a way that would broaden associations’ ability to offer health coverage to members. The draft is now under review by the Office of Information and Regulatory Affairs.
Depending on what the still-unreleased proposal contains, it could expand access to coverage through certain membership organizations and potentially offer lower-cost insurance to millions of self-employed workers, including people in the gig economy, or to small businesses.
Second Trump-era effort
The new proposal marks the second attempt by the Labor Department under President Donald Trump to expand eligibility for association health plans, or AHPs.
The first effort came in 2018. But in 2019, a federal judge vacated key parts of that rule after 11 states sued, and the Biden administration formally rescinded the rule in 2024.
"They’re going back to the drawing board on the definition of employer, which is what they did originally, but parts of it were struck down", said Kaye Pestaina, director of the program on patient and consumer protection at KFF, a nonpartisan health policy research group. "It’s hard to guess what they’ll do to get around the court’s concerns."
The Labor Department did not respond to a request for more information about the proposal.
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Why the issue is back
The move comes as health insurance costs continue to climb.
Large employers will see their costs increase by 9.5% next year, according to an estimate from Aon. The typical small business faces premium increases of 14% next year, based on a preliminary analysis by KFF. Insurers offering coverage through the Affordable Care Act marketplace are seeking a median premium increase of 15% in 2027, according to KFF.
Enhanced ACA subsidies expired at the end of 2025. Millions of people are expected to drop their coverage this year following that expiration, and premium payments for enrollees have increased by an average of 58% this year, according to a May analysis by KFF.
There were 11.9 million independent contractors in 2023, according to the latest data published by the Bureau of Labor Statistics. Unless those workers have coverage elsewhere, such as through a spouse’s employer, they may buy a policy through the ACA marketplace.
Some enrollees still qualify for subsidies if their household’s modified adjusted gross income does not exceed 400% of the federal poverty level. For example, a single individual with an income of $62,600 would be at the 400% threshold this year, according to KFF. Through the marketplace, the average unsubsidized premium for a benchmark silver plan for a 40-year-old consumer is $625 per month, according to KFF.
Supporters want broader access
Supporters of broader AHP access have focused in part on self-employed workers.
The National Association of Realtors, which has more than 1.4 million members, supports wider availability of the plans. "has long supported expanding access to [AHPs] because self-employed real estate professionals deserve the same health coverage choices that employees and union members already have", said Shannon McGahn, executive vice president and chief advocacy officer for NAR.
Under current law, AHPs generally can be offered only through associations whose members are in the same industry and have employees of their own. Many trade associations, however, include sole proprietors who do not qualify for an AHP, and some organizations have members from multiple industries.
The 2018 rule had extended the definition of "employer" under ERISA to self-employed workers, making them eligible for an AHP. It also allowed associations to qualify for plan sponsorship based only on shared geography, even if members worked in unrelated industries. The court ruled that the Labor Department had stretched the meaning of "employer" under ERISA and also rejected the expanded qualifications for associations to offer an AHP.
It is not verified whether the new proposal will again try to reach self-employed workers through AHPs.
Lower premiums for some, higher costs for others
Experts said broader access to AHPs could lower premiums for some enrollees compared with individual coverage such as ACA marketplace plans.
This is because when an association health plan is treated as a large-group plan, it does not have to follow every rule that applies to individual coverage. "has to follow some of the same rules that apply to individual coverage, but not all of the same ones", said Justin Giovannelli, an associate research professor and project director at Georgetown University’s Center on Health Insurance Reforms.
For example, a large-group AHP does not have to follow the individual and small-group age-rating rule that says a plan’s premium for a 64-year-old can be no more than three times the rate for a 21-year-old for the same coverage. A large-group AHP also could lower costs by excluding or limiting some coverage areas required in small-group and individual ACA plans. The federal government considers a large-group plan one with at least 51 employees enrolled, although some states may require a higher minimum.
"The thinking is that most of those self-employed business owners aren’t eligible for premium tax credits, and that’s why they pay more, and that’s why this option for AHPs might be better for them if they are allowed to participate", said KFF’s Pestaina.
McGahn said some current marketplace coverage remains difficult for members to afford. "While ACA coverage works for many members, others face double-digit premium increases and high out-of-pocket costs", McGahn said. About 14% of the NAR’s members are uninsured, she said.
At the same time, experts said that if younger, healthier workers leave the ACA marketplace for cheaper AHP coverage, premiums could rise for people who remain.
"If more workers could enroll in an AHP, "they might be able to purchase cheaper coverage, but then there’s the implication for everyone else who’s left in the marketplace", Pestaina said.
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