In State of New York v. United States Department of Labor, the District Court for the District of Columbia held that the U.S. Department of Labor’s (“DOL”) final regulations on association health plans (“AHPs”) issued on June 21, 2018 (the “Final Rule”) impermissibly expanded the definition of “employer” beyond what the Employee Retirement Income Security Act of 1974 (“ERISA”) allowed, and effectively created a workaround intended to help small businesses and sole proprietors avoid many of the requirements of the Affordable Care Act (“ACA”) applicable to health coverage available in small group and individual insurance markets.

Background

ERISA, the key statute at issue in the case, regulates employee benefit plans, including health and welfare plans, arising out of employment relationships. The ACA regulates health insurance markets more broadly, and among other things, subjects individual and small-group healthcare plans to stricter rules and coverage guidelines than apply to large employer-sponsored plans. ERISA’s definitions of “employer” and “employee,” which have not changed since ERISA was enacted back in 1974, are incorporated into the ACA’s statutory scheme.