Association health plans for employers

The legal test has changed in recent years. This page states the status as of November 12, 2026, and how we review an association plan for a client. It is not a recommendation to join any association, and it is not legal advice.

What it is

On April 29, 2024, the U.S. Department of Labor published a final rule rescinding its 2018 rule titled "Definition of Employer Under Section 3(5) of ERISA — Association Health Plans." The rescission took effect on July 1, 2024. The 2018 rule had set an alternative, more expansive set of criteria for when a group or association could be treated as an employer under ERISA. A federal district court had already held core provisions of that 2018 rule invalid in *New York v. United States Department of Labor*.

After the rescission, DOL applies its pre-2018, facts-and-circumstances guidance on bona fide groups or associations of employers. In that guidance, the Department looks at whether the group has a business or organizational purpose unrelated to providing health coverage, whether the employer members have a genuine organizational relationship and a commonality of interest apart from the coverage itself, and whether the employer members control the plan in form and substance.

The 2018 rule's working-owner provisions, which would have made it easier for owners without employees to join an AHP, were among the parts the court held invalid and are not the current federal standard.

A new proposed rule on the definition of "employer" for association health plans (RIN 1210-AC43) appears on the federal regulatory agenda, with a notice of proposed rulemaking listed for November 2026. As of November 12, 2026, that proposal had not been published in the Federal Register and has no legal effect. Until a rule is proposed, finalized, and effective, the pre-2018 facts-and-circumstances standard is the working federal standard we use.

State insurance law still applies, and many association arrangements are also MEWAs. A plan that is labeled an "association plan" is not, by that label alone, a bona fide AHP under ERISA.

Who it fits

An association health plan can be a fit when the company already belongs to — or is prepared to join — a bona fide association that sponsors a plan, and when that plan stands up under current federal guidance and the insurance law of the relevant states. Trade, professional, and industry associations are the usual place this question arises.

A company that is simply shopping the small-group or large-group market does not need an association in order to get coverage. A fully insured small-group plan, SHOP, a level-funded plan, or a defined contribution arrangement can be issued without one.

How it works for employers

If you are considering an association plan, we will ask for the association's organizing documents, the plan documents, a clear statement of who the plan sponsor is, and how employer members control the plan. We will also check the state-law issues that apply to the arrangement, including MEWA status where it is relevant. We will then compare that plan with the other structures that can actually be issued for your census, on the same proposal.

We will not treat a chamber membership, a purchased "association" certificate, or a plan marketed primarily as a way around small-group rating as a completed analysis.

How it compares

A bona fide association plan is one way some employers obtain group coverage. A company-sponsored small-group or large-group policy, a PEO-arranged plan, and an ICHRA or QSEHRA are other ways. Each is a legitimate fit when the legal requirements for that structure are met. We will not describe an association plan as cheaper or as a way to step out of the market rules that apply to the group.