WSR 19-15-140
[Insurance Commissioner Matter R 2019-12—Filed July 23, 2019, 5:20 p.m.]
Subject of Possible Rule Making: Association health plans/multiple employer welfare arrangements.
Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 48.43.733, 48.02.060.
Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: On June 19, 2018, the United States Department of Labor (DOL) issued a final rule on Association Health Plans (AHP) The DOL rule expanded the ability of small businesses and self-employed individuals to band together by geography or industry to provide health care coverage to their employees as if they were a single large employer. It established a set of requirements that associations and the health plans they offer must meet in order to offer coverage under the new rule.
Under the final federal rule, there would be two types of associations that can offer health plans. Under the rule, both types of associations would be considered a "bona fide group or association of employers":
Pathway 1: Association health plans that are formed and offered under "pre-rule guidance" issued by DOL prior to issuance of the new rule on June 19; and
Pathway 2: Association health plans that are formed and offered under the criteria of the new rule.
In response to a challenge to the rule, on March 28, 2019, the United States District Court for the District of Columbia held that several components of the Pathway 2 association health plan rule violate federal law.1 DOL is currently appealing the district court's decision. As of the filing of this CR-101, the district court decision has not been stayed pending appeal.
State of New York v. United States Department of Labor, Civil Action No: 18-1747 at 33 (March 28, 2019); accessed at
In its ruling, the federal district court discussed the statutory limitations set by congress in the Employee Retirement Income Security Act (ERISA), emphasizing that bona fide associations are those that act in the interest of employers. The court relied heavily upon the "pre-rule guidance" interpreting ERISA that DOL has issued over the past twenty-nine years, noting its importance in determining whether an association health plan is truly acting in the interest of its employer members:
… ERISA is premised on the idea that employers and employees are connected by an employment nexus: "[a]n employee depends on his employer," and vice versa. This nexus is reproduced at the level of associations and their employer members.2
State of New York v. United States Department of Labor, Civil Action No: 18-1747 (March 28, 2019) at p. 33.
Permanent rules on this subject are needed to sustain association health plans offering coverage in Washington state that comply with federal law and to protect small employers purchasing coverage through association health plans. To accomplish this, the office of the insurance commissioner plans to develop rules related to filings for association health plans.
Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: DOL enforcement of the federal rule is accomplished through cooperation between states and DOL. The preamble to the new federal rule reinforces state authority to regulate association health plans and this rule exercises that authority.
Process for Developing New Rule: Comments due August 26, 2019.
Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Jane Beyer, P.O. Box 40261, Olympia, WA 98504, phone 360-725-7043, fax 360-586-3109, TTY 360-586-0241 or 360-725-7087, email, web site
July 23, 2019
Mike Kreidler
Insurance Commissioner