Legal Uncertainty Keeps Association Health Plans on Hold

October 11, 2018

The hope of a nationwide association health plan for the real estate industry got a boost in June when the U.S. Department of Labor released a rule expanding the definition of “employer” to include “working owners.” The change meant independent contractors and sole practitioners could participate in AHPs that often offer more health care options at lower costs. As a result, NAR embarked on a multitiered effort of research and outreach with legal experts, insurance providers, benefits consultants, and other associations to assess the feasibility of AHPs for real estate professionals and their families. Now, four months later, there has been significant progress. But a number of hurdles remain.

Association health plans on hold

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First among them is an uncertain legal landscape that’s caused a go-slow approach among insurance providers. Shortly after the AHP rule came out, more than a dozen states filed suit to overturn it. The lawsuit argues that AHP eligibility for “working owners”—such as self-employed individuals—amounts to a skirting of the individual market protections in the Affordable Care Act, putting consumers’ health and financial security at risk.

Many of the states also issued or are considering issuing conflicting legal guidance to restrict AHP eligibility. Some states—such as Louisiana, Iowa, and Illinois—issued guidance that is consistent with the Labor Department’s rule while other states—including Pennsylvania, New York, and California—issued conflicting guidance that does not conform to the rule.

The inconsistent state guidance and the pending lawsuit are creating uncertainty for insurance providers. It is also preventing a national insurance provider from stepping forward to offer a nationwide AHP option. This is affecting all national trade associations and their members. 

Until the legal uncertainty is cleared up by federal courts or by more states accepting the federal rule, insurance companies are more likely to remain on the fence about developing plans that would meet the coverage and affordability needs of the real estate industry.

NAR has published a page on nar.realtor that outlines the steps NAR has taken so far and what it’s doing moving forward. The page includes a timeline of NAR actions, a map of state responses to the AHP rule, and a video that walks you through the situation as it stands today.

—Robert Freedman, REALTOR® Magazine