AHP Final Rule Update: the IRS and DOL Sketch in the Details

In mid-July we posted a blog summarizing the AHP’s Final Rule; this week, the IRS and DOL published guidance on how to apply these rules to an AHP.

Let’s begin with the IRS: they updated their Questions & Answers on Employer Shared Responsibility Provisions with a new one addressing AHPs.  Of note in this Q&A is their guidance that “controlled group” rules provide the only circumstance where multiple employers are treated as a single employer for determining ALE status.

The DOL’s guidance on application of the AHP Final Rule, however, is broad and multi-faceted—and published in a seven page document on their website. Their summary of key ERISA rules as applicable to AHPs follows:

1. Disclosure Rules: The DOL provides an extensive Employer Guide to Reporting and Disclosure—emphasizing the three most important disclosures as the: Summary Plan Description (SPD); Summary of Material Modifications (SMM); and Summary of Benefits and Coverage (SBC).
2. Reporting Rules: Both fully insured and self-insured AHPs must generally file a Form 5500 and Form M-1 each year.  Guidance reminds employers that both forms are available on their website and that existing AHP Form M-1s are housed in a searchable database.
3. Claims Administration: FAQs about benefit determinations and claims procedures is available, with a focus on specific timing requirements.
4. COBRA: The DOL simply defines COBRA requirements and states future guidance on the applicability of COBRA to small employers in AHPs is anticipated.
5. Consumer Health Protections: the guidance here is an alphabet grab-bag consisting of HIPAA, ACA, MHPA, GINA and other ERISA (Part 7) requirements applicable to AHPs.
6. Fiduciary Rules: here, the DOL highlights ERISA’s regulations on the importance of maintaining written plan documents and holding plan assets in trust. As a reminder, the DOL stresses to employers in an AHP: they have a duty to monitor the AHP through periodic reports on the administration and management of the AHP.
7. Voluntary Correction: The DOL doesn’t want applicable AHPs to forget they may correct compliance failures using its Voluntary Fiduciary Correction Program (VFCP) and Delinquent Filer Program—so they suggest the VFCP may be used to send corrected employee contributions to the AHP.
8. Enforcement: Last, but not least, the DOL reminds employers that their enforcement on Multiple Employer Welfare Arrangements (MEWAs) is applicable to AHPs. Enforcement may include cease-and-desist orders, asset seizure, and criminal penalties for false statements in sales and marketing of MEWAs. And of course, the DOL notes that ERISA permits states to regulate AHPs.

The DOL wraps up its guidance on the AHP Final Rule by stating that AHPs and their participating employers continue to be subject to a multitude of regulations. While the AHP Final Rule simplified the creation and administration of an AHP, the atmosphere is complex and additional guidance is forthcoming.