New Department of Labor Regulation Expands Access to Employee Benefits

The rule, overseen by the DOL's Employee Benefits Security Administration, modifies the definition of “employer” under the Employee Retirement Income Security Act (ERISA §3(5)) regarding entities — such as associations and PEOs — that could sponsor group health and benefit coverage. An association can be formed for the sole purpose of offering a benefit plan (BP) to its members.

Broadening ERISA

The broader interpretation of ERISA will let employers anywhere in the country that can pass a “commonality of interest” test join together to offer benefits and health care coverage to their employees. An association could show a commonality of interest among its members on the basis of geography or industry, if the members are either:

• In the same trade, industry or profession throughout the United States; or
• In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.

Sole proprietors will be able to join small business health plans to provide coverage for themselves as well as their spouses and children. The new rule does not affect previously existing BPs, which were allowed — but with stricter geographic and commonality restrictions — under prior guidance. Such plans can continue to operate as before, or elect to follow the new requirements if they want to expand within a geographic area, regardless of industry, or to cover the self-employed, the DOL said. New plans can also form and elect to follow either the old guidance or the new rules.

“BPs are about more choice, more access and more coverage,” said Secretary of Labor Alex Acosta in a statement. “Many of our laws, particularly Obamacare, make health care coverage more expensive for small businesses than large companies,” he said, referring to the ACA.