No Funding for Labor Dept. Health Rule in Budget Bills

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By Madison Alder

Funding to implement the Labor Department’s new rule expanding access to association health plans isn’t included in committee-approved labor, health, and education spending bills in Congress.

The House and Senate appropriations bills didn’t address a request from the White House in its February budget proposal to increase funding for the Labor Department’s Employee Benefits Security Administration “to develop policy and enforcement capacity to expand access to AHPs.” Both bills would cut funding to the Labor Department overall.

The Labor Department’s regulation expanding small-business access to association health plans was finalized in June, eight months after President Donald Trump in an executive order asked the DOL to look into expanding the plans. The new rule allows more types of businesses, including self-employed individuals and independent contractors, to band together in associations by industry or geography and purchase health care as a large group.

The Congressional Budget Office says an estimated 4 million Americans will join the plans in the next five years. States will be the primary regulators of the new plans, but the DOL also will play a large role in their enforcement.

The White House proposed an $8.5 million increase in EBSA’s funding from $181 million to pay for the new enforcement responsibility.

The bill approved by the House Appropriations Committee on July 11 would decrease funding by $400,000 from the previous year and makes no mention of the association health plans. The Senate Appropriations bill, approved June 28, would increase funding by $5.5 million only for the update and replacement of EBSA’s filing system for retirement plans under the Employee Retirement Income Security Act, “as requested by the Department.”

“As it has always done, the Department will accomplish its mission within the budget provided by Congress,” a DOL spokesman told Bloomberg Law in an email July 13.

The House bill also requested a report on EBSA’s efforts to mitigate the risks to the Pension Benefit Guaranty Corporation system, which insures federal pensions. The PBGC’s mutliemployer pension system is expected to be insolvent in 2026.

“The Department recognizes the multiemployer pension system faces significant challenges, and engages in oversight of the system, including publishing a list describing the financial statuses of plans,” a DOL spokesman said. “The Department is closely monitoring the progress of the Joint Select Committee on Solvency of Multiemployer Pension Plans, including providing technical assistance.”

Future Funding

George Sepsakos, principal at Groom Law Group in Washington who worked in EBSA’s enforcement department, told Bloomberg Law the absence of specific funding for the enforcement of association health plans isn’t out of the ordinary for new rules.

“They may have to shift priorities internally,” Sepsakos said. “Different administrations place importance on different things.”

The current administration could shift resources away from enforcement of the Obama-area fiduciary rule, Sepsakos said. The rule, which required investment advisers to put the interests of retirement savers above their own, died the same week the association health plan rule was finalized when a circuit court decision striking it down took effect.

Enforcement of association health plans may not be a priority for the next couple of years, but when it is, the Labor Department may choose to leverage them for more funding, Sepsakos said. “It’ll be interesting to see down the line how the DOL enforces association health plans.”

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