As you may recall, in June 2018, the Department of Labor (DOL) released final regulations expanding the availability of AHPs.
The IRS has updated Questions and Answers (Q&As) on the employer shared responsibility provisions of the Affordable Care Act on their website to address the effect of association health plans (AHPs) on applicable large employer (ALE) status if the employer offers health coverage through an AHP.
The new Q&A 18 clarifies that an employer does not automatically become an ALE for purposes of the employer mandate just because of participation in an AHP. The IRS further stated that if an ALE was already subject to the employer mandate, they will continue to be subject to the employer mandate regardless of the ALE's participation in an AHP.
ALE status depends on the number of full-time employees (and full-time equivalent employees) that the AHP member-employer employed in the previous calendar year. IRS expressly stated that this determination is unrelated to whether the employer offers coverage through an AHP.
The IRS also noted that the only circumstances in which multiple employers are treated as a single employer for purposes of determining whether the employer is an ALE is if the employers have a certain level of common or related ownership.
For more information on AHPs, see regulations issued on June 21, 2018 by the Department of Labor.