The U.S. Labor Department has submitted a draft rule proposal to the White House that would broaden the definition of “employer” under federal benefits law to expand worker access to health insurance through membership organizations and associations. The proposal could potentially help millions of self-employed workers and small business owners obtain lower-cost insurance coverage.
This marks the second attempt by the Labor Department under President Donald Trump to expand eligibility for association health plans, or AHPs. A similar effort in 2018 during Trump’s first term faced legal challenges, with a federal judge ruling that the Labor Department had overextended the meaning of “employer” under the Employee Retirement Income Security Act. The rule was subsequently rescinded by the Biden administration in 2024. The specifics of the current proposal have not yet been made public, making it unclear whether it will again attempt to extend AHP eligibility to self-employed workers.
The proposal comes amid rising healthcare costs across the industry. Large employers are expected to see increases of 9.5% next year, while small businesses face preliminary premium increases of 15%. Insurance premiums through the Affordable Care Act marketplace have surged following the expiration of enhanced subsidies at the end of 2025, with average premium payments increasing by 58% this year. The approximately 11.9 million independent contractors in the workforce, many of whom lack employer-sponsored coverage, have been particularly affected by rising marketplace costs.
Supporters of expanded AHPs argue the plans could offer lower premiums than individual marketplace coverage by allowing associations to operate under fewer regulatory requirements than traditional individual plans. Organizations such as the National Association of Realtors, which represents over 1.4 million members, have advocated for broadening AHP access to include self-employed professionals. However, experts noted that the legal pathway forward remains uncertain given previous court rulings on similar proposals.
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