The Labor Department is preparing to submit a proposed rule that would broaden the definition of “employer” under federal benefits law to expand how membership organizations can offer health insurance coverage to their members. The initiative could potentially make insurance more accessible and affordable for self-employed workers, gig economy participants, and small business owners, according to information from the federal regulatory database.
This represents the second attempt by the Labor Department to expand association health plans, or AHPs, during the Trump administration. The first effort occurred in 2018, but key provisions were struck down by a federal judge in 2019, with the Biden administration formally rescinding the rule in 2024. Legal experts note that the new proposal appears to focus on redefining “employer” to address the court’s previous concerns, though the specific details remain unreleased.
The timing of the proposal comes as health insurance costs continue rising across multiple segments. Large employers are projected to see cost increases of 9.5% next year, while small businesses face preliminary estimates of 14% increases. On the ACA marketplace, insurers are seeking median premium increases of 15% for 2027. These rising costs have been compounded by the expiration of enhanced subsidies at the end of 2025, which had lowered premiums for a broader range of enrollees since their enactment in 2021.
Under current law, AHPs generally can only be offered through associations whose members work in the same industry and have employees. The previous 2018 rule would have allowed self-employed workers to participate in AHPs and permitted associations based on geographic proximity rather than industry commonality. Trade organizations like the National Association of Realtors, representing more than 1.4 million members, have advocated for such expansion, noting that self-employed professionals deserve comparable coverage options to traditional employees.
Experts suggest that broader AHP access could potentially result in lower premiums than individual marketplace coverage, as large-group plans follow different regulatory requirements. With approximately 11.9 million independent contractors according to recent labor statistics, expanded AHP eligibility could significantly affect insurance access for workers currently reliant on ACA marketplace plans or uninsured populations.
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