The U.S. Department of Labor (DOL) is drafting a rule change that could make it easier for small businesses and self-employed workers to buy health insurance through Association Health Plans (AHPs), pooling with other employers to negotiate lower group rates. The draft was sent to the Office of Information and Regulatory Affairs (OIRA), according to reporting from Homepros and CNBC.

If it clears OIRA's review and survives the public comment period, the rule could expand who qualifies for AHPs and give a five-person electrical contractor, a solo bookkeeper, or a two-person law firm access to the kind of group buying power that today is mostly reserved for large employers.

What the DOL is actually proposing

The DOL's draft would revise the federal definition of "employer" under ERISA so that more industry groups, trade associations, and chambers of commerce can sponsor a single health plan covering all of their small-business members. It would also, per CNBC's reporting, open the door for self-employed workers with no employees to join.

Under the current framework, an association that wants to sponsor an AHP has to clear three hurdles:

• It must exist for a real business purpose beyond selling insurance.
• Its member employers must share a "sufficient common interest" (usually the same industry or geography).
• Those employers must have meaningful control over the association and the plan.

Lexi Branson, Vice President of Health Policy at the U.S. Chamber of Commerce, told Homepros that this framework "can leave out small businesses that do not fit neatly within those requirements. Self-employed individuals without employees also generally cannot participate."

The new rule is expected to loosen those tests, though the exact language will not be public until OIRA finishes its review.

Why this matters for your premiums

Health insurance costs are rising sharply going into 2027.

For a general contractor with 12 employees, a 14% jump on a $1,500-per-employee monthly premium works out to roughly $30,000 in additional annual cost. That is real money for a business with tight margins, and it is why the AHP proposal is getting attention from trade groups.

The pitch behind AHPs is scale. An HVAC contractor with 18 employees has no leverage with a carrier. A trade association representing 4,000 HVAC contractors and their 60,000 combined employees has meaningful leverage. Pooling spreads administrative overhead, spreads risk across a bigger population, and can give small employers access to plan designs, networks, and rates that individually they cannot get.

Who this could help

The businesses most likely to benefit if the DOL rule takes effect in something close to its expected form:

• Solo professionals and freelancers: consultants, bookkeepers, graphic designers, and freelance web developers who today buy on the individual ACA marketplace and often pay full retail because they have no employees to pool with.
• Very small firms: the two-person law office, the four-person accounting practice, or the six-person landscaping crew that is technically eligible for small-group coverage but faces pricing close to individual-market rates.
• Trade-heavy small businesses: roofing, plumbing, electrical, HVAC, and general contracting firms that already belong to industry associations and could plug into a national or regional AHP through those groups.

How the rulemaking process works, and what the timeline looks like

The draft is currently sitting at OIRA. Here is the sequence from here:

1. OIRA review: up to 90 days. OIRA is an office inside the White House's Office of Management and Budget that reviews significant proposed regulations for cost, benefit, and consistency with administration priorities.
2. Notice of Proposed Rulemaking (NPRM): once OIRA clears the draft, the DOL publishes it in the Federal Register.
3. Public comment period: typically 30 to 60 days. Businesses, associations, insurers, states, and consumer groups file comments.
4. Final rule: the DOL reviews comments, sometimes revises, and publishes a final rule with an effective date.
5. Almost certain litigation: the last major AHP rule, issued in 2018, was struck down in part by a federal district court in 2019 in State of New York v. U.S. Department of Labor. Any new AHP rule should be expected to draw challenges from state attorneys general.

Even in an optimistic scenario, small businesses should not expect to buy coverage through a newly expanded AHP for many months.

What AHPs actually are, in plain English

An Association Health Plan is a single health insurance arrangement covering the employees of multiple employers who belong to the same sponsoring association. Two structures matter:

Fully insured AHPs: the association contracts with a licensed carrier (Blue Cross, Aetna, UnitedHealthcare, etc.), and the carrier bears the medical risk. The association negotiates terms; the carrier prices the coverage under state and federal rules. This is the more common and lower-risk structure.

Self-insured AHPs: the association itself pays claims, usually with stop-loss reinsurance. Historically these have been the source of most AHP problems, including several high-profile insolvencies where employers were left with unpaid medical bills for their workers. Regulators watch these closely.

Branson told Homepros that for a fully insured AHP, "the association typically works with an insurance carrier and often a broker or benefits administrator to structure coverage for the combined group. The carrier ultimately prices the insurance under the applicable federal and state rules."

What small-business owners should do right now

Nothing about the DOL proposal requires you to act today. But a few things are worth doing while you wait for the rule to clear OIRA:

1. Ask your trade association or chamber what they already offer. Many chambers of commerce and industry associations already sponsor small-group health plans or MEWAs (multiple employer welfare arrangements) under existing rules. You may have access to pooled coverage today without waiting for the new rule.

2. Get a current quote for comparison. Whatever you decide later, you need a baseline. Get a quote for standard small-group coverage from a licensed broker, and if you are self-employed, get an ACA marketplace quote with subsidies calculated.

3. Track the OIRA docket. OIRA's dashboard at reginfo.gov shows the status of the draft. When it moves from "pending review" to "concluded," the DOL's NPRM is imminent.

4. Budget for higher premiums in 2027 regardless. Even if the AHP rule is finalized quickly, it will not affect your 2027 renewal. Assume the KFF-projected small-group increase of roughly 14% and plan cash flow accordingly.

A budget worksheet for your 2027 healthcare line item

If you want a quick spreadsheet to estimate what a 14% premium increase would mean for your business, paste the template below into ChatGPT, Claude, or Gemini and ask it to build you a working file.

2027 SMALL BUSINESS HEALTH INSURANCE BUDGET WORKSHEET

Company: [Your business name]
Renewal month: [Month/Year]
Number of covered employees: [#]
Number of covered dependents: [#]

CURRENT PLAN (2026)
Monthly premium per employee (employer share): $____
Monthly premium per employee (employee share): $____
Total monthly employer cost: $____
Total annual employer cost: $____

PROJECTED 2027 (assume 14% small-group increase per KFF)
Projected monthly premium per employee (employer share): $____
Projected total monthly employer cost: $____
Projected total annual employer cost: $____
Projected annual increase in dollars: $____

ALTERNATIVES TO PRICE OUT
- Same plan, same carrier, 2027 renewal quote: $____
- Higher-deductible option with same carrier: $____
- Small-group quote from second carrier via broker: $____
- Trade association / chamber pooled plan (if available): $____
- QSEHRA reimbursement model (if <50 employees): $____
- ICHRA reimbursement model: $____

DECISION DATE: [30 days before renewal]

Tip: paste that block into an LLM and prompt it with something like "Turn this into a Google Sheet with formulas that auto-calculate the total annual cost and the projected 14% increase, and add a comparison table for the alternatives." You will get back a functional file you can share with your bookkeeper or broker.

How Novo fits in

Health insurance is not something Novo sells or brokers. But paying for it, tracking it, and separating the employer share from the employee share is bookkeeping work, and that is where a business checking account with clean categorization helps.

A few practical points:

• Use Novo Reserves to earmark money inside your Novo checking account for health premium accruals. If your carrier bills on the 1st, setting aside one-twelfth of your annual premium each month gives you a running budget line for premiums without opening a separate account.
• Route employee payroll deductions and employer contributions through clearly named categories so your accountant can produce a clean Form W-2 Box 12 code DD figure at year-end.
• Novo offers integrations with QuickBooks and Xero, which can reduce the amount of manual entry your bookkeeper does each month. See Novo's integrations page for the current list.

The bottom line

The DOL's forthcoming AHP proposal is not law yet, and it is not a guarantee of lower premiums. It is a rulemaking that, if finalized and if it survives court challenges, could give millions of small businesses and self-employed workers a new way to buy pooled health coverage through their industry associations and chambers of commerce.

Watch the OIRA docket, get your current renewal quote, and budget conservatively for 2027. Talk to a licensed broker or benefits attorney before making a coverage decision.

Frequently asked questions

When will the new AHP rule take effect? There is no firm date. OIRA has up to 90 days to review the draft. After that the DOL publishes a Notice of Proposed Rulemaking, runs a public comment period (typically 30 to 60 days), reviews comments, and issues a final rule with its own effective date. Litigation is likely.

Can self-employed workers join an AHP today? Generally no. Current DOL rules require an AHP's member employers to have at least one common-law employee. The proposed rule is expected to change that, but until it is final, self-employed individuals should shop the ACA individual marketplace.

Are AHPs cheaper than ACA marketplace plans? Sometimes, not always. AHPs can offer lower premiums because of scale and because they can be rated more like large-group plans. They may also cover fewer services than ACA-compliant plans, so compare benefits, not just price.

What happened to the 2018 AHP rule? The 2018 DOL rule expanding AHPs was partly struck down in State of New York v. U.S. Department of Labor (D.D.C. 2019). The court held that portions of the rule stretched ERISA's definition of "employer" beyond what the statute allowed. The current administration is expected to draft the new rule with that decision in mind.

Does Novo offer health insurance? No. Novo is a fintech that offers small-business banking solutions. Health insurance is separate and should be arranged through a licensed broker, your trade association, or a marketplace like healthcare.gov.

Disclosures

Novo Platform Inc. ("Novo") is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A., Member FDIC. Eligibility subject to final Novo determination.

Novo Reserves is not a separate account. Novo Reserves is a budgeting feature within the Novo checking account. All funds within Reserves remain a part of the overall balance of the Novo checking account.

Novo Platform Inc. ("Novo") strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.