1. Multiple Employer Welfare Arrangement (MEWA)
Presented by Steve Doty, Aldrich Benefits LP

2. Regulation of MEWAs Under ERISA
Passed in 1974
ERISA covers plans, funds or arrangements that constitute an “Employee Welfare Benefit Plan.”
MEWAs that constitute “Employee Welfare Benefit Plans” are subject to ERISA provisions governing employee benefit plans
ERISA

3. Employee Welfare Benefit Plan
What is a MEWA?
Employee Welfare Benefit Plan
as defined by ERISA
“Any plan, fund or program which is established or maintained by an employer or by an employee organization, or both, for the purpose of providing for its participants, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits…”

4. Multiple Employer Welfare Arrangement (MEWA) as defined by ERISA
What is a MEWA?
Multiple Employer Welfare Arrangement (MEWA) as defined by ERISA
“An employee welfare benefit plan, or any other arrangement which is established or maintained for the purpose of offering or providing any benefit, to employees of two or more unrelated employers.” (i.e., not part of a “controlled group”)
Coverage offered by a Bona Fide Association is typically considered a Multiple Employer Welfare Arrangement. (MEWA)

5. History of MEWAs

6. Prior to 1983 Insurers and others established MEWAs and METs
History of MEWAs
Insurers and others established MEWAs and METs
MEWA, (Multiple Employer Welfare Arrangement)
MET, (Multiple Employer Trust)
MEWAs, & METs promoters claimed ERISA preemption exempting them from State insurance regulation
Many MEWAs and METs had insufficient claims reserves
Some cases of excessive administrative fees and embezzlement
Prior to 1983

7. ERISA Amended 1983 1983 Congress amended ERISA
History of MEWAs
1983 Congress amended ERISA
Provided an exception to ERISA preemption of State insurance laws
States could now regulate plans offered to MEWAs
ERISA Amended 1983

8. Regulation of MEWAs Under State Law

9. State Regulation of MEWAs
“Fully Insured” MEWAs, provide benefits guaranteed under an insurance contract issued by an insurance carrier qualified to do business in the State
“Fully Insured” MEWAs, any state law which regulates insurance may apply
States regulate the insurance carriers and the plans they offer plans to MEWAs
States regulate “Not Fully Insured” MEWAs, as an insurer
What State Laws Apply to MEWAs

10. Advantages and Disadvantages of MEWAs

11. Advantages and Disadvantages of MEWAs
Pools small employers, share claims experience
Plan is rated as a single large employer, avoiding many ACA requirements for small employer plans
Plans are controlled by members, through a Board of Trustees
Greater Flexibility
Pre ACA, allowed self employed an alternative to individual plans
What Are Some Advantages to MEWAs?

12. Advantages and Disadvantages of MEWAs
Participation is voluntary
Difficult to set rates
Cannot prevent high claim utilizer employers from enrolling
Smaller pool than carriers small employer pool
Employers can leave at any time
Potential for “death spiral”
What Are Some Disadvantages to MEWAs?

13. ACA Impact On MEWAs and Association Plans

14. ACA Impact on MEWAs and Association Plans
Group has formal organizational structure
Group exists for reasons other than sponsoring a health plan
Commonality of Interest
Coverage only available to employer members
Employer defined as have at least 1 common law employee
Self employed and sole proprietors lost coverage, forced into the individual market
Bona Fide Association Requirements

15. Executive Order 13813 Impact On MEWAs

16. “Promoting Healthcare Choice and Competition Across the United States”
Executive Order 13813
Signed October 12, 2017
Effective 60 days after final rules published
Final rules likely published Spring/Summer
Possibly take effect late Summer early Fall
Expands definition of “employer”
Includes sole practitioners and self employed individuals
Does not limit the size of employers who may participate
Applies Large Group rules under the ACA, employers not subject to “look through doctrine”
“Promoting Healthcare Choice and Competition Across the United States”

17. “Promoting Healthcare Choice and Competition Across the United States”
Executive Order 13813
Expands “commonality of interest” test
Current test – Must be “Bona Fide Association” meaning the association exists for reasons other than providing insurance
Under new rules - Employers could band together in an organization for the sole purpose of providing health insurance to employer members
Commonality of interest – “common industry” and/or “common geography”
“Promoting Healthcare Choice and Competition Across the United States”

18. Bona Fide Association Requirements
Executive Order 13813
Group exists for purpose of sponsoring a health plan
Employers act as employer for anyone covered
Group has formal organizational structure
Group activities controlled by employer members
Commonality of Interest
Coverage only available to employer members
Coverage must comply with HIPAA non discrimination
Group is not a health insurer or controlled by health insurer
Bona Fide Association Requirements

19. Working Owner Definition
Executive Order 13813
Working Owners, i.e., sole proprietors and self employed individuals, may act as employers for purpose of participating association health plan
Must have ownership rights
Must earn wages from trade or business
Not eligible to participate in any subsidized group health plan maintained by any other employer
Must work 30 hours/week or 120 hours/month, or,
Earned income from business that at least equals the cost of coverage or owner and any covered beneficiaries
Working Owner Definition

20. Non Discrimination Requirements
Executive Order 13813
Prohibits eligibility and premium differences between employers based on health status, including claims experience
Permissible to set rates based on gender, age, industry or business size
Non Discrimination Requirements

21. MEWA Compliance

22. M-1 Due March 1 of each year Must be filed electronically
MEWA Compliance
Due March 1 of each year
Must be filed electronically
Filed by plan administrator – Provide following information
Sponsoring Entity
List Board, Officers or Trustees
Administrator, Agent, Financial Institution Holding Assets
Fully Insured - Carriers Information
Verification of Compliance with Part 7 of ERISA
M-1

23. Form 5500 Form 5500 filed annually Must be filed electronically
MEWA Compliance
Form 5500 filed annually
Must be filed electronically
Due last day of the seventh month following the end of the plan year
Attach list of participating employers with EIN numbers
Form 5500

24. Questions?

25. Thank you!
This presentation is current as of the date presented and is for informational purposes only. It is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Please contact legal counsel for legal advice on specific situations. This presentation may not be duplicated or redistributed without permission. © 2014, 2016 Zywave, Inc. All rights reserved.