DFE vs MEWA

[katieinny]

Multiple employers contribute to a single trust established and maintained by an outside third party. Each employer determines which health and welfare benefits it needs for its employees. The individual employers have access to, but might not chose all the same benefits for their employees. This master trust has been filing 5500s as a DFE, and the participating employers have been filing their own 5500s as well. Now someone has asked if it's a MEWA.

Apparently, if it's a MEWA, it can't be a DFE. How do we determine if it's a MEWA or a DFE? And if it is a MEWA, what is the significance (other than it needs to file Form M-1)?

[Don Levit]

Are the claims paid out of the trust separated by employer; in other words, are the premiums paid by the employers, experience rated?

Are the benefits self insured or fully insured?

Don Levit

[vebaguru]

DOL MEWA Enforcement

You ask the US DoL if it's a MEWA. They will say yes. If it is a MEWA, it is subject to regulation by the DoL and by the state insurance department of each state in which employees reside.

[katieinny]

The details about this plan are trickling in. I think the MEWA issue just went away.

The plan is funded by the prevailing wage portion of an employee's pay. The employee's remaining pay is subject to payroll taxes and worker's compensation insurance. I'm a bit fuzzy about this next part, but I think the portion that was paid to the trust is reimbursed to the employee, or is used toward a fringe benefit. It was set up to comply with New York's Department of Labor laws relating to prevailing wage jobs.

So, I'm thinking that since the plan is funded with prevailing wage money, it is not a MEWA.

Does that seem like a logical conclusion?

[vebaguru]

No, your conclusion is not logical. It is possible to comply with prevailing wage laws and still violate other laws. The MEWA issue doesn't go away unless they are covered under a collective bargaining agreement. By definition, a prevailing wage plan is NOT for CBA employees.