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Voluntary Benefit Plan Safe Harbor

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Employer receives a discount on service fees for administering the employer's health plan if the employer designates an affiliate of the service provider as broker of record to market voluntary benefits to the employer's employees.

Does that arrangement alone raise any issues that the benefits will become subject to ERISA because the employer has too much involvement with the arrangement or because the employer is receiving consideration in connection with the voluntary plan?


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One of the elements of the DOL safe harbor exemption is that "The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues check-offs." I believe the safe harbor exemptions are very strict, however, just because an employer is barred from using the safe harbor rules, does not mean that the policy is necessarily part of an ERISA plan. Rather, if the plan fails to meet the safe harbor exemption, the employer’s involvement will be evaluated on a case-by-case basis to determine whether the employer’s level of involvement is deemed to rise to the level of plan establishment and maintenance.

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