Controlled Group Plan vs Contract

[oriecat]

We have two closely controlled corporations under one plan. We also have a separate company that is currently not under the plan, but we would like to add it. It is not a corporation, but a sole proprietorship, if that matters. All 3 are 100% owned by the same person.

We contacted our broker to look into adding the third company to our plan. She talked with the carriers (or one anyway) and is now telling us that we can't do that because they all have separate tax ID#s. So we are confused. Is what they are telling us correct? Wouldn't the insurance contract be with the plan and not the company, so if the plan included multiple companies then so would the contract? But I assume they would have to agree to that, and is it common that an insurance company wouldn't? They are saying that we would have to have separate contracts for each tax ID#, but can you have separate contracts for one carrier under a single plan. That just seems weird.

Any thoughts on this would be greatly appreciated.

Thank you!

Edit to add - Especially confusing is because we already have two taxIDs that we consider as part of the plan, so are we then in violation of our contract because they are only using one taxID#?

[E as in ERISA]

Sounds to me like an insurance underwriting issue, not a legal issue?

[GBurns]

Whenever you have a complicated or legal question, don't ask the broker, ask someone in authority at the insurance company (not the Customer Service or Account Rep. either).

Now you do not know what the broker asked and you do not know who provided the answer. What happens if he did not explain properly? What happens if the person he asked was really not in a position to know the answer?

Brokers are sales reps who know sales issues. Underwriting knows underwriting issues, Claims know certain claims issue. Company policy and legal interpretations of coverage, conditions and policy provisions etc are Legal Dept issues.

[oriecat]

Thanks, GBurns. That is good advice, and I will try to remember it. We tend to often rely on our broker as the middle man when dealing with our carriers (they should do something to earn all that commission they get!). We have learned a lot lately that they really don't know a lot outside of their little area, especially erisa issues.