ERISA Preemption for welfare benefit plans

[Don Levit]

I am discussing with the OIC in WA regarding the degree of state regulation for self funded MEWAs. Sec. 514(b)(6)(A)(ii) says in the case of any other employee welfare benefit plan which is a MEWA, any law of any state which regulates insurance may apply to the extent not inconsistent with ERISA.

The OIC believes that MEWA case law would be totally separate from single employer case law. When considering the standard "inconsistent with ERISA," would different levels be applied for self funded single employer plans versus self funded MEWAs?

Don Levit

[GBurns]

I do not quite understand your post.

A single employer plan whether fully insured or self funded cannot ever be a MEWA and therefore neither state, DoL or ERISA MEWA rules would apply. As a result a single employer plan has totally separate case law etc from MEWA case law etc.

[Guest Moe Howard2]

I disagree with the OIC.

ERISA preemption of state insurance laws that are "Inconsentent with ERISA" applies to both single employer plans and plans of employers who are members of multiple employer arrangements.

[Don Levit]

I agree with Moe Howard. Moe, could we correspond offline, and then we can submit material to back our "claim?" I have some court case information I would like to share with you. I am curious if you have similar material, or maybe specific ERISA or IRS regulations you can cite?

Don Levit

[Guest Moe Howard2]

There are people that post on this board that are far more knowledgeable than I am.

I suggest that you offer more specific details about your delima and see what other responses you get. You'll be amazed at the quality assistance and unbiased ideas that will come from kicking around a question on this message board.

I am in no way a benefits guru. I'm just a good-ole country boy who offered his 2-cents worth. Let's see what others have to say.

[GBurns]

moehoward2,

How do you get a single employer plan to be a MEWA?

[Guest Moe Howard2]

MEWAs are not plans (just like an insurance policy is not a plan). MEWAs are arrangements comprised of single-employer plans.

GBurns, you seem to be confusing a "MEWA" with a "multiple-employer plan". They are not the same thing.

I'm not sure what you mean by getting "a single member plan to be a MEWA".

[Don Levit]

George and Moe:

Single employer plans are not MEWAs, for a MEWA, by definition, includes 2 or more employers. The MEWA could be one ERISA plan with several employers, or as many ERISA plans as there are employers. But the fact still remains that a MEWA is comprised of 2 or more employers.

So, George is correct, a single employer plan is not a MEWA.

The states are allowed to regulate self-funded MEWAs, but not single employer plans that are self funded.

Fully-funded plans, whether single employer or MEWA, can be regulated by the states.

States can regulate MEWAs with any laws that regulate insurance, except for those laws inconsistent with ERISA. I have several court cases which define how state regulation could be inconsistent with ERISA. Each of these cases involved, I believe, fully-funded single employer plans. I was wondering if the same standard for fully-funded single employer plans could be used for self-funded MEWAs, in determining if the regulation is "inconsistent with ERISA."

I would be happy to provide those standards, if it would be helpful.

Don Levit

[GBurns]

moe,

You need to re-read your posts from scratch.

You were the person who would not accept the OIC statement that "The OIC believes that MEWA case law would be totally separate from single employer case law".

All that I and others have pointed out is that the OIC is correct. MEWA does not involve single employer plans and therefore single employer plans have separate case law etc etc.

[Don Levit]

G Burns:

While Moe is rereading the posts, you should do so as well. I will, too, if you deem it necessary.

We know that a MEWA does not equal a single employer, for one is less than 2 or more. The question is not mathematical. The question, I pose is regarding self funded plans, regardless of the number of employers involved.

Regarding the exception to state regulation, in that state laws cannot conflict with ERISA, I have 2 questions.

First, what parameters are involved regarding whether a plan conflicts with ERISA?

Second, is there any difference between single employer self funded plans and MEWA self funded plans in applying these parameters?

By the way, I do have (at least some of) the parameters listed from a couple of court cases.

Don Levit

[GBurns]

I usually suggest re-reading in cases where a person misquotes a post or contradicts their own post.

I do not recall ever seeing any difference, regarding ERISA pre-emption, between single employer self funded and multiple employer self funded plans (that are ERISA MEWAs). MEWAs that are not ERISA are regulated by the State.

To more directly address your question regarding parameters, I have to refer you to a Google search for "ERISA preemption". The issue of ERISA preemption is still rather unsettled and the standards are still evolving. The issue is also very facts and circumstances dependent. As a result a broad brush answer would not be appropriate, and your own reasearch would be best so that you can apply your specific facts and circumstances to each of the items that you find.

In general, the exceptions to preemption are under:

1. The Savings Clause.

2. The Deemer Clause.

3. The MEWA Clause.

However, it is possible that a contractual condition could cause waiver of an exemption, for example: http://www.bccb.com/Publications/Files/Hea...rivacyRule.aspx

The Fordham Law Review (61 Fordham L. Rev. 401) has identified a four-step process, within ERISA, for determining whether a state statute has been preempted by ERISA.

1. a determination must be made that a state law exists,

2. that it relates to an ERISA covered plan,

3. whether the law falls within 1 of the preemption exceptions.

4. even if a state law covers matters within an exemption and relates to insurance, it must be determined whether the law is still pre-empted under the Deemer Clause because the law is being applied to a self-insured plan.

There is also a de facto "standard" of a 4 step process derived from Supreme Court cases for determining whether state law relates to an ERISA employee benefit plan which is 1 of the steps in the Fordham process:

1. determine whether there is a conflict between the state law and ERISA,

2. does the state law contain an explicit reference to employee benefit plans.

3. Is the state law intended to affect an ERISA plan.

4. does the state law produce a substantial indirect effect on an employee benefit plan.