State MEWA regulation

[Steve72]

Is anyone aware of a source that provides a state-by-state summary of MEWA regulation?

Thanks in advance.

[Lori Friedman]

The Department of Labor has a publication called "Multiple Employer Welfare Arrangements Under the Employee Retirement Income Security Act (ERISA): A Guide to Federal and State Regulation". You can view the publication at

www.dol.gov/ebsa/pdf/mwguide.pdf

I don't know if the (rather lengthy) publication includes a state-by-state comparison, but it might be a good place for you to get started.

[Don Levit]

Are you looking at one state in particular? I have researched several states by simply going to their insurance codes. They are usually broken down by articles, with the headings of each article listed. Can you be a bit more specific of what information you are needing?

Don Levit

[Steve72]

I've used both the routes suggested above. The DOL brochure is very good, but is (for good reason) primarily concerned with Federal issues.

I was hoping to short-cut my research with a site or resource that references the appropriate sections of each states insurance code. I've seen similar sites for (for example) state mini-COBRA laws and health privacy, and was hoping someone had run across one for MEWAs.

[Don Levit]

Go to naic.org. Type in mewa under search for the naic site. One of the first choices is a list of state contacts for MEWAs. The rep. should be able to give you the appropriate code sections.

You can contact me, offline, if you wish, to get my "take" on state v. federal regulation of MEWAs.

Don Levit

[Ron Snyder]

The NAIC website lists who to contact in each state's insurance department. NAPEO has some materials on their site (NAPEO), but I believe they are restricted to NAPEO members.

I also have had to go to the insurance code for several states to ascertain their laws concerning MEWAs. Even if a state has no MEWA law, it may have a statute for aggregation groups (several have healthcare purchasing alliances) or other entities permitted in that state. It may also be smart to ascertain whether a state has a PEO law (about half do) and what is permitted there.

A health plan may operate as a MEWA in one state, as a HCPA in another and as a PEO-sponsored health plan in another quite legally. What they all have in common is that each approved group or type of group has to be filed in each state in which it operates. My own feeling that it is easier to get an insurance company to custom-build a health plan that it is to qualify in a bunch of states with a patchwork of inconsistent laws.

[GBurns]

Since someone brought up the issue of PEOs and aggregation of groups under state law, this article should be of interest:

http://users.erols.com/spba/p0000035.html

Bear in mind that even if a plan is filed in another state, whether MEWA or not, many states have laws regulating what can be sold to residents of that state and by whom. This is mentioned near the end of the article.

[Don Levit]

Thanks, George, for supplying the article entitled, MEWA Mindset.

Two comments. First, it stated the DOL also gives states authority to regulate MEWAs to any degree not inconsistent with Title 1 of ERISA. So, 90% of the nitty-gritty regulatory authority over MEWAs including prohibiting them from existing rests with the states.

I disagree that states have the authority to ban self funded MEWAs.

First, self funded MEWAs are expressly allowed for in ERISA. To disallow them would be inconsistent with ERISA.

Second, in 1983, Congress could have disallowed self funded MEWAs from existing.

If you read the section in 514, you will see that the primary purpose of state regulation of MEWAs was to ensure timely payments were made for claims.

Prohibition is quite a stretch from legal regulation.

The article also states, VEBA in a discussion about ERISA status or regulation is irrelevant.

This is true if the VEBA is a single employer, but not a multiple employer. Beacuse

VEBAs are mentioned in sections 501 and 419, this federal entity must be allowed to exist in the states, because of the supremacy clause.

Don Levit

[Ron Snyder]

Don-

You are mistaken: Since ERISA doesn't pre-empt state regulation of MEWAs, states may ban them if desired, whether or not they are self funded. Read the 10th Amendent to the Constitution.

You are also mistaken: VEBA is a federal income tax concept and has nothing to do with state or DOL regulation, state law or ERISA.

There is no "supremacy clause" that applies to VEBAs or MEWAs. And there is no federal common law; the existence of VEBAs as trusts or non-profit corporations is pursuant to state law, not federal.

[Don Levit]

VEBAGURU:

Before you jump to the conclusion I am mistaken, I am willing and able to discuss this issue with you. I have many court cases to back my premise, and have communicated extensively with attorneys who disagree with me. Not one has mentioned the 10th amendment.

You (or anyone else) can E-mail me at donaldlevit@aol.com.

This is probably best to discuss offline, although if the demand is there, I will be happy to do so online.

Don Levit

[GBurns]

Hey, please keep the discussion on-line. Inquiring minds need to know.

Don,

Which item are you not mistaken on and have court cases to support your position? The pre-emption, the VEBA issue or both?

The 10th Amendment is really irrelevant in the initial decision on merits of the issues, anyhow, so the fact that no one mentioned it before is not worth consideration at this time.

[Don Levit]

George:

Thanks for your reply. Of course, I believe that states have the right to regulate self funded MEWAs. The difference is in the degree of regulation.

For example, WA state recently passed a law allowing self funded MEWAs to exist.

Before the law was passed, only fully funded MEWAs could be offered in WA.

I believe the prohibiting of self funded MEWAs was illegal, for ERISA specifically provides for such an entity.

CA forbids any new MEWAs from forming. This 9 year old law is illegal, because the state law is inconsistent with ERISA.

Back to WA state. My interest lies in introducing a plan I have designed to be offered by multiple employer VEBAs in the state. My hope is that competing plans will be introduced to invigorate the market, and force the commercial insurers to offer different plans.

Under the MEWA law for WA, a MEWA must meet 2 requirements (along with several others that I believe are reasonable).

The 2 "unreasonable" requirements are that the MEWA must have $2million in surplus, and must be in existence for 10 years.

If you have questions about these 2 requirements, I will respond as to why I believe them to be unreasonable.

My "negotiations" with the WA OIC are continuing.

My court cases focus mostly on ERISA preemption issues. The VEBA is a federal entity which states, I believe, can regulate, but cannot eliminate. In addition, the regulation must be reasonable to primarily ensure timely payments of claims.

Don Levit