Insurance in Welfare Trust-spousal consent ?

[JAY21]

Does an insurance policy inside a Welfare Benefit Trust have spousal consent requirements like a qualified plan where in order to name a beneficiary other than a spouse it requires spousal consent ? (I don't think this would apply but just want to make sure). Thx.

[Mary C]

Our fully insured life insurance plan held by the Welfare Benefit Trust complys with state community property regulations by requiring the spousal consent to naming someone other than the spouse primary beneficiary.

[Ron Snyder]

Jay-

No, as you suspected.

Mary-

(1) I don't believe that your approach automatically complies with community property laws, unless, as you imply, a state has adopted regulations requiring spousal consent. Please note that only 7 states are community property states; the rest are separate property states. Application of community property laws depends on the state of residence of the husband and wife, not of the employer.

(2) Welfare plan benefits are still ERISA plans and therefore may not be subject to state community property laws due to ERISA pre-emption. I would word my plan document carefully and limit such spousal consent to married residents of state X, and to the condition that the benefits have been found to be subject to regulation by state X.

(3) Of course, if the requirement is under state insurance laws and applies to all insurance contracts in the state the result may be different, but that is not the scenario you described.

[Mary C]

Perhaps I didn't word my response correctly or perhaps you didn't fully understand.

1. Yes, we know the number of community property states is limited and we list those states that require spousal consent on the application and change of beneficiary forms. And we only apply this requirement to people living in the community property state (we operate in 44 of the 50 states and in Puerto Rico and Guam)

2 Yes, our life insurance plan is an ERISA plan and we know ERISA plans are exempt from state laws, but the carriers are not.

3. Our life carrier is the one that requires the spousal consent and we administer the plan to comply with regulations the carrier may be subject to so they (and we) may offer fully insured coverage in states where we do business

Hopes this clarifies