Multiple Employer Cafeteria Plan?

[Madison71]

Company A has a cafeteria plan. Company B is being formed and there is some common ownership to Company A, but does not meet the definition of a controlled group and is not an affiliated employer. Company B wants to be added as a participating employer of the Company A cafeteria plan (Company A approves). I know the proposed regulations asked for comments on multiple employers in cafeteria plans. At this point are you permitted to have a multiple employer cafeteria plan? If so, any thought on the future in this area?

Thank you!

[J Simmons]

Two ERs that are not part of a controlled group may share a cafeteria plan. If it is subject to ERISA, it will also nevertheless be subject to state law because it is a MEWA (multiple employer welfare arrangement). That is, the MEWA cafeteria plan must comply with both ERISA and state law, likely including state health insurance laws. Single employer welfare arrangements subject to ERISA are exempt from having to deal with most state laws. The exemption alone might make it well worth the while to set up two different cafeteria plans.

Note, for ERISA Title I purposes, there is no affiliated service group concept. That is only a concept that has tax code implications.

[Madison71]

J Simmons - oh my gosh....thank you, thank you. I forgot and I can't believe it b/c I am dealing with a MEWA issue that is under review with the maryland department of insurance. - non-admitted investments falling under the 6% bucket/basket. I think I am just trying to put it out of my mind. I would much rather set-up as a separate plan.

[jpod]

Don't know if there are mewa issues or not, but gosh, unless the payrolls are integrated in some fashion, why would you even bother? What's the advantage of having one plan over two plans for two separate workforces? Some savings on tpa services maybe, but hard to imagine the additional costs would be significant if you have two clone plans rather than one plan.