Multiple Employer Welfare Arrangements (MEWA)

[Guest Lizzie]

We recently took over a PS/(k) Plan that appeared to be a straightforward Plan written into a custom document. Recently, the client and broker have mentionned that the ERISA atty writing these docs said that the plan is a "MEWA". My understanding of MEWAs under ERISA is that these are welfare benefit arrangements, not pension plan arrangements. My ? is - can a pension plan be a MEWA and if so what is different about the document and/or the operation/administration of the plan.

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[pjkoehler]

ERISA Sec. 3(40)(A) says that in general a MEWA includes employee welfare benefit plans "and any other arrangement (other than an employee welfare benefit plan)," which provides any benefit described in Sec. 3(1) (the definition of "employee welfare benefit plan") to the employees of 2 or more unrelated employers. Sec. 3(1) includes a wide range of benefits including some benefits that could conceivably be provided in your pension benefit plan, e.g. disability and death benefits, or any benefit described in LMRA Sec. 302© (other than pensions on retirement or death). Even if the plan provides this type of benefit, the plan would have to be jointly maintained by 2 employers who do not form a "control group," as described in ERISA Sec. 3(40)(B), to be a MEWA. Can you give us more information in light of these comments?

The bad news about being a MEWA is that the plan loses its protection from state insurance regulation under ERISA preemption, i.e. the plan would be subject to state insurance regulation in each state in which the company provides coverage to its employees. Depending upon the size of the plan and the number of states involved, the compliance burden can make continued operation of the plan as a MEWA admnistratively prohibitive.

[This message has been edited by PJK (edited 06-12-2000).]

[Guest Lizzie]

In my reading of ERISA Sec 3 (40)(A) I noticed a reference back to Paragraph 1, which specifically refers to welfare benefit plans and specifically excludes plans providing pensions on retirement or death, etc.etc. This is why I was confused about whether a MEWA can also provide employee pension benefits.

The Plan in ? is in fact a multiple employer plan that was originally sponsored by a management company under the auspcies of CIGNA. So, insurance was the primary vehicle for the provision of the retirement benefits. CIGNA has since spun off the mgnt company, but the ERISA atty indicates that the Plan is still a MEWA.

Can you provide a cite re: pension plan benefits under MEWAs? (PS-I understand that insurance issue that you mentionned earlier, thanks for the heads up.)

Also, can anyone provide a copy of the Multiple Employer Welfare Benefits Act of 1983? Any insight here re pension benefits, other than adding MEWAs to ERISA ? I appreciate any comments at all. Thanks.

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[Guest Lizzie]

In my reading of ERISA Sec 3 (40)(A) I noticed a reference back to Paragraph 1, which specifically refers to welfare benefit plans and specifically excludes plans providing pensions on retirement or death, etc.etc. This is why I was confused about whether a MEWA can also provide employee pension benefits.

The Plan in ? is in fact a multiple employer plan that was originally sponsored by a management company under the auspcies of CIGNA. So, insurance was the primary vehicle for the provision of the retirement benefits. CIGNA has since spun off the mgnt company, but the ERISA atty indicates that the Plan is still a MEWA.

Can you provide a cite re: pension plan benefits under MEWAs? (PS-I understand that insurance issue that you mentionned earlier, thanks for the heads up.)

Also, can anyone provide a copy of the Multiple Employer Welfare Benefits Act of 1983? Any insight here re pension benefits, other than adding MEWAs to ERISA ? I appreciate any comments at all. Thanks.

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[Guest Karen Geiger]

I have a copy of the DOL's MEWA guide, which is available on the DOL's website. Page 4 of the guide states "y definition, MEWAs do not provide pension benefits; therefore, only those MEWAs which constitute "employee welfare benefit plans" are subject to ERISA's provisions governing employee benefit plans." Unfortunately, they do not give a cite for this claim.

[pjkoehler]

I hope the guidance in the DOL publication is right, but I think under a fair reading of ERISA Sec. 3(40)(A) the reference to "any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of providing ANY BENEFIT described in paragraph (1). . . " encompasses nonwelfare benefit plans, otherwise it has no meaning. It would be reasonable to infer that such "other arrangement" only has to provide the kind of benefits described in Section 3(1), without actually qualifying as a welfare benefit plan itself. Section 3(40)(A) has its own set of exceptions (i)-(iii), which don't refer to pension benefit plans. So at least at the statutory level, it's not free from doubt that multiple employer pension benefit plans that also provide welfare type benefits (e.g. death and disability)could also potentially qualify as a MEWA. However, it may also be argued that such benefits under a pension benefit plan are purely ancillary and incidental to its main purpose and therefore, such an arrangement was not "established or maintained for the purpose of providing the [welfare type] benefits." Therefore, it's not a MEWA. Have you asked the attorney for a letter explaining his analysis that the plan is a MEWA?