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Davis-Bacon and level funded health plan

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Anyone with experience with use of level funded health plan and Davis-Bacon?  Client has MEWA with a level funded health plan and would like to offer to employers subject to Davis-Bacon.  Would contribution of employer premium to MEWA sponsor be considered an "irrevocable contribution to an unrelated third party" under Reg. Sec. 5.26?  Since a level funded plan is a partially unfunded plan, we are trying to verify whether the contribution of the premium to the sponsor makes the plan a bona fide fringe plan, despite the fact that the plan is technically partially unfunded.  

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I have done both, but do not know the answer to your question, sorry.  But I do not know if I would agree with your statement that a level-Funded Plan is un-Funded.  (Damn spell check). If anything, it is the opposite.  Level funded requires the employer to fully fund the claim accounts, and at the end of the contract if any claim dollars remain, they are returned to employer.  Did I misunderstand.

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  • 1 month later...

I have never thought about this issue simply because I was long ago warned of the problems caused by mixing DB or any Prevailing Wage employees with regular employees. After having my first payroll audit failing because of mixing, i never questioned the warning.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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