terminees, medical stipend, erisa

[TPApril]

Terminated employees who meet certain requirements are given a stipend to be used to purchase their own medical coverage from one of several designated insurance providers.  (if one provider is more expensive ee covers the difference).  They are then treated as being within the same group by the provider. At what point is it determined that this is a group plan subject to erisa?

[leevena]

There is insufficient information here, suggest you discuss with counsel.  From an arms length, it does appear as if you may have a plan that is subject to ERISA, but it depends on how the plan is structured.  If it is an informal plan then it may be subject to state regulation, and if you have a multi-state organization there may be multiple state regulations to consider.  If it is a formal plan, it tends to be ERISA regulated.  But keep in mind, I do not know enough, just some thoughts for you to consider.

[Chaz]

If these ex-employees are given cash that they can use to purchase insurance (if they choose) or for other purposes (if they choose otherwise), then this is just taxable compensation and is not a group health plan.

If these ex-employees must provide evidence of coverage before they receive the stipend (i..e, they are reimbursed for the cost of coverage), then it is most likely a group health plan subject to ERISA. 

Either way, it is unlikely that any state insurance law will be applicable.

But, as leevena says, we would need more facts before making a determination.  It is probably best that you ask your questions to benefits counsel.