Voluntary Benefits - Consideration?

If a voluntary vendor offers a premium discount for other benefits (1% discount for our life coverages).  My concern is that this would constitute "consideration" and therefore would not satisfy that prong of the safe harbor exemption.  Any thoughts?

From context, I guess an employer has (or someone seeks that an employer provide) a wage-deduction convenience for buying, voluntary-only, insurance under an arrangement that those involved imagine does not establish or maintain an employee-benefit plan.

Whether a lowered premium for life insurance (other than under the voluntary-only arrangement) is “consideration” that might result in not meeting 29 C.F.R. § 2510.3-1(j)(4)’s condition for a nonplan might turn on exactly who enjoys the lowered expense for the other life insurance. 29 C.F.R. § 2510.3-1(j)(4) asks whether the employer or the labor union gets consideration. See https://www.ecfr.gov/current/title-29/part-2510/section-2510.3-1#p-2510.3-1(j)(4).

Under the life insurance plan, does the employer pay all or some of the cost of that benefit?

Or is the life insurance plan’s benefit employee-pay-all?

Further, each of the employer, an insurer, an insurance intermediary, and perhaps others involved might want its lawyer’s advice about whether following the Labor department’s rule is enough for an arrangement to be a nonplan. A Federal court might interpret ERISA § 3(1) [29 U.S.C. § 1002(1)] differently than the Labor department did in 1975. A Federal court no longer defers to an executive agency’s interpretations, even those made in a rule.

This is not advice to anyone.

First of all, do you feel confident you're meeting the other prongs of the DOL's voluntary plan safe harbor?  They're notoriously difficult to satisfy--especially the "no endorsement" piece.

As to your specific question, I agree with Peter that it matters whether the life plan is employer or employee-paid.  If it's employer-paid basic life, I would see that as consideration to the employer that blows the safe harbor.

There are probably other cases out there addressing this issue, but here's an example of a court grappling with something similar and finding it didn't blow the safe harbor:

https://law.justia.com/cases/federal/district-courts/FSupp/849/1451/2139942/

Determining whether the life insurance plan meets the fourth criterion, whether AFC received any consideration in connection with the life insurance program, is also a close question. AFC did not receive any compensation for payroll deduction services from the life insurance plan. However, when employees signed up for the insurance plan, AFC received tax savings from their simultaneous participation in the cafeteria plan. AFC also saved the expense of having its own managers go to its various divisions and explain the cafeteria plan; Metropolitan Life agents went to the various divisions instead at the expense of Metropolitan Life. The court is nevertheless convinced that benefit AFC received was too indirect and tenuous to conclude that the Metropolitan Life plan falls outside the safe-harbor regulation.

• Here's an overview of the voluntary plan safe harbor generally: https://www.newfront.com/blog/the-erisa-voluntary-plan-safe-harbor

Slide summary:

2024 Newfront ERISA for Employers Guide