In a recent information letter to the Attorney General of the State of Nevada, the Department of Labor has advised that a health care plan maintained by a professional employer organization, that covers employees of the PEO's client companies, is a multiple employer welfare arrangement.
In a recent information letter to the Attorney General of the State of Nevada, the Department of Labor (DOL) has advised that a health care plan maintained by a professional employer organization (PEO), that covers employees of the PEO's client companies, is a multiple employer welfare arrangement (MEWA). The DOL reached this conclusion even though, under the terms of the arrangement between the PEO and its clients, the employees were "shared" by the PEO and its client employers, and even though the PEO was a "co-employer" of the employees for various statutory purposes.
A health care plan that is a MEWA is subject to state insurance regulation. MEWA's that are "fully insured" may be subject to state insurance regulation to the extent state law provides standards regarding the maintenance of premium reserves and contribution levels. MEWA's that are not fully insured may be subject to all state insurance laws that are not inconsistent with ERISA. In addition, MEWA's may need to file a Form M-1 with the DOL on an annual basis, and can be assessed penalties of as much as $1,100 per day if a required filing is not made.
If you are a PEO and would like assistance in reviewing the status of your welfare benefit plans, please contact Margaret R. Bernardin, mbernardin@fordharrison.com, 407-418-4365, or any member of the Ford & Harrison Employee Benefits Group.