The Office of General Counsel issued the following opinion on February 14, 2003, representing the position of the New York State Insurance Department.
RE: Multiple Employer Welfare Arrangements (MEWA), State Regulation
1. Are MEWAs exempt from the New York Insurance Law?
2. Do MEWAs have to register with New York State?
1. The extent of a MEWAs exemption from the New York Insurance Law depends on whether or not it has purchased insurance for the benefits provided.
2. There is no provision under New York law for registration of MEWAs.
The inquirer is contemplating the formation of a trust that will be established by two or more separate employers to provide health benefits to their employees. The inquirer believes that the trust will be a MEWA within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1001 et seq. (West 1999), although the resulting plan will not be an employee welfare benefit plan within the meaning of ERISA. The inquirer seeks guidance as to the extent of state regulation of the proposed trust.
New York Insurance Law § 1101(a) (McKinney Supp. 2003) defines doing an insurance business:
In this article: (1) "Insurance contract" means any agreement or other transaction whereby one party, the "insurer", is obligated to confer benefit of pecuniary value upon another party, the "insured" or "beneficiary", dependent upon the happening of a fortuitous event in which the insured or beneficiary has, or is expected to have at the time of such happening, a material interest which will be adversely affected by the happening of such event. (2) "Fortuitous event" means any occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party. . . .
New York Insurance Law § 1102 (McKinney 2000) prohibits, unless the entity is exempt from such licensure by another statute, the doing of an insurance business in New York without a license from this Department.
ERISA, 29 U.S.C.A. § 1002(1) (West 1999), defines an employee welfare benefit plan as follows:
The terms employee welfare benefit plan and welfare plan mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death . . . .
ERISA, 29 U.S.C.A. § 1144(a) (West 1999) generally preempts all state laws affecting employee welfare benefit plans and in accordance with 29 U.S.C.A. § 1144(b)(2)(B) such plans are not to be considered insurers for the purpose of insurance regulatory statutes. A special rule, however, applies to MEWAs, which are defined in 29 U.S.A. § 1002(40)(A) as:
The term multiple employer welfare arrangement means an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit described in paragraph (1) to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries, except that such term does not include any such plan or other arrangement which is established or maintained-- (i) under or pursuant to one or more agreements which the Secretary finds to be collective bargaining agreements, . . . .
ERISA, 29 U.S.C.A. § 1144(b)(6)(A) provides that:
Notwithstanding any other provision of this section-- (i) in the case of an employee welfare benefit plan which is a multiple employer welfare arrangement and is fully insured . . . any law of any State which regulates insurance may apply to such arrangement to the extent that such law provides-- (I) standards, requiring the maintenance of specified levels of reserves and specified levels of contributions, which any such plan, or any trust established under such a plan, must meet in order to be considered under such law able to pay benefits in full when due, and (II) provisions to enforce such standards, and (ii) in the case of any other employee welfare benefit plan which is a multiple employer welfare arrangement, in addition to this title, any law of any State which regulates insurance may apply to the extent not inconsistent with the preceding sections of this title.
The inquirer believes that the proposed trust will not be an employee welfare benefit plan because it will not be an employer and control will not be the hands of its members. The United States Department of Labor has promulgated a regulation expanding upon the definition of employee welfare benefit plan in 29 U.S.C.A. 1002(1). 29 C.F.R. § 2510.3-1 (1975).
It is correct to state that the trust would not be an employer, however, the trust might still, since it would provide benefits to the employees of separate employers, be considered by the United States Department of Labor to be an employee welfare benefit plan and a MEWA. New York, unlike some states, does not separately register or regulate MEWAs. If a MEWA is not fully insured, it must be licensed by this Department in accordance with New York Insurance Law § 1102.
In addition, even if the trust would not be considered an employee welfare benefit plan by the Department of Labor, if it provides health benefits on a self-funded basis to employees of several employees, it would have to be licensed by this Department in accordance with New York Insurance Law § 1102 and would be subject to all applicable statutes and regulations regulating health insurance policies or contracts.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.