The Office of General Counsel issued the following informal opinion on March 7, 2002, representing the position of the New York State Insurance Department.

RE: Multiple Employer Welfare Arrangements (MEWA)

Question Presented:

Would a business that presently self-funds health coverage for its employees and then provides such coverage to independent sales representatives be considered, by reason of the addition of the independent sales representatives to its self-funded plan, to be a Multiple Employer Welfare Arrangement (MEWA) within the meaning of the Employee Retirement Income Security Act, 29 U.S.C.A. § 1001 et seq. (West 2001) (ERISA)?


This Department would not, for the reason indicated below, consider such an arrangement to constitute a MEWA.


A major manufacturer, (hereinafter, the Manufacturer), domiciled in Indiana with an excess of 4,000 employees. The Manufacturer’s products are sold through 700 independent sales representatives, some of which have their own employees. While none of the Manufacturer’s employees are located in New York State, some of the independent sales representatives and their employees either sell your client’s products in New York State or are domiciled here.

The Manufacturer provides its employees with health benefits through a self-funded plan that constitutes an "employee welfare benefit plan", as that term is defined in ERISA. 29 U.S.C.A. § 1002(1) (West 2001). The Manufacturer has purchased a policy of stop-loss insurance covering expenditures above a specified attachment point.

The Manufacturer desires to provide coverage through its plan to the independent sales representatives and their employees. The insurer providing the stop-loss coverage has indicated that the addition of the independent sales force will transform the plan into a MEWA and that it will not provide coverage for payments on behalf of the independent sales force, unless the Manufacturer demonstrates compliance with applicable state laws governing MEWAs.

Although Indiana law requires that MEWAs doing business in the state must register with the Indiana Insurance Department, Indiana Code § 27-1-34-2 (2001), the Indiana Department has not yet adopted rules for MEWA registration. The Manufacturer has submitted a letter to the Indiana Department acknowledging a potential status as a MEWA; and is seeking an acknowledgement by the Indiana Department that it is presently in full compliance with applicable Indiana requirements.

The Manufacturer seeks a ruling as to whether, if the Manufacturer adds health coverage for the independent sales force to the existing ERISA plan, this Department would, insofar as coverage may be provided to New York residents, consider it to be a MEWA.


New York Insurance Law § 4235(c)(1)(A) (McKinney 2000) authorizes the issuance group policy of accident & health insurance, inter alia:

A policy issued to an employer . . . , which employer . . . shall be deemed the policyholder, insuring with or without evidence of insurability satisfactory to the insurer, employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to the employment or a combination of such conditions and conditions pertaining to the family status of the employee, for insurance coverage on each person insured based upon some plan which will preclude individual selection. . . . The premium for the policy shall be paid by the policyholder, either from the employer's funds, or from funds contributed by the insured employees, or from funds contributed jointly by the employer and employees. If all or part of the premium is to be derived from funds contributed by the insured employees, then such policy must insure not less than fifty percent of such eligible employees or, if less, fifty or more of such employees.

New York Insurance Law § 4235(d)(1) defines employee:

In this section, for the purpose of insurance hereunder: ‘employees’ includes the officers, managers, employees and retired employees of the employer and of subsidiary or affiliated corporations of a corporate employer, and the individual proprietors, partners, employees and retired employees of affiliated individuals and firms controlled by the insured employer through stock ownership, contract or otherwise; "employees" may be deemed to include the individual proprietor or partners if the employer is an individual proprietor or a partnership; and "employees" as used in subparagraph (A) of paragraph one of subsection (c) hereof may also include the directors of the employer and of subsidiary or affiliated corporations of a corporate employer.

This Department has previously considered the situation of "independent" truckers that had contracted with a common carrier. See Opinion of September 19, 2000 dealing with New York Insurance Law § 4235. Based upon the contract between the truck operators and the common carrier, this Department determined, notwithstanding that the truck operators were not employees for other purposes, that sufficient control by the common carrier existed so the independent truckers could be considered "affiliated" with the common carrier, and thus "employees" for the purpose of New York Insurance Law § 4235(c)(1)(A). Based upon the furnished information, it does not appear that there is sufficient control exercised by the Manufacturer over the sales representatives to allow a similar conclusion with respect to the sales representatives.

The provision of health benefits to employees by an employer under a self-funded plan would, in the absence of ERISA, be considered the doing of an insurance business within the meaning of New York Insurance Law § 1101 (McKinney 2000) and, unless otherwise exempted under the Insurance Law, require a license from this Department. New York Insurance Law § 1102 (McKinney 2000). However, since ERISA provides, 29 U.S.C.A. § 1122(b)(2)(B) (West 2001), that employer welfare benefit plans are not to be considered as insurers under state law, this Department may not require such self-funded plan to be licensed.

Congress has, however, provided an exception to the ERISA exemption from state laws for employee welfare benefit plans for MEWAs, 29 U.S.C.A. § 1144(b)(6):

(A) 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 (or which is a multiple employer welfare arrangement subject to an exemption under subparagraph (B)), 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.

(B) The Secretary [of Labor] may, under regulations which may be prescribed by the Secretary, exempt from subparagraph (A)(ii), individually or by class, multiple employer welfare arrangements which are not fully insured. . . .

. . .

(D) For purposes of this paragraph, a multiple employer welfare arrangement shall be considered fully insured only if the terms of the arrangement provide for benefits the amount of all of which the Secretary determines are guaranteed under a contract, or policy of insurance, issued by an insurance company, insurance service, or insurance organization, qualified to conduct business in a State.

A MEWA is defined, 29 U.S.C.A. § 1003(40)(A):

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, (ii) by a rural electric cooperative, or (iii) by a rural telephone cooperative association.

The Secretary has not heretofore exempted any MEWAs from being subject to appropriate state laws.

Although the Indiana Department is expected to adopt rules governing most operations of a MEWA, Indiana Code § 27-1-34-9 (2001); and thus regulate them; in New York there is no comparable statute and accordingly, an uninsured MEWA, which the Manufacturer would be if it were considered a MEWA, may not provide a self-funded health plan unless licensed by this Department or otherwise exempted under the Insurance Law.

The provisions governing MEWAs were added by Congress, Public Law 97-473, to grant states some modicum of authority over arrangements that did not fall within traditional arrangements, such as single employer plans, trade association plans, or labor union plans. The legislative history of the MEWA amendment to ERISA indicates it was intended to eliminate an exemption that had been taken advantage of by "scam artists":

It has come to our attention, through the good offices of the National Association of Insurance Commissioners, that certain entrepreneurs have undertaken to market insurance products to employers and employees at large, claiming these products to be ERISA covered plans. For instance, persons whose primary interest is in the profiting from the provision of administrative services are establishing insurance companies and related enterprises. . . . They are no more ERISA plans than any other insurance policy sold to an employee benefit plan.

House Committee on Education and Labor, Activity Report of Pension Task Force (94th Congress 2d Session, 1977) quoted in Cong. Rec. (daily ed. May 21, 1982) (statement of Rep. Erlenborn).

The arrangement contemplated by the Manufacturer would not be among those group recognized by New York Insurance Law § 4235, nor is it among those arrangements intended to be reached by the MEWA amendment. However, this Department would not regard the contemplated arrangement as constituting a MEWA. Thus, the plan would continue to be entitled to an ERISA exemption from the otherwise applicable licensing requirements of the New York Insurance Law.

The second question, as to whether this Department would accept registration with Indiana as constituting compliance with New York law, is therefore moot.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.