US Labor Department issues final rules for multiple employer health care arrangements

WASHINGTON — The U.S. Department of Labor's Employee Benefits Security Administration today announced final rules under the Affordable Care Act to protect workers and employers whose health benefits are provided through Multiple Employer Welfare Arrangements. The final rules increase the department's enforcement authority to protect participants in MEWAs and call for such plans to adhere to enhanced filing requirements.

"A MEWA can be a means to offer benefits to workers where none other exists. But too often the individuals operating such arrangements take advantage of employers who want to make health insurance available to workers," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "Today's final rules give the department more tools to protect the employees of small companies that band together to purchase benefits."

A MEWA is an employee welfare plan or other arrangement through which multiple employers might seek to provide health care and other benefits to their workers. Employers are often told that MEWAs are more affordable than traditional forms of coverage, but unscrupulous promoters, marketers and operators of certain MEWAs have taken advantage of gaps in the law to avoid state insurance regulations, putting enrollees at financial risk. These actions include the requirement to maintain sufficient funding and adequate reserves to pay health care claims of workers and their families. EBSA has been involved in many cases where MEWAs have been operated by individuals who drained them of their assets through excessive administrative fees or outright embezzlement, leaving participants and their families with unexpected, unpaid health care bills. The Affordable Care Act includes provisions implemented by today's final rules that are designed to remedy these gaps.

The final rules authorize the secretary of labor to immediately issue a cease and desist order when it is apparent that fraud is taking place within a MEWA. The secretary could also seize assets from a MEWA when there is probable cause that the plan is in a financially hazardous condition. The final rules also require MEWAs to register with the Labor Department prior to operating in a state. To streamline the process, the department is making available a new, all-electronic filing system that also will serve as a searchable registry of MEWAs.

The final rules, and related changes to the Form 5500 Annual Return/Report, also enhance the department's ability to enforce Form M-1 filing requirements. This enhancement is achieved by requiring all employee welfare plans that file a Form M-1 to file a Form 5500 including information on compliance with Form M-1 filing requirements. Complete details on all provisions are included in the final rules and form revision notices, which will be published in the March 1 edition of the Federal Register. They can be read now at https:/www.dol.gov/find/20130228a/ (Ex Parte Cease and Desist and Summary Seizure Orders) and https://www.dol.gov/find/20130228b/ (Filings Required of Multiple Employer Welfare Arrangements and Certain Other Related Entities).

EBSA protects the retirement, health and other workplace-related benefits of America's workers and retirees, and their families. The agency oversees approximately 707,000 private sector retirement plans, 2.3 million health plans and a similar number of other benefit plans that cover more than 141 million Americans. Learn more at http://www.dol.gov/ebsa/. For more information about the Affordable Care Act, visit http://www.healthcare.gov.