Federal Court Finds ERISA-Covered Plan May Be Comprised of Individual Rather than Group Insurance Policies


Employers should be aware that an employee welfare benefit plan may be comprised of individual, rather than group, insurance policies, as illustrated by a recent federal court decision from Tennessee. In Alexander v. Provident Life and Accident Insurance Co., No. 1:09-CV-27 (E.D. Tenn. Oct. 16, 2009), the court held that a medical practice group established and maintained an employee welfare benefit plan within the meaning of section 3(1) of ERISA through the purchase of insurance for its physician employees. The opinion clarifies that if a class of employees acquires individual policies and, by virtue of their employment relationship with the employer, obtains a benefit that they could not otherwise have obtained – such as a discount on premiums payable under the policies – the employer will be deemed to have established an ERISA plan.

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