In Steigleman v. Symetra Life Ins. Co., 2023 WL 7413668 (D. Ariz. 2023), a court considered whether a package of various welfare benefit insurance policies an individual business owner arranged for herself and her employees was subject to ERISA. Ultimately, the court concluded that the business owner’s involvement in the package of insurance policies constituted an “ongoing administrative scheme” that made it subject to ERISA.

The lawsuit arose in connection with a dispute over long-term disability coverage for the business owner. The insurance company claimed that the coverage was subject to ERISA. Still, the business owner claimed it was not, which would have allowed the court to decide the lawsuit under state law, thus granting her the potential for more expansive remedies. 

Determination of the existence of an ERISA plan depends on the facts and circumstances viewed from the perspective of a reasonable person. The key analysis is whether the business owner’s arrangement of the package of insurance policies for herself and her employees represented an “ongoing administrative scheme.” Elements that might indicate an “ongoing administrative scheme” include the employer’s ability to exercise discretionary decision-making and the need for the employer to coordinate and control the financial aspects of the policies periodically. 

In this instance, the business owner made discretionary choices concerning the benefits available to herself and the employees, such as selecting different medical coverage and which portions would be paid by the employer. She also paid premiums for the policies from her commission check and treated those premiums as business expenses for tax purposes. Based on these facts, the court concluded that an “ongoing administrative scheme” promised employees certain benefits and necessitated ongoing financial monitoring. Therefore, the policies were subject to ERISA. 

The court also noted that the employer’s intent to create or not create an ERISA plan was not determinative as to whether an ERISA plan exists. Employers can inadvertently create benefits plans subject to ERISA. Likewise, the fact that the business owner failed to comply with ERISA administrative and reporting requirements was irrelevant as to whether the plan was subject to ERISA. As a result, employers should be aware of the basic elements of ERISA plans and be fully aware of whether their benefits plans are subject to ERISA.