Legal Alert: MEWA Form M-1 And Final Regulations Released

by FordHarrison
Contact

Executive Summary: The Department of Labor ("DOL") recently released a series of final rules affecting health benefits provided through multiple employer welfare arrangements ("MEWAs").  Notably, the 2012 Form M-1 filing deadline has been extended to May 1.  In addition, new guidance implementing portions of the Affordable Care Act ("ACA") applicable to MEWAs has been released.

Overview: Generally, a MEWA is an arrangement that offers medical benefits to employees or their beneficiaries of two or more employers.  MEWAs must comply with certain disclosure and annual filing requirements, as well as certain state-based insurance regulations. 

Some employee welfare benefit plans and other arrangements claim they are not MEWAs because they are established or maintained under, or pursuant to, one or more collective bargaining agreements.  These entities are referred to as "entities claiming exception" or "ECEs."  If an entity claims this exception, the entity must file the Form M-1 for a limited time only. 

MEWAs arise in several contexts.  Health and welfare coverage provided to leased employees by a Professional Employer Organization ("PEO") might be considered a MEWA if the PEO provides coverage to multiple recipient organizations, and the recipient organizations are determined to be the common law employer of the leased employees.  Additionally, an employer might inadvertently create a MEWA following a corporate transaction if it continues to provide health and welfare coverage to employees who are transferred to an unrelated buyer. 

Filing Deadline Extended.  Most MEWAs must annually file a Form M-1 usually in March.  This year, the filing deadline for the 2012 Form M-1 has been extended until May 1, 2013.  An additional 60-day, one-time extension to file will automatically be granted if the administrator of the MEWA requests an extension in accordance with the Form M-1 instructions.

In accordance with the ACA, a MEWA plan administrator is required to file the Form M-1 30 days before beginning operations in any state.  A MEWA plan administrator must also make a special Form M-1 filing within 30 days of any of the following: (1) knowingly operating in any additional state or states that were not indicated on a previous Form M-1 filing; (2) operating with regard to the employees of an additional employer (or employers, including one or more self-employed individuals) after a merger with another MEWA; (3) the date on which the number of employees receiving coverage for medical care under the MEWA is at least 50% greater than the number of these employees on the last day of the previous calendar year; or (4) experiencing a material change (as described in the instructions to the Form M-1).

For registration, origination, and special filings, the 2012 Form M-1 is due for events beginning on or after July 1, 2013, with a one-time, additional 60-day extension available on request.

Form M-1, Revised.  The 2012 Form M-1 is substantively different from the 2011 Form M-1.  The revised Form M-1 includes additional fields for filers to indicate the type of entity and the type of filing, and it expands the amount of custodial and other financial information collected. 

MEWAs are still required to certify compliance with part 7 of ERISA by using the 36-page checklist/questionnaire that needs to be completed as part of the form.  As with previous years, there are penalties associated with incomplete or incorrect forms.  Additionally, all plan administrators must now file the Form M-1 electronically using the online filing system.

In addition, the final rules contain the following components:

  • Cease and Desist Orders.  The ACA authorizes the DOL to issue a cease and desist order, without prior notice or hearing, when it appears that the conduct of a MEWA is fraudulent, creates an immediate danger to the public safety or welfare, or is causing or can be reasonably expected to cause significant, imminent, and irreparable public injury.Persons who are the subject of a cease and desist order may request an administrative hearing to show cause why the order should be modified or set aside.  The final rules describe the procedures for a hearing before a DOL administrative law judge.
  •  "Summary Seizure" Orders.  The ACA provides that the DOL may issue a "summary seizure" order to preserve plan assets when the DOL has probable cause to believe that a MEWA is in a financially hazardous condition.  The DOL will normally obtain judicial authorization, and appointment of an independent fiduciary or receiver, before issuing the order.  However, the new regulations allow the DOL to issue the order first, and then promptly seek authorization when it reasonably believes any delay will result in loss or concealment of assets.
  • MEWA Reporting and Registration.  Under the final rules, all ERISA-covered MEWAs and ECEs subject to the Form M-1 reporting requirements must file a Form 5500 Annual Return/Report, regardless of the plan size or type of funding, and include information regarding compliance with the Form M-1 filing requirements.
  • Changes to the Form 5500.  The revisions to the Form 5500 enhance the Department's ability to enforce the Form M-1 reporting requirements by requiring all ERISA-covered MEWAs subject to the Form M-1filing requirements to indicate whether they are currently in compliance with the Form M-1 requirements and include proof of Form M-1 filings as part of the Form 5500.

FordHarrison's Employee Benefits team has extensive experience with MEWAs, and we can assist you in the preparation of Form M-1 Filings, and compliance with the new rules and regulations.

If you have any questions regarding this legal alert please contact Tiffany Downstdowns@fordharrison.com, Isabella Leeilee@fordharrison.com, Scott Wagner, swagner@fordharrison.com, any member of FordHarrison's Employee Benefits Practice Group, Gordon Berger, gberger@fordharrison.com, or the FordHarrison attorney with whom you usually work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© FordHarrison | Attorney Advertising

Written by:

FordHarrison
Contact
more
less

FordHarrison on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.