The DOL's Employee Benefits Security Administration has issued proposed regulations and related guidance addressing multiple employer welfare arrangements (MEWAs), which includes:

A MEWA is a plan or funding arrangement offered by two or more employers that provides health or welfare benefits to the employers' employees or their beneficiaries. Under the MEWA rules, two or more businesses are treated as a single employer if they are within the same control group. MEWAs are often marketed to small employers as a low-cost alternative to traditional forms of health insurance. According to the DOL, however, some MEWAs have used abusive or fraudulent practices and become financially unstable, making the MEWAs unable to pay claims.

Under the Affordable Care Act (ACA), the DOL is authorized to issue cease and desist orders, without prior notice or hearing, when it appears that a MEWA's conduct:

Under the proposed regulations, which would implement the DOL's new authority, a cease and desist order may apply to a MEWA or to persons with:

The DOL's authority to issue cease and desist orders under the proposed regulations is not limited to MEWAs that are ERISA-covered employee welfare benefit plans. Instead, the authority reaches any arrangements that control the assets or management of ERISA-covered plans established and maintained by others. Addressing the scope of a cease and desist order, the regulations provide that an order may, among other things, prohibit individuals from:

The proposed regulations also include procedures for individuals to request an administrative hearing of a cease and desist order. Individuals subject to a cease and desist order have 30 days from receiving the order to request a hearing before an administrative law judge.

In addition, the DOL can issue summary seizure orders when it appears that a MEWA is in a financially hazardous condition. This could occur, for example, if the MEWA is unable to pay benefit claims as they become due. A seizure order:

The DOL must make final cease and desist and summary seizure orders, and modifications or terminations of these orders, available to the public.

A second set of proposed regulations:

Under the ACA, MEWAs that provide medical care benefits and that are not ERISA-covered group health plans must:

The proposed regulations would:

This change would allow filers, among other things, to more efficiently copy or update previously reported information in future filings. The proposal also expands certain special filings events, for example, if a MEWA opens operations in additional states.

The DOL also proposed related, and substantial, revisions to Form M-1 and its instructions. Among other changes, the proposed Form M-1 would:

The DOL also proposed corresponding changes to Form 5500 and its instructions. The changes would:

These MEWAs would be ineligible to file Form 5500-SF. The DOL proposed a new Part III to Form 5500 that would ask whether an employee welfare benefit plan is a MEWA subject to Form M-1 reporting. If so, the plan would be:

According to the DOL, the regulations and guidance are intended to address abusive and fraudulent practices by some promoters, marketers and operators of MEWAs. Collectively, the proposed changes would provide the DOL with significant enforcement tools for addressing these abuses.

The elimination of paper filing for Form M-1 should come as no surprise, given the DOL's transition to all-electronic filing in the Form 5500 context. Also, the guidance explains that the Form M-1 self-compliance tool, which is a helpful resource for assessing group health plan compliance, will continue to be included in the Form M-1 instructions.

For analysis of the ACA, which includes the MLR standards, see Practical Law's Affordable Care Act (ACA) Toolkit.