Multiple Employer Welfare Associations (Employee Benefits)

Not to be confused with Multiple Employer Trusts, which are generally not subject to ERISA legislation, Multiple Employer Welfare Associations, or MEWA's as they are more commonly known, allow smaller employers to band together to obtain more affordable healthcare coverage. MEWA's have come under scrutiny in recent years following a number of fraudulent schemes which ran out of funds to pay claims. Originally States were frustrated in their attempts to regulate MEWA's as they were pre-empted from State regulation by ERISA. However in 1883 the Employee Retirement Income Security Act (ERISA) was amended by congress to allow states to directly regulate MEWA's if they chose to. MEWA's can represent a viable option for smaller employees however due diligence and scrutiny are essential. Under ERISA employers and plan fiduciaries have an obligation to protect plan assets and could be liable were they not to satisfy themselves with regard to a MEWA's financial stability prior to passing over plan assets and premiums. Questions to ask a MEWA include the following:

1. How long has the MEWA been in business?
2. Who is the administrator (if different)?
3. How long has the administrator been in business?
4. How many clients does the MEWA have?
5. What is its premium size?
6. What have its results been and are they audited?
7. Does a qualified actuary professionally set the rates?
8. Who are the stop-loss or other excess insurers?
9. Is it licensed by a State?