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CCH® BENEFITS — 02/16/11

MEWA Is Subject To State Laws, DOL Asserts

from Spencer’s Benefits Reports: The Custom Rail Employer Welfare Trust Fund ("CREW"), an employee health care benefit program designed exclusively for the rail industry, is a MEWA and is not fully insured for purposes of ERISA, according to Department of Labor Advisory Opinion 2011-01A.

The opinion notes that "Determining whether the CREW MEWA is fully insured for purposes of ERISA is significant in that such determination will dictate the extent to which a state may apply its insurance laws to regulate CREW."

Earlier, in DOL Advisory Opinion 2007-06A, the DOL found that, because CREW's insurance "did not unconditionally guarantee payment of all benefits due under the CREW Welfare Trust, as required by ERISA Sec. 514(b)(6)(D), CREW was not fully insured for purposes of ERISA".

Subsequently, CREW revised its certificate of insurance and again asked the DOL for a ruling on its status. Advisory Opinion 2011-01A reiterates that the trust is not fully insured: "Because it appears that Revised Certificate would not be issued as group health insurance nor regulated under the group health insurance laws of a state, the Department would not view CREW as fully insured under the Revised Certificate. Consequently, ‘any state law that regulates insurance may apply to the MEWA to the extent that such state law is not inconsistent with ERISA.’"

Advisory Opinion 2011-1A also notes that "ERISA Sec. 501(b) imposes criminal penalties on any person who is convicted of violating the prohibition in ERISA Sec. 519 against making false statements or representations of fact in connection with the marketing or sale of a MEWA." As recently as February 7, the CREW website (http://www.crew-benefits.com/index.html) included this statement, "CREW qualifies as a fully insured employee benefit plan under federal ERISA standards."

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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