What Is a Mult💛iple Employer Welfare Arrangement♔ (MEWA)?

A multiple employer welfare arrangement (MEWA) is a system for marketing health and welfare benefits to employers, for their employees. Also described as a "multiple employer trust (MET)," a multiple employer welfare arrangement happens when a 澳洲幸运5官方开奖结果体彩网:group of employers combines their contributions in a self-contributing benefits plan for the benefit of their employees.

For the arrangement to work, the employers must make contributions to the plan based on the number of employees they have and the estimated costs associated with each employee. MEWAs are a way for smaller companies to offer employee benefits outside of the government-run health insurance exchanges by sharing risk. They became popular as a result of the 澳洲幸运5官方开奖结果体彩网:Patient Protection an﷽d Affordable Care Act (ACA).

How a Multiple Emplo♍yer Welfa🐠re Arrangement (MEWA) Works

As defined by the 澳洲幸运5官方开奖结果体彩网:Employee ෴Retirওement Income Security Act (ERISA), a multiple employer welfare arrangement is "an employee welfare benefit plan, or any other arrangement which is established or maintained for the purpose of offering or providing" medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or daycare centers, scholarship funds, or prepaid legal services to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries.

Overall, a multiple employer welfare arrangement is a good way for smaller employers to get group health and other insurance benefits for their employers. By pooling their contributions together, these smaller employers are better positioned to offer the best benefits packages from insurance companies due to 澳洲幸运5官方开奖结果体彩网:economies of scale.

Also, since each employer is a partner in 𒀰a MEWA, they have the ability to suggest plan changes, giving them more power over what they can offer employees than when they go it alone.

Special Considerations

There are some financial considerations and challenges that need to be taken into account when an em𝓰ployer is thinking of participating in a MEWA🌳. In some cases, multiple employer welfare arrangements find themselves unable to pay claims as a result of inadequate funding or reserves. In more extreme cases, due to poor management or outright fraud and embezzlement, some MEWAs have seen their funds drained altogether.

As such, most MEWA administrators and part♌icipants buy stop-loss insurance to limit their liability. Such insurance covers errors and omissions, fidelity bonds, directors and officers, crime, cyber liability, and more.

MEWAs must follow ERISA law, and also may be subject to state insurance regulation, which can vary by jurisdiction (some states are MEWA-friendly; some not so much). An example of such state-level regulatory requirements can be found at the New Jersey Department of Banking and Insurance (an example of a state with generally higher oversight standards). At a minimum, MEWAs must follow fღiling, reporting an𒊎d funding guidelines.

The Bottom Line

A multiple employer welfare plan is a type of pooled benefit plan where unrelated companies can pool their resources to provide health care benefits to their employees. This type of plan is particularly useful to smaller companies, allowing them to provide health insurance at a lower cost.