Multiple Employer Plans and the Affordable Care Act

Now that the U.S. Supreme Court has found most of the Affordable Care Act constitutional, it creates an interesting dilemma for the Dept of Labor. One of the key provisions of the Affordable Care Act establishes multiple employer plans which employers can utilize to provide health care benefits to their employees.

When the Dept. of Labor issued Advisory Opinion 2012-04A on May 25, 2012, it said that although the multiple employer plan requesting the Advisory Opinion “appears to provide benefits described in ERISA section 3(2), to be an employee pension benefit plan, it must also be established or maintained by an employer, an employee organization, or both.”

ERISA section 3(5), 29 U.S.C. 1002(5), defines the term “employer” as:

(5)The term “employer” means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.

ERISA section 3(4), 29 U.S.C. 1002(4), defines the term “employee organization” as:

(4)The term “employee organization” means any labor union or any organization of any kind, or any agency or employee representation committee, association, group, or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan, or other matters incidental to employment relationships; or any employees’ beneficiary association organized for the purpose in whole or in part, of establishing such a plan.

The Affordable Care Act does not contain an amendment to either ERISA sections 3(4) or 3(5). As of May 25, 2012, the DOL said, in Advisory Opinion 2012-04A, that it has issued no regulations interpreting ERISA section 3(5). Hopefully, those regulations will be coming soon.

In a footnote, there are rumors that the DOL has been meeting with representatives of multiple employer plans over the last month since Advisory Opinion 2012-04A was released. A check of the Federal Register revealed no meeting notice as required by the Government in the Sunshine Act, 5 U.S.C. 552b so I doubt that this rumor is true. Even if the DOL wanted to meet with representatives of multiple employer plans, there is no registry for multiple employer plans other than the IRS’ list of multiple employer plan who have requested a determination letter pursuant to Rev. Proc. 2007-44 during Cycle B. The first Cycle B ended Jan. 31, 2008, and we are currently in the next Cycle B (it ends Jan. 31, 2013), so the IRS will not have even a workable list of multiple employer plans until Jan. 31, 2013 at the earliest.

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