Various Employer Welfare Arrangement (MEWA)
What Is a Multiple Employer Welfare Arrangement (MEWA)?
A various employer welfare arrangement (MEWA) is a system for marketing wellbeing and welfare benefits to employers, for their employees. Likewise depicted as a "different employer trust (MET)," a various employer welfare arrangement happens when a [group of employers](/group-health care coverage plan) consolidates 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 in view of the number of employees they have and the estimated costs associated with every employee. MEWAs are a way for smaller companies to offer employee benefits outside of the public authority run health care coverage exchanges by sharing risk. They became famous because of the Patient Protection and Affordable Care Act (ACA).
For more on MEWAs from the Department of Labor, see ERISA's Multiple Employer Welfare Arrangement instructive page, which records the rules administering them, fact sheets, filing requirements, news releases, current amendments, public remarks, and that's just the beginning.
How a Multiple Employer Welfare Arrangement (MEWA) Works
As defined by the Employee Retirement Income Security Act (ERISA), a numerous employer welfare arrangement is "an employee welfare benefit plan, or whatever other arrangement which is laid out or kept up with to offer or giving" medical, careful, 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, grant funds, or prepaid legal services to the employees of at least two employers (counting at least one self-employed people), or to their beneficiaries.
Overall, a various employer welfare arrangement is a decent way for smaller employers to get group wellbeing and other insurance benefits for their employers. By pooling their contributions together, these smaller employers are better situated to offer the best benefits bundles from insurance companies due to economies of scale.
Likewise, since every employer is a partner in a MEWA, they can recommend plan changes, giving them more power over what they can offer employees than when they go solo.
Special Considerations
There are a financial contemplations and moves that should be considered when an employer is considering participating in a MEWA. At times, numerous employer welfare arrangements find themselves incapable to pay claims because of insufficient funding or reserves. In additional extreme cases, due to poor management or outright fraud and embezzlement, some MEWAs have seen their funds depleted by and large.
In that capacity, most MEWA administrators and participants buy stop-loss insurance to limit their liability. Such insurance covers errors and omissions, fidelity bonds, directors and officers, crime, cyber liability, and that's just the beginning.
MEWAs must follow ERISA law, and furthermore might be subject to state insurance regulation, which can shift by jurisdiction (a few states are MEWA-accommodating; some not really). An illustration of such state-level regulatory requirements can be found at the New Jersey Department of Banking and Insurance (an illustration of a state with generally higher oversight standards). At the very least, MEWAs must follow filing, reporting and funding rules.
Features
- MEWAs are especially valuable for small companies, permitting them to offer employee's benefits past the public authority run medical coverage exchanges by sharing risk.
- With a MEWA, several employers join contributions in a self-contributing benefits plan, making payments in light of the number of employees and the estimated costs.
- A various employer welfare arrangement (MEWA) is a way for a group of employers to pool their resources to get their employees better medical coverage options.
