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June 2000
Update In February 2000, the Employee Benefits Security
Administration (EBSA) published the new Form M-1 Annual Report for
Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities
Claiming Exception (ECEs). At that time, EBSA also published "Q's and
A's: Filing the Form M-1" which addresses the basics of the Form M-1
filing. In April 2000, EBSA then published an update, "More Q's and
A's: Filing the Form M-1", which addresses frequently-asked questions
received by EBSA on the Form M-1 filing. This new publication "Third
Installment of Q's and A's: Filing the Form M-1" addresses even more
questions received by the EBSA on the Form M-1.
Q. 20: The Department's regulations state that
no civil penalty will be assessed against the administrator of an entity
that has made a good faith effort to comply with a Form M-1 filing that is
due in the Year 2000. What are some of the types of situations that may
implicate this good faith safe harbor?
Many types of situations may implicate this good faith
safe harbor for Form M-1 filings due in the Year 2000. The following
situations are three examples of arrangements that would be eligible:
EBSA has received questions from group health plans
that provide coverage to two or more businesses regarding whether the
businesses are within the same "control group" within the
meaning of section 3(40) of ERISA and section 414 of the Internal Revenue
Code. Pending the adoption of regulations regarding a "control
group" under section 3(40) of ERISA, the administrator of a group
health plan will be eligible for the safe harbor if the administrator
determines that the plan provides coverage to two or more trades or
businesses that share a common control interest of at least 25 percent at
any time during the plan year, applying principles similar to the
principles applied under section 414 of the Internal Revenue Code.
Other questions have arisen involving situations
following changes in control of businesses (such as mergers and
acquisitions) where there is a short period of time during which employees
continue to be covered under the health plan of their former employer. The
administrator of an arrangement that is created by such a change in
control is eligible for the safe harbor, provided that the administrator
determines that the arrangement is temporary in nature. For purposes of
good faith compliance, the arrangement is considered temporary (and a
filing will not be required) if it does not extend beyond the end of the
plan year following the year in which the change in control occurs
Also, sometimes a plan covers a very small number of
individuals who are not employees of the plan sponsor, such as
non-employee members of the Board of Directors or independent contractors.
The administrator of this type of arrangement is eligible for the safe
harbor provided that the administrator determines that the number of
non-employee participants covered by the plan is very small. For purposes
of good faith compliance, the number of non-employee participants covered
by the plan is very small if it does not exceed one percent of the total
number of participants, determined as of the last day of the year to be
reported (or in the case of a 90-day origination report, determined as of
the 60th day following the origination date).
Q. 21: If a MEWA offers only dental coverage
that meets the definition of excepted benefits under sections 732(c) and
733(c) of ERISA, and their implementing regulations, is the MEWA required
to file the Form M-1?
No. If a MEWA provides coverage that consists solely of
excepted benefits which are not subject to Part 7 of ERISA, the MEWA is
not required to file the Form M-1. The purpose of the Form M-1 filing
requirement is to provide information concerning compliance by MEWAs with
the requirements of Part 7 of ERISA (including the provisions of the
Health Insurance Portability and Accountability Act, the Mental Health
Parity Act, the Newborns' and Mothers' Health Protection Act, and the
Women's Health and Cancer Rights Act). 65 FR 7153.
However, if a MEWA provides coverage that consists of
both excepted benefits and other benefits for medical care that are not
excepted benefits, the MEWA is required to file the Form M-1.
Q. 22: I understand that the 1999 Form M-1 was
due on May 1, 2000. I just found out about the requirement and I missed
the May 1, 2000 deadline. What should I do?
EBSA is committed to working together with
administrators to help them comply with this filing requirement. In this
regard, with respect to filings due in the Year 2000, the Department does
not intend to assess penalties in cases where there has been a good faith
effort to comply with the filing requirement.
Accordingly, you should send in a completed copy of the
Form M-1 as soon as possible and attach a cover letter. This cover letter
should explain your good faith efforts to comply with the reporting
requirement.
Q. 23: Where can I get information on the Year
2000 Form M-1?
Information on the Year 2000 Form M-1 should be
available on EBSA's web site by the end of the year.
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