The Department of Labor (DOL) recently finalized regulations on an enhanced reporting obligation imposed by the federal health reform law primarily on multiple employer welfare arrangements (MEWAs). A MEWA is an employee welfare benefit plan providing benefits to employees of multiple, unrelated (i.e., not in the same controlled group) employers. MEWAs are different from multiemployer plans, which are plans benefiting employees of multiple employers, but the plans are maintained by union and management representatives under collective bargaining agreements.
Form M-1 Filing Obligations
The final regulations focus on the federal Form M-1, an annual and sometimes more frequent filing required of most MEWAs supplying healthcare benefits. Form M-1 filing obligations also apply, to a lesser extent, to multiemployer plans. The regulations update the Form M-1 and, among other things, require the Form to be filed electronically. Forms M-1 are filed by most MEWAs upon their inception, annually thereafter, and in the wake of certain special events.
The revised Form M-1 (to be used for the 2012 plan year) includes fields where filers indicate the type of filing they are making (registration, annual or special filing). The Form also requires filers to include more extensive custodial and financial information and to make new disclosures regarding assets and fiduciaries.
Under the new rule, an M-1 filing is required 30 days prior to a MEWA’s commencement of operations in any state.
Annual M-1 filings are required each March 1, for the previous year, although the DOL has deferred until May 1, 2013, the filing deadline for the 2012 Form M-1. Filers may obtain an extension to July 1, 2013.
A special M-1 filing is required within 30 days after the MEWA:
- Knowingly begins operating in any additional state that was not indicated on a previous M-1 report;
- Supplies coverage to employees of an additional employer after a merger with another MEWA;
- Supplies medical coverage to fifty percent (50%) more employees than the number of participants reflected on the last day of the previous calendar year; or
- Experiences a material change. A “material change” is any change in the custodial or financial information reported on Part II of the Form M-1.
Not every MEWA is required to file a Form M-1. For example,….
The DOL has made multiemployer plans subject to some of the M-1 filing requirements. A multiemployer plan is only subject to annual M-1 filings for the first three years it is in existence, but must make origination filings when the plan first begins operating in a State, experiences a merger or has a participant increase of 50% or more. Multiemployer plans are not required to file outside of the three year window when they move into an additional State or experience a material change.
Filing exceptions apply for MEWAs where the members are under at least 25% common control, for short-term MEWAs that arise in the wake of certain mergers and similar transactions, and for MEWAs that arise due to coverage of a few non-employees like outside directors.
Companion Form 5500 Filing Requirements
All plans that file Form M-1, regardless of plan size or type of funding, are required to file a Form 5500 each year to indicate whether they are currently complying with the Form M-1 requirements. In Part III of the 5500 Form (Questions 11a-c), plan administrators who indicate that the plan is subject to the M-1 filing requirements must enter a Receipt Confirmation Code for the most recent Form M-1 filed by the plan. Failure to answer the M-1 compliance question will cause the Form 5500 to be rejected as incomplete and cause civil penalties to be assessed under ERISA.