Generally, a multiple employer welfare arrangement (MEWA) is a welfare benefit program that is sponsored by a group of employers that have common business and industry interests, but not common ownership interests. The Department of Labor (DOL), continuing its effort to curb abusive MEWAs, has issued final regulations that revise a MEWA's Form M-1 reporting obligations and has revised the annual Form 5500 to include questions related to MEWAs. The Form 5500 revisions, in essence, allow the DOL to impose civil penalties of up to $1,100 per day on a "plan" MEWA (i.e., a MEWA that is a single employee welfare benefit plan as defined in ERISA) that fails to satisfy its Form M-1 reporting obligations. Previously, the DOL could impose such penalties on a plan MEWA only for its Form 5500 failures. The DOL continues to have authority to impose such penalties on a non-plan MEWA for failing to satisfy its Form M-1 obligations. Additionally, the new regulations shed light on the DOL's authority to issue a cease and desist order and/or a summary seizure order to protect MEWA participants and plan assets.
The DOL's Form M-1 revisions require a MEWA to report additional financial, custodial and administrative information, as well as the names of parties associated with the MEWA. Furthermore, in addition to the annual Form M-1, the new regulations require a MEWA to file a Form M-1 at least 30 days prior to beginning to "operate" in a State and within 30 days after certain other events. The new requirements and revised Form M-1, which now must be filed electronically, are generally effective April 1, 2013. The Form 5500 revisions, which require a plan MEWA to certify that it has satisfied its Form M-1 reporting obligations, are effective for the 2013 Form 5500 (which must be filed in 2014). Also beginning with the 2013 Form 5500, a "small" plan MEWA (i.e., one that covers fewer than 100 participants) must file the regular Form 5500 and not the shorter Form 5500-SF.
The Patient Protection and Affordable Care Act authorized the DOL to issue a cease and desist order and/or a summary seizure order to protect MEWA participants and plan assets. The DOL has issued final regulations, effective April 1, 2013, that prescribe procedures for issuing and contesting such orders. A cease and desist order generally prohibits a certain action, or a specific party from acting, where the DOL believes that fraud or other actions will impair the MEWA's ability to pay claims when due. A summary seizure order authorizes the DOL (or an independent fiduciary the DOL appoints) to seize some or all of a MEWA's assets if it is in a "financially hazardous condition." Normally, the DOL will seek judicial approval prior to issuing a summary seizure order, but it may issue such an order prior to seeking approval if the delay will likely result in dissipation or concealment of plan assets.