Group insurance exclusion and welfare reporting exemptions

P/OPINION 75-05


                                                              3(1)✓
                                                              104


                        October 20, 1975


Dear              :

This is in reply to your communication forwarding a
letter from            concerning the reporting obligations
of trade and professional associations under the Employee
Retirement Income Security Act of 1974 (ERISA). Please
accept my sincere apology for the delay in responding
to your letter. The heavy volume of inquiries and
regulations which must be promulgated under ERISA has made
an earlier reply impossible.

The reporting and disclosure regulations promulgated August 15,
1975, (40 FR 34526 et. seq.) answer        concern regarding
the reporting requirements of trade or professional associations
which are “passive” in the administration of welfare benefit
plans.

Generally, an employee benefit plan which cannot be said
to be “established or maintained by an employer or by an
employee organization, or by both” is not covered by ERISA.
The regulations attempt to clarify this by describing
certain types of benefit plans which are not considered
employee benefit plans under ERISA. Particularly relevant
to           focus of concern is section 2510.3-1(1) which
describes certain group insurance programs which would not
be employee benefit plans.

Limited exemptions are also permitted based on the assumption
that many of the reporting requirements of Title I of ERISA
are inappropriate as applied to small unfunded or totally
insured welfare plans. For this reason, those plans with
fewer than 100 participants, which could be overwhelmed
by the expense and administrative burden of all the reporting
and disclosure requirements, have been exempted. Section
2520.104-20 applies to welfare plans in which the employer
has a direct relationship with the insurance company or the
participants; section 2520.104-21 applies to welfare
2

P/OPINION 75-05



plans in which a trust or some other entity, such as a
trade association, is used as a conduit to pay insurance
premiums. Consequently, the reporting problem, as stated
by          has been alleviated by the regulations in
many cases.

The Department of Labor recognizes the danger of increasing
the administrative burden on employee benefit plans,
particularly small plans. As the August 15 regulations
indicate, the Department is trying to avoid that danger as
much as possible, consistent with the purpose of ERISA.

I trust this information will be helpful to you in replying
to         .

Sincerely,