County medical care facility benefit plan exemption

P/OPINION 76-108

                                                 3(32)
                   September 27, 1976




Dear          :

Thank you for your letters requesting a determination
under the Employee Retirement Income Security Act of 1974
(ERISA). I am sorry we could not reply sooner.

According to the letters and documents submitted, the
(named) Medical Care Facility (Facility) was established
by the counties of (named) under the authority of (State)
Statutes. The Facility is administered by a Board of
Trustees, an instrumentality of the three counties. The
Facility has established and is the sole contributor
toward a life insurance program and a pension plan for
employees. In addition, employees may make voluntary
contributions and, thus, be entitled to receive an
employee supplemental retirement benefit. You request
that we issue a determination that the employee benefit
programs are exempt from coverage under the ERISA.

Section 4(b) of Title I of the ERISA exempts governmental
plans from coverage thereunder. Section 3(32) defines the
term "governmental plan", in part, to mean a plan estab -
lished or maintained for its employees by the Government
of the United States, by the government of any State or
political subdivision thereof, or by any agency or
instrumentality of any of the foregoing.

It is concluded that the plans are established and
maintained for its employees by the Facility, an
instrumentality of the counties of (named), political
subdivisions of (State). Accordingly, they are "govern -
mental plans" as defined in section 3(32) of the ERISA,
and are exempt from coverage under Title I pursuant to the
provisions of section 4(b)(l).
                        - 2 -


P/OPINION    76-108

However, even though a governmental plan is exempt from
coverage under Title I, many of the tax provisions of
Title II (which are administered by the Internal Revenue
Service) may apply. For example, governmental plans may
qualify under section 40l(a) of the Internal Revenue Code
in order to attain special tax treatment for employees who
participate under such types of plans. Although a govern-
mental plan does not have to meet the alternative minimum
participation, vesting, and funding requirements added to
the Code by Title II, in order to attain qualified status,
it must satisfy the coverage requirements of section
40l(a)(3) of the Code, the nondiscrimination rule of
section 40l(a)(4), and the vesting provisions of section
40l(a)(7), as in effect prior to the enactment of ERISA.
In addition, qualified governmental plans must satisfy the
requirements of section 415 of the Code relating to
contributions or benefits.

Sincerely,