13.2 b Flashcards
A multiple employer plan is established through a financial contract called a ______ in which each employer joins and pays premiums towards in order to participate in the multiple employer plan. The trust is established and managed by trustees who serve as the master policyowner and sponsor of the trust. As a small employer joins the trust, its employees receive certificates of insurance under the group life plan paid for through the trust.
Multiple Employer Trust (MET)
Not to be confused with a multiple employer plan, a ______ is established by two or more employers within a related industry who are also part of a collective bargaining agreement. Unions and similar labor organizations establish multiemployer plans for the benefit of employees who may transfer between employers within the same union. Because a collective bargaining agreement exists between these employers, the group is categorized and treated as a single entity. Group size is based on whether the plan covers local members only or if it provides coverage on a larger national or international scale.
Multiemployer Plan
Similar to a multiple employer plan, a multiemployer plan is established through a type of trust, known as a ______, which is specific to employers who are associated through a common bargaining agreement. The name of this trust refers to the two Congressmen who spearheaded the Labor Management Relations Act of 1947, also referred to as the ‘Taft-Hartley Act’ which set forth regulation for such trusts to provide safeguards against unethical mismanagement of employee funds and plan benefits. Such regulation includes appointing a joint employer-union board of trustees to serve as the plan’s sponsor. Responsibilities include establishing and maintaining the trust, as well as regulating funds within the trust.
Taft-Hartley Trust
Welfare arrangements, known as Multiple Employer Welfare Arrangements, or MEWAs, are utilized by two or more employers of similar professions or trades (but not associated through a collective bargaining agreement) who group together and form a type of multiple employer trust or other arrangement in order to provide benefits to participating employers. In comparison to a typical multiple employer trust in which several small employers group together to purchase insurance at a lower rate as a result of the increased size of the group, MEWAs are often ______. Although insurance is sometimes utilized, most MEWAs provided non-insured funds designated to pay employee claims instead of purchasing insurance through an insurer. As a result, MEWAs were often the subject of mismanagement and fraud in the past, prompting both state and federal regulators to place strict requirements on MEWAs under which to operate to ensure compliance with regulation under both ERISA and state insurance laws. Although it is important to understand such arrangements, MEWAs have become obsolete in many states and only few such arrangements currently exist.
self-insured or partially insured arrangements
Group insurance is also common in non-employment groups including professional, civic, community organizations, alumni and professional associations, and societies such as fraternal benefit societies or other similar groups. As with an employer-related group, a trust can be established by a group of similar associations in order to increase its ______ to reduce rates for is members.
‘economy of scale,’ or size
