United States: DOL Issues Final Rules On MEWA Reporting And Enforcement Under Healthcare Reform

Last Updated: April 3 2013
Article by Jessica S. Sackin and Jeffrey R. Capwell

McGuireWoods Healthcare Reform Guide: Installment No. 30

This is the 30th in a series of WorkCite articles concerning the Patient Protection and Affordable Care Act and its companion statute, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the Act). In this article, we discuss two sets of final rules issued by the Department of Labor (DOL or Department) addressing multiple employer welfare arrangements (MEWAs) in light of changes made by the Act. The rules serve to expand the Department's enforcement authority over MEWAs.

One set of rules contains expanded reporting requirements applicable to both MEWAs and entities claiming exception from MEWA status (the Reporting Rules). In conjunction with the Reporting Rules, the DOL also issued notices detailing changes to the Form M-1, Report for Multiple Employer Welfare Arrangements and Certain Entities Claiming Exception, and to the Form 5500, Annual Return/Report of Employee Benefit Plan.

The other new rules implement the direct enforcement techniques the DOL is now authorized by the Act to use to target fraudulent MEWAs, such as ex parte cease-and-desist orders and summary seizures of assets of financially unstable MEWAs (the Enforcement Rules).


MEWAs are arrangements that provide healthcare and other welfare benefits to employees of two or more unrelated employers. They can be ERISA-covered employee welfare benefit plans (plan MEWAs) or other non-ERISA funding arrangements (non-plan MEWAs). MEWAs do not include plans or arrangements that are established or maintained pursuant to a collective bargaining agreement. Entities that claim to fall under this exception are known as Entities Claiming Exception (ECEs).

MEWAs can provide employers with an effective, affordable way to make medical coverage available to their employees. However, historical gaps in enforcement and regulation of MEWAs have often given rise to abuses and fraud perpetrated by MEWA promoters and operators, particularly those associated with unlicensed entities. In extreme cases, MEWAs have been drained of their resources and left unable to pay benefit claims. Both sets of final rules are intended to help combat such abuses.

Reporting Rules

Form M-1

Since the passage of HIPAA in 1996, both plan and non-plan MEWAs that provide medical benefits have been required to file an annual Form M-1 with the DOL to demonstrate compliance with the group health plan requirements in Part 7 of ERISA. ECEs have also been required to file the Form M-1 annually but only during the first three years of operation.

The Reporting Rules implement additional filing requirements applicable to both MEWAs and ECEs. In addition to the annual Forms M-1, MEWAs and ECEs must now file a Form M-1 at least 30 days before beginning initial operations and within 30 days after specified triggering events, such as beginning operations in an additional state not previously reported on a Form M-1 or experiencing a "material change" as defined in the Form M-1 instructions. In conjunction with the expanded Form M-1 filing requirements, the DOL also issued a notice revising the Form M-1 itself. The revised form requests more information than previously required, including expanded custodial and financial information, additional information regarding assets and fiduciaries, and identification of a broader group of individuals associated with the MEWA or ECE.

On account of the new filing requirements, the filing deadline for the annual 2012 Form M-1 has been moved from March 1, 2013 to May 1, 2013, but an extension may be granted until July 1, 2013. Forms M-1 reporting on initial operations or other special events must be filed for events beginning on or after July 1, 2013, with a 60-day extension available. The Reporting Rules eliminate the paper filing option and require that the new Form M-1 be filed electronically.

Entities exempt from the reporting requirements in the Reporting Rules include MEWAs and ECEs that are licensed as health insurance issuers in every state in which they operate and those that provide coverage only through group health plans that are not covered by ERISA (for example, a governmental plan or church plan).

Form 5500

The Reporting Rules also require all MEWAs or ECEs that are employee welfare benefit plans and that are subject to the Form M-1 filing requirement to file a Form 5500 as well, beginning with the 2013 filing year, regardless of plan size or type of funding. The 2013 Form 5500 will include a new Part III, which MEWAs and ECEs will be required to complete to demonstrate compliance with the Form M-1 filing requirements. The instructions to the 2013 Form 5500 will include directions for completing this new section in a nonstandardized attachment. The new Part III will be fully integrated into the Form 5500 for 2014 and all subsequent years. The DOL has indicated that the failure to provide information on the Form 5500 about compliance with the Form M-1 filing requirement could result in the rejection of the form as incomplete and the assessment of civil penalties.

Enforcement Rules

As indicated above, the Act gave the DOL the power to issue cease-and-desist orders against abusive MEWAs and individuals associated with them, and to seize the assets of a financially unstable MEWA if necessary to protect participants, employers or other members of the public. The Enforcement Rules implement these two new DOL powers and set forth the criteria under which they may be invoked. The rules only apply to plan MEWAs and to those non-plan MEWAs that offer benefits in connection with one or more employee welfare benefit plans subject to ERISA. Health insurance issuers that are licensed and approved by each state in which they offer health insurance coverage are excepted from coverage under the rules.

Cease-and-Desist Orders

Under the final rules, the DOL may issue a cease-and-desist order, without prior notice or hearing, when it determines it has reasonable cause to believe that the MEWA or any individual acting on behalf of the MEWA (including a third-party administrator) has engaged in conduct that:

  • Is fraudulent;
  • Creates an immediate danger to the public safety or welfare (in that it unreasonably increases the risk of nonpayment of benefits); or
  • Is causing or can be reasonably expected to cause significant, imminent and irreparable public injury.

Seizures of MEWA Assets

The DOL also has the authority under ERISA and the final rules to summarily seize a MEWA's assets if it appears that the MEWA is in financial jeopardy. In the normal course, the rules require the DOL to obtain court authorization prior to seizing assets. However, the Department may issue a summary seizure order without prior court authorization if it reasonably believes that a delay in issuing the order will result in the dissipation of plan assets or the destruction of plan records. Under the rules, a seizure order may apply to the MEWA or to any person with custody over its assets or control over its management or business. The DOL may also request that a court appoint a receiver or independent fiduciary, in addition to seeking other relief.

The rules allow parties who are subject to a DOL cease-and-desist order or seizure to request an administrative hearing with a DOL administrative law judge in order to show cause as to why the order should be modified or set aside.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions