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CCH® PENSION AND BENEFITS — 2/2/06

Benefit plans of private college associations were employee welfare benefit plans

A benefits consortium and a mutual benefit corporation, formed by associations of independent private colleges for the purpose of providing health, life, accident and other welfare benefit coverage to the employees of its member employers, were employee welfare benefit plans, the Employee Benefits Security Administration (EBSA) has advised.

EBSA noted that it has previously ruled that where several unrelated employers merely execute identically worded trust agreements as a means to provide benefits, in the absence of any genuine organizational relationship between the employers, no employer association exists for purposes of ERISA §3(5). Similarly, where membership in an association is open to anyone engaged in a particular profession regardless of their status as employer, and where control of the group or association is not vested solely in employer members, the group or association is not a bona fide group or association of employers for purposes of ERISA §3(5).

Here, however, EBSA ruled that the private college members of the associations creating the benefit plans did have an organizational relationship limited to employers, and, therefore, the plans must be considered "employee welfare benefit plans" within the meaning of ERISA §3(1), maintained by a "group or association of employers" within the meaning of ERISA §3(5).

For more information on this and related topics, consult the CCH Pension Plan Guide.

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