1976, April, Pg. 507. Welfare Plans and ERISA.

5 Colo.Law. 507

Colorado Lawyer

1976.

1976, April, Pg. 507.

Welfare Plans and ERISA

507Vol. 5, No. 4, Pg. 507Welfare Plans and ERISAAn often neglected feature of the Employee Retirement Income Security Act of 1974 (ERISA) is that it imposes substantial requirements on fringe benefit arrangements which are not retirement plans (i.e., not profit-sharing plans, not pension plans and not deferred compensation plans). These nonretirement plans are called "employee welfare benefit plans" or "welfare plans." Examples of welfare benefit plans are accident and health insurance plans, medical reimbursement arrangements, wage continuation plans, split-dollar insurance plans, employee death benefit plans, and almost any plan, fund or program which provides an employee with some kind of nonretirement fringe benefit.

Welfare plans are governed by Title I of ERISA (the "Labor Provisions"). Title I prescribes strict rules in the areas of reporting and disclosure, participation, vesting, funding and fiduciary responsibility. This article examines the reporting and disclosure requirements and the fiduciary responsibility provisions. The participation, vesting and funding requirements are not applicable to welfare plans. (Sections 201(1) and 301(a)(1).

Briefly, a welfare plan is defined by § 3(1) of ERISA and § 2510.3-1(a)(2) of the Department of Labor's regulations to mean any plan, fund or program established or maintained by an employer or employee organization for the purpose of providing its participants or beneficiaries with (1) medical, surgical or health care benefits, or (2) benefits in the event of sickness, accident, disability, death or unemployment, or (3) vacation benefits, apprenticeship or training programs, day-care centers, scholarship funds or prepaid legal services. Such benefits may be provided through the purchase of insurance or otherwise.

Several considerations are important in understanding the applicability of this definition. First, it is only employee welfare plans which fit within this definition. There must be at least one common law employee covered by the plan. The Secretary of Labor's final reporting and disclosure regulations at § 2510.3-3(c)(1) provide that an individual and spouse are not deemed to be employees with respect to a trade or business, whether incorporated or unincorporated, which...