What Is a Multiple Employer Trust?

If you’re looking for a better way to reduce costs for employee benefits, you might be wondering, ‘What is a Multiple Employer Trust?’

This type of employer-sponsored benefits plan is unique in that it involves more than one business.

Learn more about what this type of plan includes and what benefits you can offer if you invest in one in our small business guide to what a multiple employer trust is below.

What Is A Multiple Employer Trust? 

 

A Multiple Employer Trust (MET) is a legal trust created by a plan sponsor to bring together a group of small, unrelated employers to provide group medical coverage on a self-funded or insured basis. 

Like Health Plan Purchasing Cooperative, small businesses typically use MET plans. 

 

A MET is formed with more than ten employers within the same field. When you join the trust as an employer, you can enjoy a few benefits, including minimized tax liability. 

 

In 1984, the U.S. Congress authorized the formation of METs under Section 419(A) of the Internal Revenue Code. Employers must follow specific rules to guarantee no individual employer adds more to the plan than the rest. Approximately no more than 10 percent of the total funding for the benefit plan, to be exact. 

 

The plan’s purpose is to have all employers contribute equally to the plan. 

What Is A Multiple Employer Welfare Arrangement (MEWA)?

 

The Multiple Employer Welfare Arrangement (MEWA) is similar to the MET. MEWA plans are created by two or more employers to offer welfare benefits to employees, such as health care and pensions. 

 

The primary difference between a MET and a MEWA is that a MEWA is subject to the Employee Retirement Income Security Act of 1974 (ERISA) requirements. This act regulates the pension plans of businesses with more than 25 employees. 

 

As a MEWA, multiple employers can come together under the umbrella of an association to provide their benefits. Essentially, multiple employers belong to the same association and reap the financial benefits of doing so. 

 

Small businesses in Houston benefit from this plan style by gaining improved leverage in negotiations with insurance companies and healthcare providers. 

 

To learn more about Texas’ laws regarding MEWAs, please contact Primary Care Insurance Solutions. We would be happy to discuss whether this type of plan is right for your small business in Texas.

What’s The Purpose of Multiple Employer Trusts?

 

The primary purpose of a MET is to provide small business owners in Texas with a tax-advantaged way to offer benefits to employees. 

 

Larger businesses can afford larger benefits packages for their employees because cost is not an issue, and the larger the pool, the more affordable the plans. 

 

A MET is an excellent way for small businesses to also enjoy these benefits without paying significant monthly fees for their employees. 

 

Keep in mind that this style of benefits plan has various restrictions, so it’s important to work with a group health insurance broker who understands the red tape to get you set up. 

 

What Are The Benefits of Joining A MET?

 

The primary benefit for employers offering a MET is the costs are shared, and the risks are pooled for employers. 

 

Multiemployer plans provide employees with the competitive benefits they crave without the high costs to employers. Thanks to this unique plan, small business owners can offer an attractive benefits package without expensive fees. 

 

Another benefit employees enjoy is the ability to move among participating employers and retain their benefits packages. This can be an attractive quality to talented employees. The collective bargaining agreement among employers makes it less hassle for employees to switch positions and jobs if needed. 

 

What Are The Disadvantages of a MET Plan?

Limited Flexibility–One disadvantage of MET is that employers cannot choose individual experts for their plans. This can include a plan administrator, among other experts. This could prevent employers from tailoring their benefits packages to suit their employees’ needs or desires.

Fiduciary Responsibility--Another disadvantage is that joining a MET does not mean you are free of fiduciary liabilities. Employers are responsible for selecting and monitoring the MET. You are also responsible for ensuring the MET administrator has the highest fiduciary standards at a reasonable cost. 

Essentially, you are more limited with a MET than with other employer-sponsored group health insurance plans, and you have more responsibility when it comes to the legalities and fiduciary regulations if that applies to your business insurance plans.

What Requirements Do You Have to Meet to Qualify for MET?

If you’re interested in joining MET for your business and employer-sponsored plans, consider the following requirements to qualify. 

 

• Only employees of a current employer member or a working owner member of the group or association.
• Former employees of a current employer member of the group or association who became entitled to coverage under a group health plan while employed by the employer.
• Beneficiaries of the individuals mentioned above (e.g., spouses).

Who Can Participate in a Multiple Employer Plan? 

The sponsor of an MEP can be either a Board of Directors, which is appointed by adopting employers, to be the plan sponsor. Or it can be a Co-sponsorship, where each adopting employer is a co-sponsor of the plan. 

What You Need to Know About the Future of Group Health Insurance

The future of group health insurance is in flux. We know that MET plans could be a great option for small business owners who want to reduce their costs without cutting employee benefits. 

 

There are multiple ways to save on your group health insurance plans in Texas that you may not know about. Our team of qualified, knowledgeable, and friendly insurance brokers is eager to help you maximize your plan options and satisfy your employees. 

 

If you want to learn more about group health insurance plans, please get in touch with us.