DOL Advisory Opinion 2020-01A (Jan. 24, 2020)
A partnership requested the DOL’s opinion whether the general partner’s limited partnership programs would constitute ERISA employee welfare benefit plans and, if so, whether they would be single-employer group health plans sponsored by the limited partnerships as employers. The general partner would manage the day-to-day affairs of the limited partnerships while the limited partnerships captured, segregated, and aggregated electronic data generated by individual limited partners for sale to third-party marketing firms. This would be accomplished by installing software on individual limited partners’ personal electronic devices to capture the data tracking as they used the Internet on their devices. The individual partners would obtain health coverage through the limited partnership (paying their own premiums) but would apparently not have any meaningful equity interest in the limited partnership, not perform any work for or through the partnership, and not receive revenue.
The DOL pointed out that ERISA covers only employee welfare benefit plans sponsored by employers or employee organizations for the benefit of plan participants who are employees or former employees. In this scenario, the partnership is not the limited partners’ employer, and the limited partners are neither employees nor employers with respect to the partnership. The DOL was unconvinced that permitting the software to capture data constitutes “work” by the individual partners. Given the lack of an employment or services-based relationship, the DOL concluded that the individual limited partners are not “working owners” or “bona fide partners” for purposes of ERISA provisions allowing those categories of non-employees to participate in ERISA plans. It also found unpersuasive the argument that the program should be treated as a single ERISA-covered plan if it covered at least one common-law employee of the limited partnership even if that employee was “outnumbered by thousands or tens of thousands of limited partners” who obtain health coverage through the arrangement. In operation, obtaining health benefits appeared to be the sole reason for limited partners to participate in the arrangement. Because ERISA does not regulate the commercial sale of insurance outside the context of employment-based relationships, the DOL concluded that the arrangements would not constitute single-employer group health plans or “ERISA plans at all.”
EBIA Comment: Entities continue to test the bounds of ERISA to avoid Affordable Care Act requirements applicable only in the individual and small group insurance markets, such as mandatory coverage of essential health benefits and certain restrictions on risk underwriting. The association health plan regulations expanded the definition of “employer” to allow a wider variety of arrangements to be treated as single ERISA plans, thereby avoiding these requirements, but key provisions were set aside by a court (see our Checkpoint article). (Pending further resolution, interim guidance applies (see our Checkpoint article).) These issues will continue to play out on multiple fronts. For more information, see EBIA’s ERISA Compliance manual at Sections VI.E (“Are Plan Benefits Provided to Participants or Beneficiaries?”) and XIX.D (“Is There an ERISA Plan at the MEWA Level or at the Participating Employer Level?”). See also EBIA’s Health Care Reform manual at Section XIV.A (“Introduction and Understanding Small and Large Group Markets”), and EBIA’s Self-Insured Health Plans manual at Section III.D (“Who Can Sponsor a Self-Insured Health Plan”).
Contributing Editors: EBIA Staff