how a multiple employer welfare arrangement mewa works
as defined by the employee retirement income security act erisa a multiple employer welfare arrangement is an employee welfare benefit plan or any other arrangement which is established or maintained for the purpose of offering or providing medical surgical or hospital care or benefits or benefits in the event of sickness accident disability death or unemployment or vacation benefits apprenticeship or other training programs or daycare centers scholarship funds or prepaid legal services to the employees of two or more employers including one or more self employed individuals or to their beneficiaries overall a multiple employer welfare arrangement is a good way for smaller employers to get group health and other insurance benefits for their employers by pooling their contributions together these smaller employers are better positioned to offer the best benefits packages from insurance companies due to economies of scale also since each employer is a partner in a mewa they have the ability to suggest plan changes giving them more power over what they can offer employees than when they go it alone special considerationsthere are some financial considerations and challenges that need to be taken into account when an employer is thinking of participating in a mewa in some cases multiple employer welfare arrangements find themselves unable to pay claims as a result of inadequate funding or reserves in more extreme cases due to poor management or outright fraud and embezzlement some mewas have seen their funds drained altogether as such most mewa administrators and participants buy stop loss insurance to limit their liability such insurance covers errors and omissions fidelity bonds directors and officers crime cyber liability and more mewas must follow erisa law and also may be subject to state insurance regulation which can vary by jurisdiction some states are mewa friendly some not so much an example of such state level regulatory requirements can be found at the new jersey department of banking and insurance an example of a state with generally higher oversight standards at a minimum mewas must follow filing reporting and funding guidelines 