What type of group or group-type insurance programs are expressly excluded from ERISA coverage?

For purposes of ERISA coverage, the term “employee welfare benefit plan” does not include a group or group-type employee pay-all insurance program offered by an insurer to employees or members of an employee organization, under which:  

1.    No contributions are made by the employer or employee organization;  

2.    Participation in the program is completely voluntary for employees or members;  

3.    The sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs, and to remit them to the insurer; and  

4.    The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs.  

A U.S. District Court in Florida ruled that a disability plan originally maintained by an employer remains subject to the provisions of ERISA even after it becomes an employee pay-all welfare benefit arrangement.  

Such employers who pay all of an insurance program may, unintentionally, find themselves subject to ERISA where the employer or employee organization that has offered the program inadvertently endorses it (e.g., advising employees that the program offers a “valuable” extension of existing insurance coverage, or the marketing pamphlets for the program contain the employer or employee organization’s logos).