How to determine whether a Welfare Benefit Arrangement is an ERISA Plan

Determining exactly which plans are ERISA welfare benefit plans is complicated. Even minimal employer involvement, in some situations, has lead to a court’s finding that an arrangement has created an ERISA plan. Employers looking to provide benefits to employees without originally creating an ERISA-qualified plan should use extreme caution as they may inadvertently create an ERISA plan, subjecting it to ERISA rules.
An ERISA plan exists if a plan, fund or program is established or maintained by an employer, employee organization or both, for the purpose of providing specified benefits to participants and their beneficiaries.
This checklist, relating to each of these categories, will help guide you in determining if your welfare benefit plan is an ERISA plan.

Plan, Fund or Program?

Could a reasonable person:
· Determine what the arrangement’s intended benefits are?
· Determine the class of beneficiaries?
· Determine the source of financing for the arrangement?
· Understand how to apply for or receive benefits under the arrangement?

Established or Maintained?

· Did the employer intend to create a plan? Did the employer’s actions suggest that it decided to extend     benefits?
· Is the employer clearly involved in the plan administration?
· Does the arrangement include ongoing administration?
· Is the arrangement an informal practice (payroll deduction), or is a funding mechanism present (ex:             funded trust)?
· Is there a written plan document?
· Are employees aware of the plan, and have they relied on its existence?

By an Employer, Employee Organization or Both?

Is the arrangement offered by an employer or an employee organization?

For Providing Specified Benefits?

Does the arrangement provide participants and beneficiaries with benefits specifically covered by ERISA as a welfare benefit plan? These include:
· Medical, surgical or hospital care
· Benefits for accident, disability, sickness or death
· Unemployment benefits
· Vacation benefits
· Apprenticeship or other training programs
· Day care centers
· Scholarship funds
· Prepaid legal services
· Holiday and severance pay plans
Does the arrangement cover benefits specifically exempt by ERISA? Under ERISA, welfare benefit plans do not include the following:
· Overtime and other premium pay
· Sick pay
· Leave pay
· On-premises facilities
· First-aid centers
· Holiday gifts
· Sales to employees
· Hiring halls
· Remembrance funds
· Strike funds
· Industry advancement programs
· Group insurance programs
· Unfunded scholarship funds
· Labor-management cooperation funds
· Job banks

To Participants and their Beneficiaries?

Do employees receive benefits under the arrangement? Or are the benefits received only by nonemployees? ERISA plans cover employees, former employees, union members and beneficiaries of any of these. A plan that no employees participate in is not an ERISA welfare benefit arrangement.