The 80% Trap
You run your companies like one big family. The IRS disagrees.
If you own multiple companies but have less than 80% common ownership between them, you generally cannot legally offer a single health plan to all employees.
If you do, you have inadvertently created a MEWA (Multiple Employer Welfare Arrangement).
The Risk: Intense DOL scrutiny, accidental insurance fraud, and massive daily penalties.
The Reality: "Total control" isn't enough. Without the right legal architecture, "business as usual" is a regulatory red flag.
The Solution: The "Mirror Image" Strategy
You don’t have to break up your benefits package to satisfy the government. You just need the right architecture. Our experienced professionals can restructure your plans from a legal perspective while keeping your benefits platform intact.
For your Employees: Nothing changes. They experience the same seamless, unified benefits package they have always enjoyed.
For the Regulators: They see a compliant, legally defensible structure that respects the separation of your companies.
Why "Off-the-Shelf" Solutions Fail
Standard, templated plan documents and routine filing services are designed for simple, single employers. They are not built for complexity.
The M-1 Blind Spot: You can’t file what you don’t know about. Commodity vendors won't flag the Form M-1 requirement, but DOL and the due diligence team of prospective purchasers of your business will. Missing this filing—which attests to your HIPAA and ACA compliance—or failing to document an exemption is one of the fastest ways to trigger a federal audit.
The 5500 Filing Trap: Insurance carriers provide aggregate data for the whole group. Commodity vendors simply plug that data into a standard Form 5500, which is signed under penalty of perjury and is a public record. That means you are effectively admitting to the government (and anyone else pulling your filing) that you are running a non-compliant MEWA.
The Ownership Risk: Ownership percentages change. A standard document is a snapshot in time; our retainer provides year-round monitoring to adjust your compliance strategy the moment your business structure evolves.
Thinking of Going Self-Funded? Read This First.
Self-funding a group of companies that don't all have 80% shared common ownership with each other strips away the federal safety nets that protect most other employers. Without a specialized strategy, the risks are severe:
The 50-State Nightmare: You may lose federal preemption, forcing you to register as an insurance company in every state where you have an employee.
The Audit Trap: Mishandling how funds move between your companies can trigger ERISA's requirement to put benefits contributions into a trust, forcing a mandatory CPA audit that can cost $15K-$25K every year.
No Small Plan Exemption: In a MEWA environment, the standard exemptions from having to file Form 5500 disappear. All MEWAs must file a 5500 for each plan of each employer, no matter the size of the plan.
Compliance is an Investment
When you're a multiple employer group, your benefits compliance risk increases and if not structured correctly, mistakes can be costly to remedy. Don't let a technicality become a liability.
ERISAfire can help proactively manage your benefits compliance risk. Reach out via the in-app messenger below or email us at sales@erisafire.com to request a proposal for a customized MEWA or mirror-image plan compliance risk management retainer.