Multiple Employer Welfare Arrangement in California Allowed to Continue Large Employer Rating for Small Employers Per New California State Legislation

Biocom, an employer association for employers in the biotech life sciences based in San Diego, established a health plan for its member employers in 2012. The Beyond Benefits Life Science Association Trust, a multiple employer welfare arrangement or MEWA, helps small employers (often startups with limited budgets) obtain high quality health coverage at competitive premium rates. 

However, the Beyond Benefits Trust faced a significant regulatory challenge in 2019 when the California Department of Managed Healthcare (“DMHC”) issued an “All Plan Letter” informing all multiple employer plans and insurance carriers that small employers (i.e., employers with 100 employees or less) could not receive large employer insurance rating through a trust, particularly a MEWA. In response, Biocom worked with Senator Patricia C. Bates (Rep. District 36) to sponsor a successful California Senate bill providing an exception for Biocom’s Beyond Benefits Trust, so that the trust could continue rating small employers as a large group. On October 8, 2021, California Governor Newsom signed the bill, supporting small biotech employers – many involved in important life science innovations, such as COVID vaccine development – and giving those employers the ability to afford robust health coverage for their employees.

Prior to sponsoring the Senate bill, Biocom and Beyond Benefits Trust, along with trust legal counsel Linda Stuessi of The Wagner Law Group and their insurance consultant, Marsh McLennan Agency (MMA), met with the DMHC to voice their concerns and show proof of the value of the program to small employers in the biotech industry. Biocom’s Chief Policy Officer, Jimmy Jackson, along with Todd Bennett and Trevor Walker from MMA, presented information showing that the insurance products offered to employers participating in Beyond Benefits Trust provided high quality, robust benefits exceeding the benefits packages offered in the normal small employer pool. The small employers in the biotech industry need these rich benefit packages to attract talent away from large scientific companies and continue their innovation. The Beyond Benefits Trust has shown over the years that when small employers come together to negotiate with insurance carriers for enhanced benefits and reduced premiums, they can be as effective as a very large employer in obtaining good pricing and benefits for their employees. 

When the DMHC was not willing to take regulatory action on its behalf, Biocom switched its focus to a lobbying effort at the California legislature, and Senator Bates and her staff helped to develop California Senate Bill 718. The lobbying effort included revision of the bill to meet concerns of other legislators and consumer groups. Over 100 biotech employers wrote to the California legislature and Governor Newsom in support of the bill. The passage of this Bill will allow these companies to continue providing valuable employee benefits and enable them to continue their innovation in the State of California. 

The Wagner Law Group is proud of Linda Stuessi’s work on this project to aid small employers in accessing the valuable healthcare plans of the Beyond Benefits Trust. Wagner Law Group attorneys also helped Biocom to establish the Beyond Benefits Trust and serve as Trust Legal Counsel – our attorneys have decades of experience establishing health trusts and providing legal counsel to them.

Biocom was also assisted in its legislative efforts by Moira Topp of Topp Strategies, Maureen Higgins of Sloat, Higgins, Jensen & Associates, and insurance consultants from Marsh McLennan Agency’s San Diego office.