DOL Confirms Limited Partnership's Health Plan is Not an ERISA-Covered Single Employer Plan
The United States Department of Labor ("DOL") has issued guidance (i.e., Advisory Opinion 2020-01A) to confirm that a limited partnership's health-benefit programs were not ERISA-covered group health plans.
Background. A partnership that managed the day-to-day affairs of various limited partners created a single-employer, self-insured group plan, which it offered to its employees and limited partners, as well as spouses and family members.
The partnership requested that the DOL confirm whether the limited partners' health programs were employee welfare benefit plans within the meaning of ERISA §3(1) and, if so, whether the arrangements would collectively constitute a single-employer group health plan sponsored by the limited partnership as an employer.
In its request to DOL, the partnership represented that the limited partners would not have any meaningful equity interest in the partnership, and they would not expect any appreciable financial benefit from their participation in the partnership. The only benefit that the limited partners would receive through the partnership would be health coverage that the limited partners would pay for separately.
Based on additional information included with the partnership's request, the DOL concluded that the limited partners did not report to any assigned "work" location or otherwise notify the partnership that they would be commencing work. Furthermore, the limited partners would not be required by the partnership to possess any particular work-related skills. The DOL also determined that the terms of the partnership agreement did not require the limited partners to perform any work for or through the partnership.
DOL Advisory Opinion 2020-01A. The DOL concluded that the limited partners would not be participants in a single-employer group health plan or in an ERISA plan. The DOL noted that there would be no employer-employee relationship between the partnership and the limited partners, and that the limited partners would not depend on the limited partnership as a source of revenue. As a result, the DOL found that the primary purpose for the arrangement was to acquire health coverage for the limited partners.
The DOL noted in its analysis that ERISA covers employee welfare benefit plans sponsored by an employer or employee organization for the benefit of plan participants who are themselves employees or former employees, and that ERISA's coverage expressly turns on the provision of benefits in the employment context. In the instant case, the DOL found the arrangement proposed by the general partner did not satisfy these criteria because the partnership is not the limited partners' employer, and the partners are neither employees nor employers with respect to the partnership.
DOL Advisory Opinion 2020-01A is available at: https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/guidance/advisory-opinions/2020-01a.pdf