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:: Employee Welfare Benefit Plan

The terms “employee welfare benefit plan” and “welfare plan” mean any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186(c) of this title [Title 29] (other than pensions on retirement or death, and insurance to provide such pensions).

As noted by Justice Souter, ERISA’s definition of an employee welfare benefit plan is ultimately circular. Thus, [o]ne is thus left to the common understanding of the word “plan” as referring to a scheme decided upon in advance . . . Here the scheme comprises a set of rules that define the rights of a beneficiary and provide for their enforcement. Rules governing collection of premiums, definition of benefits, submission of claims, and resolution of disagreements over entitlement to services are the sorts of provisions that constitute a plan. See Hansen v. Continental Ins. Co., 940 F.2d 971, 977 (C.A.5 1991).” Pegram v. Herdrich, 530 U.S. 211, 120 S.Ct. 2143 (2000).

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  1. [...] In a self-funded plan, the employer assumes the financial risk for providing health care benefits to the plan participants. Though the employer will typically contracts with a third party administrator to assist in the administration of the plan, the employer bears the risk of plan solvency. Likewise, though an employer may purchase stop loss insurance, the employer bears the risk of plan solvency. In other words, the employer is responsible for claims under the plan regardless in a true self-funded plan. See Tri-State Machine, Inc. v.Nationwide Life Ins. Co., 33 F.3d 309, 315 (4th Cir. 1994); Thompson v. Talquin Bldg. Prods. Co., 928 F.2d 649, 653 (4th Cir. 1991). [Note: I will probably add string cites to this post later for reference.] [...]