```

[Federal Register Volume 78, Number 41 (Friday, March 1, 2013)]
[Rules and Regulations]
[Pages 13781-13796]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04863]

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2520

RIN 1210-AB51

Filings Required of Multiple Employer Welfare Arrangements and 
Certain Other Related Entities

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Final rules.

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SUMMARY: This document contains final rules under Title I of the 
Employee Retirement Income Security Act (ERISA) that implement 
reporting requirements for multiple employer welfare arrangements 
(MEWAs) and certain other entities that offer or provide benefits that 
consist of medical care (within the meaning of section 733(a)(2) of 
ERISA and 29 CFR 2590.701-2) for employees of two or more employers. 
These final rules amend the existing Form M-1 reporting rules by 
incorporating new provisions enacted as part of the Patient Protection 
and Affordable Care Act (the ``Affordable Care Act''). They also amend 
existing Form 5500 annual reporting rules for ERISA-covered plans 
subject to Form M-1 reporting rules. Elsewhere in this edition of the 
Federal Register, the Employee Benefits Security Administration is 
publishing final rules related to the Secretary of Labor's new 
enforcement authority with respect to MEWAs, a notice adopting final 
revisions to the Form 5500 Annual Return/Report and its instructions to 
add new Form M-1 compliance questions, as well as an additional notice 
announcing the finalized revisions to the Form M-1 and its 
instructions. These improvements in reporting, together with stronger 
enforcement tools authorized by the Affordable Care Act, are designed 
to reduce MEWA fraud and abuse, protecting consumers from unpaid 
medical bills.

DATES: Effective date. These final rules are effective on April 1, 
2013. Applicability dates: These final rules pertaining to Form M-1 
filings generally apply for all filing events beginning on or after 
July 1, 2013, except that in the case of the 2012 Form M-1 annual 
report, the deadline is now May 1, 2013 with an extension until July 1, 
2013 available. The rules pertaining to Form 5500 annual reporting will 
be applicable for all Form 5500 Annual Return/Report filings beginning 
with the 2013 Form 5500.

[[Page 13782]]

FOR FURTHER INFORMATION CONTACT: Allison Goodman or Suzanne Bach, 
Employee Benefits Security Administration, Department of Labor, at 
(202) 693-8335. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (http://www.dol.gov/ebsa). Information on health reform can be found at http://www.healthcare.gov.

I. Executive Summary

A. Purpose of the Regulatory Action

1. Need for Regulatory Action
    ERISA section 101(g), 29 U.S.C. 1021(g), as amended by the 
Affordable Care Act, directs the Department of Labor (the Department) 
to promulgate rules requiring MEWAs that are not group health plans 
(non-plan MEWAs) to register with the Secretary of Labor (the 
Secretary) prior to operating in a State. The statute also allows the 
Department to promulgate rules requiring non-plan MEWAs to report 
annually for the purpose of determining the extent to which the 
requirements of ERISA part 7 are being carried out in connection with 
such benefits. While the statutory authority is directed at non-plan 
MEWAs, the Department asserts its authority under ERISA sections 505, 
29 U.S.C. 1135, 104, 29 U.S.C. 1024(b), and 734, 29 U.S.C. 1191c, 
consistent with the MEWA annual reporting rule promulgated in 2003 (the 
2003 rule or 2003 regulation), to apply these filing requirements to 
MEWAs which are group health plans (plan MEWAs) as well.
    The Form M-1 and the MEWA reporting requirements were originally 
developed under the 2003 rule and used as a mechanism to help States 
identify MEWAs in order to combat a history of MEWA fraud and abuse. 
Despite these reporting rules, MEWA abuses persist and often lead to 
insolvency.\1\ As a result, affected employees and their dependents 
become financially responsible for medical claims even though they 
previously paid premiums to MEWAs for their medical coverage.\2\ These 
regulations amend the 2003 rule and establish new registration and 
reporting requirements under the amended section 101(g) of ERISA. 
Specifically, these final rules establish filing requirements and 
deadlines that apply to MEWAs annually and upon specified events.
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    \1\ See, e.g., Chao v. Graf, 2002 WL 1611122 (D. Nev. 2002), In 
re Raymond Palombo, et al., 2011 WL 1871438 (Bankr. C.D. CA 2011) 
and Solis v. Palombo, No. 1:08-CV-2017 (N.D. Ga 2009); Chao v. 
Crouse, 346 F.Supp.2d 975 (S.D. Ind. 2004).
    \2\ See Kofman, Mila, Bangit, Eliza, and Lucia, Kevin, MEWAs: 
The Threat of Plan Insolvency and Other Challenges (The Commonwealth 
Fund March 2004), and Employee Benefits: States Need Labor's Help 
Regulating Multiple Employer Welfare Arrangements, March 1992, GAO/
HRD-92-40 Employee Benefits: States Need Labor's Help Regulating 
Multiple Employer Welfare Arrangements, March 1992, GAO/HRD-92-40.
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    The statute is detailed but not self-implementing, contains 
ambiguities, and specifically requires the Department to develop 
regulations. Therefore, these consumer protections cannot be 
established without these regulations.
2. Legal Authority
    The substantive authority for these regulations is generally ERISA 
section 101(g), which explicitly requires the Department to issue 
regulations requiring MEWAs to register with the Secretary prior to 
operating in a State. It further provides the Secretary with authority 
to issue regulations requiring MEWAs to report annually on their 
compliance with part 7 of ERISA. Section 505 of ERISA also gives the 
Secretary authority to prescribe such regulations as necessary or 
appropriate to carry out the provisions of Title I of ERISA, which 
includes the amended ERISA section 101(g). Further, ERISA section 734 
authorizes the Secretary to promulgate regulations necessary or 
appropriate to carry out the provisions of ERISA part 7.
    In addition, section 104(a)(3) authorizes the Secretary to exempt 
any welfare plan from all or part of the reporting and disclosure 
requirements of Title I or provide for simplified reporting and 
disclosure if she finds that such requirements are inappropriate as 
applied to welfare plans.

B. Summary of the Major Provisions of This Regulatory Action

    Paragraph (a) of Sec.  2520.101-2 in these final rules implements 
the general registration and reporting requirements and explains which 
entities are required to file. The regulations explain that while the 
language in section 101(g) of ERISA only applies to non-plan MEWAs, the 
regulations preserve the structure promulgated as part of the 2003 
rule, which required both plan MEWAs and non-plan MEWAs to file the 
Form M-1 based on authority found in sections 505 and 734 of ERISA.
    Paragraph (b) defines the terms used in the final regulations, with 
some additions and modifications from the 2003 rule. Paragraph (c) sets 
forth the requirement that, with certain exceptions, the administrators 
of MEWAs and certain entities that claim not to be a MEWA solely due to 
the exception in section 3(40)(A)(i) of ERISA (referred to as Entities 
Claiming Exception or ECEs) file reports with the Department.
    Paragraph (d) describes how MEWAs and ECEs will comply with the 
final rules by filing the Form M-1, and the conditions under which the 
Secretary may reject a filing.
    Paragraphs (e) and (f) set forth the timeframes when MEWAs and ECEs 
must file the Form M-1. Paragraph (g) directs that the Form M-1 be 
filed electronically. The information provided through Form M-1 filings 
will then be accessible by the public and other interested parties such 
as State regulators.
    Paragraph (h) explains the civil penalties that may result from a 
failure to comply with these final rules. Civil penalties for failure 
to file a report required by ERISA section 101(g) or Sec.  2520.101-2 
have been applicable for non-plan MEWAs under ERISA section 502(c)(5) 
since May 1, 2000.
    These final rules also amend regulations under ERISA sections 103 
and 104 to further enhance the Department's ability to enforce Sec.  
2520.101-2 by making the filing of the Form M-1 an integral part of 
compliance with ERISA's annual reporting requirements for plans subject 
to the Form M-1 filing requirements under Sec.  2520.101-2. As a 
result, failure to provide information on the Form 5500 about 
compliance with the requirement to file a Form M-1 may result in the 
rejection of the Form 5500 as incomplete and the assessment of civil 
penalties under ERISA section 502(c)(2).
    Finally, new criminal penalties were added by the Affordable Care 
Act under ERISA section 519 for any person who knowingly submits false 
statements or false representations of fact in connection with a MEWA's 
financial condition, the benefits it provides, or its regulatory status 
as a MEWA. The Affordable Care Act also amended ERISA section 501(b) to 
impose criminal penalties on any person who is convicted of violating 
the prohibition in ERISA section 519. The final rules retain the cross-
reference to sections 501(b) and 519 for the purpose of implementing 
these new rules as these provisions relate to filing a Form M-1.
    Final rules published elsewhere in today's Federal Register provide 
further guidance with respect to ex parte cease

[[Page 13783]]

and desist and summary seizure orders for MEWAs.

C. Costs and Benefits

    These final regulations are designed to impose a minimal amount of 
burden on legally compliant MEWAs and ECEs while implementing the 
Secretary's authority under the Affordable Care Act to take enforcement 
action against fraudulent or abusive MEWAs and working to protect 
health benefits for businesses and their employees. This rule 
implements the new provisions while preserving the filing structure and 
provisions of the 2003 rule, which directed plan MEWAs and non-plan 
MEWAs to file the Form M-1.
    The additional filing requirements will enhance the State and 
Federal governments' joint mission to take enforcement action against 
fraudulent and abusive MEWAs, thus limiting the losses suffered by 
American workers, their families, and businesses when abusive MEWAs 
become insolvent and fail to reimburse medical claims.
    Under the final regulations, MEWAs and ECEs will incur costs to 
fill out and electronically file the Form M-1 and Form 5500. The 
Department estimates that the annualized cost may be approximately $0.1 
million. As is common with regulations implementing new policies, there 
is considerable uncertainty arising from general data limitations and 
the degree to which economies of scale exist for disclosing this 
information. Nonetheless, the Department believes that these final 
regulations lower overall administrative costs from the 2003 rule 
because of the move to an electronic only filing system.
    In accordance with Executive Orders 12866 and 13563, the Department 
believes that the benefits of this regulatory action justify the costs.

II. Background

    The term ``multiple employer welfare arrangement'' (MEWA) is 
defined in section 3(40) of ERISA, 29 U.S.C. 1002(40), in pertinent 
part, as an employee welfare benefit plan, or any other arrangement 
(other than an employee welfare benefit plan), which is established or 
maintained for the purpose of offering or providing welfare benefits to 
the employees of two or more employers (including one or more self-
employed individuals), or to their beneficiaries, except that such term 
does not include any such plan or other arrangement which is 
established or maintained under or pursuant to one or more agreements 
which the Secretary finds to be collective bargaining agreements, by a 
rural electric cooperative, or by a rural telephone cooperative 
association. For purposes of this definition, two or more trades or 
businesses, whether or not incorporated, shall be deemed a single 
employer if such trades or businesses are within the same control 
group. The term ``control group'' means a group of trades or businesses 
under common control. The determination of whether a trade or business 
is under ``common control'' with another trade or business shall be 
determined under regulations of the Secretary applying principles 
similar to the principles applied in determining whether employees of 
two or more trades or businesses are treated as employed by a single 
employer under section 4001(b) of ERISA, 29 U.S.C. 1301(b), except 
that, for purposes of this paragraph, common control shall not be based 
on an interest of less than 25 percent.\3\
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    \3\ This provision was added to ERISA by section 302(b) of the 
Multiple Employer Welfare Arrangement Act of 1983, Public Law 97-
473, 96 Stat. 2611, 2612 which also amended section 514(b) of ERISA, 
29 U.S.C. 1144(a). Section 514(a) of ERISA provides that State laws 
that relate to employee benefit plans are generally preempted by 
ERISA. Section 514(b) sets forth several exceptions to the general 
rule of section 514(a) and subjects employee benefit plans that are 
MEWAs to various levels of State regulation depending on whether the 
MEWA is fully insured. Sec. 302(b), Public Law 97-473, 96 Stat. 
2611, 2613 (29 U.S.C. 1144(b)(6)).
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    The Health Insurance Portability and Accountability Act of 1996 
(Pub. L. 104-191, 110 Stat. 1936) (1996)) (HIPAA) amended ERISA to 
provide for, among other things, improved portability and continuity of 
health insurance coverage. HIPAA also added section 101(g) to ERISA, 
providing the Secretary with the authority to require, by regulation, 
annual reporting by non-plan MEWAs. The Secretary exercised the 
authority under the HIPAA provision by creating the Form M-1 under a 
2000 interim final rule and 2003 rule.\4\ Those rules generally 
required the administrator of both non-plan and plan MEWAs and ECEs to 
file the Form M-1 annually with the Secretary. The purpose of this form 
was to allow the Department to determine whether the requirements of 
part 7 were being met. Part 7 of ERISA includes statutory amendments 
made by HIPAA and other statutes for which MEWAs must annually report 
compliance.
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    \4\ 65 FR 7152 (02/11/2000) and 68 FR 17494 (04/09/2003). The 
Form M-1 is reissued each year in December by the Department and has 
been modified to address changes to the statutory provisions in part 
7 of ERISA.
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    The original MEWA reporting requirement created under HIPAA was 
also enacted in response to a 1992 General Accounting Office (GAO) 
report \5\ that detailed a history of MEWA fraud and abuse.\6\ To 
combat fraudulent MEWAs, the GAO recommended that the Department 
develop a mechanism to help States identify MEWAs. Although the annual 
MEWA reporting rules enabled the Department to develop a registry of 
MEWAs that filed the Form M-1, the requirement alone has not stopped 
the abuses discussed in the GAO report. MEWAs are frequently marketed 
by unlicensed entities that do not comply with State insurance reserve, 
contribution, and consumer protection requirements. As a result, such 
entities often offer health coverage at rates substantially lower than 
licensed insurers, making them particularly attractive to some small 
employers that find it difficult to obtain affordable health insurance 
for their employees. Unfortunately, due to insufficient funding and 
inadequate reserves, and in some situations, excessive administrative 
fees and fraud, some MEWAs have become insolvent and unable to pay 
medical benefit claims. This results in affected employees and their 
dependents becoming financially responsible for paying medical claims 
even after they paid premiums for their medical coverage. The 
unfortunate reality is that currently, the Department often does not 
find out about insolvent or fraudulent MEWAs until significant harm has 
occurred to employers and participants. Furthermore, while the 
Department--often working with State insurance departments--has had 
some success with both civil and criminal cases against MEWA operators, 
the monetary judgments are often uncollectible, leaving the employers 
and/or individual participants without coverage for claims that can be 
considerable.\7\
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    \5\ See, Employee Benefits: States Need Labor's Help Regulating 
Multiple Employer Welfare Arrangements, March 1992, GAO/HRD-92-40.
    \6\ For example, the 1992 GAO report indicated that between 1988 
and 1991, MEWAs left at least 398,000 participants and beneficiaries 
with over $123 million in unpaid claims. Meanwhile more than 600 
MEWAs failed to comply with State insurance laws. See supra note 3.
    \7\ See United States v. Gerald Rising, Jr., plea agreement, 11-
cr-00117-WYD-01 (U.S.D.Ct.CO) (In 2012, the owner of a MEWA that 
sold stop-loss insurance pled guilty for understating the claim 
amounts that would trigger stop-loss payments in order to charge 
excessive fees; the owner also commingled clients' premiums, 
overcharged fees, and issued fraudulent invoices, to a cost of over 
$3.6 million to his victims, which included over 250 individuals, 
businesses and government agencies.) See also United States v. 
Edwards, plea agreement, 1:05CR 265 (M.D.N.C. 2006) (In 2005, a MEWA 
operator, whom the Department showed collected over 36 million 
dollars in healthcare insurance premiums and failed to obtain health 
insurance coverage for its employer clients which resulted in 
thousands of uncovered employees and approximately $8 million in 
unpaid claims), and Solis v. W.I.N. Ass'n, L.L.C., et. al., slip op. 
4:11-cv-00616 (S.D. Tex. 2011) (The Department investigated a MEWA 
which failed to make payments on health care claims, charged 
excessive fees, engaged in self-dealing, and failed to disclose fees 
to the client employers in the plan. The Department obtained a 
Consent Judgment and Order against the MEWA operators for leaving 
hundreds of participants without coverage and permanently enjoining 
them from acting as fiduciaries in the future. Also, the court 
authorized the Secretary to bring a collection action for the plan 
losses against one of the MEWA operators relative to his ability to 
restore those plan losses.) For additional information about MEWAs, 
see http://www.dol.gov/ebsa/newsroom/fsMEWAenforcement.html.

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[[Page 13784]]

    The Patient Protection and Affordable Care Act (Pub. L. 111-148, 
124 Stat. 119) and the Health Care and Education Reconciliation Act of 
2010 (Pub. L.111-152, 124 Stat. 1029) (these are collectively known as 
the ``Affordable Care Act''), have established a multipronged approach 
to MEWA abuses. The principal provisions include sections 6601, 6605, 
and 6606 of the Affordable Care Act. Section 6601 prohibits false 
statements and representations in connection with the marketing or sale 
of a MEWA. Section 6605 enables the Secretary to issue administrative 
cease and desist orders when MEWAs engage in certain conduct and 
summary seizure orders against MEWAs in a financially hazardous 
condition. In addition, section 6606 amended section 101(g) of ERISA. 
Under this last amendment, MEWAs providing benefits consisting of 
medical care (within the meaning of section 733(a)(2) of ERISA, 29 
U.S.C. 1191b(a)(2)), which are not group health plans must now register 
with the Secretary prior to operating in a State. Congress left 
untouched the Secretary's authority to issue regulations directing such 
MEWAs to report, not more frequently than annually, in such form and 
such manner as the Secretary specifies for the purpose of determining 
the extent to which the requirements of part 7 of ERISA are being met. 
These final regulations implement the ERISA section 101(g) MEWA annual 
reporting provision by directing all MEWAs, including those that are 
plan MEWAs, to report compliance with the part 7 rules, including the 
Public Health Service Act (PHS Act) market reforms (PHS Act sections 
2701 through 2728) incorporated by reference in ERISA section 715 by 
the Affordable Care Act. These final regulations also require MEWAs to 
register with the Department before operating in a State. The 
additional information provided on the Form M-1 as a result of these 
final rules will enhance the State and Federal governments' joint 
mission to prevent harm and take enforcement action against fraudulent 
and abusive MEWAs, thus limiting the losses suffered by American 
workers, their families, and businesses when abusive MEWAs become 
insolvent and fail to reimburse medical claims. These final rules 
implement the statutory requirements in a way that limits the burden on 
legitimate MEWAs but gives the Secretary, States, employers, and the 
participants and beneficiaries of the plans additional information 
about these entities and a stronger enforcement scheme.
    On December 6, 2011, the Department published in the Federal 
Register proposed regulations (76 FR 76222) implementing the new 
reporting requirements for MEWAs and ECEs. The Department received six 
comments on the proposed rules. After consideration of the comments 
received, the Department is publishing these final regulations. While 
these final rules reflect a few changes and add some clarifications in 
response to questions posed by commenters, they do not significantly 
modify the requirements set forth in the proposed rules.

III. Overview of the Final Regulations

A. Amendment of 29 CFR 2520.101-2 Under ERISA Section 101(g).

    To implement the changes made to ERISA section 101(g) by the 
Affordable Care Act, these final rules amend the 2003 rule. In the 2003 
rule, ECEs and MEWAs were largely subject to the same filing 
requirements. ECEs, however, were only required to submit an annual M-1 
filing for the first three years following an origination event. In 
keeping with this structure, these final rules extend the new filing 
events prescribed by the Affordable Care Act to MEWAs and ECEs alike. 
They also preserve the three-year limitation included in the 2003 
regulation for ECEs. Based on comments on the proposed rules from the 
multiemployer plan community, the final rules limit the events that 
will constitute an origination to those defined as such in the 2003 
rule.
    Paragraph (a) of Sec.  2520.101-2 in these final regulations 
describes the provisions of section 101(g) of ERISA that direct MEWAs 
that provide benefits consisting of medical care (within the meaning of 
section 733(a)(2) of ERISA) to register with the Secretary prior to 
operating in a State, and to report annually regarding compliance with 
part 7 of ERISA.
    Paragraph (b) defines the terms used in the final regulations, with 
some additions and modifications from the 2003 rule. Paragraph (c) sets 
forth the requirement that, with certain exceptions, the administrators 
of MEWAs or ECEs file reports with the Department.
    Paragraph (d) describes how MEWAs and ECEs will comply with the 
final rules by filing the Form M-1, and the conditions under which the 
Secretary may reject a filing.
    Paragraphs (e) and (f) set forth the timeframes when MEWAs and ECEs 
must file the Form M-1. Paragraph (g) directs that the Form M-1 be 
filed electronically. In addition to minimizing errors and providing 
faster access to reported data, electronic filing will also be less 
burdensome on the filer. Once information about the MEWA or ECE is 
entered into the system, filers will have the option of allowing the 
system to copy information provided on a past filing into a new filing. 
This transfer of past information provides filers an easy way to update 
or verify information. The information provided through Form M-1 
filings will then be accessible by the public and other interested 
parties such as State regulators.
    Paragraph (h) explains the civil penalties that may result from a 
failure to comply with the rule. Civil penalties for failure to file a 
report required by ERISA section 101(g) or Sec.  2520.101-2 have been 
applicable for non-plan MEWAs under ERISA section 502(c)(5) since May 
1, 2000.\8\
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    \8\ Under these final regulations, similar civil penalties under 
ERISA section 502(c)(2) may apply to plan MEWAs and ECEs required to 
file the Form M-1 that fail to answer questions on the Form 5500 
about compliance with the requirement to file a Form M-1. See 
section B of this preamble for the changes that are being made to 
Sec. Sec.  2520.103-1, 104-20, and 104-41 to further enhance the 
Department's ability to enforce these provisions with regard to 
MEWAs and ECEs that are group health plans.
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    Finally, new criminal penalties were added by the Affordable Care 
Act under ERISA section 519 for any person who knowingly submits false 
statements or false representations of fact in filing reports required 
under the rule.
1. Basis and Scope
    These final regulations set forth rules implementing section 101(g) 
of ERISA, as amended by section 6606 of the Affordable Care Act, which 
directs MEWAs that are not group health plans to register with the 
Secretary prior to operating in a State. These regulations also update 
the existing requirement in section 101(g) of ERISA, that MEWAs, which 
are group health plans, and certain other entities claiming an 
exception, file the Form M-1 annually and upon the occurrence of 
specified events. While the language in section

[[Page 13785]]

101(g) of ERISA only applies to non-plan MEWAs, these final rules 
preserve the structure promulgated as part of the 2003 regulation, 
which required both plan and non-plan MEWAs to file the Form M-1, based 
on authority found in sections 505 and 734 of ERISA. Section 505 of 
ERISA states that the Secretary may prescribe such regulations as she 
finds necessary or appropriate to carry out the provisions of Title I 
of ERISA. Section 734 of ERISA allows the Secretary to promulgate such 
regulations as may be necessary or appropriate to carry out the 
provisions of part 7 of ERISA.
    One commenter questioned the Department's authority to require ECEs 
to file a Form M-1 prior to operating in a State. As explained in the 
preamble to the 2003 rule, the Department has set forth procedures for 
administrative hearings to obtain a determination by the Secretary that 
a collectively bargained plan is exempted from ERISA's definition of a 
MEWA. 29 CFR 2510.3-40. An entity that has a determination from an 
Administrative Law Judge (ALJ) that it is such a collectively-bargained 
plan is not required to file a Form M-1 while the opinion remains in 
effect unless the circumstances underlying the determination change. 
Entities may, however, claim the exemption on their own accord and 
sometimes do so incorrectly, including as part of an insurance fraud 
scheme using sham unions and collective bargaining agreements to market 
health coverage to small employers. The Secretary remains concerned 
about MEWA operators who avoid State insurance regulation by making 
false assertions that the arrangement is pursuant to a collective 
bargaining agreement. The requirement that ECEs file the Form M-1 for 
only three years after an origination event continues to provide an 
important enforcement tool while imposing little burden on bona fide 
collectively bargained plans. Bona fide collectively bargained plans 
also benefit from the early identification of MEWA operators using sham 
unions and collective bargaining agreements. Consequently, based on the 
Department's authority under ERISA sections 505 and 734, the final 
rules preserve the three-year limitation included in the 2003 
regulation for ECEs.
2. Definitions
    a. Operating. Paragraph (b)(8) of Sec.  2520.101-2 of the proposed 
and these final rules adds a definition of ``operating'' and defines it 
as any activity including but not limited to marketing, soliciting, 
providing, or offering to provide benefits consisting of medical care. 
This definition, which includes marketing and administrative 
activities, governs when Form M-1 filings must be made. Some commenters 
raised concerns that the definition in the proposed rules could be 
interpreted broadly to include participants receiving medical care in a 
State in which the MEWA or ECE has not been providing medical benefits 
and for which it is not otherwise required to make any filings. These 
commenters noted that MEWAs or ECEs would be unable to comply with the 
requirement to file the Form M-1 30 days before operating in an 
additional State because they would not know when a participant 
planned, for instance, to move or travel to a new State. The Department 
never intended for the definition of operating to apply to the receipt 
of medical care without any action by, or on behalf of, the MEWA or ECE 
to market, solicit, provide, or offer to provide medical benefits to a 
participating employer in that State.
    Commenters also noted that, in general, they would not be aware in 
advance if an employer or union, on its own accord, distributes 
information about medical care in a State in which the MEWA or ECE has 
not been operating and is not registered. ECEs, in particular, may not 
be aware of a contract awarded for work in a new State to a company 
that is part of a collective bargaining agreement. The Department 
agrees that there are circumstances in which it would be difficult, if 
not impossible, for a MEWA or ECE to file the Form M-1 30 days before 
operating in an additional State. Consequently, while the Department 
has not revised the definition of operating, as discussed later in this 
preamble, provisions in paragraph (e) in these final rules on when a 
MEWA or ECE must file when it begins operating in an additional State 
have been revised to address this concern.
    b. Origination and Special Filing Events. The 2003 rule used the 
term ``origination'' to determine if additional filings were necessary 
for both MEWAs and ECEs. As in the proposed rules, the Department only 
uses the term ``origination'' when it refers to events that trigger an 
additional filing by ECEs in the final rules. The term ``registration'' 
also continues to be used to refer to filings by MEWAs.
    The definition of origination, however, has been modified in the 
final rules. This change responds to a commenter who found the 
provisions in the proposed rules relating to the application of the 
three-year limitation to ECEs that begin operating in additional States 
to be confusing. These final rules have been adjusted to clarify that 
an ECE is not required to file a Form M-1 solely because it begins 
operating in an additional State or experiences a material change after 
the three-year period following any of the three origination events: 
(i) The ECE first begins operating with regard to the employees of two 
or more employers (including one or more self-employed individuals); 
(ii) the ECE begins operating following a merger with another ECE 
(unless all of the ECEs that participate in the merger previously were 
last originated at least three years prior to the merger); or (iii) the 
number of employees receiving coverage for medical care under the ECE 
is at least 50 percent greater than the number of such employees on the 
last day of the previous calendar year (unless the increase is due to a 
merger with another ECE under which all ECEs that participate in the 
merger were last originated at least three years prior to the merger).
    In paragraph (b)(9)(ii) and (v) of Sec.  2520.101-2 of the proposed 
rules, the definition of origination also included an ECE that begins 
operating in an additional State or experiences a material change. To 
clarify that the three-year rule does not restart or extend when those 
two events occur, they were moved to a new paragraph (b)(11) in the 
final rules on special filing events. Additionally, the reference to 
the three-year period during which filings are required was removed 
from the definition of origination. In the final rules, the paragraph 
(b)(9) origination events and the corresponding filing rules in 
paragraph (c)(1)(ii) now clarify that only the events in paragraph 
(b)(9) restart or extend the three-year period for ECEs.
    c. Reporting. As in the proposed rules, the final rules add a 
definition of ``reporting.'' ``Reporting'' or ``to report'' means to 
file the Form M-1 as required pursuant to section 101(g) of ERISA; 
Sec.  2520.101-2; or the instructions to the Form M-1. The term 
``reporting'' is used in order to correspond to the terminology of 
Sec.  2560.502c-5, which uses the generic term ``report'' to describe 
the Form M-1 filing process, including the annual report as well as 
registration, origination, and all other required M-1 filings.
    d. State. The final rules also, like the proposed rules, add a 
definition of ``State'' and define the term by reference to Sec.  
2590.701-2. This definition was added because MEWAs must register, and 
ECEs must make an origination filing, prior to operating in a State.

[[Page 13786]]

3. Persons Required to Report
    Paragraph (c) of Sec.  2520.101-2 of the final rules set forth the 
persons required to report. As under the 2003 rule and the proposed 
rules, the final rules direct the administrator of a MEWA that provides 
benefits consisting of medical care, whether or not the MEWA is a group 
health plan, to file the Form M-1. It also requires filing by the 
administrator of an ECE that offers or provides coverage consisting of 
medical care. Several commenters suggested changes to this section. One 
commenter sought to have third party administrators carved out of the 
definition of administrator. Another sought to have affiliated service 
groups exempted from the filing requirements. The Department considered 
these comments but declines to modify these longstanding provisions 
promulgated as part of the 2003 rule. However, as noted above, to 
clarify the timing requirements for filings required of ECEs, this 
paragraph references the requirement that such filings be made only 
during the three years after the ECE is originated.
4. Information To Be Reported
    Paragraph (d) of the final rules is unchanged from the proposed 
rules. It clarifies that the reporting requirements of Sec.  2520.101-2 
will only be satisfied by filing a completed copy of the Form M-1, 
including any additional statements required pursuant to the Form M-1 
instructions. One commenter wanted even more detailed financial 
information collected on the Form M-1. As noted earlier, after 
consideration of the comments made, the Department has reviewed the 
Form M-1 but made only minor changes to the content of the Form M-1 
that was proposed to correspond to these final rules. A notice 
announcing the availability of the finalized revisions to the Form M-1 
and its instructions are published elsewhere in this edition of the 
Federal Register.
5. Reporting Requirements and Timing
    The final rules retain from the 2003 rule and the proposed rules 
that both MEWAs and ECEs must file the Form M-1 annually, with ECEs 
only having to file annually for the first three years following an 
origination. However, to clarify the application of the new 
registration requirements, the annual filing requirements were moved 
from paragraph (e) to paragraph (f) (and paragraphs (f) and (g) were 
redesignated paragraphs (g) and (h)).
    As mentioned previously, MEWAs and ECEs are also subject to 
additional (non-annual) filings in certain circumstances. Several non-
annual filing events were included in the 2003 regulation, but, as 
previously explained, these filings were relabeled and expanded in the 
proposed rules and these final rules to implement changes to the 
statutory language. The 2003 regulation and the proposed rules 
generally required an additional filing when a MEWA or ECE: (1) First 
began offering or providing coverage for medical care to employees of 
two or more employers; (2) began offering or providing coverage for 
medical care to employees of two or more employers after a merger with 
another MEWA or ECE; or (3) increased the number of employees receiving 
medical care under the MEWA or ECE by at least 50 percent over the 
number of employees on the last day of the previous calendar year. In 
the proposed rules, the first event was modified to conform to the 
statutory language under ERISA section 101(g) directing MEWAs to 
register with the Secretary by filing a Form M-1 prior to operating in 
any State. Additionally, the proposed rules directed that a filing be 
made in the event a MEWA (and in some cases an ECE) expands its 
operations into additional States or experiences a material change as 
defined in the Form M-1 instructions. These filing events are preserved 
in these final rules.
    Several commenters sought to limit filings due to a material 
change. This filing event was added to direct an entity to update its 
Form M-1 filing in the event that it experienced changes in certain 
financial or custodial information. The Department intends to follow 
the same basic structure for these filings as it has indicated it will 
for filings related to operating in a State. So, for example, if a MEWA 
or ECE takes action to add or remove an individual who is a marketer or 
promoter, the MEWA or ECE would have experienced a material change and 
would need to report. However, if the MEWA or ECE employs a third party 
(and appropriately identifies that entity in its filings) and the third 
party takes action to add or remove an individual who is a marketer or 
promoter, the MEWA or ECE will not have experienced a material change 
and no additional filing will be required. In the event an entity 
experiences a material change, the online filing system will allow them 
to log on, import data from the most recently completed filing, and 
make the necessary changes. The regulatory provision is retained as 
proposed, but in response to these comments, the Department will 
continue to ensure the electronic filing system minimizes the 
additional burden on entities that experience a material change. 
Consistent with the 2003 rule and the proposed rules, these final rules 
direct MEWAs to submit filings for the duration of their existence and 
ECEs to file only during the three-year period following an 
origination. As noted above, ECEs that begin operating in a new State 
or experience a material change during their three-year filing period 
report those events. ECEs that are not required to file because they 
are outside their three-year period do not need to report those events.
    The final rules also apply new timing standards on MEWAs and ECEs 
for these additional filings. Under the 2003 regulation, MEWAs and ECEs 
filed the Form M-1 within 90 days of the occurrence of certain events. 
The proposed and these final rules direct entities to file 30 days 
prior to or within 30 days of the event, depending on the type of event 
which prompts the filing. The timing requirements in paragraph (e) 
implement section 6606 of the Affordable Care Act, which provides that 
the filing must happen ``prior to operating in a State'' and will also 
facilitate the Department's timely receipt of information related to 
the other filing events described above. One commenter suggested that 
ECEs not be required to file 30 days prior to operating in an 
additional State because it might be difficult for the entity to 
determine when the event occurs. The Department considered this comment 
and, as previously stated, has revised the provision to address this 
concern. In these final rules, a MEWA or ECE will need to make a 
registration or special filing within 30 days of knowingly operating in 
any additional State or States. The Department does, however, expect 
MEWAs and ECEs to periodically monitor the activities of participating 
employers so that they become aware of any unilateral actions by 
participating employers that have caused them to begin operating in an 
additional State. Knowledge by a MEWA or ECE includes knowledge by an 
employee or agent of the MEWA or ECE.
    The provision included in the proposed rules to discourage 
``blanket filings,'' (i.e., registration, origination, or special 
filings that cover multiple States, unless the filer expects to begin 
operating in all the named States in the near future), was retained in 
these final rules. Blanket filings that list States where the filer has 
no immediate intent to operate could frustrate the law's goal of 
gathering and maintaining timely and accurate information on MEWAs. 
Under this provision, a filing is considered lapsed with respect to a 
State if benefits

[[Page 13787]]

consisting of medical care are not offered or provided in the State 
during the calendar year immediately following the filing. A new filing 
would be required if the filer intends to resume operating in that 
State.
    To minimize the burden of compliance, the final rules continue to 
permit MEWAs and ECEs to make a single filing to satisfy multiple 
filing events so long as the filing is timely for each event.
    As in the 2003 rule and the proposed rules, filing extensions are 
available. Any filing deadline that is a Saturday, Sunday, or federal 
holiday is automatically extended to the next business day. The 
proposed rules provided a more substantial extension for annual filings 
if MEWAs and ECEs requested such an extension following the procedure 
outlined in the instructions to the Form M-1. A question was raised 
regarding whether extensions were limited to annual filings. The 
Department considered this option and believes that any filing should 
be eligible for an extension so long as the request is made in a timely 
manner and in accordance with the Form M-1 instructions. A modification 
to this effect was made to the operative language in paragraph (e) of 
Sec.  2520.101-2 of the final rules.
6. Electronic Filing
    As in the proposed rules, paragraph (g) of Sec.  2520.101-2 of the 
final rules eliminates the option to file a paper copy of the completed 
Form M-1. As is now the case for Form 5500 Annual Return/Report filings 
required under Title I of ERISA and consistent with the goals of E-
government, as recognized by the Government Paperwork Elimination Act 
\9\ and the E-Government Act of 2002,\10\ these final rules require 
that the Form M-1 be filed electronically. Electronic filing of benefit 
plan information, among other program strategies, facilitates EBSA's 
achievement of its Strategic Goal to ``assure the security of the 
retirement, health and other workplace related benefits of American 
workers and their families.'' EBSA's strategic goal directly supports 
the Secretary of Labor's Strategic Goal to ``secure health benefits.'' 
\11\ A cornerstone of the Department's enforcement program is the 
collection, analysis, and disclosure of benefit plan information. 
Electronic filing minimizes errors and provides faster access to 
reported data, assisting EBSA in its enforcement, oversight, and 
disclosure roles and ultimately enhancing the security of plan 
benefits. Electronic filing of the Form M-1 also reduces the paperwork 
burden and costs related to printing and mailing forms and, with the 
use of secure account access, allows updating of previously reported 
information to facilitate simplified future reporting. Finally, 
consistent with current practice, the information will be available for 
reference by participants, beneficiaries, participating employers, and 
other interested parties such as State regulators. A notice announcing 
the availability of the updated Form M-1 filing system will be 
published elsewhere in this edition of the Federal Register.
---------------------------------------------------------------------------

    \9\ Title XVII, Public Law 105-277, 112 Stat. 2681 (Oct. 21, 
1998).
    \10\ Public Law 107-347, 116 Stat. 2899 (Dec. 17, 2002).
    \11\ For further information on the Department of Labor's 
Strategic Plan and EBSA's relationship to it, see http://www.dol.gov/_sec/stratplan/.
---------------------------------------------------------------------------

7. Penalties
    a. Civil penalties and procedures. The final rules retain the 
references to section 502(c)(5) of ERISA, 29 U.S.C. 1132(c)(5) and 
Sec.  2560.502c-5 regarding civil penalties and procedures.
    b. Criminal penalties and procedures. Affordable Care Act section 
6601 added ERISA section 519, which prohibits a person from making 
false statements or representations of fact in connection with a MEWA's 
financial condition, the benefits it provides, or its regulatory status 
as a MEWA. The Affordable Care Act also amended ERISA section 501(b) to 
impose criminal penalties on any person who is convicted of violating 
the prohibition in ERISA section 519. The final rules retain the cross-
reference to sections 501(b) and 519 of ERISA, 29 U.S.C. 1131 and 1149, 
for the purpose of implementing these new rules as they relate to 
filing a Form M-1 prior to operating in a State or other registration, 
origination, and special filings.
    c. Cease and desist and summary seizure and procedures. Section 
6605 of the Affordable Care Act added section 521 to ERISA, which 
authorizes the Secretary to issue cease and desist orders, without 
prior notice or a hearing, when it appears to the Secretary that the 
alleged conduct of a MEWA is ``fraudulent, or creates an immediate 
danger to the public safety or welfare, or is causing or can be 
reasonably expected to cause significant, imminent, and irreparable 
public injury.'' This section also allows the Secretary to issue an 
order to seize the assets of a MEWA that the Secretary determines to be 
in a financially hazardous condition. The regulation providing guidance 
on the cease and desist orders and summary seizure rules published 
elsewhere in this Federal Register also includes regulatory guidance on 
the procedural rules for this process. A cease and desist order 
containing a prohibition against transacting business with any MEWA or 
plan would prevent the MEWA or a person from avoiding the cease and 
desist order by shutting the MEWA down and re-establishing it in a new 
location or under a new identity.
    As such, the final rules retain the cross-reference to section 521 
of ERISA and Sec.  2560.521 regarding the Secretary's authority to 
issue cease and desist and summary seizure orders.

B. Amendment to Regulations Under ERISA Sections 103 and 104

    Pursuant to authority in ERISA section 104(a)(3) to establish 
reporting exemptions and simplified reporting for welfare benefit 
plans, this rulemaking also makes filing the Form M-1 an integral part 
of compliance with ERISA's simplified reporting requirements by 
requiring all plans subject to the Form M-1 filing requirements under 
Sec.  2520.101-2 to file a Form 5500 Annual Return/Report, and include 
specific Form M-1 compliance information. The revisions to the Form 
5500 and instructions reflecting these final rules are being published 
simultaneously as a Notice of Adoption of Revisions to the Form 5500 
Annual Return/Report in today's Federal Register. That document 
includes a discussion of the changes to the Form 5500 and instructions 
as well as the Department's findings required under sections 104(a)(3) 
and 110 of ERISA with regard to the use of the revised Form 5500 as a 
simplified report, alternative method of compliance, and/or limited 
exemption pursuant to Sec.  2520.103-1(b).
    We requested but received no comments on these changes to the 
annual reporting requirements; therefore, these final rules retain the 
changes proposed to further enhance the Department's ability to enforce 
the Form M-1 filing requirements under Sec.  2520.101-2, except for 
technical changes and a clarification that all plans required to file 
the Form M-1 (plan MEWAs and ECEs) are required to file a Form 5500 and 
to answer the Form M-1 compliance questions on the Form 5500.\12\
---------------------------------------------------------------------------

    \12\ Unlike plan MEWAs that are under a permanent requirement to 
file the Form M-1, 29 CFR 2520.101-2 requires an ECE to file the 
Form M-1 only during the three years following each origination 
event (an ECE may experience more than one origination event). 
Therefore, the final Form 5500 rules for plans required to file the 
Form M-1 apply to ECEs only during the periods in which ECEs are 
required to file the Form M-1.

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[[Page 13788]]

    The primary change to Sec.  2520.103-1 being adopted in this rule 
is the addition of a new paragraph (f) regarding the content of the 
annual report. Existing paragraph (f) of Sec.  2520.103-1 is 
redesignated paragraph (g), but is otherwise unchanged. New Sec.  
2520.103-1(f) applies to all plans that are subject to the Form M-1 
filing requirements of Sec.  2520.101-2 during the plan year. This 
change provides that all such plans must demonstrate compliance with 
Sec.  2520.101-2 (filing the Form M-1) in order to satisfy the annual 
reporting requirements of Sec.  2520.103-1. Pursuant to ERISA section 
502(c)(2), 29 U.S.C. 1132(c)(2), a plan administrator who fails to file 
a Form 5500 Annual Return/Report with a proof of compliance with Sec.  
2520.101-2 may be subject to a civil penalty of up to $1,100 a day (or 
higher amount if adjusted pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended) for each day a plan 
administrator fails or refuses to file a complete report. Although 
ERISA sections 505 and 734 give the Secretary the authority to require 
MEWAs and ECEs that are employee benefit plans to comply with the 
requirements of Sec.  2520.101-2, unlike MEWAs that are not employee 
benefit plans, there is no specific ERISA civil penalty applicable to 
plan MEWAs and ECEs for a failure to comply with those requirements. 
These changes to the Form 5500 annual reporting requirements for plan 
MEWAs and ECEs will enhance the Department's ability to enforce the 
Form M-1 filing requirements.
    The final rules include conforming changes adding references to the 
new Sec.  2520.103-1(f) and other conforming changes in Sec. Sec.  
2520.103-1(a), (b), (c) and Sec.  2520.104-41. A corresponding change 
is also made to Sec.  2520.104-20 to expressly provide that the limited 
filing exemption under Sec.  2520.104-20 is no longer available to plan 
MEWAs and ECEs with fewer than 100 participants required to file the 
Form M-1 (small plans). In addition, a new paragraph (E) has been added 
to Sec.  2520.103-1(c)(2)(ii) to provide that small plans subject to 
the Form M-1 filing requirements are not eligible to file the Form 
5500-SF (Short Form 5500 Annual Return/Report of Small Employee Benefit 
Plan) under Sec.  2520.103-1(c)(2)(ii) and Sec.  2520.104-41.\13\
---------------------------------------------------------------------------

    \13\ In addition, an unrelated technical correction to 29 CFR 
2520.104-41 is being included in this rulemaking to add an express 
reference to the Form 5500-SF.
---------------------------------------------------------------------------

    Although small plans subject to the Form M-1 filing requirements 
are not eligible to file the Form 5500-SF, these plans are still 
eligible for the simplified Form 5500 annual reporting for small 
welfare plans, and these plans that meet all of the requirements for 
the relief under Sec.  2520.104-44 are exempt from certain financial 
reporting and audit requirements. Small plan MEWAs and ECEs that 
qualify for the relief provided by 29 CFR 2520.104-44 would only need 
to file the Form 5500 Annual Return/Report and, if applicable, Schedule 
A (Insurance Information) and Schedule G, Part III (nonexempt 
transactions).\14\ Such plans are no longer eligible to use the Form 
5500-SF because that form does not include Schedule A insurance 
information. The Department believes that plans subject to these final 
rules that claim to provide insured benefits should be required to 
complete the Schedule A so that enforcement officials and the public 
have information about the insurance policy and insurance company 
through which the plan is providing insurance coverage. Thus, these 
changes give the Secretary an important enforcement tool while imposing 
minimal burden on small plan MEWAs and ECEs.
---------------------------------------------------------------------------

    \14\ Neither these final regulations nor the companion revisions 
to the Form 5500 change the eligibility requirements for the limited 
exemption under 29 CFR 2520.104-44. The Department expects that many 
plan MEWAs and ECEs will not satisfy the unfunded and insured 
eligibility requirements in the limited exemption and will continue 
to be ineligible for the reporting relief under 29 CFR 2520.104-44.
---------------------------------------------------------------------------

IV. Regulatory Impact Analysis

A. Executive Order 12866 and 13563

    Under Executive Order 12866, a ``significant'' regulatory action is 
subject to the requirements of the Executive Order and subject to 
review by the Office of Management and Budget (OMB). Under section 3(f) 
of the Executive Order, a ``significant regulatory action'' is an 
action that is likely to result in a rule: (1) Having an annual effect 
on the economy of $100 million or more, or adversely and materially 
affecting a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local or tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order. OMB has determined that this action is not 
economically significant within the meaning of section 3(f)(1) of the 
Executive Order but is significant under section 3(f)(4) of the 
Executive Order because it raises novel legal or policy issues arising 
from the President's priorities. Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, of reducing costs, 
of harmonizing rules, and of promoting flexibility.
    The Department estimates that the total cost of this rule would be 
approximately $137,400 in the first year, or an average of 
approximately $284 for each of the 484 entities expected to file the 
Form M-1. These costs are all associated with the information 
collection request contained in these rules and, therefore, are 
discussed in the Paperwork Reduction Act Section, below.
1. Summary and Need for Regulatory Action
    As discussed earlier in this preamble, section 6606 of the 
Affordable Care Act amended section 101(g) of ERISA to require the 
Secretary of Labor to promulgate regulations requiring MEWAs providing 
medical care benefits (within the meaning of section 733(a)(2) of 
ERISA) that are not ERISA-covered group health plans (non-plan MEWAs) 
to register with the Secretary before operating in a State.
    The original MEWA reporting requirement in ERISA section 101(g) was 
enacted by Congress as part of the Health Insurance Portability and 
Accountability Act (HIPAA) of 1996 in response to a 1992 General 
Accounting Office (GAO) recommendation.\15\ The GAO recommended that 
the Department develop a mechanism to help States identify fraudulent 
and abusive MEWAs. The HIPAA provision led to the Department creating 
the Form M-1 under a 2000 interim final rule and 2003 final rule.\16\
---------------------------------------------------------------------------

    \15\ See, Employee Benefits: States Need Labor's Help Regulating 
Multiple Employer Welfare Arrangements, March 1992, GAO/HRD-92-40.
    \16\ 65 FR 715 (02/11/2000) and 68 FR 17494 (04/09/2003). The 
Form M-1 has been updated and is reissued each year in December by 
the Department and modified periodically to address changes to the 
statutory provisions in part 7 of ERISA.
---------------------------------------------------------------------------

    ERISA section 101(g), as amended by the Affordable Care Act, 
directs the Department of Labor (the Department) to promulgate rules 
requiring MEWAs that are not group health plans (non-plan MEWAs) to 
register with the Secretary of Labor (the Secretary) prior to operating 
in a State. ERISA sections 505 and 734 provide the Secretary with the 
authority to require plan MEWAs and

[[Page 13789]]

ECEs to comply with the Form M-1 reporting requirements,\17\ but 
because ERISA section 101(g) only applies to non-plan MEWAs, only non-
plan MEWAs are subject to civil penalties under ERISA section 502(c)(5) 
for failure to comply with the Form M-1 requirements.\18\ In order to 
enhance the Department's ability to enforce the Form M-1 requirements 
and ensure that MEWAs are subject to the same rules under the law, this 
final rule will require all plan MEWAs to prove compliance with the 
Form M-1 filing requirements in order to satisfy the ERISA annual 
reporting requirements.\19\ In amending the Department's MEWA reporting 
regulation to require MEWAs to register with the Secretary before 
operating in a State, these final rules direct Form M-1 filers to 
provide additional information regarding the MEWA or ECE and apply new 
timing standards for the filings that are made when a MEWA's or ECE's 
status changes. These amendments will aid the Department in its 
oversight of MEWAs consistent with its expanded authority provided by 
the Affordable Care Act \20\ and allow the Department to provide 
critical information to State insurance departments that coordinate 
their investigations and enforcement actions against fraudulent and 
abusive MEWAs with the Department.
---------------------------------------------------------------------------

    \17\ In the preamble to the 2000 interim final rule, the 
Department explained ``[a]n important reason for requiring these 
groups to file is that the administrator of a MEWA may incorrectly 
determine that it is a group health plan or that it is established 
or maintained pursuant to a collective bargaining agreement. A 
reporting requirement limited only to MEWAs that are not group 
health plans may not result in reporting by many such MEWAs, thus 
greatly reducing the value of the data collected.'' See 65 FR 7152, 
7153 (Feb. 11, 2000).
    \18\ Pursuant to ERISA section 502(c)(5), a civil penalty of up 
to $1,100 (or higher amount if adjusted pursuant to the Federal 
Civil Penalties Inflation Adjustment Act of 1990, as amended) a day 
may be assessed for each day a non-plan MEWA fails to file a 
complete Form M-1.
    \19\ Pursuant to ERISA section 502(c)(2), a plan administrator 
who fails to file a Form 5500 Annual Return/Report with a proof of 
compliance with the M-1 filing requirements may be subject to a 
civil penalty of up to $1,100 a day (or higher amount if adjusted 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended) for each day a plan administrator fails or refuses 
to file a complete report.
    \20\ As part of the Affordable Care Act, Congress also enacted 
ERISA section 521, which authorized the Secretary to issue cease and 
desist orders, without prior notice or a hearing, when it appears to 
the Secretary that a MEWA's alleged conduct is fraudulent, creates 
an immediate danger to the public safety or welfare, or causes or 
can reasonably be expected to cause significant, imminent, and 
irreparable public injury. Section 521 also authorizes the Secretary 
to issue a summary order to seize the assets of a MEWA that the 
Secretary determines to be in financially hazardous condition. The 
Department also is finalizing rules for these provisions, which are 
published elsewhere in today's Federal Register.
---------------------------------------------------------------------------

    Over the last several years, the Department has observed a downward 
trend in the number of MEWAs that file the Form M-1, raising concerns 
that some existing MEWAs are not filing the form. Under the 2003 
regulation, the Department has the ability to assess penalties against 
MEWAs that fail to file the Form M-1 only in limited circumstances and 
if a determination regarding plan status was made by the Secretary. To 
address this issue and encourage compliance with the Form M-1 filing 
requirement, the Department also is amending, as part of this 
regulatory action, the Form 5500 annual reporting requirements. The 
amendment will require all plans subject to the Form M-1 filing 
requirements, regardless of plan size or type of funding,\21\ to file 
the Form 5500 Annual Return/Report and demonstrate on the form 
compliance with Form M-1 filing requirements. Failure to do so may 
result in an assessment of penalties under ERISA section 502(c)(2).\22\
---------------------------------------------------------------------------

    \21\ The final rules expressly provide that the limited 
exemption for certain unfunded and insured small welfare plans under 
Sec.  2520.104-20 is not available for any plans subject to the Form 
M-1 filing requirements. In addition, these plans also are not 
eligible to use the Form 5500-SF.
    \22\ A plan administrator who fails to file a Form 5500 with a 
proof of Form M-1 compliance could be subject to a civil penalty of 
up to $1,100 a day for each day the plan administrator fails or 
refuses to file a complete report.
---------------------------------------------------------------------------

    These amendments to the Department's MEWA reporting standards would 
provide a cost effective means to implement the expanded MEWA reporting 
as enacted in the Affordable Care Act. As stated above, the Department 
estimates that the average cost for each entity that the Department 
expects to file the revised Form M-1 would average approximately $284 
during the first year and $181 during each subsequent year.
2. Benefits of Rule
    As discussed earlier in this preamble, section 6606 of the 
Affordable Care Act amended section 101(g) of ERISA directing the 
Secretary to promulgate regulations requiring non-plan MEWAs providing 
medical care benefits (within the meaning of section 733(a)(2) of 
ERISA) to register with the Secretary before operating in a State. By 
implementing this statutory amendment, the Department would receive 
prior notice of a MEWA's intention to commence operations in a State. 
Such notification would help the Department and State insurance 
commissioners to ensure that MEWAs are being lawfully operated and that 
sufficient insurance has been purchased or adequate reserves 
established to pay benefit claims before the MEWAs begin operating \23\ 
in a State. These final rules would improve MEWA compliance and deter 
fraudulent and abusive MEWA practices, thereby protecting and securing 
the benefits of participants and beneficiaries by ensuring that MEWA 
assets are preserved and benefits timely paid. These potential benefits 
have not been quantified, but the Department expects that they will 
justify the costs.
---------------------------------------------------------------------------

    \23\ Section 2520.101-2(b)(8) of the proposed rule provides that 
the term ``operating'' means any activity including but not limited 
to marketing, soliciting, providing, or offering to provide medical 
care benefits.
---------------------------------------------------------------------------

3. Costs of Rule
    The costs of the rule are associated with the amendments to the 
Form M-1 and Form 5500 reporting requirements and are therefore 
discussed in the Paperwork Reduction Act section, below.

B. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA) (44 U.S.C. 3506(c)(2)), the Department submitted an 
information collection request (ICR) to OMB in accordance with 44 
U.S.C. 3507(d), contemporaneously with the publication of the proposed 
regulation, for OMB's review.
    Although no additional public comments were received that 
specifically addressed the paperwork burden analysis of the information 
collections at the proposed rules stage, the comments that were 
submitted and described earlier in this preamble, contained information 
relevant to the costs and administrative burdens attendant to the 
proposals. The Department took into account such public comments in 
connection with making changes to the final rules and in developing the 
revised paperwork burden analysis summarized below.
    In connection with publication of these final rules, the Department 
submitted a revision to the ICR under OMB Control Number 1210-0116. OMB 
approved the revised ICR, which is scheduled to expire on February 29, 
2016. A copy of the revised ICR may be obtained by contacting the PRA 
addressee shown below or at http://www.RegInfo.gov.
    PRA ADDRESSEE: G. Christopher Cosby, Office of Policy and Research, 
U.S. Department of Labor, Employee Benefits Security Administration, 
200 Constitution Avenue NW., Room N-5718, Washington, DC 20210. 
Telephone: (202) 693-8410; Fax: (202)

[[Page 13790]]

219-4745. These are not toll-free numbers.
    Between 2006 and 2010, an average of 484 entities (MEWAs and ECEs) 
filed the Form M-1 with the Department (a high of 533 in 2006 and a low 
of 436 in 2010). Of the total filings, on average, 217 were submitted 
via mail and 267 were submitted electronically through the Form M-1 
electronic filing system provided by the Department via the Internet. 
The fraction filing electronic returns has been increasing and reached 
nearly 63 percent in 2010. This rule will require all filings to be 
submitted electronically.
    As discussed above and pursuant to section 6606 of the Affordable 
Care Act, these rules amend the information required to be disclosed on 
the Form M-1 by adding new data elements. Therefore, the Department 
assumes that all administrators of MEWAs and ECEs that file the Form M-
1 in-house (an estimated 10 percent of filers) would spend two hours 
familiarizing themselves with the changes to the form that would be 
made by the final regulations. This would result in a total hour burden 
of 97 hours (48 entities * 2 hours). The Department estimates that Part 
I of the Form (the identifying information) would require five minutes 
to complete. The time required to complete Part II would vary based on 
the number of States in which the entity provides coverage, and the 
Department estimates that this would require 60 minutes for single-
State filers and 120 minutes for multi-State filers. The Department 
expects the time required to complete Part III would be 15 minutes for 
fully-insured filers and 30 minutes for not fully-insured filers. Table 
1 below summarizes the estimates of time required to complete each part 
of the form. Based on the foregoing, the Department estimates that the 
total hour burden for entities to file the Form M-1 using in-house 
resources would be 188 hours in the first year with an equivalent cost 
of $17,900 assuming all work will be performed by an employee benefits 
professional at $94.91 per hour.\24\ The cost to submit electronic 
filings would be negligible.
---------------------------------------------------------------------------

    \24\ The Department estimates 2012 hourly labor rates include 
wages, other benefits, and overhead based on data from the National 
Occupational Employment Survey (June 2011, Bureau of Labor 
Statistics) and the Employment Cost Index (September 2011, Bureau of 
Labor Statistics); the 2010 estimated labor rates are then inflated 
to 2012 labor rates.
---------------------------------------------------------------------------

    The Department estimates that the annual hour burden for Form M-1 
filings prepared in-house in subsequent years would be approximately 
100 hours as summarized in Table 2.\25\ The Department's estimate is 
based on the assumption that approximately 44 new entities \26\ will 
file the Form M-1 each year, and thus, approximately four new entities 
will prepare the Form M-1 in-house. The Department estimates that it 
would take two hours for these administrators, resulting in an hour 
burden of eight hours. The Department estimates that entities preparing 
the form in-house would spend four hours completing Part I, 68 hours 
completing Part II, and 15 hours completing Part III. The equivalent 
cost of this annual hour burden is estimated to be $8,600, assuming a 
$94.91 hourly labor rate for an employee benefits professional.
---------------------------------------------------------------------------

    \25\ These are rounded values. The totals may differ slightly as 
a result.
    \26\ An average of 9 percent of entities originate each year 
according to Form M-1 data.

                                         Table 1--Time To Fill Out Form
                                                    [Minutes]
----------------------------------------------------------------------------------------------------------------
                                                           Fully-insured                 Not fully-insured
                                                 ---------------------------------------------------------------
                                                     One State     Multi States      One State     Multi States
----------------------------------------------------------------------------------------------------------------
New Filing......................................             120             120             120             120
Part I..........................................               5               5               5               5
Part II.........................................              60             120              60             120
Part III........................................              15              15              30              30
----------------------------------------------------------------------------------------------------------------

                         Table 2--Hour Burden To Prepare Form M-1, In-House Preparation
----------------------------------------------------------------------------------------------------------------
                                           Fully-insured                 Not fully-insured
                                 ----------------------------------------------------------------      Total
                                     One State     Multi States      One State     Multi States
----------------------------------------------------------------------------------------------------------------
 of MEWAs and ECEs.....              16              18               9               5              48
                                 -------------------------------------------------------------------------------
Review: Year 1..................              32              36              18              11              97
New Filing: Subsequent Years....               3               3               2               1               9
Part I..........................               1               2               1               0               4
Part II.........................              16              36               9              11              72
Part III........................               4               5               4               3              16
Total Time: Year 1..............              54              78              31              25             188
Total Time: Subsequent Years....              24              45              15              15             100
----------------------------------------------------------------------------------------------------------------

1. Cost Burden
    The Department assumes that 90 percent of the 484 entities (435 
entities) that will file the Form M-1 will use third-party service 
providers to complete and submit the Form M-1.\27\ Because the 
Department is adding additional data elements to the form, the 
Department assumes that in the year of implementation, all service 
providers would spend additional time familiarizing themselves with the 
changes. The Department estimates that entities that use third party 
service providers would incur the cost of one hour for service 
providers to review the new rule as service providers likely will 
provide this service for multiple entities and therefore spread this 
burden across multiple entities. This results in a one-time cost burden 
of $41,300 (435 entities * 1 hour * $94.91).
---------------------------------------------------------------------------

    \27\ This assumption is made in connection with EBSA's principal 
reporting form, the Form 5500, and was validated through a filer 
survey.
---------------------------------------------------------------------------

    The total estimated cost burden for preparing the form is arrived 
at by

[[Page 13791]]

multiplying the number of filers (found in Table 3) by the amount of 
time required to prepare the documents (Table 1) and multiplying this 
result by the hourly cost of an employee benefits professional ($94.91 
dollars an hour). Based on the foregoing, the total cost burden for 
entities that use purchased third-party resources to file the Form M-1 
is $119,500 in the first year and $78,200 in later years. Table 3 
summarizes the estimates of the cost burden.

                        Table 3--Cost Burden To Prepare Form M-1, Third-Party Preparation
----------------------------------------------------------------------------------------------------------------
                                           Fully-insured                 Not fully-insured
                                 ----------------------------------------------------------------      Total
                                     One State     Multi States      One State     Multi States
----------------------------------------------------------------------------------------------------------------
 of MEWAs and ECEs.....             145             163              79              49             435
                                 -------------------------------------------------------------------------------
Review: Year 1..................         $13,700         $15,400          $7,500          $4,700         $41,300
New Filing: Subsequent Years....              $0              $0              $0              $0              $0
Part I..........................          $1,100          $1,300            $600            $400          $3,400
Part II.........................         $13,700         $30,900          $7,500          $9,400         $61,400
Part III........................          $3,400          $3,900          $3,700          $2,300         $13,400
���������������������������������
    Total: Year 1...............         $32,000         $51,400         $19,300         $16,800        $119,500
    Total: Subsequent Years.....         $18,300         $36,000         $11,800         $12,100         $78,200
----------------------------------------------------------------------------------------------------------------
Note: The displayed numbers are rounded to the nearest hundred and therefore may not add up to the totals.

    These regulations direct a plan that is subject to Form M-1 filing 
requirements to include proof of Form M-1 compliance as part of the 
Form 5500. Accordingly, the Department is adding a new Part III to the 
Form 5500, that asks for information regarding whether the employee 
welfare benefit plan is subject to the Form M-1 filing requirements, 
and if so, whether the plan is currently in compliance with the Form M-
1 filing requirements under Sec.  2520.101-2. Plan administrators that 
indicate the plan is subject to the Form M-1 filing requirements also 
would be required to enter the Receipt Confirmation Code for the Form 
M-1 annual report or the most recent Form M-1 required to be filed with 
the Department. Failure to answer the Form M-1 compliance questions 
will result in rejection of the Form 5500 Annual Return/Report as 
incomplete and civil penalties may be assessed pursuant to ERISA 
section 502(c)(2). The Department believes that the burden associated 
with this revision would be de minimis because plan administrators 
would know whether the plan is subject to and in compliance with the 
Form M-1 filing requirements, and they would have the Receipt 
Confirmation Code for the Form M-1 filing readily available.
    The regulations also amend Sec.  2520.104-20 to expressly provide 
that the exemption from filing the Form 5500 is not available for small 
plans required to file the Form M-1. Following the methodology used to 
calculate the burden in the Form 5500 regulations, the Department 
estimates that for small plans that meet the requirements of Sec.  
2520.104-44, filing a Form 5500 and completing Schedule A and Part III 
of Schedule G would cause them to incur an annual cost of $450 to 
engage a third-party service provider to prepare the form and schedules 
for submission. The Department does not have sufficient data to 
determine the number of small plan MEWAs and ECEs that would be 
required to file the Form 5500 under the final rules, but believes that 
the number of such plans would be small, because 90 percent of the 
entities that file Form M-1 with the Department cover more than 100 
participants.
2. Cost to the Government
    The Department estimates that the cost to the Federal government to 
process Form M-1s is approximately $7,200. This includes the cost to 
process online submissions and maintain the processing system, and was 
estimated by the offices within EBSA that are responsible for 
overseeing these activities.

             Table 4--Cost of Federal Government of Form M-1
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                         Processing of M1 Forms
------------------------------------------------------------------------
  Online.......................................................   $2,200
  Maintenance of System........................................    5,000
                                                                --------
    Total......................................................    7,200
------------------------------------------------------------------------

    These paperwork burden estimates are summarized as follows:
    Type of Review: Revised collection.
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Title: MEWA Form M-1
    OMB Control Number: 1210-0116
    Affected Public: Business or other for-profit; not-for-profit 
institutions.
    Estimated Number of Respondents: 484 (first year); 484 (three-year 
average).
    Estimated Number of Responses: 484 (first year); 484 (three-year 
average).
    Frequency of Response: Annually.
    Estimated Annual Burden Hours: 188 (first year); 130 (three-year 
average).
    Estimated Annual Burden Cost: $119,500 (first year); $92,000 
(three-year average).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and are likely to 
have a significant economic impact on a substantial number of small 
entities. Unless an agency certifies that a rule will not have a 
significant economic impact on a substantial number of small entities, 
section 603 of the RFA requires the agency to present an initial 
regulatory flexibility analysis at the time of the publication of the 
notice of proposed rulemaking describing the impact of the rule on 
small entities. Small entities include small businesses, organizations 
and governmental jurisdictions. In accordance with the RFA, the 
Department prepared an initial regulatory flexibility analysis at the 
proposed rule stage and requested comments on the analysis. No comments 
were received. Below is the Department's final regulatory flexibility 
analysis and its certification that these final regulations do not have 
a significant economic impact on a substantial number of small 
entities.
    The Department does not have data regarding the total number of 
MEWAs and ECEs that currently exist. The best

[[Page 13792]]

information the Department has to estimate the number of MEWAs and ECEs 
is based on filings of the Form M-1, which MEWAs and certain 
collectively bargained arrangements have filed annually with the 
Department. Just over 436 entities filed the Form M-1 with the 
Department in 2010, the latest year for which data is available.
    The Small Business Administration uses a size standard of less than 
$7 million in average annual receipts as the cut off for small business 
in the finance and insurance sector.\28\ While the Department does not 
collect revenue information on the Form M-1, it does collect data 
regarding the number of participants covered by MEWAs and ECEs that 
file Form M-1 and can use participant data and average premium data to 
determine the number of MEWAs and ECEs that are small entities, because 
their revenues do not exceed the $7 million threshold. For 2009, the 
average single coverage annual premium was $4,717 and the average 
annual family coverage premium was $12,696.\29\ Combining these premium 
estimates with estimates of the ratio of policies to the covered 
population from the Current Population Survey at employers with less 
than 500 workers (0.309 for single coverage and 0.217 for family 
coverage), the Department estimates that 62 percent of entities filing 
Form M-1 (258 entities) are small entities.
---------------------------------------------------------------------------

    \28\ U.S. Small Business Administration, ``Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes.'' http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf
    \29\ Kaiser Family Foundation and Health Research Educational 
Trust, ``Employer Health Benefits, 2009 Annual Survey.'' The 
reported numbers are from Exhibit 1.2 and are for the category 
Annual, all Small Firms (3-199 workers).
---------------------------------------------------------------------------

    While this number is a relatively large fraction of all entities, 
it is about 7 percent when expressed as a fraction of all participants 
covered by MEWAs and ECEs. In addition, the Department notes that the 
reporting burden that would be imposed on all MEWAs and ECEs by the 
rule is estimated as an average cost of $284 for each entity filing 
Form M-1. For all but the smallest MEWAs or ECEs (less than 15 
participants), this represents less than one-half of one percent of 
revenues.
    The regulations also amend Sec.  2520.104-20 to expressly provide 
that the limited exemption from filing the Form 5500 for certain 
unfunded and insured small welfare plans is not available for plans 
required to file the Form M-1. As discussed in the PRA section above, 
the Department estimates that these small plan MEWAs and ECEs would 
incur an annual cost of $450 to engage a third-party service provider 
to prepare the form and schedules for submission. Any burden for small 
ECEs is even less because these plans are subject to the Form M-1 
filing requirements only for limited periods. The Department does not 
have sufficient data to determine the number of small plan MEWAs and 
ECEs that would be required to file the Form 5500 under the final 
rules. About 10 percent (48) of MEWAs and ECEs filing the Form M-1 in 
2010 had less than 100 participants. However, the 2010 Form M-1 lacks 
information on the source of funding to determine which of these small 
MEWAs and ECEs would be ERISA-covered plans affected by the Final 
Rules.
    Accordingly, the Department hereby certifies that this regulation 
does not have a significant economic impact on a substantial number of 
small entities.

D. Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1501 et seq.), as well as Executive Order 12875, this rule does not 
include any federal mandate that may result in expenditures by State, 
local, or tribal governments, or the private sector, which may impose 
an annual burden of $100 million.

E. Executive Order 13132

    When an agency promulgates a regulation that has federalism 
implications, Executive Order 13132 (64 FR 43255, August 10, 1999) 
requires the Agency to provide a federalism summary impact statement. 
Pursuant to section 6(c) of the Order, such a statement must include a 
description of the extent of the agency's consultation with State and 
local officials, a summary of the nature of their concerns and the 
agency's position supporting the need to issue the regulation, and a 
statement of the extent to which the concerns of the State have been 
met.
    This regulation has federalism implications, because the States and 
the Federal government share dual jurisdiction over MEWAs that are 
employee benefit plans or hold plan assets. Generally, States are 
primarily responsible for overseeing the financial soundness and 
licensing of MEWAs under State insurance laws. The Department enforces 
ERISA's fiduciary responsibility provisions against MEWAs that are 
ERISA plans or hold plan assets.
    Over the years, the Department and State insurance departments have 
worked closely and coordinated their investigations and other actions 
against fraudulent and abusive MEWAs. For example, EBSA regional 
offices have met with State officials in their regions and supported 
their enforcement efforts to shut down fraudulent and abusive MEWAs. 
States have often lobbied for stronger Federal enforcement tools to 
help combat fraudulent and insolvent MEWAs. By requiring MEWAs to 
register with the Department before operating in a State by filing the 
Form M-1 and to provide additional information, these final rules 
respond to the States' concern and enhance the State and Federal 
governments' joint mission to take enforcement action against 
fraudulent and abusive MEWAs and limit the losses suffered by American 
workers, their families, and businesses when abusive MEWAs become 
insolvent and fail to reimburse medical claims.

List of Subjects in 29 CFR Part 2520

    Accounting, Employee benefit plans, Pensions, Reporting and 
recordkeeping requirements.

    For the reasons set out in the preamble, part 2520 of Chapter XXV 
of Title 29 of the Code of Federal Regulations is amended as follows:

PART 2520--[AMENDED]

0
1. The authority citation for part 2520 is revised to read as follows:

    Authority:  29 U.S.C. 1021-1024, 1027, 1029-31, 1059, 1134 and 
1135; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9, 
2012). Sec. 2520.101-2 also issued under 29 U.S.C. 1181-1183, 1181 
note, 1185, 1185a-d, and 1191-1191c. Sec. 2520.103-1 also issued 
under 26 U.S.C. 6058 note. Sec. 2520.101-6 also issued under 29 
U.S.C. 1021(k); Secs. 2520.102-3, 2520.104b-1 and 2520.104b-3 also 
issued under 29 U.S.C. 1003, 1181-1183, 1181 note, 1185, 1185a-d, 
1191, and 1191a-c. Secs. 2520.104b-1 and 2520.107 also issued under 
26 U.S.C. 401 note, 111 Stat. 788;

0
2. Section 2520.101-2 is revised to read as follows:

Sec.  2520.101-2  Filing by multiple employer welfare arrangements and 
certain other related entities.

    (a) Basis and scope. Section 101(g) of the Employee Retirement 
Income Security Act (ERISA), as amended by the Patient Protection and 
Affordable Care Act, requires the Secretary of Labor (the Secretary) to 
establish, by regulation, a requirement that multiple employer welfare 
arrangements (MEWAs) providing benefits that consist of medical care 
(as described in paragraph (b)(6) of this section), which are not group 
health plans, to register with the Secretary prior to operating in a 
State. Section 101(g) also permits the

[[Page 13793]]

Secretary to require, by regulation, such MEWAs to report, not more 
frequently than annually, in such form and manner as the Secretary may 
require, for the purpose of determining the extent to which the 
requirements of part 7 of subtitle B of title I of ERISA (part 7) are 
being carried out in connection with such benefits. Section 734 of 
ERISA provides that the Secretary may promulgate such regulations as 
may be necessary or appropriate to carry out the provisions of part 7. 
This section sets out requirements for reporting by MEWAs that provide 
benefits that consist of medical care and by certain entities that 
claim not to be a MEWA solely due to the exception in section 
3(40)(A)(i) of ERISA (referred to in this section as Entities Claiming 
Exception or ECEs). The reporting requirements apply regardless of 
whether the MEWA or ECE is a group health plan.
    (b) Definitions. As used in this section, the following definitions 
apply:
    (1) Administrator means--(i) The person specifically so designated 
by the terms of the instrument under which the MEWA or ECE is operated;
    (ii) If the MEWA or ECE is a group health plan and the 
administrator is not so designated, the plan sponsor (as defined in 
section 3(16)(B) of ERISA); or
    (iii) In the case of a MEWA or ECE for which an administrator is 
not designated and a plan sponsor cannot be identified, jointly and 
severally, the person or persons actually responsible (whether or not 
so designated under the terms of the instrument under which the MEWA or 
ECE is operated) for the control, disposition, or management of the 
cash or property received by or contributed to the MEWA or ECE, 
irrespective of whether such control, disposition, or management is 
exercised directly by such person or persons or indirectly through an 
agent, custodian, or trustee designated by such person or persons.
    (2) Entity Claiming Exception (ECE) means an entity that claims it 
is not a MEWA on the basis that the entity is established or maintained 
pursuant to one or more agreements that the Secretary finds to be 
collective bargaining agreements within the meaning of section 
3(40)(A)(i) of ERISA and Sec.  2510.3-40.
    (3) Excepted benefits means excepted benefits within the meaning of 
section 733(c) of ERISA and Sec.  2590.701-2 of this chapter.
    (4) Group health plan means a group health plan within the meaning 
of section 733(a) of ERISA and Sec.  2590.701-2 of this chapter.
    (5) Health insurance issuer means a health insurance issuer within 
the meaning of section 733(b)(2) of ERISA and Sec.  2590.701-2 of this 
chapter.
    (6) Medical care means medical care within the meaning of section 
733(a)(2) of ERISA and Sec.  2590.701-2 of this chapter.
    (7) Multiple employer welfare arrangement (MEWA) means a multiple 
employer welfare arrangement within the meaning of section 3(40) of 
ERISA.
    (8) Operating means any activity including but not limited to 
marketing, soliciting, providing, or offering to provide benefits 
consisting of medical care.
    (9) Origination means, with regard to an ECE, the occurrence of any 
of the following events (an ECE is considered to have been originated 
only when an event described below occurs)--
    (i) The ECE begins operating with regard to the employees of two or 
more employers (including one or more self-employed individuals);
    (ii) The ECE begins operating following a merger with another ECE 
(unless all of the ECEs that participate in the merger previously were 
last originated at least three years prior to the merger); or
    (iii) The number of employees receiving coverage for medical care 
under the ECE is at least 50 percent greater than the number of such 
employees on the last day of the previous calendar year (unless the 
increase is due to a merger with another ECE under which all ECEs that 
participate in the merger were last originated at least three years 
prior to the merger).
    (10) Reporting or to report means to file the Form M-1 as required 
pursuant to sections 101(g) of ERISA; Sec.  2520.101-2; or the 
instructions to the Form M-1.
    (11) Special filing event means, with regard to an ECE--
    (i) The ECE begins knowingly operating in any additional State or 
States that were not indicated on a previous report filed pursuant to 
paragraph (e)(1)(i) or (f)(2)(i) of this section; or
    (ii) The ECE experiences a material change as defined in the Form 
M-1 instructions.
    (12) State means State within the meaning of Sec.  2590.701-2 of 
this chapter.
    (c) Persons required to report--(1) General rule. Except as 
provided in paragraph (c)(2) of this section, the following persons are 
required to report under this section:
    (i) The administrator of a MEWA regardless of whether the entity is 
a group health plan; and
    (ii) The administrator of an ECE during the three-year period 
following an event described in paragraph (b)(9) of this section.
    (2) Exceptions--(i) Nothing in this paragraph (c) shall be 
construed to require reporting under this section by the administrator 
of a MEWA or ECE described under this paragraph (c)(2)(i).
    (A) A MEWA or ECE licensed or authorized to operate as a health 
insurance issuer in every State in which it offers or provides coverage 
for medical care to employees;
    (B) A MEWA or ECE that provides coverage that consists solely of 
excepted benefits, which are not subject to ERISA part 7. If the MEWA 
or ECE provides coverage that consists of both excepted benefits and 
other benefits for medical care that are not excepted benefits, the 
administrator of the MEWA or ECE is required to report under this 
section;
    (C) A MEWA or ECE that is a group health plan not subject to ERISA, 
including a governmental plan, church plan, or a plan maintained solely 
for the purpose of complying with workmen's compensation laws, within 
the meaning of sections 4(b)(1), 4(b)(2), or 4(b)(3) of ERISA, 
respectively; or
    (D) A MEWA or ECE that provides coverage only through group health 
plans that are not covered by ERISA, including governmental plans, 
church plans, or plans maintained solely for the purpose of complying 
with workmen's compensation laws within the meaning of sections 
4(b)(1), 4(b)(2), or 4(b)(3) of ERISA, respectively (or other 
arrangements not covered by ERISA, such as health insurance coverage 
offered to individuals other than in connection with a group health 
plan, known as individual market coverage).
    (ii) Nothing in this paragraph (c) shall be construed to require 
reporting under this section by the administrator of an entity that 
would not constitute a MEWA or ECE but for the following circumstances 
under this paragraph (c)(2)(ii).
    (A) The entity provides coverage to the employees of two or more 
trades or businesses that share a common control interest of at least 
25 percent at any time during the plan year, applying principles 
similar to the principles of section 414(c) of the Internal Revenue 
Code;
    (B) The entity provides coverage to the employees of two or more 
employers due to a change in control of businesses (such as a merger or 
acquisition) that occurs for a purpose other than avoiding Form M-1 
filing and is temporary in nature. For purposes of this paragraph, 
``temporary'' means the MEWA or ECE does not extend beyond the end of 
the plan year following the plan year in which the change in control 
occurs; or

[[Page 13794]]

    (C) The entity provides coverage to persons (excluding spouses and 
dependents) who are not employees or former employees of the plan 
sponsor, such as non-employee members of the board of directors or 
independent contractors, and the number of such persons who are not 
employees or former employees does not exceed one percent of the total 
number of employees or former employees covered under the arrangement, 
determined as of the last day of the year to be reported or, determined 
as of the 60th day following the date the MEWA or ECE began operating 
in a manner such that a filing is required pursuant to paragraph 
(e)(1)(i), (2), or (3) of this section.
    (3) Examples. The rules of this paragraph (c) are illustrated by 
the following examples:

    Example 1. (i) Facts. MEWA A begins operating by offering 
coverage to the employees of two or more employers on August 1, 
2013. MEWA A is licensed or authorized to operate as a health 
insurance issuer in every State in which it offers coverage for 
medical care to employees.
    (ii) Conclusion. In this Example 1, the administrator of MEWA A 
is not required to report via Form M-1. MEWA A meets the exception 
to the filing requirement in paragraph (c)(2)(i)(A) of this section 
because it is licensed or authorized to operate as a health 
insurance issuer in every State in which it offers coverage for 
medical care to employees.
    Example 2. (i) Facts. Company B maintains a group health plan 
that provides benefits for medical care for its employees (and their 
dependents). Company B establishes a joint venture in which it has a 
25 percent stock ownership interest, determined by applying the 
principles similar to the principles under section 414(c) of the 
Internal Revenue Code, and transfers some of its employees to the 
joint venture. Company B continues to cover these transferred 
employees under its group health plan.
    (ii) Conclusion. In this Example 2, the administrator is not 
required to file the Form M-1 because Company B's group health plan 
meets the exception to the filing requirement in paragraph 
(c)(2)(ii)(A) of this section. This is because Company B's group 
health plan would not constitute a MEWA but for the fact that it 
provides coverage to two or more trades or businesses that share a 
common control interest of at least 25 percent.
    Example 3. (i) Facts. Company C maintains a group health plan 
that provides benefits for medical care for its employees. The plan 
year of Company C's group health plan is the fiscal year for Company 
C, which is October 1st--September 30th. Therefore, October 1, 
2012--September 30, 2013 is the 2013 plan year. Company C decides to 
sell a portion of its business, Division Z, to Company D. Company C 
signs an agreement with Company D under which Division Z will be 
transferred to Company D, effective September 30, 2013. The change 
in control of Division Z therefore occurs on September 30, 2013. 
Under the terms of the agreement, Company C agrees to continue 
covering all of the employees that formerly worked for Division Z 
under its group health plan until Company D has established a new 
group health plan to cover these employees. Under the terms of the 
agreement, it is anticipated that Company C will not be required to 
cover the employees of Division Z under its group health plan beyond 
the end of the 2014 plan year, which is the plan year following the 
plan year in which the change in control of Division Z occurred.
    (ii) Conclusion. In this Example 3, the administrator of Company 
C's group health plan is not required to report via the Form M-1 on 
March 1, 2014 for fiscal year 2013 because it is subject to the 
exception to the filing requirement in paragraph (c)(2)(ii)(B) of 
this section for an entity that would not constitute a MEWA but for 
the fact that it is created by a change in control of businesses 
that occurs for a purpose other than to avoid filing the Form M-1 
and is temporary in nature. Under the exception, ``temporary'' means 
the MEWA does not extend beyond the end of the plan year following 
the plan year in which the change in control occurs. The 
administrator is not required to file the 2013 Form M-1 annual 
report because it is anticipated that Company C will not be required 
to cover the employees of Division Z under its group health plan 
beyond the end of the 2014 plan year, which is the plan year 
following the plan year in which the change in control of businesses 
occurred.
    Example 4. (i) Facts. Company E maintains a group health plan 
that provides benefits for medical care for its employees (and their 
dependents) as well as certain independent contractors who are self-
employed individuals. The plan is therefore a MEWA. The 
administrator of Company E's group health plan uses calendar year 
data to report for purposes of the Form M-1. The administrator of 
Company E's group health plan determines that the number of 
independent contractors covered under the group health plan as of 
the last day of calendar year 2013 is less than one percent of the 
total number of employees and former employees covered under the 
plan determined as of the last day of calendar year 2013.
    (ii) Conclusion. In this Example 4, the administrator of Company 
E's group health plan is not required to report via the Form M-1 for 
calendar year 2013 (a filing that is otherwise due by March 1, 2014) 
because it is subject to the exception to the filing requirement 
provided in paragraph (c)(2)(ii)(C) of this section for entities 
that cover a very small number of persons who are not employees or 
former employees of the plan sponsor.

    (d) Information to be reported--(1) Any reporting required by this 
section shall consist of a completed copy of the Form M-1 Report for 
Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities 
Claiming Exception (ECEs) (Form M-1) and any additional statements 
required pursuant to the instructions for the Form M-1.
    (2) Rejected filings.--The Secretary may reject any filing under 
this section if the Secretary determines that the filing is incomplete, 
in accordance with Sec.  2560.502c-5 of this chapter.
    (3) If the Secretary rejects a filing under paragraph (d)(2) of 
this section, and if a revised filing satisfactory to the Secretary is 
not submitted within 45 days after the notice of rejection, the 
Secretary may bring a civil action for such relief as may be 
appropriate (including penalties under section 502(c)(5) of ERISA and 
Sec.  2560.502c-5 of this chapter).
    (e) Origination, registration, and other non-annual reporting 
requirements and timing--(1) General rule for ECEs--(i) Except as 
provided in paragraph (e)(1)(ii) of this section, and subject to the 
limitations established by paragraph (c)(1)(ii) of this section, when 
an ECE experiences an event described in paragraphs (b)(9) or (b)(11) 
of this section, the administrator of the ECE shall file Form M-1 by 
the 30th day following the date of the event.
    (ii) Exception. Paragraph (e)(1)(i) of this section does not apply 
to ECEs that experience an origination as described in paragraph 
(b)(9)(i) of this section. Such entities are required, subject to the 
limitations established by paragraph (c)(1)(ii) of this section, to 
file the Form M-1 30 days prior to the date of the event.
    (2) General rule for MEWAs--(i) In general. Except as provided in 
paragraph (e)(2)(ii) of this section, the administrator of the MEWA is 
required to register with the Secretary by filing the Form M-1 30 days 
prior to operating in any State.
    (ii) Exception. Paragraph (e)(2)(i) of this section does not apply 
to MEWAs that, prior to the effective date of this section, were 
already in operation in a State (or States). Such entities are required 
to submit an annual filing pursuant to annual reporting rules described 
in paragraph (f)(2)(i) of this section for that State (or those 
States).
    (3) Special rule requiring MEWAs to make additional filings. 
Subsequent to registering with the Secretary pursuant to paragraph 
(e)(2)(i) of this section, the administrator of a MEWA shall file the 
Form M-1:
    (i) Within 30 days of knowingly operating in any additional State 
or States that were not indicated on a previous report filed pursuant 
to paragraph (e)(2)(i) or (f)(2)(i) of this section;
    (ii) Within 30 days of the MEWA operating with regard to the 
employees of an additional employer (or employers, including one or 
more self-

[[Page 13795]]

employed individuals) after a merger with another MEWA;
    (iii) Within 30 days of the date the number of employees receiving 
coverage for medical care under the MEWA is at least 50 percent greater 
than the number of such employees on the last day of the previous 
calendar year; or
    (iv) Within 30 days of experiencing a material change as defined in 
the Form M-1 instructions.
    (4) Anti-abuse rule. If a MEWA or ECE neither offers nor provides 
benefits consisting of medical care within a State during the calendar 
year immediately following the year in which a filing is made by the 
ECE pursuant to paragraph (e)(1) of this section (due to an event 
described in paragraph (b)(9)(i) or (b)(11)(i) of this section) or a 
filing is made by the MEWA pursuant to paragraph (e)(2) or (3) of this 
section, with respect to operating in such State, such filing will be 
considered to have lapsed.
    (5) Multiple filings not required in certain circumstances. If 
multiple filings are required under this paragraph (e), a single filing 
will satisfy this section so long as the filing is timely for each 
required filing.
    (6) Extensions. (i) An extension may be granted for filing a report 
required by paragraph (e)(1), (2), or (3) of this section if the 
administrator complies with the extension procedure prescribed in the 
instructions to the Form M-1.
    (ii) If the filing deadline set forth in this paragraph (e) is a 
Saturday, Sunday, or federal holiday, the form must be filed no later 
than the next business day.
    (f) Annual reporting requirements and timing--(1) Period for which 
reporting is required. A completed copy of the Form M-1 is required to 
be filed for each calendar year during all or part of which the MEWA is 
operating and for each of the three calendar years following an 
origination during all or part of which the ECE is operating.
    (2) Filing deadline--(i) General March 1 filing due date for annual 
filings. Except as provided in paragraph (f)(2)(ii) of this section, a 
completed copy of the Form M-1 is required to be filed on or before 
each March 1 that follows a period for which reporting is required (as 
described in paragraph (f)(1) of this section).
    (ii) Exception. Paragraph (f)(2)(i) of this section does not apply 
to ECEs and MEWAs if, between October 1 and December 31, the entity is 
required to make a filing pursuant to paragraph (e)(1), (2), or (3) of 
this section and makes that filing timely.
    (3) Extensions. (i) An extension may be granted for filing a report 
required by paragraph (f)(2)(i) of this section if the administrator 
complies with the extension procedure prescribed in the instructions to 
the Form M-1.
    (ii) If the filing deadline set forth in this paragraph (f) is a 
Saturday, Sunday, or federal holiday, the form must be filed no later 
than the next business day.
    (4) Examples. The rules of paragraphs (e) and (f) of this section 
are illustrated by the following examples:

    Example 1. (i) Facts. MEWA A began offering coverage for medical 
care to the employees of two or more employers on July 1, 2003 (and 
continues to offer such coverage). MEWA A has satisfied all filing 
requirements to date.
    (ii) Conclusion. In this Example 1, the administrator of MEWA A 
must continue to file a timely completed Form M-1 annual report each 
year, but the administrator is not required to register with the 
Secretary because MEWA A meets the exception to the registration 
requirement in paragraph (e)(2)(ii) of this section and has not 
experienced any event described in paragraph (e)(3) that would 
require registering with the Secretary.
    Example 2. (i) Facts. On August 25, 2013, MEWA B is operating in 
State P and has made all appropriate filings related to those 
operations. On December 22, 2013 one of the employers that 
participates in MEWA B is awarded a new contract in State Q. The 
employer adds an office in State Q and the employees there are 
eligible to access its group health plan.
    (ii) Conclusion. In this Example 2, the administrator of MEWA B 
must report the addition of State Q by filing the Form M-1 within 30 
days of knowing that it is operating in State Q.
    Example 3. (i) Facts. As of July 1, 2013, MEWA C is preparing to 
operate in States Y and Z. MEWA C is not licensed or authorized to 
operate as a health insurance issuer in any State and does not meet 
any of the other exceptions set forth in paragraph (c)(2) of this 
section.
    (ii) Conclusion. In this Example 3, the administrator of MEWA C 
is required to register with the Secretary by filing a completed 
Form M-1 30 days prior to operating in States Y or Z. The 
administrator of MEWA C must also report by filing the Form M-1 
annually by every March 1 thereafter.
    Example 4. (i) Facts. As of July 28, 2013, MEWA D is operating 
in States V and W. MEWA D has satisfied the requirements of (e)(2) 
and, if applicable, (e)(3) with respect to those States. MEWA D is 
not licensed or authorized to operate as a health insurance issuer 
in any State and does not meet any of the other exceptions set forth 
in (c)(2) of this section. On August 5, 2013 MEWA D knowingly begins 
operating in State X.
    (ii) Conclusion. In this Example 4, the administrator of MEWA D 
is required to make an additional registration filing with the 
Secretary by September 4, 2013 (within 30 days of knowingly 
operating in State X). Additionally, the administrator of MEWA D 
must continue to file the Form M-1 annually by every March 1 
thereafter.
    Example 5. (i) Facts. ECE A began offering coverage for medical 
care to the employees of two or more employers on January 1, 2007 
and ECE A has not been involved in any mergers or experienced any 
other origination as described in paragraph (b)(9) of this section.
    (ii) Conclusion. In this Example 5, ECE A was originated on 
January 1, 2007 and has not been originated since then. Therefore, 
the administrator of ECE A is not required to file a 2012 Form M-1 
because the last time the ECE A was originated was January 1, 2007 
which is more than three years prior. Further, the ECE has satisfied 
its reporting requirements by making three timely annual filings 
after its origination.
    Example 6. (i) Facts. ECE B wants to begin offering coverage for 
medical care to the employees of two or more employers on July 1, 
2013.
    (ii) Conclusion. In this Example 6, the administrator of ECE B 
must file a completed Form M-1 on or before June 1, 2013 (which is 
30 days prior to the origination date). In addition, the 
administrator of ECE B must file an updated copy of the Form M-1 by 
March 1, 2014 because the last date ECE B was originated was July 1, 
2013 (which is less than three years prior to the March 1, 2014 due 
date). Furthermore, the administrator of ECE B must file the Form M-
1 by March 1, 2015 and again by March 1, 2016 (because July 1, 2013 
is less than three years prior to March 1, 2015 and March 1, 2016, 
respectively). However, if ECE B is not involved in any mergers and 
does not experience any other origination as described in paragraph 
(b)(9) of this section, there would not be a new origination date 
and no Form M-1 is required to be filed after March 1, 2016.
    Example 7. (i) Facts. ECE D, which currently operates in State A 
and is still within the three-year window following its origination 
and the timely filing related thereto, is making preparations to 
operate in State B beginning on November 1, 2013.
    (ii) Conclusion. In this Example 7, by operating in State B, ECE 
D experiences a special event within the three-year window following 
its origination and must make a filing by December 2, 2013.
    Example 8. (i) Facts. Same facts as Example 7. ECE D satisfied 
its special filing requirement but is unsure about its annual filing 
requirements.
    (ii) Conclusion. ECE D is exempt from the next annual filing due 
March 1, 2014 pursuant to the filing deadline exception under 
(f)(2)(ii) of this section. However, ECE D must continue making 
annual filings for the remainder of the three years following its 
origination.
    Example 9. (i) Facts. MEWA E begins distributing marketing 
materials on August 31, 2013.
    (ii) Conclusion. In this Example 8, because MEWA E began 
operating on August 31, 2013, the administrator of MEWA E must 
register with the Secretary by filing a completed Form M-1 on or 
before August 1, 2013 (30 days prior to operating in any State). In 
addition, the administrator of MEWA E must file the Form M-1 
annually by every March 1 thereafter.

[[Page 13796]]

    Example 10. (i) Facts. Same facts as Example 9, but MEWA E 
registers on or before August 1, 2013 by filing a Form M-1 
indicating it will begin operating in every State. However, in the 
calendar year immediately following the filing, MEWA E only offered 
or provided benefits consisting of medical care to participants in 
State Z.
    (ii) Conclusion. In this Example 10, the registration for all 
States (other than State Z) have lapsed under (e)(4) because MEWA E 
only offered or provided benefits consisting of medical care to 
participants in State Z in the calendar year immediately following 
the filing. If subsequently, MEWA E begins offering or providing 
benefits consisting of medical care to participants in any 
additional State (or States), it must make a new registration filing 
pursuant to (e)(3) of this section.

    (g) Electronic filing. A completed Form M-1 is filed with the 
Secretary by submitting it electronically as prescribed in the 
instructions to the Form M-1.
    (h) Penalties--(1) Civil penalties and procedures. For information 
on civil penalties under section 502(c)(5) of ERISA for persons who 
fail to file the information required under this section, see Sec.  
2560.502c-5 of this chapter. For information relating to administrative 
hearings and appeals in connection with the assessment of civil 
penalties under section 502(c)(5) of ERISA, see Sec. Sec.  2570.90 
through 2570.101 of this chapter.
    (2) Criminal penalties and procedures. For information on criminal 
penalties under section 519 of ERISA for persons who knowingly make 
false statements or false representation of fact with regards to the 
information required under this section, see section 501(b) of ERISA.
    (3) Cease and desist and summary seizure orders. For information on 
the Secretary's authority to issue a cease and desist or summary 
seizure order under section 521 of ERISA, see Sec.  2560.521.

0
3. Section 2520.103-1 is amended by:
0
a. Revising paragraphs (a) introductory text, (b) introductory text and 
(c)(1),
0
b. Amending paragraph (c)(2)(ii)(C) by removing the reference ``and'' 
at the end of the paragraph,
0
c. Removing the period at the end of paragraph (c)(2)(ii)(D) and adding 
the reference ``; and'' at the end of the paragraph,
0
d. Adding a new paragraph (c)(2)(ii)(E),
0
e. Redesignating paragraph (f) as paragraph (g) and adding a new 
paragraph (f).
    The revisions and additions read as follows:

Sec.  2520.103-1  Contents of the annual report.

    (a) In general. The administrator of a plan required to file an 
annual report in accordance with section 104(a)(1) of the Act shall 
include with the annual report the information prescribed in paragraph 
(a)(1) of this section or in the simplified report, limited exemption 
or alternative method of compliance described in paragraph (a)(2) of 
this section.
* * * * *
    (b) Contents of the annual report for plans with 100 or more 
participants electing the limited exemption or alternative method of 
compliance. Except as provided in paragraph (d) and paragraph (f) of 
this section and in Sec. Sec.  2520.103-2 and 2520.104-44, the annual 
report of an employee benefit plan covering 100 or more participants at 
the beginning of the plan year which elects the limited exemption or 
alternative method of compliance described in paragraph (a)(2) of this 
section shall include:
* * * * *
    (c) * * *
    (1) Except as provided in paragraph (c)(2), paragraph (d) and 
paragraph (f) of this section, and in Sec. Sec.  2520.104-43, 
2520.104a-6, and 2520.104-44, the annual report of an employee benefit 
plan that covers fewer than 100 participants at the beginning of the 
plan year shall include a Form 5500 ``Annual Return/Report of Employee 
Benefit Plan'' and any statements or schedules required to be attached 
to the form, completed in accordance with the instructions for the 
form, including Schedule A (Insurance Information), Schedule SB (Single 
Employer Defined Benefit Plan Actuarial Information), Schedule MB 
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan 
Actuarial Information), Schedule D (DFE/Participating Plan 
Information), Schedule I (Financial Information--Small Plan), and 
Schedule R (Retirement Plan Information). See the instructions for this 
form.
    (2) * * *
    (ii) * * *
    (E) Is not a plan subject to the Form M-1 requirements under Sec.  
2520.101-2 (Filing by Multiple Employer Welfare Arrangements and 
Certain Other Related Entities).
* * * * *
    (f) Plans subject to the Form M-1 filing requirements under Sec.  
2520.101-2. The annual report of an employee welfare benefit plan that 
is subject to the Form M-1 requirements under Sec.  2520.101-2 (Filing 
by Multiple Employer Welfare Arrangements and Certain Other Related 
Entities) during the plan year shall also include any statements or 
information required by the instructions to the Form 5500 relating to 
compliance with the Form M-1 filing requirements under Sec.  2520.101-
2.
* * * * *

0
4. Section 2520.104-20 is amended by removing the reference ``and'' in 
paragraph (b)(2)(iii), removing the period at the end of paragraph 
(b)(3)(ii) and adding the reference ``; and'' in its place, and adding 
a new paragraph (b)(4) to read as follows:

Sec.  2520.104-20  Limited exemption for certain small welfare plans.

* * * * *
    (b) * * *
    (4) Which are not subject to the Form M-1 requirements under Sec.  
2520.101-2 (Filing by Multiple Employer Welfare Arrangements and 
Certain Other Related Entities).
* * * * *

0
5. In Sec.  2520.104-41, revise paragraph (c) to read as follows:

Sec.  2520.104-41  Simplified annual reporting requirements for plans 
with fewer than 100 participants.

* * * * *
    (c) Contents. The administrator of an employee pension or welfare 
benefit plan described in paragraph (b) of this section shall file, in 
the manner described in Sec.  2520.104a-5, a completed Form 5500 
``Annual Return/Report of Employee Benefit Plan'' including, if 
applicable, the information described in Sec.  2520.103-1(f) or, to the 
extent eligible, a completed Form 5500-SF ``Short Form Annual Return/
Report of Small Employee Benefit Plan,'' and any required schedules or 
statements prescribed by the instructions to the applicable form, and, 
unless waived by Sec.  2520.104-44 or Sec.  2520.104-46, a report of an 
independent qualified public accountant meeting the requirements of 
Sec.  2520.103-1(b).

    Signed this 26th day of February, 2013.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2013-04863 Filed 2-28-13; 8:45 am]
BILLING CODE 4510-29-P
```