Overview: Beyond standard employer group plans, several alternative structures allow employers — particularly small employers — to access group-type coverage.

Multiple Employer Welfare Arrangements (MEWAs)

A Multiple Employer Welfare Arrangement (MEWA) is defined under ERISA Section 3(40) as any employee welfare benefit plan (or other arrangement) established to provide welfare benefits — medical, dental, life, disability — to the employees of two or more unrelated employers. MEWAs are typically formed by trade associations or industry groups, allowing small businesses to pool their purchasing power and risk.

MEWAs can be either fully insured (backed by a licensed commercial carrier) or self-insured (the participating employers pool contributions into a trust and pay claims directly). Self-insured MEWAs carry much higher financial risk.

Historically, MEWAs have been plagued by financial instability and fraud — promoters in the 1980s and 1990s established MEWAs, claimed ERISA preemption from state insurance regulations, collected premiums, and then failed to pay claims, leaving workers with millions of dollars in unpaid medical bills. Congress responded with the Erlenborn Amendment of 1983, which explicitly subjected MEWAs to dual regulation: both federal oversight (through the Department of Labor, Form M-1 annual registration, and Form 5500 reporting) and state insurance department oversight (licensing, reserve requirements, audits, and potential prohibition of self-insured MEWAs). Unlike typical ERISA-covered employer plans, MEWAs do not enjoy complete federal preemption of state insurance laws.

Multiple Employer Trusts (METs)

A Multiple Employer Trust (MET) is a legal trust structure — often established by an insurer or association — through which multiple small, unrelated employers can access group health coverage by joining the trust. Employers sign a joinder agreement, and the trust holds the master policy. Individual employees receive certificates of coverage.

In practice, the terms MET and MEWA are closely related. Any MET that provides health or welfare benefits to employees of unrelated employers is legally classified as a MEWA and subject to the same dual regulatory framework. The term "MET" refers more to the legal vehicle (a trust), while "MEWA" is the statutory classification under federal law.

Franchise Plans

Franchise health insurance (also called wholesale insurance) is a hybrid structure designed for small groups that don't meet minimum size requirements for traditional group coverage. The insurer offers a program to a specific group (an employer, association, or professional guild), but issues individual policies to each participating member rather than a single master policy.

Key characteristics of franchise plans:

No master policy — each member holds their own individual policy
Individual underwriting may apply — unlike true group plans, each applicant may be evaluated separately
Centralized premium collection — the employer or association consolidates billing, often through payroll deduction, reducing administrative costs
High portability — if an employee leaves, they keep their individual policy (though the group discount may be lost)
Customization — individuals can often select different deductible and benefit levels

Franchise plans are most useful for micro-businesses, professional associations, and labor unions whose members move between employers but want consistent, portable coverage.

Arrangement	Structure	Primary Use	Regulatory Notes
MEWA	Multi-employer welfare arrangement	Small employer pooling	Dual federal/state regulation; Form M-1 required
MET	Legal trust pooling employer contributions	Small employer access to group-type coverage	Also classified as a MEWA for welfare benefits
Franchise plan	Individual policies issued within a group program	Small groups; portability-focused workers	Standard state individual insurance laws apply