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Negotiation of a Premium Discount May Constitute an Employer Contribution

A recent case decided by a federal district court in California highlights that employer action other than a direct payment of premiums may constitute an ?Ç£employer contribution?Ç¥ for purposes of determining whether a group insurance program is exempt from ERISA. Under the so-called ?Ç£Voluntary Plan Exemption?Ç¥, generally such a program will be exempt from ERISA if (i) there are no employer contributions toward coverage, (ii) participation in the program is completely voluntary, (iii) the employer does not endorse the program, and (iv) the employer receives no consideration for the program. In Bommarito v. Northwestern Mutual Life Ins. Co., the plaintiff, who was the sole owner of her company, and nine of her employees applied for individual policies of disability insurance to be issued by Northwestern Mutual Life Insurance Company (?Ç£Northwestern?Ç¥). In the submission of her application to Northwestern, the plaintiff included the nine employee applications and a request for a… Continue Reading

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