§1144a Clarification of Church Welfare Plan Status Under State Insurance Law

Summary

When a church-run welfare plan is being looked at under certain state insurance rules, it must be treated like a plan run by a single employer that pays costs out of general church money or buys insurance with that money. The state rules meant here are ones that either require the plan (or the group that runs or pays for it) to have a license, or rules about the plan’s ability to pay its bills or go bankrupt, including state guaranty funds. For those state insurance rules, the state can enforce them against the church plan as if the plan were a licensed insurer. Aside from enforcement, this only decides how the plan is treated under those specific state insurance laws and does not change participants’ rights. Definitions (short): Church plan = the federal definition of a church retirement/welfare plan. Reimburses costs from general church assets = pays costs from church funds rather than spreading risk, for these state rules only. Welfare plan = a church plan that provides things like medical, hospital, sickness, disability, death or unemployment benefits, vacation, training, day care, scholarships, or prepaid legal services; it does not include outside insurers or HMOs that do business with the plan.