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May 3, 2005
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Version
2005-07A
ERISA Sec. 3(32)
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Neal B. Childers, Esq.
Georgia Department of Community Health
2 Peachtree Street, NW
Atlanta, GA 30303-3159
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Dear: Mr. Childers:
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This is in response to your request for an advisory
opinion from the Department of Labor (Department) regarding the
applicability of Title I of the Employee Retirement Income Security Act of
1974, as amended (ERISA). Specifically, you ask whether employees of certain
federally qualified health centers in the State of Georgia may participate
in the Georgia State Health Benefit Plan (“SHBP”) without adversely
affecting the status of the SHBP as a “governmental plan” within the
meaning of section 3(32) of ERISA.
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The following summary is based on facts and
representations we received in support of your request. In accordance with
section 45-18-2 of the Official Code of Georgia, the Georgia Department of
Community Health established the SHPB to provide employees and retired
employees of the State with, among other benefits, group health insurance
for hospitalization, surgery, and medical treatment and care. The Public
Employee Health Benefits Division of the Georgia Department of Community
Health is responsible for the day-to-day operations of the SHBP. There are
currently approximately 315,000 participants in the plan, of which
approximately 1,500 are not governmental employees of the State, a political
subdivision of the State, or of an agency or instrumentality of either. You
represent that State policy requires the preservation of the SHBP’s
governmental plan status under Title I of ERISA. For purposes of this
opinion, we assume, without examining the issue, that the SHBP, as currently
structured and operated, is a “governmental plan” within the meaning of
ERISA § 3(32).
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The SHBP is considering an amendment that would allow all
the employees of federally qualified health centers (FQHC) in the State of
Georgia to qualify for participation in the SHBP. There are approximately
880 employees employed by eighteen FQHCs operating in the State. You
represent that section 1905 of the Social Security Act defines FQHCs to
include diverse types of organizations and programs that are eligible to
receive federal funding under section 330 of the Public Health Service Act
for serving certain medically underserved areas or populations. Both public
and private not-for-profit health centers may qualify as FQHCs. Public FQHCs
in Georgia are defined by Ga. Code Ann § 31-7-51 as those owned or operated
by a municipality, county, hospital authority, or a combination thereof. You
represent that the FQHCs that are the subject of your request are not owned
or operated by a municipality, county, hospital authority, or a combination
thereof, and that they are not otherwise agencies or instrumentalities of
the State of Georgia. For the purposes of this opinion we assume, therefore,
without examining or expressing an opinion on the issue, that none of the
FQHCs that are the subject of your request would constitute an “agency”
or “instrumentality” of state government within the meaning of section
3(32) of ERISA.
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ERISA section 4(b)(1) provides that Title I of ERISA does
not apply to an employee benefit plan that is a “governmental plan” as
defined in section 3(32) of ERISA. Section 3(32) defines governmental plan,
in pertinent part, as “a plan established or maintained for its employees
by the Government of the United States, by the government of any State or
political subdivision thereof, or by any agency or instrumentality of any of
the foregoing.” It is well established that, in the Department’s view,
participation by a de minimis number of private sector employees will not
adversely affect a plan’s status as a governmental plan. See, e.g.,
Advisory Opinion 95-15A (Jun. 26, 1995); Advisory Opinion 95-27A (Nov. 8,
1995). However, if a benefit arrangement is extended to cover more than a de
minimis number of private sector employees, the Department may not consider
it a governmental plan under Title I of ERISA.
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Based on the representations and assumptions described
above, it is the opinion of the Department that the SHBP’s status as a
governmental plan under section 3(32) of ERISA would not be adversely
affected by the participation of 880 employees of FQHCs in the State of
Georgia. These 880 employees, together with the approximately 1,500 other
non-governmental employees currently participating in SHBP, represent less
than one percent of the total participants in the Plan, and in the
Department’s view, comprise no more than a de minimis number of the Plan’s
total participants.
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This letter constitutes an advisory opinion under ERISA
Procedure 76-1, and is issued subject to the provisions of that procedure,
including section 10 thereof concerning the effect of advisory opinions.
This letter relates solely to the application of the provisions of Title I
of ERISA and is not determinative of any particular tax treatment under the
Internal Revenue Code. Questions regarding any applicable provisions of the
Internal Revenue Code should be directed to the Internal Revenue Service.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
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