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Mr. Martin S. Rosenthal
Schottenstein, Zox & Dunn
41 South High Street
Columbus, Ohio 43215
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2000-07A
ERISA Sec. 3(32)
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Dear Mr. Rosenthal:
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This responds to your request for an advisory opinion concerning the
applicability of Title I of the Employee Retirement Income Security Act of
1974, as amended, (“ERISA”) to the OCSEA Benefits Trust (“Trust”).
The Trust provides welfare benefits to approximately 47,000 active employees
of the State of Ohio (also referred to herein as “Ohio” or the
“State”), to former employees of Ohio, and to dependents of such active
or former employees. Based on these and other representations and on
documents that you submitted, you request an opinion that the Trust is a
“governmental plan,” as defined in section 3(32) of ERISA, that is
excluded from Title I coverage by section 4(b)(1) of ERISA.
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You advise that the Ohio Civil Service Employees Association (“OCSEA”)
is a labor union that represents a majority of the employees of the State of
Ohio who are covered by the State’s public employee collective bargaining
laws. Pursuant to collective bargaining between OCSEA and the State, OCSEA
created the Trust in January 1993 to provide group life insurance, dental
care benefits, and vision care benefits that the State had been providing to
its union represented employees.(1)
In addition to employees represented by OCSEA, employees represented by
certain other labor unions participate in the Trust pursuant to negotiations
between those unions and the State.(2)
All of the individuals eligible to participate in the Trust are current or
former employees of the State or their dependents.
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The Trust currently provides two additional benefits that are available to
all covered participants at no cost to them. Specifically, in 1997, the
Trust instituted “Working Solutions Services,” which is described in
your submission as an arrangement with a service organization that provides
employees with information and referrals related to adult/elder dependents
and special needs dependents, including children, and information on
personal legal and financial matters.(3)
In 1998, the Trust added disability gap insurance that supplements
disability benefits provided by the State to its employees.
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The Trust is funded primarily by contributions made by the State under
collective bargaining agreements between the State and the unions that
represent participating employees. Trust participants contribute only for
benefits that they elect, i.e., supplemental life insurance benefits and
COBRA continuation coverage for dental and vision benefits. The “Working
Solutions Services” benefits and disability gap insurance are paid out of
the Trust’s earnings and reserves. The State contributed over 90% of the
total contributions to the Trust during fiscal years ending June 30, 1995,
through June 30, 1998.
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The trust agreement under which the Trust was originally created provided
for governance of the Trust by eleven trustees to be appointed by OCSEA or,
at OCSEA’s discretion, by one or more other unions representing
participants covered by the Trust. Since the inception of the Trust, OCSEA
has appointed seven trustees and four other participating unions each has
appointed one trustee.(4) The
first amendment to the trust agreement, effective April 14, 1993, designated
as an additional, State-appointed trustee the person who serves as
Management Co-Chair of the Joint Health Care Committee of the State of Ohio.
The most recent amendment and restatement of the trust agreement, executed
as of September 11, 1995, gave the State the sole right to appoint its own
trustee representative. In addition to the appointment of a trustee, the
State has certain responsibilities relating to the administration of the
Trust. Under a July 1, 1993, agreement between the Trust and the Ohio
Department of Administrative Services (“DAS”), DAS and/or other State
agencies perform certain functions regarding, among other things,
notifications of eligibility and coverage, collection and scrutiny of
enrollment forms, deposits of employer contributions for Trust benefits, and
payroll deductions for supplemental life insurance.
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ERISA section 4(b)(1) provides that Title I of ERISA does not apply to any
employee benefit plan that is a "governmental plan" as defined in
ERISA section 3(32). Section 3(32) of ERISA defines the term
"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."
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It is the view of the Department of Labor (“Department”) that the term
"governmental plan" as defined in ERISA section 3(32) is not
limited to plans established by the unilateral action of employers which are
governmental agencies. In this regard, the Department has interpreted the
term "governmental plan" to include plans established or
maintained pursuant to a collective bargaining agreement between a
governmental entity and a labor union where such plans are funded by, and
cover only employees of, governmental entities.
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Your submission indicates that the Trust was created pursuant to collective
bargaining between Ohio and OCSEA, and continues to be subject to agreements
between those entities and between the State and the other participating
unions; the Trust provides benefits exclusively for individuals who are
current or former employees of the State of Ohio or their dependents; and
the State provides substantially all of the contributions to the Trust. The
State also participates in the administration of the Trust through the
appointment of a trustee and the performance of a number of functions
related to the daily operations of the Trust. Based on this information, it
is the view of the Department that the Trust is a "governmental
plan" within the meaning of section 3(32) of ERISA and, by virtue of
ERISA section 4(b)(1), is excluded from ERISA Title I coverage.
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This letter constitutes an advisory opinion under ERISA Procedure 76-1 and,
accordingly, 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.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
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You state the Trust began actual
administration of the group life, dental, and vision benefits on July
1, 1993, and continues to provide those same benefits, although not
necessarily under the same terms and provisions or by the same
vendors.
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You identified the other unions
whose members currently participate in the Trust as: United Food and
Commercial Workers, AFL-CIO; District 1199, Service Employees
International Union, AFL- CIO; The Fraternal Order of Police, Ohio
Labor Council, Inc.; and State Council of Professional Educators, Ohio
Education Association/National Education Association. The Trust’s
website, to which you referred for additional information on the Trust
and its benefits, indicates that State employees represented by the
Ohio State Troopers Association and the Communications Workers of
America also participate in the Trust.
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Whether any of the “Working
Solutions Services” benefits are benefits described in section 3(1)
of ERISA, defining the term “employee welfare benefit plan,”
depends on the facts pertaining to those particular benefits. See, for
example, Opinion 91-26A (employee assistance program did not provide
benefits which are in the nature of “medical” benefits or benefits
“in the event of sickness”).
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OCSEA’s board of directors adopted
resolutions August 24, 1996, stating that “OCSEA shall always have
at least seven of the Union Trustee positions” and that “OCSEA
will appoint representatives to the remaining four Union Trustee
positions upon written nomination by the four exclusive
representatives of covered trust beneficiaries which represent the
greatest number of non-OCSEA employee members.”
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