Multiple Employer Welfare Arrangement

What Does Multiple Employer Welfare Arrangement Mean?

A Multiple Employer Welfare Arrangement (MEWA) is a formal arrangement where a group of employers pool their contributions into a single plan that provides benefits to their employees. Each employer contributes to the plan based on the number of employees they have and the associated costs for each employee.

Insuranceopedia Explains Multiple Employer Welfare Arrangement

A Multiple Employer Welfare Arrangement (MEWA) is a cost-effective way for employers to provide group insurance benefits to their employees. By pooling their resources, employers can leverage economies of scale and secure competitive benefit packages from insurance companies. Smaller employers tend to use MEWAs because they cannot negotiate group health rates on their own, and many of these same businesses also carry workers’ compensation insurance to cover injuries that happen on the job.

The group forming an MEWA can consist of an association of employers, a trust formed by employers, or a trust established by a labor union. Business owners weighing whether to join a MEWA usually look at it alongside the rest of their coverage budget, including what they already pay for small business insurance.