Can a health and welfare trust (“HWT”) which is jointly established by a union and multiple employers, provide benefit coverage to non-unionized employees of participating employers, retired employees, and individuals who are not employees (i.e., dependants or survivors of current or retired employees (“non-employees”)). Can an HWT administer a plan for retired employees that is not funded by any participating employers, or a plan that provides drug or alcohol rehabilitation services as part of an employee assistance program? CRA responded:
A HWT may only administer a group sickness or accident insurance plan (“GSAIP”), a private health services plan (“PHSP”), a group term life insurance policy (“GTLIP”), or a combination thereof.
…[T]here is no condition in Folio S2-F1-C1 which requires that all employees be in the same employee group. Accordingly … the provision of benefit coverage to non-unionized employees, in and of itself, would not disqualify the trust as a HWT. …
[T]he provision of benefit coverage to retired employees or non-employees would not disqualify a trust as a HWT where the underlying plan or policy (i.e., a GSAIP, PHSP, or GTLIP) allows for the provision of benefit coverage to such individuals. …
[A] GTLIP may only provide benefit coverage to current and former (including retired) employees. …
…Folio S2-F1-C1 … clarifies that a trust funded only with contributions made by employees or an employee union would not qualify as a HWT. However … there is no explicit requirement that an employer be legally obligated to make contributions in respect of each plan or policy administered by a HWT.
[W]here is it established that retired employees may be provided benefit coverage through a GSAIP, PHSP, or GTLIP, and none of the participating employers have a legal obligation to pay any premiums or contributions in respect of the particular plan or policy, it would appear permissible for a HWT to administer such a plan or policy provided that the trust also administers other employer-funded plans or policies. …
A HWT may administer a plan that offers drug and alcohol rehabilitation services, provided the plan qualifies as a PHSP. …
[A] plan that otherwise meets all of the conditions in paragraph 3 of … IT-339R2… is considered a PHSP as long as all of the expenses covered under the plan are medical or hospital expenses (“medical expenses”) or expenses incurred in connection with and within a reasonable time period following a medical expense, and all or substantially all (generally 90% or more) of the premiums paid under the plan relate to the coverage of medical expenses that are eligible for the medical expense tax credit (“METC”).