A trust is established by multiple employers to provide designated employee benefits (DEB’s) for their employees. Each participating employer determines its own benefit plan design. The trust negotiates the premiums payable (in respect of insured plans) or contributions required (in the case of self-insured plans) with an insurance carrier (or carriers) to fund the benefit plans established for each participating employer.
At the direction of trustees, participating employers are required to remit premiums or contributions directly to an insurance carrier to acquire insurance coverage rather than to the trust. Would this satisfy the requirements of s. 144.1(2) for being an employee life and health trust (ELHT)?
In responding, “yes,” CRA stated:
[T]he fact that premiums and contributions paid by an employer are not made directly to a trust will also not, in and of itself, impair that trusts’ ability to qualify as an ELHT, as there is no requirement in section 144.1 … which explicitly requires that an employer make contributions directly to an ELHT (or to any extent whatsoever). That is, a trust established to provide DEB’s to employees and certain related persons may qualify as an ELHT absent employer contributions. For example, a trust established by a union may qualify an ELHT where the union or participating employees have the legal obligation to fund the entire cost of DEB’s (i.e., an employee-pay-all plan).