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The approval of two companies' captive employee benefit funding plans over the past 18 months should speed the way for other companies seeking U.S. Department of Labor approval for similar programs, a captive benefits expert said Thursday.
“Obtaining DOL approval for employee benefits is moving back to the fast track,” said Karin Landry, managing partner of Boston-based Spring Consulting Group L.L.C., during a webinar on using captives to fund benefits programs.
Together, approval of captive benefits funding applications by Santa Clara, Calif.-based Intel Corp. in April and another by Atlanta-based The Coca-Cola Co. in March 2013, “will usher in a new wave of funding benefits,” in captives, Ms. Landry said.
Ms. Landry noted that for a decade employers seeking DOL approval of their plans to fund benefits programs in captives had access to an expedited process known as ExPro that cut the average time for approval to 78 days from nearly twice that for companies not eligible for ExPro consideration.
ExPro was essentially available to companies who could cite two substantially similar individual exemptions approved by the DOL in the past five years, or one substantially similar individual exemption approved in the last 10 years and one approved through ExPro within the past five years.
Two events in 2012 took that option off the table for captive parents, however, Ms. Landry said. One was the DOL's decision to review the ExPro process and criteria. The other was the nearing sunset of the ability to cite a 2003 exemption granted to Decatur, Ill.-based Archer Daniels Midland Co. in seeking ExPro consideration.
But the DOL's 2013 approval of Coca-Cola's application for an individual exemption to use its South Carolina captive to insure life and accidental death and dismemberment benefits, and its April approval of Intel's application to fund life and ADD benefits in its Hawaii captive “really sets the stage for others who want to go forward with life and ADD programs to use these two as cites for their application,” Ms. Landry said.
Ms. Landry said that DOL's review of the ExPro process didn't lead to changes in the criteria for approving captive benefits programs, though the department is now placing greater emphasis on employers' demonstrating that their captive plans would enhance benefits. “While the criteria really haven't changed the focus has changed,” she said.