This could present a significant problem for any employer using staffing firms or temp agencies once the PPACA employer mandate kicks in next year. This is from Allen Bianchi and Ed Lenz at Mintz Levin:
If employees placed with a client organization are the common law employees of the client organization but are covered under the staffing firm’s group health plan, then that plan is, and is regulated as, a multiple employer welfare arrangement. If the plan is fully insured, then it may violate the terms of the agreement with the carrier that is under the impression that it is insuring a single-employer plan. In addition, if the client organization is a small group, the plan may run afoul of the state’s small group requirements. The arrangement must also file annually a Form M-1 with the Department of Labor. And if the plan is self-funded, then the arrangement would likely constitute an unlicensed insurance company for state law purposes, or, in the alternative, fail to satisfy any separate state law governing self-funded MEWAs.