What is a Multiple Employer Welfare Association (MEWA)?

A Multiple Employer Welfare Association (MEWA) is defined as an entity that provides employee benefit plans, including health insurance, to a group of at least two employers. This structure allows smaller employers to pool their resources, thereby sharing the risks and expenses associated with providing employee benefits that might be cost-prohibitive on an individual basis. By forming a MEWA, participating employers can offer their employees a wider range of benefits and potentially lower costs through collective bargaining.

The correct answer reflects this fundamental concept of MEWAs, highlighting their collaborative nature aimed at providing employee benefits across multiple employers. Establishing a MEWA is particularly advantageous for small businesses that might struggle to provide comprehensive employee benefits due to financial constraints or administrative burdens.