Why Controlled Groups Status Matters to You (and How To Understand It)


You research HR trends and you get to know your employees so you can build a benefits program that truly supports them. You diversify your offerings so every life in your diverse workforce knows their employer is there to partner with them and elevate their work experience. You compete for top talent, win it and retain it with a stellar benefits package. You’ve worked hard to develop an HR strategy, and that strategy will keep your organize at the top - as long as you’re also compliant when it comes to your organization’s controlled group status.

What Does “Controlled Group Status” Mean?

“Controlled group” is the term broadly used to refer to commonly owned entities. The rules were designed to prevent businesses from using their structure to receive unintended benefits or avoid legal obligations.

Know That Controlled Group Status Impacts the Application of Many Laws

The structure of an organization can significantly impact health and welfare benefits compliance. The controlled group status is also important because:

  1. It can affect tax rates and reporting
  2. It has lability issues, such as joint and several liability possibly applying to employers who are members of a controlled group
  3. It can impact mergers and acquisitions because knowledge of the status is essential for the parties to properly structure the transaction and understand their respective obligations

When it comes to benefits, determination of controlled group status impacts application of laws for executive compensation, retirement plans and — the main focus of this webinar — health and welfare plans.

It’s a Technical Topic Worth Having an Overview

Determine. Consult. Consider. These three steps will put you on the path to understanding how controlled group status impacts the application of laws for health and welfare plans:

  1. It’s crucial to determine your organization’s status before beginning any benefits program. It’s a threshold issue.
  2. It is worth every effort and dime to consult with counsel or a tax professional for assistance because the laws in this area are complex!
  3. Once you’ve determined your status and consulted with the right professionals, you will have educated and prepared yourself to productively consider controlled group status when designing your benefit plans. This will help you, for instance, not to inadvertently create a MEWA.

Ultimately, following these steps will position you to build a benefits plan that’s as fully compliant as it is competitive.

That’s About It, But You Can Learn More

Carol Wood, VP and benefits compliance counsel, and Chase Cannon, SVP and deputy chief compliance officer, review the basic types of IRS controlled groups and how controlled group status affects compliance with laws such as the ACA, COBRA, and Section 125 and 105 nondiscrimination rules.

click here to view the webinar or download notes from the presentation