3766 / Can working owners with no employees participate in MEPs?

Sole proprietors and other self-employed workers are entitled to participate in the MEP as both employer and employee.¹ To qualify, the owner must have an ownership right in a trade or business (partners in partnerships also qualify). The owner must earn wages or self-employment income from the trade or business by providing personal services to the business. Additionally, the working owner must meet one of two additional criteria: |

1. the owner must work at least an average of 20 hours per week or at least 80 hours per month in the business; or
2. in the case of an MEP offered via a bona fide group or association of employers (i.e., not a PEO, see Q ), the owner must have wages or self-employment income from the business that at least covers the working owner’s cost of coverage for participation by the working owner (and any covered beneficiaries) in any group health plan sponsored by the association in which the individual participates.²

For purposes of determining the working owner’s eligibility to participate in the MEP, the relevant date is when the individual first becomes eligible to participate, but verification of continuing eligibility must also be made over time. The DOL rule specifies only that reasonable monitoring procedures must be developed to ensure continued eligibility.³

1.  DOL Reg. 2510.3-55(d)(1).

2.  DOL Reg. 2510.3-55(d)(2)(iii).