[Federal Register Volume 90, Number 128 (Tuesday, July 8, 2025)]
[Notices]
[Pages 30102-30109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12641]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2025-05; Application Number L-12066]
Exemption for Certain Prohibited Transactions Involving Meta
Platforms, Inc. (Meta) Located in Menlo Park, CA
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: This document provides notice of an individual exemption from
certain prohibited transaction restrictions of the Employee Retirement
Income Security Act of 1974 (ERISA). The exemption permits Prudential
Life Insurance Company of America (Prudential) to reinsure the Meta
Platforms Inc. Health and Welfare Benefit Plan (Plan)'s group term life
insurance benefits, accidental death and dismemberment benefits,
survivor income benefits, supplemental employee term coverage,
dependent term life insurance (spouse or domestic partner), dependent
term life insurance (children) (the Reinsured Benefits), by entering
into a reinsurance contract with Ekahi Insurance Company, LLC (Ekahi),
an insurance company that is owned by Meta Platforms, Inc. (Meta or the
Applicant). This arrangement is hereinafter referred to as the
``Reinsurance Arrangement.''
DATES: This final exemption will be in effect as of July 8, 2025.
FOR FURTHER INFORMATION CONTACT: Nicholas Schroth, Office of Exemption
Determinations, Employee Benefits Security Administration, U.S.
Department of Labor, (202) 693-8571 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION: Meta requested an exemption pursuant to
ERISA section 408(a) in accordance with the Department's exemption
procedures set forth in 29 CFR part 2570, subpart B.\1\ On November 21,
2024, the Department published a notice of proposed exemption in the
Federal Register at 89 FR 92162 (November 21, 2024) (the Proposed
Exemption).
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\1\ The procedures that govern the Applicant's request for an
exemption (the Exemption Procedures) are set forth in 29 CFR part
2570, subpart B at 76 FR 66637, 66644 (October 27, 2011). Although
the Applicant's submission is being processed under the Exemption
Procedures in effect as of December 27, 2011, the Exemption
Procedures were recently amended at 89 FR 4662, 4691 (January 24,
2024). Additionally, because the Plan will not be qualified under
section 401 of the Internal Revenue Code of 1986, as amended (the
Code), there is no jurisdiction under Title II of the ERISA pursuant
to section 4975 of the Code. However, there is jurisdiction under
Title I of ERISA.
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Based on the record and representations made by the Applicant, the
Department has determined to grant the Proposed Exemption. This
exemption provides only the relief specified herein and does not
provide relief from violations of any law other than the prohibited
transaction provisions of ERISA.
As discussed below, the Department makes the requisite findings
under ERISA section 408(a) that the exemption is: (1) administratively
feasible for the Department, (2) in the interest of the Plan and its
participants and beneficiaries, and (3) protective of the rights of the
participants and beneficiaries of the Plan, based on the Applicant's
adherence to all the conditions and definitions of the exemption at all
times. Accordingly, affected parties should be aware that the inclusion
of the conditions and definitions incorporated in this exemption was
necessary for the Department to make its findings to grant the relief
requested by the Applicant.
Benefits of the Exemption to Plan Participants: This exemption will
yield an immediate and objectively determined benefit to Plan
participants in the form of the benefit enhancements described in
paragraphs 14 through 27 below, which must be paid for solely by Meta.
Initially, the benefit enhancements are expected to cost Meta around
$3,854,000 per year, although that amount will change over time.
Prudential (or any successor Fronting Insurer) will remain fully
responsible for the payment of Reinsured Benefits if Ekahi does not
fulfill its contractual obligations to Prudential.
Background 2
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\2\ Any capitalized terms not defined herein are given the
meanings ascribed to them in the Proposed Exemption at 89 FR 92162
(November 21, 2024).
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The Sponsor
1. Meta Platforms, Inc. (Meta) is a multinational technology
company headquartered in Menlo Park, California. Meta sponsors the
Plan.
The Plan
2. Meta Platforms Inc. Health and Welfare Benefit Plan (Plan)
provides the following health and welfare benefits to its employees and
their beneficiaries: health, dental, vision, temporary disability
insurance for accidents and sickness, prepaid legal services, long-term
disability, death benefits, basic employee term life coverage, basic
AD&D coverage, employee survivor benefits life coverage, supplemental
employee term coverage, dependent term life insurance (spouse or
domestic partner), and dependent term life insurance (children). As of
December 31, 2023, the Plan covered 56,511 participants.
Reinsured Benefits
3. As of January 1, 2021, Prudential insured a subset of the Plan's
group term life insurance benefits, basic accidental death and
dismemberment benefits, survivor income benefits, supplemental employee
term coverage, dependent term life insurance (spouse
[[Page 30103]]
or domestic partner), and dependent term life insurance (children).
Once Ekahi commences the Reinsurance Arrangement, these benefits will
be reinsured by Ekahi (hereinafter collectively referred to as the
Reinsured Benefits).
Fronting Insurer
4. Prudential Life Insurance Company of America (Prudential) will,
at least initially, operate as the Plan's Fronting Insurer for the
Plan's Reinsured Benefits. Prudential received an ``A+'' financial
strength rating from A. M. Best Company (A. M. Best) as of February 4,
2025. Prudential is unrelated to Meta, and the conditions of the
exemption require it to remain so throughout the duration of the
Reinsurance Arrangement. The conditions for relief prescribe several
requirements that any future Fronting Insurer must adhere to for the
parties to continue to rely on the exemption.
The Captive
5. Meta organized Honu Insurance Company, LLC (Honu) on December 1,
2020, as a wholly-owned subsidiary of Meta. Honu has authority to
transact business as a pure captive insurance company, which means it
only insures or reinsures risks of Meta and affiliated entities or of a
controlled unaffiliated business.\3\ On May 10, 2022, Hawaii approved
Honu's conversion from a pure captive insurance company to a sponsor
captive insurance company and allowed the establishment of a protected
cell, called Ekahi Insurance Company, LLC (Ekahi) to operate as a cell
company sponsored by Honu.\4\ Hawaii state law generally provides that
a sponsor captive insurance company is a captive insurance company if:
(1) its minimum required capital and surplus is provided by one or more
sponsors; (2) it is formed or licensed under Hawaii state law; (3) it
insures the risks only of its participants through separate participant
contracts; and (4) it may fund its liability to each participant
through one or more protected cells.\5\
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\3\ Hawaii state law 19 Section 431:19-101.
\4\ The Applicant represents that the use of an incorporated
protected cell to conduct reinsurance operations as described herein
has no effect on the parties' adherence to the conditions for
exemptive relief.
\5\ Hawaii state law 19 Section 431:19-101.
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6. Ekahi is a wholly-owned subsidiary of Meta. Presently, Ekahi
reinsures employee benefits for Meta's international benefit plans, and
Meta intends to expand its global benefits program by using Ekahi as
its reinsurer for its domestic benefits as well. The Applicant states
that, as a protected cell of a captive insurance company, Ekahi is a
separate juridical entity (e.g., a corporation or an LLC) formed under
the captive insurance company laws of a state and has no responsibility
for the liabilities of other cells that may be formed within such
captive insurance company. The juridical entity formed as a cell has
all of the characteristics of any such entity, e.g., in the case of a
corporate cell it has articles of incorporation.
Independent Fiduciary
7. Milliman, Inc. (the Independent Fiduciary or Milliman) will
serve as the Plan's Independent Fiduciary with respect to the
Reinsurance Arrangement and Kathleen E. Ely, FSA, MAAA, of Milliman
will perform the functions required of the Independent Fiduciary on
behalf of Milliman with respect to the requirements of this
exemption.\6\ The conditions for the exemption require the Independent
Fiduciary to evaluate, monitor, and confirm whether the terms and
conditions of the exemption have been satisfied. As part of this
analysis, Milliman must document its review of the terms of the
exemption and conclude whether, based on its review of all of the
relevant documents and evidence, all of the exemption's terms and
conditions have been met (or, due to timing requirements, can
reasonably expected to be met consistent with the time requirements set
forth in this exemption)). Milliman must submit this report to the
Department's Office of Exemption Determinations at least 30 days before
the Plan engages in the Reinsurance Arrangement.
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\6\ For a description of the Independent Fiduciary's
qualifications, independence, and contractual requirements with
regard to its engagement agreement, please see the Proposed
Exemption at 89 FR 92162 (November 21, 2024).
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8. For the duration of the Reinsurance Arrangement, the Independent
Fiduciary must perform the following duties: (a) monitor, enforce and
ensure compliance with all conditions of the exemption, including all
conditions and obligations imposed on any party dealing with the Plan,
throughout the period during which Ekahi's assets are directly or
indirectly used in connection with a transaction covered by the
exemption; (b) report any instance of non-compliance immediately to the
Department's Office of Exemption Determinations; (c) monitor the
transactions covered by the exemption on a continuing basis to ensure
the transactions remain in the interest of the Plan; (d) take all
appropriate actions to safeguard the interests of the Plan and its
participants and beneficiaries; (e) review all contracts pertaining to
the Reinsurance Arrangement, and any renewals of such contracts, to
determine whether the requirements of this exemption continue to be
satisfied; and (f) determine that the Reinsurance Transaction is not
detrimental to the interest of the Plan and its participants and
beneficiaries and take immediate corrective action if it is.
9. Additionally, Milliman must file annual certified reports with
the Department, under penalty of perjury, confirming that the terms and
conditions of the exemption have been met (including that Meta has not
reduced or offset any participant benefits in relation to its
implementation and maintenance of the Reinsurance Arrangement), and
explaining Milliman's bases for that conclusion.
Mechanics of the Reinsurance Arrangement
10. Meta intends to utilize Ekahi to reinsure the following Plan
benefits: basic employee term life coverage, basic accidental death and
dismemberment coverage, employee survivor benefits coverage,
supplemental employee term coverage, dependent term life insurance
(spouse or domestic partner), dependent term life insurance (children)
(hereinafter collectively referred to as the Reinsured Benefits).
11. In general terms, the Plan will make premium payments with
respect to certain insurance coverages to Prudential, known as the
Fronting Insurer, and Prudential will make corresponding payments for
those coverages to Ekahi, also known as the Captive Insurer, in an
amount less than the premiums it is paid by the Plan. The amount
Prudential retains from the Plan's premium payment is a negotiated fee
between Prudential and Ekahi; while the amount Prudential pays to Ekahi
is Ekahi's premium for reinsuring the Plan's risks. The reinsurance
agreement between Prudential and Ekahi is ``indemnity only,'' which
means that Prudential retains the responsibility to pay benefit claims
to participants and beneficiaries if Ekahi does not satisfy any of its
contractual obligations to Prudential under the Reinsurance
Arrangement.
12. Administration of the claims under the Plan will be performed
by Prudential as the direct insurer of the Plan. Ekahi will be bound by
Prudential's claims handling decisions under the Plan and will not have
direct contact with participants, make direct payments to participants,
or have responsibility for their benefit determinations. Under the
terms of the
[[Page 30104]]
Reinsurance Arrangement, Ekahi's reinsurance obligations to Prudential
are secured with collateral (i.e. a letter of credit or funds in a
trust account), but Prudential will assume ultimate financial liability
for payment of the Plan's benefit claims if Ekahi is unable (or
unwilling) to satisfy its obligations to Prudential.
The Primary Benefit Test
13. Under the exemption, Meta must satisfy the exemption's
``Primary Benefit Test.'' This means the Plan must benefit from the
Reinsurance Arrangement by an amount that exceeds 50% of the net
financial benefit that Meta and its related parties receive from the
Reinsurance Arrangement. Initially, with respect to the first year of
the Reinsurance Arrangement, Ekahi expects to realize a net financial
benefit increase of $5,775,000 from the Reinsurance Arrangement; and
Meta will pay an estimated $3,854,000 to improve the Plan with the new
benefit enhancements. If these estimates prove accurate, and if Meta
does not receive any other direct or indirect benefit from the
arrangement other than the net financial benefit increase of
$5,775,000, the Primary Benefit Test will be met ($3,854,000/5,775,000
x 100 = 66.7%). This exemption allows for certain adjustments,
described below, to ensure the Primary Benefits Test remains satisfied
over time.
Department's Note: An essential premise of this exemption is that
the Independent Fiduciary will be able to accurately quantify both the
net financial benefit to Meta from the Reinsurance Arrangement, and the
benefit to the Plan from the Reinsurance Arrangement. The Department
expects the Independent Fiduciary to discuss the specifics of the
Primary Benefit Test with Meta well in advance of the start date of the
Reinsurance Arrangement, so that the Independent Fiduciary may approve
and monitor the Plan's participation in the arrangement, consistent
with its duties under ERISA. The Independent Fiduciary must be able to
identify and trace all data relevant to the Primary Benefit Test (i.e.,
premium payments, net income amounts, reserve amounts, among other
things), cognizant that Ekahi also reinsures employee benefits for
Meta's international benefit plans (outside the scope of this
exemption).
The Independent Fiduciary must diligently and proactively explore
the scope of each prong of the Primary Benefits Test, to ensure the
test has been properly met. For example, the amount that Meta pays in
premiums for benefit enhancements may not accurately reflect (and may
not, in some instances, overstate) the ultimate benefit the Plan
receives from the Reinsurance Arrangement. Failure of the Independent
Fiduciary to perform a prudent, robust review of all data relevant to
the Primary Benefits Test may result in loss of the exemption.
Benefit Enhancements
14. The benefit enhancements are:
15. Removal of the age reduction clauses for the Plan's basic life
insurance benefits, optional life insurance coverages and AD&D benefits
at no additional cost. Additionally, under this enhancement, the
insured will no longer incur reductions to the policy's insurance
amount when they reach the ages of 65 and 70.
16. Increase in the percentage allowed for an accelerated insurance
payout from 90 percent to 100 percent of the total amount of coverage
up to $1,000,000 for the basic life insurance benefit. Additionally, if
a participant is enrolled in the supplemental employee term coverage
and the accelerated payment from the basic life insurance does not
amount to at least $1,000,000, 100 percent of the supplemental employee
term coverage will be accelerated until both the basic life insurance
and the supplemental life insurance accumulate to $1,000,000.
17. New Plan portability option to participants under basic life
insurance that will allow participants to retain coverage without
regard to their medical conditions when they leave Meta's employment.
18. New Plan portability option to AD&D insurance benefits. The
insurance will be issued without regard to participants' medical
conditions but may be offered at higher rates.
19. New Plan benefit permitting qualifying disabled former employee
participants to cease premium payments and continue AD&D death benefit
coverage for one year. This enhancement may be renewed on an annual
basis up to age 65 if the disabled individual is determined to continue
to be Totally Disabled (as defined in the Plan).
20. New Plan-paid AD&D benefit of 52 sessions of bereavement and
trauma counselling relating to AD&D claims up to $150 per session that
are held within a year of the loss.
21. New Plan-paid AD&D benefit covering dependent children's
tuition upon the death of a participant in an annual amount equal to
the lesser of (1) the actual annual amount of the dependent child's
tuition (exclusive of room and board); (2) 10 percent of the
participant's AD&D death benefit; \7\ or (3) $25,000. This benefit will
be payable annually for up to 4 consecutive years, but not beyond the
date the child reaches age 26.
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\7\ The Plan's AD&D death benefit is equal to 100 percent of a
participant's basic life insurance benefit.
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22. New Plan-paid AD&D benefit covering childcare expenses for
qualifying dependent children of a qualifying deceased participant in
an annual amount equal to the lesser of: (1) the actual cost charged by
the relevant Child Care Center \8\ per year; (2) 10 percent of the
deceased participant's AD&D death benefit; or (3) $24,000. This benefit
is payable annually for a maximum of four consecutive years, but not
beyond the date the child reaches age 13. If there is no dependent
child eligible for this benefit, the Plan will pay a $1,000 benefit.
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\8\ As defined in the Plan's policy.
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23. New Plan-paid AD&D benefit coverage for funeral expenses in an
amount equal to the lesser of: (1) the actual amount of the Funeral
Expenses; (2) 10 percent of the amount of the deceased participant's
AD&D death benefit; or (3) $20,000.
24. New Plan-paid AD&D benefit coverage for monthly rehabilitation
payments. The Plan will make a monthly payment equal to the lesser of
(1) five percent of the amount of the participant's relevant AD&D
benefit \9\ and (2) $500 for rehabilitation expenses for a maximum of
12 consecutive months.
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\9\ An individual's AD&D benefit under the Plan is equal to a
percentage of a participant's basic life insurance benefit that
depends on the particular loss or injury. For example, in the event
of a participant's loss of sight in one eye, they would receive 50
percent of their basic life insurance benefit.
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25. New Plan-paid AD&D benefit covering a higher monthly mortgage
payment of $2,000 per month. The benefit will be paid until the first
of the following events occur: (1) the spouse or domestic partner dies;
(2) the mortgage is paid in full; (3) the house subject to the mortgage
is sold; or (4) the benefit has been paid for 12 consecutive months.
26. New Plan AD&D benefit increases the monthly survivor income
benefit to an employee's spouse or domestic partner to 60 percent of
the employee's monthly earnings for a monthly maximum of $15,000 if
certain conditions are met.
27. New Plan benefits education program offering the following
Life@Benefits concierge services for Plan benefits and well-being
resources.
EstateGuidance--estate planning concierge services.
[[Page 30105]]
ComPsych--funeral concierge services.
GuidanceResources--employee assistance program (EAP)
services, financial information resources, legal resources, and online
informational resources.
International Medical Group Travel Assistance Services--
travel support services, e.g., medical assistance, emergency medical
transport, and security services.
Look-Back Requirement
28. The value of the Benefit Enhancements determined at the outset
of the Reinsurance Arrangement is based on projections performed by an
actuary on behalf of Meta. Therefore, the exemption requires the
Independent Fiduciary to look back over successive five-year periods to
determine whether the Primary Benefit Test has been met based on the
actual value the Benefit Enhancements provided to the Plan participants
during that period.
29. If the Independent Fiduciary finds that the Primary Benefit
Test has not been met during a prior five-year period, Meta must
immediately implement a prospective reduction to the participants'
portion of the Plan premiums in an amount that is sufficient to make up
for the shortfall.\10\ The reduction in participants' premiums must be
allocated equally across all Plan participant premium contributions for
Plan benefits, regardless of whether the benefits are subject to the
Reinsurance Arrangement. The amount of the prospective reduction must
include an additional payment of interest on the shortfall at the
Internal Revenue Code of 1986 (Code) federal underpayment rate set
forth in Code section 6621(b).
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\10\ The Department retains the right to propose a revocation or
amendment to the exemption if it is unable to confirm the
reliability of the underlying financial data supporting the
Independent Fiduciary's ``look-back'' findings. The Department notes
that its determination not to revoke an exemption is not an
endorsement or conclusion that the conditions of the exemption are
met.
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30. Further, Meta is prohibited from reducing any benefits provided
to Plan participants and beneficiaries in connection with its
implementation of the Reinsurance Arrangement. Finally, if the Plan's
total annual participant premiums for all Plan benefits are
insufficient to make up the shortfall, Meta must make up the remaining
shortfall by increasing the value of enhanced benefits to all
participants in a monetary value equal to the remaining shortfall.
These additional enhanced benefits must be valued by an actuary and
approved in writing by the Independent Fiduciary.
Written Comments Received
31. In the Proposed Exemption, the Department invited all
interested persons to submit written comments and/or requests for a
public hearing. The Department received no comments or public hearing
requests during the proposal's comment period from November 21, 2024,
to January 21, 2025.
For the purposes of clarification and as an outgrowth of condition
(a)(1), the Department added that the phrase ``the benefits to the Plan
and'' to the last sentence of condition (a)(2) to clarify that the
Independent Fiduciary has the option of reviewing each prong of the
Primary Benefit Test with respect to years two through five of the
arrangement. Further, the revisions to the Plan document and Summary
Plan Description described in condition (r) must now include the
Federal Register citation for this exemption.
The Department made several minor, non-substantive revisions to the
operative language of the Proposed Exemption that are intended to
clarify the exemption and/or correct scrivener's errors.
32. The complete application file (L-12066) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC 20210 reachable by telephone at
(202) 693-8571. For a more complete statement of the facts and
representations supporting the Department's decision to grant this
exemption, please refer to the notice of proposed exemption published
on November 21, 2024 (89 FR 92162).
33. In making its findings to grant this exemption, the Department
relied on the Applicant's representations. If any material statement in
the Application, proposed exemption, or final exemption, is or may no
longer be completely and factually accurate, the Applicant and
recipients of the exemptive relief provided herein must immediately
alert the Department.\11\
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\11\ The Representations stated herein are based on the
Applicant's representations provided in its exemption application
and do not reflect factual findings or opinions of the Department
unless indicated otherwise. The Department notes that the
availability of this exemption is subject to the express condition
that the material facts and representations contained in application
L-12066 are true and complete at all times, and accurately describe
all material terms of the transactions covered by the exemption. If
there is any material change in a transaction covered by the
exemption, or in a material fact or representation described in the
application, the exemption will cease to apply as of the date of the
change.
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General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under ERISA section 408(a) does not relieve a fiduciary or other party
in interest from certain other provisions of ERISA, including any
prohibited transaction provisions to which the exemption does not apply
and the general fiduciary responsibility provisions of ERISA section
404, which, among other things, require fiduciaries to discharge their
duties respecting the plan solely in the interest of the participants
and beneficiaries of the plan and in a prudent fashion in accordance
with ERISA section 404(a)(1)(B);
(2) As required by ERISA section 408(a), the Department hereby
finds that the exemption is (1) administratively feasible for the
Department, (2) in the interests of affected plans and of their
participants and beneficiaries, and (3) protective of the rights of
participants and beneficiaries of such plans;
(3) The exemption is supplemental to, and not in derogation of, any
other ERISA provisions, including statutory or administrative
exemptions and transitional rules. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is
not dispositive of determining whether the transaction is in fact a
prohibited transaction; and
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transactions
that are the subject of the exemption and are true at all times.
Accordingly, after considering the entire record developed in
connection with the Applicant's exemption application, the Department
has determined to grant the following exemption under the authority of
ERISA section 408(a) in accordance with the Department's exemption
procedures regulation.\12\
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\12\ The procedures that govern the Applicant's request for an
exemption (the Exemption Procedures) are set forth in 29 CFR part
2570, subpart B at 76 FR 66637, 66644 (October 27, 2011). Although
the Applicant's submission is being processed under the Exemption
Procedures in effect as of December 27, 2011, the Exemption
Procedures were recently amended at 89 FR 4662, 4691 (January 24,
2024).
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Exemption
Section I. Definitions
(a) An ``affiliate'' of Meta, Honu, or Ekahi includes: (1) Any
person or entity who controls Meta, Honu, or Ekahi or is controlled by
or under common control
[[Page 30106]]
with Meta, Honu, or Ekahi; (2) Any officer, director, employee,
relative, or partner with respect to Meta, Honu, or Ekahi; and (3) Any
corporation or partnership of which the person in (2) of this paragraph
is an officer, director, partner, or employee.
(b) ``Benefit Enhancements'' means the following Plan benefit
enhancements, unless adjusted consistent with the terms of the
exemption:
(1) Removal of Age Reduction Clause Enhancement. At no additional
cost to the Plan's participants and beneficiaries, the Plan's age
reduction clause applicable to the Plan's basic life insurance
benefits, optional life insurance coverages and accidental death and
dismemberment (AD&D) benefits will be removed. Under this enhancement,
the insured will no longer incur a reduction in the amount of coverage
from 100% to 65% at the age of 65; and no longer incur a reduction in
the amount of coverage from 65% to 50% at the age of 70.
(2) Enhanced Basic Life Insurance Benefit. The Enhanced Basic Life
Insurance Benefit will increase the accelerated insurance payout for
qualified terminal illnesses from 90% to 100% of the policy's coverage
amount (up to $1,000,000) before the insured's death. Additionally, if
the participant or beneficiary is also enrolled in supplemental life
insurance, then he or she will receive an increased accelerated
insurance payout, from 90% of the supplemental term coverage to 100% of
the supplemental term coverage, but only to the extent that the total
accelerated benefit amount of both basic and supplemental coverages
does not exceed $1,000,000.
(3) Enhanced Basic Life Insurance Benefit Portability. The
enhancement will add a portability option for its basic life insurance
benefit which allows participants to obtain another Basic Life
Insurance Benefit upon termination of coverage under the Plan. This
benefit will be provided without regard to participants' medical
condition, although they may be required to pay higher rates for the
insurance.
(4) The Enhanced Accidental Death & Dismemberment Benefits (AD&D
Benefits).
(i) The first Enhanced AD&D Benefit will add a portability
enhancement to the Plan that will allow participants to pay for a new
AD&D policy after their employment with Meta ends. The insurance will
be issued without regard to participants' medical conditions but may be
offered at higher rates.
(ii) The second Enhanced AD&D Benefit will add a new waiver of
premium enhancement allowing qualified disabled former employees a
waiver of premiums and a continuation of death benefit coverage for
their AD&D coverage while such benefit is extended as a result of their
total disability (as defined in the Plan).
(iii) The third Enhanced AD&D Benefit provides for bereavement and
trauma counseling sessions after a participant experiences a qualifying
loss. The benefit will pay 100% of the cost up to $150 per session for
52 counseling sessions that are held within a year of the loss.
(iv) The fourth Enhanced AD&D Benefit will pay a qualifying
dependent's tuition upon the death of a participant. This enhancement
will require the Plan to pay an annual amount equal to the lesser of
(1) the actual annual amount of the dependent child's tuition
(exclusive of room and board); (2) 10% of the participant's AD&D death
benefit; or (3) $25,000. This benefit is payable annually for up to 4
consecutive years, but not beyond the date the child reaches age 26.
(v) The fifth Enhanced AD&D Benefit will pay the childcare expenses
of a deceased participant. The Plan will pay an annual amount equal to
the lesser of: (1) the actual cost charged by the relevant Child Care
Center per year; (2) 10% of the deceased participant's AD&D death
benefit; or (3) $24,000. The benefit is payable annually for a maximum
of 4 consecutive years, but not beyond the date the child reaches age
13. If there is no dependent child eligible for this benefit, a benefit
of $1,000 will be paid.
(vi) The sixth Enhanced AD&D Benefit will pay for qualifying
deceased persons' funeral expenses in an amount equal to the lesser of:
(1) the amount of the Funeral Expenses, (2) 10% of the amount of the
deceased participant's AD&D death benefit, or (3) $20,000.
(vii) The seventh Enhanced AD&D Benefit will pay a monthly amount
equal to the lesser of (1) five percent of the amount of the
participant's relevant AD&D benefit and (2) $500 for rehabilitation
expenses for a maximum of 12 consecutive months.
(viii) The eighth Enhanced AD&D Benefit will pay a $2,000 per month
supplemental monthly mortgage payment to the spouse or domestic partner
of a deceased participant's mortgage until the first of the following
occurs: (1) the spouse or domestic partner dies; (2) the mortgage is
paid in full; (3) the house subject to the mortgage is sold; or (4) the
benefit has been paid for 12 consecutive months.
(5) Enhanced Survivor Income Benefit. The monthly survivor income
benefit offered to an employee's spouse or domestic partner will be
increased to 60% of the employee's monthly earnings up to a monthly
maximum of $15,000, from the current 50% of monthly earnings up to a
maximum of $12,500 per month.
(6) Benefits Education Program. The Plan will offer a new Benefits
Education Program that will include the following components:
Life@Benefits service through PartnerComm, Inc.;
EstateGuidance Program;
ComPsych Final Arrangements Service;
GuidanceResources Program; and
International Medical Group Travel Assistance Services
(IMG Travel).
(c) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.
(d) ``Ekahi'' means Ekahi Insurance Company, LLC, a wholly-owned
subsidiary of Meta certified by the State of Hawaii to operate as a
captive insurance cell company sponsored by Honu.
(e) ``Fronting Insurer'' means Prudential or the successor third-
party insurance company that insures certain of the Plan's risks, and
then enters into a reinsurance agreement with Ekahi for such risks.
(f) ``Honu'' means Honu Insurance Company, LLC, a wholly-owned
subsidiary of Meta certified by the State of Hawaii to transact
business as a sponsor captive insurance company.
(g) ``Independent Fiduciary'' means Kathleen Ely, FSA, MAAA, a
Consulting Actuary with Milliman of Windsor, Connecticut or a successor
Independent Fiduciary that is appointed to represent the interests of
the Plan with respect to the subject transaction, provided that such
person:
(1) Is not Meta or an affiliate of Meta, Honu or Ekahi and does not
hold an ownership interest in Meta, Honu, Ekahi or their affiliates;
(2) Was not a fiduciary with respect to the Plan before its
appointment to serve as the Independent Fiduciary;
(3) Has acknowledged in writing that:
(i) It is a fiduciary and has agreed not to participate in any
decision with respect to any transaction in which it has an interest
that might affect its best judgment as a fiduciary; and
(ii) Has appropriate technical training or experience to perform
the services contemplated by the exemption;
(4) For purposes of this definition, no organization or individual
may serve as Independent Fiduciary for any fiscal year if the gross
income received by such organization or individual from
[[Page 30107]]
Meta, Honu, or Ekahi, or their affiliates for that fiscal year exceeds
two percent of such organization's or individual's gross income from
all sources for the prior fiscal year. This provision also applies to a
partnership or corporation of which such organization or individual is
an officer, director, or 10 percent or more partner or shareholder and
includes as gross income amounts received as compensation for services
provided as an independent fiduciary under any prohibited transaction
exemption granted by the Department;
(5) No organization or individual that is an Independent Fiduciary
and no partnership or corporation of which such organization or
individual is an officer, director or ten percent or more partner or
shareholder may acquire any property from, sell any property to, or
borrow any funds from Meta, Honu, or Ekahi, or their affiliates while
the individual serves as an Independent Fiduciary. This prohibition
must continue for a period of six months after either (1) the party
ceases to be an Independent Fiduciary or (2) the Independent Fiduciary
negotiates on behalf of the Plan during the period that such
organization or the individual serves as an Independent Fiduciary; and
(6) In the event a successor Independent Fiduciary is appointed to
represent the interests of the Plan with respect to the subject
transaction, no time should elapse between the resignation or
termination of the former Independent Fiduciary and the appointment of
the successor Independent Fiduciary.
(h) ``Meta'' means Meta Platforms, Inc.
(i) ``Plan'' means the Meta Platforms Inc. Health and Welfare
Benefit Plan.
(j) ``Prudential'' means the Prudential Life Insurance Company of
America.
Section II. Covered Transactions
The exemption will provide relief from the prohibited transactions
provisions of ERISA sections 406(a)(1)(D), and 406(b)(1) and (b)(3),
with respect to: (1) the reinsurance of risks; and (2) the receipt of
premiums, by Ekahi, in connection with insurance contracts sold by
Prudential (or any successor Fronting Insurer) to provide basic life
insurance benefits, AD&D benefits, and survivor income benefits to Plan
participants and beneficiaries (the ``Reinsurance Arrangement''). In
order to receive such relief, the conditions in Section III must be met
in conformance with the definitions set forth in Section I.
Section III. Conditions
(a) Meta must improve the Plan with Benefit Enhancements that are
funded solely by Meta in accordance with (1) through (5) below:
(1) For every dollar of net financial benefits that the Reinsurance
Arrangement is expected to generate, the Plan, its participants and
beneficiaries must receive at least 51 cents on the dollar and, Ekahi
and related parties must not receive more than 49 cents (the Primary
Benefit Test);
(2) The Independent Fiduciary must determine whether the Primary
Benefit Test has been met with respect to each successive five-year
period covered by the exemption. The Independent Fiduciary must report
its determinations as part of the Independent Fiduciary's next annual
report. For purposes of the initial five-year period, the Independent
Fiduciary may test only the benefits to the Plan and the costs and
benefits that inure to Meta and/or parties directly or indirectly
related to Meta during years two through five of the initial five-year
period;
(3)(A) If the Primary Benefit Test has not been met with respect to
a five-year period, Meta must reduce the participants' portion of the
Plan's premium in the next consecutive year by an amount that is at
least equal to the amount by which the prior five-year Primary Benefit
Test was not met, plus an additional payment of interest on the
shortfall at the Code's federal underpayment rate set forth in Code
section 6621(b) (such amount, as increased by interest, is referred to
as the ``Shortfall''). The reduction in participants' premiums must be
allocated equally across all Plan participant contributions toward
premiums for Plan benefits (i.e., each Plan participant's contribution
must be reduced by the same amount), regardless of whether the
respective benefits were reinsured by Ekahi. The premium reduction must
be fully implemented during the course of the year following the last
year of the five-year period to which it relates, and be verified by
the Independent Fiduciary;
(B) If the Plan's total annual participant premiums for all Plan
benefits are less than the Shortfall in the year following the
aforementioned five-year period, Meta must eliminate all annual
participant contribution premiums toward all Plan benefits to cover as
much of the Shortfall as possible. Meta must then make up the remaining
Shortfall by increasing the value of enhanced benefits to all
participants in a monetary value equal to the remaining Shortfall.
These additional enhanced benefits must be valued by an actuary and
approved in writing by the Independent Fiduciary;
(4) If the Reinsurance Arrangement is terminated, the Independent
Fiduciary must determine whether the Primary Benefit Test was met
during the period of time between (A) the end of the last five-year
period for which a Primary Benefit Test determination was made by the
Independent Fiduciary, or if no Primary Benefit Test determination has
yet been made, the beginning of the Reinsurance Arrangement, and (B)
the termination date of the Reinsurance Arrangement (the Final Term).
If the Primary Benefit Test was not met during the Final Term, Meta
must address the Shortfall in accordance with Section III(a)(3)(A) and
(B) above. Relief in the exemption does not extend to prohibited
transactions described in the exemption that occur during the Final
Term unless the requirements in Section III(a)(1) through (3) have been
met with respect to such Final Term. Furthermore, the Independent
Fiduciary must ensure Meta's obligations under Section III(a)(3)(A) and
(B) were properly implemented to address the Shortfall, notwithstanding
that the Reinsurance Arrangement has already been terminated; and
(5) If the Shortfall is not corrected pursuant to the terms of this
exemption, then this exemption's relief will lapse as of the first day
of the five-year period to which the Shortfall relates.
(b) The Plan must pay no commissions with respect to its purchase
of insurance contracts to provide the benefits that are reinsured under
the exemption, or with respect to the reinsurance of such contracts;
(c) In each year of coverage provided by a Fronting Insurer, the
formulae used by the Fronting Insurer to calculate premiums will be
similar to formulae used by other insurers providing comparable life
insurance coverage under similar programs. Furthermore, the premium
charges calculated in accordance with the formulae will be reasonable
and comparable to the premiums charged by the Fronting Insurer and its
competitors with the same or a better financial strength rating
providing the same coverage under comparable programs that are not
captive reinsured;
(d) No amount of Ekahi's reserves that are attributable to premiums
paid for Plan benefits may be transferred to Meta or a related party;
(e) Ekahi, the captive reinsurer, must:
(1) Be a party in interest with respect to the Plan based on its
affiliation with Meta that is described in ERISA section 3(14)(G);
(2) Be licensed to sell insurance or conduct reinsurance
operations, or be a cell corporation that is legally allowed
[[Page 30108]]
to rely on the license of a sponsoring captive insurance company, in at
least one state, as such term is defined in ERISA section 3(10);
(3) Have obtained a Certificate of Authority from the state of
Hawaii authorizing Ekahi to transact the business of a captive
insurance company in Hawaii or legally rely on a sponsoring captive
insurance company's valid Certificate of Authority from the state of
Hawaii authorizing Ekahi to transact the business of a captive
insurance company in Hawaii. Such certificate must not have been
revoked or suspended;
(4)(A) Undergo and pass a financial examination (within the meaning
of the law of its domiciliary state, Hawaii) by the Insurance Division
of Hawaii within five years of the year in which the reinsurance
transaction occurred; and
(B) Have undergone, and continue to undergo, an examination by an
independent certified public accountant for its last completed taxable
year immediately before the taxable year of the Reinsurance Arrangement
covered by the exemption; and
(5) Be licensed to conduct reinsurance transactions or legally rely
on a sponsoring captive insurance company's license to conduct
reinsurance transactions by a state whose law requires that an
actuarial review of reserves be conducted annually by an independent
firm of actuaries and reported to the appropriate regulatory authority;
(f) The Plan retained and will continue to retain an independent,
qualified fiduciary or successor to such fiduciary, as defined in
Section I(d), (the Independent Fiduciary) to analyze the transactions
covered by the exemption, and render an opinion that the requirements
of the exemption have been satisfied;
(g) The Independent Fiduciary must:
(1) In compliance with the fiduciary obligations of prudence and
loyalty under ERISA Sections 404(a)(1)(A) and (B), review the terms of
the exemption, engage in a prudent and loyal analysis of the covered
transactions, and verify that based on its review of all relevant
documents and evidence, it has concluded that all of the exemption's
terms and conditions have been met (or, due to timing requirements, can
reasonably be expected to be met consistent with the terms of this
proposed exemption). This conclusion must be documented in a written
report submitted to the Department's Office of Exemption Determinations
at least 30 days before the Plan engages in a transaction covered by
the exemption. The report must include copies of each document relied
on by the Independent Fiduciary and discuss the bases for its
conclusion;
(2) Monitor, enforce and ensure compliance with all conditions of
the exemption including all conditions and obligations imposed on any
party dealing with the Plan, throughout the period during which Ekahi's
assets are directly or indirectly used in connection with a transaction
covered by the exemption;
(3) Report any instance of non-compliance immediately to the
Department's Office of Exemption Determinations;
(4) Monitor the transactions described in the exemption on a
continuing basis, to ensure the transactions remain in the interest of
the Plan;
(5) Take all appropriate actions to safeguard the interests of the
Plan, its participants and beneficiaries;
(6) Review all contracts pertaining to the Reinsurance Arrangement,
and any renewals of such contracts, to determine whether the
requirements of this proposed exemption and the terms of Benefit
Enhancements continue to be satisfied;
(7) Determine that the Reinsurance Arrangement is in no way
detrimental to the Plan and its participants and beneficiaries;
(8) Provide an annual report to the Department, under penalty of
perjury, certifying that each term and condition of the exemption is
satisfied and setting forth the bases for the certification. Each
report must be completed within six months after the end of the twelve-
month period to which it relates (the first twelve-month period begins
on the first day of the implementation of the Reinsurance Arrangement
covered by the exemption) and submitted to the Department within 60
days thereafter. The relevant report must include the objective data
necessary to demonstrate that the Primary Benefit Test has been met;
and
(9) Confirm in its annual report (and describe the steps taken to
confirm) that Meta has not reduced or offset any participant benefits
in relation to its implementation and maintenance of the Reinsurance
Arrangement as required by paragraph (k) below;
(h) The Independent Fiduciary must not (1) enter into any agreement
or instrument that violates ERISA section 410 or section 2509.75-4 of
the Department's regulations, or (2) enter into any agreement,
arrangement, or understanding that includes any provision that provides
for the direct, or indirect, indemnification or reimbursement of the
Independent Fiduciary by the Plan or other party for any failure to
adhere to its contractual obligations or to state or Federal laws
applicable to the Independent Fiduciary's work, or waives any rights,
claims, or remedies of the Plan under ERISA, state, or Federal law
against the Independent Fiduciary with respect to the transaction(s)
that are the subject of the exemption;
(i) Neither Meta nor any affiliate may use participant-related data
or information generated by, or derived from, the Reinsurance
Arrangement in a manner that benefits Meta or any affiliated entity;
(j) All the facts and representations set forth in the Summary of
Facts and Representation must be true and accurate at all times;
(k) Meta will not offset or reduce any benefits provided to Plan
participants and beneficiaries in connection with its implementation of
the Reinsurance Arrangement in order to defray the costs, expenses, or
obligations of complying with the exemption conditions;
(l) The Plan will only contract with a Fronting Insurer that is
unrelated to Meta or any of its affiliates, and that has a financial
strength rating of ``A'' or better from A.M. Best. For purposes of this
provision, the term ``unrelated'' means that the Fronting Insurer is
not owned or controlled by Meta or any of its affiliates in whole or in
part;
(m) The Plan pays no more than adequate consideration with respect
to insurance that is part of the Reinsurance Arrangement covered by the
proposed exemption;
(n) In the event a successor Independent Fiduciary is appointed to
represent the interests of the Plan with respect to the subject
transaction, no time shall elapse between the resignation or
termination of the former Independent Fiduciary and the appointment of
the successor Independent Fiduciary;
(o) All expenses associated with the exemption and the exemption
application, including any payment to the Independent Fiduciary, must
be paid solely by Meta and not the Plan;
(p) Meta may adjust the Benefit Enhancements to the Plan at any
time if such adjustment is approved in advance by the Independent
Fiduciary after the Independent Fiduciary first determines that each
adjusted Benefit Enhancement is in the interest of the Plan's
participants and beneficiaries and available to them on an equal basis.
The cost incurred by Meta to fund the Benefit Enhancement may be used
to determine whether the Primary Benefit Test has been met but may not
be considered to address a Shortfall if the
[[Page 30109]]
Primary Benefit Test has not been met with respect to a five-year
period, unless in accordance with Section III(a)(3)(A) and (B). A
complete description of any new Benefit Enhancements and the
Independent Fiduciary's rationale and determinations regarding such
enhancements must be included in the next Independent Fiduciary report
submitted to the Department;
(q) The Reinsurance Arrangement between Ekahi and Prudential or any
successor Fronting Insurer must be indemnity insurance only. The
arrangement must not relieve a Fronting Insurer from any responsibility
or liability to the Plan, including liability that would result if
Ekahi fails to meet any of its contractual obligations to Prudential or
any successor Fronting Insurer under the Reinsurance Arrangement.
Further, the executed reinsurance contract between the Fronting Insurer
and Ekahi will expressly state (by rider, addendum, amendment, etc.)
that, in the event that Ekahi is insolvent, unable or unwilling to pay
any claims, or otherwise prevented from paying any claims, the Fronting
Insurer remains solely obligated to pay any claim properly incurred by
the Plan and its participants and beneficiaries;
(r) The Plan document and Summary Plan Description (SPD) will be
revised within 90 days after the final exemption is published in the
Federal Register to include a summary of the Reinsurance Arrangement,
an explanation of why the arrangement constitutes a transaction
prohibited by ERISA (including an explanation of why Ekahi is a party
in interest), and the citation for this exemption as published in the
Federal Register. The revision must also state that the Plan is
currently relying on an individual prohibited transaction exemption
granted by the U.S. Department of Labor. The revision to the Plan and
SPD must be conspicuously displayed and not contained in a footnote.
The Plan Administrator must distribute the updated SPD to all Plan
participants within six months after the publication date of the
granted exemption.
(s) If the Reinsurance Arrangement is terminated, the Plan
Administrator will revise and update the SPD accordingly. The Plan
Administrator will then distribute the updated SPD to all Plan
participants within six months after the termination of the Reinsurance
Arrangement.
(t) Meta, and its affiliates, must maintain all the records
necessary to demonstrate the conditions of the exemption have been met
with respect to all the prohibited transactions described in this
exemption for a period of six years from the date of any prohibited
transaction for which the exemption provides relief. Meta must provide
these records to the Department within 30 days after the date the
Department requests these records.
Applicability Date: This exemption will be in effect for the period
beginning on the date of its publication in the Federal Register.
Signed at Washington, DC, this 3rd day of July 2025.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2025-12641 Filed 7-7-25; 8:45 am]
BILLING CODE 4510-29-P