Proposed Exemption from Certain Prohibited Transaction Restrictions Involving Meta Platforms, Inc. Located in Menlo Park, CA, 92162-92174 [2024-27260]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92162-92174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27260]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Exemption Application No. L-12066]


Proposed Exemption from Certain Prohibited Transaction 
Restrictions Involving Meta Platforms, Inc. Located in Menlo Park, CA

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemption.

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SUMMARY: This document provides notice of the pendency before the 
Department of Labor (the Department) of a proposed individual exemption 
from certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act). If the 
proposed exemption is granted, the Meta Platforms Inc. Health and 
Welfare Benefit Plan (the Plan) would enter into an insurance contract 
with Prudential Life Insurance Company of America (Prudential). The 
contract would cover the Plan's group term life insurance benefits, 
accidental death and dismemberment benefits, and survivor income 
benefits (the Covered Insurance). Prudential would then reinsure the 
Covered Insurance by entering into a reinsurance contract with Ekahi 
Insurance Company, LLC (Ekahi), an insurance company that is owned by 
Meta Platforms, Inc. (Meta). Importantly, at all times and in all 
events, Prudential would remain fully and completely responsible to the 
Plan with respect to the Covered Insurance, regardless of whether Ekahi 
met its obligations to Prudential.

DATES: Applicability date: If granted, this proposed exemption will be 
in effect for the period beginning on the date of publication in the 
Federal Register.
    Comments due: Written comments and requests for a public hearing on 
the proposed exemption should be submitted to the Department by January 
21, 2025.

ADDRESSES: All written comments and requests for a hearing should be 
sent to the Employee Benefits Security Administration (EBSA), Office of 
Exemption Determinations, Attention: Application No. L-12066, via email 
to [email protected] or online through https://www.regulations.gov. Any 
such comments or requests should be sent by the end of the scheduled 
comment period. The application for exemption and the comments received 
will be available for public inspection in the Public Disclosure Room 
of the Employee Benefits Security Administration, U.S. Department of 
Labor, Room N-1515, 200 Constitution Avenue NW, Washington, DC 20210 
((202) 693-8673). See SUPPLEMENTARY INFORMATION below for additional 
information regarding comments.

FOR FURTHER INFORMATION CONTACT: Nicholas Schroth of the Department at 
(202) 693-8571. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION:

Comments

    1. Persons are encouraged to submit all comments electronically and 
not to follow with paper copies. Comments should state the nature of 
the person's interest in the proposed exemption and the manner in which 
the person would be adversely affected by the exemption, if granted. 
Any person who may be adversely affected by an exemption can request 
that the Department holds a hearing on the exemption. A request for a 
hearing must state: (1) the name, address, telephone number, and email 
address of the person making the request; (2) the nature of the 
person's interest in the exemption and the manner in which the person 
would be adversely affected by the exemption; and (3) a statement of 
the issues to be addressed and a general description of the evidence to 
be presented at the hearing. The Department will grant a request for a 
hearing made in accordance with the requirements above where a hearing 
is necessary to fully explore material factual issues identified by the 
person requesting the hearing. A notice of such hearing shall be 
published by the Department in the Federal Register. The Department may 
decline to hold a hearing if: (1) the request for the hearing does not 
meet the requirements above; (2) the only issues identified for 
exploration at the hearing are matters of law; or (3) the factual 
issues identified can be fully explored through the submission of 
evidence in written (including electronic) form.
    2. WARNING: All comments received will be included in the public 
record without change and may be made available online at https://www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be confidential or 
other information whose disclosure is restricted by statute. If you 
submit a comment, EBSA recommends that you include your name and other 
contact information in the body of your comment, but DO NOT submit 
information that you consider to be confidential, or otherwise 
protected (such as a Social Security number or an unlisted phone 
number) or confidential business information that you do not want 
publicly disclosed. However, if EBSA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EBSA 
might not be able to consider your comment. Additionally, the https://www.regulations.gov website is an ``anonymous access'' system, which 
means EBSA will not know your identity or contact information unless 
you provide it in the body of your comment. If you send an email 
directly to EBSA without going through https://www.regulations.gov, 
your email address will be automatically captured and included as part 
of the comment that is placed in the public record and made available 
on the internet.

Background

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA), and in accordance with the procedures 
set

[[Page 92163]]

forth in 29 CFR part 2570, subpart B (75 FR 66637, 66644, October 27, 
2011).\1\ As described in more detail below, the proposed exemption 
would allow the Meta Platforms Inc. Health and Welfare Benefit Plan 
(the Plan), which is sponsored by Meta Platforms, Inc. (Meta) to enter 
into an insurance contract with Prudential Life Insurance Company of 
America, an unrelated A-rated insurance company (hereafter referred to 
as Prudential or the Fronting Insurer). Contemporaneously, the Fronting 
Insurer would enter into a reinsurance contract (collectively, the 
Reinsurance Arrangement), with Ekahi Insurance Company, LLC (Ekahi), a 
captive insurer that is owned by Meta.
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    \1\ This proposed exemption does not provide relief from the 
requirements of, or specific sections of, any law not noted above. 
Accordingly, the Applicant is responsible for ensuring compliance 
with any other laws applicable to the transactions described herein.
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    Under the Reinsurance Arrangement, Ekahi would reinsure the Plan's 
risks related to providing group term life insurance benefits, 
accidental death and dismemberment (AD&D) benefits, and survivor income 
benefits. Importantly, the Fronting Insurer (or any successor fronting 
insurer) would remain fully responsible for these risks in the event 
that Ekahi does not fulfill its contractual obligations to the Fronting 
Insurer.
    Meta Platforms, Inc. (Meta), through its ownership of Ekahi, is 
expected to receive a benefit from the Reinsurance Arrangement. To 
ensure that most of the financial benefits from the arrangement are 
passed through to the Plan and its participants and beneficiaries, this 
proposed exemption would require Meta to fund certain new Plan benefit 
enhancements. Specifically, the financial benefit that Ekahi or a 
related party (including Meta) receives directly or indirectly from the 
Reinsurance Arrangement must be less than the value of the enhanced 
financial benefits to the Plan and its participants and beneficiaries. 
Accordingly, for every dollar of 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 may not receive more than 49 
cents. Furthermore, Ekahi and related parties may not offset the 
enhanced financial benefits, directly or indirectly, by reducing other 
plan benefits or other compensation to the Plan's participants or 
beneficiaries.
    This proposed exemption also would require Meta to delegate 
fiduciary oversight of the Reinsurance Arrangement to a qualified 
fiduciary that is independent of Meta and its affiliates (the 
Independent Fiduciary). The Independent Fiduciary would be required to 
approve the Reinsurance Arrangement in advance, ensure that the 
Reinsurance Arrangement is in the interest and protective of the Plan 
and its participants and beneficiaries at all times, submit annual and 
five-year ``look-back'' reports to the Department, and ensure that all 
of exemption's conditions are met.\2\
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    \2\ The Department notes that the Independent Fiduciary's annual 
written report is essential to the Department's tentative finding 
that the exemption will be in the interest and protective of the 
Plan and its participants and beneficiaries. The Independent 
Fiduciary must clearly, prudently and loyally determine whether Meta 
and its affiliates have complied with each term and condition of the 
exemption and include its finding in the report. The relief provided 
in the exemption is conditioned upon the independent fiduciary's 
compliance with this requirement.
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Summary of Facts and Representations 3
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    \3\ The Department notes that availability of the exemption is 
subject to the express condition that the material facts and 
representations contained in application L-12066 are true and 
complete, 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 such change.
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The Parties

    1. Meta. Meta is a multinational technology company headquartered 
in Melo Park, California.
    2. The Plan. The Plan is sponsored by Meta and provides 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, 2020, the 
Plan covered more than 45,714 participants.
    3. Prudential Life Insurance Company of America. The Plan's 
benefits are insured by Prudential Life Insurance Company of America, 
which received an ``A+'' financial strength rating from A. M. Best 
Company (A. M. Best) as of December 15, 2022. Prudential is unrelated 
to Meta and, per the conditions of the exemption, must remain so 
throughout the duration of the Reinsurance Arrangement.
    4. Honu. Honu Insurance Company, LLC (Honu) was organized on 
December 1, 2020, as a wholly-owned subsidiary of Meta. On December 22, 
2020, the State of Hawaii Department of Commerce and Consumer Affairs' 
Insurance Division Hawaii (hereafter referred to as Hawaii) issued Honu 
a certificate of authority to transact business as a pure captive 
insurance company. Under Hawaii state law, a pure captive insurance 
company is a captive insurance company that only insures or reinsures 
risks of its parent and affiliated entities or of a controlled 
unaffiliated business.\4\ 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, to operate as a cell company 
sponsored by Honu.\5\ In turn, 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.\6\
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    \4\ Hawaii state law 19 section 431:19-101.
    \5\ 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.
    \6\ Hawaii state law 19 section 431:19-101.
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    5. Ekahi. Ekahi Insurance Company, LLC (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.

The Reinsurance Arrangement

    6. 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)

[[Page 92164]]

(hereinafter collectively referred to as the Reinsured Benefits).
    7. The Reinsurance Arrangement would be structured as follows: (a) 
the Plan would enter into an insurance arrangement with Prudential to 
insure the Plan's risks; and (b) Prudential would enter into a 
reinsurance agreement with Ekahi in reliance on Honu's license, whereby 
Ekahi would reinsure 100 percent of the Plan's risks relating to the 
Reinsured Benefits.
    8. In general terms, the Plan would make premium payments to 
Prudential, and Prudential would make corresponding payments to Ekahi 
in an amount less than the premiums it is paid by the Plan. The amount 
that Prudential retains from the Plan's premium payment is a negotiated 
fee, while the amounts Prudential pays to Ekahi is Ekahi's premium for 
reinsuring the Plan's risks. The reinsurance agreement between 
Prudential and Ekahi would be ``indemnity only,'' which means that 
Prudential would maintain the responsibility to pay benefit claims to 
participants and beneficiaries in the event Ekahi does not satisfy any 
of its contractual obligations to Prudential under the Reinsurance 
Arrangement for any reason.
    9. In this Reinsurance Arrangement, Prudential is known as the 
``Fronting Insurer,'' and Ekahi is known as the ``Captive Insurer.'' 
Administration of the claims under the Plan will be performed directly 
by Prudential as the direct insurer of the Plan, and Prudential will 
remain directly liable to the participants for administration and 
payment of claims under the Plan. Prudential would pay all claims under 
its insurance contract with the Plan and seek reimbursement for its 
proportionate share of claims payments from Ekahi under the Reinsurance 
Arrangement. Ekahi would be bound by Prudential's claims handling 
decisions under the Plan and not have direct contact with participants, 
make direct payments to participants, or have responsibility for the 
benefit determinations. Under the terms of the Reinsurance Arrangement, 
Ekahi's reinsurance obligations to Prudential would be secured with 
collateral (i.e. a letter of credit or funds in a trust account), but 
Prudential would assume ultimate financial liability for payment of the 
Plan's benefit claims in the event Ekahi is unable to satisfy its 
obligations to Prudential.

Benefit to Meta

    10. The Applicant states that Ekahi (and Meta indirectly) expects 
to receive a $5,775,000 total benefit in the first year of the 
Reinsurance Arrangement.\7\ The Department is basing the issuance of 
this proposed exemption based on the premise that this $5,775,000 
amount would reflect the entire direct and indirect benefit (including 
non-net income direct or indirect benefits) that is expected to be 
generated from the Reinsurance Arrangement. The total benefit may 
increase or decrease from year to year, and will reflect a number of 
factors, including the amount of claims incurred, reserves set aside 
for claims, expenses, taxes, etc. but the total net benefit would not 
include expenses for the enhanced benefits or other payments required 
to be made by Meta to or on behalf of participants under the exemption.
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    \7\ Meta represents, based on information from Milliman and 
Willis Towers Watson, that Ekahi's projected net premiums in the 
first year from the Reinsurance Arrangement will be $33.5 million 
from the Fronting Insurer and $0 in investment income. Meta further 
represents that Ekahi's projected expenses from the Reinsurance 
Arrangement in the first year will be $22.3 million in claims 
incurred, $3.8 million in underwriting expenses, $200,000 in general 
and administrative expenses, and $1.5 million in taxes. Resulting in 
a first-year projected benefit of approximately $5.7 million to 
Ekahi.
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    This proposed exemption would require the qualified independent 
fiduciary to review the Reinsurance Arrangement, and to confirm and 
quantify all the benefits generated from the Reinsurance Arrangement, 
such as a benefit from a further diversification of Ekahi's risks or 
tax benefit from the reinsurance of corporate risks through a captive 
reinsurance company. Under the terms of the exemption, for every dollar 
of net financial benefits that the Reinsurance Arrangement is expected 
to generate, the Plan and 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.
    Department's Note: The Department developed this proposed exemption 
based on the Applicant's representation that Meta, and all related 
parties directly and indirectly related to Meta are not expected to 
receive any benefit from the Reinsurance Arrangement other than the 
benefit described herein (which must be offset in the manner discussed 
below), which must be verified annually by an Independent Fiduciary. If 
Meta or a related party directly or indirectly receive any other 
benefit from the captive reinsurance arrangement, the benefit must be 
quantified by the Independent Fiduciary and included in the Primary 
Benefit Test described below.\8\ Consistent with this condition, the 
proposed exemption would expressly prohibit Meta (or a related entity) 
from, among other things: (1) using any participant-related data or 
information that is generated by (or derived from) the Reinsurance 
Arrangement in any manner that benefits Meta or a related entity; or 
(2) transferring any portion of Ekahi's reserves that is attributable 
to Plan participants' portion of the Reinsured Benefits premiums to 
Meta or to a related entity.
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    \8\ This includes any benefit to Meta or a related party arising 
from a further diversification of Ekahi's risks in connection with 
the addition of the Plan's employee benefit insurable risks to 
Ekahi's other insurable risks, or arising from an additional tax 
benefit, for example, due to a change in circumstances or law 
permitting a deduction for Meta's reinsurance of its own corporate 
risks through Ekahi.
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Benefit to the Plan

    11. Under the proposed exemption, Meta would be required to satisfy 
the ``Primary Benefit Test'' as a condition for exemptive relief. In 
other words, for every dollar of net financial benefits that the 
Reinsurance Arrangement is expected to generate for Meta and its 
related parties, the Plan, its participants and beneficiaries must 
receive at least 51 cents on the dollar, and Meta and related parties 
may not receive more than 49 cents. As described above, in the initial 
year of this proposed transaction, Ekahi is estimated to realize a 
benefit (after taxes) increase of $5,775,000. At the same time, 
according to the Applicant, Meta would provide an immediate and 
objectively determined estimated benefit in the form of enhanced 
benefits to Plan participants in the amount of $3,854,000.\9\ In other 
words, 66.7% of the $5,775,000 benefit received by Meta will be passed 
on to Plan participants in the form of benefit enhancements worth 
$3,854,000. As discussed in further detail below, Meta must pay all 
costs associated with providing the benefit enhancements. The cost for 
providing the benefit enhancements cannot be factored into the Primary 
Benefit Test.
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    \9\ 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 failure to revoke an exemption is not an endorsement or 
conclusion that the conditions of the exemption are met.
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    Department's Note: Both the benefit and the cost to Meta from the 
Reinsurance Arrangement are based on projections. Therefore, the 
exemption would require the Independent Fiduciary to look back over 
successive five-year periods to determine whether the Primary Benefit 
Test has been met based on actual results. If the Independent Fiduciary 
finds that the

[[Page 92165]]

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. The reduction in participants' 
premiums should be allocated equally across all Plan participant 
contributions toward premiums for Plan benefits, regardless of whether 
the respective benefits were reinsured by Ekahi. The amount of the 
prospective reduction would be required to include an additional 
payment of interest on the shortfall, at the Code's federal 
underpayment rate set forth in Code section 6621(b). Further, Meta 
would be prohibited from reducing any benefits provided to Plan 
participants and beneficiaries in connection with its implementation of 
the captive reinsurance arrangement. Finally, if the Plan's total 
annual participant premiums for all Plan benefits are insufficient to 
make up the shortfall, Meta would be required to 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 would be valued by an actuary and 
approved in writing by the Independent Fiduciary.

Description of Plan Benefit Enhancements

    12. In order to satisfy the Primary Benefit Test, Meta would be 
required to fund the following Plan benefit enhancements (Benefit 
Enhancements):
    a. Removal of Age Reduction Clause Enhancement. The Applicant 
represents that currently basic life insurance, optional employee term 
life coverage, optional dependents term life coverage, and AD&D 
benefits have an age reduction schedule that reduces a participant or 
beneficiary's benefit based on the age of the participant. Under this 
schedule, the amount of the participant or beneficiary's life insurance 
coverage is reduced from 100% to 65% when the participant reaches the 
age of 65 and is further reduced from 65% to 50% when the participant 
reaches the age of 70.
    The proposed exemption would require the removal of the age 
reduction clause for the Plan's basic life insurance benefits, optional 
life insurance coverages and AD&D benefits at no additional cost. Under 
the Removal of age reduction clause enhancement, the insured would no 
longer incur reductions to the policy's insurance amount when they 
reach the ages of 65 and 70.
    b. Enhanced Basic Life Insurance Benefit. The Plan's current basic 
employee term life insurance benefit contains an accelerated benefit 
option for qualified terminal illnesses. This option allows the payout 
to the participant of 90% of the amount of life insurance coverage on 
the participant's life up to $500,000 before the insured's death.\10\ 
If the participant is also enrolled in supplemental employee term 
coverage and the accelerated payment from the basic life insurance did 
not amount to at least $500,000, 90% of the amount of the supplemental 
employee term coverage would be accelerated until both the basic life 
insurance and the supplemental life insurance accumulated to 
$500,000.\11\ Under this proposed exemption, the Enhanced Basic Life 
Insurance Benefit would increase the accelerated insurance payout from 
90% to 100% of the total amount of coverage up to $1,000,000. If the 
participant is also enrolled in supplemental employee term coverage and 
the accelerated payment from the basic life insurance did not amount to 
at least $1,000,000, 100% of the supplemental employee term coverage 
would be accelerated until both the basic life insurance and the 
supplemental life insurance accumulated to $1,000,000.
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    \10\ Under the Plan, the participant's basic life insurance 
benefit is equal to 300% of their annual earnings (as defined in the 
Plan) up to a maximum of $2,000,000.
    \11\ Under the Plan, a participant may enroll in supplemental 
life insurance coverage in an amount equal to 100% to 800% of their 
annual earnings (as defined in the Plan) up to a maximum of 
$2,500,000.
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    c. Enhanced Basic Life Insurance Benefit Portability. Currently, 
the Plan also does not have a portability option for its basic life 
insurance benefit. Under the proposed exemption, the Plan would provide 
an enhanced benefit to basic life insurance that adds a portability 
option to participants. This portability option would allow 
participants to retain coverage without regard to their medical 
conditions when they leave Meta's employment. Terminated participants 
would be required to pay premiums for coverage, and the premium rates 
may be higher for coverage than the employer's current premium 
rate.\12\
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    \12\ According to the Applicant, evidence of insurability is not 
required for an individual to become insured under the portability 
option. However, if the individual submits such evidence and 
Prudential decides the evidence is satisfactory, the individual will 
pay lower premium rates.
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    d. The Enhanced Accidental Death & Dismemberment Benefit 
Portability (AD&D). The Plan offers Accidental Death & Dismemberment 
benefits to participants. Currently, this benefit ends when a 
participant's employment with Meta ends. If the exemption is granted, 
Meta will provide a portability enhancement that allows participants to 
retain coverage without regard to their medical conditions after their 
employment with Meta ends. Terminated participants would be required to 
pay premiums for coverage, and the premium rates may be higher for 
coverage than the employer's current premium rate.\13\
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    \13\ As with the above, the Applicant states that, if the 
individual submits acceptable evidence of insurability, the 
individual will pay lower premium rates.
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    e. The Enhanced AD&D Benefit Waiver of Premium. Currently, AD&D 
coverage does not include a waiver of premium option which grants a 
waiver of AD&D premiums for death benefits until the age of 65 for 
qualifying disabled participants that no longer work for Meta. If the 
exemption is granted, the Plan benefit would be enhanced by allowing 
former employee participants a cessation of premium payments and a 
continuation of death benefit coverage for one year, which 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).
    f. The Enhanced AD&D Benefit Bereavement Counseling. Currently, the 
Plan's AD&D benefits do not include bereavement and trauma counselling. 
If the exemption is granted, the Plan would pay 100% of the cost for 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.
    g. The Enhanced AD&D Benefit Tuition Payments. Currently, the 
Plan's AD&D benefits do not include benefits related to paying a 
dependent child's tuition upon the death of the participant. If the 
exemption is granted, the Plan would 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,\14\ or (3) $25,000. This benefit would be payable annually for 
up to 4 consecutive years, but not beyond the date the child reaches 
age 26.
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    \14\ The Plan's AD&D death benefit is equal to 100% of a 
participant's basic life insurance benefit.
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    h. The Enhanced AD&D Benefit Childcare Payments. Currently, the 
Plan's AD&D benefits do not include benefits related to paying for the 
childcare expenses of a deceased participant. If the exemption is 
granted, the Plan would pay childcare expenses for qualifying dependent 
children of a

[[Page 92166]]

qualifying deceased participant in an annual amount equal to the lesser 
of: (1) the actual cost charged by the relevant Child Care Center \15\ 
per year, (2) 10% 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, a benefit of 
$1,000 would be paid.
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    \15\ As defined in the Plan's policy.
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    i. Enhanced AD&D Benefit Funeral Reimbursement. Currently, the 
Plan's AD&D benefits do not provide a funeral expense reimbursement to 
beneficiaries with AD&D claims. If the exemption is granted, the Plan 
would pay for funeral expenses in an amount equal to the lesser of: (1) 
the actual amount of the Funeral Expenses, (2) 10% of the amount of the 
deceased participant's AD&D death benefit, or (3) $20,000.
    j. Enhanced AD&D Benefit Rehabilitation Payments. Currently, the 
Plan's AD&D benefits do not include benefits relating to monthly 
rehabilitation payments. If the exemption is granted, the Plan would 
make a monthly payment equal to the lesser of (1) 5% of the amount of 
the participant's relevant AD&D benefit \16\ and (2) $500 for 
rehabilitation expenses for a maximum of 12 consecutive months.
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    \16\ 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% 
of their basic life insurance benefit.
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    k. Enhanced AD&D Benefit Supplemental Mortgage Payment. Currently, 
the Plan's AD&D benefits provide a $1,000 supplemental monthly mortgage 
payment to the spouse or domestic partner of a deceased participant for 
up to 12 consecutive months. The benefit is 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 for12 consecutive months. If the 
exemption is granted, the Plan would increase this benefit from $1,000 
per month to $2,000 per month.
    l. Enhanced Survivor Income Benefit. Currently, the Plan offers a 
monthly survivor income benefit to an employee's spouse or domestic 
partner equal to 50% of the participant's monthly earnings up to a 
maximum of $12,500 per month. The benefit is paid continuously until 
the earlier of (1) 10 years from date of the insured's death, (2) the 
spouse or domestic partner's attainment of age 67, or (3) the spouse or 
domestic partner's death, but in any event it is to be provided for a 
minimum of at least 3 years. If the exemption is granted, the survivor 
income benefit would be increased to 60% of the employee's monthly 
earnings for a monthly maximum of $15,000.
    m. Enhanced Benefits Education Program. Currently, the Plan does 
not offer a benefits education program. If the exemption is granted, 
the Plan would provide a benefits education program offering the 
following benefits Life@Benefits concierge services for Plan benefits 
and well-being resources.
     EstateGuidance--estate planning concierge services.
     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.

ERISA Analysis and Request for Relief

    13. The Applicant requests an exemption from ERISA sections 406(a) 
and 406(b) with respect to the Reinsurance Arrangement. In this regard, 
Meta is a party in interest with respect to the Plan pursuant to ERISA 
section 3(14)(C), because it is an employer whose employees are covered 
by the Plan. In addition, the captive reinsurer, Ekahi, is a party in 
interest with respect to the Plan pursuant to ERISA section 3(14)(G) 
because it is wholly owned by Meta.
    14. ERISA section 406(a) prohibits a wide variety of transactions 
between plans and parties in interest. For example, ERISA section 
406(a)(1)(D) prohibits a plan fiduciary from causing a plan to engage 
in a transaction if it knows or should know that such transaction 
constitutes a direct or indirect transfer to or use by or for the 
benefit of a party in interest, of the assets of the plan. The 
Reinsurance Arrangement would violate ERISA section 406(a)(1)(D), 
because the Fronting Insurer's payment of premiums to the Captive would 
constitute the indirect transfer of Plan assets to Ekahi, a party in 
interest with respect to the Plan.
    15. ERISA section 406(b)(1) prohibits a fiduciary from dealing with 
plan assets in its own interest or for its own account, and ERISA 
section 406(b)(3) prohibits a fiduciary from receiving any 
consideration for the fiduciary's personal account from any party 
dealing with the plan in connection with a transaction involving the 
plan. The Reinsurance Arrangement would violate ERISA sections 
406(b)(1) and 406(b)(3), because the plan fiduciary would cause Plan 
premiums to be paid to Prudential with knowledge that Ekahi, an entity 
owned 100% by Meta, would ultimately receive compensation as a 
result.\17\
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    \17\ The Department notes that, pursuant to section 406(b) of 
ERISA ``a fiduciary may not use the authority, control, or 
responsibility which makes such person a fiduciary to cause a plan 
to pay an additional fee to such fiduciary (or to a person in which 
such fiduciary has an interest which may affect the exercise of such 
fiduciary's best judgment as a fiduciary) to provide a service. Nor 
may a fiduciary use such authority, control, or responsibility to 
cause a plan to enter into a transaction involving plan assets 
whereby such fiduciary (or a person in which such fiduciary has an 
interest which may affect the exercise of such fiduciary's best 
judgment as a fiduciary) will receive consideration from a third 
party in connection with such transaction. A person in which a 
fiduciary has an interest which may affect the exercise of such 
fiduciary's best judgment as a fiduciary includes, for example, a 
person who is a party in interest by reason of a relationship to 
such fiduciary described in section 3(14)(E), (F), (G), (H), or 
(I).'' DOL Regulation 29 CFR 2550.408b-2. Ekahi, a party in interest 
by reason of a relationship to Meta described in section 3(14)(G) of 
ERISA, is an entity in which Meta has an interest that may affect 
the exercise of Meta's best judgment as a fiduciary of the Plan.
---------------------------------------------------------------------------

    16. Therefore, subject to the parties' adherence to the conditions 
described herein, the Department is proposing an exemption from ERISA 
sections 406(a)(1)(D) and 406(b)(1) and (3) for (a) the reinsurance of 
risks; and (b) the receipt of premiums, by Ekahi, in connection with 
insurance contracts sold by Prudential (or any successor fronting 
insurer) to the Plan in order to provide basic life insurance benefits, 
AD&D benefits, and survivor income benefits to Plan participants and 
beneficiaries.

The Independent Fiduciary

    17. Kathleen Ely, FSA, MAAA, a Consulting Actuary with Milliman of 
Windsor, Connecticut will serve as the Plan's qualified independent 
fiduciary (the Independent Fiduciary or Milliman) with respect to the 
Reinsurance Arrangement. Ms. Ely represents that she and Milliman are 
independent of all parties associated with the Reinsurance Arrangement, 
including Meta, Ekahi, and the Plan. In this regard, Ms. Ely represents 
that she and Milliman do not have: (a) an interest in any party 
involved in the Reinsurance Arrangement; (b) an ownership interest in 
Meta, Ekahi, or Prudential (nor are they directly or indirectly, 
controlled by, or under common control with them); and (c) any economic 
stake or financial interest that

[[Page 92167]]

is contingent upon the implementation of the Reinsurance Arrangement.
    18. Milliman represents that its only financial interest related to 
the Reinsurance Arrangement is in the express fees paid for their work 
as an Independent Fiduciary. Ms. Ely represents that Milliman's gross 
income received from Meta, Honu, Ekahi, Prudential, and the Plan is 
less than 0.1 percent of Milliman's gross annual income from all 
sources.\18\ As a condition of the exemption, neither Ms. Ely nor 
Milliman may enter into any agreement or instrument that violates ERISA 
section 410 or section 2509.75-4 of the Department's regulations.\19\ 
Furthermore, the exemption would prohibit the Independent Fiduciary 
from entering 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. Any successor Independent Fiduciary appointed to represent 
the interests of the Plan with respect to the subject transaction must 
also comply with the independence requirements specified herein, and no 
time may elapse between the resignation or termination of the former 
Independent Fiduciary and the appointment of the successor Independent 
Fiduciary.
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    \18\ Under the exemption, the gross income Milliman receives 
from Meta, Honu, Ekahi and Prudential in a fiscal year must not 
exceed two percent of Milliman's gross annual income from all 
sources for that year.
    \19\ ERISA section 410 provides, in part, that ``except as 
provided in ERISA sections 405(b)(1) and 405(d), any provision in an 
agreement or instrument which purports to relieve a fiduciary from 
responsibility or liability for any responsibility, obligation, or 
duty under this part [meaning part 4 of title I of ERISA] shall be 
void as against public policy.''
---------------------------------------------------------------------------

    19. The conditions for the exemption require the Independent 
Fiduciary to evaluate, monitor, and confirm whether or not the terms 
and conditions of the exemption have been satisfied. As required by the 
conditions for the exemption, Milliman represents that it has, among 
other things, in full accordance with its prudence and loyalty 
obligations under ERISA sections 404(a)(1)(A) and (B), reviewed a draft 
of Meta's application for an exemption that was submitted to the 
Department and conducted extensive diligence reviews to determine that 
the conditions of the proposed exemption would be met. Milliman 
concluded that, based on its review of all relevant documents and 
evidence, all of the exemption's terms and conditions can reasonably be 
expected to be met consistent with the terms of this proposed 
exemption.
    Department's Note. If the Department grants an exemption, 
Milliman's findings would not be current as of the exemption's 
effective date. Therefore, as a condition of the exemption, Milliman 
must engage in another analysis of the proposed transactions in full 
accordance with ERISA Section 404(a)(1)(A) and (B). As part of this 
analysis, Milliman must review the terms of the exemption and verify 
that it has concluded, based on its review of all of the relevant 
documents and evidence, that 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 proposed exemption)). Milliman must document the basis 
for its conclusions in a written report submitted to the Department's 
Office of Exemption Determinations at least 30 days before the Plan 
engages in the reinsurance arrangement. The report must include copies 
of all documents and evidence Milliman relied on when conducting its 
review.
    20. For the duration of the Reinsurance Arrangement, the 
Independent Fiduciary must: (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) determine that the Reinsurance 
Transaction is in no way detrimental to the Plan and its participants 
and beneficiaries; and (e) take all appropriate actions to safeguard 
the interests of the Plan and its participants and beneficiaries. 
Milliman must also review all contracts and agreements (and any renewal 
of such contracts) relevant to the captive reinsurance arrangement and 
exemption.
    21. Additionally, Milliman must file annual certified reports with 
the Department, under penalty of perjury, confirming that all of 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 the bases for that conclusion.
    22. In order to verify that Meta has adhered to the conditions for 
relief, Milliman must have access to all relevant documents and 
evidence. In the Department's view this may include (but is not limited 
to) the captive insurance company's financial statements, filings with 
regulators, reports and opinions of actuaries, reports describing 
utilization of insurance coverages, and any other items showing 
premiums, claims, reserves, and other relevant materials which in 
Milliman's opinion is necessary to validate Meta's adherence to the 
conditions for relief. Milliman must use this information to determine 
ongoing savings and any other benefits to the Applicants that result 
from the reinsurance transaction. In addition, Milliman must: (1) 
review all contracts (and any renewal of such contracts) of the 
reinsurance of risks and the receipt of premiums therefrom by Ekahi and 
determine that the requirements of the exemption continue to be 
satisfied; (2) quantify (in dollars) all benefits that Meta and its 
related parties receive from the proposed captive reinsurance 
arrangement; and (3) ensure that the Plan's participants receive an 
additional benefit, at Meta's expense, of an amount, and in the manner, 
required under the terms of the exemption.
    23. Independent Fiduciary Analysis. Ms. Ely (the Independent 
Fiduciary), provided the Department with two independent fiduciary 
reports, dated November 17, 2021, and June 21, 2023, and two letters, 
dated September 15, 2022, and December 9, 2022 (collectively, the 
Milliman Reports). The Milliman Reports state that Ms. Ely reviewed the 
following documents: (a) a draft application to the Department 
requesting exemptive relief; \20\ (b) group

[[Page 92168]]

insurance renewal exhibits for 2021 and 2022 prepared by Prudential and 
a review of the 2021 renewal performed by Mercer; (c) a confirmation of 
the insurance coverage effective 1/1/2022 for a guaranteed period of 24 
months; (d) a copy of Certificate of Authority from the State of Hawaii 
Insurance Division authorizing Honu to transact the business of a 
captive insurance company in Hawaii; (e) a copy of Meta life insurance 
certificates; (f) a draft of reinsurance agreement between Honu and 
Prudential; (g) Ekahi's projected year one financial results prepared 
by Willis Towers Watson (WTW); (h) 2020 audited financial statements 
for Honu; (i) Meta's declaration that no commissions will be paid with 
respect to the Reinsurance Arrangement; (j) Written confirmation from 
Paul McNiff of WTW that WTW will provide the actuarial review of the 
captive's life insurance reserves after approval of the proposed 
transaction; (k) draft of the reinsurance treaty between Ekahi and 
Prudential; (l) 2021 audited financial statements for Honu (m) 
confirmation from the State of Hawaii, Department of Commerce & 
Consumer Affairs Insurance Division that Honu's license is current and 
in good standing.
---------------------------------------------------------------------------

    \20\ Considering that some of the documents reviewed by the 
Independent Fiduciary were draft documents and/or documents that are 
no longer current, this proposed exemption requires the Independent 
Fiduciary to re-validate its findings by: reviewing the final terms 
of the exemption; obtaining and reviewing all current objective, 
reliable, third-party documentation necessary to make the 
determinations required of the Independent Fiduciary under the 
exemption; and confirming in writing that all of the exemption 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). The Independent Fiduciary must send this 
written confirmation to the Department's Office of Exemption 
Determinations at least 30 days before Meta engages in the 
Reinsurance Arrangement. The confirmation must include copies of 
each document relied on by the Independent Fiduciary, and a 
description of the steps the Independent Fiduciary took to make its 
confirmation.
---------------------------------------------------------------------------

    24. Based on her review of the foregoing documents, Ms. Ely stated 
that in the initial year of this proposed transaction ``there [would] 
be an immediate and objectively determined benefit available to all 
participants and beneficiaries of the Plan who [would] be affected by 
the proposed transaction.'' The Milliman Reports provide preliminary 
estimates with regard to the costs that Meta would incur to fund the 
Benefit Enhancements, which are discussed below. The incremental 
additional cost would be built into the premiums charged by Prudential, 
so variations in the actual benefit amounts or the number of people who 
use a benefit will not impact the cost to Prudential. The cost to Meta 
for any Benefit Enhancement represents the corresponding incremental 
increase in premiums charged by Prudential. The participants would bear 
no portion of such incremental increase in premium.
    (a) Enhanced Basic Life Insurance. The additional cost to Meta to 
provide the Enhanced Basic Life Insurance would be $390,000 annually, 
representing a 3.8% increase to the projected annual premium of 
$10,300,000 for the non-enhanced benefit.
    (b) Enhanced Accidental Death and Dismemberment. The cost to Meta 
to provide the enhanced AD&D would be an additional $420,000 annually, 
representing an 8.3% increase to the projected annual premium of 
$5,100,000 for the non-enhanced benefit.
    (c) Enhanced Survivor Income Benefit. The cost of the Enhanced 
Survivor Income Benefit would be an additional cost of $2,090,000 to 
Meta annually, representing a 20.5% increase to the projected annual 
premium of $10,200,000 for the non-enhanced benefit.
    (d) Benefits Education Program. To estimate the cost to Meta for 
the new Benefits Education Program, Ms. Ely relied on data provided by 
the respective vendors offering services in the program (i.e. 
EstateGuidance, ComPsych, International Medical Group Travel Assistance 
Services, and Life@Benefits and Resources). The prices represent fixed 
costs and do not depend on how many employees utilize the program. 
Further, the amount charged will be paid by Meta and not passed on to 
participants. The estimated annual cost to Meta for this program is 
$954,000.
    25. The Primary Benefit Test: Based on the above, Ms. Ely states 
that a reasonable estimate of the expected annual costs for Meta to 
fund the Benefit Enhancements would be $3,854,000. This includes 
$390,000 for basic life insurance benefit enhancements; $420,000 for 
AD&D enhancements; $2,090,000 for survivor income benefit enhancements; 
and $954,000 for the Benefit Education Program. Given that Ekahi 
expects to realize an increase of $5,775,000 from the Reinsurance 
Arrangement, the estimated cost to Meta to fund the Benefit 
Enhancements represents 66.7 percent of the projected benefit that 
would inure to Meta ($3,854,000/$5,775,000). Thus, Ms. Ely 
preliminarily estimated that the Primary Benefit Test would be met in 
the initial year of the Reinsurance Arrangement.
    26. Department's Note. Even though Ms. Ely's prior findings suggest 
the conditions of the exemption would be met, those findings would not 
be current as of the effective date of this proposed exemption. 
Therefore, as the Plan's Independent Fiduciary, Ms. Ely must perform an 
additional review and analysis meeting the standards of prudence and 
loyalty in ERISA Section 404(a)(1)(A) and (B), as well as the terms of 
the exemption, and she must receive and review all necessary documents 
required to make her determinations hereunder and based on such review, 
conclude that: the majority of the net benefits from the proposed 
Reinsurance Arrangement can reasonably be expected to inure to the 
Plan; and all of the exemption's other terms and conditions have been 
met (or, due to timing requirements, can reasonably be expected to be 
met consistent with the terms and conditions of the proposed 
exemption). This conclusion must be submitted to the Department's 
Office of Exemption Determinations at least 30 days before the Plan 
engages in the Reinsurance Arrangement. The conclusion must include 
copies of each document relied on by Milliman and set forth the steps 
Milliman took to make its confirmation.
    27. The Independent Fiduciary is also required to file annual 
certified reports to the Department, under penalty of perjury, 
confirming whether all terms and conditions of the exemption have been 
met during the year to which the annual report relates. The Independent 
Fiduciary must complete each report within six months from 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 captive 
reinsurance arrangement covered by the exemption) and submit it to the 
Department within 60 days thereafter.
    28. Further, 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 actual financial results 
and costs incurred by Meta to provide the Plan Benefit Enhancements, as 
opposed to the current projections. The Independent Fiduciary must 
provide the Department with a written report of the actual costs and 
benefits, along with the underlying sources for such data. The 
Department notes that this information would be included in the public 
record. The Department is proposing the exemption based on its 
understanding that the Independent Fiduciary would be able to quantify 
the necessary information based on reliable and verifiable information, 
including audited financials and information obtained from the 
unrelated Fronting Insurer. 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'' report. Any failure by the 
Department to propose a revocation or amendment to the exemption is not 
an endorsement or conclusion by the Department that the

[[Page 92169]]

conditions of the exemption were, in fact, met.
    29. Benefit Enhancements Adjustment. Before the end of any five-
year period and before a ``look-back'' by the Independent Fiduciary, 
Meta may change Benefit Enhancements (e.g., by modifying existing 
Enhancements or adding new Enhancements) at its own expense to ensure 
that the Primary Benefit Test would be satisfied. The exemption 
requires any modification or new Benefit Enhancement to be: (a) widely 
available to all Plan participants on an equal basis; (b) approved, in 
advance, by the Independent Fiduciary, after the Independent Fiduciary 
has determined that each Benefit Enhancement is in the interest of the 
Plan's participants and beneficiaries and widely available to them on 
an equal basis; and the modification otherwise meets the operative 
requirements of the exemption. A complete description of any new 
Benefit Enhancement and the Independent Fiduciary's prior determination 
regarding why the new enhancement is in the interest of the Plan's 
participants and beneficiaries must be included in the next annual 
Independent Fiduciary report submitted to the Department.
    30. Terminating the Captive Arrangement. If Meta terminates the 
captive reinsurance arrangement, the Independent Fiduciary must 
determine whether the Primary Benefit Test was met during the period of 
time between (1) the end of the last five-year period for which a 
Primary Benefit Test ``look-back'' determination was made by the 
Independent Fiduciary and (2) the termination date of the captive 
reinsurance arrangement (the Final Term). The Final Term may consist of 
an entire five-year period or the Final Term may be less than the five-
year period if no Primary Benefit Test ``look-back'' determination has 
yet been made, depending on when Meta terminates the arrangement. If, 
based on the Independent Fiduciary's ``look-back,'' the Primary Benefit 
Test was not met during the Final Term, Meta must reduce the 
participants' portion of the Plan's premiums in the following year by 
an amount at least equal to the amount by which the Final Term Primary 
Benefit Test was not met (the Shortfall). The premium reduction must 
benefit all plan participants equally, be fully implemented during the 
course of the year following the last year of the Final Term, and be 
verified by the Independent Fiduciary. The relief in the exemption will 
terminate at the end of the Final Term, as long as all Plan 
participants receive a pro-rata reduction in their portion of Plan 
premiums for all Plan benefits. No exemptive relief will be available 
with respect to any covered transaction that occurs during the Final 
Term unless and until all participants are given premium reductions in 
the manner described above. The premium reduction amounts must be 
verified by the Independent Fiduciary and reported to the Department as 
part of the Independent Fiduciary's annual report.
    31. As described above, if the Plan's total annual participant 
premium obligation for all Plan benefits is zero or cannot be reduced 
any more by Meta, Meta shall then make up the remaining Shortfall by 
increasing the value of Enhanced Benefits to all participants in an 
amount equal to the remaining Shortfall. These additional Enhanced 
Benefits must be valued by an actuary and approved in writing by the 
Independent Fiduciary as part of the Independent Fiduciary's final 
written report.
    32. If the Shortfall is not corrected pursuant to the terms of this 
exemption, then exemptive relief will lapse as of the first day of the 
five-year period to which the Shortfall relates.
    33. Department's Note. Notwithstanding a determination by the 
Independent Fiduciary that a Benefit Enhancement meets the terms of the 
exemption, the Department may propose to revoke or amend the exemption 
to the extent that, among other things, the Department determines that 
a Benefit Enhancement is not sufficiently protective or in the interest 
of the Plan and its participants and beneficiaries. Any failure by the 
Department to propose to modify or revoke the exemption is not an 
endorsement or conclusion by the Department that the conditions of the 
exemption were, in fact, met.

Additional Representation and Conditions for Relief

    34. Meta represents that Ekahi, as a cell company, is a party in 
interest with respect to the Plan based on its affiliation with Meta 
described in ERISA section 3(14)(G). Ekahi must comply with State 
licensure and insurance regulations to sell insurance or conduct 
reinsurance operations in at least one State; must obtain permission 
from Hawaii to transact the business of a captive insurance company in 
Hawaii; must pass a financial examination by the Insurance Division of 
Hawaii within five years of any reinsurance transaction covered by the 
exemption; must have undergone a financial examination by an 
independent certified public accountant for the taxable year 
immediately prior to the reinsurance arrangement covered by the 
exemption, and must continue to undergo these examinations annually 
throughout the duration of the captive insurance arrangement. Finally, 
Ekahi's reinsurance operations must be licensed by a State whose law 
requires an independent firm to conduct an actuarial review of Ekahi's 
reserves and require Ekahi to report its reserves to the appropriate 
state authority on an annual basis.
    35. The exemption, if granted, requires that: (a) neither the Plan 
nor any Plan participant would pay any commissions with respect to the 
direct insurance agreement between Meta and Prudential and the 
reinsurance agreement between Prudential and Ekahi; (b) the formulae 
used by Prudential, or any successor insurer, to calculate premiums 
would be similar to the formulae used by other insurers providing 
comparable coverage under similar programs that are not captive 
reinsured; (c) the Plan will only contract with insurers with a 
financial strength rating of ``A'' or better from A. M. Best; (d) the 
Plan would pay no more than adequate consideration with respect to 
insurance that is part of the captive reinsurance arrangement covered 
by the proposed exemption and (e) the Reinsurance Arrangement between 
the insurer and Ekahi will be indemnity reinsurance only (i.e., the 
Fronting Insurer will not be relieved of any liability to the Plan 
should the reinsurer be unable or unwilling for any reason to cover any 
liability arising from the reinsurance arrangement).
    36. The exemption, if granted, would expressly prohibit Meta (or a 
related entity) from using any participant-related data or information 
that is generated by (or derived from) the proposed captive reinsurance 
arrangement in any manner that benefits Meta (or a related entity). 
Meta could not reduce or offset any benefits provided to Plan 
participants and beneficiaries in connection with its implementation of 
the proposed captive reinsurance arrangement. Further, all expenses 
associated with the exemption and the exemption application, including 
any payment to the Independent Fiduciary, must be paid by Meta and not 
the Plan.
    37. If the exemption is granted, Meta must update the Plan's 
Summary Plan Description (SPD) within 90 days of publishing the 
exemption and conspicuously disclose in the SPD the nature of the 
exemption and an explanation of why the underlying transaction is 
prohibited by ERISA Section 406. Meta shall distribute the revised SPD 
to all participants and beneficiaries within six months of the

[[Page 92170]]

publishing of the granted exemption. Similarly, if the reinsurance 
arrangement is terminated, Meta must update the SPD accordingly and 
distribute the revised SPD within six months of the termination.
    38. The exemption, if granted, expressly requires Meta and its 
affiliates to maintain all records necessary to demonstrate compliance 
with all of the conditions of the exemption for a period of six years 
from the date of any prohibited transaction for which the exemption 
provides relief and to produce such records within 30 days in the event 
that the Department makes a request.

The Department's Findings

    39. The Department has the authority under ERISA section 408(a) of 
ERISA to grant exemptions from the prohibition transaction provisions 
of ERISA section 406 if the Department finds that the transaction is in 
the interest and protective of the rights of the affected plan and its 
participants and beneficiaries and is administratively feasible.\21\ 
The Departments findings required under ERISA section 408(a) are 
discussed below.
---------------------------------------------------------------------------

    \21\ Specifically, ERISA section 408(a) provides that the 
Department may not grant an exemption unless it finds that the 
exemption is administratively feasible, in the interests of the plan 
and its participants and beneficiaries, and protective of the rights 
of the plan participants and beneficiaries.
---------------------------------------------------------------------------

    40. The Proposed Exemption is ``Protective of the Plan.'' The 
Department has tentatively determined that the proposed exemption is 
protective of the rights of Plan participants and beneficiaries. In 
addition to the requirements described above, no commissions would be 
paid by the Plan with respect to the sale of any third-party insurance 
contract and/or any reinsurance contract, and Meta will only contract 
with insurers with a financial strength rating of ``A'' or better from 
A.M. Best Company or an equivalent rating from another rating company.
    41. Under the terms of this proposed exemption, the Independent 
Fiduciary must review the Reinsurance Arrangement, determine and 
confirm the total benefit derived by Meta and related parties from the 
Reinsurance Arrangement, and validate that (a) for every dollar of net 
financial benefits that the Reinsurance Arrangement generated, the 
Plan, its participants and beneficiaries received at least 51 cents on 
the dollar, and Ekahi and related parties did not receive more than 49 
cents; (b) the Reinsurance Arrangement created real and substantial 
additional benefits for the Plan and its participants; and (c) the 
Reinsurance Arrangement did not result in an offset or reduction in 
participants' other benefits and was otherwise consistent with ERISA.
    42. Ms. Ely has confirmed that: (i) she has the requisite knowledge 
regarding the Reinsurance Arrangement and ERISA to fulfill her duties 
under ERISA section 404 as a prudent and independent plan fiduciary; 
(ii) she will monitor the Reinsurance Arrangement throughout the 
duration of the exemption; and (iii) the Reinsurance Arrangement is 
consistent with ERISA, including the prudence and loyalty provisions of 
ERISA section 404.
    43. The proposed exemption would require the independent fiduciary, 
Ms. Ely, to file annual certified reports to the Department, under 
penalty of perjury, confirming whether all terms and conditions of the 
exemption have been met. She must complete each report within six 
months from the end of the 12-month period to which it relates (the 
first twelve-month period begins on the first day of the implementation 
of the captive reinsurance arrangement covered by the exemption) and 
submit it to the Department within 60 days thereafter.
    44. The Proposed Exemption is ``In the Interest of the Plan.''The 
Department has tentatively determined that the proposed exemption would 
be in the interest of the Plan and its participants and beneficiaries. 
Among other things, the proposed exemption requires that 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.
    45. The Proposed Exemption is ``Administratively Feasible.''The 
Department has tentatively determined that the proposed exemption would 
be administratively feasible, because the proposed reinsurance 
arrangement is subject to robust annual reviews by the Independent 
Fiduciary, Ms. Ely, or a subsequent qualified independent fiduciary, 
that must be submitted to the Department's Office of Exemption 
Determinations. The exemption also requires Meta and its subsidiaries 
to maintain all records necessary to demonstrate the conditions have 
been satisfied and provide these documents to the Department within 30 
days of the Department's request.

Summary

    46. Based on the conditions that are included in this proposed 
exemption, the Department has tentatively determined that the relief 
sought by the Applicant would satisfy the statutory requirements for an 
individual exemption under ERISA section 408(a).

Notice to Interested Persons

    Persons who may be interested in the publication of this notice in 
the Federal Register include Plan participants and beneficiaries. The 
Applicant will provide notification to such interested persons via U.S. 
Postal Service first class mail and/or in accordance with the 
Department's Regulations governing electronic disclosures in 29 CFR 
2520.104b-1(c) within twenty-eight (28) calendar days after the 
publication date of the Notice in the Federal Register. Such mailing 
will contain a copy of the Notice as it appears in the Federal Register 
on the date of publication and a copy of the Supplemental Statement 
required, by 29 CFR 2570.43(a)(2), which will advise interested persons 
of their right to comment on the proposed exemption and request a 
hearing. The Department must receive all written comments and requests 
for a hearing no later than fifty-eight (58) days after the date the 
Notice is published in the Federal Register. All comments will be made 
available to the public.
    Warning: If you submit a comment, EBSA recommends that you include 
your name and other contact information in the body of your comment, 
but DO NOT submit information that you consider to be confidential, or 
otherwise protected (such as Social Security number or an unlisted 
phone number) or confidential business information that you do not want 
publicly disclosed. All comments may be posted on the internet and can 
be retrieved by most internet search engines.

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 a fiduciary to discharge his 
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) Before an exemption may be granted under ERISA section 408(a), 
the

[[Page 92171]]

Department must find that the exemption is administratively feasible, 
in the interests of the plan and of its participants and beneficiaries, 
and protective of the rights of participants and beneficiaries of the 
plan;
    (3) The proposed exemption, if granted, will be supplemental to, 
and not in derogation of, any other provisions of ERISA, 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 whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemption, if granted, will be subject to the 
express condition that the material facts and representations contained 
in the application are true and complete, and that the application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

Proposed Exemption

    The Department is considering granting this proposed exemption 
under the authority of ERISA section 408(a), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (75 FR 66637, 
66644, October 27, 2011)).

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 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 would 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, the 
participant or beneficiary would receive an increased payout if the 
accelerated payment is less than $1,000,000 and he or she is also 
enrolled in supplemental life insurance.
    (3) Enhanced Basic Life Insurance Benefit Portability. The 
enhancement would 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 would 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 would 
be issued without regard to participants' medical conditions but may be 
offered at higher rates.
    (ii) The second Enhanced AD&D Benefit would 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 would 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 would 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 would add the benefit of paying 
for the childcare expenses of a deceased participant. If the exemption 
is granted, 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 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 would 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 would add monthly 
rehabilitation payments. The Plan would make a monthly payment 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 
partners 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.
     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.

[[Page 92172]]

    (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 Ms. Ely of Milliman 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 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 would 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. 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, as may be 
adjusted under condition (p) below (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 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 should 
be allocated equally across all Plan participant contributions toward 
premiums for Plan benefits, 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 shall eliminate all annual 
participant contribution premiums toward all Plan benefits to cover as 
much of the Shortfall as possible. Meta shall 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 captive 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 captive reinsurance 
arrangement, and (B) the termination date of the captive 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)-(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)-(B) were properly implemented to address the Shortfall, 
notwithstanding that the captive reinsurance arrangement has already 
been terminated; and

[[Page 92173]]

    (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 which 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 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 captive reinsurance 
arrangement covered by the exemption) and submitted to the Department 
within 60 days thereafter. The relevant report must include all of 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 captive 
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;
    (k) Meta will not offset or reduce any benefits provided to Plan 
participants and beneficiaries in connection with its implementation of 
the captive reinsurance arrangement in order to defray the costs, 
expenses, or obligations of complying with the exemption;

[[Page 92174]]

    (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 captive 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 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 Primary Benefit Test has 
not been met with respect to a five-year period, unless in accordance 
with Section III(a)(3)(A)-(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) If the exemption is granted, 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 why the arrangement 
constitutes a transaction prohibited by ERISA (including an explanation 
of why Ekahi is a party in interest). 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 of the publishing 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 of 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 from the date the 
Department requests these records.
    Applicability Date: This exemption will be in effect for the period 
beginning on the date of publication in the Federal Register.

    Signed at Washington, DC, this this 15th day of November 2024.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2024-27260 Filed 11-20-24; 8:45 am]
BILLING CODE 4510-29-P