April 29, 2021

In the movie, The Princess Bride, Vizzini (the villain), says “Inconceivable!” every time the Dread Pirate Roberts (the hero) overcomes a roadblock. Vizzini delivers this line so many times that his lieutenant, Inigo Montoya, finally questions – “You keep using that word (inconceivable). I do not think it means what you think it means.


Your business can provide contractors access to a program that provides traditional health and welfare-like benefits and - in some situations - even provide a contribution or loyalty reward, “Inconceivable!” Just like the hero in The Princess Bride, you can do the inconceivable!


What factors determine employee versus contractor relationships?


There are several factors that help keep these benefits from creating an employee versus contractor relationship.


A group plan might create concern about employee-employer relationship. Mercer Indigo has built these plans as individual insurance programs. They are not group benefits.

These plans are not ERISA plans which, again, is another issue that might create an employer-sponsored program for employees.

There are typically no requirements for a contractor to purchase these benefit.

Special Note:

We are seeing some employers of contractors begin to require that a contractor have health coverage. See Prop 22 in California and other similar proposed legislation across the country.



The IRS outlines a 20-Factor Test to determine if an individual is an employee or contractor. None of these factors mention anything about benefits. Typically, the problem area for most employers is the issue of Behavioral Control, which is a facts and circumstances test. A couple examples could be, “how much supervision does the employer provide for the contractor?” “do they tell the individual exactly how and when to do their work, take breaks, the specific tools to use and so forth?”  Obviously, there is nothing here about benefits.


As always, there is an Attorney standing behind whispering (not quietly), “be careful.”  Concern here focuses on the number of test items your organization may have an issue with - as it is a layering, or building of items, that could cause trouble.  Bottom line still remains - providing benefits does not single-handedly create an employee relationship.


Achieving Conceivability!


Mercer Indigo was built to address these compliance concerns and continuously monitor changes in this environment to ensure we are “careful”.


We look forward to talking with you about your concerns to help you overcome the “Inconceivable!”


Paige Clay

Eric Bassett

Senior Partner, Association and Affinity Leader, Mercer

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