By: HUB’s EB Compliance Team

The first article of the 5500 series, What is Form 5500?, covered the basic definition and purpose of the Form 5500. Since not all plans are required to file, it is important for Plan Sponsors to understand which plans are required to file Form 5500. This month’s article will help Plan Sponsors determine which plans require the Form. Health & Welfare plan requirements differ significantly from those of the Pension Benefit Plan requirements. This article will only address the Health & Welfare side.

Participant Definition

The terminology used in the Form 5500 instructions can be confusing or misleading in certain circumstances. To determine if a group health plan must file, Plan Sponsors must first feel confident in interpreting the language used in the instructions.

For health and welfare plans subject to ERISA, the Form 5500 filing requirements typically depend on the number of participants in the plan. Participants include enrolled employees (active employees), former employees enrolled under COBRA, retirees (if applicable), and individuals eligible for COBRA but have not yet elected coverage. Dependents and spouses do not count towards the participant count.

Threshold for Filing

Group health plans with 100 or more participants at the beginning of the plan year must file Form 5500 for that year. Many small group health plans with fewer than 100 participants are generally exempt from filing (but should confirm exemption each year). Group health plans sponsored by churches or government entities are typically exempt from filing as well.

A small group health plan that is funded by a trust does not get the benefit of the less than 100-participant exemption and must file a Form 5500. A small group health plan that is a MEWA is also required to file a Form 5500 if the Form M-1 has been filed, regardless of the participant count on the first day of the plan year.

Oftentimes group health plans are “wrapped” under one ERISA plan document (i.e. medical, dental, and vision are filed under one plan number on Form 5500). For these plans, the participant count used as the threshold for filing should be based on whether an employee participates in any part of that group health plan. The requirements also mean that you must look at all participants of the plan as an individual election count. It is important to determine if you wrap your ERISA group health plans under one plan number before filing any Form 5500, as separate insurance policies or lines of coverage do not necessarily mean there are separate ERISA plans in place.

Conclusion

Plan Sponsors that are determining participant counts in the group health plan should rely on payroll records that are cross-referenced with enrollment information to ensure that accurate data is used. After determining that a Form 5500 is required, Plan Sponsors should partner with an experienced vendor to assist with the preparation process. In the next article of this series, we will focus on the key components of the Form 5500.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.