By: HUB’s EB Compliance Team

This article is the third in our series about Form 5500. A Health & Welfare Form 5500 is made up of several key components including basic plan information, financial information, participant information, compliance information, and carrier information. Each of these components ensures that the plan is operating according to legal requirements and provides transparency regarding the plan’s financial health and participant coverage.

The information provided on Form 5500 is crucial for accurately identifying the plan and reporting period, which should match the information provided in the ERISA plan documents. The key information obtained includes the plan year, plan name and number, employer identification number (EIN), Plan Sponsor’s information, type of plan, Plan Administrator’s information, and the filing status.

Annual Report on Identification Information

The plan year relates to the beginning and ending dates of the plan year being reported. The type of plan indicates whether the plan is a single-employer plan, a multiple-employer, or a multiemployer plan. While a single-employer plan is a plan maintained by one employer, a multiple-employer plan is maintained by two or more employers who are not part of a controlled group. A plan maintained pursuant to one or more collective bargaining agreements involving two or more employers is considered a multiemployer plan.

Basic Plan Information

The official name of the plan and assigned number should match the ERISA plan name and number that is also listed in the plan documents. Most often, the EIN, name, address, and contact of the Plan Sponsor will be the same as the employer’s. The Plan Administrator may be the same as the Plan Sponsor, but if different, the information about the individual responsible for managing the plan will be required.

The participant counts are crucial for understanding the scope of the plan’s coverage. Participant counts are needed for the following categories:

  • Enrolled employees are active employees who are enrolled in the plan as of the first and last day of the plan year.
  • COBRA participants are former employees who are enrolled under COBRA continuation coverage as of the first and last day of the plan year.
  • Retirees are retired employees who are enrolled in the plan, if applicable.
  • Eligible participants are individuals eligible for COBRA but have not yet elected coverage.

The basic plan information also requires employers to list plan characteristic codes that describe the features of the plan. These codes provide detailed information about the types of benefits offered and the structure of the plan. A list of the codes and their descriptions are available in Form 5500’s Instruction sheets. 

Plan funding arrangement questions require the plan to report on how premiums and claims are paid. They also provide a clear picture of the financial transactions between the plan and the insurance carriers, ensuring transparency and compliance with regulatory requirements.

Schedule A

Carriers are required to provide Schedule A data to the Plan Administrator within 120 days of the end of the ERISA plan year. Schedule A provides information about insurance contracts that provide benefits under the plan. The information includes the insurance carrier information (EIN, NAIC code, contract number), coverage details, and premiums paid to the insurance carrier during the policy year.

Schedule A will also provide details of recipients that received any fees and commissions paid to agents, brokers, and other individuals. The detailed purpose of the payments made to agents, brokers, or other individuals should be provided to ensure transparency in financial transactions related to insurance contracts and to maintain compliance with ERISA regulations.

Additional Schedules

Depending on the plan design, Schedule C may be required to report information about service providers who received $5,000 or more in compensation in connection with the plan. Schedule C provides detailed information regarding service providers, compensation, and service codes associated with the services provided to the plan.

Plans that include a Master Trust Investment Account (MTIAs), Common/Collective Trusts (CCTs), Pooled Separate Accounts (PSAs), 103-12 Investment Entities (IEs), or Group Insurance Arrangements (GIAs) may also be required to file Schedule H. Schedule H requires detailed financial information.

Conclusion

While a Form 5500 will vary depending on the specific plan design, it is important for Plan Sponsors to understand the data being provided in order to ensure accuracy prior to filing each year. Partnering with a reliable vendor partner can reduce the heavy administrative lift in preparing Form 5500; however, Plan Sponsors are only able to outsource the work to help complete the Form, not the responsibility of filing or any liability if mistakes are made.

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.