At ANCO Insurance, we aim to simplify the complexities surrounding benefits administration for our clients. One topic that often causes confusion is the relationship between Schedule A information received from insurance carriers and the requirement to include this information in Form 5500 filings. Here’s what you need to know.
Form 5500 Filing Requirements
The Form 5500 filing requirement for health and welfare plans subject to ERISA is straightforward: all such plans with 100 or more plan participants on the first day of the plan year must file Form 5500 for that plan year. This includes all applicable insurance information on Schedule A.
Receiving Unrequested Schedule A Information
Plan administrators often face challenges with Schedule A reporting, primarily because it relies on the timely delivery of Schedule A information from insurance carriers. While carriers are obligated to provide this information, plan administrators often have to proactively retrieve from the carriers.
However, the opposite issue can also occur. Sometimes, plan administrators receive Schedule A information they neither requested nor expected. This can be surprising, especially if they had not considered filing Form 5500 for that particular benefit.
Why You Might Receive Unrequested Schedule A Information
Insurance carriers may adopt a “when-in-doubt-send-it-out” approach. To ensure compliance, they might send Schedule A information to all customers, regardless of whether each customer needs it for Form 5500 reporting. This blanket approach fulfills the carrier’s obligation but can lead to confusion for plan administrators.
Additionally, carriers may send Schedule A information if a benefit covers 100 or more persons. This practice stems from the differing definitions of “participants” for Form 5500 reporting and “covered persons” for Schedule A. Form 5500’s “participant” count includes only participating employees and former employees, excluding spouses and dependents. Conversely, Schedule A’s “covered persons” count includes everyone covered under the benefit, including spouses and dependents.
Does Receiving Schedule A Information Mean You Must Report It?
Receiving Schedule A information does not automatically obligate a plan administrator to report it on Form 5500. However, it should not be ignored. Plan administrators should take reasonable steps to confirm whether Form 5500 reporting is required for the benefit.
Common Reasons for Not Including a Benefit on Form 5500
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Voluntary Benefits:
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Ensure that the benefits considered “voluntary” meet the Department of Labor’s (DOL) voluntary plan safe harbor requirements. This includes limiting the employer’s role to facilitating the program without endorsing it or profiting from it.
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Fewer than 100 Participants:
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Verify that the benefit does not have 100 or more participants or is not part of a wrap plan that does. If the benefit is included with other components under a wrap plan with 100 or more participants, it should be reported on Form 5500.
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Non-Insurance Benefits:
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Some programs, such as point solutions for specific conditions, may not seem like traditional insurance but could still be considered insurance for Schedule A reporting. Receiving unprompted Schedule A information from such vendors often indicates the program is reportable.
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Final Decision
The ultimate decision to report Schedule A information on Form 5500 rests with the plan administrator. Consulting with experienced counsel can help navigate situations that are too close to call. Remember, receiving Schedule A information does not automatically necessitate Schedule A reporting.
For more guidance on managing your benefits and Form 5500 reporting requirements, contact ANCO Insurance. We’re here to help you navigate these regulatory complexities with confidence.
