Health and Welfare Form 5500 Q&A

Health and Welfare Form 5500 Q&A 2017-01-29T13:56:29+00:00

Determining when to file a Form 5500 as well as deciding on the details to relay within the report may not be as straight-forward as one may have suspected. Wrangle recommends that the Plan Sponsor consults with an ERISA attorney to discuss and evaluate its ERISA Plan, the internal structure of the company as well as state laws that can play a factor.

In the meantime, here are some of the fundamental details to learn on the Health and Welfare Form 5500s.

Health and Welfare Form 5500 Q&A

Under ERISA Title I, there are various reporting and disclosure provisions to be met. One of those requirements is satisfied by the Health and Welfare (H&W) Form 5500 Annual Report. It is used to report information concerning employee benefit plans. More specifically, it comprises of various schedules with information on the financial condition and operation of the Plan.

Per the Department of Labor (DOL) and IRS, this report is required to be e-filed annually by many Plan Sponsors. The requirements for completing the Form 5500 will vary according to the type of plan or arrangement.

ERiSA form

The primary reason for the Health and Welfare Form 5500 is to meet the ERISA Title I compliance provisions on reporting. It is intended to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards and that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans. Additionally, the DOL, IRS and other governmental agencies, including Congress use the data for research in assessing employee benefit, tax, and economic trends and policies.
Health and Welfare Benefit plans, also known as Welfare Benefit Plans or Employee Welfare Benefit plans, are any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise: medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services.

Please note: Several payroll practices are specifically excluded from the definition of employee welfare benefit plans (namely overtime, shift, holiday and vacation pay as well as certain time off).

The following two points provide the due dates for the Form 5500:

  • Form 5500s are due the last day of the 7 th month after the end of the plan year
  • Form 5500s can be extended for an additional 2 ½ months, if the extension (Form 5558) is filed prior to the original due date
A plan sponsor must furnish a Summary Annual Report (SAR) to plan participants. The principal purpose of the SAR is to provide participants with information regarding the plan’s financial condition and to summarize information provided in the Form 5500.

The SAR is due within nine months after end of the ERISA Plan Year or two months after the filing Form 5500 due date (with an approved extension).

  • Small funded plans -Trust plans (unless deemed unfunded Technical Release 92-01)
  • A welfare benefit plan that covers 100+ participants* as of the first day of ERISA Plan year such as:
    • Large unfunded plans (or deemed unfunded by Technical Release 92-01
    • Large insured plans
    • Large combination unfunded/insured plans
  • Plans required to file Form M-1: MEWAs
    • A MEWA is a multiple employer welfare arrangement as defined in section 3(40) of ERISA, and Entities Claiming Exception (ECEs), as defined in 2520.101-2. Generally a MEWA is a plan maintained by two or more employers. However, if the employers are deemed to be a part of the same “controlled group”, they would not be considered a MEWA, but a single employer plan.
  • A welfare benefit plan maintained outside the United States for persons substantially all of whom are non-resident aliens
  • Governmental Plans
  • An unfunded or insured welfare plan for a select group of management
  • An employee benefit plan maintained only to comply with workers’ compensation, unemployment compensation or disability insurance laws
  • An apprenticeship or training plan
  • Church Plans
  • A welfare benefit plan that covers fewer than 100 participants* as of the first day of the plan year and is unfunded, fully insured or a combination of insured and unfunded. Starting with the 2013 plan year, this exemption does not apply to a plan that is a MEWA** (all entities that are required to file an M-1 must file a Form 5500).
An individual becomes a participant covered under an employee welfare benefit plan on the earliest of:

  • the date designated by the plan as the date on which the individual begins participation in the plan;
  • the date on which the individual becomes eligible under the plan for a benefit subject only to occurrence of the contingency for which the benefit is provided; or
  • the date on which the individual makes a contribution to the plan, whether voluntary or mandatory.

See 29 CFR 2510.3-3(d)(1). This includes former employees who are receiving group health continuation coverage benefits pursuant to Part 6 of ERISA and who are covered by the employee welfare benefit plan. Covered dependents are not counted as participants.

A MEWA is a multiple employer welfare arrangement as defined in section 3(40) of ERISA, and Entities Claiming Exception (ECEs), as defined in 2520.101-2. Generally a MEWA is a plan maintained by two or more employers. However, if the employers are deemed to be a part of the same “controlled group”, they would not be considered a MEWA, but a single employer plan.
Severe fines can be imposed for each day that the filing is not in compliance.  There is only one way a plan administrator can remedy a delinquent filing; take advantage of EBSA’s Reduced Penalty Program (Delinquent Filer Voluntary Compliance – DFVC) which allows for voluntary compliance and payment of reduced penalties.
A Schedule A (Insurance Information) consists information about insurance contracts under which plan benefits are provided. The premiums paid (applicable to both experience and non-experience contracts), plus fees and commissions paid to brokers, agents, or other persons are to be noted are outlined by the carrier in the Schedule A. Additionally, the carrier provides the information about investment and annuity contracts and the type of benefits provided.

The purpose of the Schedule C is to provide information about service providers fees and compensation. This Schedule is only reported in a Form 5500 if the plan is funded through Plan Assets (ERISA Plan is under a Trust).

Disclaimer: Wrangle, LLC as well as its employees and affiliates do not offer legal and accounting consultation and services.  Information relayed through Wrangle-produced materials serves to provide general information only; whether expressed or implied it is not intended to constitute legal or other advice or opinions on any specific matters and is not intended to replace the advice of a qualified attorney, accountant, or other professional advisor.   Wrangle applies its best effort to provide accurate and complete results and provides its service in accordance with the ERISA rules that govern Form 5500 completion.  This document may contain information that is confidential.  Any use, disclosure, distribution, or duplication by anyone other than an intended recipient is prohibited.