Hundreds attended our semi-annual national webinar: Demystifying ERISA Compliance on September 14th. In case you missed it, we have posted the questions and answers reviewed during the webinar below. If you have further questions, contact Ann McAdam at amcadam@wrangle5500.com.
Questions on Plan Documents and SPDs:
- Are Plan Documents required for small groups as well? In other words, does any employer who offers a health and welfare plan have to have a Wrap Plan document and distribute an SPD to Plan Participants?
Answer: Yes, ERISA requires all employers who sponsor health and welfare benefits to have the Plan Document and SPD.
- I have a group that is a PEO and offers benefits to their PEO clients. They file a Form 5500 on those benefits, and they have an SPD for their WRAP Plan Doc that lists those benefits deemed Plan 501. The PEO has a voluntary life plan that is ONLY for their INTERNAL employees. This is not offered to the PEO clients. They have a separate Plan Document for this Plan, Plan 502, and it’s not filed with their 5500 for Plan 501. Is this the correct way to handle this?
Answer: This is fine. Employers have discretion on how many plans they want to maintain.
- If you create a new WRAP each year, would you need to provide an SMM?
Answer: A restated wrap plan document and SPD can replace any SMM requirement for that year.
- If I post my SPDs on an for the employees to see when they want, do I still have to send them one?
Answer: No. However, you should send them an email with the link noting the importance of the document and offer them a hard copy at no cost.
This is under the assumption that the participants have workplace access to a computer. If the participant does not have workplace access to a computer, they first need to provide written consent to receive electronic distribution.
- What is the difference between the Wrap and the SPD?
Answer: ERISA has two separate regulations for each document with different content requirements. The SPD is the summary of the plan that needs to be delivered to participants. The Plan Document establishes the plan and only needs to be delivered to participants upon written request.
- What do you mean by…” if the participant sends a written request?” What kind of written request would this be?
Answer: Participants can send an email or written note to state that they wish to have a copy of the SPD, a particular notice, etc. In addition, they can specify if they want it electronically or as a hard copy. The Plan Sponsor is required to oblige within 30 days of the written request. If they do not, the penalty is $110 per day it is late.
- Are the notices the same for each state?
Answer: The annual notice packet usually contains notices required by more than one federal law. It will depend on the law and the notice as to how they should be provided to participants. However, usually, they are packaged into the open enrollment materials each year. Certain states (like California) may have an extension to federal COBRA or another law that is not preempted by federal law that could be included in the packet.
- Can the SPD be printed and distributed to the EEs? We have many small groups who are in the restaurant industry and many folks who are not set up with email.
Answer: Yes, you can print and distribute. We suggest keeping a log to track the distribution and to have a backup to show in case anyone (like the DOL) were to inquire.
- Should employers with different eligibility classes (different waiting periods, ER contributions, etc.) be listed in the SPD?
Answer: All the eligibility classes should be written in the Wrap Plan Document. For the SPDs, you can create different versions for each class to have only their specific details notated.
- When you send the SPD to employees, what else needs to accompany the SPD? COCs?
Answer: Unfortunately, there is no specific universal list to follow. Many provide the SBC with the SPD along with the needed annual notices that are not housed in the SPD (e.g., the COBRA Notice). If the Plan has been amended, there may be Summary Material Modifications (SMM) that need to be provided as well.
Questions on Health and Welfare Form 5500s:
- The Form 5500 does not apply to employers who have less than 100 enrolled; is that correct?
Answer: This is correct if the group is not a Trust or a Multiple Employer Welfare Arrangement (MEWA; see question #5) that filed a Form M1. MEWAs and Trusts do not have a reporting threshold. They file regardless of the count. A trust would even file if there are zero enrolled but there are plan assets to report.
- When we ask the carrier for Schedule A, do we request with the ERISA plan year dates or the policy plan dates? 1/1/ to 12/31 or 04/01 to 3/30?
Answer: You would request the policy period dates.
- Will an embedded EAP show up on the Schedule A?
Answer: Unfortunately, the carrier may not list EAP on the Schedule A when it is embedded, especially if the EAP is provided at no charge. If the carrier contract is specified, you would note it in the Form 5500 report.
- To determine whether a group is subject to a 5500 filing, my understanding is that it depends on whether there were 100+ enrolled on the FIRST day of the plan year. What does Wrangle recommend as a best practice when Schedule A reports from carriers don’t provide this information? Some only provide a number on the LAST day of the plan year. Some carriers provide a number that includes employees and dependents. It seems that Schedule A reports aren’t necessarily always accurate, so I find it confusing when we are using them for information for a5500 filing. How does Wrangle handle this?
Answer: The Schedule As are from the carriers and tabulate the counts at the end of the policy year. They can be a guide but would not be the ideal source for the beginning of the plan year. A billing statement or census is more accurate.
For the end of the Plan year, if you only have the Schedule As, select one that is from a non-contributory benefit such as Life, LTD, or EAP. These tend to have all the employees. If you only have a health Schedule A and the dependents are included, our default is to take the total and divide it by 2.35. This unit is used by the IRS to divide family counts to get it to just the active employee count.
- What is a MEWA?
Answer: A MEWA, a Multiple Employer Welfare Arrangement, is when two unrelated employers share benefits, particularly medical. The employers do not share common control as outlined under the IRS Codes 414(b)(c) and (m). The most common is to look at 414(c) which applies to Corporations. One corporation needs to own 80% or more than the other corporation(s) to achieve common control.
- What is the DOL website for e-filed Form 5500s?
Answer: https://www.efast.dol.gov/5500Search/
Miscellaneous Questions:
- If a group has multiple locations with different tax IDs, but is a common control group, is that considered multiple employers?
Answer: With common control met under the IRS Code 414(c), this likely is under a single employer, not multiple employers. Multiple employers are unrelated. For the IRS Code 414 (c), the percentage to apply is 80%. If the ownership falls below, then the group could be a multiple employer. (Please note, brother and sister groups have different percentages to be applied.)
- In 2021, we did not have over 100 employees in the medical plan and did not file a 5500 for that year. Is there any type of communication we need to supply to the DOL?
Answer: Generally, no, when the aspect is for 5500s and Plan Documents for unfunded plans. If the Plan is funded by a Trust or is a MEWA which filed a Form M1, even if they are under 100, they are to file a 5500 and distribute the SAR to participants. Remember to check the enrollment for all benefits, not just the medical, to determine if a 5500 must be filed.
- When there is common control, do I need to add the affiliates on the Wrangle Wrap intake form?
Answer: Yes, the participating employers/affiliates need to be mentioned since they are sharing the benefits. This information is to be included in the Wrap Plan Document.
- Where do we find the SAR notice on the Wrangle Dashboard?
Answer: After you enter our Dashboard, go to the scorecard and click on the 5500 published box. Choose the client/plan sponsor you are interested in. Click on their name, then choose the desired ERISA Plan Year and look to the right to the button indicating “Access Form 5500, SAR, Schedules”. Click on that and one of the PDF options will be the SAR.
- What are the compliance items for small group?
Answer: They are to have a Plan Document for their benefits such as a Wrap Plan Document or a POP Plan Document if they apply Section 125 for their benefits, etc. They need to distribute the SPD to Plan Participants and they have the various annual notices as they apply.