EAPs and Form 5500s

This year Wrangle has received an unprecedented number of questions on Employee Assistance Programs (EAPs). To help provide clarity and understanding, we have provided a list of these questions and answers for your reference:

1. Is an EAP benefit ERISA reportable?

Most of the time EAPs are ERISA reportable. Often trained staff answer the phone and refer employees to appropriate services under medical care such as counseling for stress, mental health matters, etc. This was pointed out in two DOL Advisory Letters, “83-35A” and “88-04A””. Very few EAPs are 100% referrals without trained staff and therefore not under ERISA.

Wrangle spoke to the DOL’s Office of Regulations and Interpretation, the attorneys for the DOL, on this matter for their input. Here is what was gathered:

• Agreed that EAP and Telehealth benefits typically fall under ERISA and are reportable benefits from a 5500 perspective.
• Refer to the Wrap Plan Document to see if it is listed or if it is to be a standalone benefit outside of the Wrap. (This may mean it will be on its own Form 5500 report if the reporting threshold was met.)

If there is uncertainty, we suggest seeking the advice of an ERIA attorney. We will defer to the Plan Sponsor’s decision.

2. If the EAP is attached as a value-added benefit or embedded benefit to a life or LTD policy and there is no premium, is it to be reported in a Form 5500? If yes, how?

If the EAP is deemed under ERISA, even if it is added/embedded, it is a benefit that is part of the ERISA Plan and would be reported in the Form 5500.

Wrangle’s approach to the EAP arrangement is to list it along with the benefit that it is attached. Here’s an example:

Life (with EAP):

• On page two of the 5500 Wrangle will list the benefit code, “4Q” to represent “miscellaneous.”
• In addition, the Life 5500 Schedule A’s page four would have the benefit box life checked and also the box labeled, “m” for other. We would then type in Employee Assistance Program.

The DOL will understand that the carrier contract package covers multiple benefits.

• One more thing to remember: The number of covered lives and premiums reported on the Life or LTD is equal to or includes the embedded EAP information.

3. EAPs are often provided by a vendor, not an insurance carrier. Are the funds deemed as premium? Is a Schedule A required?

Wrangle again spoke to the DOL’s Office of Regulations and Interpretation, the attorneys for the DOL, on this matter for their input. Here is what was gathered:

• Typically, these benefits are provided by vendors who are not insurance carriers. These are characteristically “fee for service” benefits where the employer pays 100% of the fee out of their general assets. This would indicate an ASO arrangement (not fully “insured”).

As a result, Wrangle continues to check on the status of EAP, and we will prepare the 5500 following how the EAP has been noted in our Dashboard. If it is noted as “Fully insured”, we will request the Schedule A. If it is noted as a “Self-insured” or fee-for-service, we will mark general assets, include the benefit code (4Q), and not include a Schedule A.

4. If EAPs were not reported in the past, but were part of the Plan, are past reports to be amended? 

Technically, yes. You amend when a benefit is omitted and should have been reported as found in the Wrap Plan Document.

If the Plan Sponsor chooses not to amend, the DOL would likely not apply a penalty but rather ask for the 5500 to be amended to reflect the correct information, if the DOL were to audit.

However, the DOL’s Enforcement Manual does have the following penalty listed; in other words, the DOL has the option to apply a penalty if they choose to do so. Wrangle has not seen them take this action for an EAP benefit when not being listed, but the purpose of this blog is to give you all the available information.

• The penalty for non-critical missing or deficient reporting items is $10/day capped at $3,650

Source: Reporting Compliance Enforcement Manual Chapter 5: Enforcement Programs Procedures | U.S. Department of Labor (dol.gov)

5. If an EAP under ERISA was not in the Wrap Plan Document, is it a standalone benefit? Would the EAP be required to use the DOL’s DFVCP filings (Delinquent Filing Voluntary Compliance Program)? 

Wrangle cannot give a one-size-fits-all type of response, unfortunately. We would want to handle this on a case-by-case basis. However, here are some notes to consider:

• If the EAP was embedded with the Life or LTD and the group had the life/LTD listed in its Wrap Plan Document, there is good reason to amend the Wrap Plan Document due to an administrative error to include the EAP and then amend the Form 5500 to note it is part of the Plan.
• If it is a standalone benefit whether it does or does not have its own Wrap Plan Document, and has met the reporting threshold, this warrants the need for a Form 5500 report.
• If a group did not file the 5500, then Wrangle would likely encourage the DFVC.
• However, we would want to review all details before final consideration (and if there were uncertainty, we would encourage an ERISA Attorney to review and advise). 

If you have further questions, please contact Ann McAdam at amcadam@wrangle5500.com.