We are often asked, “The group has always filed multiple benefits under one Plan number and one 5500. However, they cannot find a corresponding Wrap Plan Document in place. Can we continue to file as one plan?” Unfortunately, we feel a pang of apprehension and worry each time we are asked this because what was done in the past, does not justify what should be done in the present.
Or can it?
In the following blog, we will share different viewpoints and considerations, but ultimately the decision will be up to the Plan Sponsor.
Form 5500 Instructions (page 19)
You must review the governing documents and actual operations to determine whether welfare benefits are being provided under a single plan or separate plans.
With the absence of the Wrap Plan document as a guide, the DOL may defer to the carrier contracts, and if the benefits are not bundled, then the 5500 would also not bundle with the benefits. Following that viewpoint, technically speaking, past 5500s would need to be amended to break out the benefits for each to be their own Plan. Although, as the instructions point out, one may also consider the “actual operations” to determine how to file. This could mean how the benefits are communicated to the participants and how they are managed. This coincides with how some courts approach the question – they don’t focus on only one attribute.
Looking at the courts for this decision is challenging since there are only a handful of cases that focus on bundling benefits. For those that the courts heard, they considered an assortment of factors in the determination of what is in place for a single benefit plan, not just the Plan Document as noted in Loren v Blue Cross Cross & Blue Shield of Mich., (6th Cir. 2007). They looked at such details as how the carrier contracts were negotiated, if a single Plan number was used, and if a single 5500 was filed.
Department of Labor (DOL)
We asked two of our trusted representatives at the Department of Labor about this topic and heard two different answers:
DOL Rep #1’s response: If the Plan Sponsor had bundled their benefits in the past without a Wrap Plan document and then shows a good faith effort to have the Wrap in place going forward, she would focus on what they have done currently rather than focus on the past.
DOL Rep #2’s response: If a Wrap Plan Document was not in place for the past, each benefit was its own plan and the past needs to be amended (there would be multiple delinquent filings as a result).
Our input always follows the conservative approach; we abide by the letter of the law. We would want to have the Wrap Plan Document in place to back up the Form 5500s.
As far as we know, ERISA provisions have not provided the “historical precedence,” approach and as a result, the DOL during a DOL audit may still take the position that 5500s are to be amended to reference each carrier contract if a Wrap Plan Document was not present to bundle the benefits. Ultimately, the decision comes down to how comfortable the Plan Sponsor feels defending the approach that they take. The decision is best discussed with the Plan Sponsor’s legal team and/or with an ERISA attorney.
If you have any questions on Wrap Plan Documents and SPD or need Documents, please contact Aubrey Box at firstname.lastname@example.org.