Conversations these days with HR folks include the discussion around wellness plans, health clinics, telemedicine/teledoc, health help lines, EAP, etc. Folding these benefits within the ERISA Plan brings many questions on reporting within the Form 5500 to Wrangle. Here are the top five:
- Are these benefits under ERISA?
- If the benefit is not within the Plan Document, would it be in the Form 5500?
- If they are 100% voluntary would the 5500 be warranted?
- Why would a Vendor refuse to issue a Schedule A?
- What is to be done if a Schedule A is refused?
1. Are the Benefits Under ERISA?
If medical care is provided within the meaning of Section 3(1) of Title 1 of ERISA, there is a very strong likelihood the benefit is under ERISA. To help bring clarity on what constitutes as medical-care for these types of benefits, the DOL wrote an assortment of Advisory Opinion Letters on this matter surrounding EAPs which can be applied to the other types of wellness benefits mentioned earlier.
Here is a quick synopsis of the letters…
In the letters for 91-26A, 88-4A and 83-35A, the DOL highlighted that:
If those who answer calls from the 1-800 or if the counselors brought to the facility are in the profession of providing medical care and are not a mere referral service with no medical background, the benefit is under the employee welfare plan.
[Please note, an ERISA attorney may be needed to make the best determination especially if there is more of a grey area to distinguish].
2. If the Benefit is Not Within the Plan Document, Would It Be in the Form 5500?
No the benefit would not be in the 5500 for the corresponding ERISA Plan Document. It would be deemed as a stand-alone benefit though, and if there were 100+ enrolled participants, its own Form 5500 would be warranted (if the benefit was under a trust or a MEWA that filed a Form M1, a filing is required regardless of the number of enrolled participants).
3. If the Benefit is 100% Voluntary Would the 5500 Be Warranted?
To find the answer here, we encourage you to be positive that the benefit reached safe harbor and is in fact 100% voluntary. If it has reached safe harbor, then the 5500 would not be warranted. The criteria to meet is a bit of a labyrinth; ideally bringing in an ERISA attorney to verify that the benefit has reached safe harbor is a best practice.
What does Safe Harbor ultimately mean? To reach safe harbor, the benefit is not endorsed by the Plan Sponsor (if endorsed, it would be under ERISA).
The following flow chart highlights the thought process on determining Safe Harbor. In addition, a checklist also has been posted below to help point out what would be deemed “endorsing.”
4. Why would a Vendor Refuse to Issue a Schedule A?
Form 5500’s Schedule A instructions explicitly state that the Schedule A is for an insurance product and carrier. However, vendors for these types of benefits may not be an insurance carrier.
As a result Vendors for wellness policies, EAPs and telemedicine tend to balk at the idea of submitting a Schedule A
Keep in mind though, that under ERISA all benefits that provide medical care under a group health plan would be deemed reportable. Telemedicine as well as EAPs and wellness programs plans all provide medical care and are found in group health benefits. Overall, those who wrote the ERISA Provisions and those who wrote the Form 5500 Instructions did not compare their notes and materials. If they did we would not be in this situation now!
Wrangle defers to the thought process and interpretation of reference materials prepared by EBIA which is written by scores of experienced and well-versed attorneys. The authors have noted that the intent of the Form 5500 is to report the benefits within the ERISA Plan. Even though these benefits do not fit the mold of a Fully-insured benefit, the Schedule A is the only vehicle to highlight its characteristics. Overall the Schedule A provides an outline of the benefits covered under an ERISA plan including the funds, commissions and covered persons’ counts. These benefits would have the data for the Schedule A.
5. What is to Be Done if a Schedule A is Refused?
We follow a game plan that does not impose on the clients to obtain the Schedule A.
- We start off with a series of requests to the vendor(s).
- If after a genuine and documented effort there has been no Schedule A or Schedule A details issued, we then insert a Place-holder Schedule A within the 5500 report.
- This lists the policy, the carrier/vendor and policy dates.
- Page four of the Schedule A (at the very bottom) provides a space to relay notes to the DOL. In this section we would specify that the vendor refused to comply with the Schedule A requests.
Bottom line: No actions or details need to come from your client. We keep the ownership of the information on the shoulders of the vendor. The placeholder does its job to acknowledge that the benefit is part of the ERISA Plan.
Feel free to share your thoughts and experiences on this topic with Ann McAdam at [email protected]. We very much value hearing from the front-lines.
The following items could push the voluntary benefit out of Safe Harbor and make it an ERISA Voluntary benefit:
- Selecting an Insurer
- Negotiating the terms and linking coverage to Employee Status
- Using Employer’s name/Associating policy with other Employer’s policies (i.e. OE material).
- Recommending policy
- Saying ERISA applies
- Conducting more than permitted payroll deductions
- Allowing Employees to pay premium through ER’s Cafeteria Plan on a pre-tax basis
- Assisting employees with claims and disputes.