Our national webinar, Health & Welfare Plans: Roadmap to ERISA Compliance brought over forty questions to better understand ERISA, Plan Documents, and the Form 5500s. Here are samples of those questions and their corresponding answers discussed to broaden your understanding of ERISA reporting and disclosure.
| Focused on Benefit Plan Structure | |
| Question | Answer |
| If an FSA benefit plan had a 501 plan number and a Section 125 Plan document prior to a WRAP document being in place, does the ERISA plan number need to be a unique number ex 502 for the newly established WRAP? | If there is a health FSA that is subject to ERISA and is included in the wrapped plan, then the plan number for both should match. If the FSA will not be included in the wrapped plan, then they would have a separate plan number. |
| Can you explain why a trust would be needed for a level funding arrangement? | Level funding typically requires funds to be held in a reserve to manage when the claims exceed a certain threshold. If a vendor holds those funds on behalf of the Plan Sponsor, there is likely the need for a trust. If a health insurance carrier such as Aetna holds the funds, ERISA makes an exception and does not require a trust. If there is uncertainty, best to seek the advice of an ERISA attorney for a level funding benefit plan. |
| Why not err on the side of caution and assume that all voluntary plans are subject to ERISA and 5500 filing? Is there a benefit to not reporting? | Including non-ERISA benefits can create ERISA requirements where none exist and increase the compliance responsibilities for the group. |
| Plan Documents | |
| Question | Answer |
| If a group, such as a manufacturing company that does not provide work access to a computer, can it still provide materials such as the SPD and SAR electronically? Will they be compliant? | There are specific rules regarding an SPD Distribution electronically. If an employee does not have regular access to a computer through their everyday work, it would likely be recommended that the employer provide a physical SPD to those employees. Alternatively, they can request the employee to sign a written consent notice to receive materials electronically. Feel free to reach out to ERISA Desk team for more information at ERISADESKInfo@ascensus.com. |
| Are there a certain number of participants needed for a Wrap Plan Document to be required? | The requirement of ERISA to maintain an official written plan document does not have an employee enrollment threshold like the Form 5500 filing. Generally recommended is for all employers who offer benefits to employees to establish an official written plan document. The Wrap document satisfies this requirement of ERISA while also combining all benefits under one ERISA Plan to allow for one Form 5500 filing annually. |
| What is the difference between the Wrap Plan Document and an SPD? | The “wrap” package includes two items: the official written plan document and the Summary Plan Description (SPD). The plan document is written in legalese language and does not need to include required participant notices. The SPD is a summary of the provisions of the Plan, is written in language that is easier for participants to understand, and it does include required participant notices. |
| Health and Welfare Form 5500s | |
| Question | Answer |
| Does a Stop Loss need to be included in the 5500 filing? | Stop Loss is insurance on the Employer and generally is only included in the Form 5500 filing when the Plan is a Trust where benefits are paid out of the Trust’s plan assets. When employee contributions are used to cover the premium, we encourage for an ERISA attorney to review and advise. |
| Does a single employer need to list all their subsidiaries and their corresponding EINs? | If they are under common ownership, they would not be listed within the Form 5500 filing. However, they would typically be included in the ERISA Wrap Plan Document. If they are a MEWA, a list of the participating employers would be attached to the 5500 reports before it is efiled. |
| When determining the number of participants, are dependents to be included? | For determining if the threshold has been met, you would count current and former employees enrolled on the first day of the ERISA plan year. Dependents would not be included. |