Prospecting with the 5500

With a new year comes the push for you to bring in new clients. Don’t forget that the Form 5500 is an excellent tool to help in prospecting. It quickly highlights the main factors of a Prospect’s Plan(s) as well as pointing out errors and compliance issues. A producer who can swoop in with informed questions for a prospect will highlight the fact that the basics of their plan are not just understood, but rather the producer is in the position to assist…The producer will then be considered as an ally in the challenging employee benefits world.

Here are a series of common questions and guidelines that the producer can raise that can show areas in need of further conversation and consideration:

Participants

• What source for the number of enrolled participants are you using to determine if a 5500 is required to be filed?
  • If a Schedule A was used for the beginning count, this is not accurate – Schedule As only report enrolled count at the end of the policy period. Best to use the first month of the Plan year’s carrier billing that shows enrollment counts or a census report.
• Have you included Dependents when determining to file the Form 5500?
  • If yes, this is incorrect. Only subscribers: enrolled active or former employees are to be used.
• There was a big drop in the participant count at the beginning of the Plan Year vs End of Plan Year, however the COBRA Count is left blank. Are there any COBRA participants?
  • Many forget to report on COBRA subscribers enrolled in the medical, dental and vision benefits.

Funding

• Only Insurance was checked. Are there any self-funded plans? Is there a FSA or HRA benefit for health?
  • If Self-funded benefits are in place, general assets must to be checked on page two of the Form 5500.
• Trust was indicated, along with a self-insured medical but no Schedule A appears for Stop Loss. Do you report Stop Loss for the Trust?
  • Stop Loss is to be reported on a Schedule A under a Trust. (If it was reported without a trust, this is incorrect most of the time.)
• You don’t have a Trust Plan, however, the Schedule C was included. Were you instructed do so?
  • Schedule Cs should not be included for a self-funded benefit. Schedule Cs are used to report fees paid for services for the Trust plan.

Voluntary Benefits:

• Do you offer voluntary benefits? Do you report them in your Form 5500?
  • Many are misinformed that voluntary means that the benefit is not to be reported. Even if the employee pays 100% of the premium, the benefit may still be required to be reported in the 5500. The determination is based on endorsing. For instance if you allow the voluntary benefit premium contributions to be deducted through your Section 125 Plan, meaning the contributions are withdrawn with pre-tax dollars, you may be endorsing.

Plan Documents

• I see that you bundle all of your benefits under 501. Do you have a Mega-Wrap Plan Document to support this approach?
  • Many overlook the need for the Wrap Plan Document to be in place. Without it each benefit that meets the reporting threshold is to have its own separate Form 5500 filing.
• Are the appropriate plan documents available if the DOL scheduled an audit?
  • The first set of documents requested by the DOL are ERISA Plan Documents.
• If a plan participant asked to see the Summary Plan Description (SPD) of the ERISA Plan Document is this readily available to meet the request?
  • If a Plan Participant asks for a SPD and it is not provided, the DOL can fine $110 per day and multiply by the number of days late.

Coming to Wrangle for Assistance:

These are just a small handful of the questions to ask. There are several other areas to consider and review. If you ever need assistance on reviewing a prospect’s report to determine if there are compliance issues and questions to ask, feel free to reach out to Wrangle for assistance. Please reach out to Ann McAdam at amcadam@wrangle5500.com.

As for the DOL…

By the way, the DOL learns valuable attributes from 5500 filings, particularly on self-funded plans. They report their insight and findings annually to Congress and the public. Wrangle’s April blog will be summarizing the latest annual DOL report.