Demystifying the Details Needed to Set Up a Wrap Plan Document, H&W Form 5500 and NDTÂ
Our Demystifying National Webinar in February brought an assortment of questions from our attendees. Below are the top five on the Plan Documents and SPDs as well as the top eight for the Health and Welfare Form 5500s:
Q&A Session – Questions Focused on the Plan Documents and SPDs
1. Would including voluntary benefits within an employer’s benefit guide be seen as “sponsoring/endorsing” the plan?
Answer: Advertising the benefits in the open enrollment materials will likely cause the benefit to be subject to ERISA, as the action suggests that the Plan Sponsor has endorsed the benefit. Nevertheless, we encourage the Plan Sponsor to work with their legal advisor to best determine.
2. If the Third-Party Administrator (TPA) creates an account to hold the claims fund dollars on behalf of the employer, is that considered funded (a plan under a trust) or unfunded? This would be for a level-funded plan.
 Answer: The key objective is to determine if the account is segregated from the Plan Sponsor’s general assets. This could position it as funded which equates to requiring a trust.
Plan sponsors should consult with the TPA to see how the payments are arranged, because a TPA may arrange for a sub-account to a plan sponsor’s general assets to keep the benefit plan unfunded.
Overall if there is uncertainty, we encourage an ERISA attorney to review and advise.
3. A group has a voluntary benefit that they considered not under ERISA and did not include in their Wrap Plan Document. However, the employer has allowed pre-taxed dollars through the Section 125 Plan to cover the contributions/premium to the carrier. Does this remove the exemption and line up the benefits to be subject to ERISA?
Answer: Yes, adding these voluntary benefits to the cafeteria plan/Section 125 Plan (allowing the pre-tax dollars for the employee contributions) will most likely cause the benefits to be subject to ERISA.
4. Can you elaborate on the self-insured plan document? What is this?  An attorney advised me that the HRA can be mentioned in the medical plan SPD. No self-insured was needed. What is the difference?
Answer: Self-insured plans require their own comprehensive plan documents that set forth all the plan’s terms including details on the benefits provided (e.g. schedules of benefits). These documents are like the EOCs/booklets for fully insured benefits.
As for the HRA Plan: This self-insured benefit can be listed in a Wrap Plan Document and SPD by reference just like the EOCs/booklets. However, the HRA does require its own plan document and SPD (in addition to the Wrap Plan Document). It would list the same ERISA plan number as found in the Wrap Plan Document if it is bundled with the benefits.
If it is a standalone benefit outside of the Wrap Plan Document, it would need its own Plan number.
5. Is the broker supposed to help you with these compliance items? Or should we work with Wrangle directly?
Answer: The ERISA Desk team at Wrangle can arrange preparing Plan Documents/SPDs with either the broker or directly with the client. Our service agreement and payment are based per project. A broker can work directly with Wrangle for one client on one project and can choose to have another client work directly with Wrangle for another. We create flexibility and will support 100%. Please contact our Sales Director, Elaine Harvey at eharvey@wrangle5500.com to learn more.
Questions Focused on H&W Form 5500s
1. An employer is a religious entity and has opted out of ERISA and therefore never filed a 5500. However, their group medical plan is now part of a consortium. Are they required to file a 5500 for the plan year that they are in the consortium/association?
Answer: Consortiums can be established in more than one way. Below are two examples that can bring different results on what to expect for filing:
Option 1: A Consortium sets up a Plan and serves as the Plan Administrator. Those who join are participants of the Plan. If the employers are unrelated to each other and the medical benefit is offered/shared, this would likely be an Association Health Plan / MEWA. If the Plan is at the MEWA level, the MEWA files the 5500. The participants would not be required to file.
Option 2: Each participant of the Consortium adopts their own benefits and their own plan. They serve as their own Plan Administrator. If the religious entity is deemed exempt from ERISA, they would likely not file the 5500. However, we would encourage an ERISA attorney to review and advise in case there are unique aspects of the arrangement.
We would recommend consulting with the Consortium to better understand the benefit plan structure, the roles, who is responsible as the Plan Administrator, etc.
 2. For the Form 5500, is the participation calculated as of the beginning of the plan?
Answer: Yes, this is correct. The participant count to check is on the first day of the ERISA Plan Year. As a reminder, Schedule As report at the end of the policy period. You would not use a Schedule A as the data source as a result to determine if a Form 5500 report is required.
3. To determine if the reporting threshold has been met, would the enrollment count have to be 100 under one carrier contract, or can you add up the participants together amongst multiple carrier contracts?
 Answer: If there is a Wrap Doc in place, that includes all policies and carriers, then the participant count would be adding each unique participant in all lines of coverage to see if the 100 enrolled participant count has been met. If you don’t have the Wrap Plan Document, you look at each carrier contract as a standalone and add up each participant count per contract (A good practice is to look at the bill for the first month of the renewal period.)
Side note: Quite often the life policy or EAP benefit that is used to make this determination as these are noncontributory benefits, and all participants are enrolled.
4. When does the SAR need to be distributed if the Form 5500 has an extension through the Form 5558?
Answer: The distribution date for the SAR is two months from the 5500 deadline. If the Form 5500 is extended due to the Form 5558, the SAR deadline moves along with the 5500 extended deadline. For example, if the Form 5500 is a January 1 Plan year and its deadline is due July 31st, the SAR would have been distributed by September 30th. With the extension, the deadline for the Form 5500 is then moved to October 15th. The SAR deadline moves to December 15th, two months after the Form 5500 extended deadline.
5. We have a group of under 100 enrolled participants under a trust plan with a medical benefit. The trust files the 5500 for the medical. However, we have dental and vision benefits separate from the trust. These are not filing a Form 5500, because they are under 100 enrolled participants. This won’t raise any red flags, correct?
Answer: If the dental and vision are outside of the trust and are standalone benefits, you would not file a Form 5500 for either of these since they are under a trust. This does not create a red flag.
Important Note: The 5500 should be filed in accordance with the ERISA Plan or Wrap Document. If the Plan Doc notes that medical, dental, and vision are all under one single plan, then the 5500 should report all benefits. The Trust Schedule’s – the Schedule I for a small plan – would just cover the medical benefit. However, the 5500 would report all benefits under the Plan.
6. During a recent creation of a Wrap Plan, a client identified that an incorrect EIN has been used in the 5500 filings for many years. What will be needed with the next 5500 filing to correct the EIN and how do they address the error from years past?
Answer: The DOL does allow plan sponsors to file amended 5500s to correct any incorrect details, such as an incorrect EIN. As the EIN is a critical identifier, it is recommended to amend any impacted years.
Specifically, here is what needs to be conducted to amend the 5500: the old EIN will be listed on page two under section 4, and the new EIN will be listed on page one of the 5500; the box for an amended filing is also to be checked.
7. Are healthcare FSAs subject to 5500 filings even though they are self-insured, and should they be included in the Wrangle platform when filing 5500s?
Answer: Health FSAs do require Form 5500s if they are meeting the reporting threshold of 100 more enrolled participants on the first day of the plan year (If they are under a MEWA or trust they are to file regardless of the participant count). As a self-insured benefit, they are not to include a Schedule A. If this is a Health FSA-only plan, no SAR will be required.
Please note on the Dashboard if the Plan Sponsor has a Health FSA, especially if this is the only self-insured benefit. General Assets on page two of the 5500 need to be checked under 9A and 9B.
8. Is the broker supposed to help you with these compliance items? Or should we work with Wrangle directly?
Answer: Most current filings are handled between Wrangle and the broker. If we work directly with the client a separate agreement is required and different fees. Often Wrangle will work directly with the client for multiple-year delinquent filings especially if the current broker was not in place when the filings were due.
If you have any questions on this material, please reach out to Ann McAdam at amcadam@wrangle5500.com.