On September 12th, Wrangle presented our national webinar, “Demystifying ERISA Compliance 2.0: Wrap Plan Documents, Complex 5500s and More.” During our presentation, we received scores of questions that we answered. We thought all would benefit from receiving the information to enhance your understanding.
| Q&A Session Scroll Down to Three Sets of Questions: Plan Docs and MEWAs, Form 5500s and ACA |
||
| Questions Focused on the Plan Documents and MEWAs | ||
| Question | Answer | |
| 1 | Do indemnity plans require a Wrap Plan Document? | If we are talking about hospital indemnity, it will generally be subject to ERISA, and should either be included in the Wrap Plan Document or the benefit documents should be reviewed to ensure they comply with ERISA. |
| 2 | Do the carrier certificates need to be included when sending out the Wrap Plan Document to employees? | The carrier certificates are incorporated by reference in the SPD. If enrollees receive these documents at enrollment in a benefit, there is no need to send them to participants again with the SPD delivery. |
| 3 | What’s the difference between the Plan Document Amendment and a Summary Material Modification (SMM)? | The Amendment updates the details/provisions of the original Plan Document and requires a signature. The SMM updates the Summary Plan Description and is to be distributed to the Plan Participants. |
| 4 | Are Minimum Essential Coverage (MEC) plans included in a Wrap Document? | Yes, these are often included in the Wrap as they are typically subject to ERISA. |
| 5 | If an SPD can be provided to satisfy the Wrap Plan Document, for an employer under 100 and no requirement of a 5500, why do they need to do a Wrap Plan Document? What circumstance would it ever be requested in? | The Employee Retirement Income Security Act of 1974 (ERISA) requires that a plan sponsor maintain official written Plan Documents describing the terms and conditions of its welfare benefit plans. All employer welfare plans, except government and church plans, are subject to these reporting and disclosure requirements of ERISA. These Wrap Plan Document and Summary Plan Description (SPD) requirements apply to all employer-sponsored health and welfare plans regardless of size (there is no 100-participant exemption similar to the one for Form 5500 filings). |
| 6 | Can a MEWA exist for disability/life insurance benefits or just medical? | Yes, a MEWA Plan can include all Health & Welfare benefits. The difference would be that the MEWA plan that includes Medical would need to file the M-1 form. If the MEWA Plan did not include Medical, then the Form M-1 would not be required. |
| Are there other compliance actions filings required for a life and disability MEWA? | They still need to attach the list of participating entities and their EIN. Non-medical multiple employers do not need to file the M1. | |
| 7 | Why doesn’t an SPD satisfy the official written plan document requirement? You said that an SPD can be provided so why is a Wrap Document required for employers under 100? | The term “SPD” is often utilized by the insurance carriers and do not generally include all the requirements of ERISA to qualify as an ERISA Plan Document. |
| The Wrap Plan Document can satisfy the requirement of ERISA to maintain an official written plan document and the SPD is what is used as the instrument to communicate plan benefits, rights, and obligations to participants. | ||
| 8 | I think you said plan sponsors can have separate SPDs for the same plan depending on different classes? I thought since plan participants are entitled to all plan information, there shouldn’t be multiple SPDs for the same plan. The argument could be made that a plan sponsor is hiding information – for example when they want to offer richer benefits to a certain class of employees. Your thoughts? | A client might want to consult with their ERISA attorney, but we have always allowed multiple SPDs for one plan. As long as the plan meets nondiscrimination compliance, we don’t believe that there would be an issue. |
| 9 | Do all MEWA’s have a trust fund? | No. Many do though. We would encourage for an ERISA attorney to review as we suspect those that don’t may need to have the Trust. When funds are segregated out of general assets of the participating employ and go to the unrelated Plan Sponsor, a trust is often required. |
| 10 | Is there such a thing as a CAA Plan document for self-funded clients? | Consolidated Appropriations Act of 2021? If so, we do add CAA language in our wrap plan documents. |
| 11 | What needs to be included in a Plan Document for a non-ERISA plan (e.g. like a church plan)? | Certain governmental, tribal governmental, and church plans are expressly exempted from the Employee Retirement Income Security Act (ERISA) requirements. This exemption relates only to ERISA itself. Health plans maintained by such employers, although exempt from ERISA, may be required to comply, pursuant to the Public Health Service Act (PHSA) and other laws, with federal requirements for health plans like those for ERISA health plans. These include, among others, COBRA requirements virtually identical to those found in ERISA; the ACA requirements; HIPAA requirements; and numerous other mandates. |
| 12 | If I am working on producing a client a Wrap Plan Document for a plan year 1/1/2024, and I am just producing it now, 9/2024. Is this considered backdating the Wrap Plan Document? | Preparing a Wrap Plan Document within the current plan year is permitted. Backdating in prior years is not. For instance, if you realized you needed a Wrap Plan Document in 2018, created one today and had it signed as 1/1/2018, this would not be permitted. This is falsifying the document which can be viewed as a criminal offense. |
| 13 | If the employee contributes to the stop loss, will the stop loss need to be included in the Wrap Plan Document? | Properly informing the Plan Participants on how their contributions are allocated would need to be specified in the Wrap Plan Document. We would encourage to include these details. Many consultants do believe that stop loss insurance will need to be added to the ERISA plan documents if the employer requires the employees to pay for a portion of the stop loss insurance premiums. |
| Form 5500s | ||
| 1 | How can we amend a filing where the MEC plan was left out of the wrap document? | The Wrap Plan Document and the Form 5500 are to match. If the MEC was omitted in the Wrap Plan Document, it is then a standalone benefit. If it met the reporting threshold to report a Form 5500, you might have delinquent filings. |
| 2 | Can a MEWA exist for disability/ life insurance benefits or just medical?
Are there other compliance actions filings required for a life and disability MEWA? |
Yes, a MEWA Plan can include all Health & Welfare benefits. The difference would be that the MEWA plan that includes Medical would need to file the M-1 form. If the MEWA Plan did not include Medical, then the Form M-1 would not be required.
They still need to attach the list of participating entities and their EIN as a PDF to the Form 5500 report. Non-medical multiple employers do not need to file the M1. |
| 3 | Is it better to include the stop loss schedule A or exclude it if a group isn’t sure? Is there a risk with over reporting? | Including the Stop Loss Schedule A could cause employees to litigate that reimbursements from the stop loss insurance are their assets and not the assets of the employer. Good rule is to check if the contract is with the employer or with the plan. |
| 4 | If the EAP is a value-added service that is tied to Life or LTD, and is free, does it need to be reported in the 5500? | We recommend including the value-added EAP in the Form 5500 filing by including the benefit code 4Q and on the Schedule A. It is also recommended to include that in the Wrap Document as well. The EAP benefit is generally considered ERISA Reportable. |
| 5 | Are level-funded medical plans shown on a Schedule A? | Level-Funded benefits are considered self-insured for purposes of the Form 5500 filing. They would follow the same process as self-insured benefits: check off general assets under the funding and list the benefit code appropriate on page two. A Schedule A would not be included. |
| 6 | So if a group doesn’t have a trust, they shouldn’t file the Schedule C from their TPA for their self-funded medical plan? | A Schedule C is only included if there is a large trust where a service provider received $5,000 or more in fees. Schedule Cs are very much reviewed by the DOL. You don’t want to include a Schedule C unless you absolutely need to do so. |
| 7 | I have a question regarding a Vision Schedule A. I have a carrier stating they don’t create it, but we typically obtain them for other carriers. What is your thoughts are on this? | If the benefit is ERISA-reportable, then a Schedule A is required. If the carrier refuses a placeholder Schedule A is inserted acknowledging that the benefit is part of the plan. A footnote would be added on page four of the Schedule A citing that the carrier declined to provide the details. The responsibility of the Policy data on the Schedule A rests on the carrier. |
| 8 | Should voluntary accident and/or voluntary critical illness be reported? These seem to be a grey area | They are in a gray area as some voluntary benefits reach safe harbor and are not reported. However, if the Plan Sponsor endorsed the benefit (slide # covered this in detail) and if it is considered ERISA Reportable, we recommend to include in the Wrap Plan document and Form 5500. Best practice is to seek the advice from an ERISA attorney. |
| ACA | ||
| 1 | Why are we still required to file 1095s?
I read that we are no longer required to file with our tax returns. Does that mean the Employees are no longer required but the Employers are still required to send it to the employees? |
It is true that individual’s don’t really need the 1095C Form anymore for their own tax filing; however, the form still informs the individual that they had an offer or not and had coverage or not. So the form to the individual is really just informational at this point. The need for individuals to have their 1095C form went away when the individual mandate portion of the ACA was eliminated. That said, employers still MUST create the forms and submit them to the IRS as the Employer Mandate portion is alive and enforced. Also, some states do require the employer file forms on the state level too. |
| 2 | If we offer benefits to all employees, and consider them all full time, do we have to track hours? | For full-time employees that are offered benefits, the employer does not have to track their hours. The key is you consider every employee to be full time and you offer benefits to all employees |
If you have any follow-up questions or need further assistance, feel free to contact Ann McAdam at amcadam@wrangle5500.com.