On February 22nd, Wrangle held a national webinar on the life of the ERISA plan. We went over the needed framework for an ERISA Plan, the wrap plan documents, and other areas such as self-funded benefits, the various types of Form 5500s, annual notices, and Non Discrimination testing. During our presentation, several questions were asked by our attendees. We have compiled those questions and answers for you to have as a reference. If you have any questions on this material, please send an email to Ann McAdam at amcadam@wrangle5500.com.
| Plan Documents | ||
| Question | Answer | |
| 1 | Do affiliated organizations need to have their entity names listed, or just information stating that there are affiliated organizations part of the plan? | Typically, the legal company name and FEIN would be detailed in the plan document. |
| 2 | Is this correct: A fully-insured plan does NOT need a comprehensive plan document? | No. Fully-insured plans need the wrap plan document/ the ERISA plan document. Please read Q&A #3 below for more details on plan documents. |
| 3 | Can you please clarify the self-funded plan document? Are you indicating they need a wrap which would be for all the coverages, as well as an additional plan document? Is there another plan document for the self-funded plan? | Self-funded plans are subject to ERISA on their own. Unlike a wraparound plan document, the plan documents for a self-funded plan do not just fill in the gaps that are not addressed by insurance documents. They are comprehensive plan documents that set forth all of the plan’s terms including details on the benefits provided (e.g. schedules of benefits). Self-funded plans are not subject to state insurance laws, so should follow ERISA rules in order to comply with the plan documentation requirements.
If the self-funded plan is incorporated into the wraparound plan it should have the same plan number and plan year as noted in the wrap plan document. If the self-funded plan has a different ERISA plan number, it is seen as a separate ERISA plan in the DOL’s eyes. ERISA plan documents and the Section 125 Cafeteria plan document are two different types of plans with different purposes and different regulations – ERISA is regulated by the DOL and Section 125 plans are regulated by the IRS. The ERISA attorneys we work with believe they should be maintained separately, especially since POP plans are not subject to ERISA. [cafeteria plan documentation is required because it’s a funding mechanism that takes away tax money from the IRS, while the ERISA plan documents are required to protect the benefits and rights of the participants. Another point to remember is that ERISA and IRS definitions of eligible plan participants are different as cafeteria plans have stricter rules on dependents and owners vs. employees]. For purposes of pre-tax benefits under a cafeteria plan, only the Health FSA is subject to ERISA and should be included in the wraparound plan documents. Our wraparound plan documents will wrap the Health FSA. |
| 4 | If a group has a self funded STD Plan, how do we populate/create the SPD for this Group? Does it need to be included in the wrap? | Often self-funded STD benefits fall under a payroll practice and would be considered Non-ERISA. It would therefore not need the SPD. However some do list all the benefits in the SPD. We would encourage further details on the fact that it is a payroll practice to be noted to prevent confusion. It is always best to consult with an ERISA attorney to review and advise. |
| Form 5500s, Schedule As, and Benefits | ||
| 1 | For 5500’s, if only one line of coverage has more than 100 enrolled participants, will the 5500 only list the one benefit? | Yes, this is correct if they do not have a wrap document in place.
If there is a wrap document in place with multiple benefits bundled, then the 5500 would include all benefits/policies included under that wrap, even if only one line of coverage had more than 100 enrolled. |
| 2 | Do Severance plans require Form 5500s? | Yes, and since they are often self-funded, there are no Schedule As. We would check off the general assets box on page two as well as list the benefit code “4I” for severance. |
| 3 | Does a benefits app provider need to provide a Schedule A if they have a telehealth component attached to the app? | Potentially. If the Telehealth benefit is considered fully-insured then the Schedule A would be needed for the 5500 filing.
Please see our Status of Benefits for more information. |
| 4 | How are you defining small groups versus large groups? | In the Form 5500 world, small is less than 100 enrolled participants in a plan, and large is 100+ enrolled. |
| 5 | Do concierge benefits such as Alight and Healthcare Blue Book need to be reported in a Form 5500? | We have seen these types of benefits included in wrap documents and thus 5500 filings before. An ERISA Attorney would be able to determine for sure if the benefit is subject to ERISA.
Please see our Status of Benefits for more information. |
| 6 | Is PFML, like MA PFML subject to ERISA? | State mandated disability and FML are usually Non-ERISA. MA has an interesting provision that allows employers to set up plans that may be subject to ERISA, so it is best to seek legal counsel. |
| 7 | Are text/online mental health services also subject to ERISA when they are provided to the employee, paid 100% by the employer? | Yes, they can be. This type of benefit is one of those gray areas and could be considered an EAP type benefit. It is always a good idea to consult with an ERISA Attorney to determine if the benefit is ERISA reportable.
For additional insight, please see our Status of Benefits for more information. |
| 8 | For 5500 filing, how do you know when the wellness program needs to be included? Is it only when they provide medical care like blood draws and physicals? | First, you need to reference the wrap plan document to see if wellness is part of the ERISA Plan.
If it is not listed, but is a benefit offered to plan participants, then it may be a standalone benefit and you will need to check if it meets the criteria of being under ERISA, and if it met the reporting threshold. Wellness is often characterized as providing medical care even if it is just “diagnosis or preventive.” The DOL in its letter to Joseph S. Dunn (Nov. 17, 1993) noted that the term medical, “should be construed narrowly to apply only to “benefits of a medically remedial nature.”” It is still best to ask for an ERISA attorney to confirm to know for certain. If it is under ERISA then you need to proceed to review its details: Is it provided by the Plan Sponsor as a self-funded benefits? If yes, then it would not require the Schedule A and the benefit code “4A” would be checked to note if health is part of the plan and general assets on page two would be checked to signal that there is a self-funded benefit. For fully insured wellness benefits, yes you need a Schedule A to be included. At times wellness vendors can be resistant in providing the needed documentation. If this is the case, Wrangle will insert a placeholder Schedule A. |
| 9 | Do we need to request a Schedule A for both the LTD plan as well as the embedded EAP? | Often in this situation the embedded EAP will not be spelled out in the Schedule A. We just need to know that the EAP exists in the embedded LTD benefit and will note it within the Schedule A of the 5500 report. |
| 10 | Do level funded plans with less than 100 enrolled need to file a 5500? | As long as the plan is not a Trust or MEWA, an ERISA plan that does not have 100 employees plus ex-employees/COBRA enrolled as of the first day of the ERISA Plan year wouldn’t be required to file.
Wrangle associates level-funded as a type of self-funded benefit unless instructed otherwise. |
| NonDiscrimination Testing | ||
| 1 | A. Can you explain the testing for group life (over 50K)?
B. What if the life benefits have a carve out for execs with a substantially higher benefit, and other employees get a low flat benefit amount? |
A. Most group term life carriers do set their plans up to be nondiscriminatory. But there is an eligibility test to show the plan doesn’t favor key employees and a benefits test.
B. It will probably depend on how many execs are key employees (officer earning $185K, 5% owners, 1% owners earning more than $150K) Here is a good resource to learn more: https://buck.com/nondiscrimination-testing-of-group-term-life-insurance-an-overview/ |
| 2 | For a plan that offers several medical options, is only their H.S.A. plan tested or is NDT for all of the medical plans? | The NDT would be for all the self-funded medical plan (Section 105h) options. Fully-insured medical plans and the HSA would only be tested as part of the POP under Section 125. |
| 3 | How does testing impact municipalities? | The IRS doesn’t have any carveout for nonfederal governmental plans. Therefore, all code section testing would apply. |