Although companies are well aware that they need to file the Form 5500 for their retirement plans: 401(k), profit sharing, defined benefit and now 403(b) plans on a more detailed level, especially those with over 100 participants, many are not aware that there are also filing requirements for health and welfare plans.
What is a welfare plan?
For a welfare plan to exist (1) there must be a plan, fund, or program (2) that is established or maintained by an employer for the purpose of providing (3) the following benefits to participants and beneficiaries:
It is easy to have a plan, fund, or program. Any ongoing administrative scheme will satisfy this condition, even if there is no plan document.
Why should I worry about filing a health and welfare filing if I never filed one before?
Large penalties can be imposed if the employer is “caught”
I didn’t file previously and before I get “caught”, what steps do I need to take?
See “Delinquent Filing”
How many welfare plans do I have?
It depends. It is important to determine how many plans there are. As a matter of plan design, plan sponsors can offer benefits through various structures and combinations. For example, a plan sponsor could create (1) one plan providing major medical benefits, dental benefits, and vision benefits, (2) two plans with one providing major medical benefits and the other providing self-insured dental and vision benefits, or (3) three separate plans. Governing documents and actual operations should be reviewed to determine whether welfare benefits are being provided under a single plan or separate plans.
The fact that there are separate insurance policies for each different welfare benefit does not necessarily mean there are separate plans.
Some plan sponsors use a “wrap” document to incorporate various benefits and insurance policies into one comprehensive plan. In addition, whether a benefit arrangement is deemed to be a single plan may be different for purposes other than Form 5500 reporting. For example, special rules may apply for purposes of HIPAA, COBRA, and Internal Revenue Code compliance.
If my plan is under 100 participants, do I need to file?
A (1) welfare plan that (2) covers fewer than 100 participants as of the beginning of the plan year and is (3) unfunded, fully insured, or a combination of insured and unfunded is not required to file Form 5500.
Who is considered a “participant”?
“Participants” are:
Define an “unfunded welfare benefit plan”.
An “unfunded welfare benefit plan” has its benefits paid as needed directly from the general assets of the employer or employee organization that sponsors the plan. A plan is not unfunded if it uses a trust to hold plan assets.
Define a “fully insured welfare benefit plan”.
A “fully insured welfare benefit plan” has its benefits provided exclusively through insurance contracts or policies, the premiums of which must be paid directly to the insurance carrier by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members (which the employer or employee organization forwards within 3 months of receipt). The insurance contracts or policies must be issued by an insurance company or similar organization that is qualified to do business in any state.
When is my Form 5500 due?
The Form 5500 due date is the last day of the 7th month following the last day of the plan year. For example, the due date for a plan that has a calendar plan year (January 1 – December 31) is due on July 31st. If the due date falls on a weekend, then it is moved to the next weekday.
Can I get an extension of time?
The Form 5500 due date can be granted a one-time extension for 2 – 1/2 months if a Form 5558 is completed and submitted to the IRS on or before the Form 5500 original due date. For a calendar plan year, the July 31st due date can be extended to October 15th. Also, a Form 7004 – Corporate Tax Extension can be used to extend a Form 5500 filing 1 – 1/2 months if the plan year and corporate fiscal year are the same.
Do I need to file a Schedule C with my Form 5500?
A Schedule C is not required as part of a health and welfare plan filing that meets the conditions of the limited annual reporting exemption under 29 CFR 2520.104-44 or Technical Release 92-01 are not required to file a Schedule C. In general, these regulations provide relief for certain welfare plans from various reporting and disclosure requirements of Part 1 of Title I of ERISA, including, in the case of plans with fewer than 100 participants, the requirements to file an annual report and, in the case of a plan with 100 or more participants, the requirement to engage an independent qualified public accountant.