Did you know that Form 5500 is a basic requirement under ERISA laws?
Do you know what a Form 5500 actually is, or ERISA for that matter? No, well, you are certainly not alone. So let's take a moment to review.
ERISA
According to the U.S. Department of Labor, ERISA, or the Employment Retirement Income Security Act of 1974, "is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry." ERISA laws were established to provide protection for the individuals who are covered by the plans.
Form 5500
Form 5500 was developed by the U.S. Department of Labor, Internal Revenue Service, and the Pension Benefit Guaranty Corporation. The form is intended to satisfy annual reporting requirements under Title I and Title IV of ERISA and the IRS Code. The form is a requirement under ERISA and disclosure rules. Fillings must be submitted annually to the Employee Benefit Security Administration (EBSA) for Retirement Plans starting with the Plan Number 001, and Health & Welfare Plans starting with Plan Number 501.
What is on Form 5500?
There is a lot of information provided about employers and their plan offerings. This is not a comprehensive list, but it does show the wide range of data collected through the form:
- Employer's address & phone number
- Broker/Consultant information
- Total number of employees for the plan year
- Total covered lives for the plan coverage
- Carriers, TPAs, and other service providers
- Premiums paid and renewal dates
- Funding and benefit arrangements
The list goes on... and on...and on.
Who is Subject to ERISA?
Plans that are generally subject to ERISA are:
- Group Health Plans
- Dental & Vision Plans
- Life Insurance Plans
- HRAs
- FSAs
- Disability Plans
- Prepaid Legal Plans
- Telemedicine Programs
There are additional plans but certain restrictions apply.
Who is NOT subject to ERISA?
As with any type of plan or policy, there are exceptions to the rule. Here are a few of the plans not subject to the ERISA requirements:
- Government Plans
- Church Plans
- HSAs
- Section 125 Pop plans
- Sections 129 DCAP
- and a few others
Which Plans Must File?
All ERISA plans that do not meet the small plan exemption must file. This applies to the typical ERISA Welfare Plans mention above in "Whos is Subject To ERISA." The Small Plan Exemption only applies to plans with FEWER than 100 participants, not including spouses or dependents. This exemption, however, does not apply to Trust Plans or MEWAs, also known as a Multiple Employer Welfare Arrangement.
Who Must File?
This one is pretty simple (shocking, I know!) Under ERISA, the Plan Administrator is FULLY RESPONSIBLE for filing form 5500s. The Plan Administrator is typically the employer or an individual designated by the employer. This is not the same as a TPA, benefit administrator, or claims administrator.
If the designated person responsible for filing fails to do so, the Department of Labor will notice. The potential consequences for noncompliance are tough! Penalties will be assessed for any failure or refusal to file, including non-filing, late filing, or incomplete/deficient filing. Adding insult to injury, there is no statute of limitations, these penalties can be applied at any time for any year. We are not talking a bit of change either. The penalties range from $1,100 to $2,233 PER DAY and are cumulative. In the most extreme cases. the plan administrator may be held criminally liable for ERISA violations.
Excuse Me What?
Yes, we know this is all confusing. If you read our blogs, you know I am quite regularly confused with the acronyms, the financial terms, and government lingo. Nevertheless, we are here to help. Medcom has a highly trained staff of compliance experts including three JDs. If you are experiencing trouble filing your 5500's or would like advice on how to move forward in a more positive, less "I'm scared of going to jail" direction next year, please reach out to our Health & Welfare Compliance department. They certainly know how to help and guide you and your business to safer, more secure ground for the future.
