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Should separate insurance contracts with less than 100 participants be combined and require a 5500?


Guest zia111
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My experience is with DC plans so my knowledge with welfare benefits is limited.

My client offers the following benefits to their employees:

* GTL policy end 1/31 - over 100 participants

* STD policy end 7/31 - over 100 partic

* Community Blue HMO with KHPW policy end 12/31 - 75 partic

* Keystone HMO with KHPW policy end 12/31 - 34 partic

* Select Blue POS and drug plan with KHPW policy end 12/31 - 22 partic

Question: the prior administrator prepared a 5500 for the GTL as plan #502 and one for the STD as plan #503. They instructed the client that it was not necessary to prepare a return for the health insurance benefits since none of the policies exceed 100 participants. Is this correct? I've seen returns that combined all benefits even though the policy periods were different. Is there some reason why these benefits were not reported on one 5500 and given one plan number?

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The question seems to be whether the benefits are intended to be a consolidated “plan,” or whether separate “plans” are being maintained? There is nothing in ERISA that would require that they be reported together, or anything that would prohibit it. It would really be up to the plan sponsor/administrator as to whether one or multiple plans are maintained. However, if they are all intended to be one plan, it would probably require the use of a “wrap document” to consolidate the insurance contracts into one, cohesive plan. Also, insurance contracts typically do not include all of the necessary language to comply with the document requirements of ERISA. (Even a plan consisting of a single, insured benefit may need additional documentation to comply with ERISA.) There have been other discussions of wrap plans on the message boards, so you may wish to conduct a search.

For what it is worth, I typically have not seen employers consider multiple medical insurance offerings (i.e., an HMO, PPO, indemnity arrangement) as separate health plans. They are usually considered as part of one plan. The treatment of other insured benefits (i.e., STD, LTD, life) would vary as to whether considered part of an overall welfare benefit plan, or stand-alone plans. Back when I was a consultant, we often proposed wrap plans as a way to simplify 5500 filings for multiple welfare benefits, and to correct prior filing oversights.

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