Large Self Insured Welfare Benefit Plan

[Guest sgwaddell]

We prepare Form 5500 for a large self insured welfare benefit plan (general assets of the employer) which has been exempt from the independent audit requirement through the use of a cafeteria plan. It has been our understanding that if COBRA premiums are the only "plan assets" there would be no trust requirement or audit required to be performed or filed with the 5500. In 2009 the plan administrator discovered benefits were paid on behalf of ineligible dependents and will request reimbursement from the participants. Will these recoveries constitue plan assets and thereby trigger the trust requirement and independent audit requirement?