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multiple medical insurance carriers - 1 plan or many?


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Company offers two carriers for medical coverage. Each one has about 60 employees signed up. The sum just reached over 100 for 1st time as of 12/31/11 so the question is if there is a need for a 2012 5500. I see some plan sponsors file 5500-s for separate carriers as separate plans but I am thinking that this is one plan because they both offer medical coverage. Only difference is one includes dental and vision and the other does not. what is the general consensus on how to treat this? also, if combining the two carriers for one 5500, does there need to be a wrap document even though they offer the same benefit?

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  • 3 months later...

In this particular case there is no plan document, no SPD, and no Plan number since no 5500 ever filed. I would guess then proceed with getting plan document/spd requirements settled, and as you suggest, maintain both as separate plans so as not to have to file 5500's.

General conclusion is that each separate medical carrier can be considered its own plan for erisa purposes, even though employees can only choose one or the other.

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I have never seen anyone file a separate F5500 for each insurance company. Every F5500 that I see have multiple insurance companies and multiple products. I suggest that you browse through a few at www.freeerisa.com

The filing of a 5500 has no bearing or relevance to there being a Plan Document or SPD.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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GBurns - In order to file multiple insurance companies in one 5500, a wrap plan document is required. There are many companies that do not have such documents and therefore file their benefits separately. I work in a small plan market where the issue of 100 employees is very common and whether a company is required to file is a big issue, which is the source of my inquiry.

Here are a couple of examples of companies that file separately: 593472656, 650784737.

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I just took another look at a few companies who I know do not have a wrap document. They all had multiple Schedule As, one for each insurance company, and for those large enough, multiple Schedule Cs, one for each service provider.

I also do not know why you feel that a wrap document is required, but that is your choice.

I do not know where you even see mention of either "wrap document" or "plan document" in the Instructions or why you feel that that is of some relevance, but that is your choice.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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My understanding was that the 'wrap plan' document was required in order to file multiple welfare plans in one 5500. It can also help fulfill the ERISA plan document requirements which welfare benefit plan contract documents do not always satisfy. We use legal compliance tools for reference which detail these requirements and Im happy to have welfare plan discussion on this board which mostly focuses on retirement plans.

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Multiple welfare plans are not the same as multiple insurance providers/choices/programs/policies etc.

Insurance coverage is not a welfare plan.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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I think that we need a definition of a "wrap" document.

Is it a document for the employee welfare plan or is it a document for the cafeteria plan?

What does it "wrap" etc?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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If the Employee Benefits Plan has wording such as " This XYZ EBP will provide the following benefits: " Then it lists all of the various items Why is there need for a "wrap" document if the EBP has them listed and incorporated ?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Maybe that woudl allow you to file as one plan. I'm not sure. But you need an SPD for that "plan" and certificates of insurance are usually not SPDs. So you would have run afoul of the SPD requirement.

Or if you have converted your certificates of insurance to SPDs have you acted consistently with the notion of them being one plan or have you assigned different plan numbers and different plan names etc.

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  • 4 months later...

For what its worth, the EBIA ERISA Compliance Manual's view based on "discussions with DOL" is that absent a wrap DOL will consider each insurance policy a separate plan.

KJohnson - I do see this in the EBIA Manual - however, it also goes on to talk about an Employer who offers its employees a choice between a Health Insurance Option and an HMO. It says, without a wrap document, these two carriers would still be considered within 1 plan. Wouldn't this imply the answer to my original question above is yes, they are 1 plan? Only difference, which may not be relevant is that, in my case in question, neither option is an HMO, though as indicated they do not offer equivalent benefits (vision/dental in one not the the other).

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I see that in EBIA as well. They indicate that it might come down to a "benefit by benefit" determination. An insured AD&D plan and an insured group medical plan would definitely be separate plans unless somehow affirmatively wrapped into a single plan. But two group health contracts that offered the same type of benefit might be a single plan even if not "wrapped". If there is no employer designation, whether the fact that one includes dental and vision makes it a separate plan--I don't know.

I think employers have a good bit of discretion in how they define what is a separate plan and what is not as long as they document it and follow the rules with regard to the separate plans (separate SPDs, separate 5500's if required etc.). The EBIA manual mentions that an employer could document that each group medical benefit, PPO, HMO, HDHP etc. could be separate plans if it wanted to.

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Thanks for your follow up. I think I got it now. When individual medical options have greater than 100, they can be treated as separate plans with separate 5500 filings. However, that is not an option when looking at counts below 100 in which case they are treated as 1 for the purpose of 5500 filing requirements, whether or not they file as 1. To avoid filing because each medical option had under 100 would be to not fulfill filing requirements.

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None of the replies conditioned anything on employee count. Why do you?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Isn't this where it started? You initially posted "Company offers two carriers for medical coverage. Each one has about 60 employees signed up. The sum just reached over 100 for 1st time as of 12/31/11 so the question is if there is a need for a 2012 5500."

KJohnson pointed out. " But two group health contracts that offered the same type of benefit might be a single plan even if not "wrapped"" along with other observations.

So I wondered How you rationalized that you have 2 different plans if both are medical, which would mean that they are offering the same type of benefit.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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I will attempt to respond as to what I understand you are asking.

Ultimate conclusion was that if there are two medical options, when the sum of the ee's exceeds 100, there is a 5500 filing requirement. The EBIA manual still recommends preparing a wrap plan document to include the two carriers together for their 5500 filing.

Unrelated Conclusion - The EBIA manual presents that having multiple medical carriers does not alone mean they have to be filed together and takes the strong approach that any time multiple carriers are included in a 5500 filing, that there be a wrap around plan document prepared. It says that such separate medical carriers can still file their own 5500.

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