Separate 5500s and Audit Required?

[Guest jsga]

We have a plan that offers 3 group medical choices, one self-funded plan and 2 fully insured plans, self-funded dental, vision, flexible spending account, group life, supplemental life, dependent life and supplemental dependent life, and group legal. The employee is given the choice of cash if opting out of the plan. Pre-tax payroll deductions are taken for the benefit choices made and the employer funds the remaining premium and funds the claims. As claims are incurred funds are provided from the employer's general assets to a separate account that the claims are written on so it is more of a fund as we go plan. Question is, can we file one 5500 and just a Schedule F and is an audit required. There were more than 100 participants at the beginning of the plan year. Calendar year 2000 was the first year of the plan and we have filed an extension. There is one plan document describing the coverages, benefits, and provisions of the plan. Help!

[JohnCheek]

This sounds like a combination welfare plan/fringe benefit plan, and the reporting requirements are a combination of welfare and fringe reporting, but they are not too onerous.

First, since there is one plan document describing all of the benefits, and I assume "eligibility" for all types of benefits is uniform, it looks like one 5500 would be appropriate. If eligibility for different benefits were based on different criteria, you might have more than one plan.

On 5500 page 4, check both box 8b and 8c.

The single filing clearly needs one Schedule F for all of the cafeteria-type benefits, everything that is offered as cash-or-choice-of-benefits on a use-it-or-lose-it basis. Schedule A is not needed to report insurance data on these benefits.

To the extent that you have other types of benefits, they represent the welfare plan; for this, it appears an audit is not needed, because funding and benefits are a combination of unfunded and fully insured. Your 5500 will need Sched. A's for each "welfare plan" insurance contract, Sched C for service provider data (and change of accountant), Sched D if applicable (but probably not), Sched G if any prohibited transactions, and no H or I.

If you want to discuss the benefits or filing requirements in more detail, feel free to call me.

John Cheek, CPA NY: 716-226-2621

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