Plan document required for fully insured health plan covering more than 100 participants? Form 5500 needed?

[Lori Foresz]

Hi,

Sorry for the basic question, but I have been out of the welfare plan area for a few years. Our client received Schedule A information from Blue Cross showing the premiums paid and the number of subscribers for the period 6/1/02-6/1/03. The number of subscribers are over 100.

It is my understanding that a Form 5500 would need to be filed since the plan is fully insured and covers over 100 participants. A Form 5500 never hs been filed before, but they had filed for the POP plan through 2001 when the filing requirement for 125 plans still applied.

We asked the client for the plan document for the welfare plan so we could get the plan name, plan year and effective date. The client said they do not have a plan document that he is aware of.

Questions:

1) Are welfare plans required to have plan documents like retirement plans?

2) Am I correct that the plan needs to file a Form 5500. The client thinks they don't have a "plan", just a contract with Blue Cross. Is this possible?

Many thanks for anyone's help!

[Guest eafredel]

A written plan document is required. However, the written plan document(s) may include a contract with Blue Cross to provide health benefits on an insured basis. The written plan document also may include the summary plan description provided to participants and beneficiaries to explain their health benefits. The written plan documents also may include enrollment forms. You should try to identify each document describing the health benefits you provide and determine whether it is an "official" plan document.

[Lori Foresz]

Hi,

Thank You. So, if I understand you, the document may informally consist of an SPD or group booklets from the insurance carriers and may not actually look like a formal plan document for a retirement plan? I'm assuming SPDs would be required.

Also, do you agree that a Form 5500 would be filed? Are there types of welfare plans that are just arrangements and not actually plans required to file?

I'm thinking, no, but I thought it best to confirm.

Thanks!

[GBurns]

I do not think that that is what eafredel stated. The PD can include the SPD etc but the SPD is not the PD. A PD does not and should not informally do or contain anything, it is a required formal document and should be treated as such.

[Ron Snyder]

Pages 3 and 4 of the instructions for form 5500 are quite explicit about which welfare plans have to file and which ones are excepted.

[GBurns]

lgolden,

Re: Question (2)

There must be a written Plan.

Did you ask this employee of the client, Who and What authorized any employee of the company to:

1, Pay for employee health benefits?

2. Enter into a contract with BCBS or anyone else?

I cannot imagine BCBS not asking for an Adoption Agreement or Board Resolution etc.

[Guest eafredel]

Let me try to answer more completely:

1. ERISA requires that every employee benefit plan be established and maintained pursuant to a written instrument. This instrument must provide for one or more named fiduciaries with authority to manage the operation and administration of the plan. ERISA further provides that "Every emplyee benefit plan shall--(1) provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan and the requirements of this title, (2) describe any procedures under the plan for the allocation of responsibilities for the operation and administration of the plan,,,,,(3) provide a procedure for amending the plan and for identifying the persons who have authority to amend the plan, and (4) specify the basis on which payments are made to and from the plan." A health insurance policy between BCBSA and an employer may satisfy many of the basic ERISA requirements. (In addition, ERISA also contains a number of specific requirements for group health plans, including the continuation coverage provisions of COBRA ) However, it often is advisable to have a separate written document identifying the plan administrator, the plan year, setting forth an amendment procedure, and describing the basis on which premium payments are made. The separate written document may be a cafeteria plan. In addition, ERISA requires that participants be provided with an SPD. Many insurance companies provide certificates or booklets intended to constitute an SPD. Recent Department of Labor regulations specify in some detail the contents of a summary plan description for a health or medical plan. In the absence of a "formal" plan document, a court is likely to find that the insurance policy is the plan document. (If there is no insurance policy, the SPD may be the plan document.) At a minimum, I would ask the employer if it has a copy of the insurance policy and whether it has a cafeteria plan.

2. Generally, an employer with a fully insured medical plan with more than 100 participants is required to file a Form 5500.