Self-Funded Dental welfare planIs an audit required?

[oriecat]

Self-funded Plan established 11/1/02, plan year 11/1/02 through 10/31/03, to pay dental benefits for employees. Funds are kept in a separate bank account under employers name, but with "Dental" specified on the second line. Can that be seen as still being paid from employers assets, or would that be seen as a funded plan requiring an audit?

Thanks!

[E as in ERISA]

"Trust" issue is often grey. Does the SPD tell the employees that the benefits are unfunded or does it suggest that there is an account set up specifically to pay benefits for this plan?

[oriecat]

I can't find where it really specifies something like that. Only thing I see is in the ERISA Information it says "Trust Fund: N/A"

[E as in ERISA]

I think that most would treat the plan as unfunded -- with no audit required -- when the account from which benefits are paid is set up in the name/EIN of the employer. However, as you realize it is not a completely risk free situation. If it has been represented to employees that it is funded with a special account, it might be treated as a trust for some purposes. Or if for some other reason it is considered a trust under state law. But I don't think that there is really much enforcement effort against such arrangements -- particularly if there are no problems.

[oriecat]

Thanks for your thoughts, Katherine!