Is a 5500 required?

[Guest QKAcked Up]

Client has supplimental benefits (cancer, etc.). The employees purchase individual policies on an after-tax basis and the premiums are run through payroll.

Is this an arrangement that would require a form 5500 filing? I'm pretty sure the answer is yes, but the client is arguing against it and making me second-guess myself. Any thoughts?

Thanks

[Guest JimD-EBR]

First question, are there > 100 participants? If not, no 5500. If so, then consider the following.

Certain arrangements may be excluded from ERISA (and therefore the 5500 filing requirement). Determining whether a plan is exempt requires that the plan meet the following four conditions:

•The employer does not make any contributions to the plan;

•Employee participation in the program is completely voluntary;

•The employer does not endorse the plan and limits its actions to (a) permitting the insurer to publicize the program to employees, (b) collecting premiums through payroll deduction, and © remitting premiums to the insure; and

•The employer does not receive any consideration (cash or otherwise) other than reasonable compensation for payroll administration related to the benefit.

There are numerous court cases which address the point of employer endorsement of benefits for determining if the benefit is an ERISA plan. Examples of points of consideration in the courts’ analysis of employer endorsement include:

•Who designed the program including eligibility and benefit?

•Who is the policyholder?

•Who distributes the SPD? Employer or Carrier?

•How are employees notified of the availability of the coverage? and

•Are the voluntary benefits included with other plans as part of the employer’s “cafeteria plan” of employee benefits?

If...premiums are paid through payroll withholding only; there is no eligibility requirement (available to all employees), and employer provides the opportunity to address employees to the carrier representative, but does not promote...then it would appear that no reporting is necessary.