SECT 125 Plan >100 employees eligible but less then 100 actually participating

[Guest Nancy I]

I am trying to determine if my client has to file a 5500. They have a Premium only Section 125 Plan. They have >100 employees eligible to participate in the health insurance coverage but less than 100 actually take advantage of the coverage.

I think this means that they have an unfunded welfare plan because the employee money via the Section 125 plan is treated as employer money.

My question is what is the definition of participant? Is it the eligible employees or the ones who actually elect coverage?

[SLuskin]

They actually have to elect coverage. Be careful, though. The employer could have a little group term life or group std policy that covers everyone. Those plans would still need a 5500.

[Guest Lynnemarie]

The premium-only portion is unrelated to filing a Form 5500. You would only be filing because it's a welfare plan (eg, medical, dental, std, ltd, etc.)

If the medical plan is fully-insured and no plan assets (i.e., no trust), you would just look at the # of participants at the beginning of the plan year and file if 100+.

We use actual participants to determine 100+ at the beginning of the yr. as this is what is reported on the Schedule A and frankly, makes the most sense for welfare plans.

[Guest msearle]

Please define all the elements included in a welfare benefits plan.