Schedule A

[Lori Friedman]

1. A welfare benefit plan has stop-loss coverage. It's the plan's initial year. The PYE is 06/30/06, and the insurance contract year ends on 12/31/06.

2. Known - The plan administrator must check the "Insurance" box as a funding arrangement and segregate the stop-loss premiums on Schedule H, Line 2e(2).

3. Known - Schedule A is required. The plan administrator reports the information for the insurance contract year that ends within the plan year.

4. Not known - What happens when there's no Schedule A information? This is the plan's initial year, and the first insurance contract year won't end until halfway through the plan's second year.

The DOL software will do an edit check, notice the lack of a Schedule A, and issue a letter to the plan administrator. Is there any way to avoid the letter? Or, would you simply alert your client to expect a DOL letter, and then respond to it after it's arrived?

I can't get anyone at EBSA to return my calls. (The EBSA employees might not have a clean and simple answer.)

[Lori Friedman]

Well, the people at EBSA's helpdesk couldn't answer my question. I got transferred to someone at another DOL agency. I received some interesting and unusual instructions.

Prepare a Schedule A with no numbers. Provide the basic information on page 1 (insurance company name, EIN, NAIC code, contract number, etc.), but don't complete any of the financial items. Also, attach an explanatory statement to the return.

The DOL edit check software will search for a Schedule A. If there's no Schedule A, the plan administrator gets a letter. But, the software doesn't balk at a $0 Schedule A.

For the 2nd plan year and going forward, everything's ok. As specified in the instructions for Schedule A, simply report the information for the insurance contract year that ended within the plan year.