Health & Welfare 5500

[Earl]

Plan is a Medical/Dental health & welfare plan with benefits fully paid from the general assets of the employer. There is a stop-loss policy to protect the school.

The instructions for the exemption for filing Schedule C read (see below).

School is wondering if

• 2(b)(1)(i) AND 2(b)(1)(ii) both have to apply, or
• 2(b)(1)(i) by itself being true is enough to qualify for the exemption.

(Client says, “(b)(1)(i) does not end with “or” and we are 100% (b)(1)(i) so do we need a Schedule C?”)

Thank you for any help you can give.

Schedule C instructions:

Tip. Health and welfare plans that meet the conditions of the limited exemption at 29 CFR 2520.104-44 or Technical Release 92-01 are not required to complete and file a Schedule C.

29 CFR 2520.104-44 - Limited exemption and alternative method of compliance for annual reporting by unfunded plans and by certain insured plans.

(a) General.
(1) Under the authority of section 104(a)(3) of the Act, the Secretary of Labor may exempt an employee welfare benefit plan from any or all of the reporting and disclosure requirements of title I. An employee welfare benefit plan which meets the requirements of paragraph (b)(1) of this section is not required to comply with the annual reporting requirements described in paragraph © of this section.
(2) Under the authority of section 110 of the Act, an alternative method of compliance is prescribed for certain employee pension benefit plans subject to part 1, title I of the Act. An employee pension benefit plan which meets the requirements of paragraph (b)(2) or (b)(3) of this section is not required to comply with the annual reporting requirements described in paragraph © of this section.
(b) Application. This section applies only to:
(1) An employee welfare benefit plan under the terms of which benefits are to be paid—
(i) Solely from the general assets of the employer or employee organization maintaining the plan;
(ii) The benefits of which are provided exclusively through insurance contracts or policies issued by an insurance company or similar organization which is qualified to do business in any State or through a qualified health maintenance organization as defined in section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. 300e-9(d), the premiums for which are paid directly by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members, provided that any plan assets held by such an insurance company are held solely in the general account of such company or organization, contributions by participants are forwarded by the employer or employee organization within three months of receipt and, in the case of a plan that provides for the return of refunds to contributing participants, such refunds are returned to them within three months of receipt by the employer or employee organization, or
(iii) Partly in the manner specified in paragraph (b)(1)(i) of this section and partly in the manner specified in paragraph (b)(1)(ii) of this section;

[Flyboyjohn]

In preparing a 5500 for an unfunded welfare benefit plan (where there's no VEBA trust holding any plan assets):

1. No Schedule A (don't report with respect to the stop loss policy)

2. No Schedule H (no plan assets)

3. No Schedule C (since there are no plan assets there are no fees or expenses to report being paid from plan assets)

[Earl]

John - Thank you very much. Follow up, if you have time:

1. Company purchases, for a monthly fee, access to a PPO network. Would that kick in the Schedule A requirement? (Schedule A, Part III, box 8k, PPO Contract)

2. 5500 9a (funding arrangement) & 9b (benefit arrangement): Would "Insurance" would be checked for either?

- Stop-Loss: The employer has insurance, not the plan

- PPO Access: Not sure but answer to #1 probably answers this also. (Maybe this is not a new question and you answered it above? Just not sure.)

Thanks again.

Earl

[Flyboyjohn]

1. No, purchase of access to a network is not insurance

2. No, check General Assets

[Earl]

Thanks, again.