Is a 5500 form required for a normally "unfunded" welfare pl

[Guest LTM]

Client maintains a unfunded welfare plan for payment of small medical and dental claim. Do the COBRA continuation requirements cause this plan to file a form 5500 if someone elects it? There are fewer than 100 employees in this situation.

If someone elects to take COBRA coverage, then the plan has now accepted contributons and thus becoming a "funded" plan, which requires a 5500 form. At least that's the way I read the 5500 instructions.

Anybody know a way out of this?

[JohnCheek]

I don't see this as a problem.

The exception for filing the 5500 for "under 100" welfare plans is a)unfunded, b)fully insured or c)a combination of unfunded and insured. For this purpose, "unfunded" means benefits are paid from the general assets of the employer/sponsor. Expressed another way, the Plan has no assets and there is no trust.

The rules allow for participant contributions towards the cost of insurance premiums, etc. As long as participant contributions are remitted to the insurance company timely (I think the limit is 90 days, but I'm doing this from memory), they do not cause the plan to be other than unfunded/insured, so a 5500 is not needed.

COBRA buy-ins should not be any different.

[Guest]

I agree with John, however, there may be a different answer if the plan is "funded" by employee salary reductions through a cafeteria plan.

[Kristina]

If the plan is "funded" by salary reduction thru a Cafeteria Plan, the Cafeteria Plan would file. Not the welfare plan with less than 100 lives.