Significant Proposed Changes to Form 5500

Posted August 12, 2016 Industry Insights, Expert Tips, Company News



On July 21, 2016, federal regulators released proposed regulations that seek to modernize and improve the Form 5500 annual return/report that is filed by employee benefit plans. Historically, the Form 5500 has been modified periodically to remain current with legal and market developments. Changes to the form have not been significant. These proposed modifications, however, are measurable because of their focus on group health plans. Particularly, the proposed rule would eliminate the current filing exemption for small group health plans and require group health plans to complete a new detailed schedule. In addition, the proposed changes would expand the Form 5500’s financial and compliance reporting, analytics capability and service provider information. The good news here is that the changes aren’t expected to apply until January 1, 2019.

Current State of Affairs for Small Welfare Plans

Most small employers have not been required to file the Form 5500 because of the Small Welfare Plan exemption that has been in place. These employers have had fewer than 100 covered participants at the beginning of the plan year; and have been unfunded (benefits are paid from the employer’s general assets), fully insured or a combination of insured and unfunded.

Proposed Changes for Small Welfare Plans

The proposed changes intend to eliminate the complete Form 5500 exemption for small group health plans. This would mean all ERISA-covered plans that provide group health benefits would be required to file a Form 5500, together with any required attachments and schedules, including a new Schedule J (Group Health Plan Information). This requirement pertains to group medical and prescription plans, dental, vision, life, accidental death & dismemberment, disability, some employee assistance plans (EAPs), and wellness programs. In some cases, other employer-provided coverage must be reported as well.

Limited Exemption

For small, fully insured plans that provide health benefits, the DOL is proposing a new limited exemption as an alternative form of reporting. Specifically, these small plans would be required to answer only a limited number of questions on the Form 5500 and the new Schedule J. According to the DOL, this limited filing is intended to serve as an annual registration statement with basic identification and insurance information.

The current exemptions from financial reporting on Schedules H, G and C for insured plans, unfunded plans and plans that are combination of unfunded/insured would continue to apply to all qualifying welfare plans, regardless of size. Also, the current exemption from financial reporting on Schedule G for welfare plans that cover fewer than 100 participants would continue to apply.

New Schedule J

This new schedule would report valuable information about group health plan operations and ERISA compliance, including compliance with certain Affordable Care Act provisions.

Proposed data required:

  • The approximate number of covered participants and beneficiaries and the number of persons offered and receiving COBRA coverage under the plan;
  • The type of group health benefits offered under the plan;
  • Benefit funding (i.e., health insurance, trust or general assets of the employer);
  • Whether one or more of the plan’s benefit package options are claiming grandfathered status under the ACA and whether the plan is a high deductible health plan (HDHP) or includes a health flexible spending account (FSA) or health reimbursement arrangement (HRA);
  • Whether the plan received rebates, refunds, or reimbursements from a service provider (such as a medical loss ratio (MLR) rebate and offset rebates from favorable claims experience), and, if so, the type of service provider, the amount received and how the rebates were used;
  • Detailed claims payment data, including information on benefit claims and claims appeals; and
  • Compliance information, including whether the plan’s summary plan content:encoded (SPD) and summary of benefits and coverage (SBC) comply with the applicable content requirements and whether the plan complies with federal coverage mandates, such as the parity requirements for mental health and substance use disorder benefits.

Other Proposed Changes

The proposed revisions should also enable the Department of Labor to access service provider fees, evaluate certain investment information and use the reported data for data-mining and analytic purposes.

Effective Date

The proposed regulations, if finalized, will apply for plan years beginning on or after January 1, 2019. Henderson Brothers, Inc. will be carefully monitoring the regulations and will be prepared to provide education and resources for the completion and filing of the new Form 5500 and its accompanying schedules.


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Please note that the information contained in this document is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This document should be reviewed by your legal counsel or tax consultant before use.

Additionally, the messages and content within the Pittsburgh Health Care Reform group do not reflect the advisory services of Henderson Brothers, Inc.