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Major Changes Proposed to Form 5500







On July 21, 2016, federal regulators published a proposed rule that aims to modernize and improve the Form 5500 annual return/report that is filed by employee benefits plans. These proposed updates are important to employers because they focus on group health plans.


In particular, the proposed changes would eliminate the current filing exemption for small group health plans and require group health plans to complete a new detailed Schedule J (as well as any other applicable schedules). Currently, small welfare plans are exempt from filing Form 5500 if they have fewer than 100 covered participants at the beginning of the plan year and are unfunded, fully insured, or a combination of insured and unfunded.


The DOL, though, is proposing a new limited exemption as an alternate form of reporting for small, fully insured plans. Under this proposal, small plans would be required to only answer a limited number of questions on the Form 5500 and the new Schedule J. This limited filing would serve as an annual registration statement with basic identifying and insurance information.


Under the proposed rule, group health plans would have to complete the new Schedule J (Group Health Plan Information), which would report information about group health plan operations and ERISA compliance, in addition to compliance with certain provisions of the ACA. For instance, Schedule J would include information on how benefits are funded, what type of group health benefits are offered and detailed claims payment data.


In addition, proposed revisions to the Form 5500 would include the following updates:


·         Financial information—More reporting on alternative investments, hard-to-value assets and investments through collective investment vehicles;

·         Data mining—Conversion of more elements of the Form 5500 into data or information for data-mining and analytic purposes;

·         Service provider fee information—Updated fee and expense information for plan services providers; and

·         Compliance information—Additional reporting on plan operations, service provider relationships and financial management of plans.

The proposed changes, if finalized, would apply to plan years beginning on or after Jan. 1, 2019. Some form changes could be made earlier, though, depending on public comments and developments in the ERISA Filing Acceptance System (currently EFAST2).


To prepare for any potential changes, employers should monitor proposed changes to the Form 5500 and consider how these changes could affect them if implemented. For instance, businesses with small group health plans that were previously exempt may want to contact service providers to assess their options for Form 5500 fillings.


For more information on proposed changes, contact Brady, Chapman, Holland & Associates, Inc. today.




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BCH has a unique approach to advising our clients on how to control their Total Cost of Risk, not simply insurance cost. The Total Cost of Risk (TCOR) includes preventive, direct and indirect costs associated with operating a business. The BCH approach includes collaborating with our clients to create a long range written plan for controlling their TCOR .