And looming around the corner…
September 29, 2016
Your small group customers, or said differently, your customers that are not considered an Applicable Large Employer under the Affordable Care Act, escaped IRS Code Section 6056 reporting requirements (Forms 1094 and 1095). But, under a requirement being considered by our friends in Washington, completing Form 5500 for all health plans would be required beginning with plan year 2019. When I say all health plans, I mean all health plans: both those that are self-funded and currently required to report on Form 5500. New to the game will be fully-insured plans, regardless of the number of enrolled participants. Yes, companies with only one or two employees enrolled would be required to complete and submit Form 5500.
This of course would impact thousands of SBAM members, tens of thousands of Michigan employers and millions of plans across the country. As proposed, the requirements for smaller employers may not be as extensive as they are for larger plans, but smaller plans will still have to file reports. That said, can you imagine the reaction from your customers, many/most of whom have no idea what ERISA means to them, let alone Form 5500? Additionally, who will help them with the Form and the cost to report…
This effort is part of an overall review of Form 5500 requirements currently underway in Washington by various federal agencies including the Department of Labor and Internal Revenue Service. The agencies are hoping that if approved they will begin gathering additional plan information leading to increased transparency, improved data mining and modernized reporting requirements, according to proposed Form 5500 revisions that were published in the Federal Register on July 21. The agencies are targeting the 2019 plan year for implementation.
According to a DOL Fact Sheet – A key objective of the proposal is to “help plan sponsors, fiduciaries, and participants and beneficiaries better understand their plans and plan investments.”
The agencies said they intend to:
- Modernize financial reporting to improve the reliability and transparency of investments and other financial transactions.
- Collect more information about group health plans through, among other things, eliminating the reporting exception for small insured and self-funded employee welfare plans.
- Enhance data mining and analytics tools through computer-processing capabilities.
- Improve service provider fee information.
- Improve compliance with the Internal Revenue Code and ERISA.
All that sounds just lovely for small employers doesn’t it?
Obviously, 2019 is a long way off and much can change between now and then. The comment period for this proposed regulation closes on October 4, 2016. If you would like to comment on how your small group customers will react to this change, now is the time.
Questions? Give the SBAM team a call today at (800) 362-5461.
Scott Lyon, Senior Vice Presudent
Jeff Thomas, Director of Agent Relations
Kellie Neirynck, Director of Agent Services