Proposed New and Improved DOL Form 5500 Means Big Work for Small Employers

In July, the Department of Labor and the Internal Revenue Service revealed a proposal that would significantly increase the reporting obligations for small employers by way of a new modernized Form 5500. If the proposal for revisions are passed, changes will go into effect as early as January 1, 2019.1

So what has changed?

Under the existing reporting regulations, small employer-sponsored group health plans (under 100 participants) that are either fully-insured or self-insured, aren’t required to file a Form 5500. However, under the new proposal, all employer-sponsored group health plans that are subject to ERISA (including grandfathered and retiree plans) must file a Form 5500 – regardless of a plan’s size.2

What exactly does that mean?

Simply put, small employers will now have the “privilege” of complying with the identical benefits-administrative system reporting requirements that are imposed on much larger employers. That means having to provide a tremendous amount of detail about enrollees, plan administrators, commissions, premiums and claims paid – just to name a few. This will also create a huge demand for yet even more detailed information required by tax laws. What this boils down to is that small employers and brokers alike will be held responsible for every one of these new regulatory requirements

Oh, and then there’s Schedule “J” …

In addition to the proposed change, Schedule J – a new requirement that will mandate group health plans to disclose a plethora of detailed information about their plans such as the number of participants, how many are being offered and receiving COBRA benefits, and if the plan includes coverage for not only the employee, but spouses, children, and retirees – as well as many other details.

So what exactly is your point, Lindsey?

That both of these changes are going to impose a hefty burden on all parties involved – the employer, administration, and yes, even the broker. The fact is, the 5500 filing has historically been a burden that larger employers working with better than 100+ employees have had to bear, requiring that most brokers prepare (or pay for the preparation of) the schedules required to be filed along with the employer’s return. To remain in compliance, smaller businesses will now be required to follow suit.

The bottom line is that if these new regulations come to fruition, they’ll undoubtedly create a demand for leveraging the technology capable of managing it all. The way I see it, this new regulation – and the work behind it – is going to cost employers a lot more than the mere $100 filing fee.

Without the right dose of applied technology to better manage benefits administration tasks, monthly audits that include identifying impacted accounts and participation information, will have to be assimilated manually. That means brokers who are slow to onboard technology and who continue to pencil out reports and enrollment forms on paper, should expect to spend a lot more time at the office. To learn more about how hCentive can support brokers with the right benefits technology, click here.



1 The ACA Times


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