When do small health and welfare plans become subject to the Form 5500 filing requirement?

The annual Form 5500 filing must be filed by plan sponsors that are subject to ERISA, unless there is an exception. One such exception is the small plan exception that applies to small unfunded, fully insured or combination unfunded and fully insured health and welfare plans that cover fewer than 100 participants on the first day of the plan year. In other words, an employer only needs to file a Form 5500 for a given plan year if there were 100 or more participants on the first day of the plan year; exceeding that threshold mid-year is of no consequence until the following plan year. (For calendar year plans, the plan would have to have 100 participants on January 1 to be subject to the Form 5500 requirement for that year.)

Importantly, when counting participants for this purpose, employers must count all participants who are enrolled in the plan. Benefits that are wrapped together for plan document purposes (i.e., established with a single plan document) would need to have all distinct participants counted when determining whether the small plan exception applies. As an example of this, an employer with a wrapped plan consisting of medical, dental and vision benefits would need to file a Form 5500 if there were 75 medical participants, 40 dental participants (20 of whom are not on the medical plan), and 35 vision participants (10 of whom are not on the medical or dental plan); this is because the distinct participants in each group equal more than 100 participants in the wrapped plan (75+20+10=105).

Plan sponsors should work with their service providers to ensure their compliance with the Form 5500 annual filing requirements. Employers who have engaged in compliance failures with regards to the Form 5500 can explore the DOL’s delinquent filer voluntary compliance program.