On July 21, 2016, federal regulators published a proposed rule that aims to improve the Form 5500 annual report filed by employee benefit plans.
Under the proposal, all ERISA-covered plans that provide group health benefits, regardless of size, would be required to file a Form 5500, including the new Schedule J (Group Health Plan Information) and any other applicable schedules. The proposed changes would eliminate the current filing exemption for small group health plans, and instead, small, fully insured plans would be required to answer a limited number of questions on the Form 5500 and Schedule J.
The proposed Schedule J would report information about group health plan operations and ERISA compliance, plus compliance with certain provisions of the Affordable Care Act (ACA). Because much of the information required to be reported under the ACA’s transparency-in-coverage-reporting requirement would be included in Schedule J, the DOL is considering whether completing and filing Form 5500 and Schedule J could satisfy a group health plan’s reporting obligations.
Other proposed updates to Form 5500 include:
If finalized, the changes would apply for plan years beginning on or after Jan. 1, 2019. Employers should monitor these proposed changes and consider how their businesses would be affected if they are finalized.
This April, the Department of Labor (DOL) published a final rule that expands on who is considered a “fiduciary” when providing financial advice to retirement plans and their participants. This expanded definition will take effect on April 10, 2017. Other provisions related to prohibited transaction exemptions for advisors will become effective on Jan. 1, 2018.
The final rule also covers health savings accounts (HSAs). The DOL determined that HSA owners are entitled to receive the same protections from conflicted investment advice as individual retirement account (IRA) owners. Individuals who provide advice on HSAs may be considered fiduciaries if their communications rise to the level of investment recommendations covered by the final rule.
The final rule clarifies that many common plan sponsor activities, such as providing investment educational information and communication with employees about distribution options, are not fiduciary investment advice.