Proposed Form 5500 Changes & the new Schedule J: Big Changes for Small Group Health Plans
The US Department of Labor (DOL) has proposed changes to the Form 5500 and schedules that will affect ERISA Title I group health plans of all sizes, but small group health plans should be especially aware of the changes. Certain small group health plans (fewer than 100 participants) are currently exempt from filing the Form 5500 Annual Return if they are fully insured, unfunded, or a combination of these. Under the proposed Form 5500 changes, these plans would no longer be exempt and all group health plans covered by Title I would be required to file a Form 5500 including a new Schedule J, Group Health Plan Information. This new schedule would drastically expand the group health plans information gathered.
But the increase in public data comes at a cost to the private sector, according to estimates provided by the DOL . Approximately 6,200 small group health plans currently file a Form 5500, at an aggregate cost of $4.1 million, but under the proposed changes that number would increase to an estimated 2,158,000 small group health plans at an estimated aggregate cost of $227.9 million. See “Estimated Burden Change by Type of Filer”, here at page 47502, for data regarding the impact of the proposed Form 5500 changes on large plans and pension plans. Schedule J alone is estimated to affect an estimated 2,205,900 group health plans of all sizes and will increase Form 5500 filing costs by $202.6 million, while the total increased burden from all proposed Form 5500 changes for group health plans is estimated to be a 2.2 million hours and $241.6 million.
So what would be reported on the proposed Schedule J? Fully insured group health plans with fewer than 100 participants would complete a limited portion of Schedule J covering information on participation, coverage, insurance company, and basic benefits. The complete schedule would also require reporting of:
- How many individuals are receiving COBRA coverage through the plan
- Who may be covered under the plan (employees, spouses, dependents, and/or retirees)
- Whether the plan has a high deductible
- Whether the plan is an FSA or HRA (or has either as a component)
- Whether the plan is claiming grandfathered status under the ACA
- Information about any rebates or reimbursements from a service provider, such as a medical loss ratio rebate under the ACA
- Total premium payment and other details regarding stop loss coverage
- Information about employer and participant contributions (for plans not completing Schedule H), and whether any contribution forwarding was untimely
- Claims payment information, including:
- Counts of claims approved and denied, with a dollar amount of claims paid
- Counts of benefit claim appeals (and results of appeals)
- Counts of benefit claims adjudicated late
- Counts of pre-service claims appealed (and results of appeals)
- Whether the plan was unable to pay claims at any time during the year
- For plans with insurance policies, whether premiums were paid timely and whether any delinquent payments resulted in coverage lapse
- Self-reporting of compliance with various federal laws (including HIPAA, GINA, MHPAEA, and ACA)
- Whether the plan is subject to, and if so, has complied with the Form M-1 filing requirements, a question that would be moved from the current Form 5500
The deadline for submitting comments on the proposed changes is October 4, 2016. Changes to the form would generally be effective for plan years beginning on or after January 1, 2019.
Contact Benefits Notes for more information.