Compliance Reminder
ERISA is a complex federal law, and employers should always seek guidance from qualified ERISA counsel or an experienced benefits consultant when applying these rules to their own plans. This content is provided for informational purposes only and does not constitute legal advice.
Important Note
Form 5500 filings are federal tax forms jointly administered by the Department of Labor (DOL) and Internal Revenue Service (IRS).
While brokers may help employers understand general filing concepts, they should avoid providing specific tax or legal advice. Employers should consult qualified tax or legal counsel to determine how filing requirements apply to their individual plan structure and funding arrangement.
Overview
The Form 5500 is an annual reporting requirement under ERISA and the Internal Revenue Code. It serves as a public disclosure and compliance document, allowing the Department of Labor (DOL), Internal Revenue Service (IRS), and Pension Benefit Guaranty Corporation (PBGC) to evaluate whether employee benefit plans are being operated and funded in accordance with federal law.
The filing provides key information about the plan’s size, funding, benefits offered, and administrative arrangements.
For most employers, Form 5500 compliance applies to their welfare benefit plans – such as medical, dental, vision, life, and disability plans – if they meet certain filing thresholds.
Who Must File Form 5500
Generally, ERISA-covered welfare plans must file Form 5500 unless they qualify for an exemption (explained below).
This includes employers that maintain:
- Self-funded or level-funded health plans.
- Partially self-funded arrangements (including level-funded arrangements).
- Fully insured plans combined under a wrap plan structure.
The plan administrator – (usually the employer) – is responsible for filing Form 5500, not the carrier or broker.
Understanding the 100-Participant Threshold and Funding Status
The most common question employers face is when Form 5500 filing becomes mandatory. The answer depends on two factors: how the plan is funded and how many participants are covered at the start of the plan year.
Fully Insured or Unfunded Plans
Most small and mid-sized employers offer fully insured health plans. These plans are typically also unfunded, meaning benefits are paid directly from the employer’s general assets (for example, the employer pays insurance premiums from its operating account and forwards employee payroll deductions to the carrier).
For these plans:
- Fewer than 100 participants at the beginning of the plan year → Exempt from filing if fully insured, unfunded, or a combination of both.
- 100 or more participants at the beginning of the plan year → Form 5500 filing required, even if the plan is fully insured.
Self-Funded and Level-Funded Plans
Self-funded and level-funded welfare plans are treated differently because they are considered funded under ERISA. These plans involve employer or employee contributions held for the payment of benefits, often through a claims account, stop-loss reimbursement arrangement, or trust.
As a result, self-funded and level-funded plans must always file Form 5500, regardless of participant count. There is no small-plan exemption for these arrangements.
Counting Participants
Participant counts are based on covered employees only – not dependents or spouses.
- Count each employee who is enrolled in any part of the plan.
- Do not count dependents or spouses.
- If multiple welfare benefits (medical, dental, vision, life, disability) are combined under a single wrap plan, you generally count total participants across all benefits together, not separately for each benefit line.
Because of this, many employers choose to establish a wrap plan to consolidate all benefits under one ERISA plan. This allows for one plan number, one SPD, and one Form 5500 filing, reducing administrative work and ensuring consistency across all benefits.
Form 5500 Variations
Form 5500 (Standard)
- Used by large plans (100+ participants) and all funded arrangements.
- Requires Schedule A (for insured benefits), Schedule C (for service providers), and other schedules depending on the plan type.
Form 5500-SF (Short Form)
For smaller plans that:
- Have fewer than 100 participants,
- Are fully insured, unfunded, or both, and
- Meet simplified reporting criteria.
This version is rarely used for welfare plans, as most small welfare plans are exempt rather than eligible for the SF form.
Form 5500-EZ
Applies to certain one-participant retirement plans (like owner-only 401(k)s).
- Not applicable to welfare benefit plans.
Exemptions for Small, Fully Insured Health Welfare Plans
A health welfare plan is exempt from Form 5500 filing if it meets all of the following:
- Fewer than 100 participants at the start of the plan year;
- Fully insured, unfunded, or a combination of both; and
- No separate trust established to hold plan assets.
“Unfunded” means benefits are paid directly from the employer’s general assets, rather than from a separate fund, like in a self-funded plan.
Example: When an employer pays monthly premiums to an insurance carrier and employees pay their share through payroll deductions, the plan is typically considered unfunded and exempt if under 100 participants.
Filing Deadlines and Procedures
Form 5500 filings are due:
- By the last day of the seventh month after the plan year ends (July 31 for calendar-year plans).
All filings must be submitted electronically through the DOL’s EFAST2 system.
Filing Best Practices
To maintain compliance and minimize audit risk, employers should:
- Verify whether their welfare plan meets the 100-participant filing threshold each year.
- Use a wrap plan to simplify reporting across multiple benefits.
- Coordinate with carriers, TPAs, and ERISA counsel to ensure all required schedules (especially Schedule A forms) are included.
- Review filings annually for accuracy and timely submission.
- Retain filing confirmations and supporting documentation for at least six years.
- Consult qualified tax or legal counsel for full compliance with ERISA law.
Key Takeaway
The Form 5500 is a core component of ERISA’s disclosure and oversight framework.
- Employers with 100 or more participants in a fully insured or unfunded plan must file annually.
- Self-funded and level-funded plans must file regardless of size. Using a wrap plan, counting participants correctly, and coordinating with qualified ERISA professionals are the best ways to ensure compliance, avoid penalties, and maintain transparency in plan administration.