ERISA and the Internal Revenue Code demands that several major reports or items of disclosure be prepared for each plan or funding vehicle.
- Annual Report
The so-called 5500 series describes the plan’s characteristics and is provided to both the IRS and the Department of Labor.
- Summary Annual Report
This report is for plan beneficiaries and is a capsule of the Form 5500.
- Summary Plan Description
This item is more commonly referred to as the plan booklet. It is prepared for the plan beneficiaries and describes in understandable language the plan benefits and operation.
- Tax Filings
These are for the IRS and deal exclusively with trust filings and plans offering certain fringe benefits (premium option plan, e.g.).
There are three ways of administering the self-funded plans:
Third party administrator
Employer or self-administrator
The administrator’s duties are rather extensive, reflective of the truth that such self-funded plan is, in effect, a miniature insurance company:
Accounting (employer, plan, trust are entities which require accounting and/or auditing)
Actuarial (COBRA premiums, funding levels, reserves, etc.)
Managed care-related (utilization review, arranging for benefit carve-outs, provider-assumed risks, etc.)