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March 3, 2010
Note: This article was originally published in the Feb. 17 special edition of In the Know.
BCBSIL Sending NEW Reports Regarding ERISA Form 5500 Filings [Group Markets]
(The information below relates only to customers who are required to file an ERISA Form 5500. Please inform your clients this week about the pending mailing. You can disregard if none of your customers are required to file an ERISA Form 5500.)
As you’re aware, Blue Cross and Blue Shield of Illinois (BCBSIL) has communicated to all of our group customers that beginning with the 2009 Plan Year, the Department of Labor, the Department of the Treasury, and the Pension Benefit Guaranty Corporation have published new requirements pertaining to the ERISA Form 5500 report.
To assist your customers in complying with the new regulatory requirements regarding the types of reportable “indirect monetary and non-monetary compensation,” BCBSIL will send two new reports to customers who are subject to the ERISA Form 5500 filing requirements. Customers should start receiving these reports in the mail within the next several weeks. These new reports are in addition to the original ERISA Form 5500 Information Report that has been sent annually and will be mailed separately. The content and the timing of the original ERISA Form 5500 Information Report have not changed.
Prior to the mailing of the two new reports, a letter will be sent to customers providing them with additional information about the content provided in the new reports.
Following are details about the new reports, which will be mailed together:
ERISA Form 5500 Supplemental Information Report
The 2009 Supplemental Information Report will contain an estimate of non-monetary compensation in the form of meals, entertainment, gifts and meetings provided by Health Care Service Corporation (HCSC), a Mutual Legal Reserve Company, including Dental Network of America, Inc. to customers and producers in relation to the customer’s business.
This report will be automatically sent to Prospective Premium group customers with more than 100 enrolled employees, all Retrospective, Minimum Premium, Cost-Plus and ASO group customers, as well as any other group customer that received an annual ERISA Form 5500 Information Report last year. Excluded from the mailing will be any group customers who have previously communicated that they are ERISA exempt.
The amount of non-monetary indirect compensation included in the Supplemental Information Report will be an estimated amount. It will not be the exact amount spent on each customer or on each producer relative to each customer. The actual amount spent per customer or per producer may be greater or lesser than the estimated amount shown in the report. Expenses may be allocated to a customer or to a producer even if none was actually received. In some cases the actual amount may be zero.
The estimated non-monetary compensation will be calculated by first aggregating the non-monetary expenses associated with customers and producers by block of business (Small Group, Large Group, Labor, etc.). The block of business totals will be divided by the number of enrolled lives in the block. The resulting amount will be the Average Expense per Enrolled Life for the block. Each customer will be associated with one of the blocks of business. The customer’s estimated amount will be calculated by multiplying the customer’s enrolled lives by the Average Expense per Enrolled Life for the block of business in which the customer is classified. Customers with fewer enrolled employees will receive smaller non-monetary expense totals and customers with more enrolled employees will receive larger non-monetary expense totals. The detailed description of the calculation will be listed in the footnote to the Supplemental Information Report. An estimation methodology is allowed for reporting purposes per the Department of Labor guidance on the revised legislation. (Note: Expenses with a unit value of less than $10 were excluded from this report.)
The indirect non-monetary compensation provided by HCSC for miscellaneous gifts, meals, entertainment and meetings will be reported to the customer as a single line item per recipient (customer and producer(s), if applicable). There will be no itemized expenses and no change to the calculation of the previously reported Special Commissions.
2009 ERISA Disclosure Information Report
The 2009 ERISA Disclosure Information Report will be sent to ERISA Group Customers that have purchased Minimum Premium, Cost-Plus funded plans, or self-insured (ASO) services. This information will also be available, upon request, for customers with other funding arrangements. The 2009 ERISA Disclosure Information Report will be included in the same mailing as the 2009 Supplemental Information Report.
The 2009 ERISA Disclosure Information Report contains information about Health Care Service Corporation, our corporate structure and the companies it uses to assist in delivering services to our group customers. In the past, much of this information was provided to these customers through a variety of channels, including marketing materials, Web sites, RFPs, contracts, reports, and other communications.
Included in the 2009 Disclosure Information Report is also detailed information that we believe meets the requirements for Eligible Indirect Compensation (EIC) under the new ERISA regulations. We are providing this information to these customers because a plan administrator’s reporting requirements on Schedule C to the Form 5500 Report are streamlined if the requirements for disclosure of EIC are met. Please note that the amounts that are included as disclosures in the 2009 Disclosure Information Report will NOT be included in the annual Form 5500 Information Report. The content and the timing of the original Form 5500 Information Report have not changed.
HCSC is required to provide certain information to our customer groups and they may receive more information than they actually need, depending on their specific Form 5500 reporting requirements. Your customers should consult their own advisors and legal counsel to determine how the new reporting requirements may apply to their organization.
If your customers are required to file an ERISA Form 5500 and have not received the new reports by the end of March, or they need more information, please contact your BCBSIL account representative.
See FAQs for more detailed information.
Review sample employer letter with Form 5500 Supplemental Information.
Review sample employer letter with Form 5500 Supplemental Information and 2009 ERISA Disclosure Information Report. |
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