For Employers, Obamacare was just the first Act

By Bill Hill


The Affordable Care Act is almost fully implemented now and it looks as if no relief is forthcoming.  The second half of the show is just beginning as agencies write controlling regulations.  By the time the new Congress implements any repeal or reform, the new ERISA (Employee Retirement Income Security Act) regulations will begin.

For most employers, offering a health plan is nothing more than choosing a plan and paying premiums.  Even though ERISA has always imposed notification requirements on employers, most employers were simply not aware of the additional duties.  But once an employer decides to offer a group insurance plan to employees, they take on the responsibility of a plan sponsor and MUST follow the regulations or face penalties.  Since many employers had a waiver from reporting requirements, fines were typically rare.  Beginning in 2019, every plan sponsor will be required to file Form 5500 reporting information about their plan and confirming compliance with the regulations.

Last June, the Department of Labor (DOL) issued final regulations to Form 5500 filings for small firms.  These regulations re-enact a filing requirement which was suspended several years ago. This time however, the DOL is looking for substantially more information. They have created an entirely new schedule asking the plan sponsor to acknowledge they are providing all the required notices to employees at the prescribed times.  Schedule J will ask if you have given employees the following documents:

  • Summary Plan Description
  • Summary of Material Modification
  • Summary of Benefits and Coverage
  • COBRA -continuation of coverage
  • HIPPA -protection of personal information
  • Mental Health Parity
  • Women’s Health & Cancer
  • Newborns & Mothers Health
  • Affordable Care Act
  • GINA -Genetic nondiscrimination
  • Michelle’s Law
  • Medicare Part D
  • Notice of waiver from annual limits (Mini Med Notice)


These documents are typically distributed at the initial enrollment, during open enrollment and upon request. Since there are always modifications to the laws, the documents must also be kept current.  

Normal reaction time to group health insurance regulations has proven to be very slow and rightly so since the regulations in recent years have been changed before final implementation.  This should not be the case with Form 5500.  The DOL may not have required small employers to file Form 5500 but the requirement to distribute the plan notices above has always existed.  If your plan files for the first time in 2019, the DOL will know very quickly if your plan should have filed in 2018.  There is no statute of limitation on penalties for failures.

There has been a change in focus at the DOL, the warning signs are all around.  Some of recent changes:

  • Carriers have changed applications asking about ERISA compliance
  • DOL budget request for 2017 list “vigorous enforcement” as the first effort out of six listed to obtain compliance.  
  • DOL recently increases the fine for failure to file 5500 from $1,100 to $2,063 per day.  This increase is attributed to inflation.

The DOL knows almost all employers are out of compliance, there are approximately 7.5 million businesses in the US and there were only about 54,000 5500’s filed.  The DOL rightly assumes a good number of plans are out of compliance.

There are many services available to plan sponsors to help with compliance, some of them will even take responsibility in event of an audit.  If you are the fiduciary of a plan, this could be the worst possible time to watch and to see what happens.  If you wait until the end of the second act to find out how much the show cost, you will find it very expensive.