We offer employee-paid voluntary benefits. As the employer, we do not contribute to the cost of such benefits. Are we required to include them in the Form 5500 filing?

ERISA applies to group medical, dental, vision, health FSA, HRA, group disability, AD&D, and group term life. It can also apply to business travel accident plans, telemedicine, and employee assistance programs based on the program’s specific benefits. It does not apply to a dependent care assistance program (DCAPs/dependent care FSA), HSAs, transportation plans, and certain voluntary products.

Employee-paid voluntary products generally fall into that last category. ERISA contains an exception for voluntary plans, if they meet the voluntary safe harbor rules. They do so by meeting the following criteria:

  • 100% employee contributions (no employer contributions).
  • Employee participation is completely voluntary.
  • The employer does not endorse the program. However, the employer may permit the insurer to publicize the program to employees and the employer may collect premiums through payroll deductions and remit premiums to insurer.
  • The employer receives no consideration for plan implementation. However, reasonable compensation (no profit) is allowable for administrative services rendered for the plan.

There is additional guidance on how employers can be involved without endorsing the program:

  • Plan documents, including an SPD/wrap document, should not indicate that the plan is sponsored by the employer.
  • The employer should not encourage or urge participation in the plan.
  • Insurance presentations in the workplace are permissible.
  • Employer may notify employees of the existence of the plan, but should refer plan questions to insurer.
  • Maintaining eligibility lists and submitting enrollment forms to the insurer are permissible.
  • Employees do not contribute to the cost of coverage on a pre-tax basis (not included in the Section 125 plan).

If the voluntary plans meet this criteria, they would be exempt from ERISA, which means they would not be included in the Form 5500 filing, not included in the SPD or wrap document, not subject to the DOL claims and appeal procedures, and the employer would not have fiduciary obligations associated with the plan.

If the only criteria that applies to the plan is that the premiums are taken pre-tax, that alone may be enough to subject the plan to ERISA. Thus, an employer needs to carefully consider whether to include voluntary products in its Section 125 cafeteria plan.