Form 5500-ology - What Businesses Need to Know

When a business decides to offer health and welfare benefits, there are some tax and legal obligations that are required to continue to provide those benefits to their employees.   One of those obligations is filing Form 5500. 

What is the Form 5500 and how can BASE® help?

The Form 5500 is an important part in ERISA’s disclosure and reporting.  It provides an annual report that includes the information about the health and welfare benefit plans that are being offered by the employer.   

The BASE® 5500 Solver helps employers, with 100 or more participants in the employer-sponsored health and welfare benefits, effectively prepare and file the Form 5500.  This comprehensive compliance solution generates custom compliant 5500 documents and is an innovative solution that allows for employers to do so electronically each year. 

What is the Form 5500 filling due date?

For most plans, the due date is the last day of the seventh month after the plan ends, typically July 31 for those businesses on a calendar-year plan.   Extensions are available if filed with the IRS before the July 31 deadline to avoid penalties.  If a business knows they will be late, an extension is filed, and two-and-a-half months are given to the company.   If a deadline is missed, there are penalty relief programs available to help minimize the penalties for late submissions. 

How much are the Form 5500 late filing penalties?

Late filers can be penalized twice – one from the IRS and one from the DOL.  The IRS penalties for a late filing without notice or qualified extension are $250 per day, up to a maximum of $150,000.  The DOL civil penalties are up to $2,586 per day with no maximum. 

How to file?

BASE® can help!  BASE® will gather the data from the employer then prepare and file the required Form 5500 forms and schedules for that unique client.  Upon review and approval, the signature step is next and then BASE® electronically files.  Once complete, BASE® will obtain confirmation of a successful filing.  Not only can an employer be ensured that these forms are handled properly, all data and forms are stored for later reference, and workflow is tracked. 

What are some of the common Form 5500 errors to avoid?

  1. Noting “zero” plan participants
  2. Excess deferral
  3. Plan termination
  4. Fraud
  5. Other pitfalls like incorrectly entering the EIN or providing too much information

Using a third-party administration to effectively prepare and file this form will help minimize plan-related workload and risk.  To learn more, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

Would an ICHRA be the Right Fit for Your Business?

The Affordable Care Act (ACA) changed the game when it changed the way that health insurance is purchased and provided to employees.  For decades, small businesses struggled to provide health benefits to employees due to continuously changing regulations and high costs.  This is where the Individual Coverage HRA (ICHRA) steps in.

The Individual Coverage Health Reimbursement Arrangement (ICHRA) allows for businesses to provide money, on a tax-free basis, to employees to use towards their eligible health care expenses. 

The BASE® ICHRA provides a health benefit that better fits the needs of both employers and employees.  It helps to streamline benefit options and cut the cost without reducing value when it comes to the health benefits an employer provides their employees. 

Would your business benefit from…

Cost Savings.

One of the biggest benefits of the ICHRA is that it can save businesses money on health insurance costs.  By not providing a traditional group health plan, the employees can choose their own individual health plan and be reimbursed a certain amount each month, saving both the employer and employee on health insurance premiums.

Increased Employee Satisfaction.

The ICHRA can provide employees with more control over their health care choices.  They get to pick a plan that fits their needs resulting in an increase in employee satisfaction.  Satisfied employees are more than likely to stay with a company that offers benefits that fit their needs.

Recruitment Opportunities.

Small businesses struggle when it comes to competing with larger companies who can provide a comprehensive health benefits package to their employees.  But by offering the ICHRA, small businesses can level the playing field by providing a more attractive benefits package. 

Budget Friendly.

The ICHRA allows small businesses to set a budget that fits their bottom line and makes it easier to predict their monthly costs.  While allowing them to contribute to their employees’ health insurance. 

Design Flexibility.

Long gone are the days of one-size-fits-all.  The ICHRA can be designed to meet the specific needs of the business such as set different contribution limits for different categories of employees. 

…then the ICHRA might be the perfect fit for your business. 

The ICHRA is a great option for small businesses wanting to provide health benefits to their employees.  To learn more, contact BASE® at 888.386.9680 or visit www.BASEonline.com.