Proposed Form 5500 updates likely to increase small market competition
The Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corp. proposed revisions to Form 5500 this week in an effort to increase enhance data mine-ability, modernize financial reporting and provide more information about group health plans.
The proposed revisions would update how service provider fees and benefit plans are reported. Small-group plans would have to begin submitting Form 5500s and even self-funded plans would also have to disclose information that they currently do not.
“The notion that every employer, regardless of size, will be required to submit is a huge development that will significantly advance our ability to provide data,” says Mark Smith, the CEO of miEdge, which provides data for insurance professionals using the 5500 forms. “There will probably be millions of employers that didn’t previously need to file that will now have to.”
With more data comes more transparency — and competition. As large groups’ data became more transparent, competition in the industry grew and led to changes in pricing. Now that smaller groups are entering the market, a similar outcome is expected.
“There’s a consistent balance between transparency and competition,” Smith says. “The more transparency that exists, the more competitive the free market becomes. This will only benefit the employers themselves.”
Yet the revisions are still just a proposal. With a plan year of 2019, they are subject to change before they become legal and implemented.
“We’re still some ways away from these proposed changes,” Smith says. “But I think this shows that the government is clearly looking for a lot more transparent information.”