In today's BeAdvised, we turn to a former contributor of our sister publication, Employee Benefit News, Karrie Andes. Today, she's writing on two topics that never run short on blogworthy material: Form 5500 and the IRS. Enjoy, and be sure to share your thoughts in the comments.


I’ve worked with self-insured plans for years.  I feel I have an adequate knowledge base that keeps me in tune to the soft engine hum of operating my plan, legislation that affects it, and the industry overall. Leave it to the IRS to throw a wrench into my world. 

This past summer, I was down to the wire finishing my 5500s, along with all the other employers in the U.S.   It was the same old routine:   reviewing drafts, analyzing numbers, and tinkering with electronic signatures.  For me, this is the perfect time to compare my benefit financial statements to what’s reported annually.  I simply take out my spreadsheet, slot in the 5500 numbers for each benefit plan, and compare notes. Because I had a new preparer, I was executing the ole’ eagle-eye review on every number on the Form.  I noticed some of my plans and stop loss were not reported on the Schedule A (Insurance Information) or Schedule C (Service Provider Information).

A few emails later, I was plunged into a new discovery. Not all the finances and commissions are reportable.  According to the IRS, if your self-insured plans are handled with a trust account, everything flowing through it is reported. If the money is funneled through your own assets, only the fully-insured products need to be included. Now, read that again for me. The IRS basically says “Employer, if you’re paying for your health plan expenses with general assets, we don’t care to know the details.  But if you’re paying an invoice each month for a fully-insured plan, or if you’re using a trust account, by golly we want to know.” 

I am befuddled.  The monkey threw a wrench.  Why in the world would the IRS not require all the data?  Perhaps insurance companies, as an industry, do enough of their own reporting for the rest of us.     I’ve pondered on this for months and can’t figure out the logic.  Further, how could I have missed this? 

First, I admit I’ve never actually read the 63-page Form 5500 Instructions, not even when I’ve desperately needed sleepy reading material.  Secondly, I do believe that most firms who prepare 5500s just report it all as a matter of convenience.  Hat’s off to my new preparer for knowing their stuff. 

Honestly, this was a mellow moment for me.  If an employer is not in-tune with their commission arrangements or expenses on their plans, this creates yet another blind spot when driving.  Sometimes the carrier schedule information isn’t even delivered to the employer – it’s just mailed to the preparer, and that’s where the details lie.  The 5500 has always been a fantastic go-to source for looking under hood.  Now I find out, after all these years, it may be incomplete. 

It’s kind of like paying for a CarFax Report on a used car, and finding out later when the windshield leaks, the flood wasn’t reported. 

Next time my hubby asks me to grab him an allen wrench and I bring him everything but – a torque, a ratchet, a socket, or a monkey – it’s a good reminder that in the world of self-funding (and my own garage for that matter), I always have more to learn.

Karrie Andes, SPHR, CBP, is the senior benefits manager for PGi in Kansas City, MO. She’s also the chairperson for the upcoming February 2012 World Congress Self-Funding & Alternative Models for Health Benefit Financing Conference in Washington D.C. She can be reached at

This post originally ran on EBN's blog, Employee Benefit Views.

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