Frequently Asked Questions

If the number of participating employees is close to meeting the threshold for filing Form 5500, the Wrap SPD and Wrap Plan Document can create a situation where the plan may meet the threshold requiring a Form 5500 (which is generally where 100 or more participants are covered). The key here is that you are wrapping all the benefits into one Welfare Benefit Plan. So before this point, if you have a series of benefits and each had less than 100 participants, the company would not have to file a Form 5500. Once all the benefits are wrapped together into one Welfare Benefit Plan, the number of participants can change because they are all added together rather than having the benefits treated as separate benefit plans with their own unique participants as was done previously. The example below illustrates this principle:

An employer has a Wrap plan that has only medical and dental. The medical plan portion of the Wrap plan has 80 participants. The dental plan portion has 70 participants of whom 40 are also signed up for medical. That would mean the employer would have 80 participants from the medical portion and 30 more individuals who are only participating in the dental plan (the other 40 are already getting the medical portion). This would mean that the Wrap plan has a total of 80 plus 30, or 110 individual participants. This plan would have to file a Form 5500.

By contrast, if the number of unique participants does not equal 100, the plan would not have to file a Form 5500. For this reason, employers are strongly advised to consult with their benefits counsel and/or their TPA/Carrier for guidance on the creation of a Wrap SPD and Plan Document.