Frequently Asked Questions

If you implemented a short plan year when it might not have been needed, it would generally be prudent to maintain the short plan year for that plan, as a retroactive amendment could be very complex and affect a number of laws. It would also be prudent to consult with the party responsible for filing Form 5500s on behalf of the plan sponsor.

The Effective Date of the plan refers to the Wrap Welfare Benefit Plan, which incorporates all other welfare plan benefits (along with insurance contracts and other relevant documents) into a single plan. It does not refer to the effective dates for individual lines of coverage. The effective date of the Wrap Plan depends upon whether this is a new plan or an amendment and restatement of an existing plan. Please note that, because Wrap documents can be created for existing plans, the plan is not new simply by virtue of the creation of Wrap documents.

If you have an amended and restated plan (which would be the case, for example, if a plan sponsor is merging all types of coverage such as dental and life into the existing group health plan), the effective date could either be the date the group health plan was first offered, or the date on which any specific plan provisions became effective.

If this is a new plan (i.e., the plan sponsor wants to have a clean break from past practices), the effective date would be the date the Wrap documents are created.

The Wrap Plan Year does not have to match the Wrap Effective Date. If this is a new plan (i.e., the plan sponsor wants to have a clean break from past practices), the plan sponsor can choose any twelve-month period for the Plan Year. The Plan Year does not have to match any insurance contract year or the open enrollment period or the employer’s fiscal year. Generally, however, most employers select a January 1 calendar year as their Plan Year, which matches the date of their open enrollment selections. If a Plan Year does match an insurance contract year and the insurance contract year changes, there is no need to change the Plan Year.

If this is an amended and restated plan (which would be the case, for example, if a plan sponsor is merging all individual coverages such as dental and life into the group health plan), the plan sponsor should generally continue to use the group health plan's existing Plan Year (which could have already been established through a prior document or practice, or in a previously filed Form 5500).

Please consult with benefits counsel for individualized guidance if you are unsure of which option applies to your plan, as Wrap360 cannot offer legal advice.

A plan can have a short plan year when there is a legitimate business purpose, including for the first plan year, a plan termination, or a merger of two plans that have conflicting plan years.

Generally speaking, a short plan year is only used for new plans. Most employers with new Wrap plans or new PCP plans choose to use the calendar year as their Plan Year simply for administrative convenience (or to match their open enrollment dates). Often, they create a short plan year to enable them to align their Plan Year with the calendar year.

• For example, an employer initiates its employee welfare benefit plan as of June 2017, but wants to have a calendar year plan year. It could then have a short plan year from June 1, 2017, through December 31, 2017, followed by a twelve-month plan year beginning on January 1, 2018. All subsequent plan years would be calendar years until there is another legitimate business purpose for creating a short plan year.

If you have an amended and restated plan, the plan sponsor should generally continue to use the existing Plan Year (which could have already been established through a prior document or practice, or in a previously filed Form 5500).