Benefits February 4, 2015

Managing Benefits Costs a Top Goal for Companies

Managing costs and maintaining employee productivity are top goals for companies, a Wells Fargo survey finds.
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A survey released by Wells Fargo Insurance reveals managing costs and maintaining employee productivity are the most important goals in both the short-term (12 to 18 months) and long-term (five years) for C-suite executives and benefit managers. Wellness programs will be a top priority for companies over the next five years, followed by coverage of family members, employee attraction due to benefit offerings, and employee retention due to benefit offerings.

Most companies have already made changes to their health benefit plans in 2015, with seven in 10 companies reporting they have made or are in the process of implementing changes for covering spouses, as well as to increase the percentage that employees must contribute to premiums. Another six in 10 companies have changed or are in the process of changing options for the type of plan offered. The survey found that most employers have not yet made changes such as moving from fully-insured to self-funded or using private exchanges, however, those decisions and offering a high deductible plan are the top initiatives currently under construction.

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Survey results show half of the companies that have considered or are considering a change in wellness offerings said they are doing so as a result of the Patient Protection and Affordable Care Act (ACA). Wellness is a strong focus for C-suite executives, with 93% anticipating an increase or improvement in the importance of wellness offerings. Statistics show 55% of employers will have implemented incentives and/or penalties in 2015 for wellness compliance.

“As the benefits landscape continues to evolve, employers face challenges and opportunities as they adapt to new requirements,” says Dan Gowen, national practice leader with Wells Fargo Insurance’s employee benefits national practice. “It’s a balancing act for many companies as they look to maximize employee productivity, retention, and morale while also controlling cost – a factor we expect to become even more important as companies prepare for the Affordable Care Act (ACA) excise tax in 2018.”

Gowen adds, “Employers who take a more coordinated approach to integrating wellness programs with their existing employee benefits and productivity solutions will be well-positioned to achieve growth and cost savings.”

The “Employee Benefits Trends Survey” generated 950 responses from C-suite executives and benefit managers from companies across the U.S. with more than 50 employees. The complete report is available here. 

Compliance February 4, 2015

IRS Shares Tips for Avoiding Form 5500 Scrutiny

The IRS revealed Form 5500 errors it found during various compliance projects, which could cause a plan to be selected for a compliance check.
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The Internal Revenue Service (IRS) says in many of its Employee Plans Compliance Unit (EPCU) projects, it finds plan sponsors enter incorrect information on their Form 5500 series returns or information reports.

The agency says it uses information on Form 5500 returns and reports to select cases for compliance checks. For the sponsor, entering incorrect information on the return or report, or leaving a field blank when there should be an entry, increases the likelihood that a plan will be selected for an EPCU compliance check.

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Examples of the types of errors found during recent projects include:

  • Plan Participants project – The IRS found sponsors incorrectly entered 0 for the number of participants or left that line item blank.
  • Termination project – Plan sponsors incorrectly marked their 5500 return to show they: 1) adopted a resolution to terminate the plan when they had not; 2) distributed all plan assets but did not mark the return as the final return; 3) claimed to have terminated the plan when it was not fully terminated; or 4) distributed all plan assets but did not mark zero assets at the end of the plan year. 
  • Fraud project – Plan sponsors incorrectly entered the fidelity bond amount or gave inaccurate/incomplete answers on questions about loss caused by fraud or dishonesty.
  • Hacienda project – Plan sponsors incorrectly entered the Puerto Rico-related pension feature code 3J on their 5500 return when they should have entered 3C.
  • Frozen Plans project – Plan sponsors entered pension feature code 1l, frozen defined benefit plan, on their 5500 return when their plan was not a defined benefit plan or frozen.

The IRS also found, during its Excess Deferral project, that 403(b), 457 or nonqualified plan elective deferrals were frequently and incorrectly coded as 401(k) elective deferrals (box 12, code D) on W-2, Wage and Tax statements. During its Simplified Employee Pension (SEP) Plans project, the IRS found incorrect reporting of rollover contributions as SEP contributions on Form 5498, IRA contribution information, in box 8 instead of box 2.

The IRS says plan sponsors that prepare the Form 5500 return or information report themselves should look at each line item and related instructions with fresh eyes. It warns plan sponsors not to copy line item entries from year to year without reviewing them carefully to ensure they did not make an entry on the wrong line item, put an entry in a wrong box, leave a line blank that needs an entry, or use an incorrect code.

When a third party prepares the Form 5500 return, plan sponsors should take time to review it and match answers to the form’s questions. The IRS recommends making sure providers have administrative procedures in place to prevent mistakes on the 5500 return and information reports. If a plan sponsor finds errors on a return or information report, it should fix them promptly by amending the return or filing a corrected information report.

More information is here.

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