Small employers are not exempt from ERISA
Almost all private-sector employers that have a welfare benefit plan for their employees are subject to ERISA’s requirements, with only the narrow exception of church plans, governmental plans and Indian tribal plans. This includes corporations, partnerships, LLCs, sole proprietorships, non-profits and most tax-exempt organizations.
This means that any plan that's subject to ERISA, regardless of size, must have a written plan document. Through the plan document, participants are notified of benefits they’re entitled to and their own obligations under the plan. Also, it provides guidelines on which to make decisions. For example, if an employee asks to enroll their domestic partner, the administrator should look to the plan document to confirm whether or not domestic partners are actually eligible for coverage.
Now, there is a small plan exemption from filing Form 5500, but not from having to have a plan document or from ERISA itself. Specifically, small unfunded, fully-insured, and combination welfare plans are completely exempt from the Form 5500 requirement. To qualify for this small plan exemption, a plan must have less than 100 covered participants as the first day of the plan year, even if it goes over 100 during the year. Non-employees like covered spouses or dependent children are not counted for form 5500 purposes, but all former employees on COBRA would be included in the calculation.
Thus, since most employer-sponsored health plans have to comply ERISA, they should make sure they’re correctly complying with ERISA’s many requirements (beyond those listed in this blog).
As always, we're here to help with your benefits compliance questions. Contact us below.