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The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA), in conjunction with the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC), publishes the Form 5500 Annual Return/Report of Employee Benefit Plan (Form 5500) and the Short Form Annual Return/Report of Small Employee Benefit Plan (Form 5500-SF). To satisfy annual reporting obligations under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code), employee benefit plan administrators complete either the Form 5500 (for plans with 100 or more participants) or the Form 5500-SF (for plans with fewer than 100 participants). These annual reports contain information on the general characteristics, financial condition, and operations of a plan.

Plan administrators that file the Form 5500 and certain Direct Filing Entities (DFEs) must include Schedule A (Insurance Information) as an attachment to their Form 5500. Schedule A filings report information on the insurance contracts covering participant benefits. Benefits include those associated with pension plans, such as investments and annuities, and those associated with welfare plans, such as health and life insurance.

In the report, researchers analyzed the most recent Form 5500 Schedule A filings, Form Years 2012–2016, and looked for changes in the population over the 5-year timeframe. The analysis provides a descriptive study of Schedule A reports and covers three topics: (1) population characteristics of the plans that file Schedule A and report on insurance contracts related to pension and welfare benefits, (2) key financial attributes of the welfare contracts reported on Schedule A, and (3) the population of insurance carriers associated with ERISA plans that file Schedule A for welfare contracts.

Key Takeaways

• Population of Schedule A Filers: The number of plans filing Schedule A declined over the period of study from 121,758 in 2012 to 115,580 in 2015. However, the number of Schedule A reports each plan filed increased from an average of 2.3 in 2012 to 2.5 in 2015.
• Agent and Broker Commissions and Fees: Welfare plans report insurance companies paying brokers via commissions more often than via fees (75% versus 30% of filings). Per covered person, smaller plans (plans with fewer than 100 covered persons), which report fees paid on Line 10e of the Form 5500-SF, pay more in broker compensation (commissions + fees) than larger plans.
• Premiums: Contracts covering health and prescription drug benefits have substantially higher premiums per covered person than any other type of contract (e.g., life insurance contracts). The median per-person premium for contracts that provide health benefits across all years is $4,614. 4 The median per-person premium for prescription drug contracts across all years is $1,963. But the median per-person premium for all other contract types across all years is $227.
• Largest Health Insurers: The five largest health insurers, as determined by the number of Schedule As on which they appear, cover 43% of Schedule As filed in 2015. These same insurers are also the largest health insurers in terms of the number of persons they cover for health contracts.

Citation

Brotsos, H., Langford, R., Moore, B., Urdapilleta, O. (2018). Summit Consulting. Analysis of Form 5500 Schedule A Data for Years 2012–2016: Final Version. Chief Evaluation Office, U.S. Department of Labor.

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The Department of Labor’s (DOL) Chief Evaluation Office (CEO) sponsors independent evaluations and research, primarily conducted by external, third-party contractors in accordance with the Department of Labor Evaluation Policy and CEO’s research development process.