My favorite part of the Form 5500 is the Schedule A. Here’s where we find the meat of health and welfare plans, the insurance contract disclosure and any brokers that sold the policy. Retirement plans will fill out this Schedule as well if they have an annuity contract. But for the purpose of this article, we’ll focus entirely on how to interpret a Schedule A on welfare plans. This article is an introduction, and you can check out its follow-up for building more nuanced searches.

Given how integral it is to either developing broker relationships or assessing competition, there’s a brevity of fields on the Schedule A. Never fear! Judy Diamond Associates has spent years supplementing the data and making connections so that you can work more efficiently and effectively. Below is a list of the most commonly requested data points.

Carrier Name

This is the carrier who is assuming the risk for the benefits selected on the Schedule A. You’ll only see one carrier per Schedule A. Fun fact, sometimes a sponsor name will show up in this field. I take this to mean they’re self-insuring the benefits.

Renewal Date

This usually is identical to the plan year beginning and end date. However, I like to point it out because sometimes you see a policy that ends mid-plan year abruptly. Always worth investigating!

Carrier Benefit Codes

This list of health and welfare benefits was determined by the DOL and has only 13 codes that run through the letters A – M. This is isn’t to be confused with the Form 5500s main page’s Plan Types descriptions (Section II, Field 8a) where a sponsor identifies what they’re offering to their participants. These codes are only for the policy in question and may provide a bit more detail than the Play Types. For example, in addition to the option to select Health a carrier could use HMO or select Health and PPO as a qualifier.

You might have noticed that JDA has 26 codes in their tools. That’s thanks to the next item, “Other” text entries.

The “Other” Text

When a carrier marks code M for “Other” they need to fill out a brief description of what that “Other” benefit includes. That text is searchable in The American Directory of Group Insurance, but we realized early on that it was going to be like hunting for a bent needle in a haystack. That’s because there are no guidelines on how to report benefits. So we created a process to identify the most frequently filed write-ins and created an additional 13 categories just for them. That way you’re not struggling to figure out if Accidental Death & Dismemberment was disclosed as AD&D, AccD&D, Accidental Death & portDismemeberment (that typo is intentional in this article but probably not on the policy), or any other variation you can imagine!

Lives Covered

The number of individuals covered by the policy. Caution, there’s potential for confusion here. The DOL’s instructions indicate on the Form 5500 that participants should be either current or former employees or members of the sponsor. The Schedule A’s instructions say to disclose who is covered by the policy. Some carriers interpret this as spouses, dependents, and participants because their lives covered count exceeds the Total Participants field.

Broker Name

In the fourteen years Managing Director Eric Ryles has been with Judy Diamond Associates, he’s never had a good night’s sleep. Why? Because the DOL has some fuzzy disclosure requirements on brokers. And it’s all thanks to this simple sentence:

What we see on 5500s is that there’s a broad interpretation of how to report that information. Maybe they list the individual but not the firm. Or perhaps it’s the firm, and no individual is registered (particularly common with the larger brokerages). But rarely do filers provide both an agent and the firm they work for.

Fortunately for you, Eric’s restlessness has become JDA’s restlessness. Our dedicated team identifies connections between a broker and a firm and cleaning up data, so your prospect lists and market reports are representative of your search. That’s the core of our BCMS database.

Premiums

This is the value of the contract for the benefits and lives covered. It’s a single-line field with no ability to clarify if the premiums were voluntary or determine how much each benefit on a multi-line policy earned. And yes, you guessed correctly, JDA has identified workarounds to that! Voluntary benefits are typically found on policies with write-in text, and as I mentioned above, that’s searchable. As for multi-line policies, we introduced our Modeled Premiums in late 2018 and continue to build out that model in both Group Insurance and BCMS.

I’ve been working with 5500 data for the last 16 years. In that time I have come to appreciate both its value as well as its limitations. One of those limitations has always been how to handle multi-line insurance policies. This is one of those things that is perhaps better explained with a visual. Below is a typical insurance policy found on a 5500.

Data Collection Methodology

These insurance policies (commonly known as “Schedule A’s”) are created, filled out by the insurance company, and sent over to the plan sponsor to be filed along with their 5500. The insurance company checks off the boxes, as we see above, to indicate what kind of insurance coverages are offered as a part of this policy. So far so good, right? A problem arises in that although there can be many different coverages, there is only a single dollar figure to represent the premiums collected by the insurance company.

Why is this an issue? Looking across multiple policies to figure out how much an insurance carrier is collecting for a specific type of coverage is impossible. How much dental coverage does MetLife write? We don’t know and we can’t know. It is too often mixed in with life coverage. The situation gets even worse for big carriers like Aetna and Cigna who offer health insurance as well as life, dental, etc…

Breaking the Data Apart

After years of grappling with the issue, we finally found a solution. With the help of some friendly insurance carriers who prefer to remain nameless, we developed a model that allows us to break apart these multi-line policies. We call these “modeled premiums.” Our testing shows these models are accurate to within 10% of what the carrier themselves recognizes in premiums. We’ve successfully modeled premiums for Health, Life, Dental, Vision, STD, and LTD coverages.

Modeled premiums have been live in our Group Insurance tool for nearly a year. Because of their popularity, at the beginning of Q2, 2019 we put them into our Brokers and Carriers Market Share database. Having the ability to recombine modeled premiums by the broker, across every 5500 on which that broker appears, gives us an entirely new way to assess the market share of brokers. Want to know who sold the most dental in California? Which carrier sold more dollars of group life coverage east of the Mississippi? Now, finally, we can tell you.

Because this has been my project for the last few years, I took the first whack at producing some original research on the subject. It includes a state-by-state and industry-by-industry breakdown of the change in overall ERISA-spend year over year, modeled out by each of our six lines of coverage. Here’s a sneak peek at one of the tables:

To download the complete report, for free, simply click here: https://www.judydiamond.com/slide-deck-state-of-the-industry/. For more information, contact us at 800-231-0669

If you’re a user of our American Directory of Group Insurance tool, you might be familiar with the Plan Type search, which allows you to search by the plan type codes listed on the Form 5500 (and if you’re not a user of the American Directory of Group Insurance, sign up for a free trial here). While this search is useful for finding basic plan types like Health, Dental, Vision, and etc., there are a number of plan types that aren’t included in this search filter that you might be missing out on. That’s where Carrier Benefits All comes in. We’re going to explore this underused search filter to show you where the data comes from and what the differences are, so that you can use this in your own group insurance lead generation.

Where The Data Comes From

The data that we use for the Plan Types search comes from section 8b on the main Form 5500. This section gives an overview of the basic plan types covered by the entire plan.

Sample Section 8b of the 5500

The data we use for the Carrier Benefits All search filter comes from the Schedule A itself, section 8 in Part III to be exact. This section has a much more expansive list of benefit types, and shows exactly what each policy covers.

Sample Section 8 of the Schedule A

Since Section 8 on the Schedule A covers more types of coverage, Carrier Benefits All is the search filter you’ll want to use if you’re looking to do more prospecting within a specific niche.

Plan Coverages Searchable in Carrier Benefits All, but Not in Plan Type

Prescription Drug:

Prescription drug insurance covers some or all of the costs of prescriptions for the participants in the plan. If you work for one of the many carriers and brokers who specialize in prescription drug coverage, the Carrier Benefits All search filter is just what you’re looking for.

Stop-Loss:

Stop-Loss insurance provides protection against catastrophic or unpredictable losses, and is used by sponsors who self-fund their benefit plans but don’t want to take on all the liability for losses from the plan. If you work with self-funded plans, this type of search is available only through the Carrier Benefits All search filter.

HMO, PPO and POS plans:

If you specialize in working with specific plan network types, these searches are made for you. You can easily identify the plan networks by searching for companies that have HMO, PPO and/or POS contracts with a carrier.

Employee Assistance Program:

These programs were originally instituted to combat occupational alcoholism, but now work with employees to resolve many issues that affect productivity and satisfaction at work. Providers who operate in this space can go to this search to find all the companies who utilize EAPs and how much they’re being paid for the service.

Conclusion

This is just a small sample of the different plan types not covered by the basic Plan Type search in the 5500. If you’re looking for more niche areas of coverage, it might just be available in the Carrier Benefits All search option.

Retirement vs. Health & Welfare when Examining 5500 Data

This article is going to focus on how the disclosure differs for two distinct industries, retirement and welfare. Sponsors fill out a different Form 5500 for these plans and may even file a separate 5500 for multiple types of retirement or welfare plans. A great example is that a Sponsor might have a defined benefit plan and a defined contribution plan. That would result in two different filings with the Department of Labor.

Despite being utilized by both retirement and welfare plans, 5500 data has a lot in common between these two distinct groups. The sponsors who file are primarily private sector employers. That means that government agencies and employers are exempt, whether it’s at the city, county, state, or federal level. There’s a gray area when it comes to non-profits. Those organizations typically file a Form 990 about their expenses and funding, but not a Form 5500. They can elect to file if they feel it is advantageous for them to do so. It’s always worth a shot to search for them!

Many Schedules are filled out by both retirement and welfare plans. The publicly disclosed Schedules are A, MB, SB, C, D, G, H, I, and R. Not every plan files each Schedule though. It depends on the services utilized by the plan, its funding, and how it’s structured. Below we discuss some of the significant differences between the two plans. Most of us are solidly working within one industry, such as retirement, so you can jump to the section that applies to you.

Retirement Plans

You may have noticed while researching prospects that a behemoth like Acme Explosives disclosed their schedule of assets, an auditor’s report, their annuity carrier and vendors like their record keeper, yet Mom & Pop Shop USA has none of that. Absolutely maddening!

What you’re seeing is the Form 5500-SF, an abbreviated version of the Form 5500. In 2009 the DOL created a short form version of the 5500 to reduce the burden on companies with under 100 participants. With the exception of the Schedule SB, filed by smaller defined benefit plans, sponsors are not required to fill out schedules.

The Schedule A

If a plan has an insurance contract, they need to complete this Schedule. It’s where a carrier and their brokers are disclosed. When disclosing annuity contracts, they fill out Part II for the value of their investments.

The Schedule C

Retirement plans often use this Schedule to list their record keepers, brokers, investment managers, accounts, and so on. Section 2 is where service codes describe what they’ve been compensated for and we can see how much they received. Retirement plans are also more likely to make use of Sections 1 and 3, where we can see if a provider was eligible for indirect compensation and the formula for it.

The Schedule H

Only plans with over 100 participants file this Schedule. It has the same financial disclosure questions as the Form 5500-SF yet many more. You’ve probably heard that these filings also have a Schedule of Assets. As of 2018, the DOL doesn’t have a standard document for this supplementary Schedule. Instead, Sponsors submit attachments which are viewed as PDFs. These are always available in the Retirement Plan Prospector tool once you are looking at the Plan Details pages.

Health & Welfare Plans

Health and welfare plans can cover a wide variety of benefits. As long as they’re ERISA-qualified, it’s likely you can find it. Unlike with retirement plans, the minimum to file is 100 participants. Note, it’s not employees, but the number of individuals in a plan. If a sponsor has under 100 participants in their plan, then they’re exempt from filing a Form 5500.

The Schedule A

Like many of the Schedules, this one can be filled out by both retirement and health and welfare plans. On welfare returns, the Schedule A is often the star. Plans with insurance policies file this schedule and report the carrier, lives covered, premiums, benefits insured, and, if applicable, the brokers who sold the policy.

The Schedule C

When a welfare plan has organizations or individuals who are not insuring benefits, yet providing services to the plan, they’re disclosed here. The most commonly filled out Section is 2, where we see provider service codes and compensation values. Typically this includes third-party administrators, consultants, ASOs, and accountants. Users who work with self-funded plans make more use of this Schedule because it provides clues as to how the plan is managing their benefits.

The Schedule H

Unlike retirement plans, this isn’t as commonly filed. Roughly 10% of the plans in American Directory of Group Insurance have this Schedule. The general rule of thumb, when a plan is unfunded, they’ll file a Schedule H.