Employers who filed a Health and Welfare Form 5500 (“Form 5500”) must distribute the Summary Annual Report (“SAR”) to plan participants within 9 months after the plan year, or 2 months after they file a Form 5500 (if the employer was granted a filing extension).
Compliance Snapshot:
- Employers with calendar year plans must distribute the SAR to participants by September 30, 2019, or December 15, 2019, if they were granted a filing extension (most Sequoia clients file on extension).
- Employers with non-calendar year plans must distribute the SAR within 9 months of the end of the plan year, or 2 months after filing the Form 5500, if they were granted a filing extension.
- This year, employers must distribute the SAR to participants covered under the 2018 plan year, which may include COBRA participants and employees who have been terminated.
- Employers can distribute the SAR through in-person hand delivery, U.S. mail, or electronic delivery (but must comply with electronic distribution rules).
Which employers must distribute the SAR?
Employers who filed a Form 5500 must distribute the SAR, which is a summary of the Form 5500, to plan participants for the corresponding plan year. Employers who sponsored health plans with 100 or more enrollees on the first day of the 2018 plan year were required to file a Form 5500 in 2019. For more on Health and Welfare Form 5500s, see our blog article.
To whom do employers need to distribute the SAR?
Employers must distribute the SAR to each plan participant covered under the plan during the applicable plan year, including COBRA participants and terminated employees who were covered under the plan. For instance, the Form 5500 (and the associated SAR) filed in 2019 pertain the to the plan offered in 2018.
How can employers distribute the SAR?
Employers can distribute the SAR a variety of ways, including hand delivery, U.S. mail, or electronic delivery. Employers must follow Department of Labor electronic disclosure rules if they decide to distribute the SAR electronically, as discussed below.
- Employees with “regular access” to electronic media at work: Employers can electronically deliver the SAR to employees with “regular access” to electronic media at work if they accompany the SAR with a notice that briefly describes the document, how it can be accessed, a statement that employees have the right to request a paper copy, and an explanation of the procedure for updating the employee’s email address.
- Employees or individuals “without regular access to electronic media” at work (which would include terminated employees or COBRA participants): Employers cannot electronically deliver the SAR to individuals without regular access to electronic media at work unless the individual affirmatively consents to electronic distribution beforehand. Before obtaining consent, the employer must provide a statement of the types of documents that will be sent electronically, the individual’s right to withdraw consent and the procedure for doing so, the procedure for updating the individual’s email address, the individual’s right to obtain a paper copy, and a description of the necessary hardware and software requirements to access the SAR. Some employers include this consent in their offboarding or leave paperwork so that they can send terminated employees certain documents, including the SAR, electronically.
What is the deadline to distribute the SAR?
The deadline for distributing the SAR depends on whether the plan is a calendar year plan, meaning that the first day of the plan year is on January 1st, or a non-calendar year plan, meaning that the first day of the plan year is any day besides January 1st. The deadline also depends on when the employer filed their Form 5500 and whether they obtained a filing extension.
- For calendar year plans, employers must distribute the SAR by September 30th, or December 15th if the employer received a filing extension.
- For non-calendar year plans, employers must distribute the SAR within 9 months after the end of the plan year, or 2 months after filing the Form 5500, if the employer received a filing extension.
For Sequoia Clients:
- Sequoia partners with a CPA firm who works with our clients to prepare the Form 5500. The CPA firm also provides clients with the SAR, along with distribution instructions.
- Most Sequoia clients file an extension on the 5500 filing.
- Sequoia clients on Sequoia Tech may have two SARs to distribute if more than 100 employees were enrolled in your Guardian or Kaiser plans. Sequoia will provide the SAR to you if this applies, along with instructions.
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.
