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 plan participants by September 30, 2020, or December 15, 2020, (if a Form 5500 filing extension was granted).
- 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 in the 2019 plan year, which may include COBRA participants and employees who have since been terminated.
- Employers can distribute the SAR through in-person hand delivery, U.S. mail, or electronic delivery (but must comply with the Department of Labor electronic distribution rules).
Which employers must distribute the SAR?
Employers who sponsored health plans with 100 or more enrollees on the first day of the 2019 plan year were required to file a Form 5500 in 2020. Employers who filed a Form 5500 must also distribute the SAR, which is a summary of the Form 5500. The SAR must be distributed to plan participants for the corresponding plan year. For more on Health and Welfare Form 5500, 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 2020 pertain the to the plan that was offered in 2019.
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 the 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 as in integral part of their job: Employers can electronically deliver the SAR to employees with “regular access” to electronic media at work, as long as 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 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 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 the first day of the plan year is on January 1st, or a non-calendar year plan, meaning 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.
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved
