Acquisitions of Healthcare Providers—Is Your Related Employee Benefit Plan Affected?

A growing trend in the healthcare industry is the consolidation of hospitals, health systems, and physician practices to create larger health systems. This consolidation is occurring through mergers and acquisitions, joint venture arrangements, and other types of affiliation. This trend is due to a variety of factors, including the desire to create a larger service footprint, to address challenging financial situations, or to contend with increasingly burdensome regulatory requirements.

An indirect effect of these transactions is potential changes to sponsored employee retirement plans. Whether the retirement plan is a defined benefit pension plan or a defined contribution [i.e. 401(k) or 403(b) plan], the plans are often impacted in a variety of ways.

One specific issue may be the changing of a plan’s year-end date to match the year-end date of the newly created entity. There are certain Department of Labor and Internal Revenue Service provisions to be followed when changing a year-end for a retirement plan, and many questions may arise regarding the filing of Form 5500 and audited financial statements from an independent qualified public accountant (IQPA). Audited financial statements from an IQPA must be attached to the filing of Form 5500 if the plan is considered a large plan (generally plans with 100 or more participants as of the beginning of the plan year) pursuant to the Employees Retirement Income Security Act of 1974.

If a plan changes its year-end date, the plan would be required to file Form 5500 and applicable schedules for a short plan year. According to 29 CFR 2520.104-50, a “short year is a plan year of seven or fewer months’ duration, which occurs in the event that the annual date on which the plan year begins is changed.” The deadline to file the short plan year’s Form 5500 is by the last day of the seventh calendar month after the short plan year ends, or the extended due date if approved.

The audited financial statements are not required to be attached to the short plan year’s Form 5500 filing if certain qualifications are met. These qualifications include: 1) the short plan year must consist of seven or fewer months, 2) an attachment explaining why the plan has a short year must be included, and 3) audited financial statements from an IQPA for both the short plan year and the following complete year are required to be included with the next consecutive year’s Form 5500 filing.

If you have questions about employee benefit plans contact the expert listed below at PYA, (800) 270-9629.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

Related Posts
Several PYA employees were acknowledged for their achievements in mid-year promotions.   PYA, a professional services firm, has announced that Matt Neilson is the latest principal to join its executive team.  In addition,...
Read More

PYA Announces Several Mid-Year Promotions

On June 25, the Centers for Medicare & Medicaid Services (CMS) published a public request for information (RFI) regarding the Physician Self-Referral Law, (a.k.a. the Stark Law).  In the last...
Read More

Stark Changes Coming?

Certain employees of governmental and not-for-profit organizations may qualify for a program that offers student loan forgiveness with zero tax liability.   The Public Service Loan Forgiveness (PSLF) Program gives full-time...
Read More

Tax-Free Student Loan Forgiveness for Eligible Public Servants

The Patient Protection and Affordable Care Act (ACA) became law eight years ago, establishing §501(r) of the Internal Revenue Code (IRC)—a section most tax-exempt hospitals have become quite familiar with...
Read More

Attention Hospitals – Does Your Financial Assistance Policy Make the Grade?

PYA, a national professional services firm headquartered in Knoxville, has been awarded a 2018 Top Workplaces honor by the Knoxville News Sentinel. The award is a result of employee feedback...
Read More

Knoxville News Sentinel Names PYA a Winner of the Greater Knoxville Area 2018 Top Workplaces Award

Bundled Payments for Care Improvement – Advanced (BPCI-A) is the Center for Medicare and Medicaid Innovation’s (CMMI) latest voluntary alternative payment model (APM), and it is garnering a great deal...
Read More

Choosing Wisely – BPCI-A Episode Selection Now Due August 8

About one-third of all hospitals and clinicians now participate in the Medicare Shared Savings Program (MSSP).  For those considering participation, the Centers for Medicare & Medicaid Services (CMS) offers a...
Read More

While You Are Waiting: Getting Ready to Apply for the MSSP

PYA has released a new white paper explaining how competing health systems may overcome antitrust obstacles to merger by formally committing to population health improvement in the communities they serve....
Read More

PYA White Paper Explains How Pro-Competitive Impacts of Hospital Consolidation Can Overcome Antitrust Concerns

PYA announces that Marci Nielsen, Ph.D., has joined as a principal within its Consulting service line. Marci Nielsen has a passion for equitable, person-centered care.  Given her background, with advanced...
Read More

Health policy expert Marci Nielsen, Ph.D., noted for putting patients in the center of healthcare, is new principal at PYA

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

* indicates required
Monthly eNewsletters
See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop