# ASC 965-10-05: Plan Accounting—Health and Welfare Benefit Plans — Overall — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/965/10/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:64230167dbc40cf63df235993355e5cf816b72fe90331d2ca5eeca4acef7d8dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 965-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/965/10/#05-overview-and-background) SEC content: no ##### [965-10-05-1](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:63309b989d489098fcaacd234f9b7a9c2f4ea2d1da1b18a84621b272c5de4c31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Codification contains several Topics for benefit plan accounting due to the differing accounting treatments for various forms of employee benefit plans. The Topics include: 1. a Plan Accounting—Defined Benefit Pension Plans, Topic 960 2. b Plan Accounting—Defined Contribution Pension Plans, Topic 962 3. c Plan Accounting—Health and Welfare Benefit Plans, (this Topic). Additionally, Topic 715 addresses financial accounting and reporting for an employer that offers pension, other postretirement, and certain special or contractual termination [benefits](https://asc.understandingaccounting.org/glossary/b/#benefits "The monetary or in-kind benefits or benefit coverage to which participants may be entitled under a pension plan or a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). Examples of benefits may include, but are not limited to, health care benefits, life insurance, legal, educational, and advisory services, pension benefits, disability benefits, death benefits, and benefits due to termination of employment.") to its employees. ##### [965-10-05-2](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:ed782547805d42da7e85d056a2e06c4c5ebebfe3f4592be6da3f3d61ef4bdf88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Plan Accounting—Health and Welfare Benefit Plans Topic includes the following Subtopics: 1. a Overall 2. b Net Assets Available for Plan Benefits 3. c Plan Benefit Obligations 4. d Terminating Plans 5. e Presentation of Financial Statements 6. f Receivables 7. g Investments—Debt and Equity Securities 8. h Investments—Other 9. i Property, Plant, and Equipment. ##### [965-10-05-3](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:be4f8e718f9e8d066bb485168bff56a33c3b372ecef43c144050ad2026da07d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Overall Subtopic provides scope-related guidance for this Topic and an overview of accounting and reporting for [health and welfare benefit plans](https://asc.understandingaccounting.org/glossary/h/#health-and-welfare-benefit-plans "Health and welfare benefit plans include plans that provide the following: Any of the following benefits: Medical, dental, visual, psychiatric, or long-term health care Life insurance (offered separately from a pension plan) Certain severance benefits Accidental death or dismemberment benefits. Benefits for unemployment, disability, vacations, or holidays Other benefits such as apprenticeships, tuition assistance, day care, dependent care, housing subsidies, or legal services."). #### Characteristics of Plans ##### [965-10-05-4](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:db16c85e384b924f961cc83cbe1347e33e4759fb9f65d6bfbe53660f6cddd591 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Plan participants may be active or terminated employees (including retirees), as well as covered dependents and beneficiaries, of a single employer or group of employers. Employer contributions may be voluntary or required under the terms of a collective bargaining agreement negotiated with one or more labor organizations. Plans may require contributions from employers and participants ([contributory plans](https://asc.understandingaccounting.org/glossary/c/#contributory-plan "A plan under which retirees or active employees contribute part of the cost. In some contributory plans, retirees or active employees wishing to be covered must contribute; in other contributory plans, participants' contributions result in increased benefits.")) or from employers only ([noncontributory plans](https://asc.understandingaccounting.org/glossary/n/#noncontributory-plan "A pension or other postretirement benefit plan under which participants do not make contributions.")). During periods of unemployment, a noncontributory plan may require contributions by participants to maintain their eligibility for benefits. Benefits may be provided in any of the following manners: 1. a Through insurance contracts paid for by the plan (an insured plan) 2. b From net assets accumulated in a trust established by the plan (a self-funded plan). ##### [965-10-05-5](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:5e71de7e51bc371053b729c1461dff50d9322dd144947a445d27024e0cfe035d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in the preceding paragraph, a plan may establish a trust to hold assets to pay all or part of the covered benefits. The assets may be segregated and legally restricted under a trust arrangement (such as a voluntary employees' beneficiary association or a 501(c)(9) trust, a 401(h) account, or other funding vehicles). Generally, if a separate trust exists, financial statements are required under the Employee Retirement Income Security Act. A trust always exists for a multiemployer plan. Such trusteed plans with more than 100 participants generally will require an audit. For Employee Retirement Income Security Act filings, the U.S. Department of Labor will not accept an accountant's report that covers the assets of more than one plan. ##### [965-10-05-6](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:ac23fb5e76c7c065479599514e6df9f413bf85abaa84bf384cd15d0178c347fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the trustee of the Voluntary Employees' Beneficiary Association is a bank or trust company, and the trust holds the assets of more than one plan sponsored by a single employer or by a group of entities under common control, it is a master trust subject to the Department of Labor's master trust filing requirements. #### Arrangements with Insurance Entities ##### [965-10-05-7](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:c936e789b0d47f59d69a060b8880cb9737175dc96317e95dfc1cc4101c9260b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nature of, and method of accounting for, the assets and benefit obligations of a health and welfare benefit plan may be determined by the arrangement with an insurance entity. The insurance entity may assume all or a portion of the financial risk (for example, in [fully insured experience-rated arrangements](https://asc.understandingaccounting.org/glossary/f/#fully-insured-experience-rated-arrangement "In a fully insured experience-rated arrangement, specified benefits are paid by the insurance entity that assumes all the financial risk. Contract experience is monitored by the insurance entity. Contract experience may or may not include the experience of other similar contract holders. To the extent that benefits incurred plus risk charges and administration costs are less than premiums paid, the related plan is entitled to an experience-rating refund or dividend (see paragraphs 965-310-25-2965-310-25-3). If the total of benefits incurred, risk charges, and administrative costs exceeds premiums, the accumulated loss is generally borne by the insurance entity but may be carried over to future periods until it has been recovered (see paragraph 965-30-25-5). The related plan often has no obligation to continue coverage or to reimburse the carrier for any accumulated loss, although there are certain types of contracts that require additional payments by the plan."), [fully insured pooled arrangements](https://asc.understandingaccounting.org/glossary/f/#fully-insured-pooled-arrangement "In a fully insured pooled arrangement, specified benefits are covered by the insurance entity. The insurance entity pools the experience of the plan with that of other similar businesses and assumes the financial risk of adverse experience. In such an arrangement, a plan generally has no obligation for benefits covered by the arrangement other than the payment of premiums due to the insurance entity (see paragraph 965-10-05-9)."), [minimum premium plan arrangements](https://asc.understandingaccounting.org/glossary/m/#minimum-premium-plan-arrangement "In a minimum premium plan arrangement, specified benefits are paid by the insurance entity. The insurance contract establishes a dollar limit, or trigger point. All claims paid by the insurance entity below the trigger point are reimbursed by the plan to the insurance entity. The insurance entity is not reimbursed for benefits incurred that exceed the trigger point. This type of funding arrangement requires the plan to fund the full claims experience up to the trigger point. Minimum premium plan arrangements may have characteristics of both self-funded and fully insured experience-rated arrangements."), and [stop-loss arrangements](https://asc.understandingaccounting.org/glossary/s/#stop-loss-arrangement "In a stop-loss insurance arrangement, a plan's obligation for any plan participant's claims may be limited to a fixed dollar amount, or the plan's total obligation may be limited to a maximum percentage (for example, 125 percent) of a preset expected claims level. These arrangements are commonly used with administrative service arrangements. The insurance entity assumes the benefit obligation in excess of the limit. Stop-loss insurance arrangements may have characteristics of both self-funded and fully insured arrangements.")), or it may provide only administrative services (for example, in [administrative service arrangements](https://asc.understandingaccounting.org/glossary/a/#administrative-service-arrangement "In an administrative service arrangement, the plan retains the full obligation for plan benefits. The plan may engage an insurance entity or other third party to act as the plan administrator. The administrator makes all benefit payments, charges the plan for those payments, and collects a fee for the services provided.")) or investment management services. It is important to have an understanding of the insurance arrangement to determine whether any or all of the risks associated with benefit payments or claims have been transferred to the insurance entity. ##### [965-10-05-8](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:2b6c9ef255888612763385ded12d4d5bd315da91f6fdfb3cd59ca9ef42acb248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain group insurance contracts covering health and welfare benefit plans include a provision for a refund, at the end of the policy year, of the excess of premiums paid over the total of paid claims, required reserves, and the fee charged by the insurance entity. Often such experience-rating refunds (or dividends) are not determined by the insurance entity for several months after the end of the policy year. ##### [965-10-05-9](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:f2537f7d8fe2924feec3107c063e29b90f5e76f558a742cb3f5f9b3c75a0824d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Benefits to participants may be provided through insurance arrangements that transfer the risks of loss or liability to an insurance entity. Group insurance contracts for health and welfare plans are usually written for a one-year period, although the contract may provide for annual renewal. The contract generally specifies, among other things, all of the following: 1. a The schedule of benefits 2. b Eligibility rules 3. c Premium rate per eligible participant 4. d The date that premiums are due. #### The Employee Retirement Income Security Act of 1974 ##### [965-10-05-10](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:a4c0e6bbc6a4f42edf8215a263a0775a7003652118915234fce4fdb5ed0296d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Health and welfare benefit plans are generally subject to certain of the reporting and other requirements of The Employee Retirement Income Security Act of 1974. In addition to establishing certain minimum standards for participation, vesting, and funding for employee benefit plans of private entities, it also requires annual reporting of certain information to particular governmental agencies and summarized information to plan participants. For many plans, the reporting requirements include financial statements prepared in conformity with generally accepted accounting principles (GAAP). ##### [965-10-05-11](https://asc.understandingaccounting.org/asc/965/10/#965-10-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:24:26.932Z to 2026-09-10T02:24:26.932Z Record version: sha256:a67a44a239de7011039d839a5d992f23c501e2bd0fe70bc60981803773da99f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reporting requirements of the Act, except for certain particular references, are not included in the Codification, but they should nonetheless be considered by those responsible for the preparation of health and welfare benefit plan financial statements.