Under the Employee Retirement Income and Security Act of 1974
(ERISA), all employers must have a written Summary Plan Description (SPD) for each separate welfare benefit plan (e.g., medical, dental, 125 plan, life, disability, etc.), informing participants of eligibility requirements, benefits, claims, and appeals procedures, and rights under ERISA.
A Wrap document is a relatively simple document that “wraps” around the insurance policy or coverage certificate/booklet. The benefits available under the plan continue to be governed by the insurance policy or coverage certificate/booklet, while the Wrap document supplements the information necessary to comply with ERISA.
Although insurance providers may provide some information required for SPD compliance, it is a common mistake by employers to think that the summary insurance information they receive from their insurance provider meets their SPD requirements. A common approach combines all SPDs into one overall SPD Wrap notice, tying in the required ERISA language and simplifying the SPD notice process. Use ERISA Solutions to create and manage your SPD Wrap, making sure you pass ERISA Audits.
For large employers (100+) subject to Form 5500 reporting, Wrap SPDs is essentially a necessity.
This is especially true for employers already filing a single Form 5500 for health and welfare plans since those employers have represented to the Department of Labor a consolidated, single ERISA plan.
Service includes Summary Material Modifications (SMM) anytime you need to create this notice related to material changes to any of your health and welfare benefit plans.
How can a small company meet ERISA requirements?
While large employers may have the resources to prepare custom plan documents and summary plan descriptions for each employee welfare benefit plan they sponsor, most small employers lack the time, money, and expertise to prepare these documents and keep them up-to-date in an ever-changing regulatory landscape. One simple and cost-effective solution is the wrap document.
ERISA requires that additional information be provided to participants in group health plans, including information about COBRA continuation coverage and HIPAA pre-existing condition exclusions.
The Department of Labor’s Employee Benefits Security Administration (EBSA) oversees more than 703,000 private retirement plans and an additional 2.3 million health plans. EBSA’s primary mission is to protect the retirement and health benefits of over 149 million participants and beneficiaries, provide education and outreach for workers and employers, and promote retirement savings.
EBSA developed this Small Business Retirement Savings Advisor to answer a variety of commonly asked questions about retirement savings options for small business employers and help you determine which program is most appropriate for your business.