What is a Wrap Document and Why Do I Need One?

The Federal Employees Retirement Income Security Act requires employers who are plan administrators of their group health plans to comply with two important requirements or risk potential penalties and possible audits.

  1. Maintain and distribute Summary Plan Descriptions (SPDs) to plan participants which accurately reflect the contents of the plan and which include specific information as required under federal law.
  2. Administer the group health plan in accordance with a written Plan Document which must be made available to plan participants and beneficiaries upon request. Penalties for Non-Compliance
  3. Employers/plan administrators may be liable for serious penalties if they don’t provide a Summary Plan Description or have a current Plan Document:
  4.  Mistakenly, many companies assume that insurance Summary of Benefits and Coverages  (SBCs), contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document–but they don’t include the required or recommended provisions that protect the plan and the employer.  SBCs from the carrier and certificates of insurance are not sufficient to cover you under ERISA laws or to protect you if audited by the Department of Labor (DOL). 
  • Failure to provide an SPD or Plan Document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110/day per participant or beneficiary for each violation.
  • Lack of an SPD could trigger a plan audit by the U.S. Department of Labor (DOL).
  • DOL has increased its audit staff and companies, small and large, are being audited.Typically businesses would have to engage an ERISA or Employment Law Attorney to have ERISA compliant Plan Documents and SPDs generated.  4i Benefits can provide you with a Wrap SPD and Wrap Plan Document which are designed to wrap around existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA.  Our document compliance solution includes the following benefits:
  • The Solution
  • Customized Wrap SPD and Wrap Plan Document that provide the required ERISA provisions and information that will help you achieve compliance.
  • Premium Conversion Plan document and SPDs for Section 125 compliance if you are taking pre-tax deductions for employee benefits
  • Distribution guidelines that explain how and when to provide these compliance documents to your plan participants.
  • The ability to keep your documents current and updated should the Federal Government Issue new amendments or if plan information needs to be changed.
  • Whether you choose to use your own attorney or utilize our service, we strongly recommend that any employer have a Wrap Plan Document and SPD created in order to avoid any risk of audit or penalties from the Department of Labor.   To reiterate, your carrier contracts and benefit summaries are not sufficient to avoid DOL audit and penalties.