BASE^® ERISA Wrap

ERISA (the federal Employee Retirement Income Security Act) requires employers who are plan administrators of their group health plans to maintain and distribute summary plan descriptions (SPDs) to plan participants. The SPD describes important information about the plan in language that can be understood by the typical participant. The SPD must accurately reflect the contents of the plan and must include specific information required under federal law, much of which is typically missing from the benefits summaries and insurance certificates distributed by insurance companies.

A Wrap SPD is designed to wrap around existing certificates of insurance and benefit plan booklets to provide the information necessary to comply with ERISA’s reporting and disclosure requirements. The Wrap SPD includes required ERISA provisions and recommended information to “wrap” around the benefit summaries or booklets, insurance certificates and other relevant plan descriptions for each fully insured or self-funded plan option or component plan. To be compliant with ERISA’s reporting and disclosure requirements, the Wrap SPD and accompanying benefit plan component documents must be distributed to plan participants.

All ERISA-covered benefit plans, including group health plans and other welfare plans, must, by law, be administered in accordance with a written plan document. ERISA, HIPAA and other federal laws require the plan document to contain certain specified provisions. Many employers assume that insurance contracts for fully insured products are written plan documents. Insurance companies, however, draft their contracts to comply with state insurance laws and, as a result, the contracts do not contain many of the required or recommended provisions that protect the plan, the employer and plan fiduciaries.

A Wrap Plan Document is designed to meet plan documentation requirements under ERISA and other federal laws and to incorporate all other welfare plans, insurance contracts and other relevant documents into a single plan. These materials can be kept together for administrative ease. The Wrap Plan Document provides additional legal protection for the employer and plan fiduciaries and can simplify plan administration.

ERISA is a federal law that covers most private sector employee benefit plans, and which sets forth uniform minimum standards to ensure that such plans are established and maintained in a fair and financially sound manner. Among other things, ERISA requires plan administrators—the people who run plans—to give plan participants in writing the most important facts they need to know about their health benefit plans including plan rules, financial information, and documents on the operation and management of the plan.

One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered health benefit plan or a beneficiary receiving benefits under such a plan, is a summary of the plan, called the summary plan description or SPD. For other basic disclosure requirements under ERISA, please refer to the U.S. Department of Labor’s Reporting and Disclosure Guide for Employee Benefit Plans.

No. While carriers do provide plan information, they typically will not provide the required provisions that must be included in an SPD and plan document. So an employer/plan administrator will not be in compliance and faces the risk of penalties and other complications if participants only receive a benefits booklet/summary or certificate of insurance.