How well do you understand your ERISA Compliance requirements? This blog post:
What is ERISA?
Let's start with the basics. The Employee Retirement Income Security Act (ERISA) is a set of federal laws designed to protect employees of private employers who provide pension, retirement, or profit-sharing plans; and also of private employers who provide insurance coverage.
Which employers must follow ERISA laws?
Which plans are subject to ERISA?
Common examples include:
It is important to note that some plans are not subject to ERISA:
Examples include:
What compliance concerns does an employer have when they are subject to ERISA?
Why do I need a Summary Plan Description (SPD) if I get the benefit booklets from the insurance carriers?
The benefit booklet or insurance certificate alone does not satisfy the Department of Labor (DOL) summary plan description requirement.
Why doesn’t my insurance carrier provide a Summary Plan Description?
Insurance carriers only are required to meet state insurance laws and are not responsible for providing the SPD.
How does a Wrap Plan help me satisfy the ERISA requirements?
A Wrap plan is a plan document/summary plan description that either wraps around a single benefit or bundles multiple benefits under one ERISA plan number. Wrap plans are an easy way to create the companion ERISA language to the insurance certificates so that when distributed to participants together the plan can remain compliant with ERISA plan document and SPD requirements.
If I have less than 100 employees, do I still need a Wrap plan?
Yes, there is no small employer exception from the ERISA plan document/SPD requirement. The small employer exception is only applicable for Form 5500 filing requirements when the employer has less than 100 participants on the first day of the plan year and has an unfunded plan.
What are the penalties for not providing a summary plan description to plan participants?
Solely providing benefit booklets or insurance certificates for employer sponsored benefits will not satisfy the DOL SPD requirements. The DOL can assess a penalty for failing to provide the SPD in a timely manner. Failure to provide the SPD within 30 days of written request can be up to $110 per day, per request (as adjusted for inflation). Failure to provide the SPD to the DOL can result in a penalty of up to $152 per day (as adjusted for inflation). The DOL could tack on additional penalties for failure to act as a fiduciary in regards to plan compliance.
Why do you need a Wrap plan?
Wrap plans are a function of complying with ERISA’s plan document and summary plan description (SPD) requirements. Keep in mind...Wrap plans are an easy way to create the companion ERISA language to the insurance certificates so that when distributed to participants together the plan can remain compliant with ERISA plan document and SPD requirements. Wrap plans also help streamline the Form 5500 process because multiple lines of coverage can be combined under 1 ERISA plan number and 1 Form 5500 (when applicable).
Remain Compliant With Our ERISA Essentials Package:
2 to 99 Eligible Employees
FULLY INSURED or SELF FUNDED - Includes (up to 10 plans):
100+ Eligible Employees
FULLY INSURED or SELF FUNDED - Includes Above, Plus:
Article Written by our Employee Benefits Director of Client Services, Lupé Salgado
This blog is for educational and/or informational purposes only and does not constitute legal advice.