ERISA
BY: BARRY FIELDS
VP OF EMPLOYEE BENEFITS,
JGS INSURANCE
Summary Plan Description
ERISA
T
he US Department of
Labor has been conducting
frequent ERISA compliance
audits and, in many cases,
imposing significant
penalties for noncompliance. This should
spur employers to make sure that they
are in compliance with that law’s plan
documentation, disclosure, and annual
reporting requirements for all applicable
plans. relatively simple document that “wraps”
around the insurance policy, coverage
certificate, or plan booklet. The benefits
available under the plan continue to be
governed by the insurance policy, coverage
certificate, or plan booklet, while the wrap
document provides the supplementary
information necessary to comply with
ERISA. In effect, the wrap document fills
the gaps left by insurance carriers and
third-party administrators.
Unfortunately, most employers are not
in compliance with the Summary Plan
Description (SPD) requirements. Why?
Many companies mistakenly assume
that insurance contracts, certificates of
insurance, SBCs, and benefits summaries
fulfill the ERISA requirements for an
SPD. Those documents do not include
the required or recommended provisions
that protect the plan, the employer, and
plan fiduciaries. The Wrap SPD should describe all of the
important plan rules and the benefits
available under the plan as well as key
information about the plan, including:
All group health plans subject to ERISA
(and all size groups) are required to
provide participants with an SPD. An SPD
must be written in a manner calculated
to be understood by the average plan
participant and must be sufficiently
comprehensive to explain the following:
the plan’s benefits, its claims review
procedures, and the participant’s rights
and obligations under the plan.
A “wrap” document will help meet
these obligations. A wrap document is a
• The plan name
• The employer’s name, address, and
employer identification number (also
known as
• A federal tax identification number)
• The name, address, and telephone
number of the plan administrator
• The name and address of the plan’s
agent for service of legal process
• The plan number for annual
reporting purposes
• The plan year
• The source of plan contributions
• Information about plan trustees
• A claims procedure
• Information about eligibility for plan
participation
• A statement of ERISA rights
In addition to easing compliance with
ERISA’s plan document and summary
plan description requirements, wrap
documents may be used by employers to
consolidate employee welfare benefit plans
into a single plan, commonly referred to
as an “umbrella” or “mega-wrap” plan.
Consolidating employee welfare benefit
plans into a single plan could reduce
the costs associated with filing multiple
annual reports, distributing multiple
summary annual reports, and amending
multiple plans in response to legislative or
regulatory changes.
Contact Barry for a complimentary
consultation. +
Barry Fields has over 26 years of employee
benefits experience advising clients in a
wide range of industries, professional and
industrial, public and private, throughout
the United States and worldwide.
Barry specializes in all aspects of
providing full-service benefits consulting
to clients including program design,
compliance, plan funding, underwriting,
wellness programs, employee
communications, benefits administration,
employee advocacy and the use of effective
strategies in benefits management.
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