What is an ERISA Wrap Document? And Why Your Company Probably Needs One

One problem I encounter when meeting with a business owner, controller or HR executive is that the company that I am trying to help does not have the correct compliance documents in place for their health
benefits.  Almost every time I ask about a Wrap document I get the same response “We do not have that. I’ve never even heard of it.”  With all of the compliance rules and regulations now associated with benefits, it is easy to understand why this is the case.  Here is exactly what an ERISA Wrap document is and why almost every business needs one.

The ERISA Wrap Document is needed by employers who offer insured or self-funded group benefits.  This includes all forms of health plans such as major medical, dental, vision to name a few.  The Employee Retirement Income Securities Act (ERISA) requires all private sector employers, regardless of size, to automatically distribute a summary plan description (SPD) free of charge. Insurance companies often provide a booklet or certificate that explains the benefits; however, most booklets or certificates do not comply with ERISA requirements. 

The easiest way to comply with the SPD requirement is to adopt a Wrap document.

The Wrap document has to include four key pieces of information: the plan number, the plan year, the employer’s tax ID number and the name and address of the plan’s legal agent.  If you were to be audited by the DOL, you would be subject to a $110 per employee per day going back to the date of inception of each plan you have.  Keep in mind that last summer the DOL did announce that they were going to be ramping up the amount of audits they will be doing per year, with their goal to have audited every group health plan within the next five years.

If you have any questions about compliance or if you are unsure about if you are in compliance, please feel free to reach out to me, and we can work together to make sure your plans are in full compliance.