In an effort to be a one-stop shop for you, we’re now providing Wrap Documents for Benefit Plans as well as Section 125 Cafeteria Plans. These plans will help keep your business compliant. Further, when you work with us, you’ll get these plans at a more affordable rate than many other agencies.
First, what is a wrap document?
A wrap document is a relatively simple document that supplements (wraps) the existing documentation of a welfare benefit plan (ex. insurance certificate or benefit booklet) with the missing ERISA-required provisions. When a wrap document is used, the ERISA Plan Document is made up of two items: the insurance certificate/benefits booklet and the wrap document that fills in all the ERISA-required information that is missing from the insurance certificate/benefits booklet.
What are the benefits of wrap documents?
Some employers are able to wrap multiple welfare benefits under a single plan, referred to as “mega-wrapping”, as a means to simplify their annual reporting by only needing to fill out one Form 5500.
Wrap documents serve as a tool to make ERISA compliance easier for all employers and in helping to avoid serious noncompliance consequences such as benefits lawsuits, Department of Labor audits, and the inability to respond to participant requests.
Why do wrap documents exist?
In order to understand what a wrap document is, we must first understand why it exists. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets the minimum standards for employee benefits plans maintained by all private sector employers, regardless of the size of the employer. The only employers exempt from ERISA are governmental employers and church plans. Under ERISA, employer-sponsored benefit plans must be described in a written plan document that addresses benefits and eligibility, funding of benefits, procedures for allocating and delegating plan responsibilities, plan amendment and termination procedures, designation of named fiduciary, and required provisions for group health plans.
ERISA generally applies to the following employee benefits, regardless of whether they are insured, or self-funded:
-Medical, surgical or hospital benefits
-Dental and vision benefits
-Prescription drug benefits
-Health reimbursement benefits (HRAs)
-Flexible Spending Accounts (FSAs)
-Group Life Insurance Benefits
– Wellness programs (when medical care is provided)
– Employee Assistance Plans (when medical care is provided)
-Disability Benefits (if insured or funded other than as a payroll practice)
-Disease-specific coverage (ex. Cancer policies)
Additionally, employers must explain the plan’s terms to participants by providing them with a Summary Plan Description (SPD). An SPD is an ERISA compliant document that is provided to plan participants that explains their rights and benefits under the plan document.
If this has you scratching your head, we get it. Insurance talk can be less than fun. That’s why we’re here to make things simple for you. If you’d like to learn more about Wrap Documents or have any questions please schedule time with Ray Ramirez or call/text (858) 384-1506.
For more details, please download Wrap Documents for Welfare Benefit Plans.