What is a Wrap Document?
The Employee Retirement Income Security Act (ERISA) requires every employee welfare benefit plan an employer offers to be described in a document that provides participating employees with an accurate and comprehensive summary of the plan. You may hear this requirement referred to as an “SPD,” or Summary Plan Description requirement. Because insurance companies and third-party administrators typically do not provide these documents, employers can comply by providing a “wrap document.” A wrap document is a document that “wraps” around an insurance policy, coverage certificate, or plan booklet. The main purpose of the wrap document is to fill in the gaps in required information left by the insurance carrier or plan administrators.
Do I Need a Wrap Document?
If your organization offers an ERISA-defined “employee welfare benefit plan,” such as a fully insured group health plan, a self-funded health plan, dental plan, vision plan, or group term life insurance plan, you are required by Section 402 of ERISA to make sure each plan is established and maintained according to a written plan document. Employers who fail to meet ERISA wrap SPD requirements may be subject to fines under the Affordable Care Act.
What Does a Wrap Document Need to Contain?
You should make sure the following information is available to all employees, whether in a summary plan document or a wrap document your organization creates.
- The plan name, number, and year
- Your organization’s name, address, and employee identification number
- The name, address, and phone number of the administrator of the plan
- The name and address of the plan’s agent
- Plan trustee information
- Claims procedures
- Information about plan participation eligibility
- The named fiduciary administering the plan
- How the plan can be terminated or amended
- The source of plan contributions
- Which plan operation responsibilities belong to the employer and which belong to the insurance carrier or administrator
- A statement of ERISA rights
How Often Does a Wrap Document Need to Be Updated?
A copy of your wrap document must be given to every employee eligible to participate in the plan. You can deliver this via hand delivery, mail, or electronic delivery as long as the employee has a computer and printer at their desk or workstation.
In addition to the initial delivery, if any change occurs to the original plan, employers must update and re-deliver their plan and wrap documents for employees every five years.
Even if there has been no change whatsoever to the original plan, your wrap document must be updated and re-delivered every ten years.
Need Help with ERISA Compliance?
Making sense of ERISA compliance can be tricky for even the most experienced human resource professionals. If your business could use expert guidance on the many ins and outs of employee health and benefits requirements, it’s time to contact Benely’s team of HR and compliance experts. Reach out to Benely for a free demo today.