Tag Archives: ERISA

Why you need an ERISA Wrap Document today.

Leave a reply

ERISA Wrap Documents are so important

If you’re a business owner, you’ve likely heard of ERISA, the Employee Retirement Income Security Act, which passed in 1974. ERISA is probably one of several acronyms you hear about all the time but likely don’t pay too close attention to. When a business provides Employee Benefit plans to its employees — this means medical, dental, vision — they’re doing so under the protection and guidance of the ERISA act.

What that means is the rules of ERISA need to be adhered to. Whether you like it or not, as an employer, you are a fiduciary. One of the rules under ERISA is fiduciaries are required to have a specific document that outlines employees’ rights. It’s called an ERISA wrap document and it takes all of your benefit plans and wraps them into one document.

What’s the big deal?

Many people think it’s not a big deal. Frankly, most employers don’t do it. But what can become a big deal is the fines you can face for not having an ERISA Wrap document. You might be thinking, “the fines aren’t that bad or “oh, it won’t be that much”. We’re here to give you a little wake up call and share what the fines can be.

Fines for not having an ERISA Wrap Document can cost $110/day, per employee until the document is produced under audit. Let that sink in for a moment. If you’re hit with these fines, they’ll add up very quickly.

You might think, “I’ll never get audited so I don’t mind taking the risk”. But in reality, here’s what can happen: An employee is terminated and they feel they were wrongfully treated or wrongfully terminated. So, said employee hires an attorney and they file a lawsuit. One of the first thing the attorney will do is call the EDD. Then EDD will be obligated to call the employer. And the first thing the EDD will ask for is the ERISA plan document, because they know most employers don’t have it.

The Good News

Fortunately, the cost to prepare these document is very reasonable. If you don’t have your ERISA Wrap documents prepared, reach out to us, we’re happy to talk you through it and help you get one. This simple step will greatly limit your exposure.

–

Don’t put yourself at risk. ERISA Wrap docs are easy and affordable to set up. We can help you with them today. Email us at marketing@corpstrat.com for more information

Why Every Employer Needs an ERISA Wrap Document

Leave a reply

 

Heading into audit season, a simple and cost effective solution to ensure your documents are prepared correctly is having an ERISA Wrap Document. Including a wrap document will mean if there’s anything missing in your insurance policy or coverage certificate, this one document will supplement the information necessary to comply with ERISA. It’s a bit like playing defense, it’s nothing flashy but when you need it, you’re so glad you’re covered. Plus, at less than $500 a year, it’s the easiest way to save yourself a ton of headaches.

What is ERISA?

  • Employee Retirement income Security Act (ERISA) is intended to protect employees who are counting on retirement benefits or pensions promised by their employer.
  • ERISA sets guidelines and rules for how employee retirements funds must be managed, it puts strict guidelines in place for when and how employees can earn a non-forfeitable interest in promised pension benefits.
  • Every employer who maintains a health and retirement plan is subject to ERISA and must have a separate written plan document.

What is an ERISA Wrap Document?

  • It’s a relatively simple written document that “wraps” around the insurance policy, coverage certificate, or plan booklet.
  • It describes the participants’ rights, benefits, and obligations within their plans as well as the plan’s terms and conditions.
  • By using a wrap document, an employer can satisfy the ERISA Summary Plan Description (SPD) requirement by using this one document for all the health and welfare benefits offered.

What doesn’t count as an ERISA Wrap Document:

  • Summary Plan Descriptions (SPD)
  • Certificate of Coverage
  • Summary of Benefits
  • Copy of the Master Contract

Why Do I Need An ERISA Wrap Document?

  • Using a wrap document is an easy, cost-effective way for employers to show auditors that they’re in compliance with ERISA and other laws affecting the employee benefits they offer.
  • The penalties for not having one are very steep.
  • Without one, the company is left vulnerable to costly lawsuits.

–

If you don’t have an ERISA Wrap Document or your company’s ERISA Wrap Document is outdated, schedule a call with us now. We can help.

ERISA Compliance – What Every Employer Needs to Know About Plan Documents

Leave a reply

Imagine an agent from the Department of Labor walks in your office and asks for your ERISA documents. For 90% of employers, the answer would be “what is that?”. Yet for every employer, maintaining ERISA documents is essential – and here is why:

ERISA is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers.

ERISA includes requirements for both retirement plans (for example, 401(k) plans) and welfare benefit plans (for example, group health plans). ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

The Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), enforces most of ERISA’s provisions. Violating ERISA can have serious and costly consequences for employers that sponsor welfare benefit plans, either through DOL enforcement actions and penalty assessments or through participant lawsuits.

All welfare plans are subject to ERISA (medical, dental, vision, life, disability, certain employee assistance and wellness programs, for example) and are required to have a plan document that is memorialized in writing. ERISA further required that the plan document contain specific, express provisions. This means if you deliver any type of benefit program to employees, it’s likely you need a current ERISA document.

How does the DOL enforce ERISA?

The DOL has broad authority to investigate or audit an employee benefit plan’s compliance with the ERISA. The DOL’s EBSA division handles audits of employee benefit plans. To perform these audits, EBSA employs over 400 investigators working out of field offices, many of whom are lawyers or CPAs or have advanced degrees in business or finance. The DOL has authority to assess civil penalties for many different types of ERISA violations.

How can an employer minimize its risk of being audited by the DOL?

As a practical matter, an employer has little control over whether it will be audited by the DOL. However, an employer can take the following steps to help minimize its exposure to a DOL audit:

  • Respond to participants’ benefit questions and requests for information on a timely basis;
  • File Form 5500 on time and make sure it is complete and accurate;
  • Create and distribute participant notices required by law (for example, the summary of benefits and coverage) by the deadline; and
  • Make timely updates to plan documents and summary plan descriptions (SPDs) to reflect legal and design changes.

How can employers be prepared for a DOL audit?

The best way to prepare for a DOL audit is to remain in compliance with the law and establish a recordkeeping system for maintaining all of the important documents relating to your employee benefit plans. Retaining complete and accurate records will help move along the audit process and provide an accurate picture of an employer’s benefit package. As a general rule, these records should be retained for seven years.

Because the DOL has increased the frequency of health plan audits, employers should consider reviewing their health plans for compliance now, before they are selected for audit. It is important for employers to get their health plans’ paperwork in order as part of this process. Don’t be fooled into thinking you are “too small” for ERISA. Employers of every size who provide any type of Employer Sponsored Benefit Plan are subject to ERISA. Ask your broker if you need documents and get them done!

Contact Us