SPD Wrap documents are a convenient way for employers to collate all the welfare benefit plans that they’re offering to their employees. However, there’s more to it than just outlining the terms of conditions of these plans. Employers have to make sure that their Summary Plan Descriptions are compliant with the Employee Retirement Income Security Act of 1974 (ERISA).
As a business owner, here’s what you need to know:
What is ERISA?
ERISA is a law that requires employee benefit plans to meet certain standards. The law aims to protect workers in the private sector enrolled in pension and health plans. It does not, however, mandate employers to establish benefit plans.
ERISA reporting requirements
Under ERISA, every employee welfare benefit plan should be implemented according to a written plan that identifies basic information such as:
- The named fiduciary who is responsible for the plan’s implementation
- Procedure for amending and terminating the plan
- Source of funding for the plan
- Responsibilities of the employer and the insurance carrier or third party administrator.
ERISA also mandates employers provide a document with a comprehensive and accurate summary of the plan. Failure to provide this document to an employee 30 days after an official request would lead to a fine of $110 per day per employees.
How does an SPD wrap document help?
Wrap documents are documents that contains the insurance certificate, plan, policy or booklet of every employee welfare plan. To ensure that your SPD wrap document meets the right standard, make sure you hire Human Resources experts to create the document for you. ERISA can be full of legal jargon that a layman could misinterpret so it’s best to talk to a professional to make sure you don’t open yourself up to any legal troubles down the road.