Often called welfare benefit plans,
ERISA is a federal law that controls group-sponsored benefits. The law mandates
employers to obey strict requirements for disclosing plan information to all
eligible employees. It also requires the provision of specific plan features
and funding information too.
Any health or welfare benefit
sponsored plan offered by an employer must be written in an exact IRS legal
compliance document and this document is to be communicated effectively with the
employees. The employers must also ensure whether ERISA provisions are included
in their insurance documentation.
One method to be assured that all IRS
compliance is included in one document is by using an ERISA Wrap plan. This
document assures that all legal compliance by an employer for IRS purposes is
included and all insurance information is written in the proper format.
Typically, insurers do not draft
contracts with ERISA plan document requirements in mind because their principal
focus is complying with applicable insurance laws, not the IRS compliance
format.
Consequently, insurance policies don’t
always protect the plan sponsor and plan administrator and often fail to
include ALL of the provision required for
ERISA plan documents. The best method is to combine the insurance documents
with an ‘ERISA Wrap document’.
For Self-Insured health plans they use
a similar plan document where plan benefits are provided in accordance to a
contract with a third party administrator other than an insurance company.
For instance, through a contracted
third-party service provider many employee assistance plans (EAPs) are
benefited. Many times, the contract is not designed to be the plan document for
ERISA purposes and might lack many of the essential elements and provisions planned
to protect the plan sponsor and plan administrator. The ERISA Wrap document
adds existing documentation to include required elements and other optional
provisions that protect the plan.
If you are looking for such a service
solution and to stay within the IRS compliance rules we recommend you contact
ACA Compliance Solution Services, Inc. They offer their preparation services of
ERISA Wrap plan documents for large and
small employer groups and that comply with the IRS ERISA Compliance and their
welfare benefit plans.
