What is the importance of an ERISA Wrap document?

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.