Is A Wrap SPD Needed?

We understand the hassles that come with changing labor and tax regulations. That’s why we lend our services from consultation to wrap SPD document generation for employers wishing to comply with these regulations. Is a Wrap SPD needed?

is a wrap spd needed

Are you hitting a brick wall with business compliance?

But just what is a wrap SPD? This is a document disclosing details of benefits, the employer affords the employee in compensation for services rendered and is required to be by law to be filed with the department of labor. We’re here to simplify the compliance process for employers.

When the Studebaker Corporation closed down the operations in 1963 due to inability to meet pension promises made to employers, the federal government moved to enact pension reforms. Through the 1974 Employee Retirement Income Security Act all the employers are supposed to view benefit payments to pension plan participants as a form of corporate debt, the participants being the lenders to the sponsor of the plan and therefore comply with some reporting and disclosure rules.

This new perspective requires transparent financial reporting and filing of Form 5500 annually, detailing conditions of benefit plans. Additionally, employers have to provide employees with Summary Plan Description (SPD) of how they will be compensated for their services. Compliance with this ERISA reporting and disclosure rules means additional administrative tasks and documents to be filed. To avoid such extra regulatory burdens, employers have therefore sought ways in which they can simplify these extra administrative tasks.

One stellar way is to use the WRAP SPD. What is WRAP SPD? In the quest to smoothen pension plans administrative tasks, employers have decided to roll up all employee benefits into a single plan and summarize the benefits in a single document using ERISA language. This document is the SPD WRAP document, and it provides details of: All the welfare and health benefits the employer offers the employee and beneficiaries. References to complementary Insurance booklets and certificates Disclosures mandated by ERISA and COBRA (Consolidated Omnibus Budget Reconciliation Act) ERISA however, in particular on how the SPD document content, language, formatting, and deadline. Additionally, changing labor laws make the preparation of the document hectic. That’s why employers need help when it comes to ERISA compliance. We can help employers make the necessary compliance adjustments and also generate the wrap SPD documents using our updated continuously ERISA wrap SPD system.

Who needs WRAP SPD? ERISA is a USA federal tax and labor law that tell Private Sector employers the minimum pension standards they have to comply with. Any private industry employer that provides welfare and health plans, therefore, must satisfy ERISA SPD requirements Health, welfare and other Employer Assistance Programs subject to ERISA requirements must comply with these reporting and disclosure rules.

1. Disclosure: Provide employees with a readable summary of information about the plan. This includes a summarized description of terms and conditions of the program and contains the name and number of the pension plan, benefits afforded plus amounts deductible and co-pay and eligibility requirements. Other mandated information includes the claim filing and investigation process and information on the plan sponsor and trustees. If it’s a medical plan, the employer should detail all the benefits it provided before the 2010 Affordable Care Act.

Additionally, disclose information regarding mothers and newborns. Provide information on COBRA rights if subjected to one. 2. Reporting When it comes to reporting, large plans with more than 100 participants, employers are to annually report on the plan status by filing form 5500 with the labor department and the Internal Revenue Service. Plans with less than 100 participants must file form 5500-SF.

These forms detail if a plan is funded or unfunded plus other operations and investments. Importance of SPD WRAP documents Using wrap to bundle all benefits into a single plan then summarize it in ERISA language for SPD compliance reduces plan administration tasks. The wrap document also makes references to insurance certificates and master contract booklets; therefore, satisfy the SPD.

SPD is used by the Department of Labor to review a firm’s file during an audit. The document, therefore, makes it easy to review and file the form 5500 as only one form is submitted. Additionally, SPD helps translate complex actuarial language into ERISA required, simple style that employees can understand. Failure to comply with ERISA SPD rules attracts a fine. No other documents can be used as WRAP SPD alternatives; this is because the language used and reporting requirement in SPD document differs from different materials such as Insurance booklets and should not be substituted with such. The wrap document, therefore, helps to avoid penalties.

The WRAP SPD not only soothes plan administration tasks but also gives auditors and employees evidence of employer’s consciousness towards the health and welfare of the employee.

Is a wrap SPD needed? BC2CO can help with your wrap plan document needs.

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What Is ERISA Wrap SPD? Everything You Need To Know

What is ERISA Wrap SPD?

If you don’t know the answer to this question, you’re not alone. There are many people that are unfamiliar with ERISA and its requirements. A lack of knowledge could cause a number of problems for you.

Who Needs To Learn About ERISA?

Anyone who is either an employer or an employee should take the time to educate themselves about ERISA. If you are an employer, federal law requires you to meet the ERISA requirements. If you are an employee, then you are entitled to certain things because of ERISA requirements. You should make sure you are getting everything that you need.

It’s okay if you don’t know a lot about ERISA right now, but you should work to change that. You can find answers to many common questions below.

What Is ERISA Wrap SPD?

ERISA stands for the Employee Retirement Income Security Act. It describes a group of federal laws that were specifically designed to protect the employees that work for a company that provides things like pension or retirement plans. It also protects employees who work for a business that provides insurance coverage.

If an employer offers a plan that is subject to ERISA, they need to make sure that they follow compliance procedures. This includes proper reporting, written plan documents, and a process for documenting claims. Employees must also fill out necessary forms, such as the Summary Annual Reports.

SPD stands for Summary Plan Description. This is a detailed description of the plans and benefits provided. The booklets that insurance companies provide are not enough to be SPD compliant. Employers will have to work to satisfy the Department of Labor requirements.

A Wrap plan can help employers to do exactly that. A Wrap plan is a plan document that can either wrap around one benefit or combine multiple benefits into a single document. With a Wrap plan, employers can ensure that they have documentation with proper ERISA language that they can distribute to their employees.

erisa wrap spd

Who Is Exempt From These Regulations?

The majority of employers are subject to ERISA regulations. The only employers that are exempt are the employers that do not offer benefits like retirement plans or health insurance at all. LLCs, corporations, and nonprofits all have to comply with these regulations.

With that said, there are a few exemptions to the rules that are in place. Governmental employers do not have to follow these regulations, and church plans are exempt as well. This is because churches are currently exempt from taxes. While these types of employers are exempt right now, it’s possible that this could change in the future.

What Are The Penalties For Failing To Meet ERISA Requirements?

If a company does not meet the requirements outlined by ERISA, they will have to face a number of penalties. If the SPD is not given to the Department of Labor by the necessary deadline, employers can be fined up to $152 a day until the correct documentation is given.

If a company continually refuses to submit this documentation, additional penalties could be added on to the ones described above. Any company that is subject to these requirements needs to work hard to make sure that they are compliant with existing regulations.

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If you’re a business owner, you’ll want to take the time to learn more about ERISA and what it requires. You should ask us how we can take away the worries of ERISA compliance.

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Recognizing Summary Plan Description Distribution Requirements

Summary Plan Description Distribution RequirementsWrap plan documents are commonly used by the companies that are trying to find a way to truly present their benefits plans effectively. They need to be able to demonstrate their ERISA compliance in the first place. They also have to communicate effectively with their employees, their investors, and many of the other parties who will be interested in their ERISA compliance. It’s important for them to be aware of summary plan description distribution requirements.

These plans absolutely have to include a summary of the relevant documents. Wrap plans themselves are summaries, which can make things easier already. However, it’s possible to be even more organized than that, especially for the organizations that already have very detailed plans and who need to make sure that everything that they have been comprehensible.

This wrap plan needs to be worded effectively and clearly.

While it should be written formally, of course, the language should still be less formal than the language that will typically be used throughout the rest of the wrap document itself. This summary is what a lot of employees are going to consult when they are trying to understand what is going to be contained in a particular benefits package.

Other professionals will probably consult this summary before they look at anything else in the associated documents. They might only decide to look at the summary, in fact. Even professional scientists will sometimes only read the abstract of a particular science paper, since they have a tendency to read so many different scientific journal articles on a regular basis and they need to be able to save time.

The contents of the wrap plan are excessively important, especially for the people who are trying to find a way to quickly and accurately explain everything to large groups of people, or at least to potentially large groups of people. Obviously, these are documents that can be altered, addressed, and revised. However, getting it right the first time is important, especially since it will provide a useful template for when everything inevitably gets updated at some point.

It’s important to be concise when writing a summary, which has to be relatively short by definition. Specifically, the coverage limitations need to be mentioned, if only briefly. The summary plan is not going to be able to include all of these additional details, but it should at least give people an idea of the extent of the coverage in question. The wrap plan should certainly include direct information on the benefits themselves. People should not just be able to work backwards, figuring out the benefits based on the limitations associated with the benefits and the coverage.

There might be some cost-sharing provisions that should be mentioned in the summary plan, especially if these cost-sharing provisions are substantial at all. However, as long as they are in any way notable, they should still be included as part of this important summary.

Employees will need to have an idea about how they should file benefits claims. While they might have a general idea of how to do this, it’s still important to make this clear. Employees will also be able to participate in these benefits plans at different times, and there should be information related to the timetable involved.

These wrap plans will certainly change at some point, and everything else will have to be revised accordingly. In some cases, informing people about the changes through a different document, such as a summary of the modifications, can suffice.

Companies that present everything this effectively will be able to avoid a lot of issues in the future. They won’t run into problems with miscommunication. In many cases, they will also manage to save themselves a lot of time and effort in the long run. Once these sorts of documents are established, they will usually only need to be modified every now and then. Most of the work will have already been completed. As long as the wrap plan documents and the associated summaries are completed effectively enough initially, there shouldn’t be any worries at all. Getting some assistance with this process can certainly help, especially for the employers who are used to working with lots of different professionals.

Summary Plan Description Distribution Requirements

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Are You ERISA Compliant? Hire a Consultant to Provide Guidance

ERISA, which stands for Employee Retirement Income Security Act is a federal law that safeguards retirement plans such as 401ks and health and welfare benefit plans for private employers. The law has been amended many times since its inception in 1974 in order to provide wider benefits for participants and beneficiaries. The law is administered by the Department of Labor and while violation can have serious consequences in the way of penalties imposed by the DOL, participants and beneficiaries can also launch lawsuits against employers who they feel are not ERISA compliant.

Any employer who maintains welfare benefits plans for employees is subject to this law. This includes corporations, partnerships, limited liability companies, sole proprietorships and nonprofit organizations. The size of the employer doesn’t matter – so long as the employees are subject to benefits the employer is subject to ERISA compliance. There are, however, a couple of exemptions:

• Benefits plans that are maintained by government employers are not subject to ERISA and that includes local, state and federal.

• Benefits plans that are maintained by religious organizations are also exempt.

A small employer who wants to be exempt would have to find a way to fit in either of these two categories.

Which benefits are covered by ERISA compliance?

There are many of them and that is why many employers would rather hire a consultant to deal with this specific issue. Compliance can be tricky and confusing and sometimes employers find themselves afoul of the law through no fault of their own. The benefits that are covered include:

• Medical, hospital and surgical benefits

• Dental benefits

• Vision benefits

• Prescription drug benefits

• Health reimbursement benefits

• Health flexible spending accounts

• Group insurance benefits

• Accidental death and dismemberment

• Death benefits (not life insurance)

• Wellness programs

• Employee assistance plans

• Short term and long term disability benefits

• Disease specific benefits

There are certain benefits that are not covered under ERISA compliance:

• Adoption assistance plans

• Section 125 premium only plans

• Commuting benefits

• Dependent care assistance programs

• Health saving accounts

• Pet insurance

• Financial retirement planning programs

• Health and exercise club memberships

• Liability insurance plans

• Professional development classes

• Scholarship programs

• Tuition reimbursement

• Workman’s compensation as provided by state law

As is often the case with the law, in each of these categories there are clauses and sub-clauses that can be very confusing to a layman. Even for those who understand the law navigating the issue can be a time consuming process that takes them away from other more important duties in the workplace. That is why it is such a good idea to hire a consultant. An ERISA compliance consultant understands what it means to be ERISA complaint and ensures that all clients are doing as required by law.

How do you choose an ERISA compliance consultant?

There are many agencies that claim to help employers with ERISA compliance but you should be careful when you are choosing. You should be looking for a consultant who has guaranteed experience in this area – they should be able to show you proof of some of their work. Ideally, a consultant who has been around for at least 10 years is a good idea because in that time they will have gathered the necessary experience to ensure that their clients are ERISA compliant. They also know the loopholes that the government can use to come after you and they will help you plug them.

A good consultant will be ready with advice and play a preventative rather than a curative role, helping you make sure that you have complied with all federal requirements.

Once you hire an ERISA consultant like us you will be doing to ensure that your employees get their benefits as required by law.

Are You ERISA Complaint? Hire a Consultant Like Us.


Wrap Plan Document Preparation Assistance and Support

More and more employers are now choosing to get wrap plan document preparation assistance, which means that wrap plan document preparation at this time is more important than ever before. Employers that offer a lot of health benefits and benefits in general to their employees will often have a difficult time explaining everything that has been outlined in those benefits packages. Offering benefits to employees can be a complex process. An official wrap plan document brings all of the associated contracts and group insurance policies together, so there will be only one plan for employers and employees to examine. In many cases, the resultant plan will include information about health reimbursement, medical benefits, cafeteria access, dental benefits, and the vision benefits that an employer might offer.

The administrative process associated with employee benefits packages can certainly be complicated. When employers are able to use a wrap plan instead, they will be able to save time and money. Their employees will also have an easier time learning about their benefits packages, making them feel more secure and giving them the chance to understand everything associated with a particular job.

We at BC2 are wrap plan document preparation experts.

It should be noted that wrap plan documents typically contain more information than most insurance documents. Employers and employees will not find themselves doing research on their own in order to fully understand some of the employee benefits policies. Wrap plan documents manage to be both simple and detailed at the same time, which is a great balance to strike.

There is a lot of information that ERISA wants that is not always included in some insurance documents, or at least not thoroughly included. Issues like that are less likely to happen when wrap plan documents are prepared. Employers will avoid a lot of different problems this way. Employees will also have an easier time planning for their own futures in the process.

Putting together a wrap plan document initially can require some care, obviously. Employers have to avoid making errors at this stage. Making mistakes at this stage can be serious, and making mistakes at any other stage in this process can be just as problematic. Getting professional assistance with the whole wrap plan document preparation process can make all the difference in the world for the employers who are trying to make sure that everything goes smoothly and successfully. Our organization would be happy to help companies with this stage.

There are different types of wrap plan documents. We can help different clients decide on the wrap plan document that is going to really work for them and meet the needs of their organization. Different welfare and health plans have different structures. We have plenty of different templates for wrap plan documents, and we should be able to find a template that will work perfectly for your company, given the structure of your welfare and health plan. You’ll have an easier time analyzing those health and welfare plans, and this will also be the case for your employees.

wrap plan document preparation assistanceGetting assistance with the wrap plan document preparation process can already make everything better for the people involved. However, it’s important to remember that this is something of an ongoing process to a certain extent. A wrap plan document is not necessarily a finished product. It might be a functionally finished product for a year or so, but many things can change in a year.

Wrap plan documents will have to be revised once a year in a lot of cases, since the laws involved will change. In some cases, employers will also update the benefits packages that they offer their employees in the first place, and they will have to adjust their wrap plan documents accordingly. We will certainly be available to help at those moments as well, making it easier for employers to adapt when necessary. Employees will also have an easier time adapting to the changes to their benefits packages, since these might occur each year.

Getting wrap plan documents is going to become more common over the next few years, since more and more employers are now realizing that there are lots of benefits associated with them. Some employees are going to come to expect them. Employees tend to change jobs relatively frequently these days, and this means that they will have a lot of experience with different workplaces. Many of them will expect there to be wrap plan documents, and employers will find that many of their competitors will use them. It makes sense to start planning your wrap plan document as soon as possible.

Learn even more about wrap plan document preparation assistance

Is Your Business ERISA Compliant? How To Make Sure Your Small Business Is In Compliance

‘Compliance’ is a term that is commonly heard in the business world. Having a business that is in compliance is often a goal for many small businesses. However, if you are wondering is your business ERISA compliant, it cannot simply be a goal. In fact, ERISA non-compliance is the law, and stiff penalties await any business that fails to follow the law.

The ERISA, or the Employee Retirement Income Security Act, is a Federal law that stipulates specific minimum standards for welfare plans, health plans and retirement plans that qualify. Although this sounds simple enough at first glance, right beneath the surface lies the confusion and complexity of the law that often stops small business owners in their tracks.

The complexity of the law is becoming even more evident, especially with the passing of certain legislation such as the PPACA, or Patient Protection And Affordable Care Act. This is also known as the Health Care Reform Act. The PPACA has a direct impact on health plans that are covered by ERISA.

The Department of Labor and the Internal Revenue Service are two Federal agencies that not only oversee these types of plans but also work to ensure the plans are enforced. These agencies are also paying very close attention to sponsors, those who are compliant and those who are not. Between 2008 and 2010, over 70 percent of these retirement plans were audited by the DoL (Department of Labor), and the penalties averaged over $400,000 per plan.

So, with all of this information, it can be nerve-wracking for business owners to know is your business ERISA compliant. Fortunately, there are several things that can be done to make sure businesses are indeed compliant.

Plan Documents

All plan documents have to be compliant with the regulations and laws. Any amendments made to the documents have to be signed by the appropriate parties wherever applicable. All plan operations are also required to be in compliance.

Having A Summary Plan Description And Summary Of Benefits In Place

A summary plan description, or SPD, is information that informs participants about all of the terms and conditions of the plan. Some of the information included is:


These SPDs are typically given to participants, and ERISA compliance requires that these documents are automatically sent to participants within a certain time frame.

On the other hand, an SBC (summary of benefits and coverage) provides participants with general information and they also allow participants the opportunity to compare different health plans before choosing one.

Employers can choose to integrate these two documents, but failure to provide one or the other is an ERISA violation that can result in hefty fines.

Health Plans Compliant With ERISA

Almost all group health plans should have SPD. These types of plans include all key medical benefits, but also include plans for dental, wellness, and vision. It is important to remember that the rules for ERISA apply to more than just the main health benefits, so be sure you account for all of them.

Responsibility Of Plan Administrator
ERISA compliance is the job of the plan administrator. This can be a designated person within the organization, or it can be the employer (sponsor of the plan). The plan administrator must be named in the SPD (summary plan description), and this person is not able to avoid liability for any SPDs by delegating tasks to other people in the organization.

Also, keep in mind that most TPAs (third-party administrators) are not usually designated to be plan administrators of ERISAs. However, they may assist with the distribution and drafting of a summary plan description if they are under contract.

Insurers are not responsible for creating SPDs for ERISAs either. They may decide to assist with benefit descriptions or certificates of coverage, but these items are not considered SPDs.

So, is your business ERISA compliant? These regulations can be difficult to understand, but by working with compliance professionals and resources, you will avoid making costly mistakes.

Do not hesitate to contact us if you or a business is in need of ERISA compliance services. We will provide best service for best price. Form 5500 Champions!

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Form 5500 Answers, Wrap Plans and Benefits Compliance

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The Form 5500 series is a joint development by the DOL, the IRS, and the PBGC. It is a series of returns used to register information on employee benefit plans. Created as a disclosure tool and document, it plays a role in assessing economic trends. Its framework designs itself for benefits compliance. It attempts to ensure the proper operation and compliance of requirements. Its function is in regards to the benefit plans and rights of employees.

form 5500 preparation

Filing requirements and procedures

The Form 5500 is for companies with at least 100 employees enrolled in a specific benefit plan. Said companies have to abide by ERISA’s mandatory rule to file the form. In filling it out, taken into account is the type of benefit plans used by employees. Plans subject to ERISA include medical coverage, pension, life insurance and disability benefits. For plans with fewer than 100 participants, companies must use the Form 5500-SF. For non-resident aliens, companies must file the Form 5500-EZ instead.

The Form 5500 and its variations are all available in DOL’s website. Starting January 1, 2010, each form has to undergo electronic submission. DOL accepts either IFILE or EFAST2-approved vendor software. Paper filings are no longer accepted. Form 5500 preparation is subject to the annual reporting requirements posed by ERISA. Companies must file the form within a seven-month period by the end of each plan year. The due date lies on July 31 in the calendar year. Failure to follow the submission of requirements results in large penalties. The only way to reverse sanctions is by submitting said requirements. To avoid acquiring penalties, there is an option to request for a 2.5-month extension. Companies avail of this extension by submitting a Form 5558 before the deadline.

Usually attached to a Form 5500 is a schedule that which depends on the type of filer. On one hand, schedule A must be along with File 5500 in the case of any plans covered by group insurance contracts. On another, schedule C is only required for large funded welfare plans. But this type of situation is uncommon. Form 5500 generally asks for information on a few things. Among these are insurance contracts, service providers, retirement plans, financial condition and transactions, among others.

Wrapping the plan document

To keep track of the benefits compliance in each company, ERISA mandates the use of a wrap plan document. It improves documentation by allowing the compilation of many plans at a time. It serves as a great tool in putting a bigger stack of information into one productive single space. A well-drafted document consists of all important terms and conditions in a plan. In short, it must provide a clean summarized description of the specific benefit plan. Aside from documentation purposes, it also has a use in legal matters. It puts into paper the plan sponsor’s legal obligations, powers and rights. It also records the sponsor’s administrative actions. Additionally, the employer can limit their liability by jotting down their specific terms. These terms are ones they define and set in administrative practice.

The wrap plan comprises one single plan. Hence, only one plan description should be maintained and updated now and then. The plan sponsor should only file one Form 5500 and then attach the schedules. There are separate schedules for each benefit and their respective contracts.

All in all, the use of a wrap plan document acts as a simple solution in reducing administrative expenses. This is especially important in smaller companies. For they usually have fewer resources than large employers. Without a wrap plan to assemble each amendment, documentation poses more hassles. The employer must provide separate articles for each plan for every change implemented. To adhere to the regulations set by ERISA, the easiest way to go about this is to provide a single document. This document compiles each important content that matches ERISA’s requirements. In fact, the significance of proving summaries cannot be stressed enough. As long as one follows instructions, the whole process should be as smooth as can be.

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Benefits of Benefits Compliance

There are many benefits of benefits compliance. This article talks about just a few of those benefits in business.

So a group of persons comprises a company. Each person possesses rights both as an individual and as a member of a functioning society. One fundamental right of an individual is to have access to benefits and welfare. A running business is hence obligated to protect the rights of its employees. It should work towards ensuring social security. But benefits compliance still has to adhere to the rules set by the industry and government. Laws and policies regard the type of benefits and plans often provided to employees.

To manage employees’ benefit plans, a company must use a wrap plan document to record a plan’s details. Section 402 of the Employee Retirement Income Security Act mandates the use of the wrap plan. A wrap plan document is a legal document that assembles all plan contracts into a single plan. The design of this tool ensures better compliance to government laws. It also encourages better administration of benefits compliance.

benefits of benefits compliance

The employer or sponsor follows a certain process when a plan has more than 100 participants. Under one copy of Form 5500, the sponsor creates and files separate schedules. In general, employees usually take advantage of health and welfare plans. But the list can also extend to pension plans and retirement arrangements. Other examples of plans are drug prescription plans and life insurance, among others. As of 1974, these benefits are all subject to the requirements of ERISA. A company must pay attention to the deadlines. They must do the Form 5500 preparation every year, within seven months at the end of each plan year. If following the calendar year, the due date would then be on July 31.

As you can see the benefits of benefits compliance is far reaching.

The Form 5500 series is a joint project developed by the DOL, the IRS and the PBGC. Its specific role or function is to collect information on employee benefit plans. It assesses various variables in a business environment. Such variables include financial status, transactions, investments, insurance and operations of all plans. Benefits compliance makes sure to include all required information when filing the forms. From a legal perspective, the form establishes fiduciary. It lays down the responsibilities of an employer to their employee and vice versa. It also makes official the compliance to benefit plans. This is especially when it’s oversaw by an organized governmental body.

Benefits compliance isn’t only for documentation purposes. It also reaches out to other areas of business and industry. It has an important role in the entire company’s decision-making process. It’s a good supplement to keeping track with daily sociological trends. This is especially important with the rapid pace of industry today. Information must always pass over to people in as smooth a process as possible. Both the employers and the employees must cooperate together in this event. To assist with the task of managing plans, a person or persons with industry knowledge do the work. They’re there to make sure the entire process runs as well as possible. The benefits of benefits compliance services usually cover access to experienced attorneys, consultants and professionals.

To summarize, the role of ERISA and its implications on work life has been highlighted. A client or participant hence has the responsibility to be aware of the principles they need to abide by. They also have the right to take advantage of benefits that relate to their status as an employee. As much as possible, troubles should not pose during the process of applying for plans. An employee should be able to enroll in their chosen benefit plan. An employer then has to take the responsibility of filing the wrap plan document. Every individual has the right to good health and well-being. Hence, a person’s priorities outside of work must take precedence.

The benefits of benefits compliance is ongoing in business. As companies continue to grow online and offline there will always be uncontrollable and new factors that will need addressed. If you have questions about benefits compliance, Form 5500, wrap plan document or the Delinquent Filer Voluntary Compliance Program we offer consulting, preparation of forms and filings your business needs to stay compliant.

Watch our introduction video to learn more about Benefits Compliance Consultants Inc. and how we can help your business succeed with today’s business compliance needs.

The Idea and Process Behind Benefits Compliance

The benefits compliance process is well documented and is a much needed part of a US based business.

Before starting a business, you must know the government’s rules first. A company’s laws depend on a few things like its size, number of employees and property type.

Labor laws exist to ensure people’s satisfaction with their professional lives. An employer must always know how to form good relationships with their employees. To do so, they must understand the needs of their people, and cater to those specific needs.

In a work setting, employees often look for ways to improve their lives. One way they do this is by taking advantage of certain benefits. Benefit plans in business exist for this very purpose. A good employer must know the importance of following benefits compliance.

In general, employees usually avail of health plans, welfare plans, retirement arrangements, profit sharing plans, life insurance, disability insurance and medical coverage. Most of these benefit plans are under the Employee Retirement Income Security Act, as of 1974. ERISA’s main aim is to protect the employees’ rights to a good well-being.

Compliance of benefit plans follows a certain process. First, most companies must do the Form 5500 preparation. The Form 5500 is the annual report of employee information. It contains and collects the major details about a person’s benefit plans. Companies with 100 or more employees who have benefit plans must file the Form 5500 every year. Participants don’t cover dependents. They only include employees, retirees and primary COBRA beneficiaries. For companies with fewer than 100 participants, a different form is otherwise used.

Attached to the Form 5500 are schedules. The schedule attached depends on certain categories, like the type of filer. Usually considered when filling out the Form 5500 are financial transactions, retirement pension, insurance contracts, defined benefit plan information, and service providers. All requested information must be filled out as indicated in the Form 5500.

As of 2010, all variations of Form 5500, along with the schedules, must be submitted online. In this case, one uses the EFAST2 system. DOL allows the use of EFAST2-approved third-party software. Another alternative is its online filing system IFILE . The due date of filing the form is within seven months following the end of the plan year. Another option, though, is submitting a Form 5558 to extend the due date by two and a half months. The Form 5500 series is bound to all guidelines set by the DOL, IRS and PBGC. One receives penalties when they fail to submit the requirements on time. The Form 5500 is used to measure economic and psychological trends in industry. The form acts a disclosure tool and protects the rights of the participating people.

An employer is always encouraged to provide welfare benefit plans to their employees. For organization purposes, ERISA also mandates the use of wrap plan document. This document records the terms and conditions of each benefit plan. Its design makes it so that it includes all information required by ERISA. A well-drafted plan document consists of eligibility requirements, plan procedures, and coverage length. In short, it must provide an accurate summary of the plan’s information. It should encourage strict compliance to ERISA’s requirements. Its purpose also is to help the company easily keep track of many documents all at once. This assists in wide-scope auditing and decision-making.

Meeting the requirements for benefits compliance is a necessity in every company. It’s a task that requires an ability to keep up with new updates and changes in the industry. Hence, businesses usually hire experts to handle the processing of benefit plans. Additionally, there must be a smooth delivery of information between the people involved. In this case, it’s between the regulators and the clients. It’s important that everyone is aware of the different principles they should follow. On the other hand, a good management team must be capable of abiding by the rules. They must watch over the entire process of benefits compliance. This is so they can identify any possible issues as soon as they rise up. Making informed decisions is a must in business.

Benefits Compliance Consultants Inc.

Phone: (515) 244-2424

Our company specializes in benefits compliance services for delinquent filer voluntary compliance program, Form 5500, wrap plan document, 401k preparation filings and much more.



ERISA Procedures For Disability Provider Plans Went Into Effect April 1

For employers that sponsor a disability benefit plan governed by ERISA, March and April of 2018 represent an important period of time.

Claims filed later than April 1 must be in compliance with a new Department of Labor rule issued back in December of 2016. Among the plans falling under this umbrella are certain qualified retirement plans, health and welfare plans as well as non qualified plans for deferred compensation. The purpose of the new requirements is to boost disclosures to participants in the plans and to increase impartiality of those who make decisions concerning the plans.

Categories Of Affected Plans

In a general sense, the new regulations are applicable toward any plan that falls under the auspices of the Employee Retirement Income Security Act (ERISA). Every plan, including those related to disability benefits, that involves the claims adjudicator of that plan to make disability determinations before rendering a payment decision is part of the new layout. Thus, all employers need to take a fresh look at plans providing benefits, waiver of accrual allocation rules or accelerated vesting due to disability.

Impact On Qualified Retirement Plan Operation

It may be necessary to update retirement plans if their plan administrators are charged with determining disability. But, if such determinations are made by third parties such as the Social Security Administration or other entity, there may be no need for an update.

While it is true that non qualified deferred compensation programs largely fall outside of the ERISA regulations, they are subjected to the statutory claims regulation rules. As such, these plans will require compliance with the new rule if their administrators are the ones to make disability decisions.

Implications For Welfare Plans

The majority of plans covered by ERISA are in fact insured, and therefore broadly speaking, it is the disability carrier’s duty to make changes to claim processes and procedures. Employers and/or plan administrators ought to communicate with the insurers to ensure that coverage certificates will be appropriately updated to achieve compliance with the new rule by April 1 of 2018.

Short-term disability plans that are self-insured and that qualify as a payroll practice may also not require revision, given that they are exempted from ERISA. It should be noted, though, that administrators of such plans may wish to adopt part of even all of the final rule’s provisions, in keeping with best practices. Also, it is important that summary plan description documents and wrap plans be updated and disseminated to all plan participants.

Key Changes Within The New Rule

Every claim and appeal must now receive adjudication in a way that fosters the impartiality and full independence of those making benefit decisions. Much like the rules pertaining to group health care plans promulgated as part of the Affordable Care Act, determinations related to the compensation, hiring, promotion, termination or other issue impacting an adjudicator must never be made with an eye toward the chances that individual will support benefits denials.

Bolstered Disclosure Rules

First, a claim denial, whether at the first denial stage or later as part of an appeal, must have as part of it a discussion about the decision itself. This should include the rationale for any disagreement with the vocational expert, treating doctor or other expert who assessed the claimant; the opinions of experts secured by the plan; and a Social Security Administration disability determination offered to the plan by the claimant.

Furthermore, a denial notice needs to include all guidelines, internal rules, standards and protocols utilized in rendering an adverse claim decision (or in the alternative, a statement that no such criteria exist). There also must be a formal statement that the claimant at issue is entitled to be provided with all relevant documents upon request.

Right To Receive, Review And Refute New Facts Prior to Decision

So that all reviews are full and fairly rendered, plans are required to give claimants all new evidence or rationales used in making the benefit determination. This material must be provided to the claimant immediately and with enough advance time before the decision date so that a response by the claimant is possible. This way, claimants have an opportunity to present their side at the level of an administrative appeal instead of having to wait until the issuance of a denial.

Exhaustion Of Remedies

In cases where a plan has not met all of the claim procedural requirements, normally a claimant would have been declared to have exhausted all available administrative remedies and a lawsuit against the plan could be commenced. But, plans can still be in compliance if their rule violation was deemed non-prejudicial, de minimis, the result of good cause or something the plan could not control, made in the context of a good faith exchange and not part of an overall pattern of violation.

Rescission of coverage is in and of itself an adverse benefit adjudication. Rescission of disability coverage made retroactively is also an adverse determination and is subject to the appeals process. It must be noted that termination of coverage because of premium nonpayment does not equate to a coverage rescission.

It is necessary for all notices to be rendered in a manner that is both linguistically and culturally proper. In the same vein as the ACA rules pertaining to group health care plans, if the relevant claimant’s address of record is within a country with more than 10 percent non-English speakers, claim denial documents must be accompanied by a statement in the appropriate language, indicating how language interpretation services may be accessed.

Disclosures Regarding Contractual Limitations Time Frame

Plans with restrictions on the time period available for claimants to file lawsuits need to include on their denial notices information regarding this limit. For instances, if the relevant state has a normal limitations period of five years, but the plan’s contract states that the period is just three years, denial notices must state this fact along with the exact expiration date. Best practices suggest that this type of notice should also accompany denial notices for group health plans and other plans.

Ultimately, every employer potentially affected should make certain to review the new regulations alongside their plan documents to ascertain which rules are relevant to their activities. Furthermore, updates to SPDs should be promptly undertaken in order to achieve full compliance with the new disclosure measures outlined above.

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