BENEFITS COMPLIANCE CONSULTANTS, INC.
ERISA Wrap Document Compliance
ERISA Wrap Document Compliance
ERISA Wrap Document Compliance
ERISA Wrap Document Compliance
Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since the wrap plan is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500, with separate Schedules A for each insurance contract maintained for the various health and welfare benefits offered under the wrap plan. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file. It also reduces the risk of a late or missed filing and the associated penalties.
It is important to note that some plan sponsors believe that they can file all their welfare benefit plans on a single Form 5500 without a written wrap plan document; however, this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, if discovered in an audit, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA. – See more at: http://www.eisneramper.com/Trends_and_Developments/wrap-plan-document-welfare-0213.aspx#sthash.t4ZA1Kf
Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since the wrap plan is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500, with separate Schedules A for each insurance contract maintained for the various health and welfare benefits offered under the wrap plan. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file. It also reduces the risk of a late or missed filing and the associated penalties.
It is important to note that some plan sponsors believe that they can file all their welfare benefit plans on a single Form 5500 without a written wrap plan document; however, this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, if discovered in an audit, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA. – See more at: http://www.eisneramper.com/Trends_and_Developments/wrap-plan-document-welfare-0213.aspx#sthash.t4ZA1Kfc.dpuf
Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since the wrap plan is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500, with separate Schedules A for each insurance contract maintained for the various health and welfare benefits offered under the wrap plan. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file. It also reduces the risk of a late or missed filing and the associated penalties.
It is important to note that some plan sponsors believe that they can file all their welfare benefit plans on a single Form 5500 without a written wrap plan document; however, this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, if discovered in an audit, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA.
ADDITIONAL BENEFITS OF A WRAP PLAN
A wrap plan can be customized so that the plan document contains language that matches the employer’s administrative practices and provisions that clearly set forth definitions, benefits, and “best practices” procedures, which help protect the employer from liability.
If a plan amendment is required, the employer will need to amend only the wrap plan document, thus simplifying administration and compliance. Without a wrap plan, the employer must adopt separate amendments for each benefit plan affected by the change.
Since the wrap plan is considered a single plan, there is only one summary plan description that needs to be maintained, updated, and furnished to participants, rather than a separate summary for each benefit.
– See more at: http://www.eisneramper.com/Trends_and_Developments/wrap-plan-document-welfare-0213.aspx#sthash.t4ZA1Kfc.dpuf
Plan Document, Summary Plan Description & Wrap Plan Preparation Specialists
We are Plan Document prep experts and an ERISA benefit pro.
Our benefit consultants group provides the following health and welfare plan document preparation services:
- Assessment of your Plan Document needs.
- Complimentary review of your current Plan Documents.
- Single or multiple benefit Plan Documents.
- Wrap Plan Documents.
- Summary Plan Descriptions (SPD).
- Summary of Material Modifications (SMM).
- Delivery of required materials.
- Educational presentations, seminars and onsite training.
Let us help simplify your life so that you can concentrate on what you do best. Our all inclusive, flat rate pricing is affordable and our customer service is beyond compare…Experience the difference today. View our testimonials page.
What is a Plan Document?
A plan document is required for ALL health and welfare benefit(s) and/or plan(s), regardless of employer size. The plan document describes the plan’s terms and conditions related to the operation and administration of the plan. It is required for each health and/or welfare benefit plan an employer maintains which is subject to ERISA, and it must be in writing. An ERISA plan may exist even without a written document, but would be considered out of compliance. Note: An insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits is NOT a plan document or Summary Plan Description (SPD), and it is also important to remember that non-ERISA plans should also have a separate written plan document.
What is a Wrap Plan Document?
A Wrap Plan Document (Wrap Document) is a document that effectively bundles or “wraps” all of your health and/or welfare benefit plans (i.e: health, life, disability, vision, dental etc) into one single plan. Our plan document services can consolidate all of your health and welfare benefit plans into one plan document with one plan number, eliminating the need and the costs associated with the preparation of multiple Form 5500 filings.
What are the benefits of having a Wrap Plan Document?
- A written Plan Document, as well as a Summary Plan Description is required by ERISA.
- Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since a “Wrap Plan” is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file as well as reduces the risk of a late or missed filing and the associated penalties.
- Some plan sponsors believe that they can file all of their welfare benefit plans on a single Form 5500 without a written wrap plan document, however this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a single wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA, thereby minimizing risk exposure and potentially costly penalties attributable to having multiple plans.
- Additionally, a ERISA wrap document can be customized so that the plan document contains language that matches the employer’s administrative practices and provisions that clearly set forth definitions, benefits, and procedures, which help protect the employer from liability. Also, if a plan amendment is required, the employer will need to amend only the wrap plan document, thus simplifying administration and compliance. Without a wrap plan, the employer must adopt separate amendments for each benefit plan affected by the change.
- And finally, since the wrap plan is considered one single plan, there is only one summary plan description that needs to be maintained, updated, and furnished to participants, rather than a separate summary for each benefit.
What is a Summary Plan Description or SPD?
The Summary Plan Description, or SPD, is the main vehicle for communicating plan rights and obligations to participants and beneficiaries. It is a summary of the material provisions of the plan document, and it should be understandable to the average participant of the plan. In the context of health & welfare benefit plans, it is not uncommon for the SPD to be a combination of the complete description of the plan’s terms and conditions, such as a Certificate of Coverage, AND the required ERISA disclosure language. Note: An insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits is NOT a plan document or SPD.
Summary Plan Description (SPD) ERISA Requirements
An employer must have a written Summary Plan Description (SPD) for each separate welfare benefit plan communicating plan rights and obligations to participants and beneficiaries. These documents must contain certain ERISA law language, along with the certificate of insurance to constitute an ERISA compliant SPD. The SPD must be disclosed to participants informing them of eligibility requirements, benefits, claims and appeals procedures, and rights under ERISA. Other SPD requirements include:
- Plan name
- Plan number
- Plan sponsor
- Plan administrator
- Plan year
- Employer tax identification number (EIN)
- Benefit type
- Detailed summary and description of benefits
- List and contact information of providers
- Procedures for Qualified Medical Child Support Orders
- Loss of benefits statement
- COBRA rights
- USERRA rights
- Plan contribution information
- Claims and appeals procedures
- Statement of ERISA rights
- Affordable Care Act disclosures
- Disclaimer and indemnification language
- And much, much more
SPD Delivery Requirements
ERISA requires that a Summary Plan Description be distributed to covered participants within 90 days after becoming newly covered by a plan, or within 120 days of a new plan being established. An updated SPD must be furnished to all covered participants every five years, and every 10 years even if the SPD has not changed. An employer should be prepared to prove it furnished a SPD to participants in a way “reasonably calculated to ensure actual receipt,” using a method “likely to result in full distribution.” Acceptable methods of delivery include: first-class mail, hand-delivery, and electronic distribution, if the employees have access to computers in the workplace and can easily print a copy.
Summary of Material Modifications
Any change in your plan that materially affects the design or pricing must be communicated to participants in a Summary of Material Modifications or SMM. The SMM must be distributed to covered participants within 210 days after the end of the plan year in which a material modification has been made. If the material modification is a reduction in group health plan benefits, the SMM must be distributed to participants within 60 days of the adoption date. Other examples of SMM changes include:
- Elimination of benefits payable
- Reduction of benefits payable
- Increases in premiums, deductions, co-payments or coinsurance
- Change of coverages or carriers
There is a penalty of up to$110/day for not delivering a SMM within 30 days after a Participant or Beneficiary requests it.
What are the steps for creating a Plan Document and Summary Plan Description?
Your compliant ERISA SPD or Plan Document package is easy to implement and simple to maintain. Once you provide us with your information, you will receive a customized Plan Document and Summary Plan Description (SPD) along with detailed, personal instruction for filing and distributing the required document(s) to the appropriate parties. Additionally, we will automatically update the necessary documents so that you are always in compliance with the law. Let Benefits Compliance Consultants, Inc. help simplify your life so that you can concentrate on what you do best. Our all inclusive, flat rate pricing is affordable and our customer service is beyond compare…
Contact us at (515)244-2424 or info@bc2co.com for your Plan Document needs.
STREAMLINING FORM 5500 FILINGS
Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since the wrap plan is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500, with separate Schedules A for each insurance contract maintained for the various health and welfare benefits offered under the wrap plan. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file. It also reduces the risk of a late or missed filing and the associated penalties.
It is important to note that some plan sponsors believe that they can file all their welfare benefit plans on a single Form 5500 without a written wrap plan document; however, this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, if discovered in an audit, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA.
ADDITIONAL BENEFITS OF A WRAP PLAN
A wrap plan can be customized so that the plan document contains language that matches the employer’s administrative practices and provisions that clearly set forth definitions, benefits, and “best practices” procedures, which help protect the employer from liability.
If a plan amendment is required, the employer will need to amend only the wrap plan document, thus simplifying administration and compliance. Without a wrap plan, the employer must adopt separate amendments for each benefit plan affected by the change.
Since the wrap plan is considered a single plan, there is only one summary plan description that needs to be maintained, updated, and furnished to participants, rather than a separate summary for each benefit.
– See more at: http://www.eisneramper.com/Trends_and_Developments/wrap-plan-document-welfare-0213.aspx#sthash.t4ZA1Kfc.dpuf
Generally, a Form 5500 must be filed for each health and welfare plan with more than 100 participants maintained by the plan sponsor. However, since the wrap plan is considered a single benefit plan comprised of various health and welfare benefit components, the plan sponsor is required to file only one Form 5500, with separate Schedules A for each insurance contract maintained for the various health and welfare benefits offered under the wrap plan. Therefore, a significant benefit of the wrap plan document is that it reduces administrative costs by reducing the number of Forms 5500 that the plan sponsor must file. It also reduces the risk of a late or missed filing and the associated penalties.
It is important to note that some plan sponsors believe that they can file all their welfare benefit plans on a single Form 5500 without a written wrap plan document; however, this is incorrect. In the absence of a plan document that combines the benefits into a single plan, the DOL and IRS can assess penalties based on each separate benefit offered by rejecting the filing and requiring that each of the plans re-file separately for all prior years. Thus, if discovered in an audit, the IRS and DOL can impose penalties of up to $1,100 for each plan and for each day they fail or refuse to file a complete Form 5500 subject to certain maximum penalty amounts (commonly $30,000 per year and per benefit plan; i.e., missed filings for three benefit plans result in a maximum annual penalty of $90,000). By adopting a wrap plan document, the plan sponsor documents its decision to treat multiple benefits as a single plan for ERISA.
ADDITIONAL BENEFITS OF A WRAP PLAN
A wrap plan can be customized so that the plan document contains language that matches the employer’s administrative practices and provisions that clearly set forth definitions, benefits, and “best practices” procedures, which help protect the employer from liability.
If a plan amendment is required, the employer will need to amend only the wrap plan document, thus simplifying administration and compliance. Without a wrap plan, the employer must adopt separate amendments for each benefit plan affected by the change.
Since the wrap plan is considered a single plan, there is only one summary plan description that needs to be maintained, updated, and furnished to participants, rather than a separate summary for each benefit.
– See more at: http://www.eisneramper.com/Trends_and_Developments/wrap-plan-document-welfare-0213.aspx#sthash.t4ZA1Kfc.dpuf