The Employee Retirement Income and Security Act of 1974 (ERISA) requires that plan sponsors of group health plans comply with certain disclosure requirements including the requirement to supply employees with a Summary Plan Description (SPD). To be legally compliant with ERISA, an SPD must have certain statutorily defined specific information about the underlying plan that may not be adequately covered by the insurance company’s Benefit Booklet, Certificate of Insurance or other documentation. In other words, the SPD, is considered the “plan instrument” or “governing document” used to communicate plan rights and obligations to plan participants and beneficiaries. While insurance companies routinely provide documentation, such as the certificate of insurance and SBC’s, it is recognized that such material will not suffice to meet all of the regulatory requirements as outlined by ERISA.
If your practice currently provides a fully insured health plan to your employees, an ERISA Wrap is designed to work in union with your fully insured documents. You will see how these critical pieces work together to form your “wrap” document. Aside from the paperwork however, it is important that you, as a plan sponsor, realize that this document, as a whole, governs the overall operation of the plan. Furthermore, because the insurance company functions as a named fiduciary it is essential that the SPD contain a copy of the certificate of insurance booklet provided by your carrier.
As plan administrator, you are responsible for disseminating information about the plan to your eligible employees. ERISA requires the dissemination of SPD’s within 120 days of a plan’s effective date (for newly implemented plans). Henceforth, you are required to provide the SPD to employees on or before open enrollment – but no later than 90 days’ post enrollment. If an employee should request a copy, you must provide the SPD within 30 days of the request or you could face penalties (a fine may be imposed of $110 per day).