While you won’t find “wrap document” listed as a formal term on any government website it can be an integral part of your compliance efforts. The Employee Retirement Income Security Act (ERISA) establishes requirements and guidelines as to how employers provide benefit plans to their employees. ERISA typically applies to employers regardless of size or business type. If your health and welfare benefits are subject to ERISA, a Wrap Document can simplify your documentation requirements and make reporting tasks easier.

All ERISA-covered benefit plans, including group health plans and other employee benefit plans must be administered in accordance with a written Plan Document.  ERISA also requires that a Summary Plan Description (SPD) be provided to each participant and beneficiary.  The SPD describes certain provisions of the written plan document in understandable terms.

Many employers incorrectly assume that the documents provided by the insurance company satisfy the SPD requirements. Certificates of Coverage (COC), Summaries of Benefits and Coverage (SBC), or general contracts issued by insurance carriers are not the same as ERISA-compliant SPDs.

A Wrap Document is a document that “wraps” around the insurance policy, coverage certificate, or plan booklet and includes necessary information to comply with ERISA.  The Wrap Document essentially fills in the gaps left by the insurance carriers and third-party administrators and becomes the Plan Document and Summary Plan Description.

In addition, the Wrap Document can create an “umbrella” plan that consolidates all your health and welfare benefits into a single plan which can reduce costs associated with filing multiple annual reports and distributing multiple summary annual reports.  When you combine employee benefit plans under a single Wrap Document, you can then submit a single 5500 instead of a form for each plan.

Ultimately, compliance is the employer’s responsibility, and you have certain fiduciary duties to provide an explanation of benefits, procedures, and other plan details to employees in terms that they will understand.  Most employers lack the time, money, and expertise to prepare these documents and keep them up to date. A simple, cost-effective solution is a Wrap Document.

Kristin Young, JD, PHR, SHRM-CP | Operations and Compliance Manager