Is your health plan group ERISA compliant? Health plans subject to the Employee Retirement Income Security Act (ERISA) must make available information about the plan to participants. The plan participants have a right to know about plan rules, financial data, plan operation and plan management. Many small employers fail to realize that they need to meet this requirement. The departments of labor have been coming to more employers and asking for this document more often, but typically the DOL audit is the direct result of an employee ( or former employee) grievance.
When a member first becomes covered under an ERISA-covered health plan, the individual must receive an SPD (Summary Plan Description). This is a specific document explaining what benefits the plan provides and how it operates.This document is NOT a health plan benefit summary (SBC) but more like a summary of the benefits provided by the employer. If a plan is changed, participants must be informed either through a revised SPD or in a separate document called a Summary of Material Modifications (SMM).
Plans must also provide a Summary of Benefits and Coverage (SBC) that describes specific plan coverages. The SBC is drafted on a uniform template with easy to understand language summarizing key features of the plan, such as covered benefits, cost-sharing conditions and coverage limits.
Certain plans must provide participants with a Summary Annual Report (SAR) after the end of the plan year. A SAR describes the financial position of the plan. If a plan is exempt from the Form 5500 annual reporting requirements, it is also exempt from the SAR requirements (most plans with under 100 participants and totally unfunded welfare plans). If your company is small enough that you have less than 100 employees, you can typically disregard this one.
Employers with plans subject to ERISA should understand the communications that are required to be provided to plan participants. Unless your plan is ERISA exempt, you need to have a compliant SPD in place and available for your employees.
The ERISA “ wrap” document may be simpler to acquire than you think and is typically worth the time and effort, especially when you consider the potential $110 per day penalties to employers.
If you have any questions about your compliance or setting up an ERISA WRAP document, please contact us today at (215)355-2121 or your broker, CPA or HR consultant.