Running a business means juggling countless responsibilities—managing teams, serving clients, and keeping operations smooth. Amid the chaos, benefits compliance often gets overlooked. But ignoring ERISA (Employee Retirement Income Security Act) requirements can be one of the costliest mistakes a business makes.

Why ERISA Compliance Matters

ERISA is a federal law that protects employees by requiring employers to be transparent about their benefits, including health insurance and retirement plans. Employers must provide certain documents to employees—on time and in full.

These include:

• Summary Plan Description (SPD) (ERISA Wrap Documents) – The main explanation of how a plan works.
• Summary of Benefits and Coverage (SBC) – Clear details about the health plan.
• Summary of Material Modifications (SMM) – Updates when plans change.
• Summary Annual Report (SAR) – A financial summary of the plan.

These documents aren’t just formalities, they’re legal obligations. Failing to provide them can lead to significant fines.

The $110/Day/Employee Penalty

If an employee requests an ERISA document like an SPD, the employer has 30 days to respond. Missing that deadline can trigger a penalty of up to $110 per day per employee.

To put that in perspective:

• 1 employee, 60-day delay = $6,600
• 10 employees, 60-day delay = $66,000
• Longer delays = six-figure fines

These penalties are enforced by courts, and judges can apply the maximum amounts if they see delays as unreasonable or negligent.

Real-World Cases

ERISA penalties are not theoretical, they’re enforced regularly. Consider these examples:

• Mental Health Benefits Case (2024, Montana): A self-insured plan failed to provide mental health benefits info, resulting in $32,000 in penalties.
• Harris-Frye v. United of Omaha: A 674-day delay cost the employer $74,140 in court-ordered fines.
• Netflix (2024): Despite eventually complying, Netflix was fined $6,465 for late delivery—at a reduced rate of $15/day over 431 days.

These cases show that delays, even when unintentional, can be extremely costly.

More Than Just Fines

Monetary penalties are only one part of the risk. Non-compliance can also:

• Undermine employee trust
• Lead to lawsuits and legal costs
• Damage your company’s reputation
• Trigger further investigations by the Department of Labor

In short, non-compliance creates business risk far beyond fines.

How Employers Can Stay Compliant

The good news? Avoiding ERISA penalties is manageable with the right systems:

• Use a compliance calendar to track key deadlines
• Automate notifications for timely document delivery
• Maintain updated ERISA Wrap SPDs for easier reporting
• Train HR teams to handle document requests quickly and accurately

Proactive compliance helps you avoid penalties and shows employees that you value transparency and accountability.

Partnering with Experts: How ACA Compliance Solution Services Helps

Compliance doesn’t have to be overwhelming. At ACA Compliance Solution Services, we help businesses meet their ERISA obligations with confidence. From drafting SPDs to ensuring timely delivery, we take the guesswork out of compliance.

With ACA Compliance Solution Services, you’re not just checking boxes, you’re protecting your business and your people. Our expert support means fewer risks, fewer surprises, and total peace of mind.

Conclusion

Failing to meet ERISA requirements isn’t just a small oversight, it’s a mistake that can cost thousands and damage your business. But with the right tools and partners, it’s a mistake you never have to make.

Let ACA Compliance Solution Services handle your ERISA compliance—so you can focus on growing your business.
Call us today at 877-959-3953 x222 or Click here to speak to an ERISA Expert now!