ERISA is a federal law that regulates group-sponsored benefits, often called welfare benefit plans. Besides requiring the provision of specific plan features and funding information, the law mandates employers to comply with strict requirements for disclosing plan information to all eligible employees.

 Any employer sponsoring health or welfare benefits must determine the best way to document benefits for legal compliance and to effectively communicate with employees. Employers sponsoring insured benefits must also worry about missing ERISA provisions in their insurance documentation. Sometimes using a “wrap document” to bundle benefits into one plan and/or supplement insurance documents is much easier for the employer. 

Plan Document Compliance for Insured Plans

Special plan document considerations exist for insured plans. Insurers typically do not draft contracts with ERISA plan document requirements

in mind because their principal focus is complying with applicable insurance laws. As a result, insurance policies often fail to include all of the provision required for ERISA plan documents and don’t always protect the plan sponsor and plan administrator. The best approach is to combine the insurance documents with a “wrap” document.

Plan Document Compliance for Other Third-Party Contracts

Similar plan document considerations exist where plan benefits are provided pursuant to a contract with a third party other than an insurer. For example, benefits under many employee assistance plans (EAPs) are provided through a contract with third-party service providers. The contract often is not designed to be the plan document for ERISA purposes and may lack many of the required elements and provisions intended to protect the plan sponsor and plan administrator. The wrap document supplements existing documentation to include required elements and other optional provisions that protect the plan.

For some employers, Premium Only Plans (POPs) are a great solution! These Plans are for employers who do not want to offer a full Flexible Spending Account (FSA) Plan, but still want to offer a tax benefit for their eligible employees.

A POP is a Section 125 Cafeteria Plan that allows employer-sponsored premium payments to be paid by the employee on a pre-tax basis instead of after-tax. Coverage may include the following:

• Group Medical
• Group Dental
• Group Vision
• Group Disability
• Group Term Life Insurance

The result is a tax savings for employers and employees alike!