By: Emily Marr, Employee Benefits Consultant at Wrangle
Compliance Begins with Knowing the Rules
If a new client or prospect asks what is needed to be ERISA compliant, would you know the answer? The question is daunting because there are so many mandates to meet with HIPAA, COBRA, Reporting, and Disclosure, to name just a few. Where do you start?
The following checklist (adapted from a similar list created by the Department of Labor (“DOL”) for pension plans) is a general guide to ERISA compliance for single-employer unfunded health and welfare plans for their Plan Documents, SPDs, and Reporting on the Form 5500. It is not intended to be comprehensive but does outline the areas of major compliance concerns to the DOL for such plans.
If you answer “No” to any of the questions below, you should review your plan’s operations because you may not be in full compliance with ERISA’s requirements.
1. Have you provided plan participants with a Summary Plan Description (“SPD”), Summaries of any Material Modifications to the plan (“SMM”), Summary of Benefits and Coverage (“SBC”) and Summary Annual Reports (“SAR”)?
SPDs, SMMs, SBCs, and SARs must follow format, content, and distribution requirements under ERISA.
2. Do you maintain copies of the written plan document (e.g. wrap-around plan) and all referenced plan documents at the principal office of the plan administrator for examination by participants and beneficiaries?
Plan documents are required regardless of plan size and neither SPDs nor group policies constitute plan documents for purposes of ERISA Section 402(a).
3. Do you respond to written participant inquiries for copies of plan documents and information within 30 days?
If not, the penalty could be $110 per day if the requested materials are not received.
4. If you disseminate ERISA disclosures such as SPDs electronically, do you follow ERISA’s electronic communication requirements?
These rules are complex, including the completion of a consent form from employees who do not have computer access at work, logging of distribution and delivery, and email notification related to any copies that are available online.
5. If your plan covered 100 or more employee participants on the first day of a plan year, do you file the plan’s Form 5500 with the DOL on a timely basis?
If you file a consolidated Form 5500 with multiple benefit plans you will need to maintain a wraparound plan document and SPD.
6. Does your plan document and SPD include written procedures for making benefit claims and appealing denied claims, and are you complying with those procedures?
Group health plans must establish and maintain reasonable claims procedures that allow participants and beneficiaries to apply for and receive the plan’s promised benefits. The DOL has issued rules setting minimum standards for benefit claims determinations for ERISA plans.
7. Do you send participant contributions to the insurance carriers on a timely basis to avoid creating plan assets?
Under DOL regulations, participant contributions are plan assets. However, contributions made through withholding or salary reduction will not become plan assets if they are applied to plan benefits (such as payment of insurance premiums) within 90 days of receipt of the payroll monies.
A Bit More on SPD, SMM, SBC, and SAR Disclosures
- SPDs must be provided to plan participants within 120 days of a new plan’s inception regardless of the number of Plan participants. An amended and restated SPD generally must be distributed to all participants and beneficiaries benefiting under the plan every five years.
- SMMs must be distributed to all participants and beneficiaries under the plan within 210 days after the end of the plan year in which any material change was made to the plan. In the event that a change in plan results in a material reduction of covered services or benefits provided, the employer must distribute an SMM no later than 60 days after the date the change is adopted.
- SBCs must be provided to participants and beneficiaries with the plan’s enrollment or application materials, upon renewal or re-issuance of coverage, or within 90 days of special enrolment.
- SARs must be made available to all plan participants and beneficiaries benefiting under the plan within nine months after the close of the plan year (unless the plan sponsor has requested and received an extension for the filing of the Form 5500; in which case, the SAR must be made available within two months after the end of the Internal Revenue Service extension).
Remember, Wrangle is here to help. For more information on ERISA Compliance on Wraparound Plan Documents and SPDs, feel free to contact Aubrey Box: abox@wrangle5500.
 Federal legislators enacted the Employee Retirement Income Security Act of 1974 (“ERISA”) to protect the interests of employees (and their beneficiaries) who are covered under employee benefits plans (both pension and health and welfare benefits). Generally, a welfare benefit plan is any plan, fund or program established or maintained by an employer, an employee organization or both, that provides through the purchase of insurance or otherwise, medical, surgical or hospital care, benefits in the event of sickness, accidents, death or unemployment, vacation benefits, apprenticeship or training programs, daycare centers, scholarship funds and prepaid legal services.