On September 7th, we presented to our broker partners and clients the basics and fundamentals of Wrap Plan Documents and Summary Plan Descriptions (SPDs). In addition, we provided a high-level demo on our new ERISA Desk Platform, an online tool to initiate the preparation of the Wrap Plan Document and SPD for our clients. With scores of questions submitted during the webinar, we wanted to share the answers for all to benefit.
Questions on Plan Documents and SPD in General
| Question | Answer | |
| 1 | I’m 100% lost. I’m new to this industry. What is the ERISA and how does this affect the client? | ERISA stands for Employee Retirement Income Security Act. It is the body of laws and standards that are to be upheld when an employer offers employee benefits to its employees. These laws are to protect participants, and when they are not upheld, the employer can face penalties.
The presentation went over a small sliver of the ERISA mandates. It focused on the written instruments required, also known as the Wrap Plan Documents and SPDs. |
| 2 | What is the Plan Sponsor? | The Plan Sponsor is an employer who oversees and administers an ERISA Plan that is offered to the employees, the participants of the Plan. One way to look at this is that the employer wears an additional hat to be a Plan Sponsor of an ERISA Plan. |
| 3 | Are Plan Document and SPD different documents? | Yes. The Plan Document contains all the required legal language, the Plan Sponsor’s policies and procedures, as well as the federal rules and regulations applicable to the Plan.
In contrast, the SPD is specifically for the Participants, and as a result, it is written in layman’s terms. It outlines the benefit plan structure, claim details for each carrier when fully insured, their policy and procedures to follow such as the eligibility rules, their ERISA rights, etc. |
| 4 | When you have a small group with under 100 enrolled, does each benefit get its own Plan number? | If the Plan Sponsor/Employer is not “wrapping” all benefits into a single Plan under a Wrap Document, then yes, each benefit would have a separate Plan number and ERISA Plan Document, even if it is a smaller group. |
| 5 | Do we need to add smoking cessation if provided by the medical plan? | It is a good idea to note smoking cessation in the ERISA Plan/Wrap Doc as an included benefit. It would be included under medical on Form 5500 if provided under the medical plan. |
| 6 | A group has a 501 and a 502. If they choose to combine, does the combined Plan become 501 or 502? | The Plan Sponsor can choose to keep either Plan number or they can choose a new Plan number to further distinguish between Non-Wrap and Wrap arrangements. The Plan numbers that are no longer used are deemed retired and are not reused in the future. |
| 7 | Regarding Electronic Distribution:
1. For employees who do not work at a computer every day and use a shared computer, is electronic distribution permitted? 2. Can the group send a link to the employeeās personal cell phone that would link to the Plan Sponsor’s intranet to distribute the SPD? 3. Can they send a mailing with the link to satisfy delivery rules? |
1. On safe harbor for electronic delivery, the key element is the Plan Sponsor must be able to document and then mail anything that comes back as non-deliverable or anything that indicates the SPD was not delivered electronically.Ā As a result, the use of a common computer and single shared login would not suffice as there is no way to determine who did and did not receive the document.
2. The ERISA mandates include electronic means with an email address. Phone and texting are not specified for health and welfare. If they were, the Plan Sponsor would need prior written consent and make sure the following is upheld, “reasonably calculated to ensure actual receipt,” using a method “likely to result in full distribution.ā 3. Yes, they can send a mailing link, but only to employees with computer (not kiosk) access at work and employees with completed electronic delivery consent forms on file if they do not have computer access at work. There is standard language that must be in the email, describing the importance of the SPD and the ability to receive a printed copy of the SPD at no charge. |
| 8 | What does “endorsed by the employer” mean? | Per the DOL: āAn endorsement within the meaning of section 2510.3-1(j)(3) occurs if the employee organization urges or encourages member participation in the program or organization.ā The employer engages in activities that would lead a member to reasonably conclude that the program is part of a benefit arrangement established or maintained by the employee.
Examples include allowing the Section 125 Plan to be used where pretax dollars are permitted for employee contributions for the premium or having the employer assist with a claim. |
| 9 | If a Plan Sponsor is not sure if they have a Wrap Plan Document, what do we do? How would we determine the Plan Number if you are not supposed to duplicate the number? | Unfortunately, this rests solely on the Plan Sponsor to confirm if they did or did not have a Wrap Plan Doc in place. If they are not able to locate one, they will need to decide if they can defend having a Wrap Plan Document in the past. If they determine yes, they can continue to use that same Plan number. If they determine no, we suggest creating a new Plan Doc with a new Plan Number. Once a Plan number is terminated, it cannot be used again. |
| 10 | If a Plan has never had the Wrap Plan Document but offered benefits, what would the effective date be? Would you back date, or would the current date be deemed as the effective date? | The effective date is when the benefits were first offered; that first date would be considered the effective date.
If the group already files a Form 5500 for each benefit, we usually move all benefits to the plan that covers medical, and the original effective date of the Plan would not change. We will not backdate plan documents prior to the first day of the current Plan year. |
| 11 | I handle many small groups with under 50 enrolled. They have the SBC and regular compliance notices. Would this documentation suffice as a Wrap Plan Document, or do they need something different to be considered a Wrap Plan Document? | ERISA Plan Documents are required regardless of the size of the group. Both large and small companies would need to meet the same standards of a Wrap Plan Document. The Plan Document is used to show who the Plan Administrator is, the funding, the policies and procedures for the Plan Sponsor to follow, participantsā rights, eligibility rules, and claim procedures. If group health benefits are included there are several other provisions to include.
Likely, the SBC plus the compliance notices would not encompass all that is to be included in an ERISA Plan Document. |
| 12 | Does a specific person’s name need to be listed as a plan contact for legal purposes or otherwise? | For the Wrap Plan Document to be official, the Plan Administrator’s name and signature are to be found typically at the end of the Wrap Plan Document. |
| 13 | I’ve had past experiences in which carriers do not release SBCs within a timely manner and can take three to four months. How is this handled when employers are required to send WRAP document to employees within 90 or 120 days of renewal? | We would encourage the Plan Sponsor to meet its distribution timelines as outlined by the ERISA. If the carriers do not meet their requirements, a complaint can be filed with the DOL. |
ERISA Desk Platform
| Question | Answer | |
| 1 | Is the ERISA Desk Platform available now? Is it the same Dashboard we use for the 5500? | The ERISA Plan Document Platform was released on September 19th. It is separate from the 5500 Dashboard, but you can toggle between the two of them if you have been given access to both. |
| 2 | Can the service agreement be arranged under the Plan Sponsor? | We can set up a direct service agreement with the client. Please let us know at the start of the project how we should invoice. |
| 3 | Our population first language is Spanish. Does the platform support this language? | Unfortunately, we do not translate into Spanish. |
| 4 | For unknown items, will Wrangle pass off to ERISA attorneys for guidance and, if so, is there a cost for consulting? | We will reach out to the broker or Plan Sponsor first. If they don’t know the answer, we will then offer to pull in an ERISA attorney. Fees may be applicable depending on the complexity of the situation. We will advise before incurring any fees. |
| 5 | Would you advise that the Plan Sponsor complete the intake information or the broker? | We would encourage both if needed. The client can be given a login to work on the intake form in its Plan Sponsor page. Alternatively, the broker can create a PDF of the material in the Platform and send it to the client to review. |
| 6 | I noticed on the Platform there is a “broker access” section. How does the broker get access? | If the broker has a login for the Dashboard, their login works on the Platform as well. If a broker does not have access to the Dashboard, a login can be generated by the ERISA Desk team for the Platform. To have access to a specific Plan Sponsor, please reach out to ERISADeskInfo@ascensus.com for further assistance. |
| 7 | If help is needed for logging in or other technical challenges, who do we contact? | Please reach out to ERISADeskInfo@ascensus.com for further assistance. |
| 8 | How do we obtain a quote for a wrap and pop document for a client? | You can receive a quote through Elaine Harvey, Sales Representative for Wrangle. Her email address is eharvey@wrangle5500.com. |
| 9 | Are there any significant changes to the language in the Ascensus version vs Wrangle’s original Wrap Plan Documents and SPDs? | Yes, there are formatting and language changes from Wrangle’s original Wrap Plan Documents and SPDs to the Ascensus version. In addition, there is an added document to the package for you: the Adoption Agreement. |
| 10 | Are annual notices that are required to be provided to employees found in the new Ascensus version SPDs? | Yes. They are: ACA Patient Protections, a WHCRA annual notice, Newborns, and a HIPAA Notice of Privacy Rights. They can all be found there. |
| 11 | What is the average turnaround time for the WRAP to be completed? | Generally speaking, the timeframe that we apply is 18-24 business days. Please note, if customized language needs to be reviewed and approved by our ERISA attorneys, the timeframe may be longer. |
Form 5500s
| Question | Answer | |
| 1 | For the Form 5500 report, does the enrolled participant count equate to just the subscriber or are dependents included in the equation as well? | The Plan Sponsor/employer should look at the enrolled employees, COBRA subscribers, and Retiree subscribers (if applicable) to determine if the 5500 is required. Dependents are not to be included. If the combined total is at 100 or more on the first day of the ERISA Plan Year, a 5500 is required.
Please note: there are certain benefits such as severance that require you to look at those who are eligible, not enrolled. |
| 2 | The presentation highlighted that groups are to have a Wrap Document regardless of their size. Are 5500s required automatically then if the group has a Wrap Plan Document? | No. Groups are only required to file a 5500 if they have 100 or more enrolled employees in addition to ex-employees/COBRA on the first day of the ERISA Plan Year (with exceptions for trust plans and MEWAs). Having a Wrap Doc does not mean the employer automatically needs to file a 5500. |
| 3 | If a group must file a Form 5500 report and the Wrap Plan Document includes multiple benefits; group medical, group life, group disability etc., do we add the participants of each plan together to obtain a total number of participants?Ā For example, if one subscriber is enrolled in medical, life, and disability would he be counted as 1 participant or 3? | As silly as this may sound, the group should count each belly button just one time, even if they are enrolled in multiple benefits.
As a result, the answer to your question, “Would the participant count be one or three?” is one. |
| 4 | Where do we find the 101 Webinar? | You can contact Ann McAdam at amcadam@wrangle5500.com if you would like to schedule a Health and Welfare 101 training for your team. |
If you have any further questions, please contact Ann McAdam, Project Manager at amcadam@wrangle5500.com.