On February 28th, we presented to our broker partners and clients, the basics and fundamentals of Wrap Plan Documents and Summary Plan Descriptions (SPDs). In addition, we went over key details regarding nondiscrimination testing. During our presentation, questions were submitted by the attendees, and we wanted to share our answers for all to benefit and learn.
QUESTIONS ON PLAN DOCUMENTS AND SPDS
| Question | Answer |
| The presentation noted that the plan sponsor is to provide the SPD. Would there be an exception if the TPA provides an SPD for a self-insured plan? Would the employer/broker still need to have a Wrap Plan Doc prepared as well? | If a TPA provides the Plan Document and SPD, these documents should be reviewed to make sure they meet the requirements. The Plan Administrator still needs to sign the Plan Document.
If the self-insured plan represents a standalone benefit and has a different plan number, it will not need a Wrap Plan Document. The self-insured Plan Document has the necessary information. Self-insured plans are subject to ERISA on their own. Unlike a Wraparound Plan Document, the plan documents for a self-insured plan do not just fill in the gaps that are not addressed by insurance documents. They are also comprehensive Plan documents that set forth all the planâs terms including details on the benefits provided (e.g., schedules of benefits). Self-insured plans are not subject to state insurance laws, so individuals should follow ERISA rules on the plan documentation requirements. If the self-insured plan is incorporated into the Wraparound Plan, it should have the same plan number and plan year as noted in the Wrap Plan Document. |
| Can a SPD be provided electronically through an intranet site? | Yes, there are electronic delivery options available for SPDs. However, there are specific parameters that the plan sponsor will need to meet. We have a guide for this if needed. |
| Is a separate SPD needed for an HSA plan? | HSA benefits are typically considered non-ERISA and would not require a plan document or need to be included in a Wrap or Form 5500 filing. One other piece to note: if the HSA is pre-tax, then the HSA should be included in the Section 125 Cafeteria Plan Document. |
| “Funding of the benefits” is specified to be included in the SPD. Can you expand on what those entail and provide an example? | The ERISA mandates for details on funding to be included in the Wrap Plan Document and SPD. Funding of the benefits refers to whether the funding is through insurance contracts (fully insured benefits), through the general assets of the employer (self-insured), or funded through plan assets in the instance of trust plans. |
| If posted to their intranet, does the employer/plan sponsor need to announce it to their employees? | Yes, the plan administrator should announce to participants that it is made available to them. |
| Do you need proof of delivery and tracking information on who received the documents when you send them out electronically? | Yes, they could add a receipt confirmation to the email they sent out to participants. Or, if they post to a portal, they could have the participants check an affirmation of receipt of some kind. |
| Is it correct that Plan Documents with no changes may be distributed until they reach the ten-year mark? | Technically, yes, that is accurate. However, it is rare that a Wrap has absolutely no changes for ten years. We recommend restating every five years to be sure the documents are updated. |
| What if a group has never had an SPD? Will they be fined for the years that they did not have one? | The fines for the Wrap and SPD generally come into play when the employer/plan sponsor does not provide the documents to the DOL during an audit request or within 30 days of a participant providing a written request to the plan sponsor for a copy of the SPD. |
QUESTIONS ON NONDISCRIMINATION TESTING
| Question | Answer |
| Could non-discrimination testing be done earlier than the second or third quarter? | Yes, it can be done earlier. |
| What if life insurance products are only offered to managers? | It would be dependent on how many managers are key employees. |
| How do discrimination requirements apply to collectively bargained employees? | Collectively bargained employees are generally excluded from the NDT. |
| For contribution rates – when you say different groups, would part-time and full-time be considered different groups? | In general, contribution rates refer to single-family tier coverage. The regulations specify âsimilarly situatedâ employees when talking about employee classes, but do not provide specific details on what this means other than employees in the same geographic area. |
| Who performs nondiscrimination testing for life insurance? Is it the life carrier? | The carrier would not perform the testing. The plan sponsor would be responsible for the testing. Wrangle can perform Section 79 Life testing if needed. |
| Does an HRA plan require testing for highly compensated employers and employees? Can they participate in the HRA, and have it considered imputed income? | An HRA requires nondiscrimination testing under Code Section 105(h). There are no employee contributions to an HRA, so discrimination testing looks at the contributions by the employer. |
| Are NDT services for 105(h) done annually? | The regulations are very vague for 105(h) on how often to test. The results of the first test completed can affect how often we would recommend the employer test. |
| If you have a self-insured medical plan that has a contribution schedule based on income, would that be discriminatory? What are your thoughts if the higher-paid employees pay more? | Basing contributions on income is a red flag under Code Section 105(h). However, there is no reverse discrimination under the regulations so non-HCEs are allowed to pay less for the exact same benefit. The problem is that the definition of non-HCE might include people who pay a higher rate than other non-HCEs. It is best to stay away from basing contributions on salary. |
QUESTIONS ON BENEFITS
| Question | Answer |
| Is an ICHRA plan subject to federal reporting, regardless of size? | Our understanding is that the ICHRA may utilize the below 100 enrolled employeesâ exemption from filing the 5500. |
| When was the EAP added under ERISA? I had clients who did not previously include the EAP on the 5500. How far back do they need to go to file an amended 5500 to include the EAP? | EAPs have evolved over the years. Originally, the benefits provided did not always include a medical component, and so they were outside of the ERISA. While they can determine when they first offered EAP, that might not be when they first became ERISA reportable. To determine that, they would have to look at the description of the benefits provided for each year. This is an onerous task that many will not or cannot undertake. Wrangle recommends that the client confirms with their ERISA attorney whether the benefit is considered ERISA reportable or not.
If confirmed that the EAP is ERISA Reportable, the EAP can be added to the client’s Wrap Document via an Amendment/SMM back to when it was originally put into place, and then subsequently, the Form 5500 filing may need to be amended going back as far. DOL Advisory Letters 91-26A, 88-4A, and 83-35A would be great reference tools for further evaluation. |
| Are there any drawback to reporting private PFML plans in the SPD or the 5500? | Generally speaking, paid family medical leave plans are considered non-ERISA benefits and would not be included in the Wrap or 5500 filing. However, we recommend conferring with an ERISA attorney to determine if the benefit is ERISA-reportable or not. This is of particular importance for the state of Massachusetts which has unique private PFML arrangements.
One ERISA attorney informed Wrangle that if the employee pays contributions towards the PFML private policy, this could meet ERISA requirements. |
QUESTIONS ON WRANGLEâS SERVICES
| Question | Answer |
| Is there a template for the ERISA Wrap Plan Document or the SPD? | The Department of Labor does not have a template. However, the Code of Federal Regulations (CFR) provides an outline of what is to be included in an SPD; see link: https://www.law.cornell.edu/cfr/text/29/2520.102-3
At Wrangle, we fully prepare and customize the Wrap and SPD documents for our clients. We also do not issue templates that would be completed. |
| Does Wrangle provide 1094/1095 ACA reporting services? | We do not provide Form 1094/1095 services. If you are looking for a partner for ACA reporting, we can provide referrals. Please reach out to Lynda Taylor at ltaylor@wrangle5500.com for more information. |
| Does Wrangle have written consent templates that we can share with clients for distribution? | When we have a service agreement in place and prepare Plan documents for you, we will provide sample templates upon delivery of the draft documents. We also provide the SPD distribution guide for reference with the documents. |
| What are your fees for generating a Wrap Plan Document? Do you include the SPD? | If you would like more information on our document services, contact Elaine Harvey at eharvey@wrangle5500.com for more information. |
| Do you perform nondiscrimination testing? Who do I contact if I am in need of these services? | Yes, Wrangle provides NDT services for Sections 125, 105(h), 129, and 79. Contact Elaine Harvey at eharvey@wrangle5500.com  for a quote. |
| Could the Plan Doc templates be sent via Word if the group wanted to make customized language? | We would generally not be able to provide the draft Wrap and SPD in Word because we would not be able to guarantee the integrity of the documents going forward. If revisions are needed, or special customized language is added, we are happy to assist and update the drafts as needed. |
| Would Wrangle conduct an NDT for just an HSA plan (the group offers an HDHP on a pre-tax basis; there are no employer contributions)? | We can prepare an NDT for just the HSA if needed. The HSA benefit is often included with the POP test for all pre-tax benefits. |
FOR ANY FURTHER ASSISTANCE:
If you have any further questions or need additional assistance, please reach out to Ann McAdam at amcadam@wrangle5500.com