What Business Owners Need to Know About ERISA Wraps
Business owners are well aware of the numerous positive reasons for providing an employer-sponsored benefits plan. But because those plans are subject to the Employee Retirement Security Income Act (ERISA), things can get complicated.
Most organizations are subject to ERISA. Churches and government employers are exempt, but almost everyone else must comply. Check with a business planning attorney if you’re unsure of your status with regard to ERISA.
Most benefit plans are subject to ERISA, but some are not. Group healthcare plans, vision plans, dental plans, health savings accounts, FSAs and HRAs are all subject to ERISA regulations. Vacation and scholarship plans are often, but not always, included. But the following types of benefit plans are not subject to ERISA:
- Cafeteria Plans
- Premium-Only Plans
- Section 125 Plans
- Premium Conversion Plans
- Pre-tax Premium Plans
- Health Savings Accounts when employers have limited involvement
- Dependent Care FSAs
- Dependent Care Assistance Plans
- Transit and parking plans
- Adoption Assistance
- Educational Assistance and Tuition Reimbursement
- Paid time off
- On-site medical clinics for the purpose of providing first aid
However, even if a plan is exempt from ERISA regulation, it might become subject to the law once you appear to “endorse” the plan in any way (such as putting your company name or logo on any brochures).
Plans subject to ERISA require you to provide a Summary Plan Description. The SPD summarizes the benefits of a plan, while informing plan participants of their rights and obligations. Within 90 days of eligibility for the plan, you must provide SPDs to each employee. Non-compliance can result in fines from the Department of Labor.
So, what is an ERISA Wrap? A wrap document helps small employers meet their ERISA requirements by providing disclosures that apply to all sponsored benefits plans. An ERISA Wrap includes details like the allocation of duties and responsibilities between the employer and the insurer, and participant rights under the law. By “wrapping around” all ERISA health and welfare benefits, and including required disclosures that are not typically found in other documents, this document meets ERISA regulations more easily.
You don’t have to prepare ERISA disclosures on your own. Give us a call. We’re available to help you understand the requirements of the law, and can help you with an ERISA wrap that covers all of your bases.