What is a Wrap Summary Plan Description (SPD) and Why Do I Need One?
Here are the Wrap SPD document requirements by ERISA and the Affordable Care Act as succinctly as possible:
If you offer group health insurance, you’re now required by ERISA law, enforced by the Department of Labor and now the Affordable Care Act, to distribute a Wrap SPD within 120 days of the Plan’s effective date.
Failure to provide the Wrap SPD within 30 days of request triggers a $110 a day fine per participant. Not having a Wrap SPD can also trigger an audit by the Department of Labor.
The insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits is not a Wrap SPD.
This requirement applies to all employer sponsored group health insurance offerings, including a one-person plan.
The Summary Plan Description, or SPD, is the main vehicle for communicating group health insurance plan rights and obligations to participants and beneficiaries. As the name suggests, it is a summary of the material provisions of the plan document, and it should be understandable to the average participant of the employer. However, in the context of health & welfare benefit plans, it is not uncommon for the SPD to be a combination of a complete description of the plan’s terms and conditions, such as a Certificate of Coverage, and the required ERISA/ACA disclosure language.
Note: An insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits is not a plan document or SPD.
Simplify ERISA Compliance & Avoid Costly Penalties with Essential HR's Wrap SPD Services
Are you confident your employee benefit plan documents meet all ERISA requirements? Many businesses mistakenly believe that the insurance certificates or benefit booklets provided by carriers are sufficient on their own – but often, they aren’t. This gap can expose your company to significant Department of Labor (DOL) penalties and potential lawsuits.
Essential HR provides the solution: Wrap Summary Plan Descriptions (Wrap SPDs).
A Wrap SPD is a vital compliance document that bundles (“wraps”) all your separate health and welfare benefit plan documents (like medical, dental, vision, life insurance, disability) together with the necessary ERISA language into one comprehensive, compliant Summary Plan Description.
Why is a Wrap SPD Essential?
- Fulfill Your Legal Duty: ERISA mandates employers provide employees with a compliant SPD detailing their benefits.
- Avoid Steep Penalties: Non-compliance can result in fines of up to $110 per day, per participant (adjusted periodically for inflation), plus the risk of audits and legal action.
- Streamline Administration: Simplify the distribution and management of benefit documents for your HR team and employees.
- Provide Clarity: Give employees a single, clear document outlining their rights and benefits under all covered plans.