EverWrap™, is an ERISA wrap document solution from Admin America that provides a Plan Document & Summary Plan Description for all of your welfare benefit plans.
Admin America’s wrap document eliminates insurance document ERISA shortfalls and enables simple year-after-year compliance.
The time to prepare for an audit or a lawsuit is before either one arises. Non-compliance with ERISA’s rules governing Welfare Benefit Plans exposes employers to extensive potential liability from DOL or IRS audits and lawsuits from current or former Participants or beneficiaries.
There are several common misconceptions about ERISA liability:
- Our insurance company ‘handles’ that. Carrier provided documentation is not designed to comply with ERISA requirements and in fact cannot address several critical items where ERISA mandates written documentation.
- Our Errors and Omissions Insurance protects us from that kind of problem. Most general commercial Errors and Omissions policies specifically exclude coverage for violations of ERISA imposed obligations unless special contractual riders are purchased.
- That’s a management issue. Certain violations of ERISA’s rules can result in personal liability for the Plan Administrator. Too many human resources professionals unknowingly accept this risk without assuring indemnification.
- If an issue arises, we can address any gaps in our documentation at that time. In the absence of ERISA compliant disclosures to plan participants, courts will often look to other communications in determining what benefits a plan provides, possibly even including oral representations by supervisors or managers who are not always aware of specific benefits. The employer can be required to pay out of pocket for such potential misrepresentations.
What is ERISA?
ERISA (Employee Retirement Income Security Act) is a federal law that regulates employer-sponsored benefits, often called welfare benefit plans. Non-compliance with ERISA’s rules governing welfare benefit plans exposes employers to extensive potential liability and severe penalties through:
- DOL or IRS audits and fines; and
- Lawsuits from current or former participants or beneficiaries.
What is a welfare benefit plan?
Under ERISA, an employer that provides certain benefits to its employees, such as medical insurance or other types of coverage, is considered to have established an “employee welfare benefit plan.” With only a few exceptions, providing welfare benefits to its employees requires the employer to comply with ERISA, regardless of employer size, number of employees, or whether the benefits are paid for by the employer or its employees, through insurance or self-funding, or with pre-tax or after-tax money.
What types of benefits are included in welfare benefit plans?
Employer-provided benefits which are considered employee “welfare benefit plans” under ERISA include:
- Medical, dental, and vision insurance plans
- Health flexible spending accounts
- Prescription drug plans
- Accidental death and dismemberment (“AD&D”) insurance plans
- Long-term and short-term disability plans
- Group term life insurance plans.
Do I need a written plan document?
An employee welfare benefit plan under ERISA is required to have a written plan document containing all of the terms governing the plan. A written contract of insurance with an insurance company does not normally contain all of the rules required by ERISA and is therefore not a plan document. A well-drafted plan document typically specifies things such as eligibility requirements, plan participation rules and the length of coverage. It also contains important statements by the employer such as the employer’s right to amend or terminate the plan at any time.
What is a “Wrap” Document?
A “wrap” document is a drafting device used to supplement already-existing documentation. More specifically, a wrap document provides the information required by ERISA by incorporating (or “wrapping” itself around) the insurance policy or similar third-party contract. When a wrap document is utilized, the insurance policy or contract remains part of the plan document. That is, the “wrap” document and the insurance policy or contract together comprise the complete plan document.
Why Does an Employer Need a “Wrap” Document?
The insurance policy or contract issued to an employer rarely meets all the requirements of an ERISA plan document. This is not surprising given that an insurer’s main focus is generally on complying with state laws regulating insurance and not on ERISA compliance. Even when insurers attempt to satisfy ERISA’s requirements, the resulting document does not typically contain all of the provisions designed to protect the plan, the plan administrator, and other plan fiduciaries. Consequently, the use of a “wrap” plan document ensures ERISA compliance (through the “wrap” portion of the document) as well as an accurate insurer-provided benefit description (through the incorporation of the insurance policy or contract).
Click on the document link below to open our EverWrap Application to complete and submit to Admin America for creation of your ERISA wrap document. If you have questions or need assistance please contact our Sales Department directly at 678-578-4644 or email sales@adminamerica.com.
