Document and Summary Plan Description (SPD). A common misconception is that the carrier documents (Summary of Benefits and Coverage, Plan Summaries, or Plan Certificates) provide all they need. This is NOT the case. To supplement the carrier forms, you also need a WRAP Document that has additional ERISA language not included elsewhere.
As you think about whether or not you have an ERISA-compliant Plan Document and SPD, understand that the fines for non-compliance can be huge. For example, the fine for not having a Plan Document and SPD is $110 per day, per plan that is not in compliance, and these fines are cumulative. That means that if you have 4 health plans (medical, dental, vision, and life, for example) and have not had an ERISA Plan Document and SPD for just 30 days, the fine would be $132,000! There are employers out there that have not had these documents for years, or have never had them. Think your risk of an audit is low since you’re a small group? Think again. A few years ago, the Department of Labor hired hundreds more auditors with the specific focus of auditing smaller employers.
On top of the fines that could be assessed to your business, not having a Plan Document and SPD can expose employers to potentially expensive lawsuits. We have seen situations where an employee does not agree with a decision that either the health insurance company or the employer has made, and the first request the lawyer makes is to see the ERISA Plan Documents and Summary Plan Description. If the employer does not have these items, it does not look good in court.
Remember that employers are solely responsible for their plans being compliant with ERISA. The insurance carriers have no ERISA liability, and neither does your broker. However, Fall River proactively assists our clients in becoming fully ERISA-compliant. Remember that churches and government subdivisions are exempt, but all other private employers including non-profits are subject to these rules.
Compliant plan documents is just one area of ERISA that we help our clients evaluate. We offer ERISA and other compliance audits to our clients and remind them of important due dates, and we have the ability to produce ERISA-compliant Plan Documents and Summary Plan Descriptions. Wouldn’t you like to be able to know that your company is protected in the event of a Department of Labor audit? Join our webinar on June 15th, or This email address is being protected from spambots. You need JavaScript enabled to view it. for a complimentary ERISA review today.
