Core Documents' Wrap SPD Plan Document - $99 one-time fee

Core Documents is now offering ERISA “Wrap” Summary Plan Description (SPD) documents for employer sponsored group health insurance plans. The Wrap SPD document requirement has been around for years; it’s basically the Department of Labor required document for communicating plan rights and obligations to participants and beneficiaries of employer sponsored group health insurance plans. It wasn’t until the Affordable Care Act added several new employee notification requirements, and stiff new $110 a day penalties, per participant for non-compliance, that most employers became aware of and motivated to comply with the Wrap SPD document requirement.

The Wrap SPD is the main ERISA, DOL and now ACA mandated vehicle for communicating plan rights and obligations to participants and beneficiaries. As the name suggests, it is a summary of the material provisions of the plan documents, 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 (benefit booklet), and the required ERISA/ACA disclosure language.

An employer must prepare an ERISA “Wrap SPD” to supplement the Certificate of Insurance (benefit booklet). Together, the Wrap SPD and Certificate of Insurance (benefit booklet) comprise a proper Wrap SPD.

If you offer group health insurance you are required to distribute a Wrap Summary Plan Description (SPD) Document to all Plan participants within 120 days of the Plan’s effective date. Failure to provide the Wrap SPD within 30 days of request could trigger the Affordable Care Act $110 a day fine per participant. Not having a Wrap SPD can also trigger an audit by the Department of Labor.

The term “wraparound” as it relates to SPDs originally came from old DOL guidance suggesting that the supplemental document had to be formally bound to the benefit plan booklet. The combination of the two documents would upon distribution to participants represent a joint, compliant SPD for a particular benefit plan. Obviously times have changed, and many of these documents are now provided electronically. Thus, the “wraparound” concept no longer applies in the literal sense, but the concept remains. Wrap SPDs are typically not long or overly complicated documents, but they are valuable in the sense that they supplement the carrier booklet and fill in any necessary gaps.

For large employers (100+) subject to Form 5500 reporting, Wrap SPDs are largely a necessity. This is especially true for employers already filing a single Form 5500 for health and welfare plans, since those employers have represented to the Department of Labor that they have a consolidated, single ERISA plan. For small employers not subject to the Form 5500 requirement, the Wrap SPDs has always been the best practice but not as commonly used…… until stiff new ACA $110 a day penalties, per participant for non-compliance took effect.

Your Section 125 Plan, or HRA Plan Document and SPD does not constitute a Wrap SPD Document for the employer group health insurance plan. Also, the insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits is not a Wrap SPD. The requirement for a Wrap SPD applies to all employer sponsored group health insurance offerings, including a one-person plan.

So the insurance company’s Master Contract, Certificate of Coverage, or Summary of Benefits may constitute some of the plan documents, but they do not constitute the ERISA DOL, and ACA required Wrap SPD Document, that must be prepared by the employer.

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