Wrap SPDs: Satisfying Disclosure Requirements for Group Health Plans

To ensure that employees participating in a group health plan are provided with the most important facts about their benefits, rights, and obligations under the plan, the federal Employee Retirement Income Security Act (ERISA) requires the plan administrator--typically the employer sponsoring the plan--to furnish a Summary Plan Description (SPD). The SPD contains important disclosures and other information about the plan in understandable terms.
Comply with SPD and Plan Document Requirements
Because the benefit summaries, certificates of coverage, and other documents that are typically provided by insurance carriers to plan participants do not contain all of the information required by ERISA, many employers choose to use a Wrap SPD to make sure the plan is ERISA-compliant. The Wrap SPD includes required ERISA provisions and recommended information to "wrap" around the benefit summaries and other materials for each fully insured or self-funded plan option. To be compliant with ERISA's reporting and disclosure requirements, the Wrap SPD and accompanying benefit plan component documents must be distributed to plan participants.
Plan administrators are also required to have a written Plan Document in place that governs how the plan operates, which must be kept on file should a participant or beneficiary request it. A Wrap Plan Document, together with the insurance contracts and other materials from the carrier, fills in the gaps left by the insurer-provided materials to ensure that the plan functions in accordance with federal law.
Other Benefits of Utilizing Wrap Documents
One of the primary reasons that many employers use Wrap Documents is the significant amount of time and expense involved with preparing plan documents from scratch. Few small- or even medium-sized employers possess the resources or expertise necessary to create and maintain ERISA-compliant plan documents in an ever-changing regulatory landscape. Moreover, hiring a team of ERISA attorneys to draft an SPD and Plan Document is cost-prohibitive for the majority of small companies.
Finally, many employers simply prefer the convenience that comes with maintaining all of their employee benefit plan information within a single location. Since all employee benefits--even those not subject to ERISA--can be included in the Wrap Documents, participating employees enjoy the ability to access key aspects of their benefit information in one place.