Nothing would be scarier, or haunt a business for years to come more than being found NOT compliant with ERISA. But by having a compliant and up-to-date Plan Document and Summary Plan Description, the risk for steep penalties can be non-existent like a ghost.
The Employee Retirement Income Security Act of 1974 (ERISA) requires that each employer/plan administrator maintain Written Plan Documents and the Summary Plan Description (SPD). The written Plan Document is a contract between the employer and employees to establish the plan. It’s the document that sets forth the rights of the plan’s participants and beneficiaries. The SPD is a document that provides a summary of the key information about an employer’s benefit plan and any other additional information required by ERISA.
The BASE® ERISA Wrap is designed to help employers/plan administrators fulfill the ERISA requirements for sponsoring health benefits. Like the cloth on a mummy, it wraps around the existing certificates of insurance and benefit plan booklets to provide the required provisions and information to comply with ERISA.
Steep penalties could haunt an employer/plan administrator if they do not provide an SPD or have a current Plan Document. Failure to provide an SPD or Plan Document to a plan participant or beneficiary, after receiving the request, can result in a penalty of up to $110/day per participant for each violation. Not only could a business be required to pay out steep penalties, but it could also trigger a deeper plan audit by the US Department of Labor (DOL).
Get out your flashlight, I am going to tell you a haunting story:
In 2019, Kinsinger v. SmartCore LLC was a court case that involved an employer’s group health plan and the subsequent failure to pay for the premiums. The carrier had cancelled coverage for nonpayment, leaving the employees with several unpaid medical bills. Throughout the process, the plaintiffs requested the documents within the scope of ERISA, the Summary Plan Description (SPD), Plan Documents, and other information from the plan administrator. The plan administrator didn’t respond for over 700 days and was sued due to the requested documents not being provided before the initial 30-day period. In the end, the court awarded the plaintiff a total of $41,140 for receiving their information that they requested, late.
So, what can you learn from this haunting tale? The document requests under ERISA must be promptly addressed and acted upon in good faith, and if not, can result in some serious fines.
Having the ERISA Wrap in place is neither scary nor expensive. So, ERISA plan administrators BEWARE! Failure to provide Plan Documents may result in steep penalties. For more information on the BASE® ERISA Wrap, or to watch a short video, call 888.386.9680 or visit www.BASEonline.com.