The 5 W’s of the ERISA Wrap

Under the Federal Employee Retirement Income Security Act (ERISA), an employer that provides certain benefits to their employees is considered to have established an “employee welfare benefit plan,” whether it is medical insurance or other types of benefit plans. When an employer provides a welfare benefit plan it is required that the employer comply with ERISA, but what does that mean?


The BASE® ERISA Wrap is designed to help employers fulfill the ERISA requirements for an SPD and Plan Document. These documents “wrap” around the insurance policy and together comprise of the complete Plan Document. These documents specify things such as eligibility requirements, plan participation rules, and the length of coverage.


WHO is required to have an ERISA Wrap?

An employer of any size, with any number of employees, and an “employee welfare benefit plan” must comply with ERISA.


WHAT does an ERISA Wrap do?

The ERISA Wrap will “wrap” around existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA. An ERISA Wrap helps to provide more detailed information about the benefits being offered and are designed to supplement the existing insurance carrier certificates with all required ERISA language. These documents provide additional legal protection for the employer and plan fiduciaries and help to simplify plan administration.


WHEN is an employer-provided benefit considered an “employee welfare benefit plan” under ERISA?

As an employer, if they provide a medical, dental, and vision insurance plan, or a health reimbursement arrangement (among other things), the benefit is now considered an employee welfare benefit plan that needs to comply with ERISA.


WHERE can an audit happen?

An ERISA audit can happen anytime, anywhere. The US Department of Labor (DOL) plans to conduct more ERISA compliance audits which can be at random or when a complaint has been made. According to HR Service Inc., the DOL estimates three out of four plans they audit have an ERISA violation, and about 70% of audits with violations have resulted in monetary fines to the employer.


WHY does a business need a wrap document?

Insurance documents rarely meet all of the specific requirements of ERISA for Plan Documents and SPDs. A business could face a penalty of up to $110 per day per employee that may be assessed where an employer fails to provide the proper plan documents to an employee. Having an inaccurate or incomplete plan document can increase the risk of participant complaints and lawsuits.


…and HOW does it work?

With BASE®, the employer provides the plan information for all ERISA employee benefit plans. BASE® will produce all required documentation as established by ERISA in the form of an SPD and Plan Document, and provide and maintain all documentation to the employer required for distribution to their employees.


The DOL recommends a third-party to help review a company’s compliance materials, and with the increased DOL audits, rest easy knowing BASE® can help keep the business in compliance. Call 1-888-386-9680.

Tap Into the BASE® Knowledge!

No one has the answers to everything all the time. We look to others who are experts in their field and have hands on experiences relating to that topic. We seek advice and trust the knowledge they share and use them as a resource to make better decisions. I recently read an article about tapping other’s brains for your own personal breakthrough. That made me think of my life.

I am constantly looking to others for their advice and guidance, because again, we cannot be experts in everything. Just yesterday I asked my mom how to cook her famous lasagna. She gave me the recipe and walked me through how to make it just right. Now it didn’t turn out as good as hers, but I tapped into her knowledge of cooking and it came pretty close.

Then that made me think of BASE®. Every day we speak with people seeking advice on what they should do concerning employee benefits and tax-advantaged plans. A lot of business owners don’t even know they have these options to help them save valuable tax dollars. Our representatives walk people through our different products and services, provide benefit strategies and answer questions that come up.

Recently, a client out of Arlington, VA shared how using BASE® as a resource took something complex and made it simple and easy to understand. After speaking with BASE®, he was able to make better business decisions that led to valuable tax savings for his company. This example shows that utilizing someone’s expertise and tapping into their knowledge can be beneficial and allows you to make better, more informed decisions.

Our expertise and up to date information is what keeps our plans in compliance and penalty free. BASE® works hard to stay current on changing legislation and compliance regulations. Both BASE® Business Partners and clients have come to rely on BASE® as a resource when it comes to tax-advantaged employee benefits and compliance services. In fact, one client enrolled since 2000 stated, “I have always felt the staff was excellent and is always there to answer any questions with effective answers.” Another BASE® client said, “BASE® is courteous and thorough, and their follow up is unlike any other company.”

Utilizing BASE® and our expertise can help to assess employee benefit needs, and we can provide an initial analysis to develop a winning benefit strategy. Contact BASE® today to tap into the BASE® knowledge!