August 11, 2022

WRAP Document 101

What is an SPD and WRAP Document?

A Summary Plan Description (SPD) contains specific information, required under federal law, describing the terms of the group health plan in a manner that is easily understood by the participants. The descriptions in an SPD include the plan name, employee eligibility requirements, employee rights and responsibilities, and more. Additionally, the employer must file an annual Form 5500 for each benefit. Employers can combine multiple benefits into one plan via a WRAP document. A WRAP document allows the employer to file a single Form 5500 for all benefits and maintain one plan document.

SPD and WRAP Deadline Requirements

If an employer offers group health insurance, the employer must maintain and distribute the following:

  • Summary Plan Description (SPD) to covered participants within 90 days after becoming newly covered by an existing plan
  • Summary Plan Description (SPD) to covered participants within 120 days of a new plan being established
  • WRAP document must be created and effective prior to the Form 5500 filing deadline (the last day of the seventh month after the plan year ends)
  • Summary of Material Modifications (SMM) within 210 days of a material change and 60 days of a material reduction in covered services

Common Mistakes

Many employers offer health and welfare benefits through carriers. The carriers typically provides employers with booklets and certificates of coverage, but they don’t provide the required documentation to meet SPD/WRAP requirements. Employers who don’t review their SPDs/WRAP faces the risks of penalties.

Consequences if Failure to Comply

If an employer fails to provide a compliant SPD within 30 days of a participant’s written request, the employer may start getting fined, at minimum, $147 per day. Employers expose themselves to lawsuits from employees if SPDs are not in place or compliant.

The U.S. Department of Labor (DOL) has jurisdiction over these matters. So, the DOL may initiate an audit to conduct labor investigations as part of the penalty for failing to comply.

How Ameriflex Can Help

Ameriflex offers an easy, inexpensive way for employers to wrap their ERISA welfare benefits into a single WRAP document. Here are some of the benefits of using our document:

  • User-friendly intake form to collect plan details
  • Document generated in English and Spanish
  • Regularly updated with the most current ERISA regulations  
  • Summary of Material Modifications (SMM) available to communicate plan changes
  • 2-3 week turn-around time to produce documents

Key Takeaways

Employers who offer group health plans should review their WRAP documents to ensure they are compliant with ERISA SPD documentation requirements. The plan documents should also meet all deadline requirements to avoid the risks and penalties for non-compliance.

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