SPD WRAP Ultimate Guide

What you need to know about SPD WRAP

A Summary Plan Description (SPD) is an ERISA requirement for most employers offering group benefits. It’s the document that outlines the details and terms of a group’s health plan in understandable language for all eligible plan participants. ERISA guidelines dictate what information is to be included, to whom it has to go, and when it has to be sent. And a WRAP allows multiple benefits to be combined and wrapped into a single plan document that can help you save time and money when filing Form 5500.

Why do groups need a Summary Plan Description?

Most organizations offering employee benefits must meet ERISA reporting guidelines, which include having an SPD in place and distributing it to participants within the allotted time frame. Although the purpose of an SPD is to inform participants, it is also used to help protect employers against legal action. Groups without an SPD can face severe penalties for noncompliance, which is covered more in-depth later in the article. 

What is the difference between SPD and WRAP?

Although technically, a WRAP is a different document, you can get both without paying more. By wrapping multiple health and welfare benefits into a single document, it serves as a more convenient option. Since most employer groups offer multiple benefits, a WRAP document helps to make the whole process of filing a Form 5500 easier. For groups with 100 or more plan participants, a WRAP adds the convenience of only having to file one Form 5500 instead of a separate form for each benefit offered by the plan. While an SPD is required to be distributed to all plan participants and their beneficiaries, a WRAP doesn’t require distribution.

Who is required to have a Summary Plan Description (SPD) on file?

ERISA requires employer groups of all sizes, including one-person plans offering group health insurance, to follow SPD guidelines. Only government and faith-based organizations are exempt from the rule.

What if a group does not have an SPD in place?

  • $110/day per participant for each violation of failure to provide an SPD or plan document within 30 days of receiving a request from a plan participant or beneficiary
  • An audit by the Department of Labor (DOL) could be triggered if an SPD isn’t in place
  • Failure to furnish plan-related information requested by the DOL carries a penalty of up to $184 per day, not to exceed $1,846 per request
  • Criminal penalties may be imposed for willful violations of any Title I requirement of ERISA, including the SPD and plan document disclosure rules. The penalty per conviction could be $100,000 or imprisonment for up to 10 years. The fine can increase up to $500,000 when imposed against an entity.

What are the benefits of having Ameriflex help with the SPD WRAP instead of using a template online or figuring it out independently?

Here are a few benefits of using an Ameriflex SPD WRAP:

  • Our services are less expensive than retaining an attorney
  • Regularly updated with the most current ERISA regulations
  • An easy intake and onboarding process
  • Versions in English and Spanish*
  • Summary of Material Modifications (SMM)*
  • 24-48 hour turn-around time for document production
  • Have the benefit of a single-point of contact
  • Integrates seamlessly with *Form 5500, *Federal Filing Notices, and other compliance services

*Additional Fees May Apply


What is the timeline?

  1. Summary Plan Description (SPD) has to be distributed to covered participants within 90 days after becoming covered by the plan.

  2. Summary Plan Description (SPD) must be distributed to covered participants within 120 days of a new plan being established.

  3. The Wrap document must be created and effective prior to the end date of the plan year before filing a Form 5500, which is the last day of the seventh month after the plan year ends.

  4. A Summary of Material Modifications (SMM) within 60 days of a material reduction in covered services. (Varies)

Who should receive an SPD?

  • Participants must automatically receive an SPD free of charge when they become covered under the plan
  • COBRA-qualified beneficiaries
  • Individuals who are responsible for children under a Medical Child Support Order (QMCSO)
  • Spouses or dependents of deceased retirees who are still eligible for benefits
  • Guardians of individuals who are incapacitated

Are businesses required to have an SPD?

Yes. There is no small business exemption for the regulation. Employers of all sizes, including single-person plans, must have an SPD and follow ERISA guidelines. 

Do groups need a SPD Wrap if the insurance provides a booklet about the plan?

Yes. It’s important to note that the booklet provided by a group’s health insurance often doesn’t meet the ERISA requirements for the SPD WRAP.

How does an SPD Wrap affect Form 5500?

A Form 5500 is another ERISA requirement for organizations with 100 or more participants enrolled in any group medical benefits at the beginning of the plan year. Having an SPD WRAP that “wraps around” the benefits offered creates a single plan document that allows groups to file only one Form 5500 instead of a form for each separate benefit offered.