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Section 402 of the Employee Retirement Income Security Act (ERISA) requires that every health and welfare plan must have a written plan document. A wrap plan is a document that bundles or “wraps” ERISA health and welfare benefits (medical, dental, and vision, for example) into a single plan. It is an important component of the ERISA required documentation which includes summaries of benefits and coverage, insurance agreements, enrollment materials, and a Summary Plan Description.
A wrap plan and accompanying Summary Plan Description should contain at least the following provisions:
- A description of eligibility for benefits
- An outline of administrative powers including who has authority to interpret the plan provisions
- The benefits available to participants (which are usually detailed in other documents)
- Claims and appeals procedures
- A reservation of the right to amend or terminate the plans and benefits
- Legally required information (such as notices under HIPAA, USERRA, COBRA, ERISA, )
The 5500 Filing
All health and welfare benefit plans, unless a specific exception applies such as a fully insured plan having fewer than 100 participants, are required to file IRS Form 5500. Without a wrap plan, Form 5500 would have to be filed for each component plan – medical, dental, vision. A wrap plan can significantly reduce the administrative burden associated with annual reporting by filing just one Form 5500.
Employer Action Items
If you don’t already have a wrap plan, work with your employee benefit broker or third-party administrator for assistance in preparing one.
If you have a wrap plan, review it at least every two years to ensure that it reflects the current legal requirements and any changes that may have been made to component plans.
Ensure that you are properly and timely filing Form 5500. If participation in the plan increased to more than 100 employees, you will now be required to file.
This information has been prepared for UBA by Fisher & Phillips LLP. It is general information and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
