The Employee Retirement Income Security Act of 1974 (“ERISA”) is the primary federal law governing employee benefit plans. While ERISA was originally written to protect employee rights and interests in pension and retirement plans, the law applies with equal force to health and welfare plans. This includes medical, vision, dental, EAPs, FSAs, DCAPs, and just about any other benefit arrangement offered by employers to employees. Failure to comply with ERISA requirements can result in fines, excise taxes and liability through lawsuits brought by employees.
Written Plan Document Requirement
One of the key and most basic requirements under ERISA is the requirement that plans must be established and maintained through a written plan document. In addition, employers are required to provide employees a written Summary Plan Description that describes the plan provisions, including eligibility, benefits, costs, termination of benefits and an employee’s rights under ERISA.
The SPD has very specific requirements with respect to content. While information provided by carriers includes much of the required information, these booklets almost always omit several key pieces of information. The reason the booklets don’t meet ERISA requirements is because insurance carriers are not required to provide SPDs or plan documents to employers. The ERISA requirements apply to the employer, not carriers. That means employers are ultimately responsible for providing this information to their employees and for their own internal use.
DOL and IRS enforcement of the written plan document requirement is growing with an emphasis being placed on health plans. In addition, public awareness of individual rights in employee benefit plans has increased significantly through media coverage about the ACA and easy access to information through the internet. So now more than ever, employers need to be vigilant in making sure their plans are compliant.
How Northwestern Benefit can help
At Northwestern Benefit Corporation, we have a compliance initiative to help our clients identify, prioritize and update any plan documents that are missing, out-of-date, or otherwise needing improvement. In addition, we will provide our clients with a Plan Document Compliance Review Guide to explain which documents are required, the purpose of each document and the potential consequences if you don’t have compliant documents. Most importantly, we can recommend several options to help you bring your plan documents into compliance with ERISA.