*More Information on Wrap Documents for Fully-Insured Plans

Why do I need a Wrap Plan?

Department of Labor (“DOL”) audits often accompany requests for insurance carrier’s certificates/booklets (“booklets”) for the purpose of scrutinizing all of the legal language required for ERISA compliancy.  These booklets oftentimes do not include all of the legally required language mandated by ERISA and HIPAA, such as detailed claims procedures, plan sponsor information, HIPAA privacy rights, GINA provisions, ERISA rights provisions and others.  A Wrap Plan works with the carrier’s booklet to eliminate this problem by ensuring that employers are fully compliant with ERISA and HIPAA.

ERISA requires that all plan sponsors develop a Summary Plan Description (“SPD”) that communicates with employees what types of benefits are available to them, what the eligibility requirements are, how to receive these benefits and whom to contact when a problem or question arises.  Many employers make the mistake of believing that the booklet they receive from their insurance carrier meets the DOL’s requirements for an SPD.  In fact, the majority of booklets that are provided by major insurance carriers are NOT compliant.  While these booklets provide important information, they do not address all information required by ERISA.  If an employer is only distributing the booklets which are provided to them by the insurance carrier, then the employer is NOT in compliance.

Employers can rectify the situation by creating a Wrap Plan to attach to the insurance carrier’s booklet, provided the booklet includes specific benefit descriptions and limitations.  A clear and comprehensive Wrap Plan will provide the employer with a compliant document, as well as protect them from lawsuits.

When creating a Wrap Plan, ERISA mandates that the content include the following information:  the official plan name; the name and address of administrator and plan sponsor; the names and addresses of people on whom legal process may be served; whether records are kept on a calendar-, policy- or fiscal-year basis; date of the end of the plan year; employer tax-identification number; plan number; plan sponsor’s authority under the plan to eliminate benefits or terminate the plan; COBRA rights and obligations of participants and beneficiaries; type of plan the SPD describes (for example, the group health plan); the name, title and address of the plan; description of relevant provisions of any application collective bargaining agreement; source of financing for the plan; claim procedures; ERISA rights statement; name of organization through which benefits are provided; and the funding medium (fully insured, self-funded, etc.).

What’s the difference between an Individual Wrap and a Mega Wrap? 

 Individual Wrap
An individual Wrap is meant to “wrap” around the booklet your insurance carrier provides to you.  We offer individual Wrap plans for the following benefits:

  • Medical
  • Dental
  • Vision
  • Group Life
  • LTD
  • STD

Once we prepare your Wrap SPDs, you can attach the booklets from your insurance carriers to the appropriate Wrap SPD, and together these two documents provide employees with a fully compliant Plan Document and Summary Plan Description.

Mega Wrap
A Mega Wrap is created in order to wrap all of your individual PD/SPDs into one plan, for purposes of only having one 5500 filing.  A Mega Wrap can also be produced without the creation of Individual Wraps if you believe that the carrier booklets provided to you are already in compliance (see the DOL requirements noted above).  However, please note that the majority of times, carrier booklets ARE NOT compliant with ERISA and HIPAA, and Plan Document Solutions, Inc. strongly urges you to have the applicable individual Wrap Plans completed to make sure you are compliant should the plan have a DOL Audit.