"Benefits of Using a Wrap Plan"

If an employee walked into the human resources department of your company and asked for a copy of your company’s dental plan or for a copy of the medical plan’s summary plan description, would you be able to provide her with one?  What if you received an audit letter from the Department of Labor asking you for copies of your plan documents and summary plan descriptions for your company’s medical, dental, vision, group life or other plans?  Would you be able to provide the necessary documents?  When I ask companies these types of questions, too often the answer is “no” or “I’m not sure.”  If any of this potentially applies to your company, you should consider using a Wrap Plan.

Now, it’s possible a few of you reading this article are anticipating it will provide you with helpful tips on gift giving for the coming holiday season.  If so, I’m sorry to disappoint you.  A Wrap Plan is a document/strategy that companies can use to better ensure they’re in compliance with the Employee Retirement Income Security Act of 1974 (ERISA) and to reduce their potential exposure relating to, and costs involved in, the administration of the various health and welfare benefit plans they provide to their employees.  As such, for those who can take advantage of a Wrap Plan, I suppose it could be considered a gift. 

What is a Wrap Plan?

For the most part, and with few exceptions, employer-sponsored medical, dental, vision, prescription drug, accidental death and dismemberment, cafeteria, employee assistance programs, short-term and long-term disability insurance, group term life insurance, and certain other employee welfare benefits are covered under ERISA as “employee welfare benefit plans.”  With respect to each employee welfare benefit plan, in addition to certain claims procedures, governance rules and fiduciary and administrative responsibilities, ERISA imposes reporting and disclosure obligations on the employer that sponsors such plan.  

Click here to read the full article from Confero Magazine.

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