The Employee Retirement Income Security Act (ERISA) is a federal law setting and enforcing standards that ensure the annual disclosure of certain information to plan participants, especially to almost all employers or organizations offering or sponsoring benefits. This is regardless how big or small the number of people sponsored is.
This law can be complex to understand, as it covers an extremely broad area that it can be easy to make a mistake and lead to non-compliance. The good news is there are services available that make abidance easier, preventing the rise of potential liabilities and legal consequences.
Going Back to Basics: What Welfare Benefit Plans Constitute of
Under ERISA, any employer providing certain benefits to its employees means that it has established an employee welfare befit plan. These benefits include:
- medical, dental, and vision insurance plans
- health flexible spending accounts (health care reimbursement accounts)
- accidental death and dismemberment (AD&D) insurance plans
- short- and long-term disability plans
- group term life insurance plans
Only a few exceptions apply to the law, but in a nutshell, employers who fit the aforementioned description need to comply with ERISA.
Ensuring Compliance with ERISA Regulations
ERISA mandates employers to have a Plan Document for each health and welfare benefit plan to be in writing. The law also requires them to create a Summary Plan Description (SPD) that they will distribute to each plan participant on an annual basis.
Due to all the technicalities and complexities surrounding this federal law, more employees now invest in an ERISA Wrap Plan. HR Service Inc. explains that this allows them to remain in compliance with the regulations. Through a Wrap Plan, they can blanket or “wrap” the benefits they offer in a single plan document. This then helps them effectively meet the mandated ERISA requirements.
Avoid putting your business or organization at risk of the serious ERISA non-compliance consequences; have a wrap plan created as soon as possible.