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Alright, welcome everybody. This is RK Castillo and I am here today with Mike and Terri from
Goodsill and we were going to be asking them a couple questions.
How do I comply with ERISA for my employee welfare benefit plans or health plans?
There are a variety of compliance requirements for employee welfare benefit plans. In our
work with employers, we’ve noted several common compliance issues.
The most common one we’ve seen is that employers or their Human Resource departments are not
preparing summary plan descriptions for their employee welfare benefit plans. The summary
plan descriptions are usually referred to as SPDs. We’ve found the compliance failure
most often with insured plans, like medical, dental, and life insurance. There is a general
belief that once employees have been provided the benefit documents that the employer receives
from the insurance company that issues the policy, then there is nothing further to provide
to the employees. However, the insurance company documents are not designed to meet all of
ERISA’s requirements, and rarely do. The reason for that is because ERISA requires
information specific to the employer and their employees, and that information can only come
from the employer, and not an insurance company.
Fortunately, for insured welfare benefit plans, all that ERISA requires is what is called
a wrap SPD, which is a much shorter summary plan description than a full SPD. Goodsill
can provide a wrap SPD template for employers to use so they can develop their own wrap
SPD, and then we can help double check to make sure it is ERISA compliant.
The second most common compliance issue we see is when employers grow or expand their
business and suddenly have at least 100 employees participating in their welfare benefit plans.
Once an employer reaches 100 or more participants, ERISA requires the employer to file an “Annual
Return/Report of Employee Benefit Plan” form. The form is usually referred to as the
Form 5500, and it must be filed electronically every year. This is an important rule to know
about because there are monetary penalties if the forms are not filed timely.
If this discussion about ERISA’s requirements, and developing a summary plan description
or filing a Form 5500 has raised concerns for you, then contact Goodsill. We can help
with ERISA compliance of employee welfare benefit plans.