The Employee Retirement Income Security Act (ERISA) of 1974 (ERISA) obliges employers to offer the Summary of Plan Description (SPD) to the employees when they provide health, dental and vision, life insurance disability, and other benefits.

Many employers are unaware of this requirement or they issue documents that do not comply with the SPD specifications set out by ERISA. Certificates of coverage (COC) and summaries of Benefits and Coverage (SBC) or general contracts issued by insurance companies are not identical to SPDs that are ERISA-compliant. SPDs.

In general, these types of documents don't contain the necessary SPD requirements and disclosures. Discover more about ERISA SPD/Wrap health & welfare plan documents, by browsing online.

Image source:-Google

Insurance companies prepare their booklets and certificates in accordance with the insurance laws. It is the responsibility of the administrator of the plan (which is often an employer) to ensure compliance with the SPD rules of ERISA.

There are still a lot of ERISA requirements not being met, which means that employers need to complete the carrier documents with a separate document or face expensive penalties. A lot of employers prefer to use one document that "wraps over" all the advantages they can provide, so they don't have to write several documents and hence the name Wrap Document.

A wrap document can help employers avoid the threat of lawsuits and financial penalties and ensures they are in compliance with the stringent laws. They also save time and money. 

Employers can bundle all welfare and health plans within one wrap document, which means there's no requirement to amend or update multiple documents to accommodate legislative changes, regulatory changes , or changes made by employers in relation to the benefits offered by the plan.