Are business travel accident plans that are 100% employer-paid ERISA-covered and are they required to be included in the Wrap documents?

Business travel accident plans that are 100% paid by the employer are generally considered ERISA-covered plans, so it would be prudent to include them in the Wrap SPD and Wrap Plan Document as one of your benefit component plans.

 Are commuter benefits ERISA-covered and are they required to be included in the Wrap documents?

Internal Revenue Code Section 132 transportation benefits are generally not considered ERISA-covered employee welfare benefit plans. Please note, however, that even if a particular benefit is not ERISA-covered, it would be prudent to inform employees about the terms and conditions of the benefit in some manner.

Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. For example, some employers choose to include non-ERISA benefits in the Wrap templates for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Are long-term disability (LTD) plans ERISA-covered and do they need to be included in the Wrap documents?

According to the U.S. Department of Labor, a long-term disability plan is deemed to be a non-ERISA payroll practice if the benefits are paid to current employees out of the employer's current assets. If the benefit is funded through a trust or insurance, it is ERISA-covered.

Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. For example, some employers choose to include non-ERISA benefits in the Wrap templates for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Even if a particular benefit is not ERISA-covered, it would be prudent to inform employees about the benefit in some manner.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Are short-term disability (STD) plans ERISA-covered and do they need to be included in the Wrap documents?

According to the U.S. Department of Labor, a short-term disability plan is deemed to be a non-ERISA payroll practice if the benefits are paid to current employees out of the employer's current assets. If the benefit is funded through a trust or insurance, it may be ERISA-covered.

Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. For example, some employers choose to include non-ERISA benefits in the Wrap templates for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Even if a particular benefit is not ERISA-covered, it would be prudent to inform employees about the benefit in some manner.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Are tuition and education assistance programs ERISA-covered and are they required to be included in the Wrap documents?

An educational program, including tuition and education assistance programs, under which payments are made solely from the general assets of an employer or employee organization, are not covered by ERISA.

Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. For example, some employers choose to include non-ERISA benefits in the Wrap templates for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Even if a particular benefit is not ERISA-covered, it would be prudent to inform employees about the benefit in some manner.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Are voluntary benefits ERISA-covered and do they need to be included in the Wrap documents?

According to the U.S. Department of Labor, a voluntary welfare benefit program, where the employee pays the entire premium, would not be an ERISA-covered plan if the employer has minimal involvement in plan operations and does not "endorse" the plan. Basically, this means the employer cannot urge or encourage employee participation in the program, or engage in activities that would lead an employee reasonably to conclude that the program is part of a benefit arrangement established or maintained by the employer. Such activities include, but are not limited to:

  • Stating that the plan is part of the employer’s benefit package (e.g., "the ABC Company Life Insurance Plan");
  • Generally being involved with selecting the insurer or coverage amounts; or
  • Stating in communications that the employer is "enthusiastic" about the program.

However, the following employer activities are not considered an "endorsement" of the plan:

  • Permitting the insurer to publicize the program to employees;
  • Collecting premiums through payroll deductions and remitting them to the insurer.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and requires an analysis of whether the employer’s specific activities exceed the limitations set forth in the relevant regulations, case law, and U.S. Department of Labor Advisory Opinions.

 Are wellness programs ERISA-covered and do they need to be included in the Wrap documents?

In general, a wellness program may be governed by ERISA if it provides medical care or if compliance with the wellness program affects premiums, cost sharing, or other benefits under the terms of the plan. The term "medical care" includes amounts paid for the "diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body," whether directly or through insurance, reimbursement, or otherwise. A wellness program that offers individualized care provided by a trained professional is more likely to be ERISA-covered than one that provides, for example, only general education programs. 

If the wellness program is ERISA-covered, it might be prudent to list the wellness program as a separate component benefit plan in the Wrap (with the details to be contained in the benefit component documents). 

Even if the wellness program is not ERISA-covered (i.e., it is exempt from ERISA's reporting and disclosure requirements and is therefore not legally required to be included in the Wrap SPD and Wrap Plan Document), it would be prudent to inform employees about the terms and conditions of the benefit in some manner. Please note that non-ERISA benefits are sometimes included in the Wrap templates by employers who choose, for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. 

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Does an employer's cost-sharing or premium contribution policy need to be included in the Wrap documents?

The policy of Wrap360 is not to include employee premium contributions in the Wrap SPD because they are subject to change, which could amount to a considerable number of changes over a given year if there are numerous benefit plans. Moreover, if the changes are not made, the Wrap SPD would be incorrect. Instead, Wrap360 includes generic wording in the first paragraph of the "ELIGIBILITY AND BENEFITS" section of our Wrap SPD, which states that the plan administrator will communicate the premium contributions to the employee (if any) for each type of coverage (Note: this is typically done during open enrollment, since employees would need to know their premium contributions if they plan to enroll in the plan).

This language states as follows:

"An Employee (and his or her Spouse and Dependents, if applicable) is eligible to participate in the Plan only if and to the extent the Participant is eligible with respect to a particular type of coverage under the Plan and the Participant makes the required employee contribution for the coverage selected. The Plan Administrator will inform you of the amount of required employee contributions, if any, for each type of coverage."  

 Is a health FSA (Flexible Spending Account) ERISA-covered and is it required to be included in the Wrap documents?

Generally, a health FSA is a self-funded, ERISA-covered group health plan and, as such, is subject to the ERISA requirements. Therefore, a health FSA would need an SPD, so it would be prudent to include it in the Wrap SPD and Wrap Plan Document as one of your benefit component plans.

In addition, Section 125 of the Internal Revenue Code requires a written plan document for all health FSAs. While the Premium Conversion Plan documents provided by Wrap360 do not meet the documentation requirements for health FSAs (and for that reason health FSAs are not included as pre-tax benefits in the PCP documents), Wrap360 offers clients the ability to generate standalone documents for health FSAs.

If you already have an SPD and Plan Document for your health FSA, the health FSA can remain as a component benefit plan that is incorporated into your Wrap Plan, or the existing documents can be replaced with our FSA documents. To create standalone health FSA SPDs and Plan Documents, simply answer the questions on the FSA component benefit page, save your changes, and select the Health FSA option when generating your documents.

 Is a Health Reimbursement Arrangement (HRA) ERISA-covered and is it required to be included in the Wrap documents?

HRAs are ERISA-covered group health plans and, as such, are subject to the ERISA requirements. Therefore, an HRA would need an SPD, so it would be prudent to include in the Wrap SPD and Wrap Plan Document as one of your benefit component plans.

In addition, Wrap360 offers clients the ability to generate standalone documents for HRAs. If you already have an SPD and Plan Document for your HRA, the HRA can either remain as a component benefit plan that is incorporated into your Wrap plan, or the existing documents can be replaced with our HRA documents. To create a standalone HRA SPD and Plan Document, add HRA as a type of benefit, complete the benefit component information, and select "HRA" when generating your documents.

 Is an Employee Assistance Program (EAP) ERISA-covered and does it need to be included in the Wrap documents?

Whether or not an Employee Assistance Program (EAP) is ERISA-covered depends, in large part, upon the type of EAP and the specific goods and services provided. In general, an EAP is not covered by ERISA unless it actually provides medical services. Benefits for the treatment of drug and alcohol abuse, stress, anxiety, depression, and similar health and medical problems generally constitute medical benefits within the meaning of ERISA. However, if the program provides only referrals and does not provide any benefits which are in the nature of "medical" benefits or "benefits in the event of sickness" to the employees, it typically is not considered ERISA-covered.

It is necessary to consult knowledgeable benefits counsel for specific guidance on the type of EAP you are providing. Please note that, even if your EAP is not required to be included in the Wrap templates, it would be prudent to inform employees about the terms and conditions of the benefit in some manner. In addition, non-ERISA benefits are sometimes included in the Wrap templates by employers who choose, for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion.

 Is state-mandated disability coverage ERISA-covered and does it need to be included in the Wrap documents?

Mandatory state disability plans are specifically excluded from ERISA. State-mandated plans are governed by state law, which has its own set of rules and regulations. However, if the plan goes beyond anything required by the state (e.g., greater benefits, longer duration, additional participants), then the short-term disability plan could be subject to ERISA.

Determining which non-ERISA benefits to include in the Wrap is ultimately at the employer's discretion. For example, some employers choose to include non-ERISA benefits in the Wrap templates for administrative convenience, to communicate all benefits to which a participant may be entitled in a single document. Even if a particular benefit is not ERISA-covered, it would be prudent to inform employees about the benefit in some manner.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it would be prudent to consult with qualified legal counsel or a benefits specialist, as Wrap360 cannot offer legal advice.

 Should I include retirement benefits in the Wrap documents?

Information relating to retirement and pension plans (including SIMPLE IRAs and 401(k) plans) should not be included in the Wrap Plan Documents and Wrap SPDs for welfare benefit plans. These benefits should have their own, separate Plan Documents and SPDs to comply with ERISA. While there are some permissible combinations of retirement plan and retiree health care coverage, these are extremely rare, and employers with these types of arrangements should consult with knowledgeable benefits counsel for individualized guidance.

 What are some basic requirements of plan administrators under ERISA?

ERISA sets uniform minimum standards to ensure that employee benefit plans are established and maintained in a fair and financially sound manner. In addition, employers have an obligation to provide promised benefits and satisfy ERISA's requirements for managing and administering welfare benefit plans.

The U.S. Department of Labor (DOL) has the statutory and regulatory authority under ERISA to ensure that workers receive the promised health and welfare plan benefits. ERISA requires persons and entities that manage and control plan funds to:

  • Manage plans for the exclusive benefit of participants and beneficiaries;
  • Carry out their duties in a prudent manner and refrain from conflict of interest transactions expressly prohibited by law;
  • Fund benefits in accordance with the law and plan rules;
  • Report and disclose information on the operations and financial condition of plans to the government and participants; and
  • Provide documents required in the conduct of investigations, or from requests by plan participants (including Wrap SPDs and Plan Documents).

 What does it mean for an employee benefit plan to be 'covered' by ERISA?

The Employee Retirement Income Security Act (ERISA) is a federal law that covers most private sector employee benefit plans, and that sets forth uniform minimum standards to ensure that such plans are established and maintained in a fair and financially sound manner. Among other things, ERISA requires plan administrators—the people who run plans—to give plan participants in writing the most important facts they need to know about their health benefit plans including plan rules, financial information, and documents on the operation and management of the plan.

One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered health benefit plan, or a beneficiary receiving benefits under such a plan, is a summary of the plan called the summary plan description or SPD.

Accordingly, all ERISA-covered plans are required to be included in the Wrap SPD and Wrap Plan Document. However, even if a particular benefit is not ERISA-covered (i.e., it is exempt from ERISA's reporting and disclosure requirements and is therefore not legally required to be included in the Wrap SPD and Wrap Plan Document), it would be prudent to inform employees about the benefit in some manner.

 What if my HRA or health FSA already has an SPD? Should I still include these benefits in the Wrap documents?

If the HRA or health FSA already has an ERISA-compliant SPD, they do not have to be included in the Wrap templates. However, including all benefits in the Wrap templates helps serve the main objective behind the Wrap, which is to communicate all benefits to which a participant may be entitled in a single document.

 Which employee benefit plans are ERISA-covered?

ERISA covers plans that constitute an "employee welfare benefit plan," which is any plan established or maintained by an employer that provides any of the following through the purchase of insurance or otherwise:

  • Medical, surgical, or hospital care or benefits;
  • Benefits in the event of sickness, accident, disability, death or unemployment;
  • Vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services; and
  • Any benefit described in section 302(c) of the Labor Management Relations Act (other than pensions on retirement or death, and insurance to provide such pensions).

Where there is an employer providing one or more of the described benefits, the U.S. Department of Labor has generally held that there is a "plan," regardless of whether the program of benefit is written or informal, funded or unfunded, or offered on a routine or ad hoc basis.

The following plans are excluded from ERISA:

  • Governmental plans;
  • Church Plans;
  • Plans maintained solely to comply with workers' compensation, unemployment compensation or disability insurance laws;
  • Plans maintained outside the United States;
  • Certain "payroll practices" listed below; and
  • Certain group or group-type insurance programs under which employer involvement is minimal (see the FAQ "Are voluntary benefits ERISA-covered and do they need to be included in the Wrap documents?").

The following "payroll practices" are excluded from ERISA:

  • Payments of compensation for work performed by an employee, including compensation at a rate in excess of the normal rate of compensation, such as:
    • Overtime pay;
    • Shift premiums;
    • Holiday premiums; 
    • Weekend premiums.
     
  • Payments of normal compensation to employees out of the employer's general assets during periods of sickness, vacation, holidays, active military duty, serving as a juror, training, sabbatical leave, or while the employee is pursuing further education.

The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it is necessary to consult with qualified legal counsel for an analysis of the relevant regulations and case law.

Please Note: Wrap360 and its employees and officers are not permitted to offer legal advice. These FAQs are provided for general information purposes only. As the answers to specific questions may vary based on federal or state law, as well as on company documents for the issues in question, it would be prudent to consult knowledgeable benefits counsel for individualized guidance.