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What does ERISA stand for?

The Employee Retirement Income Security Act of 1974. ERISA is a federal law that sets minimum standards for employee benefit plans retirement and welfare benefit plans. Employers are responsible for ERISA compliance and other fiduciary roles.

What type and size of employers are subject to ERISA?

ERISA covers all private sector employers of all business types who maintain welfare benefit plans (and/or retirement plans) for their employees. C-Corps, S-Corps, Partnerships, LLC, Sole Proprietors and Nonprofit organizations would be subject to ERISA laws. Whether a company has 1 or 1,000 employees, they would be subject to ERISA as there are no small employer exemptions from ERISA.

Private sector employers that do not sponsor welfare benefit plans (and/or retirement plans) are not subject to ERISA.

What type of employers are not subject to ERISA?

  • Public sector employers such as governments and church plans are not subject to ERISA.
  • Government entities: (city, county, township, village, state, etc)
  • Church plans: (church, parochial school, etc)

What are some examples of plans that may be subject to ERISA?

Accidental Death & Dismemberment
Cancer Insurance
Dental Insurance
Disability Insurance
EAPs (if medical care is provided)
Group Term Life Insurance
Health Flexible Spending Account
Health Reimbursement Arrangement
Health Insurance
On site Medical Clinic
Vision Plan
Wellness Plan

What are the document requirements for employers if they are subject to ERISA?

They must have a written Plan Document in place (must provide upon request to employee) and they must distribute a Summary Plan Description (SPD) to participants.

What is a "Wrap" document and what information does it include?

The word "Wrap" has been adopted by the market to refer to the Plan Document and SPD that includes the all the ERISA required language for an employers' menu of welfare benefit plans. The document in effect "Wraps" around the covered benefits of an employer. The Wrap document provides the required ERISA language as a supplement to the information found in insurance policy/certificate/booklet.

What are the penalties for not have an ERISA Plan Document and SPD in place?

  • ERISA lawsuits from current of former employees
  • $147/day for failure to provide SPD to employees
  • DOL Audits and Fines
  • Other penalties & taxes

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