Last Updated on May 5, 2025

For employers offering group health insurance, compliance with the Employee Retirement Income Security Act of 1974 (ERISA) is non-negotiable. ERISA sets standards to protect employees by ensuring transparency, fiduciary responsibility and proper administration of employee benefit plans.  

A big component of ensuring transparency is through the utilization of the Summary Plan Description (SPD) and the Wrap Document. This blog post explores the significance of these documents and how they work together.  

What is a Summary Plan Description (SPD)? 

The Summary Plan Description (SPD) is a cornerstone of ERISA’s disclosure requirements. It serves as the primary vehicle for communicating the terms of an ERISA-covered benefit plan to participants and beneficiaries in clear, understandable language. The SPD is essentially a user-friendly summary of the plan’s key features, ensuring employees understand their rights, benefits and obligations. 

Key Components of an SPD 

A Summary Plan Description (SPD) is a critical document that outlines the essential details of employee benefit plans, such as pension, 401(k), health or disability plans, ensuring participants and beneficiaries understand their rights and obligations. The key information an SPD must include are as follows:

• Plan Identification: The SPD must include the plan’s official name (and any commonly used name), the sponsoring employer or organization’s name, address and IRS Employer Identification Number (EIN), and the plan’s assigned number. 
• Plan Type and Administration: It specifies the type of plan and how it is administered (e.g., by the employer, insurer or third-party administrator). 
• Key Contacts: The SPD provides the name, address and phone number of the plan administrator, the agent for legal process service, and each trustee’s name, title and principal business address. 
• Eligibility and Benefits: The SPD details eligibility requirements for participation and benefits, including any joint and survivor annuity provisions for pension plans or continuation coverage (e.g., COBRA) for health plans. It also explains circumstances that could lead to disqualification, denial or loss of benefits. 
• Contributions and Funding: It identifies the sources of plan contributions (e.g., employer, employee) and the method for calculating contributions, along with the funding medium (e.g., trust fund, insurance company) used to accumulate assets for benefits. 
• Plan Operations: The SPD outlines the plan’s fiscal year, claims procedures (including filing, review and appeal processes), and, for health plans, preauthorization or utilization review requirements. It also notes the sponsor’s authority to amend or terminate the plan. 
• Collective Bargaining Agreements (CBAs): If applicable, the SPD states that the plan is maintained under a CBA, with details on how participants can access or request a copy. 
• Pension-Specific Information: For pension plans, the SPD describes how years of service are calculated for eligibility, vesting, and benefit accrual, as well as information on Pension Benefit Guaranty Corporation (PBGC) coverage or lack thereof. 
• Health Plan Details: For group health plans, the SPD includes additional specifics, such as: 
  • Cost-sharing provisions (premiums, deductibles, copayments, coinsurance). 
  • Coverage for preventive services, prescription drugs, medical tests and maternity/newborn care. 
  • Annual or lifetime benefit limits. 
  • Network provider rules, out-of-network coverage, and conditions for selecting primary care providers or accessing emergency care. 
  • Procedures for qualified medical child support orders (QMCSOs) and COBRA continuation coverage. 
  • Wellness program details and patient protection rights (e.g., access to obstetric/gynecological care without prior authorization). 
  • A statement on whether the plan is grandfathered under the Affordable Care Act (ACA). 
• ERISA Rights: The SPD includes a statement of participants’ and beneficiaries’ rights under ERISA, ensuring transparency about legal protections. 

By clearly presenting these details in a way that the average plan participant can understand, the SPD serves as a vital resource for employees to navigate their benefits and understand the plan’s structure, funding, and procedures. For more complex plans, additional schedules or documents may be referenced, with instructions for obtaining them at no cost. 

SPD Timing 

The plan administrator must automatically furnish the SPD to participants covered under the plan within 90 days of the participant becoming covered under the plan, or within 90 days of a beneficiary first receiving benefits. For a new plan, the SPD must be furnished within 120 days after the plan becomes subject to ERISA.  

After a participant has received the SPD initially, the plan administrator must furnish an updated SPD every five years, if changes are made to the SPD or plan. In the unlikely event that no changes are made to the SPD or plan, the plan administrator must furnish the SPD every ten years after the SPD is initially furnished. 

Why the SPD Matters 

The SPD is more than a formality; it’s a legal requirement that protects both employees and employers. For employees, it ensures transparency, empowering them to make informed decisions about their benefits. For employers, a well-crafted SPD reduces the risk of misunderstandings, disputes or litigation. Failure to provide an SPD can result in penalties of up to $110 per day, per participant, as well as potential lawsuits if employees claim they were misled about their benefits. 

What is a Wrap Document? 

A Wrap Document is a supplementary document that “wraps” around existing insurance carrier documents (e.g., certificates of coverage or booklets) to create a comprehensive ERISA plan document. Many employers mistakenly assume that the insurance carrier’s booklet or certificate of coverage alone satisfies ERISA’s requirements for a plan document. However, these materials often lack critical ERISA-specific details, such as claims procedures or participant rights, leaving employers non-compliant. 

Purpose of a Wrap Document 

The Wrap Document serves two primary functions: 

• Fills Compliance Gaps: It incorporates the insurance carrier’s documents by reference while adding ERISA-required provisions that may be missing, such as detailed claims procedures, fiduciary responsibilities, and participant rights. 
• Consolidates Multiple Plans: For employers offering multiple benefit plans (e.g., medical, dental, vision), a Wrap Document can combine these into a single “wrap plan,” simplifying administration and reporting under ERISA. 

Key Elements of a Wrap Document 

A Wrap Document typically includes information such as: 

• Plan Identification: The plan is identified by its official name, the plan sponsor, their address and the Employer Identification Number (EIN). The plan number and plan year are also specified, along with the type of welfare plan (e.g., health, dental or disability). 
• Administration Details: The plan outlines how it is administered and includes the name and contact details of the plan administrator and the Agent for Service of Legal Process, who handles legal documents. 
• Eligibility and Benefits: The plan details eligibility requirements and circumstances under which benefits may be denied or forfeited, ensuring transparency for participants. 
• COBRA and FMLA: A COBRA statement informs participants of their right to continue coverage after certain events, while FMLA procedures explain leave-related benefits. 
• Contributions: The schedule of participant contributions, if any, and the source of funding (e.g., employer, employee, or both) are clearly outlined. 
• QMCSO and Appeals: Procedures for Qualified Medical Child Support Orders (QMCSOs) are included, along with the right to access documents for adverse benefit determinations.
• ERISA and Health Protections: The plan includes a statement of ERISA rights, ensuring participants understand their protections. It also covers disclosures for the Newborns’ and Mothers’ Health Protection Act, HIPAA privacy and special enrollment rights, the Women’s Health and Cancer Rights Act (WHCRA), and CHIPRA special enrollment rights. 
• Plan Amendments and Termination: Terms under which the employer may amend or terminate the plan are specified, providing clarity on plan stability. 
• Health Insurer and Claims: For insured plans, contact information for the health insurer is provided. The plan also details cost-sharing (e.g., deductibles, coinsurance) and procedures for submitting claims, streamlining the process for participants. 

Unlike the SPD, the Wrap Document is not typically distributed to employees unless requested. Instead, it serves as the official plan document that governs the plan’s operation and ensures ERISA compliance. 

Why the Wrap Document is Essential 

Without a Wrap Document, employers risk operating without a compliant ERISA plan document, which can lead to significant consequences. For example, in the event of a Department of Labor (DOL) audit, the absence of a proper plan document could result in fines or corrective actions. Additionally, unclear plan terms can lead to disputes with employees, particularly if the insurance carrier’s documents are vague or inconsistent with ERISA requirements. 

How SPDs and Wrap Documents Interact 

The SPD and Wrap Document are closely related but serve distinct purposes under ERISA. Understanding their interplay is critical for employers to ensure full compliance. 

• Complementary Roles: The Wrap Document is the comprehensive legal plan document that governs the plan’s operation, while the SPD is a summary of the plan’s key terms designed for employee consumption. The SPD draws from the Wrap Document to provide an accessible overview without overwhelming participants with legal details. 
• Consistency is Key: The information in the SPD must align with the Wrap Document. Discrepancies between the two can create confusion or legal vulnerabilities. For example, if the SPD promises a benefit that the Wrap Document does not support, courts may side with the SPD in participant disputes, holding the employer accountable for the discrepancy. 
• Distribution Differences: The SPD must be proactively provided to participants, while the Wrap Document is typically maintained by the employer and provided only upon request. The SPD must be provided as follows: 
• Employers must provide the SPD to new participants within 90 days of enrollment. 
• Updated SPDs must be provided every five years if material changes occur, or every ten years if no changes are made. 
• The SPD must be furnished in a manner reasonably calculated to ensure receipt, such as in-person delivery, mail or electronically (if DOL electronic disclosure rules are followed). 

However, both must be available for inspection during a DOL audit or participant inquiry. 

• Updating Requirements: Changes to the plan (e.g., new benefits or revised claims procedures) must be reflected in both documents. For significant changes, employers must issue a Summary of Material Modifications (SMM) to update the SPD and amend the Wrap Document accordingly. 

Best Practices for Employers

To maximize the effectiveness of SPDs and Wrap Documents, employers should follow these best practices: 

• Work with Experts: Engage ERISA attorneys or benefits consultants to draft or review SPDs and Wrap Documents. These professionals can ensure compliance with complex regulations and tailor documents to the employer’s specific plans. 
• Regularly Update Documents: Review and update both documents whenever plan terms change or at least every five to ten years, as required by ERISA. 
• Ensure Clarity in SPDs: Use plain language and clear formatting to make SPDs accessible to all employees. Consider providing translations for non-English-speaking participants. 
• Maintain Records: Keep records of SPD distribution to prove compliance in audits or disputes. Electronic distribution is permissible under ERISA’s safe harbor rules, provided employees have access to electronic media. 
• Train HR Staff: Educate human resources teams on the importance of these documents and how to respond to employee inquiries about benefits. 
• Monitor Carrier Documents: Regularly review insurance carrier booklets to ensure they align with the Wrap Document and SPD. Carriers may update their materials without notifying employers, creating compliance gaps. 

Maintaining Compliance with MyHRConcierge 

For employers offering group health insurance, the Summary Plan Description and Wrap Document are important tools for ERISA compliance. The SPD empowers employees with clear, accessible information about their benefits, while the Wrap Document ensures that the plan meets ERISA’s technical requirements. Together, these documents foster transparency, reduce legal risks and streamline plan administration.

In the complex world of ERISA, the SPD and Wrap Document are not just paperwork- they are critical safeguards for both employers and employees. MyHRConcierge offers a valuable solution  in compliance, providing expert guidance and support to help employers. Contact us today at 855-538-6947 ext. 108 or ccooley@myhrconcierge.com. Or, schedule a free consultation below: