Nearly three-quarters (71%) of benefit advisers say their clients are not maintaining plan documents nor providing employees with summary plan documents two major requirements under ERISA, according to an HR360 survey.
The top reasons brokers cited for employers not distributing SPDs to their employees or maintaining plan documents were:
- Employers mistakenly thought they were compliant by distributing benefits booklets/summaries
- Employers were not aware of the ERISA requirements
- Too difficult and time consuming to develop the documents
- Too expensive
Many companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and plan document but they dont include the required or recommended provisions that protect the plan and the employer.
And that could be costly. Failure to provide an SPD or plan document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110/day per participant or beneficiary for each violation.
The lack of an SPD could also trigger a plan audit by the U.S. Department of Labor.
For more information about DOL audits read: http://eba.benefitnews.com/news/how-to-help-employers-prepare-for-dol-investigations-2739449-1.html?pg=2
For advice on how to prepare for a DOL health plan audit read: http://eba.benefitnews.com/blog/beadvised/fear-the-dol-health-plan-audit-2739837-1.html
All ERISA-covered benefit plans, including group health plans and other welfare plans, must also, by law, be administered in accordance with a written plan document.
Benefit brokers can better position themselves as a trusted adviser by helping clients maintain compliance with these ERISA requirements.
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