Compliance Documents
WDIA is pleased to offer templates for two key federal compliance documents: the ERISA Wrap Summary Plan Description (SPD) and Section 125 POP. You will protect your business from possible federal penalties and save on payroll taxes by completing the compliance document templates provided below and keeping them on file.
Washington Dentists’ Insurance Agency (WDIA) has consulted with outside legal counsel to draft template documents to help dental offices remain compliant with the Employee Retirement Income Security Act of 1974 (ERISA) and Section 125 Premium Only Plan (POP) requirements. These templates must be completed and tailored to the specific plans offered by the dental office.
While WDIA will strive to update these forms and notify our policyholders following any change to compliance requirements, WDIA staff are not able to provide any support for dental offices completing these forms. Should dental offices need additional support in the completion of these forms, WDIA recommends reaching out to your business legal counsel.
You can also consider working with TASC, a third-party administrator that will generate custom compliance documents for an annual fee. Colleen Tobin is our local TASC representative. You can schedule a meeting with Colleen or reach her at the following: Colleen.Tobin@tasconline.com or by calling (253) 514-2846. Please Be sure to mention you were referred by WDIA.
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In Need of Professional Support?
If you have any questions about the contents of these documents, please discuss with a legal counsel familiar with business compliance documents. WDIA staff does not have the legal expertise required to provide assistance with the completion of these forms.
You can also consider working with TASC, a third-party administrator that will generate custom compliance documents for an annual fee. Connie Hobbs is our local TASC representative. You can click here to schedule a virtual meeting with Connie or reach her at the following: connie.hobbs@tasconline.com or by calling (360) 606-7877. Be sure to mention that you were referred by WDIA.
FAQs
WHY HAVE AN ERISA HEALTH PLAN WRAP DOCUMENT?
Under ERISA, an employer that provides certain benefits to its employees, such as medical insurance or other types of coverage, is considered to have established an “employee welfare benefit plan”. With only a few exceptions, providing welfare benefits to employees requires the employer to comply with ERISA, regardless of employer size, number of employees, etc. Employer-provided benefits which are considered “employee welfare benefit plans” under ERISA include:
- Medical, dental, and vision insurance plans;
- Prescription drug plans;
- Accidental death and dismemberment (“AD&D”) insurance plans;
- Long-term and short-term disability plans; and
- Group term life insurance plans. Written Plan Document.
An employee welfare benefit plan under ERISA must have a written plan document containing all the terms governing the plan. A written contract of insurance with an insurance company does not normally contain all the rules required by ERISA and is therefore not a plan document.
A well-drafted ERISA plan document typically specifies aspects such as eligibility requirements, plan participation rules and the length of coverage. It also contains important statements by the employer such as the employer’s right to amend or terminate the plan at any time.
What is a “Wrap” Document? A “wrap” document is a drafting device used to supplement already-existing documentation. More specifically, a wrap document provides the information required by ERISA by incorporating (or “wrapping” itself around) the insurance policy that outlines the coverage terms for the benefit. When a wrap document is utilized, the insurance policy remains part of the plan document. That is, the “wrap” document and the insurance policy or contract together comprise the complete plan document.
The insurance policy issued to an employer rarely meets all the requirements of an ERISA plan document. This is not surprising given that an insurer’s main focus is generally on complying with state laws regulating insurance and not on ERISA compliance. Even when insurers attempt to satisfy ERISA’s requirements, the resulting document does not typically contain all of the provisions designed to protect the plan, the plan administrator, and other plan fiduciaries. Consequently, the use of a “wrap” plan document ensures ERISA compliance (through the “wrap” portion of the document) as well as an accurate insurer-provided benefit description (through the incorporation of the insurance policy).
WHY HAVE A SEC. 125 PREMIUM ONLY CAFETERIA PLAN DOCUMENT?
Employees of businesses that offer health care plans have come to expect that their employer will deduct their employee contributions for premiums on a pretax basis and properly manage other benefits under a Section 125 cafeteria plan, also known as a flexible benefit plan. Cafeteria plans are so commonplace that the origins of this treatment and the attendant requirements are often ignored, particularly among small businesses.
While the chance of audit is probably low, the risk is high if noncompliance unexpectedly results in years of past salary reductions suddenly becoming subject to taxation. Under Sec. 125, employers with a qualified written plan are permitted to offer employees a choice between at least one permitted taxable benefit and at least one qualified nontaxable benefit, without the choice itself triggering taxation.
A premium-only plan, defined in Prop. Regs. Sec. 1.125-1(a)(5), offers only a single choice consisting of either cash or accident and health insurance coverage. Cash is defined in Prop. Regs. Sec. 1.125-1(a)(2) to include salary reduction, in which the employee elects to decline to receive a portion of his or her pay and directs the employer to use the money to pay the employee’s contribution toward a specified benefit. Under the Code, the money, if used by the employer to pay premiums for a POP, is not constructively received by the employee and is not subject to tax. Employers who offer a POP are not required to offer employees any other form of cash, including cash in lieu of benefits, so employees who opt out of coverage receive no benefit, taxable or nontaxable.
Payroll service providers, which typically don’t offer payroll or income tax advice and are not tasked with monitoring Sec. 125 compliance, will set up pre-tax salary reductions for the employees of a business as requested, but typically do not require the business to produce a Sec. 125 plan document to show that a plan exists, or make other inquiries to be sure the client understands the law. As a consequence, many small businesses are out of compliance with Sec. 125.
WHAT DO I NEED TO DO?
Download the templates. Review each template for red text and edit the document as instructed. Upon completion, make any cosmetic updates that are needed.
Some documents include a table of contents that will need to be updated. In Word this can be done by navigating to the References tab on the top ribbon of your window and select Update Table. A pop-up notification will appear – select Update Entire Table and click OK.
It is recommended that you save the final version of your documents as a pdf. Copies of the completed documents should be made available employees. The documents should be reviewed and updated for every plan year.
WHERE CAN I FIND MY MEDICAL POLICY BENEFIT INFORMATION?
Your medical carrier mails out new policy documents with complete benefit information annually upon renewal of the policy. You can also find all of your policy information by logging into your employer account. Here are the login page links and support information for each carrier. Be sure to have your group name and number available if you contact the carrier for support!
Regence
https://www.employercenter.regence.com
Call 1 (800) 505-6801 for support, or email regence_membership@regence.com
Kaiser Permanente
https://wa-business-manager.kaiserpermanente.org
Call (800) 577-8252 for support, or email employersite@kp.org
Premera
https://www.premera.com/portals/employerPortal/account/login/wa
Call (855) 756-0796 for support, or email premeramembership@premera.com
Asuris
https://www.employercenter.asuris.com
Call 1 (800) 505-6801 for support, or email asuris_membership_team@asuris.com