When managing employee benefits, maintaining compliance with federal regulations can be difficult for small and medium-sized businesses. One effective solution is to simplify the process of creating Wrap Plan documents. These documents, also called wrap documents for benefits, or Summary Plan Description (SPD) wrap documents, offer a detailed approach that simplifies administrative duties surrounding benefits compliance.
Keep reading to understand how wrap plan documents not only benefit your employees but your business as well.
The Benefits of Wrap Plan Documents For Your Business
It’s clear that a well-documented benefits package can improve employee retention and satisfaction. When employees clearly understand what benefits they are entitled to, they are more likely to appreciate the value of compensation. But did you know that a wrap plan can improve your business operations, too?
Here are the top five benefits of implementing Wrap Plan Documents for your business.
1. Simplifying Compliance
One of the main advantages of using a wrap plan document is that it simplifies compliance activities dealing with the Employee Retirement Income Security Act (ERISA). ERISA requires employers to provide a Summary Plan Description for each benefit plan. A wrap document for benefits combines multiple benefit summaries into a single, detailed document, making it easier to manage and work toward compliance.
With better direction, businesses reduce the risk of non-compliance and minimize the potential for penalties.
2. Reducing Administrative Burden
As we have said, updating and maintaining multiple benefit plans can be time-consuming and complex. A fitting example of this is when employers need to file Form 5500. Since the form contains information about health and welfare benefits, it also includes supporting schedules and other documents.
A Wrap plan document brings all benefit summaries together into a single document for easier management. The advantage comes from having to file only one Form 5500 instead of several of them. By minimizing the benefits information companies are forced to track, you can lessen the administrative burden on HR departments.
With simpler tasks to manage, HR professionals can focus on more strategic matters rather than getting bogged down in paperwork.
3. Cutting Fees and Avoiding Penalties
Wrap plan documents offer key opportunities for employers looking to reduce costs and simplify their employee benefit plan management. By combining multiple welfare benefit plans into one overarching plan, companies can cut down on administrative work and expenses. This approach allows employers to file just one Form 5500 instead of separate forms for each benefit plan, which can lead to substantial savings.
In fact, filing a single document can potentially save businesses from costly penalties resulting from non-compliance. The Department of Labor (DOL) can fine companies $110 per day for failing to provide compliant SPDs within 30 days of a request. Another advantage of wrap documents is that they make it easier to update plans when laws or regulations change.
Instead of revising multiple separate plan documents, only one needs to be modified. Adjusting saves time and resources and keeps all benefit offerings consistent and compliant.
4. Maintaining Consistency Across All Benefits
A Wrap plan document should also describe all benefit plans consistently wherever they exist. The concept is similar to the idea of a single source of truth (SSOT). In IT, SSOT principles are common in data-driven businesses, and they essentially create a single, authoritative truth. When employees work with an SSOT, it means that every employee works with the same information no matter where they work in the company.
In today’s business world, many industries are adopting a data-driven strategy for better operation and efficiency. In benefits compliance, the idea is similar, and a wrap plan is like an SSOT. A wrap document should keep all plan descriptions the same no matter who sees it or where it is, reducing the risk of discrepancies and misunderstandings.
Consistency is necessary for maintaining compliance and providing employees with accurate information about their benefits. Still, discrepancies can happen, and in such cases, the carrier/TPA document prevails.
5. Easier Updates and Changes to Benefit Plans
Benefit plans can change frequently, and keeping SPDs up-to-date can be tiresome. A wrap plan makes the updating process easier by allowing the responsible party to update and make plan amendments as needed. Using wrap plans creates a natural process that always gives stakeholders access to the most current information about benefits.
Find What Your Compliance Efforts Are Missing With BCS
It’s easy to see why wrap plan documents are important to benefit compliance efforts, but implementing them is not always so straightforward. By combining multiple SPDs into a single information source, businesses can uphold consistency, support easier updating efforts, and improve their overall benefits management. If you're a benefits consultant looking to make your compliance efforts simpler and enhance your offerings, consider an easier solution from Benefits Compliance Solutions today.
Using our comprehensive solutions, you can manage your compliance efforts and minimize your exposure to the risk of fines and lawsuits. Take the first step towards a more efficient business that doesn’t outpace your compliance capabilities.