Beyond requiring that a plan “be established and maintained pursuant to a written instrument,” ERISA does not say exactly what constitutes a plan document. Given the ambiguity, the ERISA plan document requirement has been interpreted in many different ways, and functionally has resulted in wide variations. One of those interpretations is the common use of a “wrap” document. There are 2 main purposes of a “wrap” document:
“Wrap” documents are tools used to supplement existing documentation. A wrap document provides the necessary ERISA-required language by incorporating (or wrapping itself around) the insurance policy/certs or similar third-party contract. The insurance policy or contract remains part of the plan document (reflecting many of the plan's most important terms and conditions), and the wrap document merely supplements it with the necessary information. In other words, the first purpose of a wrap document is to fill in the missing ERISA contents that are not typically found in the carrier’s certificate of coverage.
The insurance policy booklet or carrier certificate of coverage is not the SPD and it is not the plan document. It is missing required elements that must be present under ERISA. For example, the insurance company isn’t going to list someone’s ERISA rights or procedures for refunds or rebates. Also, many times the carrier’s certificate of coverage points back to the SPD for specific definitions of eligibility under the plan. In addition, many of the required notifications that should be in the SPD are not listed in a carrier certificate of coverage.
Thus, the first reason for adopting a wrap document is to supplement missing required ERISA language and information.
The second purpose of a wrap is to bundle all component benefits together. An umbrella plan or sometimes called a “mega-wrap” can be useful for bundling all single policies together (such as medical, dental, vision, disability, life, FSA, HRA, etc.) to create one single ERISA plan, which means that the employer would only have to file one single Form 5500 instead of multiple 5500 filings for each applicable health and welfare plan. In practice, many employers are already filing one single 5500 with component plans included. However, this should also be reflected in the plan's wrap document and certificates of coverage/TPA documents.
Thus, the wrap document plus carrier certificates of coverage/policy booklets/TPA contracts are altogether the plan’s SPD, which all need to be provided to participants and filed under the health and welfare 5500 filing as such.