As an employer, you know that providing group-sponsored benefit plans is one of the best ways to attract and retain a loyal workforce. But those benefit plans are also subject to certain laws, such as the Employee Retirement Security Income Act. Here’s what you need to know about this complex set of federal regulations.
Most private-sector businesses are subject to ERISA. This includes corporations, partnerships, and proprietorships. Churches and government employers are exempt. Check with a business planning attorney if you’re unsure of whether your organization is subject to, or exempt from, ERISA law.
Most employer-sponsored benefit plans fall under ERISA law. ERISA regulations apply to group healthcare plans, vision plans, dental plans, health savings accounts, FSAs and HRAs. Vacation and scholarship plans are even subject to ERISA in many cases. However, ERISA regulation generally does not cover the following:
- Cafeteria Plans
- Premium-Only Plans
- Section 125 Plans
- Premium Conversion Plans
- Pre-tax Premium Plans
- Health Savings Accounts when employers have limited involvement
- Dependent Care FSAs
- Dependent Care Assistance Plans
- Transit and parking plans
- Adoption Assistance
- Educational Assistance and Tuition Reimbursement
- Paid time off
- On-site medical clinics for the purpose of providing first aid
Any time your company appears to “endorse” a plan, such putting your company name on plan brochures, ERISA regulation could be triggered on an otherwise exempt plan.
You must provide a Summary Plan Description. The Summary Plan Description, or SPD, summarizes the benefits of the plan and informs plans participants of their rights an obligations. You must provide SPDs to all employees within 90 days of eligibility for the plan. Failure to do so can trigger fines from the Department of Labor.
Small employers can use an ERISA “Wrap”. This type of “wrap” document can help small employers meet their ERISA obligations, by detailing disclosures that apply to all employer-sponsored group benefit plans.
ERISA regulations are complicated, but you can ask for help. Because failing to comply adequately with ERISA regulations can trigger penalties, all employers should be well-versed in this complex law. But you don’t have to tackle this task alone. Call us for assistance, and we can help you understand the provisions of group benefit plans and what you need to do next.