Medcom Blog


Enhancing Compliance Through Wrap Documents

Last week, our compliance expert Derek Ashton conducted a webinar on how wrap documents enhance compliance and protect employers. He asked us to imagine arriving at the office, picking up the mail, and opening a six-page letter from the Employee Benefits Security Administration (EBSA) announcing an investigation on your health and welfare benefit plans. It’s easy to feel overwhelmed as you stare at the long list of documents they’ve requested for the audit. Medcom is here to help! Our goal is to make compliance less of a burden on the looking concerned at paper in office

Why Wrap Documents Are Required & How They Work

A wrap document “wraps” around the employer’s benefit plans, certificates of coverage, or other descriptive materials that are for participants and provide the information required by the Employee Retirement Income Security Act (ERISA).

The insurance contract rarely meets full ERISA requirements, so the purpose of a wrap document is to fill in the blanks and create a complete Plan document.

ERISA compliance regulations were put in place to protect employees participating in health and welfare plans. When we talk about ERISA compliance, it’s important to know these terms:

  • Plan Sponsor – usually defined as the employer who administrates employee benefit plan
  • Plan Administrator – the individual named in the plan document or defaults to the employer if one is not named

ERISA requires the plan sponsor and administrator to be defined in the wrap document. In addition, each plan must have a name, be numbered by a 500-series number, and include the date that the plan first took effect.

What Do Wrap Documents Do For Employers?

  • Fill in compliance gaps left by carrier-provided documents
  • Formally establish plan parameters
  • Consolidate multiple lines of coverage under a single plan
  • Set forth rights of the plan sponsor/administrator (employer)
  • Allow the employer to customize & control some plan provisions
  • Reduce the quantity of Form 5500 filings
  • Contain penalties
  • Help employer prepare for an audit

When Should A Wrap Document Be Updated?

To answer this, we must first ask ourselves, should the document be replaced entirely or just modified?

You can completely restate (replace) the plan document, which should be done every five years because ERISA requires you to distribute a new Summary Plan Description (SPD) at least once every five years or be formally amended.

For amendments, these changes can be saved up for a year and be included during the employer’s open enrollment period. Changes typically occur in three areas:

The Employer

The Plan

The Law

  • Legal Name, Tax ID, Address/Phone, Change in Plan Administrator, Plan Contacts
  • A change in employer size may trigger additional regulatory requirements (COBRA, FMLA, ACA, etc.)
  • Changes in the types of benefits that are offered, eligibility requirements, etc.


  • Regulatory changes
  • “Best practice” updates based on case law, etc.

Evaluating Quality

  • What is the age of the document?
    • Remember if it is more than five years old, it needs to be replaced
  • Has the document been updated as needed?
  • What is the overall length of the document?
    • Typical wrap documents prepared by Medcom can be over 80 pages
  • Are the plan document and SPD separate?
    • A good wrap document has them separate
  • Are all ERISA-subject welfare benefits included?
  • Are non-ERISA benefits included?
  • Verify plan number, plan name, effective date, and plan sponsor/administrator designations are correct

Reduce Your Compliance CostsThe cost of non-compliance is great. If you think compliance is expensive, try non-compliance

There are heavy penalties that come with ERISA non-compliance (see below), and these fines continue to increase with inflation each year. As of January, most of these penalties increased by 6%! But having a wrap document in place helps employers avoid these penalties.

Plan Documents & SPDs

  • Most violations - $100 to $110/day per affected participant
  • Failure to provide SPD or SMM when requested by DOL - $171 per day, up to $1,713 maximum per violation

Required Notices

  • SBC - $1,264 per willful failure to provide to participants
  • CHIPRA - $127/day for failure to provide notice
  • COBRA - $100 to $110/day per affected person


  • $127/day per affected person

Form 5500 Reporting

  • Up to $2,400/day per plan for failure to file
  • $110/day per affected person for failure to distribute SAR

Medicare Secondary Payer (MSP) Rules

  • $9,753 per violation

*Bold numbers are subject to annual adjustment for inflation

At the beginning of March, we announced a special for new wrap documents that will only last through the end of April. For more information or any questions, please contact our Strategic Client Relationship Consultant, Derek Ashton, CEBS.

Also, learn more about our ERISA Supreme Plus Compliance Package.

That’s a wrap!