What is a wrap document?

A  wrap document is a written document that helps employers meet the Employee Retirement Income Security Act (ERISA) requirements for their benefit plans. Section 402 of ERISA mandates that every employee welfare benefit plan, such as group health plans, dental plans and health flexible spending accounts, have a written plan document.

Some employers assume incorrectly that the insurance policy, coverage certificate or plan booklet they receive from their insurance carrier or third-party administrator satisfies the plan document requirement. While these documents often include detailed descriptions of the benefits available under the plan, they rarely identify components specific to the employer, such as the following:

• The named fiduciary who will have the authority and responsibility to administer the plan.
• Procedures for amending and terminating the plan.
• The source of plan contributions.
• The allocation of responsibilities for the operation of the plan between the employer and the insurance carrier or third-party administrator.

A wrap document is a relatively simple document that "wraps" around the insurance policy, coverage certificate or plan booklet. The benefits available under the plan continue to be governed by the insurance policy, coverage certificate or plan booklet, while the wrap document supplements with the information necessary to comply with ERISA. In effect, the wrap document fills the gaps left by insurance carriers and third-party administrators.

In addition to easing compliance with ERISA's plan document requirement, wrap documents may be used by employers to consolidate employee welfare benefit plans into a single plan, commonly referred to as an "umbrella" or "mega-wrap" plan. Consolidating employee welfare benefit plans into a single plan could reduce the costs associated with filing multiple annual reports, distributing multiple summary annual reports, and amending multiple plans in response to legislative or regulatory changes.