Mar 30, 2023
Why would a plan need a wrap document?
Question: Why do plans need wrap documents?
Answer: Wrap documents are generally used for either (or both) of the following:
- Supplementing already existing documentation. For example, a carrier might issue a Certificate of Coverage (COC) for a particular plan, but these are generally drafted to comply with state insurance requirements and often don't contain all of the required ERISA provisions. A wrap document supplements the COC to ensure that the COC and the wrap together compose a compliant ERISA plan document. In some cases, for the plan document requirement to be met, the wrap document is necessary.
- Combining more than one type of benefit together to form a single plan. When a wrap does this along with supplying the necessary ERISA provisions, it's often referred to as a "mega-wrap" or "umbrella" document. Having a single ERISA plan makes Form 5500 filing easier and can ease other administrative tasks, but it is not a compliance requirement.
So, it is necessary to have a wrap document in the sense that there needs to be a document supplementing the insurer's COCs or to provide the necessary ERISA provisions. But it's not necessary to bundle benefits together (via a "mega-wrap") unless the employer wishes to. Note that many wrap documents will accomplish both purposes (supplementing and combining).
The following organizations offer services to assist with WRAP documents.
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