Many answers to employee benefit plan questions can only be found in a plan’s governing documents. Knowing which governing documents apply to different scenarios requires an understanding of the different types of documents.

Benefit Plan Document

Employer-sponsored plans, of any size, subject to the Employee Retirement Income Security Act (ERISA), are required to have a written document that describes the basic information, administration, and rules of the plan, which is called a benefit plan document.

ERISA applies to most private employers, including for-profit businesses and nonprofit organizations, regardless of size. ERISA generally applies to all benefit plans sponsored by private employers or employee organizations (e.g., labor unions), including self-funded (self-insured) and insured plans, so long as the plan is providing retirement benefits, health care, or other ERISA-listed benefits. A copy of the plan document must be provided within 30 days of receiving a written request. Employers are responsible for having a plan document created, signing the adoption agreement, and for maintaining the document. Plan documents must be reviewed at least annually and updated every time there is a change.

A benefit plan document will generally include the following content:

• General information about the plan (i.e., plan name, plan year, plan number)
• Eligibility and benefits
• Notices and disclosures
• Responsibilities for the plan administrator
• Leave under the Family and Medical Leave Act or similar law
• Genetic nondiscrimination
• COBRA general information
• Funding policy
• Subrogation and rights of recovery
• Disclosure that the plan document is not an employment contract
• Health Insurance Portability and Accountability Act (HIPAA) privacy and security provisions
• Rights under ERISA
• Prudent actions by plan fiduciaries
• Participating employers
• Claims procedures

A simplified version of the benefit plan document is the Summary Plan Description (SPD). An SPD is meant to be written in a manner that is understandable to employees while providing the required plan information, and is distributed to employees. The plan administrator is responsible for creating and providing the benefit plan document and SPD. Both documents must be consistent and maintained.

A wrap document is a combination of a compliant SPD plus applicable carrier documents. An SPD must be provided within 90 days of becoming covered by the plan and within 120 days after a new group health plan is established. SPDs must also be provided within 30 days upon written request from a participant. A restated SPD must be provided every five years if material modifications have been made. Employers are responsible for the creation and maintenance of the SPD.

Cafeteria Plan Document

A cafeteria plan document is the vehicle allowing employees to make pre-tax contributions to qualified benefit plans under Internal Revenue Code (IRC) § 125. Cafeteria plans may also include tax-favored accounts such as flexible spending accounts (FSAs), health savings accounts (HSAs), dependent care flexible spending accounts (DCFSAs), and adoption assistance plans. Transportation fringe benefit plans under IRC § 132 require written documents that are similar to cafeteria plan documents.

A cafeteria plan document will generally include the following content:

• Introduction and purpose of the plan
• Participation rules
• Optional benefits such as contributions, election of benefits, and irrevocability of election (i.e., midyear change rules due to qualified events)
• Adopted permitted election changes
• Administration of the plan
• Amendments and termination of the plan
• Claims procedures
• Communications to employees
• Participant’s rights
• Description and details of included tax-favored accounts (i.e., HSA, FSA, DCFSA)
• Participating employers

Insurer’s Evidence of Coverage

The specific details about benefit plan coverage, deductibles, copays, and out-of-pocket expenses are contained in the insurer’s evidence of coverage or the Summary of Benefits and Coverage (SBC) document. All group health plans that provide medical benefits—subject to the provisions of the Public Health Services
Act (PHSA), ERISA, or IRC—including insured and self-funded plans and grandfathered plans, must automatically provide an SBC to participants and beneficiaries, including enrolled, nonactive employees. Some states also have non-health benefits SBC requirements. Other types of benefit plans (i.e., dental, vision,
disability) will generally provide evidence of coverage (EOC) or certificate of coverage documents in a booklet or summary format outlining the coverage.

FAQs and Answers in Governing Documents

Questions about various aspects of a benefit plan can be answered by referring to the applicable governing documents of the plan. The governing document titles displayed use common industry terms. Insurers and vendors may use different terminology for some of these types of documents. All plan documents, SBCs, and evidence of coverage documents should be reviewed any time there is a change in any rules and at least annually to adhere to any required communication and
distribution rules.

See below for common questions and the applicable governing document.

• When is a rehired employee eligible for benefits? – Benefit plan document: Eligibility and benefits section
• What document is required to allow employees to withhold benefits contributions on a pre-tax basis? – Cafeteria plan document
• What are the employer’s contributions to the HSA? – Cafeteria plan document
• How does the plan define “dependents”? – Benefit plan document: Eligibility and benefits section
• Who is the fiduciary of the plan? –  Benefit plan document: General information section
• Is the medical plan a grandfathered health plan? – Benefit plan document: Schedule of all benefits section
• Are other employers included in the plan? – Benefit plan document: Participating employers section
• What is the process for appealing a claim? – Benefit plan document: Claims procedures section; insurance contract or policy
• What are employees’ privacy protections? – Benefit plan document: HIPAA privacy section
• How to handle overpayment in an employee’s contribution? – Benefit plan document: Recovery of overpayment section
• When does an employee have to notify the plan sponsor of a divorce? – Benefit plan document: COBRA continuation section
• What is an employee’s maximum out-of-pocket cost for the health plan?-  SBC for coverage, SPD for contribution
• What expenses can be reimbursed under our health reimbursement arrangement? – Benefit plan document: Benefits section
• When can an employee cancel their health benefits midyear? – Benefit plan document and cafeteria plan document: Irrevocability or election section
• What is the purpose of a cafeteria plan? – Cafeteria plan document: Introduction
• When can an employee participate in a cafeteria plan? – Cafeteria plan document: Participation section or Benefit plan document: Eligibility and benefits section
• Does our FSA include a grace period provision? – Cafeteria plan document or separate FSA plan document
• What is the maximum annual withholding for a dependent care FSA? –  Cafeteria plan document or separate DCFSA plan document
• Are adult orthodontics covered in a dental plan? – Evidence of coverage document
• Who is eligible to participate in our transportation policy? – Transportation plan document

If you’re struggling with employee benefits management or looking to enhance your employee benefits offering, you can schedule a consultation with one of our experts here at Emplova to discover how a PEO can help you save time, reduce costs, attract and retain talent, and, ultimately, grow your business.

*Information in this article is general in nature and not intended to replace legal advice in any particular manner.