Compliance Reminder:
ERISA is a complex federal law, and employers should always seek guidance from qualified ERISA counsel when applying these rules to their own benefit plans. This content is provided for informational purposes only and does not constitute legal advice.
ERISA’s Core Documentation Requirements
Every ERISA-covered welfare benefit plan must exist in writing – and that means having formal documentation that governs how the plan operates and communicates with employees.
In simple terms, ERISA requires two key documents for each plan:
- A Plan Document, which serves as the official legal blueprint of the plan, and
- A Summary Plan Description (SPD), which is the plain-language summary employees must receive.
Together, these documents define the plan’s structure, protect the employer, and ensure employees understand their rights and benefits. Offering benefits without a written plan does not exempt the employer from ERISA – it simply means the employer is out of compliance with ERISA’s written plan requirement. Without proper plan documents, employers also lose the protection of having pre-established, ERISA-compliant rules to follow during times of uncertainty – such as eligibility disputes, leaves of absence, nondiscrimination testing, or ACA measurement procedures, etc.
Why ERISA Requires Written Documentation
ERISA doesn’t just regulate benefit content – it regulates process and accountability. The written plan requirement exists so that:
- Participants and beneficiaries know what the plan provides and how it operates,
- Fiduciaries have a consistent standard to follow, and
- The Department of Labor (DOL) can verify compliance during an audit.
In other words, ERISA documentation isn’t just paperwork – it’s the foundation of benefit plan governance. It is required for virtually all employer-sponsored health plans under federal law.
ERISA’s Two Core Documents
| Document | Purpose | Audience | Distributed To |
|---|---|---|---|
| Plan Document | The formal, legal governing instrument of the plan | Regulators, fiduciaries, auditors, employees by request | Not distributed (kept on file, referenced when needed) |
| Summary Plan Description (SPD) | Plain-language summary of plan rights and benefits | Employees and participants | Must be distributed to all participants |
Each document serves a separate, distinct purpose:
- The Plan Document is for compliance – the legal rulebook that establishes the plan and defines how it works.
- The SPD is for communication to employees – the instruction manual employees use to understand their benefits.
ERISA “Wrap Plans”
Most employers offer multiple benefits – like medical, dental, vision, life, and disability – that share the same eligibility and administrative rules. Rather than creating separate plan documents and SPDs for each benefit, employers can “wrap” them together under one master plan.
A Wrap Plan typically includes:
- A Wrap Plan Document – the formal ERISA plan document that “wraps” around carrier certificates or contracts; and
- A Wrap SPD – the combined summary employees receive for all included benefits.
This approach simplifies compliance by consolidating multiple welfare benefits into one ERISA plan with a single plan number, one SPD, and one Form 5500 disclosure (if applicable).
Common Employer ERISA Compliance Pitfalls and Misconceptions
Many small and and mid-sized employers mistakenly believe:
- Their carrier certificates or booklets are sufficient SPDs — they’re not, unless wrapped with ERISA-required provisions.
- Their SBCs (Summaries of Benefits and Coverage) satisfy ERISA’s disclosure requirements — they don’t (SBCs are required under the ACA, not ERISA).
- They can skip a Plan Document altogether — they can’t. ERISA §402 requires every covered plan to be formally established and maintained in writing.
The result: plenty of employers with good intentions but incomplete documentation, leaving them exposed during audits or benefit disputes.
How These Documents Work Together
Think of the Plan Document and SPD as two halves of one system:
- The Plan Document sets the official rules and fiduciary framework.
- The SPD explains those rules in understandable terms to employees.
- The Wrap bridges them together when an employer offers multiple benefit programs under one umbrella.
In Summary
Every ERISA-covered welfare plan must have:
- A formal written Plan Document,
- A Summary Plan Description (SPD) distributed to participants, and
- (Optionally) a Wrap structure if the employer wants to consolidate multiple benefits under one ERISA plan.
Together, these form the foundation of ERISA compliance – defining what the plan is, how it’s administered, and how employees understand and access their benefits.