Insurance contracts are governed and compliant with state laws in which the policy is offered. Federal (ERISA) laws are not included in most contracts. A wrap document incorporates the information required by ERISA by including or “wrapping” itself around the state compliant insurance contract or a similar third-party contract. When a wrap document is utilized, the insurance policy or contract remains part of the plan document. The wrap document and the insurance policy or contract together comprise the complete “plan document.”

A SPD is an abbreviated version of an organization’s WRAP Document. Under ERISA, employers are required to have a written plan document containing all the terms governing the plan (WRAP Document). ERISA only requires that the SPD be distributed to employees. Employees have the option to request a copy of the full WRAP Document. A SPD identifies the plan fiduciary, general plan information, and benefit plan information.

An insurance policy or contract issued to an employer rarely meets all the requirements ERISA because insurers generally focus on complying with state laws. Even when insurers attempt to satisfy ERISA’s requirements, the resulting document fails to contain all ERISA provisions designed to protect the plan, the plan administrator, and other plan fiduciaries. Consequently, the use of a “wrap” plan document ensures ERISA compliance.