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Plan Documents
Employers who offer benefit plans to their employees are required by the Employee Retirement Income Security Act (ERISA) to maintain written plan documents and to provide them to all eligible employees. Each plan must have a plan document and a summary plan description. These documents describe the plan benefits, the eligibility requirements, and how the plan operates.
If an employer allows their employees to pay their benefit contributions on a pretax basis, the employer is required to maintain a written Section 125 Plan.
Failure to maintain these documents and to provide them to eligible employees may result in significant penalties, including the loss of the plan's pretax status as well as substantial financial penalties.
If an employer allows their employees to pay their benefit contributions on a pretax basis, the employer is required to maintain a written Section 125 Plan.
Failure to maintain these documents and to provide them to eligible employees may result in significant penalties, including the loss of the plan's pretax status as well as substantial financial penalties.
Plan Documents and SPDsERISA requires group health plans to have a written plan document and to provide a summary plan description (SPD) to plan participants upon enrollment in the plan and at other times as well.
The written plan document is the rule book by which the plan administrator operates the plan. The SPD is the "plain English" description of how the plan operates, such as plan eligibility, funding, contributions and benefits. The plan administrator (usually the employer sponsoring the plan) is responsible for meeting the plan document and the SPD requirements. Plan sponsors with fully insured plans may use insurance carrier’s contract, policy or certificate booklet to meet the SPD requirement by combining them with a Wrap document to complete a fully compliant plan document and SPD. FSA Plan DocumentsA Flexible Spending Account (FSA) is an employer sponsored benefit where
employees can set aside money from their paycheck on a pretax basis for qualified health care expenses. |
Section 125 Plan DocumentsSection 125 is the portion of the IRS Code that allows employees to purchase certain employee benefits on a pretax basis. If an employer allows employees to pay their benefit contributions on a pretax basis, they are required to create and maintain a written Section 125 plan. These plans are often referred to as Premium Only Plans, Premium Contributions Plans, and Cafeteria Plans,
The employees' contribution is deducted from their earnings before income taxes are computed, which effectively reduces the amount that employees are paying for their benefits. Employers benefit as well since they do not have to pay Medicare and Social Security taxes on the contribution amounts. Dependent Care Plan DocumentsA Dependent Care Flexible Spending Account (FSA) allows employees to set aside money from their paycheck on a pretax basis for eligible dependent care expenses, such as preschool, afterschool, and day care expenses.
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HRA Plan DocumentsA Health Reimbursement Arrangement (HRA) is a tax-advantaged employer-funded medical reimbursement plan. The employer sets aside a specific amount of pre-tax dollars for employees to pay for health care expenses on an annual basis.
HRAs must be funded solely by the employer and cannot be funded by salary reduction. They are considered to be a group health plan. An HRA may be integrated with a group health plan, or may be used to reimburse employees who are not enrolled in a group health plan for qualified health expenses or for purchasing an individual health policy. Employer contributions are not subject to Medicare and Social Security taxes. Transportation Plan DocumentsTax-free commuter benefits are employer provided voluntary benefit programs that allow employees to reduce their monthly commuting expenses for transit, vanpooling and work-related parking costs. There is also a bicycle commuter benefit.
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