Plan Documents

The certificate is not the document

Almost every employer we review believes the booklet the carrier supplies is their Summary Plan Description. It is not. A certificate of coverage describes what the insurance pays for. An SPD has to describe the plan — who sponsors it, who administers it, how eligibility works, how to claim, how to appeal, how it can be amended or terminated, and the statement of ERISA rights. The carrier has no reason to include any of that, and does not.

The gap is filled by a wrap document, and it is one of the least expensive pieces of compliance there is.

What each document does

Four instruments, four different jobs.

ERISA wrap & SPD

Wraps every welfare benefit — medical, dental, vision, life, disability, EAP — into a single plan with one plan number and one document, rather than leaving each carrier policy as its own unwritten plan.

Supplies everything the certificates omit
Consolidates several 5500 filings into one
Must be furnished within ninety days of coverage starting
Restated when benefits change materially

Section 125 cafeteria plan

The written document that permits premiums to be deducted pre-tax at all. Without it, every deduction taken pre-tax is technically taxable, for every employee, for every year it has been running.

Required before the first pre-tax deduction
Sets the mid-year change rules
Governs any FSA or dependent care account
Subject to annual nondiscrimination testing

ICHRA plan document

An Individual Coverage HRA is itself a group health plan and needs its own written instrument, plus a notice to eligible employees at least ninety days before the plan year begins.

Defines the permitted employee classes
Sets the reimbursement amounts
Establishes the substantiation process
Explains the effect on any premium tax credit

QSEHRA plan document

For employers under fifty full-time equivalents offering no group health plan. Lower limits than an ICHRA, and every eligible employee must be offered the same amount.

Written plan required
Notice ninety days before the plan year
IRS-set annual maximums
Reported in Box 12 of the W-2

Nondiscrimination testing

A Section 125 plan has to be tested annually, and a self-funded medical plan is tested separately under §105(h). The tests ask whether the plan disproportionately favours highly compensated or key employees — in eligibility, in contributions, and in benefits.

Failure is not a penalty in the usual sense. It is a tax consequence, and it falls on the highly compensated employees personally: the value of the benefit becomes taxable income to them. That makes it a conversation with the owners rather than with HR, which is exactly why it tends not to happen until somebody insists.

Groups most likely to fail are small employers where the owners and a few senior people take the richest plan and everyone else takes the cheapest, and employers who exclude a category of staff from eligibility without checking whether the exclusion is permitted.

What we do

We prepare and restate wrap documents and Section 125 plans, draft ICHRA and QSEHRA documents and notices, run the annual testing, and keep a distribution record — because in an audit, proving a document was furnished matters as much as proving it exists.

Ask what you are missing How this affects the 5500

Request a review

Send the renewal, and we will tell you what we would change

No fee, and no obligation to move the business. Most employers who contact us are simply trying to work out whether the number in front of them is a fair one.

(800) 779-4090
info@waughagency.insure
22 Bateson Drive, Andover, MA 01810

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