There are two ERISA requirements that, for the most part, employers are just not meeting.
That's the word from 71 percent of brokers who say their clients aren't maintaining plan documents or providing employees with summary plan documents—two major requirements under ERISA, according to an HR360 survey.
Why? Brokers identified four main reasons: Their clients mistakenly thought they were compliant by distributing benefits booklets/summaries; they were not aware of the ERISA requirements; it was too difficult and time-consuming to develop the documents; and it was too expensive to do so.
The problem, HR360 says, is that many companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document—but they don't include the required or recommended provisions that protect the plan and the employer.
And that can be a costly mistake.
Failure to provide an SPD or plan document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110 per day per participant or beneficiary for each violation.
Plus, a lack of an SPD could trigger a plan audit by the U.S. Department of Labor.
HR360 also noted that the DOL has increased its audit staff and that companies, small and large, are being audited.
The survey reveals that brokers can better position themselves as an advisor to their clients by helping them maintain compliance with these ERISA requirements.
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