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Accurate Documentation of Welfare Plans May Save Employers Certain Costs and Headaches Down the Road

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Former Associate
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ERISA requires all pension and welfare benefit plans to be maintained in a written plan document.  The DOL and several courts have taken a broad view of what constitutes a “written plan document,” and while pension plans are usually very well documented, many welfare plans consist of a loose, and often out-of-date, collection of insurance policies, certificates of coverage and summary plan descriptions.

While a loose collection of documents may technically satisfy the ERISA written plan document rule, there are many other reasons an employer may want to consider more formal, updated plan documents:

•  The DOL has recently started to focus more on welfare plan audits.  Upon DOL audit of a benefit plan, the first thing the DOL will ask for is the employer’s plan documents.

•  If an employer is merging with, acquiring, or being acquired by another employer, the employer will likely have to provide all plan documents.

•  If an employer is amending or terminating a plan, clear reservations of rights language allowing the employer to amend or terminate the plan will be quite helpful.

•  Employers may be unaware of the terms and conditions of their insurance policies and those terms and conditions may actually conflict with the provisions of the summary plan description or the way the employer is administering the plan.

Having formal plan documents that accurately reflect the intentions of the employer and the benefits provided to the participants may help employers deal with any of the above scenarios.  Accordingly, employers may want to consider reviewing their welfare plans and assessing whether they need better, updated plan documentation.