The plan can be treated as an ERISA plan so long as the programs are “sponsored” by the employer or if premiums are paid on a pre-tax basis by the employee (which caused the contributions to be employer-paid via salary reduction), since these plans would be treated as ERISA plans, they would require a Plan Document and SPD.

On a cautionary note, when employers are establishing any employee benefits program, they may unintentionally create an ERISA plan or find themselves in a position where a common “ongoing administrative scheme” can be interpreted as an ERISA-governed benefits plan. Should this be the case, the employer may find itself with an ERISA plan that is not in compliance with ERISA requirements, which includes a written plan document.

As of now courts use a 3-part test to determine whether an ERISA plan exists. The court considers several factors including: (1) whether a plan document exists; (2) whether the plan falls within the Department of Labor’s (DOL) safe- harbor provision: and (3) whether the plan was established or maintained by the employer with the intent to benefit employees.

This is a facts-and-circumstances inquiry evaluating the specific facts and circumstances encompassed within the questioned plan.

ERISA contains a safe harbor exemption for certain types of voluntary benefits plans. The requirements for this exemption include, participation by employees is voluntary, there must be no employer (i.e., pre-tax) contributions, the employer’s role in the plan is limited to collecting premium through payroll deductions and remitting them to an insurer and the employer does not receive any compensation for its services other than sensible compensation for administrative services.

As previously stated, treating a plan as an ERISA plan requires adherence to stricter reporting and disclosure requirements for the employer, which includes a written plan document, SPD and the filing of an annual Form 5500. Should the employer chose not to sponsor a voluntary benefit, it is advised that they take a “hands-off” approach, to avoid employer-sponsorship.

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