5 Reasons to Update Your Plan Documents


Plan Documents

According to Antoine de Saint-Exupery, “A goal without a plan is just a wish.” In employee benefits, you might say “A Plan with no Plan Documents, is not a Plan at all.”

“A Plan with no Plan Documents, is not a Plan at all.”

January marks the beginning of a new Plan Year for many employers. This means possible changes to your benefits package, including your pre-tax benefit plans. As you carefully consider these changes, be sure to understand how Plan Documents are affected.

What are Plan Documents?

The Employee Retirement Income Security Act (ERISA) requires plan administrators to give plan participants the most important facts about their retirement and health benefit plans in writing. These facts include: plan rules, financial information, and documents on the operation and management of the plan. Written plan documents are used to outline these details and ensures employers remain compliant with plan administration.

If Benefit Resource is managing your pre-tax benefit plans, you will likely have the following items:

  • Plan Document—This is your legal Plan Document. It follows legal standards for plan management.
  • Plan Highlights—This is your plain language document. It outlines the basic parameters of your plan such as eligibility, funding and account access.

In order to ensure compliance, it is crucial that any revisions to your plans are reflected in the plan documents.

Why should I update my Plan Documents?

You may need to update your plan documents for a variety of reasons. However, here are the top 5 reasons that your plan documents will need to be updated.

1) Revisions to eligibility information

First, plan documents need to be updated if you change the eligibility terms of your plans. For example, if you offer a benefit to employees that were not previously eligible, you will need to update the eligibility criteria in your plan documents.

2) Adding rollover option to Medical FSA

There are generally three options you have regarding how Medical FSA funds are managed at the end of the Plan Year. Historically, funds were automatically forfeited by plan participants at the end of the plan year. In 2005, the Extended Grace Period was introduced allowing plan sponsors to extend the deadline to use Medical FSA funds by two-and-a-half months. (i.e. Calendar Plan Years have until March 15 of the following year to incur expenses.) In 2013, the options were further expanded to allow plan sponsors to roll up to $500 of unused funds from one plan year to the next.

Regardless of the option selected, plan sponsors need to ensure the details are clear. This includes when expenses must be incurred and what happens to any remaining funds at the end of the Plan Year.

3) Change to the plan run-out

The plan run-out takes it a step further by defining when expenses must be submitted for reimbursement. For example, an employer with a calendar plan year may require that plan expenses are incurred during the plan year (January 1 – December 31), but participants have 60 days to submit the expense for reimbursement.

4) Implementation of an HSA plan (even if not administered by BRI)

Your plan documents will outline the benefits being offered on a pre-tax basis. If you are allowing participants to make contributions to an HSA on a pre-tax basis, you will need to make sure your plan documents clearly identify this as an eligible benefit type.

5) Legislative changes

Finally, when you think your Plan Documents are ready to go, the IRS or Congress will throw you a curve ball. The IRS will typically release the inflation adjusted maximum election limits for Medical FSAs in the Fourth Quarter of the year. Employers can stick with their defined limit or choose to update to the new limits. Additionally, Congress, the IRS and Department of Labor (DOL), have been known to release last minute legislation and guidance. While some changes are mandated, plan sponsors often have the option of adopting these changes (or implementing them at a later time).

So, as you are wrapping up your benefit plan changes, make sure your Plan Documents are in order as well. For personalized guidance, please contact Benefit Resource.



Department of Labor: Plan Information