Plan Document & Fiduciary Guide
ERISA Compliance
ERISA governs every self-funded employer health plan. Most employers don't realize how much legal exposure they carry — or how straightforward compliance can be with the right structure.
What It Is
The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that governs most private-sector employer-sponsored benefit plans, including health plans. For self-funded employers, ERISA compliance is not optional — it is the legal framework within which the plan operates.
ERISA imposes requirements in four primary areas: plan documentation, participant disclosures, fiduciary conduct, and claims and appeals procedures. Each area carries its own compliance obligations, deadlines, and penalties for non-compliance.
One of ERISA's most powerful features for self-funded employers is preemption — ERISA preempts most state laws that relate to employee benefit plans, meaning self-funded plans are not subject to state insurance mandates. This is a structural cost advantage that fully insured plans cannot access.
How It Works
Core Requirements
Plan Document
Every ERISA health plan must have a written plan document that defines benefits, eligibility, claims procedures, and plan administration. The plan document is the legal foundation of the benefit.
Summary Plan Description (SPD)
The SPD is the plain-language document that must be distributed to all plan participants. It must describe benefits, eligibility, claims procedures, and participant rights. Failure to distribute triggers DOL penalties.
Fiduciary Duty
Self-funded plan sponsors are ERISA fiduciaries. Fiduciaries must act prudently, solely in the interest of plan participants, and in accordance with plan documents. Fiduciary breaches carry personal liability.
Claims and Appeals
ERISA requires specific timelines and procedures for initial claims decisions and appeals. Failure to follow these procedures can result in claims being deemed approved by default.
ERISA Preemption
ERISA preempts most state laws that relate to employee benefit plans. This is a significant advantage for self-funded plans — they are not subject to state insurance mandates that apply to fully insured plans.
Form 5500
Most ERISA health plans with 100 or more participants must file Form 5500 annually with the DOL. The filing discloses plan financials, service providers, and participant counts.
Why It Matters
For Employers
"DOL audits of employer health plans have increased significantly. Plans without current plan documents and SPDs are immediate targets."
"ERISA fiduciary breaches carry personal liability for plan sponsors and HR executives — not just the company."
"ERISA preemption is one of the most powerful advantages of self-funding — it exempts plans from state mandates that can add 10–20% to fully insured premiums."
Common Pitfalls
Mistakes to Avoid
- 1
Operating without a current, executed plan document — or using a carrier's boilerplate document that doesn't reflect actual plan terms.
- 2
Failing to distribute an updated SPD within 90 days of a new participant's enrollment or within 210 days of a plan year change.
- 3
Not following ERISA's required timelines for claims decisions and appeals — exposing the plan to deemed-approved claims.
- 4
Treating the TPA or broker as the fiduciary without a written allocation of fiduciary responsibilities.
- 5
Failing to file Form 5500 on time or with accurate information — triggering DOL penalties of up to $250 per day.
FAQ