If your business offers a group health plan, there’s a good chance the Employee Retirement Income Security Act (ERISA) applies to you, whether or not you’ve thought much about it.

ERISA sets federal standards for how employer-sponsored benefit plans must be documented, communicated, and administered. For employers in Charleston, Mount Pleasant, and Greenville, understanding the basics of ERISA compliance can help avoid costly penalties and protect both the business and its employees.

Does ERISA Apply to Your Business?

ERISA applies to most private-sector employers that sponsor group health plans, regardless of company size. There are some exceptions — government employers and churches are generally exempt — but the vast majority of employer-sponsored health plans fall under ERISA’s requirements. This means even a small business with a handful of employees on a group plan likely has ERISA obligations to meet.

Core ERISA Requirements for Group Health Plans

Plan documents and Summary Plan Description (SPD). Every ERISA-covered plan must have a formal written plan document, along with a Summary Plan Description that explains the plan’s benefits, rules, and participants’ rights in plain language. New participants generally must receive the SPD within 90 days of coverage, and any material changes require a Summary of Material Modifications.

Form 5500 filing. Plans with 100 or more participants at the start of the plan year generally must file an annual Form 5500 with the Department of Labor, reporting on the plan’s financial condition and operations. Smaller plans may qualify for filing exemptions, but employers shouldn’t assume they’re exempt without confirming their specific situation.

Fiduciary responsibility. Anyone who exercises discretionary authority over the plan, deciding how it’s administered or how claims are handled, is considered a fiduciary under ERISA. Fiduciaries must act solely in the interest of plan participants, follow the terms of the plan document, and avoid conflicts of interest. This duty carries personal liability for breaches.

Claims and appeals procedures. ERISA requires a written claims procedure that gives participants a clear, timely process for appealing denied benefits. Plans must also provide a Summary of Benefits and Coverage to help employees compare and understand their options.

Common Compliance Pitfalls

Many ERISA compliance issues stem from treating documentation as a one-time task rather than an ongoing responsibility. Plan documents that haven’t been updated to reflect plan changes, SPDs that were never distributed to new hires, missed Form 5500 deadlines, and unclear delegation of fiduciary duties among HR, the broker, and third-party administrators are among the most common gaps. Employers who switch carriers, add benefits, or change eligibility rules without updating their plan documents accordingly are especially at risk.

Penalties for Noncompliance

The cost of falling behind on ERISA compliance can add up quickly. The Department of Labor can assess penalties of several thousand dollars per day for late or missing Form 5500 filings, and separate daily penalties apply for failing to provide required disclosures like the SPD upon request. Fiduciary breaches can result in personal liability for plan losses, in addition to potential DOL audits, participant lawsuits, and IRS excise taxes. These penalties are cumulative and can escalate quickly the longer an issue goes unaddressed.

Frequently Asked Questions

Does ERISA apply to small businesses? In most cases, yes. ERISA generally applies to private-sector employers with a group health plan, regardless of how many employees they have.

What is a Summary Plan Description? It’s a required document that explains a health plan’s benefits, rules, and participants’ rights in plain language, and it must be distributed to new participants within 90 days of coverage.

Who counts as a fiduciary under ERISA? Anyone with discretionary authority over how the plan is administered or how claims are decided, which can include HR leaders, plan administrators, and sometimes brokers, depending on their role.

Keep Your Benefits Plan Compliant

ERISA compliance touches everything from plan documents to day-to-day claims administration, and the requirements can be easy to overlook amid the daily demands of running a business. Beckham Ellis Insurance Group helps employers across Charleston, Mount Pleasant, and Greenville stay on top of plan documentation, required disclosures, and fiduciary best practices as part of a broader benefits strategy. If you’re unsure whether your current plan documents and filings are up to date, contact Beckham Ellis Insurance Group to schedule a compliance review.

This article is intended for general informational purposes and is not legal or tax advice. ERISA requirements can vary based on plan design and employer circumstances.