Most health and welfare benefits are subject to the ERISA reporting requirements, which include distributing a Summary Plan Description (SPD) to participants describing the terms of the plan and filing an annual Form 5500 for each benefit . Combining multiple benefits into a Wrap Plan allows the employer to file a single Form 5500 for all benefits and maintain one plan document.

Certificates and booklets provided by insurers generally do not contain the language necessary to fulfill the ERISA SPD requirements or to act as a standalone plan document. A wrap document with the ERISA required language will meet the SPD requirement while also acting as a plan document, incorporating the certificates and booklets for each benefit by reference.

The plan administrator is legally obligated to provide the SPD to participants. With no SPD or an inadequate SPD, employers expose themselves to lawsuits from employees. The DOL penalty for failing to provide an ERISA-compliant SPD to participants in a timely manner, or within 30 days of a written request, can be up to $147 per day, per request.