What is a Wisconsin Employee Benefit Plan Administrator Bond?
In the State of Wisconsin, Employee Benefit Plan Administrators are required to provide a surety bond as part of the license requirements.
An Employee Benefit Plan Administrator (or Third Party Administrator) refers to any person who directly or indirectly solicits or collects premiums or charges and adjusts or settles claims for a plan under Wis. Stat S. 633.01.
The bond guarantees that the employee benefit plan administrator licensee will faithfully perform his or her duties according to state laws and statutes.
The bond also assures that the administrator licensee will conduct business in a fair and ethical manner in making full accounting, and due payment to persons entitled to the funds.
What are the bond conditions?
- The Surety must be authorized to transact surety business in the State of Wisconsin.
- This bond is payable to any Wisconsin resident who is the beneficiary of an employee benefit plan administered by the principal
- The Principal is now or is applying to become, licensed under Stat. S. 633.14, as an employee benefit plan administrator and, is obligated as a licensee to perform the responsibilities specified under Wis faithfully. Stat. ch. 633 and Wis. Stat. ch. Ins 8, subch. II, Wis. Adm. Code.
- If the Principal complies with all provisions indicated in Wis. Stat. ch. 633, and follows all applicable administrative rules mandated by the Wisconsin Office of the Commissioner of Insurance, then the bond will be null and void; otherwise, the Surety’s obligations remain in full force and effect.
- The bond will remain effective and continuous, unless terminated by the Surety by giving 60 days’ advance written notice of the bond cancellation to the Commissioner of Insurance, Madison, Wisconsin.
What is the bond amount?
If the administrator provides information only to plans and does not handle client funds; or if the administrator has check-writing authority on client checking accounts and does not pay claims or benefits from the administrator’s bank accounts, the minimum bond is $15,000, and maximum bond is $250,000.
If the administrator collects premiums and pays benefits out of its bank accounts, the minimum bond is $25,000, and maximum bond is $500,000.
The cost of the bond is a percentage of the bond amount (1%-5%), which is based on your financial history and credit score.
How do I obtain an Employee Benefit Plan Administrator Bond?
We’ve made it easier for you! Just follow the simple steps below!
STEP 1: Apply for the bond
You need to submit a bond application to us. If you’re ready to apply now, you may do so HERE!
STEP 2: Underwriting
We will ask you a couple of relevant information needed for the bond. This will include your financial history, business performance history, and your credit score. Your financial statement must indicate your most recently completed fiscal year and prepared on an accepted accounting basis that includes: assets, liabilities, and net worth (balance sheet); and the results of operations (income statement).
A certified surety underwriter will carefully evaluate all those.
You will also need to send in a copy of the bond form (which you can get from the State Office of the Commissioner of Insurance).
STEP 3: Bond execution
Once the underwriter is done with the underwriting process, we will immediately issue the bond and send it to you!
*Note: The Employee Benefit Plan Administrator license must be renewed annually on August 1 at www.nipr.com. Along with the license renewal is the surety bond renewal.
Contact us and secure your bond now!