Summary Plan Descriptions

» All group health plans subject to ERISA are required to provide participants with a summary plan description (SPD)

» ERISA requires that the SPD be provided automatically to participants under the plan

Let C&C Prepare your SPD

Delivery Requirements

> The SPD must be provided within 90 days after an employee first becomes covered by the plan

> Common distribution methods include hand delivery, mail, and electronic delivery

Insured Health Plans

> The sponsor of an insured plan (not the issuer) is responsible for providing the SPD

> The insurance certificate typically does not meet all of ERISA's requirements for SPDs

> A compliance solution for insured plans is a 'wrap document"

ERISA

Includes standards for:

> The information that must be included in the SPD

> When the SPD must be provided to plan participants

> How the SPD may be distributed.

SPD Distribution Deadlines

Plan becomes subject to ERISA

Within 120 days after plan becomes subject to ERISA

Employee becomes covered by the plan

Within 90 days of enrollment

Participant’s written request

Within 30 days of participant’s request

Penalties for Not Having A Written Plan Document/SPD

Response Penalty

The SPD must be furnished in response to a participant's or beneficiary’s written request. The plan administrator may be charged up to $110 per day if it does not provide the SPD within 30 days after an individual's request. These penalties may apply even where an SPD does not exist.

DOL Audits

The DOL has broad authority to investigate or audit an employee benefit plan’s compliance with the ERISA. Traditionally, DOL audits of employee benefit plans have focused primarily on retirement plans, such as 401(k) plans.

Benefit Lawsuits

Not having a plan document or SPD may put an employer at a disadvantage in the event a participant brings a lawsuit for benefits under the plan. Without these documents, it will be difficult for a plan administrator to prove that the plan’s terms support benefit decisions.

Frequently Asked Questions

Are all group health plans required to provide an SPD?

Virtually all group health plans subject to ERISA must provide participants with an SPD, regardless of size. Both insured and self-funded group health plans must comply with ERISA’s SPD requirements. While ERISA contains an exception to the Form 5500 filing requirement for certain small employers, this exception does not apply to SPDs. Small employers that sponsor ERISA-covered group health plans must provide an SPD to employees participating in the plan.

Does an SPD need to be filed with the DOL?

No. While ERISA initially required plans with 100 or more participants to file an SPD with the DOL, the Taxpayer Relief Act of 1997 eliminated the automatic filing requirement. However, plans must file an SPD within 30 days of a request from the DOL. If the plan administrator fails to provide the SPD within 30 days, the DOL may impose a civil penalty of up to $110 per day for each day the failure continues, up to a maximum penalty of $1,100 per request. Multiple requests for the same or similar documents are considered separate requests.

Who is responsible for providing the SPD?

Under ERISA, the plan administrator is legally responsible for making sure the SPD is provided, not the insurer or a third-party administrator (TPA). This is generally true even if another company is contractually obligated to help draft the SPD. The plan administrator is the entity designated under the terms of the plan. For single-employer ERISA plans, the plan administrator is the employer that sponsors the plan, unless the plan document designates a different entity.

Links and Resources

Department of Labor (DOL) final SPD regulations from Nov. 21, 2000
DOL’s Reporting and Disclosure Guide for Employee Benefit Plans

OTHER INFORMATION

Continued: Is it Possible to combine the plan document and SPD into one document?

For insured plans, the combined plan document/SPD is typically a wrap plan document. The wrap plan document addresses the ERISA content requirements that are missing from the insurance certificate and booklet. The wrap plan document and the insurance certificate, together, comprise the plan document/SPD for the plan. Also, when an employer decides to bundle two or more welfare benefits under one plan, a “mega” wrap plan document/SPD can be used to describe the benefits.

Does the certificate or booklet prepared by an insurer qualify as an SPD?

Some plan sponsors mistakenly believe that providing participants with the booklet (or certificate) issued by the insurance company fulfills their obligation to provide participants with an SPD. The insurance booklet will often contain detailed information regarding plan benefits and coverage. However, in many cases, the plan sponsor will need to provide additional information that is not contained within the insurance booklet in order to comply with the SPD content requirements.

Is it Possible to combine the plan document and SPD into one document?

Many ERISA welfare benefit plans only have one document, which serves as the plan document and is also distributed to plan participants as the SPD. When one document is used, it must comply with ERISA’s content requirements for plan documents and SPDs, and it must be written in a manner that is understandable to plan participants. Also, the document should prominently state that it is intended to serve as both the plan document and the SPD.

Continued: Is it Possible to combine the plan document and SPD into one document?

Does the certificate or booklet prepared by an insurer qualify as an SPD?

For your SPD call us today at 888-540-9403

Don't have an SPD or need to update your company's SPD? Call Clarke & Company Benefits today. We have a plan doc builder and documents are free. We can provide you with an updated SPD within an hour.

Summary Plan Description

Summary Plan Descriptions

Summary Plan Descriptions

ERISA Standards for SPDs

Delivery Requirements

Insured Health Plans

ERISA

SPD Distribution Deadlines

Plan becomes subject to ERISA

Employee becomes covered by the plan

Participant’s written request

Penalties for Not Having A Written Plan Document/SPD

Response Penalty

DOL Audits

Benefit Lawsuits

Frequently Asked Questions

Links and Resources

OTHER INFORMATION

For your SPD call us today at 888-540-9403

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