Summary Plan Description

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

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.

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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.

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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.

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Frequently Asked Questions

Links and Resources

OTHER INFORMATION

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.

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.

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