Summary Plan Descriptions (SPDs)

Transcription

1 Prvided by Byd Cnsulting Grup Summary Plan Descriptins (SPDs) All grup health plans subject t the Emplyee Retirement Incme Security Act (ERISA) are required t prvide participants with a summary plan descriptin (SPD). An SPD must be written in a manner calculated t be understd by the average plan participant and must be sufficiently cmprehensive t infrm the participant f his r her rights and bligatins under the plan. The SPD must be autmatically distributed t plan participants by certain deadlines. It als must be prvided upn a participant s request. Because the main purpse f the SPD is t infrm participants f their rights and bligatins under the plan, the SPD must include specific types f infrmatin, such as the plan s eligibility rules. There are serius legal cnsequences assciated with nt cmplying with ERISA s requirements fr SPDs. Fr example, a plan spnsr can be charged up t $110 per day if des nt prvide the SPD within 30 days after a participant s request. This Cmpliance Overview addresses many f the cmmnly asked questins abut SPDs. It als cntains a checklist fr the basic infrmatin that is required in an SPD. DELIVERY REQUIREMENTS The SPD must be prvided within 90 days after an emplyee first becmes cvered by the plan. Cmmn distributin methds include hand delivery, mail and electrnic delivery. INSURED HEALTH PLANS The spnsr f an insured plan (nt the issuer) is respnsible fr prviding the SPD. The insurance certificate typically des nt meet all f ERISA s requirements fr SPDs. A cmpliance slutin fr insured plans is a wrap dcument. LINKS AND RESOURCES Department f Labr (DOL) final SPD regulatins frm Nv. 21, 2000 DOL s Reprting and Disclsure Guide fr Emplyee Benefit Plans This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

2 WHAT IS A SUMMARY PLAN DESCRIPTION? The SPD is a key cmpliance dcument fr virtually every ERISA plan. Accrding t the DOL, the SPD is the primary vehicle fr infrming participants and beneficiaries abut their rights and benefits under the emplyee benefit plans in which they participate. Due t its imprtance, the SPD must be written in a manner calculated t be understd by the average plan participant. Als, ERISA and underlying Department f Labr (DOL) regulatins include strict requirements fr the cntent and delivery f SPDs. ERISA includes standards fr: The infrmatin that must be included in the SPD; When the SPD must be prvided t plan participants; and Hw the SPD may be distributed. ARE ALL GROUP HEALTH PLANS REQUIRED TO PROVIDE AN SPD? Virtually all grup health plans subject t ERISA must prvide participants with an SPD, regardless f size. Bth insured and self-funded grup health plans must cmply with ERISA s SPD requirements. While ERISA cntains an exceptin t the Frm 5500 filing requirement fr certain small emplyers, this exceptin des nt apply t SPDs. Small emplyers that spnsr ERISA-cvered grup health plans must prvide an SPD t emplyees participating in the plan. DOES AN SPD NEED TO BE FILED WITH THE DOL? N. While ERISA initially required plans with 100 r mre participants t file an SPD with the DOL, the Taxpayer Relief Act f 1997 eliminated the autmatic filing requirement. Hwever, plans must file an SPD within 30 days f a request frm the DOL. If the plan administratr fails t prvide the SPD within 30 days, the DOL may impse a civil penalty f up t $110 per day fr each day the failure cntinues, up t a maximum penalty f $1,100 per request. Multiple requests fr the same r similar dcuments are cnsidered separate requests. WHO IS RESPONSIBLE FOR PROVIDING THE SPD? Under ERISA, the plan administratr is legally respnsible fr making sure the SPD is prvided, nt the insurer r a third-party administratr (TPA). This is generally true even if anther cmpany is cntractually bligated t help draft the SPD. The plan administratr is the entity designated under the terms f the plan. Fr single-emplyer ERISA plans, the plan administratr is the emplyer that spnsrs the plan, unless the plan dcument designates a different entity. 2 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

3 DOES THE CERTIFICATE OR BOOKLET PREPARED BY AN INSURER QUALIFY AS AN SPD? Sme plan spnsrs mistakenly believe that prviding participants with the bklet (r certificate) issued by the insurance cmpany fulfills their bligatin t prvide participants with an SPD. The insurance bklet will ften cntain detailed infrmatin regarding plan benefits and cverage. Hwever, in many cases, the plan spnsr will need t prvide additinal infrmatin that is nt cntained within the insurance bklet in rder t cmply with the SPD cntent requirements. IS IT POSSIBLE TO COMBINE THE PLAN DOCUMENT AND SPD INTO ONE DOCUMENT? COMPLIANCE TIP: Emplyers with fully insured plans can use a separate dcument, ften called a wrap dcument that includes the ERISA-required infrmatin that the bklet, prepared by the insurer r TPA, des nt include. In this scenari, the wrap dcument and the bklet, tgether, make up the plan s SPD. Many ERISA welfare benefit plans nly have ne dcument, which serves as the plan dcument and is als distributed t plan participants as the SPD. When ne dcument is used, it must cmply with ERISA s cntent requirements fr plan dcuments and SPDs, and it must be written in a manner that is understandable t plan participants. Als, the dcument shuld prminently state that it is intended t serve as bth the plan dcument and the SPD. Fr insured plans, the cmbined plan dcument/spd is typically a wrap plan dcument. The wrap plan dcument addresses the ERISA cntent requirements that are missing frm the insurance certificate and bklet. The wrap plan dcument and the insurance certificate, tgether, cmprise the plan dcument/spd fr the plan. Als, when an emplyer decides t bundle tw r mre welfare benefits under ne plan, a mega wrap plan dcument/spd can be used t describe the benefits. WHO MUST BE PROVIDED WITH AN SPD AUTOMATICALLY? ERISA requires that the SPD be prvided autmatically t participants under the plan. "Participants" include emplyees and frmer emplyees wh are eligible fr benefits under the plan. Frmer emplyees include, fr example, COBRA beneficiaries, retirees and ther frmer emplyees wh may remain eligible under the plan. Plan spnsrs are NOT required t autmatically distribute the SPD t ther individuals, such as an emplyee s spuse and children wh are cvered under the plan as dependents r emplyees wh are nt participating in the plan. WHO HAS THE RIGHT TO RECEIVE A COPY OF THE SPD UPON REQUEST? In additin t prviding the SPD autmatically t plan participants, plan administratrs must prvide cpies f the SPD upn written request. Emplyees and frmer emplyees wh are participating in the plan have the right t receive a cpy f an SPD upn request, even if the SPD was recently distributed t them. Als, certain individuals wh are nt entitled t receive the SPD autmatically have the right t receive a cpy f the SPD upn written request. These individuals include emplyees wh are eligible fr 3 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

4 the plan but nt enrlled (fr example, emplyees in a waiting perid) and a plan participant s cvered dependents (spuse and children). In additin t prviding the SPD n request, a plan administratr must make a cpy f the SPD available fr examinatin by any participant r beneficiary at the principal ffice f the administratr and in such ther places as may be necessary t make available all pertinent infrmatin t all participants. The plan administratr may impse a reasnable cpying charge fr the SPD. This charge may nt t exceed 25 cents per page, and it must be less if the actual cst t the plan is less. Other than the cpying cst, n ther charge fr prviding the SPD, such as handling r pstage charges, is permitted. Als, n charge may be impsed fr examining dcuments at the administratr's principal ffice r ther required lcatins. WHAT ARE THE DEADLINES FOR PROVIDING AN SPD? Participants must receive an SPD by the fllwing deadlines: EVENT DEADLINE Plan becmes subject t ERISA (fr example, a new grup health plan) Within 120 days after plan becmes subject t ERISA Emplyee becmes cvered by the plan Within 90 days f enrllment Participant s written request Within 30 days f participant s request HOW OFTEN DOES THE SPD NEED TO BE UPDATED? ERISA des nt require plan administratrs t prvide a new SPD bklet every year. An updated SPD must be prvided every five years if material mdificatins are made t the SPD s infrmatin during that time perid. If n changes are made, then an updated SPD must be prvided every 10 years. It is typical fr plan design changes t be made each year, particularly fr grup health plans. Any material changes t plan design r peratin must be cmmunicated t participants. Since ERISA des nt require a plan s SPD t be updated each year, these changes d nt need t be cmmunicated thrugh an updated SPD bklet. Instead, they can be cmmunicated thrugh a summary f material mdificatin (r SMM). Hwever, when the plan changes are significant, an emplyer may decide that it is best t update the SPD bklet, rather than use an SMM, t cmmunicate thse changes t participants. 4 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

5 WHEN MUST SPD CHANGES BE COMMUNICATED TO PLAN PARTICIPANTS? An SMM (r an updated SPD bklet) must be prvided within 210 days after the clse f the plan year in which the change was adpted. If benefits r services are materially reduced, participants must be prvided ntice: Within 60 days frm adptin; r Within 90 days frm adptin, if participants receive such infrmatin frm the plan administratr at regular intervals f nt mre than 90 days. In additin t the SPD, the Affrdable Care Act (ACA) requires plan administratrs and issuers t prvide participants with a summary f benefits and cverage (SBC). As a related requirement, under the ACA, plan administratrs and issuers must prvide 60 days advance ntice f any material mdificatin t plan terms r cverage that takes effect mid-plan year and impacts the cntent f the SBC. The 60-day ntice can be prvided t participants thrugh an updated SBC r by issuing an SMM. A material mdificatin is any change t a plan s cverage that (independently r in cnnectin with ther changes taking place at the same time) wuld be cnsidered by the average plan participant t be an imprtant change in cvered benefits r ther terms f cverage. HOW CAN THE SPD BE DISTRIBUTED? The plan administratr is required t prvide the SPD t participants in a manner reasnably calculated t ensure actual receipt f the material by the participant. The fllwing are examples f acceptable methds f delivery: Hand delivery t emplyees at their wrksite (merely psting infrmatin in a cmmn area is nt acceptable); Included within a peridical distributed t emplyees (fr example, a unin newsletter r cmpany publicatin); U.S. mail; r Electrnic media (DOL regulatins include a safe harbr prvisin applicable t electrnic delivery f SPDs). MAY THE SPD BE DELIVERED ELECTRONICALLY TO ALL EMPLOYEES? The DOL s safe harbr cntains guidelines fr prviding disclsures t the fllwing tw grups f plan participants: Emplyees with wrk-related cmputer access; and 5 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

6 Other plan participants and beneficiaries wh cnsent t receive disclsures electrnically. Emplyees with Wrk-related Cmputer Access ERISA disclsures may be delivered electrnically t emplyees wh: Have the ability t effectively access dcuments furnished in electrnic frm at any lcatin where the emplyees are reasnably expected t perfrm their duties; and Are expected t have access t the emplyer's electrnic infrmatin system as an integral part f thse duties. Merely prviding emplyees with access t a cmputer in a cmmn area (fr example, a cmputer kisk) is nt a permissible means t electrnically furnish ERISA-required dcuments. Participants Wh Cnsent T Receive Disclsures Electrnically A plan administratr must btain written cnsent prir t electrnically delivering ERISA disclsures t plan participants wh d nt have wrk-related access t a cmputer. The cnsent may be received in either electrnic r paper frm. Prir t cnsenting, an individual must be given a clear and cnspicuus statement that explains: The types f dcuments t which the cnsent will apply; That cnsent can be withdrawn at any time withut charge; The prcedures fr withdrawing cnsent and fr updating the address used fr receipt f electrnically furnished dcuments; The right t request and btain a paper versin f an electrnically furnished dcument, including whether the paper versin will be prvided free f charge; and Hardware r sftware needed t access and retain the dcuments delivered electrnically. Where the electrnic distributin is made thrugh the Internet, the individual must affirmatively cnsent in a manner that reasnably demnstrates his r her ability t access infrmatin in the electrnic frm that wuld be used. If the plan administratr changes its hardware r sftware requirements, it must prvide a new ntice and btain cnsent again. WHAT REQUIREMENTS APPLY TO ALL ELECTRONIC DISCLOSURES? Plan administratrs are required t use measures reasnably calculated t ensure actual receipt f the material by plan participants and beneficiaries. The DOL s rules prvide sme guidance n what measures are reasnably calculated t ensure actual receipt when electrnic delivery is used. 6 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

7 Ntices A ntice must be sent either electrnically r in paper frm t each plan participant r beneficiary at the time the dcument is prvided electrnically. The ntice must indicate the significance f the dcument (when it is nt therwise reasnably evident) and explain the participant's right t request a paper cpy. Cnfirmatin f Receipt The plan administratr must make use f electrnic mail features such as return-receipt r ntice that the was nt delivered. The plan must als cnduct peridic reviews t cnfirm receipt f the transmitted infrmatin. Style, Frmat and Cntent Requirements Dcuments delivered electrnically must cntinue t be furnished in a manner cnsistent with the applicable style, frmat and cntent requirements cntained within ERISA. Fr example, SPDs prvided electrnically must cntain all the disclsures therwise required by ERISA's disclsure requirements. The DOL has indicated that the appearance f paper and electrnic versins need nt be identical. Paper Cpy Plan participants and beneficiaries are entitled t receive a paper cpy f any ERISA disclsure prvided electrnically. Where a plan participant r beneficiary requests a paper cpy f a dcument riginally prvided electrnically, the general rules fr charging fr paper cpies apply. DOES ERISA REQUIRE EMPLOYERS TO TRANSLATE THE SPD INTO ANOTHER LANGUAGE? N. While ERISA des nt require that an SPD be prvided in a nn-english language, in sme cases the SPD must include a prminently displayed ntice that assistance in a nn-english language cmmn t the plan participants is available. Sample language is prvided within the attached SPD Checklist. A plan is required t include this ntice in the fllwing cases: Plan Size* (number f plan participants) Less than 100 Greater than 100 Number f Participants wh are literate nly in the same nn-english language 25% r mre Lesser f: 500 r mre; r 10% r mre. *At the beginning f the year 7 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

8 Example: An emplyer maintains a grup health plan that cvers 1,000 plan participants. At the beginning f the plan year, 500 participants are literate nly in Spanish, 101 are literate nly in Vietnamese, and the remaining are literate in English. Each f the 1,000 plan participants must receive an SPD that cntains a ntice in bth Spanish and Vietnamese explaining the ability t btain assistance with understanding the SPD. WHAT ARE THE PENALTIES FOR NOT HAVING A WRITTEN PLAN DOCUMENT/SPD? There are n specific penalties under ERISA fr failing t have an SPD. Hwever, nt having an SPD can have serius cnsequences fr an emplyer, including the fllwing: Inability t Respnd t Participant Requests: The SPD must be furnished in respnse t a participant's r beneficiary s written request. The plan administratr may be charged up t $110 per day if it des nt prvide the SPD within 30 days after an individual's request. These penalties may apply even where an SPD des nt exist. Benefit Lawsuits: Nt having a plan dcument r SPD may put an emplyer at a disadvantage in the event a participant brings a lawsuit fr benefits under the plan. Withut these dcuments, it will be difficult fr a plan administratr t prve that the plan s terms supprt benefit decisins. Als, withut an SPD, plan participants can use past practice r ther evidence utside f the actual plan s terms t supprt their claims. Additinally, curts will likely apply a standard f review that is less favrable t the emplyer (and mre favrable t participants) when reviewing benefit claims under an unwritten plan. DOL Audits: The DOL has brad authrity t investigate r audit an emplyee benefit plan s cmpliance with the ERISA. Traditinally, DOL audits f emplyee benefit plans have fcused primarily n retirement plans, such as 401(k) plans. Hwever, nw that the DOL has started enfrcing cmpliance with the ACA, health plan audits are n the rise. When the DOL selects an emplyer s health plan fr audit, it will almst always ask t see a cpy f the plan dcument and SPD, in additin t ther plan-related dcuments. If an emplyer cannt respnd t the DOL s dcument requests, it may trigger additinal dcument requests, interviews, n-site visits r even DOL enfrcement actins. 8 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

9 Plan Summary Plan Descriptin Checklist (Fr Grup Health Plans) Name Type (fr example, grup health plan) Plan Number (three digits) Type f Plan Administratin (insured/spnsr/third-party administratr) Plan Year Plan Spnsr Name Address Emplyer Identificatin Number (EIN) A statement that a cmplete list f emplyers, emplyee rganizatins and unins spnsring the plan is available Where a plan is established pursuant t a cllective-bargaining agreement, a statement that a cpy f that agreement is available upn request t the plan administratr Financing & Administratin Funding medium (insurance cmpany, trust fund) Surce f cntributins and hw cntributins are calculated Plan Administratr Name Address Telephne Number Agent fr Service f Legal Prcess Name Address Statement that legal prcess can be served n the plan administratr r plan trustee Trustees (if the plan has a trust) Names Titles Addresses Eligibility & Benefits Statement f the cnditins pertaining t eligibility t receive benefits (such as enrllment perids, measurement methds, waiting perids and ther eligibility criteria) 9 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

10 Statement that the plan administratr has discretinary authrity t interpret and/r administer the plan (fr insured plans, a statement that the insurer will make benefit determinatins) A summary f benefits that includes a descriptin f:* Cst-sharing prvisins (premiums, deductibles, cinsurance, cpayment amunts fr which the beneficiary will be respnsible) Annual r lifetime maximums r ther limits n benefits under the plan Preventive services cverage Prescriptin drug cverage Medical test, device and prcedure cverage Requirements t use netwrk prviders List f netwrk prviders** Cverage fr services prvided by nn-netwrk prviders Limits n selectin f primary care prviders r prviders f specialty medical care Cnditins r limits applicable t btaining emergency medical care Pre-authrizatin r utilizatin review requirements Benefits prvided pursuant t the Wmen s Health & Cancer Rights Act and Newbrn s and Mther s Health Prtectin Act (Mdel Statement fr NMHPA) COBRA Rights/USERRA Rights Claims and appeals prcedures Statement that a cpy f QMSCO prcedures is available upn request Cverage fr adpted children Cntinued cverage f csts f pediatric vaccines Mental health parity disclsures ACA disclsures, including ntice f grandfathered status and ntice f patient prtectins (as applicable t the plan) HIPAA special enrllment disclsures *Sme f these cntent requirements are affected by ACA mandates, such as the ACA s ban n lifetime and annual dllar limits fr essential health benefits. **The prvider listing may be furnished as a separate dcument, prvided that the SPD cntains a general descriptin f the prvider netwrk and states that prvider lists are furnished autmatically, withut charge, as a separate dcument. Lss f Benefits Statement A statement clearly identifying circumstances which may result in disqualificatin, ineligibility, r denial, lss, frfeiture, suspensin, ffset, reductin, r recvery (subrgatin) A summary f plan prvisins gverning the authrity f the plan spnsr r thers t terminate, amend r eliminate benefits under the plan, including a descriptin f participants and beneficiaries benefits, rights and bligatins n plan terminatin and a descriptin f any plan prvisins gverning the allcatin and dispsitin f plan assets upn terminatin 10 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.

11 ERISA Rights Mdel statement f ERISA rights Freign Language Statement (if applicable Sample Statement: This bklet cntains a summary in English f yur rights and benefits under this emplyer s grup health plan. If yu have difficulty understanding any part f this bklet, cntact the plan administratr, at [insert address] frm 8:30 a.m. t 5 p.m. Mnday thrugh Friday. Yu may als call the plan administratr s ffice at fr assistance. This ntice must be prminently displayed within the SPD and must appear in the nn-english language cmmn t plan participants. Disclaimer A statement warning that, in the event f a cnflict between the SPD and the plan dcument, the plan dcument cntrls 11 This Cmpliance Overview is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice.