Summary Plan Description–What You Need to Know

Have you provided your employees with their copy of your Summary Plan Description yet? Did you know that all group health plans subject to the Employee Retirement Income Security Act (ERISA) are required to provide participants with a Summary Plan Description (SPD)? Do you even know what an SPD is?


What is a Summary Plan Description?

An SPD is a document that you must provide to employees participating in your healthplan that explains the plan’s benefits, claims review procedures and their rights. And it needs to be written in language that your average employee can understand.

ERISA provides the standards for what must be included in your SPD and how you must distribute it to your plan participants.

Some employers have mistakenly assumed that giving participants the booklet given out by the insurance company will complete the SPD obligation. Sometimes the insurance booklet contains detailed information regarding benefits and coverage. But very often there is additional required information that is not provided in the insurance carrier’s handbook.

Since the passage of the Affordable Care Act (ACA), employers are also required to provide a summary of benefits and coverage (SBC) to applicants and enrollees before enrollment or re-enrollment.

This SBC must describe the “benefits and coverage under the applicable plan or coverage.” This requirement is in addition to the ERISA requirements for an SPD.


Which Employers Must Provide an SPD?

If your group health plan has two or more unrelated employees participating in your company health plan, you are required to provide participants with an SPD. This applies to both insured and self-funded health plans. If you have heard about ERISA, you may have heard there is an exception for some group health plans with less than 100 participants, but that only applies to reporting requirements and not to providing SPDs.


When Must I Give Plan Participants their SPD?

Ideally, participants should be given an SPD as soon as possible after a new plan begins. The requirements are that SPDs must be distributed to all participants within 120 days of a new health plan beginning. New participants (such as a new hire) must be given their SPD within 90 days of enrollment, and a participant making a written request for an SPD must receive it within 30 days. After that, you need only distribute the SPD every five years if you have made substantive changes to the plan or every 10 years if you don’t make any changes.


Must I file my SPD with the Department of Labor?

No. While it was once the case for large employers, it has not been required for many years. The only time you must file an SPD with the DOL is within 30 days of their requesting it. Failing to file upon request can result in extensive fines.


How can I deliver SPDs to my Plan Participants?

You can deliver SPDs in a variety of ways, but must make sure the participants actually have a reasonable chance of getting it. Posting it in the break room won’t cut it. You may hand deliver to employees at their worksites, include it in the company newsletter or send it by mail. You can also deliver it electronically in certain situations.


What Happens If I Don’t Provide an SPD?

Since the passage of ACA, its reporting requirements has resulted in increased scrutiny of employer-sponsored health care plans and additional audits are anticipated by industry experts. They also suggest that an employer audit isn’t likely to be limited to ACA-related information and that employers should be prepared for a full audit of their health care plans.

Providing an SPD may seem overwhelming, especially for smaller employers. At Roper Insurance, we assist our clients in ensuring they are compliant with both ERISA and ACA requirements. For more information and a more detailed report on what your SPD responsibilities are, contact Roper Insurance today using the contact link above or by calling our office at 303-721-1145.

Don’t let yourself be caught unprepared. Let Roper Insurance help make administering your employee health plans easy and enjoyable.

image courtesy of and stockimages.