Summary Plan Description
The Summary Plan Description is the most important document provided to participants of an ERISA health benefit plan. The plan document provides a clear, concise, and accurate summary of the features within the plan.
The information on the Summary Plan Description documents varies with the type of plan but should include:
- employer name, address, and phone number
- type of plan
- description of benefits
- plan EIN
- the provisions covered by the plan
- any special features
- plan administrator information
- additional plan information is needed for group health plans
- the plan must be written in language that is easily understood by the plan participant
NOTE: A plan document is not the same as a plan description. The plan document tells the plan participants about the benefits they are entitled to under the plan and the Summary Plan Description is the document that outlines specific guidelines set by ERISA.
Summary Plan Description Wrap Document
Summary Plan Description Wrap Document or SPD Wrap provides the information required by ERISA by incorporating (or “wrapping” itself around) the insurance policy or similar third-party contract. If you offer a benefit that requires a waiting period before you begin receiving payments, tell employees how much time they need to wait before they can start getting paid. Employees should know how to file claims and appeal decisions made by their employer.
SPD Delivery Methods
- First-class mail or second- and third-class mail, if return/forwarding postage is guaranteed and address correction is requested.
- Hand delivery of SPDs at the worksite. Simply placing the SPDs in a location frequented by employees is not an acceptable distribution method.
- Electronically, if all employees have access to computers and notice is provided at the time electronic SPDs are provided.
Summary of Material Modifications (SMM)
- The Summary of Material Modifications (SMM) describes material modifications to a plan and changes in the information required to be in the SPD.
- The SMM must be distributed to participants not later than 210 days after the end of the plan year in which the change was adopted.
Summary Plan Document Services
- Create, edit and distribute Summary Plan Documents with accuracy and affordability.
- A one-stop document management system for your summary plan documents that are available 365 days per year, 24 hours a day.
- Login 24/7 to receive your new Wrap documents for auto updates.
- SPD Wrap Documents are automatically generated and emailed.
- SPD documents are automatically kept up to date with all legal requirements.
- We will notify you of any changes. You need not worry about missing IRS deadlines or getting a DOL penalty.
- Fast preparation – Wrap documents can usually be completed in less than 60 minutes!
Summary Plan Description Options
Summary Plan Description FAQ
If you offer group health insurance, you are required to distribute an ERISA Wrap SPD document to all Plan participants within 120 days of the Plan’s effective date.
The employer must notify all employees in writing of any change to their benefits that will apply either immediately or in the future. This includes changes to salary increase and bonuses, health care and other fringe benefits, retirement plan contributions and distributions, life insurance coverage, disability insurance coverage, time off policies or practices, employee pay rates.
The Employee Retirement Income Security Acts of 1974 (ERISA) protects individuals under voluntarily established pensions and health plans in private industries. ERISA requires plans to provide participants with plan information, including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans, and gives participants the right to sue for benefits and breaches of fiduciary duty.
• Participants must receive an SPD: Within 120 days of the Plan becoming subject to ERISA (for example, a new group health plan).
• Every five years, if material modifications are made during that period, or every ten years, if no amendments occur.
• If you offer group health insurance, you are required to distribute an ERISA Wrap SPD document to all Plan participants within 120 days of the Plan’s effective date.
• Compliance solution for insured plans is a “wrap document.”
• The insurance certificate typically does not meet all of ERISA’s requirements for SPDs.
• The sponsor of an insured plan (not the issuer) is responsible for providing the SPD.
Failure to provide written requested ERISA plan documents, Summary Plan Descriptions, Summary of material modifications, etc. can incur a penalty up to $161 per day, not to exceed $1,613 per request.
ERISA does not cover group plans for government entities or churches. It also does not cover plans made only to comply with applicable workers’ compensation, disability, or unemployment laws and those maintained for the benefit of nonresident aliens outside America. However, there is a difference between plan documents and summary plan descriptions. Plan documents explain the benefits participants are entitled to and provide:
- Name of the fiduciary who holds the authority to administer the plan.
- Process for amending and terminating the policy.
- Source of plan contributions and the distribution of responsibilities between the employer and insurance carrier.
Not having an SPD also allows participants to use other evidence or employer representations to support benefit claims or lawsuits against the employer. An employer that cannot respond to the DOL’s request may trigger additional document requests and DOL enforcement actions. The DOL may also charge a penalty up to $161 per day, not to exceed $1,613 per request.
The Department of Labor (DOL) increased ERISA audits to ensure all rules are adhered to. These rules and requirements are subject to changes, making it harder for employers to remain compliant on their own.
Section 105(h) rules suggest that employee contributions for HCls and non-HCls must be the same. These rules provide that a health plan that provides optional (elective) benefits to participants will satisfy the benefits test if: All participants are eligible to elect the optional benefits, and there are either no required employee contributions or the required employee contributions are the same amount.
As a permissible design option, a self-insured health plan may establish a maximum reimbursement limit for any single benefit or combination of benefits. However, any maximum limit attributable to employer contributions must be uniform for all participants (and for all dependents of employees who are participants) and may not be modified by reason of a participant's age or years of service. If a plan covers HCls and the type or the number of benefits subject to reimbursement under the plan are in proportion to employee compensation, the plan will fail the benefits test.
The IRS has suggested that having a longer waiting period for non-HCls than HCls will cause a self-insured health plan to fail the benefits test.
We are here to help! Just click the call or email button to the right of the page to speak with us.