United States: Summary Plan Descriptions Required For All ERISA Retirement, Health And Welfare Plans

Victoria H Zerjav is attorney in Holland & Knight's Stamford office

Courtney A Thomson is a attorney in Holland & Knight's Miami office

HIGHLIGHTS:

  • Administrators of all employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) should ensure their plans' compliance with ERISA's Summary Plan Description (SPD) requirement.
  • Misconceptions of the ERISA rules can lead plan administrators to believe that they either have provided an ERISA-compliant SPD when they have not, or that an SPD is not required at all.
  • SPDs for new plans must be furnished to participants and beneficiaries within 120 days of that plan's effective date. For existing plans, an SPD must be provided to each participant within 90 days of the date that the participant begins to be covered.

There is no time like the present for administrators of employee benefit plans subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) to confirm the plans' compliance with ERISA's Summary Plan Description (SPD) requirement. Sometimes, misconceptions of the ERISA rules can lead plan administrators to believe that they either have provided an ERISA-compliant SPD when they have not, or that an SPD is not required at all. We are not the first to write on this topic and surely will not be the last. Note that the plan administrator is often the plan sponsor, and typically not an insurer or a third-party administrator.

The penalty for failing to provide an ERISA-compliant SPD to participants in a timely manner, or within 30 days of a written request, can be up to $110 per day, per request, as adjusted for inflation. Failure to provide an ERISA-compliant SPD to the U.S. Department of Labor can result in a penalty of up to $147 per day, capped at $1,472 per request, each as adjusted for inflation. Each participant and beneficiary could make a request for an SPD, triggering the penalty with respect to each participant. A court has discretion to impose an even more significant penalty for failing to act in a fiduciary capacity by withholding an SPD from a participant. For example, one federal circuit court upheld a damages award of nearly $200,000 against a company for failing to act in a fiduciary capacity, on top of the statutory penalty, for failing to furnish an SPD to a single participant. Given the potentially onerous aggregate penalties for a plan administrator, it is worth taking a few moments to review the applicable SPD rules and how they may apply to your plan.

ERISA applies to virtually all employee benefits plans provided by private employers (i.e., non-governmental employers or churches) or employee organizations to U.S. citizens or residents, including employee welfare benefits under ERISA Section 3(1) and retirement benefits under Section 3(2). Employee welfare plans under Section 3(1) include medical, health, dental, vision, life, accident, disability insurance plans, flexible spending accounts (FSAs), health reimbursement accounts (HRAs), and any other plan that an employer has established and maintained through the purchase of insurance or otherwise and for the purpose of providing benefits for its employees. Retirement benefit plans are plans or programs designed to provide retirement income to employees, including 401(k) plans, profit sharing plans, defined benefit plans and cash balance plans. Some exceptions apply, such as top-hat plans and non-ERISA portions of cafeteria plans, but whether the exception applies to a specific employee benefit plan should be carefully considered by a plan administrator.

SPD Requirements

An SPD must contain a comprehensive description of the plan and must be clear enough so that the average person reading it can understand his or her benefits under that plan. SPDs for new plans must be furnished to participants and beneficiaries within 120 days of that plan's effective date. For existing plans, an SPD must be provided to each participant within 90 days of the date that the participant begins to be covered. Note also that if material changes are made to a plan, a Summary of Material Modifications (SMM) must be provided to participants within 210 days after the end of the plan year in which the change has been made. Every five years, assuming a plan has changed, a new SPD must be furnished to all participants (every 10 years if there has been no change).

Note that even when a welfare benefits plan has less than 100 participants and is exempt from the Form 5500 annual reporting requirements, the plan administrator is still required to furnish the SPD. Furthermore, an SPD must have certain specific information and cannot be substituted in whole by another summary of benefits, an insurance policy or an insurance certificate of coverage that does not contain all of the required information for the SPD.

In order to be ERISA-compliant, an SPD must include the following:

  1. Certain details about the plan, including plan name, plan number, type of welfare or retirement plan, the last day of the plan's fiscal year, the type of administration and a summary of benefits
  2. Employer details, such as: name, address and employer identification number (EIN)
  3. Plan administrator details, such as: name, address and telephone number
  4. Eligibility requirements for participants and beneficiaries
  5. Claims procedures, including the heightened disabilities claims procedures effective after April 1, 2018
  6. A statement of a participant's rights under ERISA
  7. For group health plans, additional information, including COBRA continuation coverage and Health Insurance Portability and Accountability Act (HIPAA) pre-existing condition exclusions

This list is not comprehensive but is intended to help plan administrators identify whether they are providing an ERISA-compliant SPD to plan participants. Sometimes, a plan administrator will choose to create a "wrap document" and "wrap SPD" to encompass the required SPD information for all of that employer's welfare plans, providing all the required information that is typically not included in insurance company-provided summaries or benefits booklets. A wrap document tends to be a cost-efficient alternative to having multiple SPDs, one for each of the individual health and welfare plans.

Additional Considerations

In addition to compliance with the ERISA requirements to provide an SPD, the plan sponsor also must consider, among other things, the manner in which the SPD will be furnished to plan participants and beneficiaries, the need to include language in the SPD for a health plan to comply with HIPAA privacy and security obligations and the need to provide the SPD in a foreign language.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions