Summary Plan Descriptions – Are Your Client’s Documents Sufficient?
- On August 13, 2018
- COBRA, DOL, ERISA, Form 5500, SPD
Any business that offers group health insurance and is subject to the Employee Retirement Income Security Act (ERISA) needs to have plan documents in place, including a summary plan description (SPD). Every broker knows that most companies do not have an SPD in place. While the risk is higher for plans without a SPD, it is also easier to help them because their next step is so clear. Brokers tend to worry less about the clients who already have plan documents, but those clients need compliance help too. Check in with all group clients about their SPDs every year. Many unknowingly have an incomplete document or one written in a manner that cannot be readily understood by the average plan participant, and many groups need annual updates to reflect plan year changes.
The Department of Labor (DOL) is explicit: each SPD must be readable, meaning it should not include technical jargon or long and complicated sentences. When crafting SPDs, employers should use examples whenever possible and clarifying graphics and illustrations as appropriate. The DOL also strongly suggests including cross-references and a table of contents. So if your client has an SPD already prepared, get out your red pen and read the document. If it is confusing, or all legalese, then help your clients make edits before the plan year begins.
The DOL also has specific rules about what information must be in an SPD, and many employers have documents in place that don’t check all the boxes. So while you have your red pen out, make sure that it includes all of the necessary elements, and the data and descriptions are current. According to their guidance, an SPD must be up-to-date within 120 days and contain:
- An official plan name and number (also used in any Form 5500 filing)
- The official plan year start and end dates
- An address and contact information for the plan, including the name of the plan administrator (could be the owner of the business or the person(s) within the company with direct authority over the plan)
- The duties of the employer plan, as well as any responsibilities of the employee
- Detailed plan eligibility criteria, including any plan waiting periods, and how the plan determines eligibility for coverage offers relative to the Patient Protection and Affordable Care Act’s employer shared responsibility provisions
- Information about what might make someone ineligible for benefits under the plan and the related procedures, including coverage rescissions or subrogation procedures
- A description of the plan benefits, including a description of covered services including preventive care, prescription drugs, and other medical treatment and services and any relevant limitations or guidelines
- Information about required precertification or preauthorization
- Information about any limits on benefits or coverage exclusions
- Information about plan networks and using in-network and out-network providers (if applicable) including a general description of any provider network and information about the composition of the network (can be in an attached document, such as the carrier’s network directory if the actual text includes a statement that provider lists are furnished automatically, without charge, as a separate document)
- A description of the plan’s claims procedures (which can either be a direct part of the SPD or can be in a separate attachment, such as the certificate of coverage)
- Information about plan premiums, cost-sharing, deductibles, co-payments, coinsurance and other cost-sharing requirements)
- Information about the handling of plan funds, including any medical loss ratio rebates
- The rights and obligations of participants and beneficiaries under the plan on termination of the plan or amendment or elimination of benefits under the plan
- Information about a description of the rights and obligations of participants and beneficiaries concerning the Consolidated Omnibus Budget Reconciliation Act (COBRA) or state-level continuation coverage, including, among other things, information concerning qualifying events and qualified beneficiaries, premiums, notice and election requirements and procedures, and duration of coverage
- A description of the plan procedures governing qualified medical child support orders (QMCSO) determinations or a statement indicating that participants and beneficiaries can obtain, without charge, a copy of such procedures from the plan administrator
- A description of a plan participant’s fundamental rights and responsibilities under ERISA (the model language a plan should use is in the text of the SPD regulations)
- Notices and descriptions of certain rights under the Health Insurance Portability and Accountability Act (HIPAA) and other health coverage laws including the Newborns’ and Mothers’ Health Protection Act of 1996. Plans can access model notice text both in the SPD regulationsand also in other DOL guidance on the notice and disclosure requirements for employee benefit plans
Brokers that make SPD review a part of their plan renewal process provide tremendous value to their clients. If you need a recommendation for an SPD vendor, please do not hesitate to contact your Kistler Tiffany Benefits’ Employee Benefits Consultant.
By Jessica Waltman, Special Contributor
Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.
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