Summary Plan Descriptions (SPD) And All You Wanted To Know About Them

It is imperative for the Benefit Plans, which are subject to the Employee Retirement Income Security Act (ERISA), to furnish the workers with an SPD (Summary Plan Description), and this document must be kept updated as well. Summary Plan Descriptions can be considered to be the primary legal documentation to communicate plan rights, benefits, and obligations to the workers of a business.

It is imperative to provide an SPD within a span of 3 months after covering an employee with this benefit plan. On the contrary, it will be possible to provide the SPD within 120 days in case the plan happens to be a new one.

Any info mentioned within an SPD is liable to modifications. In the event of any such change, it is feasible to restate SPD or even amend it by means of an SMM (Summary of Material Modification). A Summary of Material Modification is implemented to describe any alteration in the plan. In general, it will be imperative to provide an SMM within a span of 210 days following the completion of the plan year when the adaptation of the change took place. Nevertheless, it will be compulsory to provide the SMM within 2 months of the date when the change was adopted if the alteration is related to a reduction of covered services or benefits.

To get the best effects, a lot of employers are in the habit of providing an SPD along with the enrollment materials of the plan before the plan can cover the employee, while the employers will likewise provide the SMM before the effectual date of modification. In case a plan is being amended by means of an SMM, it will be essential to restate the SPD for incorporating all SMMs, and it must also be provided once again every 5 years to the participants.

Below, we have mentioned what the summary plan descriptions (SPDs) must include, per the regulations of the Department of Labor.

Descriptions to be included in SPD plans:

• Provisions for cost-sharing consisting of deductibles, premiums, coinsurance plus co-payment amounts for which the beneficiary or participant is going to be responsible

• Whether the plan will cover any new or existing drug

• Lifetime or yearly caps or any other restrictions on benefits provided by the plan

• The plan covers the preventative services to what extent

• Whether the plan provides any coverage for medicinal devices, procedures, or tests

• The limits or conditions that are applicable for obtaining emergency medicinal care

• Limitations or conditions on the selection of specialty medicinal care providers or primary care providers

• It is also essential for the SPD to explain how it will be feasible to obtain the plan benefits as well as the procedure for appealing any denied benefit

• Provisions involving utilization review to obtain a service or benefit under the plan

The methods of delivery:

The SPD ought to be delivered by the administrator to the participants through reasonable calculation to ensure actual receipt.

We would like to mention another essential thing here: It is compulsory to treat any pursuant covered by children to a competent medicinal child support order (or their caretakers), as well as the surviving spouses as partakers for purposes of the rules of the SPD delivery.

The permissible methods of delivery are going to consist of the following:

• First class mail

• Hand delivery

• Electronic in case the worker does have any work-related access to the computer as an integral part of their day-to-day chores and:

  1. The employer takes reasonably calculated measures to make sure that the system intended for furnishing the documents leads to the actual receipt of information that has been transmitted (for example, making use of return receipts, notice of any electrical mail feature that has been undelivered, and so forth)
  2. The recipient is advised by the electronic notice that he or she will get hold of a paper copy without paying anything at all upon request.
  3. The electronic notice regarding the significance of the document informs the recipient

It will be imperative for the plan administrator to take appropriate and sensible steps in case a disclosure consists of any personal info about the accounts and the benefits of an individual, and he will do this to safeguard that information’s confidentiality.

Do you have additional questions or need assistance with your summary plan descriptions? We also offer other compliance consulting services, including Form 5500, 401K, and wrap plans.

Do not hesitate to contact us with your business compliance issue. We are the experts in benefits compliance consulting!