Most benefit plans offered by businesses and non-profits are subject to regulation under ERISA. As part of administering these plans, Summary Plan Description documents (SPDs) are required. These documents are supposed to contain the most important plan information a participant would need to know, including eligibility and operational details. ERISA further regulates when these documents should be provided. Since they’re required documents that should provide your employees with important plan information, they’re not only important, but should be leveraged to help keep everyone informed.
Requirements for SPDs
Because plan documents for health, retirement, and other types of benefit plans can be complicated, the SPD is designed to be a plain language version that is easily understood. It must be written in such a way that the average plan participant understands their rights and obligations, how the plan works, and clarify plan benefits, limitations, and restrictions. This document must be given to all eligible plan participants, generally both current and former employees, at the time when they are eligible to begin making contributions to the plan and again when they’re eligible to begin receiving benefits from the plan. In the case of retirement plans, for example, the SPD may need to go to spouses and dependents as well as the retiring employee.
In addition to providing SPDs at key times, the plan administrator must also provide an updated SPD every five years showing plan updates and amendments. If no updates to the plan have occurred, the SPD must still be provided every ten years.
Using SPDs to Educate and Include
As plans get more complicated, it’s important to work with plan participants to ensure they actually understand and are able to make sound decisions based on the information provided in the SPDs. You may want to ask a sample of your employees to read the document before it is broadly distributed, ask questions about items they feel are unclear, and adapt the SPD if issues are identified. They may identify questions your HR department assumed were common knowledge, ask for specific examples of how the plan would apply to a certain situation, or even want a copy of the SPD in their native language.
Sending out the SPD may also be one of the few times your business communicates with retired employees and their beneficiaries. In this case, the SPD can make these individuals feel welcomed and supported into your business and informed of any coming changes that are likely to affect them.
Designing SPDs can be time consuming and ensuring they’re effective and ERISA-compliant is important. The experienced team at Hall Benefits Law can help your business and your human resources department review SPDs for potential compliance issues. We can also identify changes that may help make the SPDs more accurate, readable, and informative for your employees. Reach out to learn more by calling 678-439-6236 or visiting the Hall Benefits Law website.
Hall Benefits Law, LLC
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