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Getting Schooled in SPDs

We throw a lot of acronyms around in our office: SBCs, ACA, HRA, HSA, FSA, WTH?, and every once in a while even we have to stop to clarify what one of them means.  A topic of great discussion lately is SPDs or Summary Plan Descriptions.

What is an SPD?

A Summary Plan Description refers to an outline of an employee benefit plan provided under Employment Retirement Income Security Act Plan (ERISA). It contains information such as the identity of the plan administrator, the requirements for eligibility and participation in the plan, circumstances that may result in disqualification or denial of benefits, and the identity of any insurers responsible for financing or administering the plan.

No, seriously, what is it?

In lay terms, it is a document that summarizes all of your employee benefit plans (everything, not just your health insurance), and it is written in a way that is understandable to your average employee.  The document has some legalese wrapped around it and it is required under ERISA law that you hand these out to your employees.

The problem is that most companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document--but they don't include the required or recommended provisions that protect the plan and the employer.

What am I required to do?

ERISA requires employers who are plan administrators of their group health plans to comply with 2 important requirements or risk potential penalties and possible audits from the Department of Labor:

  1. Maintain and distribute Summary Plan Descriptions (SPDs) to plan participants which accurately reflect the contents of the plan and which include specific information as required under federal law.
  1. Group health plans must be administered in accordance with a written Plan Document which must be made available to plan participants and beneficiaries upon request.

Huh?

You need an SPD that you hand out to each employee that summarizes all of your benefit plans, and you need to keep a Plan Document for your health insurance on file and make it available to employees or their beneficiaries if they ask you for it.  And, you need to keep them up-to-date.

What happens if you don’t comply?

Employers/plan administrators may be liable for serious penalties if they don't provide an SPD or have a current Plan Document:

  • Failure to provide an SPD or Plan Document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110/day per participant or beneficiary for each violation.
  • Lack of an SPD could trigger a plan audit by the U.S. Department of Labor (DOL). YIKES!
  • The DOL has increased its audit staff and national enforcement initiatives to investigate employers' compliance with Health Care Reform, resulting in companies of all sizes being audited and being required to provide an SPD and Plan Document. DOUBLE YIKES!

How do I get compliant?

You get an SPD, silly!  It’s easy, you can talk to your attorney, or you can talk to us.  We have solved this problem for ourselves and our clients, with a sophisticated system developed together with a major ERISA law firm that makes it easy and economical to comply with these federal requirements.

We ask you a few questions, we gather up your plan data and we build your SPD and Plan Document.  You give it to your employees, put your Plan Document in a file, and you check it off your to-do list.  Then we update it annually to make sure it is current. Easy peasy.

Want to get compliant? Get in touch with us.

Laurie Kuzneski

Laurie Kuzneski is Director of Client Development, and is the resident Culture Guru, funny girl, and often the voice of KIG. Laurie loves drinking wine, public speaking (preferably at the same time), talking about corporate culture, riding her bike, mentoring women-led companies (guy-led companies, too), and supporting many philanthropic endeavors. Laurie doesn't have time to write many blogs - to see why, check out her full bio on the About Us page.

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