Do you offer any benefits to your employees on a pre-tax basis such as medical, dental, life insurance, Flexible Spending Accounts or Health Savings Accounts? Most employers offer at least one of these benefits but don’t always realize that there are disclosure requirements that accompany these plans.
According to the Department of Labor, “The Employee Retirement Income Security Act (ERISA) requires plan administrators – the people who run plans – to give plan participants in writing the most important facts they need to know about their health benefit plans including plan rules and documents on the operation and management of the plan. Some of these facts must be provided to participants regularly and automatically by the plan administrator. Others are available upon request, free-of-charge or for copying fees.”
One of the most important documents that participants need to receive automatically if they are eligible to participate in one of these welfare plans is a Summary Plan Description (SPD). The SPD is an summary of the plan document that gives information on a number of items such as:
- what the plan provides and how it operates
- when an employee can begin to participate in the plan
- how service and benefits are calculated
- when and in what form benefits are paid
- how to file a claim for benefits
If the plan or the benefits are changed, participants must be informed in writing either by issuing an updated SPD or through a Summary of Material Modifications (SMM) that outlines the changes.
Action Item: Review the SPD (or multiple SPDs) for your welfare and benefit plans. In addition, make sure that you are automatically providing your employees with these important documents whenever they become eligible for a benefit or if any changes are made to your benefits.
If you need help, we can take a look at your documents and let you know if they are in compliance with current law and if they describe how your benefits plans are currently managed. Make sure you’re not missing out on this important required notification.