What’s An SPD and Does It Apply To My Business?
SPD stands for Summary Plan Description. It is an important document that is required for all ERISA-covered health benefit plans. The SPD provides information on when an employee can begin to participate in the plan, what coverage is offered, how the plan operates, and the rights and responsibilities of participants and beneficiaries. The document is customized to describe the benefit plan offered by your company. The responsibility to provide a Summary Plan Description rests with the employer.
Employers who provide their employees with health benefit programs (whether fully insured or self-insured) are subject to ERISA. The requirement to have an SPD applies to plans of any size; even those with only 2 employees. The contract that you signed or the benefit booklet provided by the insurance company is not the equivalent of the Summary Plan Description. It is a separate document. Other provisions of ERISA, such as filing a Form 5500, may be limited to plans that have fewer than 100 participants. That does not apply to the SPD.
SBC is a similar term. It means Summary of Benefits and Coverage. The SBC is a document that was established by the Affordable Care Act for the purpose of providing similar information about health insurance benefits that will allow a consumer to compare plans. It can be provided by the insurance company or the employer. The SBC can be incorporated into the Summary Plan Description, but does not replace the SPD.
There are specific requirements regarding when and to whom the Summary Plan Description must be distributed as well as guidelines for paper or electronic delivery methods.
The Employee Benefits Security Administration is an agency of the US Department of Labor and is responsible for enforcement of ERISA. If your company is audited by EBSA and you do not have all of the documents required by ERISA or have not complied with the distribution standards, you can be fined. The penalty for failing to furnish an SPD within 30 days to a participant that requested it is $110 per day per participant.
We recommend that you review the documentation that you have for your health benefit plans to determine whether it meets the ERISA requirements. You should also review your company’s practices in terms of when employees are provided information about these plans. If you are not ERISA compliant or if you’re not sure where you stand, contact your employee benefits broker for guidance. If you are not represented by an agent or broker that can help you with these issues, then contact ComPro. We’ll be glad to help.
by Brian McPike, President
402-488-5100 | www.comproins.com
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