Smart Benefits: Time to Update Your SPD?

Monday, October 07, 2019

Rob Calise, GoLocalWorcester Business/Health Expert

Rob Calise

The Employee Retirement Income Security Act (ERISA) requires plan administrators to give plan participants and beneficiaries important information about their retirement and health benefit plans. Some of these must be provided regularly and automatically by the plan administrator. And one of the most important documents participants and beneficiaries under the plan are entitled to receive is a summary of the plan called the summary plan description (SPD).

Here’s what you need to know to make sure you’re SPD-compliant.

Who Provides the SPD?

A common misconception is that the carrier or broker handles distributing the SPD to employees. Rather, it is the responsibility of the employer to provide the document.

What Does the SPD Contain?

The SPD explains what the plan provides, how it operates, and a description of participant and beneficiary rights, benefits and responsibilities in language they can understand. Some of the required content includes: name and type of plan, eligibility, benefits, claims, termination of the plan and more.

How do Employers Handle Plan Changes?

If a plan is changed materially, participants and beneficiaries must be informed either through a revised summary plan description or in a separate document called a summary of material modifications no later than 210 days after the close of the plan year for which the modification was adopted. For non-material changes, a new SPD is required every five years and, if there haven’t been any plan changes, a new one must be furnished every ten years.

When are SPDs due?

SPDs for new plans have to be provided to participants and beneficiaries within 120 days of the effective date of the plan. For existing plans, the SPD must be provided to new employees within 90 days of becoming covered by the plan. The documents can be distributed in person, by first-class mail or electronically under certain circumstances.

What are the Risks of Noncompliance?

The SPD is an important disclosure document and the penalties for failing to provide it are steep: for 2019, employers can be fined up to $156 a day.

Rob Calise is the Managing Director, Employee Benefits of The Hilb Group of New England, where he helps clients control the costs of employee benefits by focusing on consumer-driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance