Where Are Your SPDs?
I have found that almost all HR or benefit professionals that assist with their company’s 401(k) or pension plan know that the retirement plan needs a summary plan description or SPD. Surprisingly, many of those same individuals don’t realize that their welfare plans, including their medical plan, also are required to have an SPD. Or if they do realize the requirement, they often think that the insurance carrier’s certificate or benefits booklet meets the requirement. Bad news for these employers – I have never seen an insurance certificate or benefits booklet that complies with all of the SPD requirements as they are generally not customized to the employer, but generic for all adopting employers.
Thanks to the Affordable Care Act welfare benefit plans are getting increasing attention, especially from DOL auditors. In the last few years, I have received calls from many employers requesting that we prepare an SPD for their medical plan. Benefit brokers and auditors have been consulting employers more on these requirements, which is great because you want to make sure you have the appropriate documents in place before a government regulator comes knocking at your door. Furthermore, if a participant requests a copy of all plan documents and you fail to provide the SPD, the DOL can assess a penalty of up to $110 per day for failing to provide the SPD. While nobody wants a penalty, the better reason to make sure that your plans have SPDs is that it gives you the opportunity to lay out all of the requirements and plan provisions and have something to point to when an employee questions why his 29-year son isn’t eligible for your dental plan.
If you haven’t taken an inventory of your SPDs lately, now would be a great time to do so. Don’t panic if you realize you don’t have an SPD for all your plans as the problem isn’t difficult to fix. For fully-insured plans, the requirement can be met fairly easily by creating a document that “wraps” around your insurance certificate. If you have SPDs for all of your plans, that is great but you should dust them off periodically to make sure they are still accurate. As always, we are happy to help.